Legal Framework for Business

MBA-114
 Legal framework for Business
MBA-114
• The Law of Contract, 1872
• The Sale of Good Act, 1930
• The Law of Partnership, 1932
• Myanmar Companies Law, 2017
• Law of Intellectual Property
• Myanmar Investment Law, 2016
• Labour Laws
• Law of Insurance
• The State owned Economic enterprise Law, 1989
• Law of Banking
• Small and Medium Enterprises Development
Law ,2015
• Special Economic Zones Law, 2014
• Business
- Activity of buying and selling; commerce and
trade
• The Law of Partnership mentions
-business include, every trade, occupation,
profession
Law of Contract
ပဋိညာဉ်ဥပဒေ
 Law of the Contract
• The most important part of business or
Mercantile Law
• ANSON, a contract is an agreement enforceable
at law made between two or more parties or
persons by whom rights are acquired by one or
more to acts or forbearances on the part of the
other or others
• Salmond, a contract is an agreement creating and
defining obligations between the parties.
• Sir Pollock, every agreement and promise
enforceable at law is contract.
➢ Importance of the Contract
• Every day each one of us enters into a number of
contracts knowingly or unknowingly.
• It is because no man is self-sufficient.
• Instance, purchasing goods from shop, travelling
by bus, train, auto rickshaw etc.
• filling fuel in vehicles, giving vehicles for
servicing, giving clothes to laundry, taking
admissions in colleges, operating bank account
etc.
• For instance, if you borrow a pen from your
friend and if you return it, it is performance of
contract and if you fail to return it, it is a breach
of contract.
➢The Contract Act, 1872
• In Myanmar, contracts are governed by the
Contract Act, 1872 which was enforced on
September 1, 1872
• as "an agreement enforceable by law" [Section
2(h)].
• Two distinct parts
✓Firstly, there must be an agreement.
✓ Secondly, such agreement must be
enforceable by law.
• Making Contracts
• Express contract
➢ in words (orally or in writing) in which the terms are
spelled out directly. The parties to an express contract,
whether written or oral, clearly intend to make a legally
enforceable agreement.
➢ For example, an agreement to buy a car for $1,000 and
to take title next Monday is an express contract.
• Implied contract
➢ the agreement is not writing or spoken, but by act of the
parties.
➢ For example, if a passenger gives one kyat to the bus
conductor, without saying anything, the conductor gives
him a ticket which cost one kyat.
• Quasi-contract
➢Both express and implied contracts embody an
actual agreement of the parties.
➢by contrast, is an obligation imposed by law to
avoid unjust enrichment of one person at the
expense of another.
➢In fact, a quasi-contract is not a contract at all.
➢ It is a judicial remedy in which the court
decides what a contract should look like
between the parties to prevent injustice.
• For example, a carpenter mistakenly believes a
homeowner hired him to repair her porch,
when it was actually the neighbor who hired
him.
• One morning the carpenter arrives and begins
work.
• Rather than stop him, the homeowner lets him
proceed, excited to get her porch fixed for free.
• Although no contract exists because there was
no offer, acceptance or consideration,
• the law will imply a contract between the
carpenter and homeowner for the value of the
work.
• The Essential Elements of a Valid Contract
➢All agreements are contracts if they are made
by
▪ the free consent of parties,
▪ competent to contract,
▪ for a lawful consideration and with a lawful
object, and
▪ are not hereby expressly declared to be void
1. Proposal or offer and acceptance of such
proposal or offer.
2. The parties must be competent to contract.
(Section 11)
3. Free consent of the contracting parties.
(Section l3 to 22)
4. Lawful consideration and with a lawful
object. (Section 23)
5. The agreement must not be expressly
declared to be void. (Sections 20, 26 to 30
and 56)
6. In writing if so required by law.
(1)Offer and Acceptance
• Offer or Proposal
➢When one person signified to another his
willingness to do or to abstain from doing
anything, with a view to obtaining the assent
of that other to such act or abstinence, he is
said to make a proposal under Section 2 (a) of
the Myanmar Contract Act.
➢ Examples:
• A offers to sell his book to B. A is making an offer
to do something, i.e., to sell his book. It is a
positive act on the part of the proposer.
• A offers not to file a suit against B, if the latter
pays A the amount of KS. 200, outstanding. Here,
the act of A is a negative one, i.e., he is offering
to abstain from filing a suit.
• 3 ingredients for a proposal-
✓ Proposal is an expression of one’s desire to do or
not to do something.
✓ It must be made or addressed to another person.
✓ The object must be to obtain the consent of
another for such act or abstinence
• The following points should be noted with respect to
proposal or offer.
➢ (i) A proposal or offer must be made not by mere
declaration, but there must be the request to accept
his offer.
✓ E.g. If ‘A’ says in conversation with ‘B’ that he
would sell his horse will not amount to an offer or
proposal.
➢ (ii) It must be made with an intention to create legal
relation. Social, domestic and family arrangements
are not usually intended to be binding
• Kalai Haldar V Sheikh,
➢ to offer a friend a meal is not creating legal
relation.
• Balfour V Balfour 1919,
➢ a husband promised his wife an allowance before
he left to take up a post abroad.
