Law 1
Law 1
1871
CONTRACT
Contracts
Contract sec2(h)- An agreement enforceable
by law is a contract.
Agreement sec 2(b)- Every promise and every
set of promise forming the consideration for
each other.
Promise an accepted proposal.
Proposal A proposal when accepted becomes
a promise.
AGREEMENT
ESSENTIAL ELEMENTS OF A
VALID CONTRACT
1.
2.
3.
4.
5.
PROPOSAL
Proposal
IMPLIED
OFFER
EXPRESS
OFFER
ESSENTIALS OF PROPOSAL
1.
2.
3.
a)
b)
CONTINUED
4.
5.
6.
ACCEPTANCE
.
ESSENTIALS OF ACCEPTANCE
1. Acceptance must be absolute and unqualified.
2. It must be expressed in some usual &
reasonable manner.
3. Mental Acceptance is not sufficient in Law.
4. Acceptance must be communicated to the
offeror.
5. Acceptance must be by a certain person.
6. Acceptance must be given within a reasonable
time.
Case- Adam v. Lindsell
7. Acceptance must be given before the offer
lapses or is revoked or is withdrawn.
8.Acceptance of proposal is acceptance of all
terms.
COMMUNICATION OF AN ACCEPTANCE
The communication of an acceptance is
complete, as against the proposer, when it is put in a
course of transmission to him, so as to be
out of the power of the acceptor;
as against the acceptor, when it comes to
the, knowledge, of the proposer.
Eg : B accepts A's proposal by a letter sent
by post. The communication of the
acceptance is complete, as against A when
the letter is posted as against B, when the
letter is received by A.
REVOCATION OF PROPOSALS
AND ACCEPTANCES
Revocation of proposals and acceptances.
REVOCATION OF ACCEPTANCE
CONSIDERATION
CONSIDERATION
PAST CONSIDERATION
Exceptions
1) Past voluntary service
2) Past service at request
EXCEPTIONS TO CONSIDERATION
Sec 25
1) Natural love and affection
2) Past voluntary service
3) Time barred debt
CAPACITY OF PARTIES TO
CONTRACT
An agreement becomes a contract if it is
entered between the parties who are
competent to Contract.
Sec. 11 Every person is Competent to
contract
1. Who is of the age of majority according
to the law.
2. Who is of sound mind.
3. Who is not disqualified by any law.
Capacity of parties
Minor
Idiots
Allien
Enemie
s
Persons of Unsound
Mind
Lunatics or
Insane
Persons
Foreign
Sovereigns
&
Ambassado
rs
Drunkard
s
Convict
s
Marrie
d
Wome
n
Disqualified
Persons
Intoxicate
d Persons
Insolven
t
Corporatio
ns
CAPACITY TO CONTRACT
Minor (sec.11)
A. Agreement void-ab-initio
. Mohoribibi v. Dharmodas Ghosh
B.
.
C.
.
D.
.
CAPACITY TO CONTRACT
Unsound mind
FREE CONSENT
"Free consent ( Sec. 14) - Consent is
said to be free when it is not caused
by
1) coercion,
2) undue influence
3) fraud,
4) misrepresentation,
5) mistake.
Consent is said to be so caused when it
would not have been given but for the
existence of such coercion, undue
influence, fraud, misrepresentation or
mistake.
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COERCION
COERCION
Techniques
1) committing or threatening to commit
any act forbidden by the IPC; or
2) unlawfully detaining or threatening to
detain any property.
Aksari Mirza v. Bibi Jai Kishore
Chikam Amiraju v. Chikam Seshamma
UNDUE INFLUENCE
CONTINUED
Illustrations
(b) A, a man enfeebled by disease or age, is induced,
by B's influence over him as his medical attendant,
to agree to pay B an unreasonable sum for his
professional services. B employs undue influence.
(c) A, being in debt to B, the money-lender of his
village, contracts a fresh loan on terms which appear
to be unconscionable. It lies on B to prove that the
contract was not induced by undue influence.
