Contract Act for IB & Retail
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Transcript of Contract Act for IB & Retail
7/31/2019 Contract Act for IB & Retail
http://slidepdf.com/reader/full/contract-act-for-ib-retail 1/42
Contract Act,1872
7/31/2019 Contract Act for IB & Retail
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Definition of Contract
According to section 2(h) “a contractis an agreement enforceable by
law”. To form an agg. There mustbe an praposal or offer by anyparty and its acceptance by the
other.
Offer + Acceptance = Agreement
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Types of contract
On the basis of formation
E
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Essential elements of valid contract
Agreement
Intention to create legal
relations
Lawful consideration
Capacity of Parties
Contd……
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Essential elements of valid contract
Free Consent
Lawful Object
Possibility of performance
Not expressly declared void
Certainty in the mening of agreement
…..Contd
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Definition of Offer(proposal)
As per section 2(a)”when one personsignifies to another his willingness to
do or to abstain, from doing anythingwith a view to obtaining ,the assentof that other to such act orabstinence, he said to make aproposal”
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RULES REGARDING A VALIDOFFER
May be Express or Implied
Give rise to legal consequences
Invitation to offer is not an offer
Must be communicated
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Classification of an OFFER
Specific offer
General offer
Cross off er
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RULES REGARDING A VALID ACCEPTANCE
Must be communicated by the acceptor
Given only to the person making offer
Must be “absolute and unqualified” (qualified acceptance is a counter offer)
Must be given within reasonable time in
usual and reasonable manner Rejected offers can be accepted only if it
is renewed
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WHAT IS CONSIDERATION
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Definition of consideration
As per section 2(d)”when at thedesire of the promisor, the promisee orany other person has done orabstained from doing ,or does orabstains from doing something ,suchact or abstinence or promise is called a
consideration”
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ESSENTIALS OF CONSIDERATION
Form of consideration
must move at the desire of the promisor
May move from promisee or any other person
May be past, present or future
Need not be adequate
Must be real
Must be lawful
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No Consideration No ContractExceptions
Agreement made out of natural love andaffection (if registered)
Agreement to compensate for past voluntary
services
Agreement to pay for time-barred debt
Completed gift and donation
For creating an agency
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No Consideration No Contract:Exceptions
For accepting lesser part of a debt or forincreasing credit period there need not be anyconsideration.
A promise to contribute to charity would beenforceable if, on the strength of the promise,the promisee undertakes some liability.
to the extent of liability incurred but notexceeding the amount promised.
kedar Nath vs. Gauri muhhammad (incurred)
Abdul Aziz vs. Masum Ali (not incurred)
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CAPACITY OF PARTIES
Who can enter into a Contract?
(sec 11)Every person is „competent tocontract‟ except:
A minor
A person of unsound mind A person disqualified by law
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Think…
M, a minor, enters into a contract withJ to buy his house and makes him the
advance payment. Later J denies tosell his house.
Q: can M sue J in a court of law?
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Minor‟s Agreement
Void ab initioBeneficial agreements are valid contracts
No ratification on attaining majority
Rule of estoppel does not apply to a minor
Minor‟s liability for necessities
Specific performance
Minor Partner
Minor Agent
Minor and insolvency
Contract by minor and adult jointly
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Minor‟s Agreement
Surety for a minor
Position of minor‟s parents
Minor shareholder
Minor‟s liability in a tort (civil wrong)
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Free consent
Consent is said to be free when it is notcaused by any of the following:
a. Coercion
b. Undue influence
c. Misreprentation
d. Fraude. mistake
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Coercion implies: (use of physical force)
(i) committing or threatening to commit any act
forbidden by Indian panel court(ii) unlawful detaining or threatening to detain
any property
with the intention of causing a person intoagreement (voidable)
Undue Influence implies: (use of mental force)
Taking unfair advantage of such arelationship where one person is in a positionto dominate the will of the other (voidable)
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Representation means a statement of factmade by one party to the other, either
before or at the time of contract, with anintention to induce the other party to enterinto a contract.