➢ When he stopped the payments, an action by the
wife failed on the ground that this was not a
binding contract but merely a domestic agreement
with no legal obligations attached to it.
• In commercial and business agreements
➢ the law will presume that the parties entering into
agreement intend those agreements to have
legal consequences.
• (iii) The terms of a proposal or an offer must be certain.
• (iv) A proposal may be general or specific.
• Carlill V Carbolic Smoke Ball Co, 1893
✓ the defendants advertised that they would pay $100 to
anyone who caught influenza while using their product.
✓ This was held to be an offer to the world at large
capable of being accepted by anyone fulfilling the
necessary conditions.
✓ Therefore, if the words of the advertisement are clear
and precise, the advertisement may constitute an offer.
✓ Such a ground offer was held to be sufficient
communication of the offer and the plaintiff got the
decree.
• (v) Every offer must be communicated.
➢ Unless the acceptor has the knowledge of the
offer, there can be no acceptance and
consequently no contract.
• Lalman Shukla V Gouri Dult, 1913,
➢the plaintiff had no knowledge of the handbills
when he found the boy.
➢The court held that the plaintiff was not
entitled to the reward.
• (vi) Where offer is uncommunicated there can
be no contract.
• Taylor V Laird 1856
✓ The captain of a ship resigned his command in
a foreign port, but later helped to work the ship
home.
✓The owners were entitled to refuse payment
for these services for, by the failure to
communicate the offer to them, the owners had
no option of either accepting or refusing.
• (vii) Sometimes a proposal takes the form of
continuous offer, which is called ‘standing
offer’.
➢The Acceptance
• ‘‘When the person to whom the proposal is
made signifies his assent thereto, the proposal
is said to be accepted” [Section 2 (b)].
• (8) different ways
• (i) The acceptance must be absolute and
unqualified. (Section 7(1))
➢ A counter-offer is final rejection of the original
offer.
➢ Hyde V Wrench 1840,
✓ The defendant offered to sell his firm to for
$1,000 on 6 June. Two days later, the claimant
made a counter-offer of $ 950 which the
defendant rejected on 26 June.
✓ The claimant then informed the defendant on 29
June that he accepted the original offer of $1,000.
✓ Decision; the original offer of $1,000 had been
terminated by the counter-offer. It was held that
no contract was existed.
• (ii) Acceptance must be made in accordance
with the prescribed manner (Section 7(2))
• (iii) The proposer or offer or cannot impose
upon the acceptor, the penalty that in the event
of his silence, he would be deemed to have
accepted.
• (iv) Acceptance must be communicated to the
person who made the offer.
➢ Mental or uncommunicated consent does not
amount to acceptance.
➢Felthouse V Bindley,
✓The nephew had never signified to Felthouse
his acceptance of the offer,
✓ there was no contract of sale, between
Felthouse and his nephew, and
✓the horse did not belong to Felthouse at the
time of auction sale.
• (v) Acceptance of the proposal means the
acceptance of all the terms.
• (vi) Whether the proposal of special terms has
been effectually communicated or not is a
question of fact.
➢U Hla Pe Vs The Board of Directors, Union of
Burma Airways (l95l-BLR, H.C. 347)
✓Plaintiffs wife (Daw Aye Kyi) was a passenger
in Dove aircraft which crushed into the Gulf of
Martaban on the March 1949 and she lost her
life.
✓ Plaintiff claimed damages under the Fatal
Accident Act and the defendants denied that they
were excused under the conditions printed on the
back of the ticket
✓ they were excluded from liability Daw Aye Kyi
(deceased) could not read English which was
written at the back of the ticket but her son-in-law
who bought the ticket could read it.
✓ It was also found that the board had done
reasonable notice on the face of the ticket. It was
held that the board was not liable.
✓ It is question of fact whether the person taking
had (or with ordinary intelligence would have)
notice of the conditions contained in the ticket.
• (vii) Performance of the conditions of a
proposal or the acceptance of a consideration
for reciprocal promise which may be offered
with a proposal is an acceptance of the
proposal. (Section 8)
• (viii) An act done by a person in ignorance of
offer does not amount to performance of the
condition of the proposal. An offer once
refused is dead and cannot be accepted unless
renewed.
• Consideration
➢Another important element in the formation of
a contract
➢In literal legal definitions Consideration can be
defined as “something of value given by both
parties to a contract that induces them to enter
into the agreement to exchange mutual
performances.”
• Section 2(d)
• When, at the desire of the promisor, the
promisee or any other person,
➢ has done or abstained from doing, or
➢promises to do or abstain from doing
something,
➢ such act or abstinence or promise is called a
consideration for promise
➢Example: If Maung Ba promises to sell his
horse to Maung Hla for five thousand Kyats,
➢ Maung Ba's promise to sell his horse is the
consideration for Maung Hla's promise to pay
Maung Ba, the price for the horse.
• five kinds of consideration
➢Present or Executed Consideration
➢Past Consideration
➢Future or Executory Consideration:
➢Unlawful Consideration
➢Illusory or Unreal Consideration
• Communication and Revocation
• In Section 2(a) and (b),
➢a promisor has to signify his willingness and a
promise has to signify his assent there to.
➢It is therefore necessary to the mode of such
signification, which is described as
communication.
