Contract Act for IB & Retail

7/31/2019 Contract Act for IB & Retail

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Contract Act,1872



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



Types of contract

On the basis of formation

E



Essential elements of valid contract

Agreement

Intention to create legal

relations

Lawful consideration

Capacity of Parties

Contd……



Essential elements of valid contract

Free Consent

Lawful Object

Possibility of performance

Not expressly declared void

Certainty in the mening of agreement

…..Contd



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”



RULES REGARDING A VALIDOFFER

May be Express or Implied

Give rise to legal consequences

Invitation to offer is not an offer

Must be communicated



Classification of an OFFER

Specific offer

General offer

Cross off er



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



WHAT IS CONSIDERATION



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”



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



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



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)



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



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?



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



Minor‟s Agreement

Surety for a minor

Position of minor‟s parents

Minor shareholder

Minor‟s liability in a tort (civil wrong)



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



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)



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”



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



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



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



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.



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



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. “



Discharge of Contracts

• By Performancea- Actual performanceb- Attempted performance

•By Mutual Agreementa-Novationb-Alteration

c- Rescissiond- Remission

cont……..



• By Supervening Impossibility

• By Operation of Law

• By Lapse of Time

• By Breach of Contract

P f



Performance

Who must perform

Who can demand performance

Time and place of performance

Assignment of contract

Contract which need not to be performed



Breach of contract

Actual Breach

Anticipatory Breach



Legal remedies for Breach of contract

Rescission of the contract

Suit for damages

Suite for specific performance

Suit for injunction

Suit upon “Quantum Merit”



Types of Damages

Ordinary Damages

Special Damages

Exemplary or Vindictive Damages

Nominal Damages

Liquidated Damages



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



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



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



Implied warranties

Warranty of quiet possession

Warranty of freedom from any charge

Warranty to disclose dangerous nature of

goods to the ignorant buyer



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



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

Contract Act for IB & Retail

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