INDIAN CONTRACT ACT – SOME IMPORTANT ISSUES by : DR. T.K. JAIN AFTERSCHO☺OL centre for social entrepreneurship sivakamu veterinary hospital road bikaner 334001 rajasthan, india FOR – PGPSE – PGPSE / CSE PARTICIPANTS (PGPSE /CSE are an online programme, open for all) mobile : 91+9414430763 06/06/10
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My words....
Here I present a few questions about Indian contract Act.
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What are the cases when agreement is not a valid contract ?
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Answer When there is no consideration when the object is illegal when there is illegal consideration when there is no intention to create a legally binding mistake when there is lack of common understanding 06/06/10
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Give examples of agreements which are not contracts ?
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Answer
Agreements relating to social matters Domestic arrangements between husband and wife
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What was the matter of Balfour v. Balfour (1919) Balfour (1919) case?
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Answer a husband working in Ceylone, had agreed in writing to pay a housekeeping allowance to his wife living in England. On receiving information that she was unfaithful to him, he stopped the allowance: Held, he was entitled to do so. This was a mere domestic arrangement with no intention to create legally binding relations. Therefore, there was no contract. 06/06/10
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What are the essential elements of a valid contract ?
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Answer An offer or proposal by one party and acceptance of that offer by another party An intention to create legal relations or an intent to have legal consequences. lawful consideration. The parties to the contract are legally capable of contracting. Genuine consent between the parties. The object and consideration of the contract is legal and is not opposed to public policy. The terms of the contract are certain. The agreement is capable of being performed
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What was the matter of (Harris v. Nickerson (1873) ?
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Answer
a person who attended the advertised place of auction could not sue for breach of contract if the auction was cancelled
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What was the matter of (Harvey v. Harvey v. Facey (1893) Facey (1893) ?
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Answer
Merely a statement of the price at which one is prepared to consider negotiating the sale of piece of land is not n ot an offer.
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What was the matter in Felthouse
v.
Bindley (1865)?
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Answer Felthouse offered by letter to buy his nephews horse for £ 30 saying: “If I hear no more about him I shall consider the horse is mine at £ 30". The nephew did not reply, but he told an auctioneer who was selling his horses not to sell that particular horse because it was sold to his uncle. The auctioneer inadvertently sold the horse. The court held that Felthouse had no claim against the auctioneer because the horse had not been sold to him 06/06/10
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What was the matter in Lalman Shukla v. Gauri Dutt (1913)? Dutt (1913)?
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Answer
A servant brought the boy without knowing of the reward, he was held not entitled to reward because he did not know about the offer.
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What is a standing offer?
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Answer
Where a person offers to another to supply specific goods, up to a stated quantity or in any quantity which may be required, at a certain rate, during a fixed period, he makes a standing offer
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What was the matter of Dunlop Pneumatic Tyre Co. v. Selfridge Ltd. (1915) A.C. 847?
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Answer Dunlop supplied tyres to a wholesaler X, on condition that any retailer to whom X re-supplied the tyres should promise X, not to sell them to the public below the list price. X supplied tyres to S upon this condition, but nevertheless S sold the tyres below the list price. Held: There was a contract between D and X and a contract between X and S. Therefore, D could not obtain damages from S, as D had not given any consideration for S's promise to X nor was he party to the contract between D and X. 06/06/10
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When can a stranger sue for enforcement of a contract ?
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Answer A Beneficiary An assignee under an assignment in case of family arrangement – for the marriage / maintenance expenses of female members of the family when a person has made a contract for the benefit of a 3rd party, the 3rd party can sue 06/06/10
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What are the kinds of consideration?
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Answer
There are 3 types of consideration : 1. future 2. present 3. past
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What are the rules governing consideration?
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Answer Consideration need not be adequate consideration may be an act or an abstinance of an act consideration must be real Consideration must be legal Consideration must be mutual 06/06/10
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What are the cases, when consideration is not required ?
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Answer 1. natural love 2. agency (read sec. 185) 3. past event – where a person has helped / supported 4. time barred debt 5. gift 06/06/10
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When can gratuitous promise be enforced ?
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Answer A gratuitous promise to subscribe to a charitable cause cannot be enforced, but if the promisee is put to some detriment as a result of his acting on the faith of the promise and the promisor knew the purpose and also knew that on the faith of the subscription an obligation might be incurred, the promisor would be bound by promise (Kedar ( Kedar Nath v. Gorie Mohan) 06/06/10
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What are the flaws in a contract ?
