THE INDIAN CONTRACT ACT, 1872 CHAPTER-1 NATURE OF CONTRACT CONTENTS: 1. DEFINITIONS 2. ESSENTIAL ELEMENTS OF A VALID CONTRACT 3. TYPES OF CONTRACTS
1 1
1. DEFINITIONS
A. CONTRACT Sec.2(!
An agreement enforceable by law.
B. A"REEMENT Sec.2(e!
Every promise and every set of promises forming consideration for each other.
C. ENFORCEA#ILITY #Y LA$
An agree agreeme ment nt which which creat creates es lega legall obli obliga gati tion on on the the part part of parties.
D. PROMISE Sec.2(%!
A proposal when accepted becomes a promise.
E. CONSIDERATION
Pric Pricee paid paid by the the one one part party y for for the the prom promis isee of the the othe otherr. Tec&'c) *+ e&'&/ 0UID PRO UO '.e. +e4'&/ '& e45&
2. ESSENTIAL ESS ENTIAL ELEMENTS OF A VALID CONTRACT SECTION 16
All A/eee&4 are contracts if they are made by the ee c+&e&4 of the 4'e c+e4e&4 4+ c+&4c4 for a )*5) c+&'e4'+& and with a )*5) +%9ec4 and are &+4 ee% e;e) ec)e 4+ %e <+' . ESSENTIAL ELEMENTS ELEMEN TS OF A VA VALID CONTRACT
1. AGREE REEE E!"
#n ord order to cons consti tit$ t$te te a valid alid cont contra ract ct%% ther theree m$st be an agre agreem emen entt between the parties. "o form an agreement% there sho$ld be proper be proper offer by one and its proper acceptance by the other. other.
&. 'REE C(!)E!"
C+&e&4 means agreed $pon same thing in the same sense i.e. there sho$ld be c+&e&5--'e. A c+&e&4 is said to be ee when it is &+4 ca$sed by coercion% $nd$e infl$ence% fra$d% misrepresentation or mista*e. E;)e: - 0A+ threatened to shoot ,B+ if he -B does not sell his ho$se to him Rs. &//// and ,B+ agreed to it. 0ere the agreement is entered into $nder coercion and hence voidable at the option of ,B+.
. C(PE" C(PE"E!C E!C2 2 (' "0E PAR"#E)
Parties m$st have the capacity to enter into a contract otherwise the contract is not valid.
$+ ' c+e4e&4 4+ c+&4c4
• • •
a3or Person of )o$nd mind Pers Person on not not dis5 dis5$a $ali lifi fied ed by law law from from contracting
6. 7A8'47 C(!)#DERA"#(!
$+ ' '&c+e4e&4 4+ c+&4c4
• • •
inor Person of 4nso$nd ind Person dis5$ s5$alified contracting
by
law
from
Consideration m$st not be $nlawf$l% immoral or opposed to the p$blic
policy. policy. E;)e: U&)*5): -A agrees to sell narcotics to B for a s$m + Rs. Rs. 1/////. "his agreement is not valid beca$se the consideration is $nlawf$l. I+): - An agreement for letting a ho$se to a prostit$te for carrying on her vocation there. O+e O+ e 4+ 4e 5%)'c 5%)'c +)'c: +)'c: - "rading with enemy% Agreement in restraint of marriage% trade% legal proceedings etc.
7A 7A8'47 (B9EC" (B9EC"
(b3ect (b3ect means means the p$rpo p$rpose se or design. design. "he "he ob3ect ob3ect of the agreem agreement ent m$st m$st be lawf$l. E;)e:- ,A+ and ,B+ ma*e an agreement for sm$ggling o$t some goods from #ndia to another co$ntry. "his agreement cannot be enforced in the co$rt beca$se the ob3ect is $nlawf$l.
!(" E:PRE))7 E:PRE))72 2 DEC7ARED ;(#D
An agreement sho$ld not be one which is e
#!"E!"#(! "( CREA"E CREA"E 7EGA7 RE7A"#(!)0#P
Parties m$st have an intention of creating the legal relationship. An agreement of a p$rely domestic or social nat$re is not a contract. E;)e 1=> ,A+ invites his friend ,B+ to his birthday party. ,B+ accepts the offer. B$t he fails to t$rn $p for the party. "his agreement creates social social and person personal al relatio relationsh nship ip betwee between n ,A+ ,A+ and ,B+. ,B+. #t cannot cannot be enforced in the co$rt. "h$s A has no legal remedy against B. E;)e 2=> ,A+ borrows s$m of Rs. ?// from his friend ,B+ for three months. ,B+ gets legal right to s$e $pon ,A+ if he fails to ret$rn money. #t is beca$ beca$se se this this agree agreeme ment nt creat creates es legal legal rela relati tion onsh ship ip%% whic which h can be enforced in the co$rt. #ALFOUR V. #ALFOUR (1=1=!
#n this case a h$sband 3$st ma*es a promise to pay his wife monthly allowance of @/ for her maintenance maintenance.. 7ater on they separated separated and h$sband failed to pay stip$lated stip$lated amo$nt amo$nt to his wife. )he filed s$it for that allowance. B$t it was held by the co$rt that s$ch arrangements are not contracts or do not res$lt in a contract beca$se parties did not intend to create legal relationship and finally the s$it was dismissed. CER"A#!"2 (' EA!#!G
Agreement made by the parties m$st be certain or capable of being made certain. E;)e: ,A+ is a dealer of *erosene oil and cocon$t oil. ,B+ ma*es an agreement with him for b$ying 1/ lts of oil. eaning of this agreement is $ncertain and therefore it cannot be enforced.
P())#B#7#"2 (' PER'(RA!CE 7EGA7 '(RA7#"#E)
An agreement to do an act impossible in itself is void. E;)e: - An agreement to discover treas$re by magic is void. )$ch as in writing% registration etc m$st be completed otherwise the contract is not enforceable at law.
policy. policy. E;)e: U&)*5): -A agrees to sell narcotics to B for a s$m + Rs. Rs. 1/////. "his agreement is not valid beca$se the consideration is $nlawf$l. I+): - An agreement for letting a ho$se to a prostit$te for carrying on her vocation there. O+e O+ e 4+ 4e 5%)'c 5%)'c +)'c: +)'c: - "rading with enemy% Agreement in restraint of marriage% trade% legal proceedings etc.
7A 7A8'47 (B9EC" (B9EC"
(b3ect (b3ect means means the p$rpo p$rpose se or design. design. "he "he ob3ect ob3ect of the agreem agreement ent m$st m$st be lawf$l. E;)e:- ,A+ and ,B+ ma*e an agreement for sm$ggling o$t some goods from #ndia to another co$ntry. "his agreement cannot be enforced in the co$rt beca$se the ob3ect is $nlawf$l.