(d) A applies to a banker for a loan at a time when
there is stringency in the money market. The banker
declines to make the loan except at an unusually
high rate of interest. A accepts the loan on these
terms. This is a transaction in the ordinary course of
business, and the contract is not induced by undue
influence.
UNDUE INFLUENCE
Williams v. Bailey
Real or apparent authority
Fiduciary relation
Mental distress
FRAUD
Sec. 17 -"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;
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CONTINUED
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.
4)Any other act fitted to deceive;
5)Any such act or omission as the law
specially declares to be fraudulent.
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CONTINUED
CONTINUED
Active concealment
Mere silence no fraud
1) duty to speak
2) where silence is deceptive
3) change of circumstances
4) half truths
MISREPRESENTATION
Sec.18-"Misrepresentation" means and
includes
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.
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CONTINUED
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.
Types
1) Unwarranted statements- Bombay Case
2) Breach of duty
3) Inducing mistake about subject- matter
Suppression -of vital facts
-of material facts
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VOIDABILITY OF AGREEMENTS
CONTINUED
CONTINUED
MISTAKE
CONTINUED
CONTINUED
Illustration
CONTINUED
CONTINUED
Mistake as to identity
a) Assumption of false identity
Jaggan Nath v. Secretary
b) Mistake caused by takeover of business
Boulten v Jones
c) Mistake of identity caused by fraud
Hardman v Booth
CONTINUED
Mistake as to subject-matter
a) Non-existent subject matter
Couturier v Hastie(Ship cast away)
b) Mistake as to title of rights
Sole v. Butcher(tenancy case)
c)Different subject-matters in mind
Raffles v Wichelhaus( Peerless ship case)
d) Mistake as to substance of subject-matter
Seikh Bros. Ltd v Ochener(sisal manufacture)
Mistake as to quality of subject-matter
Smith v Hughes(oats case)
Mistake as to nature of promise
CONTINUED
Limitations
1. Mistake of both parties
2. Erroneous opinion
3. Mistake of fact and not of law
VOID AGREEMENTS
Sec.2(g) An agreement not enforceable by law
is void.
1. Agreements of which consideration and
objects are unlawful in part (S.24)
2. Agreements without consideration (S.25)
3. Agreements in restraint of marriage (S.26)
4. Agreements in restraint of trade (S.27)
5. Agreements in restraint of legal proceedings
(S.28)
6. Unmeaning agreements (S.29)
7. Wagering agreements (S.30)
8. Agreements to do impossible acts (S.56)
ILLUSTRATIONS
ILLUSTRATIONS
ILLUSTRATION
ILLUSTRATION
PERFORMANCE OF CONTRACTS
Who can demand performance?
Who must perform contracts?
1. Promisor himself
2. By the promisor or his agent
3. By the legal representatives
4. By a third person
ORDER OF PERFORMANCE
DISCHARGE OF CONTRACTS
Actual Performance
Attempted performance or tender
a. Unconditional
b. Proper time and place
c. Whole obligation
d. Reasonable opportunity
e. Competent person
f. To proper person
g. Exact amount
h. Joint promises
DISCHARGE BY MUTUAL
CONSENT
Novation
Alteration
Recission
Remission
Waiver
DISCHARGE BY IMPOSSIBILITY
Subsequent or Supervening impossibility
1. Destruction of subject matter
2. Failure of ultimate purpose
3. Death or personal incapacity of promisor
4. Change of law
5. Outbreak of war
Difficulty of performance
Commercial Impossibility
Impossibility due to default of third person
Strikes and lock-outs
Failure of one of the objects
DISCHARGE BY BREACH OF
CONTRACT
Anticipatory breach
a. Expressly
b. Impliedly
Actual Breach
1.
3.
TYPES OF DAMAGES
Ordinary
Special
Exemplary or punitive or vindictive
a. Breach of contract to marry
b. Dishonour of cheque.
. Nominal damages