• Modes of communication
➢ Section 3
➢ the communication of proposals, the acceptance of
proposals and the revocation of proposals and
acceptances, respectively, are deemed to be made by
any act or omission of the party, proposing, accepting
or revoking by which he intends to communicate such
proposal, acceptance or revocation or which has the
effect of communicating it.
➢ two general modes of communication, namely; by
✓ (1) any act or conduct,
✓ (2) omission intending thereby to communicate to the
other or which has the affect of communicating it to the
other.
• Mode of revocation of proposal
• Section 6 of the Contract Act
➢ A proposal is revoked;
✓(1) by the communication of notice of
revocation by the proposer to the other party;
✓(2) by the lapse of the time prescribed in such
proposal for its acceptance, or if no time is so
prescribed, by the lapse of reasonable time,
without communication of the acceptance;
✓(3) by the death or insanity of the proposer, if
the fact of his death or insanity comes to the
knowledge of the acceptor before acceptance.
• Communication of Revocation
➢The communication of revocation is complete,
✓(i) as against the person who makes it, when it
is put, into a course of transmission to the
person to whom it is made so as to be out of
the power of the person who makes it,
✓(ii) as against the person to whom it is made,
when it comes to his knowledge. (Section 4)
• e.g. In the above example
➢ A revokes his proposal by telegram.
➢ The revocation is complete as against A when
the telegram is dispatched.
➢It is complete as against B when B receives it.
➢B revokes his acceptance by telegram.
➢ B’s revocation is complete as against B when
the telegram is dispatched, and as against A
when it reaches him.
• (2) Competency of Parties (Section 11, 12)
• "Every person is competent to contract who is
of the age of majority according to the law to
which he is subject and who is of sound mind,
and is not disqualified from contracting by any
law to which he is subject".
• Every person is competent to contract who-
✓- has attained the age of majority
✓- is of sound mind, and
✓- is not disqualified from contracting by any
law to which he is subject.
• The age of majority
➢In Myanmar attaining the age of majority
according to section 3 of the Majority Act
✓ every person shall be deem to have attained
his majority when he shall have completed the
age of eighteen years.
• Of sound mind (Section 12)
➢ A person is said to be of sound mind for the
purpose of making a contract if at the time he
make it, he is capable of understanding it and
forming a rational judgment as to its effect upon
his interests. (Section 12)
➢ (a) A person, who is usually of unsound mind, by
occasionally of sound mind, may make a contract
when he is of sound mind.
➢ (b) A person who is usually of sound mind may
not make a contract he is of unsound mind.
➢ The Concept of sound mind under Contract Act is
explained only from the point of view of making
the contract. This law is concerned with the sound
mind of each party, only at the time of making the
contract and not at any other time.
• Test of Sound mind – The person is said to be of
sound mind if at the time of contracting he
satisfies 2 conditions-
• He is able to understand what he is doing, and
• He is able to understand the effect or impact of
his act on his own interests.
• Thus Contract Act is very clear about its purpose
of sound mind at the time of contracting. The test
of sound mind should be made applicable to the
following categories of persons such as-
• Lunatic or insane persons.
• Person under influence of Drinks or other
intoxicants.
• Seriously ill patients or person delirious from
fever etc.
• Disqualified from contracting
➢The disqualification may arise from corporate
bodies or political status. Examples;-
➢(i) A statutory company cannot enter into a
contract out of its memorandum.
➢(ii) An alien enemy is incompetent to contract.
➢(iii)A person may be disqualified form
contracting by his or her own law to which he
or she is subject. For example- A monk cannot
enter into adopted child contract.
• (3)Free Consent (Section 13 to 22)
➢ In order to be a valid contract, the agreement must have
been made with free consent of the parties.
➢ Consent is defined in Section 13 as two or more person
are said to be so consent when they agree upon the
same thing in the same sense.
➢ Free consent According to Section 14 of the Contract
Act; Consent is said to be free when it is not caused by
✓ (i) Coercion, or
✓ (ii) Undue influence, or
✓ (iii) Fraud, or
✓ (iv)Misrepresentation, or
✓ (v) Mistake.
• Coercion
➢ the committing, or threatening to commit, any
act forbidden by the Penal Code or
➢the unlawful detaining, or threatening to
detain, any property, to the prejudice of any
person whatever, with the intention of causing
any person to enter into an agreement. (Section
15)
➢Explanation.-It is immaterial whether the Penal
Code is or is not in force in the place where the
coercion is employed.
• Illustration
➢A, on board an English ship on the high seas,
causes B to enter into an agreement by an act
amounting to criminal intimidation under the
Penal Code.
➢ A afterwards sues B for breach of contract at
Yangon.
➢A has employed coercion, although his act is
not an offence by the law of England, and
although section 506 of the Penal Code was
not in force at the time when or place where
the act was done.
• Undue influence
➢means dominating the will of the other person
to obtain an unfair advantage over the other.
➢No presumption of domination of will
➢Husband and wife
➢Landlord and tenant
➢Creditor and debtor
• Daw Maw Nwee and seven others vs L.Ahnin (a)
U Par and three others 1962, B.L.R. CC. 232,
• it was contented that appellants Daw Maw Nwee,
wife of the deceased and, U Ah Kee and U Ah
Lone, who were sons of the deceased used undue
influence to make a contract of gift and so that the
contract was void.