!(" E:PRE))7 E:PRE))72 2 DEC7ARED ;(#D
An agreement sho$ld not be one which is e
#!"E!"#(! "( CREA"E CREA"E 7EGA7 RE7A"#(!)0#P
Parties m$st have an intention of creating the legal relationship. An agreement of a p$rely domestic or social nat$re is not a contract. E;)e 1=> ,A+ invites his friend ,B+ to his birthday party. ,B+ accepts the offer. B$t he fails to t$rn $p for the party. "his agreement creates social social and person personal al relatio relationsh nship ip betwee between n ,A+ ,A+ and ,B+. ,B+. #t cannot cannot be enforced in the co$rt. "h$s A has no legal remedy against B. E;)e 2=> ,A+ borrows s$m of Rs. ?// from his friend ,B+ for three months. ,B+ gets legal right to s$e $pon ,A+ if he fails to ret$rn money. #t is beca$ beca$se se this this agree agreeme ment nt creat creates es legal legal rela relati tion onsh ship ip%% whic which h can be enforced in the co$rt. #ALFOUR V. #ALFOUR (1=1=!
#n this case a h$sband 3$st ma*es a promise to pay his wife monthly allowance of @/ for her maintenance maintenance.. 7ater on they separated separated and h$sband failed to pay stip$lated stip$lated amo$nt amo$nt to his wife. )he filed s$it for that allowance. B$t it was held by the co$rt that s$ch arrangements are not contracts or do not res$lt in a contract beca$se parties did not intend to create legal relationship and finally the s$it was dismissed. CER"A#!"2 (' EA!#!G
Agreement made by the parties m$st be certain or capable of being made certain. E;)e: ,A+ is a dealer of *erosene oil and cocon$t oil. ,B+ ma*es an agreement with him for b$ying 1/ lts of oil. eaning of this agreement is $ncertain and therefore it cannot be enforced.
P())#B#7#"2 (' PER'(RA!CE 7EGA7 '(RA7#"#E)
An agreement to do an act impossible in itself is void. E;)e: - An agreement to discover treas$re by magic is void. )$ch as in writing% registration etc m$st be completed otherwise the contract is not enforceable at law.
TYPES OF CONTRACTS
3.
ENFORCEA#ILITY
CREATION
>VOID >VOIDA#LE >UNENFORCEA#LE >ILLI"AL
>IMPLIED >E- C+&4c4
E?ECUTION
>E?ECUTORY >#ILATERAL >UNILATERAL
EN"LISH LA$ CLASSIFICATION
SIMPLE CONTRACTS
CONTRACT OF RECORD
UD"EMENT OF COURT
FORMAL CONTRACTS
CONTRACT UNDER SEAL
RECO"NISANCE
A. ON THE #ASIS OF ENFORCEA#ILITY 1. VALID VALID CONTRACT C ONTRACT
A contract which contains all the essential elements.
2. VOID CONTRACT @SEC. 2(9!
A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.
3.VOID A"REEMENT @SEC. 2(/!
An agreement which is not enforceable by law is said to be void. #t is an agreement which cannot be enforced from the date when they were made. #t is <+' % '&'4'+. An agreement% which is enforceable by law at the option of one more of the parties% b$t not at a t the option of the other -s is a voidable contract. F+ e;)e: - r. A% at *nife > point% as*s B to sell his scooter for Rs. ?/. r. B gives consent. "he agreement is voidable at the option of B% whose consent is not free. An $nenforceable contract is one which is good in s$bstance b$t cannot be enforced by law d$e to some technical defects% s$ch as $nder stamping% absence of writing% barred by limitation. A contract which is forbidden by law. F+ e;)e: - Agreement to commit crime.
B.VOIDA#LE CONTRACT @SEC. 2('!
. UNENFORCEA#LE CONTRACT . ILLE"AL CONTRACT
#. CLASSIFIC CLASSIFICAT ATION ION ON THE #ASIS #ASIS OF CREATI CREATION ON 1. E:PRE)) A contract which is created either by word spo*en or written. C(!"RAC" F+ e;)e: - #f ,A+ of Agra offers to sell his car for Rs. 1?//// to ,B+ of Delhi by a letter and ,B+ accepts the offer by writing a letter. "h$s the contract between ,A+ and ,B+ is said to be an e
A. "acit A contract which is inferred from the cond$ct of the parties is said Contract to be tacit contract. F+ e;)e: - -i 8hen we enter into a b$s witho$t as*ing any 5$estion from b$s cond$ctor% we enter into implied contract.
-ii (btaining cash form A" B. $asi Contracts
"hese are the contracts% which are created neither by word spo*en% nor written% nor by the cond$cts of the parties% b$t these are created by the law. F+ e;)e: - #f ,A+ leaves his goods at ,B++s shop by mista*e% then it is ,B++s d$ty to ret$rn the goods or to compensate the price.
1. E>C(!"RAC"
I& c4, 4ee c+&4c4 ee& 5+& 4e '&c')e 44 &+%+ *')) %e ))+*e 4+ %ec+e 'c 4 4e e;e&e + 4e +4e. T' '&c')e ' &+*& doctrine of unjust enrichment . An e>contract is one% which is entered into between two parties via internet.
C. CLASSIFICATION ON THE #ASIS OF #ASIS OF E?ECUTION 1. E;ec54e C+&4c4
An e
2. E;ec54+ C+&4c4
An E
3. U&')4e) C+&4c4
8here obligation is pending on the part of one of the parties.
B. #')4e) C+&4c4
A Bilateral Contract is a contract in which obligation is pending on the part of both of the parties.
D. EN"LISH LA$ CLASSIFICATION 1. S')e C+&4c4
A simple contract is the contract that is not formal. "hese can be made orally or in writing and m$st be s$pported by consideration.
2. F+) C+&4c4
A formal contract is one which is entered into the prescribed form. "hese contracts may be s$b>divided as follows=
. C+&4c4 + Rec+
%. C+&4c4 5&e Se)
-i
5/e&4 + C+54:- #t is an obligation imposed by the co$rt $pon one or more persons in favo$r of the others.
-ii
Rec+/&'G&ce:>#t is a written ac*nowledgement of a debt d$e to state. #t is met in connection with criminal proceedings.
#t is a contract which derives its binding force from its form alone. #t is also *nown as deed or specialty contract.
CHAPTER-2 OFFER ACCEPTANCE CONTENTS :1. 2. 3. B. .
PROPOSAL OFFER. RULES AS TO OFFER TYPES OF OFFER LAPSE OF AN OFFER ACCEPTANCE. RULES AS TO ACCEPTANCE AN ACCEPTANCE IS TO OFFER $HAT A LI"HTED MATCH IS TO A TRAIN OF "UNPO$DER . COMMUNICATION OF OFFER ACCEPTANCE 7. REVOCATION OF OFFER AND ACCEPTANCE JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ 1.!PROPOSAL @Sec 2(!:-
8hen one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that either to s$ch act or abstinence% he is said to ma*e a proposal. E;)e :- A tells B % # want to marry. "his does not amo$nt to offer b$t it is a mere e
• •
Oe+: - Person who ma*es the offer. Oeee: - Person to whom offer is made.