A wrongly made representation is termed as a
misrepresentationan intentional misrepresentation is termed as
fraud. It includes all acts intended to
deceive another person “a deceit which does not deceive gives noground for action”
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Can silence be Fraudulent?
No
Yes, when duty to speak
Yes, where silence = speech
Effects of fraud:
i) Voidable
ii) Ask for restitution (position as if no fraud)iii) Claim damages
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Legality of Object
According to section 23 ,”
Consideration or object of an agreement isunlawful under the following situation:-
It is forbidden by law It Defeats the provision of any other law
It is Fraudulent
It involves an injury to a person or property of other
It is immoral
It is against the public policy
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Agreement Expressly Declared Void
Agreement in restraint of marriage
Agreement in restraint of Trade
Agreement in restraint of Legal proceedings Agreement meaning of which is uncertain
Agreement by way of Wager
Agreement to do impossible act
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QUASI CONTRACTS
In some cases there is no offer, noacceptance and in fact no intention on thepart of the parties to enter into a contract
and still by their conduct they are into acontract.
It rests upon the doctrine „a person shall not
be allowed to enrich himself at theexpense of another.
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Quasi-contractual obligations
Claim for necessaries to persons incapable of contracting
Payment by interested parties
Obligation of person enjoying benefit of nongratuitous act
Rights and duties of finder of lost goods
Liability of a person to whom money is paid orgoods are delivered by mistake or undercoercion
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Contingent contract
A per section 31
” A contingent contract is a
contract to do or not to do something, if some event ,collateral tosuch contract does or does not
happen. “
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Discharge of Contracts
• By Performancea- Actual performanceb- Attempted performance
•By Mutual Agreementa-Novationb-Alteration
c- Rescissiond- Remission
cont……..
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• By Supervening Impossibility
• By Operation of Law
• By Lapse of Time
• By Breach of Contract
P f
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Performance
Who must perform
Who can demand performance
Time and place of performance
Assignment of contract
Contract which need not to be performed
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Breach of contract
Actual Breach
Anticipatory Breach
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Legal remedies for Breach of contract
Rescission of the contract
Suit for damages
Suite for specific performance
Suit for injunction
Suit upon “Quantum Merit”
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Types of Damages
Ordinary Damages
Special Damages
Exemplary or Vindictive Damages
Nominal Damages
Liquidated Damages
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CONTRACT OF SALE OF GOODS ACT
Essentials of contract of sale of goods:
1. Two parties (exception: execution of decree)
2. Transfer of property
3. Goods = movable property other thanactionable claims and money
4. Price
5. Includes both „sale‟ and „agreement to sell‟
6. No formalities to be observed
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Conditions and warranties
Conditions
Essential to themain purpose
On breach:cancellation
Breach can betreated as breachof warranty
Warranties
Collateral to themain purpose
On breach:damages
Breach cannot be
treated as breachof condition
Voluntary waiver and acceptance of goods
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Implied conditions
Condition as to title
Condition in sale by description
Condition in sale by sample
Condition in sale by sample as well asdescription
Condition as to fitness or quality
Condition as to merchantability
Condition as to wholesomeness
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Implied warranties
Warranty of quiet possession
Warranty of freedom from any charge
Warranty to disclose dangerous nature of
goods to the ignorant buyer
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Nemo Det Quod Non Habet “No one can give what one has not got”
Unauthorized sale by mercantile agent
Transfer of title by estoppel
Sale by joint owner Sale by person in possession under voidable
contract
Sale by seller in possession after sale Sale by buyer in possession after “agreement
to buy”
Resale by unpaid seller
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Rights of an unpaid seller
Against goods
1. Right of lien
2.Right of stoppage of goods in transit
3. Right of resale
Against buyer
1. Suit for price
2.Suit for damages fornon acceptance
3. Suit for specialdamages andinterest