• It was held that even though the deceased U Ah
Choine was ill, it could not be considered to be
influenced by his wife and sons since he was to be
able to bring himself up until to be a rich man.
• It was also held that since there was no position of
influence, it was necessary to consider whether
undue influence was used or not.
• the agreement is a contract voidable at the
option of the party whose consent was so
caused.
• Fraud means and includes any of the
following acts committed by a party to a
contract, or with his connivance, or by his
agent, with intent to deceive another party
thereto of his agent, or to induce him to enter
into the contract:—
✓(1) the suggestion, as a fact, of that which is
not true, by one who does not believe it to be
true;
✓(2) the active concealment of a fact by one
having knowledge or belief of the fact;
✓(3) a promise made without any intention of
performing it;
✓(4) any other act fitted to deceive;
✓(5) any such act or omission as the law
specially declares to be fraudulent (Section
17)
• Explanation.- Mere silence as to facts likely to
affect the willingness of a person to enter into
a contract is not fraud,
• unless the circumstances of the case are such
that, regard being had to them, it is the duty of
the person keeping silence to speak, or
• unless his silence is, in itself, equivalent to
speech.
• Illustrations
✓ (a) A sells, by auction, to B, a horse which A
knows to be unsound. A says nothing to B about
the horse’s unsoundness. This is not fraud in A.
✓ (b) B is A’s daughter and has just come of age.
Here, the relation between the parties would make
it A’s duty to tell B if the horse is unsound.
✓ (c) B says to A-“If you do not deny it, I shall
assume that the horse is sound.” A says nothing.
Here, A’s silence is equivalent to speech.
✓ (d) A and B, being traders, enter upon a contract.
A has private information of a change in prices
which would affect B’s willingness to proceed
with the contract. A is not bound to inform B.
• Misrepresentation
➢ (1) the positive assertion, in a manner not
warranted by the information of the person
making it, of that which is not true, though he
believes it to be true;
➢ (2) any breach of duty which, without an intent to
deceive, gains an advantage to the person
committing it, or any one claiming under him; by
misleading another to his prejudice, or to the
prejudice of any one claiming under him;
➢ (3) causing, however innocently, a party to an
agreement, to make a mistake as to the substance
of the thing which is the subject of the agreement.
(Section 18)
• Mistake
➢Where both the parties to an agreement are
under a mistake as to a matter of fact essential
to the agreement, the agreement is void.
(Section 20)
➢Explanation.-An erroneous opinion as to the
value of the thing which forms the subject-
matter of the agreement, is not to be deemed a
mistake as to a matter of fact.
• Illustrations
➢ (a) A agrees to sell to B a specific cargo of goods
supposed to be on its way from England to
Bombay. It turns out that, before the day of the
bargain, the ship conveying the cargo had been
cast away and the goods lost. Neither party was
aware of the facts. The agreement is void.
➢ (b) A agrees to buy from B a certain horse. It turns
out that the horse was dead at the time of bargain,
though neither party was aware of the fact. The
agreement is void.
➢ (c) A, being entitled to an estate for the life of B,
agrees to sell it to C. B was dead at the time of the
agreement, but both parties were ignorant of the
fact. The agreement is void.
• (4)Lawful consideration and Lawful Object
(Section 23)
➢Considerations should be lawful, as otherwise,
it would vitiate the whole contract and make it
void.
➢For example, A promises to pay B Ks.
500,000- if he commits a theft in C’s house.
Such a promise will not be enforced by law
even if B has committed a theft because the
object of consideration of the promise is
unlawful.
• Illustrations of lawful considerations:
➢ A agrees to sell his house to B for Ks. 10,000.
Here, B’s promise to pay the sum of Ks. 10,000 is
the consideration for A’s promise to sell the house,
and A’s promise to sell the house is the
consideration for B’s promise to pay Ks. 10,000.
These are lawful considerations.
➢ A promises to pay B, Ks 10,000, at the end of six
months, if C who owes that sum to B, fails to pay
it. B promises to grant time to C accordingly.
Here the promise of each party is the
consideration for the promise of the other party
and they are lawful considerations.
• A promises for a certain sum paid to him by B
to make good to B the value of his ship if it is
wrecked on a certain voyage. Here A’s
promises is the consideration for B’s payment
and B’s payment is the consideration for A’s
promise and these are lawful considerations.
• A promises to maintain B’s child, and B
promises to pay A Ks. 1,000 yearly for the
purpose. Here the promise of each party is the
consideration for the promise of the other
party. These are lawful considerations
• Lawful considerations and lawful object
distinguished:
➢Object is different from consideration.
➢ Object means purposes or design. However,
certain difficulties are faced in practice to
distinguish between the two, particularly when
considerations consist in a promise to do or not
to do something.
• Illustrations:
➢A promises to obtain or B an employment in
the public services and B promises to pay A
Ks. 100- The agreements is void as the
consideration being A’s promise to procure an
employment in the public services is opposed
to public policy and hence unlawful.
➢A promises to drop a prosecution which he has
instituted against B for robbery and B
promises to restore the value of things taken.
The agreement is void as its object to save a
robber from punishment is unlawful.