LE"AL RULES RE"ARDIN" OFFER 1. (ffer m$st be A social invitation% even if it is accepted% does not create legal relations capable of creating beca$se it is not so intended. (#)+5 V. #)+5! the legal relation &. (ffer m$st be "he terms of the offer m$st be certain or capable of being made certain. certain% definite and not vag$e ,A+ has two ar$ti cars% one is red and other bl$e. 0e offers to sell his car E
. (ffer may be e
0 A+ offered to ta*e a ho$se on lease provided the ho$se sho$ld be p$t into thoro$gh repairs and sho$ld be s$fficiently decorated. "his offer is too vag$e and hence not valid.
a. E
An offer which is made by words spo*en or written. E;)e: - 0:+ says to ,2+% 8ill yo$ p$rchase my
white horse for Rs. &////. E;)e: - ,:+ writes to ,2+ a letter% # want to sell my car for Rs. 6//// to yo$. b. #mplied (ffer An offer which is made otherwise than by words spo*en or written. E;)e:- A transport company r$ns b$ses on a partic$lar ro$te. "his is an implied offer from the transport company to carry passengers on the ro$te who are prepared to pay the specified fare. "he acceptance of the offer is complete as soon as the passengers board the b$s. A passenger who enters the b$s also impliedly promises to pay the prescribed fare. 6. (ffer m$st be An offer sho$ld be disting$ished from an invitation to offer. An offer is disting$ished from definite and capable of converting an intention into a contract. 8hereas an an invitation to offer invitation to an offer is only a circ$lation of an offer% it is an attempt to ind$ce offers and precedes a definite offer. E;)e + I&<'44'+& 4+ Oe 1. 8indow display of goods by a shop*eeper. 2. $otations% Catalog$e% Price list. 3. Advertisement in a newspaper for sale of an article. E;)e:- Goods are sold in a shop $nder ,self service+ system. C$stomer select the goods in the shop and ta*e them to the cashier for payment of price. Cashier ref$ses to accept the payment. 0eld that c$stomer cannot bo$nd the shop*eeper for delivery of goods . (Pce54'c) S+c'e4 + "e4 #'4'& <. #++4 C Ce'4 L4. ! ?. (ffer may be )pecific (ffer An offer made to a definite person is called )pecific specific or general offer. A specific offer can be accepted only by the person to whom it is made.
General (ffer
An offer which is made to the p$blic at large. Anyone having *nowledge of the offer can accept this offer by complying with the terms of the offer. E;)e:- A company advertised in several newspapers that a reward of 1// wo$ld be given to any person who contracted infl$enFa after $sing the smo*e balls of the company according to its printed directions. Carlill $sed the smo*e balls according to the directions of the company b$t contracted infl$enFa. 0eld that she co$ld recover the amo$nt as by $sing the smo*e balls she had accepted the offer.( C)')) V. C%+)'c S+e #)) C+.18=3! . (ffer m$st be An offer% to be complete% m$st be comm$nicated to the person to whom it comm$nicated to the is made. 4nless an offer is comm$nicated to the offeree by the offeror or person to whom it is by his d$ly a$thoriFed agent% there can be no acceptance of it. made An acceptance of an offer% in ignorance of the offer% is no acceptance and does not confer any right on the acceptor. E;)e:- ) offered a reward to anyone who ret$rned his lost dog. ' bo$ght the dog to ) witho$t having heard of the offer. 0eld% ' was not entitled to the reward (F'4c <. S&ee! . E;)e:- ) sent his servant 7 to trace his missing nephew. 0e then anno$nced that anybody who traced his nephew wo$ld be entitled to a
certain reward. 7 traced the boy in ignorance of this anno$ncement. )$bse5$ently when he came to *now of the reward% he claimed it. 0eld% he was not entitled to the reward (L)& S5) <. "5' D544! A mere declaration of intention does not amo$nt to offer.
H. (ffer m$st be made with a view to E;)e:- An a$ctioneer advertised in a newspaper that a sale of office obtaining consent of f$rnit$re wo$ld be held. A bro*er came from a distant place to attend that the offeree a$ction% b$t all the f$rnit$re was withdrawn. "he bro*er there$pon s$ed the a$ctioneer for his loss of time and e
(fferor cannot impose any s$ch condition the non>f$lfillment of which wo$ld lead to acceptance of that offer.
E;)e:- A offers to sell o$t his bi*e to B stating that if B does not reply with in a wee*% he will ass$me that he has accepted the offer. "his is not a valid offer% beca$se fail$re on the part of B to reply wo$ld res$lt in an acceptance. 1/. Comm$nication E;)e:- P deposited his bags in the cloa*room at the railway station. of )pecial terms (n the face of receipt% the words KSee %c were printed. (ne of the conditions printed on the bac* was the liability of the railway company shall be limited to 1/ for any pac*age. P+s bag was lost. 0e claimed the act$al val$e of bag amo$nting to &6. 0eld that P cannot recover the amo$nt more than 1/ since the railway company had ta*en all the reasonable steps to ens$re that conditions printed on bac* printed were bro$ght to the *nowledge of P. ( Pe <. S.E. R') C+.!
2. TYPES OF OFFER A. General offer
An offer made to the p$blic at large. Anyone can accept this offer by doing the desired act .
B. )pecific offer
An offer made to a definite person or a gro$p of persons. )$ch offer can be accepted only by the specified person to whom it is made.
C. Cross offers
8hen two parties e
3.! LAPSE (Re<+c4'+&! OF AN OFFER
(n e
8hen the person to whom proposal is made signifies his assent thereto% the proposal is said to be accepted. A proposal when accepted becomes a promise. LE"AL RULES AS TO VALID ACCEPTANCE
Acce4&ce 54 %e %+)54e & 5&5)''e
(fferee sho$ld be assented to all terms K conditions of the offer. A 5$alified acceptance amo$nts to co$nter offer.
Acce4&ce 54 %e c+5&'c4e
ere mental acceptance is not acceptance. Acceptance cannot be made in ignorance of the offer. ere silence is not acceptance.
Acce4&ce 4+ $+
Acceptance m$st be comm$nicated to the offeror i.e. the person who made the offer.
M+e + Acce4&ce
Acceptance m$st be in the mode prescribed in the proposal. #f no mode prescribed in the proposal% the acceptance m$st be according to some $s$al and reasonable mode.
T'e + Acce4&ce
Acceptance m$st be given within specified time limits given in the offer. #n case no time is specified in the offer% offer m$st be accepted within reasonable time and before the offer lapses. E;)e:> A person applied for shares in a company in 3$ne. 0e cannot be bo$nd by the allotment made late in !ovember since delay of months in acceptance of application for shares was $nreasonable. (R/4e V'c4+' H+4e) <. M+&4e'+e !
Acce4&ce % c+&5c4 $+ c& cce4 Sec''c +e "e&e) +e
By performance of an act intended by the proposer.
A )pecific offer can be accepted only by the person to whom it is made. A general offer can be accepted by anyone having *nowledge of the offer by complying with the terms of the offer.
.! AN ACCEPTANCE TO OFFER IS $HAT A LI"HTED MATCH TO A TRAIN OF "UNPO$DER
According to S' $'))' A&+&% An acceptance to offer is what a lighted match to a train of g$npowder. (ffer is compared to a train of g$npowder. Acceptance is compared to a lighted match. 8hen a lighted match is applied to a train of g$npowder% an e Acce4&ce -a As against the 8hen it is p$t into the co$rse of transmission to Proposer him so as to be o$t of power of the acceptor to withdraw the same . -b As against the 8hen it comes to the *nowledge of the proposer. Acceptor 7. REVOCATION OF OFFER ACCEPTANCE ( Sec4'+& B !
Te c+5&'c4'+& + e<+c4'+& ' c+)e4e-a As against the person 8hen it is p$t into the co$rse of transmission to the person to who ma*es it whom it is made so as to be o$t of power of the person who ma*es it.
-b As against the person to whom it is made
8hen it comes to his *nowledge.