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Answer Incapacity Mistake Misrepresentation Fraud Undue Influence Coercion Illegality Impossibility. 06/06/10
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How can payment be recovered regarding necessities supplied to a minor ?
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Answer
A minors estate is liable to pay a reasonable price for necessaries supplied to him or to anyone whom the minor is bound to support (Section 68 of the Act).
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Can a lunatic person, who becomes normal sometimes, make a contract when he is sane?
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Answer
Yes
A person unsound mind cannot enter into a contract. A lunatics agreement is therefore void. But if he makes a contract when he is of sound mind, i.e., during lucid intervals, he will be bound by it.
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Give examples of void contracts ?
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Answer
Agreement in restrain of parental right in restraint of marriage in restraint of trade in restraint of personal freedom Marriage brokerage Agreements
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What are the cases when agreements in restraint of trade is valid ?
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Answer
Sale of goodwill agreement between partners (not to enter into competing business)
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Can employment bond be a valid contract ?
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Answer Yes,
In Niranjan Shanker Golikari v. The Century Spinning and Manufacturing Co. Ltd., AIR 1967 S.C. 1098 Niranjan entered into a bond with the company to serve for a period of five years. In case, N leaves his job earlier and joins elsewhere with companys competitor within five years, he was liable for damages. N was imparted the necessary training but he left the job and joined another company. The former employer instituted a suit against N. The Supreme Court, held that the restraint was necessary for the protection of the companys interests 06/06/10
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Can you mention a few cases on restraint of trade ?
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Answer In Nordenfelt v. Maxim Nordenfelt Guns Co., (1894) A.C. 535 Nordenfelt was an inventor and a manufacturer of guns and ammunition. He sold his world-wide business to Maxim and promised not to manufacture guns anywhere in the world for 25 years. The House of Lords held that the restraint was reasonable 06/06/10
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What is restitution ?
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Answer
When a contract becomes void, it is not to be performed by either party. But if any party has received any benefit under such a contract from the other party he must restore it or make compensation for it to the other party
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What are the principles of quasi contract ?
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Answer
A quasi-contract rests on the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another.
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What are the cases of quasi contract ?
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Answer Necessaries supplied to person incapable of contracting . Suit for money had and received Quantum Meruit Obligations of a finder of goods . Obligation of person enjoying benefit of a nongratuitous act
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What is the meaning of quantum meruit ?
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Answer
“as much as earned”
or reasonable remuneration. remuneration.
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What constitutes a valid offer ?
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Answer : Clear definite complete final not be vague communicated
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How can offer be communicated?
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Answer
Verbally or orgally
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What types of offers are possible ?
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Answer
General offer – to everyone specific offer (to a particular person)
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What was the matter in
Carlill v. Carbolic Smoke Ball Co. case?
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Answer The company offered by advertisement, a reward of 100 pounds to anyone who contacted influenza after using their smoke ball in the specified manner. Mrs. Carlill did use smoke ball in the specified manner, but was attacked by influenza. She claimed the reward and it was held that she could cou ld recover the reward as general offer can be accepted by anybody. Since this offer is of a continuing nature, more than one person can accept it and can even claim the reward. 06/06/10
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What was the matter in Harbhajan Lal v. Harcharan Lal (AIR Lal (AIR 1925 All. 539)?
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Answer In this case, a young boy ran away from his fathers home. The father issued a pamphlet offering a reward of Rs. 500 to anybody who would bring the boy home. The plaintiff saw the boy at a railway station and sent a telegram to the boys father. It was held that the handbill was an offer open to the world at large and was capable to acceptance by any person who fulfilled the conditions contained in the offer. The plaintiff substantially performed the conditions and was entitled to the reward offered.
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Is it an offer ?
display of priced goods in a self- service store
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Answer
No
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Is it an offer ?
a shopkeepers catalogue of prices
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Answer
No it is an invitation to offer
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When will an offer lapse?
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Answer If it is not accepted within the specified time (if any) or after a reasonable time, if none is specified. it is not accepted in the mode prescribed or if no mode is prescribed in some usual and reasonable manner, e.g., by sending a letter by mail when early reply was requested; the offeree rejects it by distinct refusal to accept it; either the offeror or the offeree dies before b efore acceptance; the acceptor fails to fulfill a condition precedent to an acceptance. the offeree makes a counter offer,
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