• A, B and C enter into an agreement for the
division among them of the gains to be
acquired by them by fraud.
• object is to practice fraud on others, it is
unlawful.
• Essentials of lawful consideration and object
➢ the consideration or object of an agreement is
unlawful, i.e.
✓ it is forbidden by law; or
✓ is of such a nature that, if permitted, it would
defeat the provisions of any law; or
✓ is fraudulent; or
✓ involves or implies injury to the person or
property of another; or
✓ the court regards it as in moral or opposed to
public policy.
✓ Every agreement of which the object or
consideration is unlawful is void.
• (5)The Agreement not expressly declared to be
void (Sections 20-30, 32, 36, 56-57, 64-67)
➢ fourteen kinds of agreements which the Contract
Act has expressly declared to be void.
✓ 1. Agreement made by incompetent persons;
(Section 11)
✓ 2. Agreement made under mutual mistake as to a
matter of fact; (Section 20) or law; (Section 21)
and (Section 65)
✓ 3. Agreement of which consideration or object is
unlawful. (Section 24)
✓ 4. Agreement of which consideration or object is
unlawful in part; (Section 24)
✓ 5. Agreement without consideration; (Section 25)
✓6. Agreement in restraint of marriage; (Section
26)
✓7. Agreement in restraint of trade; (Section 27)
✓8. Agreement in restraint of legal proceedings;
(Section 28)
✓9. Agreement the meaning of which is
uncertain or not capable of being made certain;
(Section 29)
✓10. Agreement by way of wager; (Section 30)
✓11. Agreement contingent on an event
happening and the event become impossible;
(Section 32, Section 36)
✓12. Where the agreement is to do an act
impossible in itself; (Section 56)
✓13. Where the agreement is to do an act which
subsequently becomes impossible or unlawful;
(Section 56)
✓14. Where persons reciprocally promise firstly,
to do certain things which are legal, and
secondly, under specified circumstances, to do
certain other things which are illegal, the first
set of promises is a contract, but the second is
a void agreement. (Section 57)
➢ (6) Writing
➢ writing or attestation or registration is necessary,
✓ if so required by any law.
✓ Contracts under Section 25 and section 28
exceptions 2 are required to be in writing.
✓ In this connection, it may be noted the provisions
of the Transfer of Property Act which require
writing in the case of a sale, mortgage, lease and
gift. Submission under the Arbitration Act,
contract by companies acknowledgement to save
the law of limitation are also required to be in
writing. Contracts which require to be in writing
under Section 25 are;
✓ (1) contract out of natural love and affection
(Section 25(1))
✓ (2) promise to compensate for voluntary services
(Section 25(2))
✓ (3) promise to pay time-barred debt (Section
25(3))
✓ Section 28 Agreements in restraint of legal
proceedings void.
✓ Exception 2- Nor shall this Section render illegal
any contract in writing by which two or more
persons agree to refer to arbitration any question
between them which has already arisen, or affect
any provision of any law in force for the time
being as to references to arbitration.
• Type of Contractual Terms
➢condition or warranty.
• Condition
➢A condition is a vital term of a contract going
to the root of the contract.
➢A breach of condition entitles the injured party
to repudiate the contract (i.e. Treat the contract
as discharged) and to claim damages.
• Warranty
➢is collateral
➢the breach of which gives rise to a claim for
damages but not to a right to treat the contract
as repudiated.
➢A breach of warranty merely gives to an action
for damages and does not entitle the injured
party to repudiate the contract.
• Performance of Contract
➢ means the carrying out of obligations, which arise
out of the contract.
➢ (1) Obligations of parties to perform contracts
(Section 37-39)
➢ (2) Parties to perform the contract (Section 40-45)
➢ (3) Time, place and manner of performance
(Section 46-50, 55)
➢ (4) Performance of reciprocal promises (Section
51, 54, 57)
➢ (5) Performance of alternative promises (Section
58)
➢(6) Rules as to appropriation of payment
(Section 59-61)
➢(7) Modes of discharge of contract (Section
37-39, 56, 62-64, 67)
• Modes of Discharge of Contract
• when there is a legally binding termination of
such duty by a voluntary act of the parties or by
operation of law.
• Among the ways to discharge a contractual duty
is impossibility or impracticability to perform
personal services because of death or illness; or
impossibility caused by the other party.
• it is meant that the rights and liabilities of parties
to a contract are put to an end.
• eleven ways
✓ (1) By performance (Section 37)
✓ (2) Dispensed with or excused by any law (Section 37)
✓ (3) By refusing tender of performance (Section 38)
✓ (4) By breach (Section 39)
✓ (5) By impossibility or unlawfulness of the act to be
performed (Section 56)
✓ (6) By novation, rescission or alternation of contract
(Section 37)
✓ (7) By waiver (Section 63)
✓ (8) By accord and satisfaction
✓ (9) By rescission of a voidable contract (Section S.64)
✓ (10) By neglect of promise to afford promisor
reasonable facilities for performances. (Section 67)
✓ (11) By operation of law.
• Types of Quasi Contracts
• Sections 68 to 72
• Claim for necessaries supplied to a person
incapable of contracting or on his account
(Section 68)
• If a person, incapable of entering into a
contract or any one whom he is legally bound
to support, is supplied by another person with
necessaries suited to his condition in life, the
person who furnished such supplies is entitled
to be reimbursed from the property of such
incapable person.