TIME FOR REVOCATION ( Sec4'+& ! An offer can be revo*ed at any time before the comm$nication Revocation of (ffer of acceptance is complete as against the proposer. An acceptance can be revo*ed at any time before the Revocation of Acceptance comm$nication of acceptance is complete as against the offeree.
CHAPTER-3 CONSIDERATION CONTENTS:1. CONSIDERATION 2. LE"AL REUIREMENTS RE"ARDIN" CONSIDERATION 3. A THIRD PARTY TO A CONTRACT CANNOT SUE. E?CEPTIONS. B. AN A"REEMENT $ITHOUT CONSIDERATION IS VOID.E?CEPTIONS.
JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ 1.! CONSIDERATION: - KUID PRO UO i.e. something in ret$rn. Consideration is the price agreed to be paid by the promisee for the obligation of the promisor.
8hen% at the desire of the promisor% the promisee or any other person has done or abstained from doing or does or abstains from doing or promise to do or to abstain from doing something% s$ch act or abstinence or promise is called consideration for the promise. @Sec4'+& 2(!
2.
LE"AL REUIREMENTS RE"ARDIN" CONSIDERATI(!
A. Consideration m$st Consideration m$st move at the desire or re5$est of the promisor. Any act move at the desire of done at the desire of a third party is not consideration. the promisor E;)e:- D constr$cted a mar*et at the desire of the collector of the district. B% a shop*eeper of the mar*et promised to pay commission to D on the sales effected by him. 7ater on B denies to pay the promised amo$nt. D filed a s$it in the co$rt for the recovery of the amo$nt. "he co$rt held that D cannot recover the amo$nt from B beca$se D has constr$cted the mar*et at the desire of the collector % not at the desire of the promisor i.e. B. ( D5/ P V. #)e+ ! B. Consideration may move from the promisee or any other person
Consideration may move from the promisee or any other person who is not a party to the contract. "h$s% 4ee c& %e 4&/e 4+ c+&'e4'+&. E;)e:- A% by a deed of gift transferred certain property to her da$ghter with the direction that da$ghter sho$ld pay an ann$ity to her sister . "he da$ghter e
C. E
#f consideration $nder the contract has been given% it is said to be e
D. Consideration may be past% present or f$t$re
Past consideration Present consideration
'$t$re consideration
"he words K +&e + %4'&e + +'&/ indicates past consideration. P4 c+&'e4'+& ' &+ c+&'e4'+& '& E&/)&. "he words K+e + %4'& + +'&/ indicates present consideration. Consideration which moves sim$ltaneo$sly with the promise. E;)e:- Cash )ales. "he words K+'e 4+ + + 4+ %4'& + +'&/ indicates f$t$re consideration. Consideration which is to be performed in f$t$re. E;)e:- A get boo*ed an air tic*et from Delhi to $mbai. "he flight is to be ta*e off on the ne
E. Consideration sho$ld be real% not ill$sory
#f consideration is an ill$sory one% then it is not valid.
'. Consideration need not be ade5$ate
"ho$gh consideration is an essence of contract% ade5$acy of consideration is not regarded as an essence of contract. Co$rts do not regard the ade5$acy of consideration% it is at the part of promisor to consider that whether he is receiving ade5$ate consideration or not.
G. "he performance of an act what one is legally bo$nd to perform is not consideration for the contract
E;)e:- Promise to pay money to a witness.
0. Consideration m$st not be $nlawf$l% immoral or opposed to the p$blic policy 2.! A THIRD PARTY OR A STRAN"ER TO A CONTRACT CANNOT SUE A stranger to a contract means a person who is not a party to the contract. "here is a privity of contract between the parties. "herefore only a party to the contract can enforce its rights $nder the contract. E?CEPTIONS:'. T54
I& ce + 454, %e&e'c' c& 5e 5+& 4e c+&4c4. E;)e:- 0 s$ed her father in law L to recover Rs 1?/// being the arrears of allowance payable to her by L. L $nder an agreement made between L and 0+s father% in consideration of 0+s marriage to L+s son D. 0eld that she can recover the amo$nt beca$se she is a beneficiary $nder the contract. (*9 M5 V. H5'&' #e/5!
''. F') Se44)ee&4
#n case of family settlement% if the terms of settlement are red$ced into writing% members who were not originally party to the contract can also s$e $pon it.
'''. M'/e C+&4c4
A female member can enforce a provision for marriage e
'<. Ac&+*)e/ee&4
8here a person admits his liability% thereafter% if he ref$sed% he will be estopped from denying his liability. E;)e:- 8here A receives money from B for paying it to C and A admits C the receipt of that amo$nt. 7ater on if he ref$ses% he will be stopped from denying his liability to pay the amo$nt.
+ L'%')'4
<. A'/&e&4
#n case of assignment of a contract% 8here the benefit $nder the contract has been assigned% the assignee -the person to whom benefits of contract are assigned can enforce $pon the contract.
<'. C+
NO CONSIDERATION, NO CONTRACT "he general r$le of law is that an agreement witho$t consideration is void. 3.
E?CEPTIONS ('! A/eee&4 +& cc+5&4 + N45) )+
E;)e:- A h$sband by a registered doc$ment after referring to 5$arrels and disagreements between himself and his wife% promised to pay his wife a s$m of money for her maintenance and separate residence% it was held that the promise was $nenforceable. ( R9)5 De<' V. #++4&4 ! -ii C+e&4'+& + 4 <+)5&4 e<'ce Sec4'+& 2 (2!Q
)ervices rendered vol$ntarily. )ervices rendered for the promisor.
Promisor m$st be in e
P+'e 4+ 4'e %e e%4 Sec4'+& 2 (3!Q
A promise to pay% wholly or in part a debt which is barred by law of limitation can be enforced if it is => #n writing and )igned by the person ma*ing it or his a$thoriFed agent . ('
A/e&c
According to Sec4'+& 18 of the #ndian Contract Act% no consideration is necessary to create an agency. (
C+)e4e "'4
Gifts do not re5$ire any consideration. ( E;)&4'+& 1 4+ Sec4'+& 2! (<'!
C'4
A promise to contrib$te to charity% tho$gh grat$ito$s% wo$ld be enforceable% if on the faith of the promised s$bscription% the promisee ta*es definite steps in f$rtherance of the ob3ect and $nderta*es a liability% to the e
#')e&4 Consideration is not necessary to effect bailment .(Sec4'+& 1B8!
CHAPTER-B CAPACITY TO CONTRACT CONTENTS:1. $HO IS COMPETENT TO CONTRACT 2. POSITION OF MINORS A"REEMENT 1. $HO IS COMPETENT TO MAE A CONTRACT SECTION 11: Every person is competent to contract who is of /e + 9+'4 according to the law to which he is s$b3ect% who is of +5& '& and is &+4 '5)''e + c+&4c4'&/ % & )* to which he is s$b3ect. A. A"E OF MAORITY According to Sec4'+& 3 + I&'& M9+'4 Ac4, 187 A minor is a person who has not completed 18 e of age. Every person domiciled in #ndia attains ma3ority on the completion of 1I years of age. E;ce4'+& : - #n the following cases% a person attains ma3ority on completion of &1 years of age=> 1.
8here the g$ardian of a minor is being appointed $nder G$ardians and 8ards Act% 1IJ/.