➢ Illustration
✓ (a) A supplies B, a lunatic, with necessaries suitable to
his condition in life. A is entitled to be reimbursed form
B’s property.
✓ (b) A supplies the wife and children of B, a lunatic,
with necessaries suitable to their condition in life. A is
entitled to be reimbursed from B’s property.
✓ There are three points to be noted in this Section:
✓ (i) The person must be incapable of entering into a
contract, e.g. minor or lunatic;
✓ (ii) The thing supplied must be necessaries suited to his
condition in life; and
✓ (iii) The property and not the person of such minor or
lunatic shall be answerable for the reimbursement.
• In order to render an infant’s contract for
necessaries enforceable, the plaintiff must
prove:
• (1) that the contract for good reasonably
necessary for supporting a person to his
position, and
• (2) that the infant had not already a sufficient
supply of these necessaries.
• Necessaries
➢As to what are necessaries is a question of fact
in each case.
➢ Thus cost incurred in successfully defending a
suit on behalf of a minor in which his costs
incurred in defending him in a prosecution for
dacoity.
➢So also is a loan to save his property from sale
in execution of a decree.
• The term “necessaries” must be constructed in
conjunction with the phrase “suited to his
condition in life”.
• The construction of the term necessaries will
depend on the status of the incapable person.
Thing which are necessaries to a rich person may
not be necessaries to a poor person. So also
necessaries to a student may not be necessaries to
a house keeper.
• Nature of remedy is action against the property,
not person. Thus a supplier of necessaries has
been given a remedy to proceed against the estate
of the person under a disability; he is not entitled
to proceed personally against such a person.
• Maung Ba Tha, Ma Sein Yin v. Saw Set 1947,
B.L.R, 491
➢a buyer of the property from a person who has
no power to sell is entitled to reimburse from
the extent of the value of the benefit received
by such owner.
• Reimbursement of person paying money
due by another
➢Section 69
➢“A person who is interested in the payment of
money which another is bound by law to pay,
who therefore pays it, is entitled to be
reimbursed by the other”.
• Illustration
➢ B holds land on a lease granted by A.
➢ The revenue payable by A to the Government
being in arrear, his land is advertised for sale by
the Government.
➢ Under the Revenue Law, the consequence of such
sale will be annulment of B’s lease. B, to prevent
the sale and the consequence annulment of his
own lease, pays to the Government the sum due
from A. A is bound to make good to B the amount
so paid.
➢ The second kind applies only to payments made
bona fide for the protection of one’s own interest.
• For example-
➢If B makes a payment which A was bound by
law to make, and if B is interested making that
payment, it is only just that he should be
entitled to be reimbursed by A.
➢ In such a case though there is no agreement on
the part of A to pay B an agreement to
reimburse B is implied by law and can be
enforced by the latter.
✓ In a suit under this Section, three are points to be
considered.
✓ (1) There must be a person who is bound by law to
make a certain payment;
✓ (2) There must be another person who is interested in
such payment; and
✓ (3) A payment must have been made by the person who
has interest in such payment.
✓ (1) Bound by Law: - An action to recover money is not
maintainable under this section unless the person from
whom it is sought to be recovered was bound by law to
pay it.
✓ e.g., Money paid by way of revenue due on land
owned by one who is not the registered holder, is not
money who is bound to pay. Money paid to eh
insurgents is not also money lawfully paid.
✓ (2) Person interested in the payment of money: - The
words “interested in payment of money which another
is bound by law to pay” might include the apprehension
of any kind of loss or in convenience, or at any rate of
any detriment capable of being assessed in money.
✓ Under Section 69, if a man be interested in the payment
of money and has proper ground for thinking that,
another who is bound to pay the money either cannot
pay or does not intend to pay, he himself is entitled to
pay the money and should be allowed to recover it.
✓ (3) In order to recover the extent under Section 69, a
payment must have been made by the person who has
interest in such payment by the motive of protection of
his own interest.
• Ma Ngwe Shin and one v. Gaung Boke (a) Maung
Laung Kyamar and one
➢ the appellants leased out a place of land to the
respondents at a monthly rent of K. 30.
➢ Subsequently, the area was occupied by the
K.N.D.O, and the appellants evacuated to Yangon.
➢ The appellants sued the respondents for arrears of
rent accrued due amounting to K 411 during their
absence.
➢ The respondents pleaded that they had paid Ks
360 to the K.N.D.O, authorities during their
occupation and as such they were entitled to be
reimbursed under section 69 of the Contract Act.
✓ It was held that for the application of section 69 of
the Contract Act, it is essential that there should be:-
✓ (i) A person who is bound by law to make certain
payments;
✓ (ii) Another person who is interested in such payment
being made; and
✓ (iii) A payment by such last mentioned person.
❖This section clearly applies to payment made bona
fide for the protection of one’s own interest; if a
person who paid the money was not actuated by a
desire to protect his own interest, he certainly cannot
make a claim under this section.
❖The word “compellable to pay” does not and
cannot mean “compellable to pay” “through
fear to physical violence” and the words
“bound by law” do not mean “compellable to
pay”.