&. 8here the s$perintendence of minor+s property is ass$med by Co$rt of 8ards.
#. SOUND MIND PERSON (Sec4'+& 12 ! A person is said to be of so$nd mind for the p$rpose of ma*ing a contract if at the time when he ma*es it he is capable of $nderstanding it and of forming a rational 3$dgment so as to its effect $pon his interests.
A person who is $s$ally of $nso$nd mind% b$t occasionally of so$nd mind% may ma*e a contract when he is of so$nd mind.
A person who is $s$ally of so$nd mind b$t occasionally of $nso$nd mind% may not ma*e a contract when he is of $nso$nd mind.
UNSOUND MIND PERSONS
C. PERSONS DISUALIFIED #Y LA$
Alien enemy
An Alien enemy is a person who is a citiFen of a foreign co$ntry which is at war with #ndia.
Contracts d$ring An alien enemy cannot enter into contract d$ring the period of war the war e
A stat$tory corporation cannot enter into contracts which are $ltra vir$s its memorand$m.
$nicipal Bodies
$nicipal bodies cannot enter into acts which are beyond their stat$tory powers.
)overeign )tates% Ambassadors K Diplomatic Co$riers
"hese persons en3oy certain special privileges. "hey cannot be s$ed in the #ndian co$rts. 0owever% they can enter into contracts and enforce those contracts in #ndian Co$rts.
Convict
A convict cannot enter into contract d$ring the period of imprisonment.
#nsolvent
8hen the person is ad3$dged insolvent% his property stands vested in the official receiver or official assignee appointed by the co$rt. 0e cannot enter into contracts in relation to property which is vested to the official assignee or receiver. A c+&4c4 *'4 4 '&c+e4e&4 4+ c+&4c4 ' <+' % '&'4'+. 2. POSITION OF MINORS A"REEMENT
i. An agreement entered into by or with a minor is void ab initio
A minor is not competent to contract. A minor+s contract being void% any money advanced to a minor cannot be recovered. M+'' #'%' V. D+ "+e (1=63! Q
ii. inor beneficiary
Even if a minor is incapable of contracting% still no law prevents him from ta*ing the benefit $nder a contract. A promissory note e
can
be
inor as a partner
A inor cannot become a partner in a firm b$t he can be admitted to the benefits of the partnership with the consent of all partners .( Sec4'+& 36 + I&'& P4&e' Ac4, 1=32!
inor can always pleads minority
#f a minor by fra$d$lently representing his age enters into contract% still minor can ta*e the shelter of minority. E;)e:- A% a minor by fra$d$lently representing himself to be a ma3or% ind$ce B to lend him Rs.&///. 0e ref$sed to repay it and B s$ed him for the money. 0eld that the contract was void and A was not liable to repay the amo$nt d$e. HAN "UL V. LAHA SIN"H
7ahore 0igh Co$rt held that where the contract is set aside the status quo ante sho$ld be restored and the co$rt may direct the minor% on e5$itable gro$nds% to restore the money or property to the other party. "h$s% in s$ch cases% if money co$ld be traced% the co$rt wo$ld% on e5$itable gro$nds%
as* the minor for restit$tion.
Sec4'+& 36 & 33 + 4e Sec''c Re)'e Ac4, 1=3 provide that in case of a fra$d$lent misrepresentation of his age by the minor% ind$cing the other party to enter into a contract% the Co$rt may award compensation to the other party.
Ratification an A minor cannot ratify the agreement on attaining the age of ma3ority as attaining ma3ority is the original agreement is void>ab>initio and therefore% validity cannot be given to it later on. not allowed E;)e: ,A+% a minor ma*es a promissory note in favo$r of ,B+. (n attaining ma3ority% he ma*es o$t a fresh promissory note in lie$ of old one. !either the original% nor the fresh promissory note is valid. Contract g$ardian
by minor+s A contract may be entered into on behalf of a minor by his g$ardian or manager of his estate. #n s$ch a case the contract can be enforced by or against the minor provided that the contract -a is within the scope of the a$thority of the g$ardian or manager% and -b is for the benefit of the minor.
7iability for necessaries
!o personal liability of minor b$t minor+s property is liable. #n order to entitled a s$pplier to be reimb$rsed from the minor+s estate% following conditions m$st be satisfied=> A. Goods m$st be necessaries for that partic$lar minor having regard to his condition in life. B. "he minor m$st be in need of those goods both at the time of sale
and delivery. N <. I&&(1=68! Q C. "he minor+s estate is not liable only for necessary goods b$t also for necessary services rendered to him. inor as an Agent
inor can be an agent b$t cannot be held personally liable for negligence or breach of d$ty.
inor as an #nsolvent
A minor cannot be ad3$dicated as insolvent beca$se he is incapable of contracting.
CHAPTER- FREE CONSENT CONTENTS:1. CONSENT 2. FREE CONSENT 3. ELEMENTS VITIATIN" FREE CONSENT MMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMM 1. CONSENT (Sec4'+& 13! "wo or more persons are said to have consented when they agree $pon something in the same sense (c+&e&5--'e!. E;)e:- A offers B that he want sell his ar$ti I// to him for Rs. ?////. B replies that # can pay only Rs6//// for yo$r car. )ince there is no consent between the parties% no contract will can be formed. 2.! FREE CONSENT (Sec4'+& 1B! A c+&e&4 ' ' 4+ %e ee *e& '4 ' not c5e % coercion, $nd$e infl$ence% fra$d% misrepresentation + mista*e.
-a Coercion -)ection 1?
(%! 4nd$e #nfl$ence -)ection 1=
(c! 'ra$d -)ection 1H
3.! ELEMENTS VITIATIN" FREE CONSENT Coercion is committing or threatening to commit any act forbidden by #ndian Penal Code% or the $nlawf$l detaining or threatening to detain any property% to the pre3$dice of any person whatever% with the intention of ca$sing any person to enter into an agreement. "hreat to commit s$icide amo$nts to coercion. "he agreement ind$ced by coercion is voidable. A person to whom money has been paid or anything delivered $nder coercion% m$st repay or ret$rn it. A contract is said to be ind$ced by $nd$e infl$ence when the relations s$bsisting between the parties are s$ch that one of the parties is in a position to dominate the will of the other and $ses that position to obtain an $nfair advantage of the other. A person is deemed to be in a position to dominate the will of the other% when he holds a$thority real or apparent over the other% or when he stands in a fid$ciary relation to the other. E;)e= > -a 'ather and son -b )olicitor and Client -c "r$stee and Beneficiary -d Doctor and Patient% etc.
A contract which is ind$ced by $nd$e infl$ence is <+'%)e. 'ra$d means and incl$des any of the following acts committed by a party to a contract or with his c+&&'<&ce or by his agent with intent to deceive another party thereto or his agent% or to ind$ce him to enter into the contract= the s$ggestion as to fact of that which is not tr$e by one who does not believe it to be tr$e. the active concealment of a fact by one having *nowledge or belief of the fact. a promise made witho$t any intention of performing it. any other act fitted to deceive. any s$ch act or omission as to law specially declared to be fra$d$lent. A contract ind$ced by fra$d is <+'%)e.
> #s mere silence amo$nts to fra$d N Ans= > !o% ere silence as to facts li*ely to affect the willingness of a person to enter into a contract is no fra$d.