❖Suit decreed in full with costs in all the Courts.
• Rights and Liabilities of Finder of Goods
➢A person who finds goods belonging to
another and takes them into his custody is
subject to the same responsibility as a bailee.
• Rights of Finder of Goods
• According to Section 168 of the Contact Act,
➢ a person who finds goods belonging to another
and takes them into his custody is entitled to
retain the goods against the owner until, he
receives such compensation for trouble and
expenses voluntarily incurred by him to preserve
the goods and find out the owner, but he has no
right to sue.
➢ He can, however, sue the owner where the owner
has offered a specific reward for return of the
goods lost and may retain the goods until he
receives it.
➢ Moreover, he is entitled to its possession as
against everyone except the true owner.
• Liabilities of Finder of Goods
➢ Liabilities of finder of goods mean that he is
subject to the responsibility of a bailee to take due
care of the goods and to try and find out the
owner.
• Difference between Contracts and Quasi
Contracts
➢ In Quasi Contracts, obligation between the parties
is not contractual but one which is treated as
contractual by law.
➢ These obligations are therefore, implied by law.
➢ Quasi contracts are also called ‘implied’ contracts.
These are implied because they are ‘such
obligations’ which resemble those created by
contracts.
➢The essentials for formation of a contract are
absent but, as the results resemble those of a
contract, they are called ‘Quasi Contracts’.
➢They are called ‘Construction Contracts’ under
English law.
➢Indian law terms Quasi Contracts as “Certain
relations resembling those created by
contract.”
• Law, in such cases, places the parties in the
same position as they would have been if there
was a contract between them. Second part of
section 73 of the Act gives the right to the
injured party in the following words:
• “When an obligation resembling those created
by contract has been incurred and has not been
discharged, any person injured by the failure to
discharge it, is entitled to receive the same
compensation from the party in default, as if
such person had contracted to discharge it and
had broken his contract”.
➢It will thus, be observed that Quasi Contracts
cannot strictly be called contracts but, they
create certain obligations and are, therefore
treated as contracts by law.
➢The aggrieved party is placed in the same
position as if the actual contract exists, on the
footing that such obligations must be fairly
compensated.
➢Thus, on the basis of the points above, Quasi
Contract can be differentiated from Contract as
illustrated in the following table.
• The consequences of breach of contract
(Section 73-75)
➢Remedies for breach of contract
➢There are three kinds of remedies for breach of
contract, namely;
✓(i) damages,
✓(ii) a decree for specific performance or
✓(iii) an injunction.
• (i) Damages
• In every breach of contract the injured party is
entitled to damages.
• Damages are given by way of restitution and
compensation only and not as punishment, the
aggrieved party can therefore, recover the
actual loss caused to him and not exemplary
damages, which can be recovered only in case
of a breach of promise of marriage.
• The law as the damages for the breach of
contract and the measure of damages are laid
down in Section 73 to 75 of the Contract Act.
• (ii) Specific performance
➢The law regarding specific performance and
injunction are regulated by the Specific Relief
Act (Section 12-30).
➢Specific performance can be granted only
when the damages are
✓ (i) an inadequate remedy, or
✓(ii) when the contract is certain, fair and just.
• For example;
➢ A agrees to buy and B agrees to sell a picture by a dead
painter and two rare China vases.
➢ A may compel B specifically to perform the contract for
there is no standard ascertaining the actual damages which
would be caused by its non-performance.
➢ So also A, a singer, contract with B, the manager of a
theatre, it sings at his theatre for one year, and to abstain
from singing at other theatre during this period. She is
absent by herself.
➢ B cannot compel A to sing at his theatre, but he may sue
her for an injunction restraining her from singing at other
theatres.
➢ Thus, personal contracts that are contracts which have to be
performed by a person himself and by no one else, cannot
be specifically enforce.
➢ Similarly, it is normally the case that will be available to
enforce contracts for the sale of land, since every piece of
land is regarded as unique.
➢ In Behnke V Bede Shipping Co Ltd (1927) a
“Unique” ship was held to be capable of being
subject to an order for specific performance,
but in The Stena Nautica (1982) the decision
went the other way
• (iii) Injunction (Section 54 of the Specific
Relief Act)
➢Injunction is used as a mean of enforcing a
contract or a promise to forbear, where a
contract is about to be broken by a party to the
contract. Injunctions are of two kinds, namely,
temporary or perpetual.
• Measure of Damages for Breach of Contract
(Section 73)
➢Damages
✓compensation in money which the party who
suffers by a breach of contract is entitled to
receive from the party who has broken the
contract.
✓ Such compensation is not to be given for any
remote and indirect loss or damage sustained
by reason of the breach.
• Remoteness of Damage;
➢Section 73 paragraph (2) deals with what is
known as ‘remoteness of damage’.
➢This says “such compensation is not to be
given for any remote and indirect loss or
damage sustained by reason of the breach”.
➢The loss must things from the breach or it must
be such as the parties knew when they made
the contract to be likely to result from the
breach of it.
➢ Its follows, therefore, that a party is not liable
for loss which is too remote. i.e. which not the
natural of probable consequence of the breach
of the contract.
• For example;
• A delivers to B. a common carrier, a machine to
be conveyed without delay, to A’s mill informing
B that his mill is stopped for want of the machine
B unreasonably delays the delivery of the
machine and A in consequence losses a profitable
contract with the Government and A is entitled to
receive from B by way of compensation the
average amount of profit which would have been
made by the working of the mill during the time
that delivery of it was delayed but not the loss
sustained through the loss of the Government
contract because it is too remote.
• Quantum Meruit
➢The phrase ‘Quantum Meruit’ means as much
as is merited’ (earned).
➢ The normal rule of law is that unless a party
has performed his promise in its entirely, it
cannot claim performance from the other
➢. To this rule, however, there are certain
exceptions on the basis of ‘Quantum Meruit’.
➢A right to sue on a ‘quantum meruit’ arises
where a contract, partly performed by one
party, has become discharged by the breach of
the other party.
• Specific Contract
➢1. Contract of Indemnity
➢2. Contract of Guarantee
➢3. Bailment
➢4. Agency
• 1. Contract of Indemnity
✓A contract, by which one party promises to
save the other from loss caused to him by the
conduct of the Promisor himself, or by the
conduct of any other person, is called a
Contract of indemnity.
• All Contracts of Insurance are contracts of
indemnity except life insurance.
➢ In such contracts an insurance company (insurer)
undertakes to indemnify the respective party (assured),
of the losses suffered by the assured in the manner and
to the extent agreed in the contract.
➢ A contract of indemnity is a type of contingent contract
or conditional contract.
➢ The contingency upon which the whole contract
depends is the “happening of loss to the promisee”.
➢ The contract is formed with the object of protecting the
promisee from a contingent anticipated loss.
➢ The promisor promises to compensate the loss if it
caused by the promisor’s conduct or by the conduct of
any other person.
• 2. Contract of Guarantee
➢ A contract of guarantee is a contract to perform
the promise or discharge the liability of a third
person in case of his default.
➢ The person who gives the guarantee is called the
surety; the person in respect of whose default the
guarantee is given is called the principal debtor,
and the person to whom the guarantee is given is
called the creditor.
➢ A guarantee may be either oral or written.
➢ For example, ‘A’ lends money to ‘B’ and ‘C’
promises. ‘A’ that if ‘B’ fails to repay he will pay
the money.
• 3. Bailment
➢ A Bailment is delivery of goods by one person to another
person for some purpose, upon a contract that they shall,
when the purpose is accomplished, be returned or otherwise
disposed of according to the direction of the person
delivering them. The person delivering goods is called
‘bailor’.
➢ The person to whom they are delivered is called the
‘bailee’.
➢ From the definition, it is understood that bailment is a very
simple contract which empowers the temporary placement
of control over, or possession of personal property by one
person, the bailor, into the hands of another, the bailee, for a
designated purpose upon which the parties have agreed.” It
is generally considered to be a contractual relationship since
the bailor and bailee, either expressly or impliedly, bind
them to act according to particular terms. The term bailment
is derived from the French bailor, “to deliver
• Examples
➢ Delivering vehicle to service station for
servicing.
➢ Giving clothes to a laundry for ironing.
➢ Delivering goods to carrier for the purpose of
carrying them from one place to another.
• 4. Agency
➢“Agent” and “Principle”
➢“Agent” is a person employed to do any act for
another, or to represent another, in dealing with
third person. (Section 182)
➢“Principle” is the person who employs another
person to do an act for him, or to represent
him, in dealing with third persons. (Section
182)
• Authority of Agent (Section 186-189)
➢The authority of agent may be expressed or
implied (S.189).
➢An authority is said to be express when it is
given by words spoken or written.
➢An authority is said to be implied when it is to
be inferred from the circumstances of the case;
and things spoken or written or the ordinary
course of dealing may be accounted
circumstances of the case. (Section 187)
• Illustrations
➢A owns a shop in Mandalay, living himself in
Yangon and visiting the shop occasionally.
➢ The shop is managed by B, and he is in the
habit of ordering goods from C in the name of
A for the purposes of the shop, and of paying
for them out of A’s funds with A’s knowledge.
➢B has an implied authority from A to order
goods from C in the name of A for the
purposes of the shop.
• An agent having an authority to carry on a
business has authority to do every lawful thing
necessary for the purpose, or usually done in
the course of conducting such business.
(Section 188)
• Sub Agent (Section 190-195)
• Delegation by agent
➢According to the maxim “delegatus non
protest delegare,” an agent cannot delegate his
duties to another. But there may be some
exceptions to this rule. S. 190 of the Contract
Act deals with the Law as to when and how far
an agent can delegate his duties to another.
• Section 190, Say “An agent cannot lawfully
employs another to employ another to perform
acts which he has expressly or impliedly
undertaken to perform personally, unless by
the ordinary custom of trade a sub-agent may,
or, from the nature of the agency, a sub-agent
must be employed”.
• Sub- agent
➢ “Sub-agent” as defined in Section 191 is a person
employed by and acting under the control of the
original agent in the business of agency.
• Substituted agent (Section 194)
➢ Section 194 , where an agent, holding an express
or implied authority to name another person to act
for the principal in the business of the agency, has
named another person accordingly, such person is
not a sub-agent, but an agent of the principal for
such part of the business of the agency as is
entrusted to him.