E1. 8here it is d$ty of the person to spea*. &. 8here silence itself e5$ivalent to speech. (! isrepresentation where a person asserts something which is not tr$e tho$gh he believes it to be tr$e% his assertion amo$nts to misrepresentation.
-e
CHAPTER- LA$FUL CONSIDERATION O#ECT CONTENTS:1. LA$FUL CONSIDERATION O#ECT JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ
1. LA$FUL CONSIDERATION OR O#ECT @Sec4'+& 23 Consideration or ob3ect is 5&)*5) if it is= > A. 'orbidden by law
Acts forbidden by law are those which are p$nishable $nder any stat$te as well as those prohibited by reg$lation or orders made in e
B. Defeat provisions of law
C. 'ra$d$lent
the "he term 0L* incl$des any legislative enactment or r$le of the 0ind$ any and $slim 7aws or any other r$le for the time being in force in #ndia. E;)e:- Agreement in restraint of parental rights is in violation of 0ind$ 7aw.
8here ob3ect or consideration is $nlawf$l on gro$nd of fra$d. E;)e:-A% B and C enter into agreement for the division among them of gains ac5$ired or to be ac5$ired% by them for fra$d. "he agreement is void as its ob3ect is $nlwf$l.
D. #n3$ry to the "he general term K'&95 means criminal or wrongf$l harm. 8here the person or property of ob3ect of an agreement is to ca$se in3$ry to the person or property of another. another E;)e:- An agreement to print a boo* in violation of another+s copyright is void. E;)e:>A borrowed Rs. 1/// from B. A e
per month. "he agreement is void% the ob3ect of A+s promise and the consideration for B+s promise being in part $nlawf$l.
CHAPTER7 VOID A"REEMENTS CONTENTS :1. AGREEE!") E:PRE))72 DEC7ARED ;(#D 1. A"REEMENTS E?PRESSLY DECLARED VOID Agreements by incompetent parties -)ec. 11 Agreements with $nlawf$l ob3ect or consideration -)ec. & Agreement made $nder m$t$al mista*e of fact -)ec. &/ Agreements witho$t consideration -)ec. &? Agreements in restraint of marriage% trade or legal proceedings etc. Agreements to do impossible Acts -)ec. ? E An agreement to discover treas$re by magic is void.
U&ce4'& e&'&/ O An agreement the meaning of which is not certain is void b$t where the meaning thereof is capable of being made certain% the agreement is valid.(Sec. 2=! E;)e:- A agrees to sell 1// tons of oil Rs. &/// per ton to B. "he agreement is void on gro$nd of $ncertainty beca$se in which type of oil they are dealing is not clear.
$/e'&/ /eee&4 O #t is an agreement involving payment of a s$m of money $pon the determination of an $ncertain event. An agreement by way of wager is void.
!o party have control over the event. Collateral transactions are valid.
β
Sec5)4'
• •
$t$al intention of contracting parties to ac5$ire or deliver the commodities. "he $nderta*ing or ris* arising from movement in prices. A"REEMENTS OPPOSED TO THE PU#LIC POLICY
"hese are the agreements which are against the moral laws of the society and contravenes any established interest of society. 'ollowing agreements are opposed to the p$blic policy=> -a "rading enemy
with Any trade with person owing allegiance to a Government at war with #ndia witho$t the license of the Government of #ndia is void% as the ob3ect is opposed to p$blic policy.
-b )tifling prosec$tion
An agreement to stifle prosec$tion tends to be a preservation or an ab$se of 3$sticeQ therefore% s$ch an agreement is void. "he principle is that one sho$ld not ma*e a trade of felony -crime.(ne sho$ld not convert a crime into into a so$rce of profit. Compromise of p$blic offence is illegal. "o drop $ncompo$ndable offence witho$t permission of co$rt.
E;)e:- A Lnew that B has committed a crime. 0e obtains a promise from B to pay him Rs. &//// in consideration of not e
#t is bargain whereby one party agrees to assist the other in recovering property% with a view to sharing the profits of litigation. E;)e:- An agreement to give assistance-monetary or otherwise to another person to recover the property by legal action and to share the proceeds of litigation is a champerto$s agreement.
-d #nterference with the co$rse of 3$stice
An agreement whose ob3ect is to ind$ce any 3$dicial officer of the state to act partially or corr$ptly is void.
-e arriage bro*erage contracts
An agreement to negotiate marriage for reward% which is *nown as a marriage bro*erage contract% is void% as it is opposed to p$blic policy. F+ E;)e:- An agreement to pay money to a person hired to proc$re a wife is opposed to p$blic policy and therefore void. "a*ing a benefit against the obligation.
-f #nterest -benefit against obligation
E;)e:- A% who is the manager of a firm% agrees to pass a contract to : if : pays to A Rs. &//// privatelyQ the agreement is void.
-g )ale of p$blic office
Bribe for appointment in a p$blic office as it interfere with the appointment of a person best 5$alified for the service of p$blic. An agreement to pay money to a p$blic servant in order to ind$ce him to retire from his office so that another person may sec$re the appointment is void. An agreement to proc$re a p$blic recognition li*e Padma ;ibh$shan for reward is void.
-h Agreements for creation of monopolies void
-i Agreement restraint of marriage
Agreements having their ob3ect the establishment of monopolies are opposed to the p$blic policy and hence void. #t is also hit by R"P Act. E;)e:- A local body granted a monopoly to A to sell vegetables in a partic$lar locality. 0eld that the agreement was void.
in Every agreement in restraint of marriage of any person% +4e 4& '&+, is void (Sec. 2!. E;)e:-A promised to marry no one else e
-3 Agreement in An agreement by which any person is restraint from e
-i )ale of goodwill
8ithin specified local limits ⇓ Reasonable -ii An agreement among the sellers of a partic$lar commodity not to sell the commodity for less than a fi
-vi An agreement by a man$fact$rer to sell d$ring a certain period his entire prod$ction to a wholesale merchant is not in restraint of trade. -* Agreement in #t is one by which any party thereto is restricted absol$tely from enforcing restraint of legal his rights $nder a contract thro$gh a co$rt or which abridges the $s$al proceedings period for starting legal proceedings. #t is void.
E;ce4'+& O ♦ )ettlement of disp$te thro$gh arbitration. ♦ $estion already arisen or which may arise in f$t$re refer to arbitration s$ch a contract m$st be in writing.
CHAPTER-8 PERFORMANCE OF CONTRACT CONTENTS => 1. PER'(RA!CE (' C(!"RAC") &. B2 80( C(!"RAC" A2 BE PER'(RED . )4CCE))#(! K A))#G!E!" 6. E''EC" (' RE'4)A7 "( ACCEP" (''ER (' PER'(RA!CE ?. E''EC" (' RE'4)A7 (' PAR"2 "( PER'(R PR(#)E . 7#AB#7#"2 (' 9(#!" PR(#)(R) H. R#G0") (' 9(#!" PR(#)EE) I. "#E K P7ACE '(R PER'(RA!CE (' "0E PR(#)E J. PER'(RA!CE (' REC#PR(CA7 PR(#CE 1/. E''EC" (' 'A#74RE "( PER'(R A" A "#E '#:ED #! A C(!"RAC" #! 80#C0 "#E #) E))E!"#A7 11. #P())#B#7#"2 (' PER'(RA!CE 1&. APPR(PR#A"#(! (' PA2E!") 1. C(!"RAC") 80#C0 !EED !(" BE PER'(RED 16. RE)"(RA"#(! (' BE!E'#" 4!DER A ;(#DAB7E C(!"RAC" 1?. (B7#GA"#(! (' PER)(! 80( 0A) RECE#;ED AD;A!"AGE 4!DER ;(#D AGREEE!" (R (!E BEC(#!G ;(#D 1. D#)C0ARGE (' C(!"RAC" MMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMM 1. PERFORMANCE OF CONTRACTS @Sec4'+& 37 "he parties to a contract m$st either perform% or offer to perform their respective promises $nless s$ch performance is dispensed with or e
Promises bind the representatives of the promisor in case of death of s$ch promisor before performance% $nless a contrary intention appears from the contract.
Promisor himself
Agent
Representatives
"hird persons 9oint promisors
2. #Y $HOM CONTRACT MAY #E PERFORMED #f there is something in the contract to show that it was intention of the parties that the promise sho$ld be performed by the promisor himself% s$ch promise m$st be performed by the promisor. "his means contracts which involves the e
8here the promisee accepts performance of the promise from a third person% he cannot afterwards enforce it against the promisor. 8hen two or more persons have made a 3oint promise% then $nless a contrary intention appears from the contract% all s$ch persons m$st 3ointly f$lfill the promise. #f any of them dies% his legal representatives m$st% 3ointly with the
s$rviving promisors% f$lfill the promise. #f all of them dies% the legal representatives of all of them m$st f$lfill the promise 3ointly (Sec.B2!. 3. SUCCESSION ASSI"NMENT -a )$ccession -b Assignment 8hen the benefits of a contract are s$cceeded to by Benefits of a contract can only be process of law% then both b$rden and benefits attaching assigned b$t not the liabilities there to the contract% may sometimes devolve on legal heir. $nder. B. EFFECT OF REFUSAL TO ACCEPT OFFER OF PERFORMANCE @ Sec4'+& 38 8hen the promisor has made an offer of performance to the promisee% and the offer has not been accepted then the promisor is not responsible for non>performance% nor does he thereby lose his rights $nder the contract. C+&'4'+&: #t m$st be 5&c+&'4'+&). #t m$st be made at +e 4'e & )ce. #f the offer is to deliver &4'&/ to the promisee% promisee m$st have e+&%)e ++45&'4 4+ cec 4e /++. A& +e 4+ +&e + 4e e
6. EFFECT OF REFUSAL OF PARTY TO PERFORM PROMISE @Sec4'+& 3= 8hen a party to a contract has e5e 4+ e+ + has '%)e 'e) + e+'&/ ' +'e in entirely% the promisor may p$t an end to the contract% $nless he has signified by words or cond$ct% his ac5$iescence in its contin$ance.
R'/4 4+ 4e //'e
"o terminate the contract. "o indicate% by words or by cond$ct% that he is interested in his contin$ance. Right to claim damages. . LIA#ILITY OF OINT PROMISORS
Promisee may compel any one or more of s$ch 3oint promisors to perform the whole of the promise. #f one of the 3oint promisors is made to perform the whole contract% he can call for a contrib$tion from others. #f any of the 3oint promisors ma*e a defa$lt in ma*ing his contrib$tion the remaining 3oint promisors m$st bear the loss arising from s$ch defa$lt in e5$al shares. 7. RI"HTS OF OINT PROMISEES
All of them 3ointly have right to claim performance. #f any one of 3oint promisees dies% )$rvival promisee Representatives of deceased promisee. #f all of them dies. Representatives of deceased promises. 8.TIME PLACE FOR PERFORMANCE OF THE PROMISE
!o time specified for performance of promise% promise m$st be performed within reasonable time. #f promise is to be performed on a specified date b$t ho$r is not mentioned% the promisor
may perform it any time d$ring the $s$al ho$rs of b$siness% on s$ch day . Delivery m$st be made at the $s$al place of b$siness. 8hen no place is fi
8hen a contract consists of two promises% one being consideration for the other% s$ch promises are called Reciprocal promises. E
S'5)4&e+5 Reciprocal promises may have to be performed sim$ltaneo$sly or e+&ce + one after another. Rec'+c) +'e E;)e – 8here A promises to deliver ?// 5$intals of rice and B promises to pay the price on delivery% both the promises are to be performed sim$ltaneo$sly. Pe+&ce + Rec'+c) +'e *ee +e + e+&ce ' e;e) ';e Pe+&ce + Rec'+c) +'e *e& 4e +e + e+&ce ' ';e % ')'c4'+& Eec4 + +&e 4 e
8hen the order of performance of the reciprocal promises is e
"he order of performance may sometimes be indicated not e
o
Contract become voidable Another party is entitled to claim compensation on Ac of by s$ffered d$e to non>performance.
Rec'+c) +'e 4+ + ce4'& 4'&/ 44 e )e/) things that are illigal ;oid Agreement 16.
contract% and also some other
EFFECT OF FAILURE TO PERFORM AT A TIME FI?ED IN A CONTRACT IN $HICH TIME IS ESSENTIAL 8here time is essential and the party fails to perform promise at or before specified time% the contract becomes voidable at the option of the promisee. 8here time is not essential% the contract cannot be avoided on the gro$nd that time for performance has eperformance at time agreed $nless notice of intention to claim compensation is given.
11.
11. APPROPRIATION OF PAYMENTS Appropriation Appropriation of payment where debt to be discharged is indicated by debtor% by Debtor payment% if accepted% m$st be applied accordingly. L4'& ;' $ic*5$id soivit$r% sovit$r sec$nd$m mod$m solventis. Appropriation Appropriation of payment where debt to be discharged is not indicated by debtor% by Creditor creditor is entitled to appropriate it to the debt first in time. Appropriation 8here neither party appropriates %Payment shall be applied in discharge of the by "ime debts in order of time% where they are time barred or not. #f debts are e5$al standing% the payment shall be applied in discharge of each proportionately. 1&.
CONTRACTS $HICH NEED NOT #E PERFORMED
1. N+<4'+&
2. Rec''+&
3. A)4e4'+&
B. $'
8hen parties to a contract s$bstit$te a &e* c+&4c4 + +) . (n novation% old contract is discharged and conse5$ently it need not to be performed. "here may be change in parties. 8hen parties to a contract agree to rescind it% the contract need not be performed. #n this case% only +) c+&4c4 ' c&ce))e &+ &e* c+&4c4 ' +e . 8here parties to a contract agrees 4+ )4e it% the original contract is rescinded% with the remit that it need not be performed. • !o change in parties to the contract. Change in terms K conditions • of original agreement. Promisee can dispense with performance witho$t consideration and witho$t a new contract or may e
1. RESTORATION OF #ENEFIT UNDER A VOIDA#LE CONTRACT #f the person at whose option contract was voidable has rescind the contract% he shall e4+e 4e %e&e'4 -either ret$rn the goods the goods or pay for it received there $nder from another party to s$ch contract% to the person from whom it was received. 16.
O#LI"ATION OF PERSON $HO HAS RECEIVED ADVANTA"E UNDER VOID A"REEMENT OR ONE #ECOMIN" VOID 8hen an agreement is discovered to be void or when a contract becomes void% any person who received any advantage $nder s$ch agreement or contract m$st restore it% ma*e compensation for it to the person from whom he received it. ( E'4e e4+e %c 4e <&4/e ece'
1?.
DISCHAR"E OF CONTRACT
Discharge by m$t$al agreement !ovation% Alteration% Rescission% Remission Discharge by impossibility of performance. Discharge of lapse of time e.g. "ime barred debt $nder #ndian 7imitation Act% 1J Discharge by operation of law s$ch as by death of promisor% by insolvency% merger% material alteration etc. D'c/e % %ec + c+&4c4
Act$al Breach of Contract Breach of contract at time of performance
Anticipatory Breach of Contract Breach of contract before time of performance
8here promisee neglects or ref$ses to afford the promisor reasonable facilities for performance of promise.
CHAPTER-= #REACH OF CONTRACT CONTENTS :-
1. BREAC0 (' C(!"RAC" &. DAAGE) #! CA)E (' BREAC0 (' C(!"RAC" . 0(8 "( CA7C47A"E "0E DAAGE 6. REED#E) '(R BREAC0 (' C(!"RAC" JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ 1. #REACH OF CONTRACT
'. N+) Compensation for any loss or damage which arises nat$rally in the normal co$rse of events. (rdinary damages are calc$lated by meas$ring the difference between D/e the contract price and mar*et price on the date of breach. ''. Sec') D/e
8here party to a contract receives a &+4'ce + ec') c'c54&ce affecting the contract% he will also liable for special damages.
('
3. HO$ TO CALCULATE THE DAMA"E
Breach by b$yer
Damage S Contract price > ar*et price at the date of breach
Breach by seller
Damage S ar*et price at the date of Breach > Contract price
B. REMEDIES FOR #REACH OF CONTRACT ('! Rec''+& + C+&4c4
Discharge from his own obligations Entitled to compensation for damages s$ffered
(''! S5'4 5+& 5&45 Me5'4 As m$ch as is earned (r According to the 5$antity of 5&45 Me5'4 wor* done 8hen the person has beg$n the wor* and before he co$ld complete it% the other party terminates the contract or does something which ma*e it impossible for the other party to complete the contract% he can claim for the wor* done $nder contract. 0e may also recover the val$e of wor* done when f$rther performance of contract become impossible. S5'4 + 5&45 Me5'4 'e '& 4ee ce: A. 8or* done and accepted $nder void contract. B. Act done or something delivered non>grat$ito$sly% the person who en3oys the benefit m$st pay for it. C. Divisible Contract= > (ne part performed K ref$ses to perform other part. Party in defa$lt may s$e other party who has en3oyed the benefit of past performance. ('''! S5'4 + 8here damages are not an ade5$ate remedy in case of breach of contract% the ec''c co$rt may in its discretion on a s$it for specific performance direct party in breach% to carry o$t his promise according to the terms of contract. e+&ce ('be iss$ing an 0'&95&c4'+& +e restrain him from doing what he promised not to do.
CHAPTER-16 CONTIN"ENT UASI CONTRACT CONTENTS :-
-1 -& - -6 -? - -H
C(!"#!GE!" C(!"RAC" E))E!"#A7 E7EE!") (' A C(!"#!GE!" C(!"RAC" R47E) RE7A"#!G "( E!'(RCEE!" 4A)#C(!"RAC") )A7#E!" 'EA"4RE) (' A 4A)# C(!"RAC" "2PE) (' 4A)# C(!"AC" D#''ERE!CE BE"8EE! 8AGER#!G AGREEE!" K 4A)# C(!"RAC" MMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMM 1. CONTIN"ENT CONTRACT @Sec4'+& 31 Contingent contract is a contract to do or not to do something% if some event colletral to s$ch contract% does or does not happen. E.g. O Contract of #ns$rance 2. ESSENTIAL ELEMENTS OF A CONTIN"ENT CONTRACT "he performance of a contingent contract is made dependent $pon happening or non>happening of some event. Event on which performance is made to depend% is an event colletral to the contract i.e. it does not form part of reciprocal promises which constit$te the contract. "he contingent event sho$ld not be the mere will of the promisor. E.g. O A promise to pay Rs. 1/%///% if he so chose% is not a contingent contract. 3. RULES RELATIN" TO ENFORCEMENT
Contract contingent $pon 8here a contingent contract is made to do or not to do anything if happening of an event $ncertain f$t$re event happens% it cannot be enforced by law $nless and $ntil that event has happened. #f event becomes impossible s$ch -)ection & contracts become void. Contract contingent $pon 8here a contingent contract is made to do or not to do anything if non>happening of an event any $ncertain f$t$re event does not happen it can be enforced only the happening of that event becomes impossible and not before. #f -)ection s$ch event becomes happened% s$ch contracts become void. Contract contingent $pon Event shall have considered to become impossible when s$ch person f$t$re cond$ct of a living does anything which renders it impossible that he sho$ld act within any definite time or other than $nder f$rther contingencies. person -)ection 6 Contract contingent $pon #t becomes void if at the e
entered into it.
B. UASI CONTRACTS $asi contracts are %e +& '&c')e + e5'4, 954'ce & /++ c+&c'e&ce.
#n the case of $asi contracts% the +'+ <+)5&4') 5&e4e & +%)'/4'+& in favo$r of the promisee% or O%)'/4'+& %e '+e % )* $pon a person for the benefit of another even in the absence of contract. . SALIENT FEATURES OF UASI CONTRACTS #t +e &+4 'e + & /eee&4 of the parties concerned% b$t it is '+e % )*, and #t is a right which is available &+4 /'&4 4e e&4'e *+), b$t /'&4 4'c5) e+& +&). . TYPES OF UASI CONTRACTS C)' + &ece'e
s$pplied to a person incapable of contracting% the s$pplier is entitled to claim their price from the property of s$ch a person. E.g. – inor% Person of $nso$nd mind.
R'/4 4+ ec+
A person who has paid a s$m of money which another is obliged to pay% is entitled to be reimb$rsed by that other person provided that payment has been made by him to protect his own interest.
O%)'/4'+& + -a 8here a person )*5)) +e &4'&/ for another person or e+& e&9+'&/ 4e delivers anything to him. %e&e'4 + &+&- -b N+4 intending to do so /45'4+5) and /45'4+5 c4 -c S5c +4e e+& e&9+ 4e %e&e'4 thereof% the latter is bo$nd to ma*e compensation to the former in respect of% or to restore% the things so done or delivered. Re+&'%')'4 F'&e + /++
+ A person who finds goods belonging to another and ta*es them into his c$stody is s$b3ect to same responsibility as a %')ee. T "o ta*e proper care T !ot $se it for personal p$rposes
T Restore it to tr$e owner% if owner is traced L'%')'4 + +&e ' + 4'&/ e)'
1.
A person to whom money has been paid or anything delivered by mista*e or $nder coercion m$st repay or ret$rn it.
$/e'&/ A/eee&4
C+&4'&/e&4 C+&4c4
#t is a promise to give money or #t is a contract to do or not to do something if money+s worth $pon the determination or some event collateral to s$ch contract does or ascertainment of an $ncertain event. does not happen.
&.
#n a wagering agreement the #n a contingent contract% the event is only $ncertain event is the sole determining colletral. factor. . #t is essentially of a contingent nat$re. #t may not be of wagering nat$re. 6.
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