Laws of Contract 555

8/7/2019 Laws of Contract 555

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INDIANCONTRACT ACT, 1872

(Act 9 OF 1872, 1 st Sept )

Prof. (Dr) P.K.PattnaikPOST GRADUATE DEPARTMENT OF LAW

Utkal UniversityOrissa


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PROPOSAL

COMMUNICATION ACCEPTANCE PROMISE

CONSIDERATION AGREEMENT


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Contract

PROPOSALCOMMUNICATION

ACCEPTANCEPROMISE

CONSIDERATIONAGREEMENT


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ESSENTIAL ELEMENTS OF A VALIDCONTRACT

1. Agreement.2. Intention to create legal relationship.3. Free and genuine consent.

4. Parties competent to contract.5. Lawful consideration.6. Lawful object.

7. Agreements not declared void or illegal.8. Certainty of meaning.9. Possibility of performance.10. Necessary Legal Formalities.


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What is Contract

" A promise or set of promises which thelaw will enforce ". Sir Frederick Pollock:

An agreement enforceable by law is acontract. Section 2(h)

T he person making the proposal is calledthe promisor,and the person accepting the proposal iscalled the promisee:Section 2(c)


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1. From the point of view of enforceability(a ) Valid contracts(b ) Voidable contracts 2(i)(c ) Void contracts or agreements(d ) Illegal agreements(e ) Unenforceable Agreements (Certain contracts must be inwriting)2. According to Mode of Formation(a ) Express contract(b ) Implied contract(c ) Quasi-contracts3. According to Performance(a ) Executed(b ) Executory

(c ) Uni-laterald Bi-lateral

Classification/Types of Contracts


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Applied Forms of Contract

DGS & D Rate Contract.The Director

General of Supplies and Disposals DGS & D)constitutes the central purchasing organization of the Govt. of India.

Rate Contract. It is a contract for the supply of store at a specified rate during the period of contract. No quantity is mentioned and thecontractor is bound to accept any order, whichmay be placed on him.

AMC/Repair Contracts.


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B ased On The Scope Of Work Required To B eExecuted :

W orks Contract:Supply Contract:Erection Contract:Service Contract:

R unning Contract.B ased on the method of execution(a) Lump sum contract: Specific time and content

(b) Schedule rate contract: carryout a work or effectsupply specified and within a given period, at the fixedunit rates or the prices for each of the various itemscomprising such work or supply.


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E-Contracts

G enerally the basic forms of "E-Contracts " that aperson comes across if he is computer savvy are:The Click-wrap or Web-wrap Agreements .The Shrink-wrap Agreements.Specht v. Netscape Communications Corp. , 150 F. Supp. 2d 585

(S.D.N.Y.2001) ,

The Electronic Data Interchange or (EDI).There are four major sets of EDI standards:The UN-recommended UN/EDIFACT is the only international standard and ispredominant outside of North America.The US standard ANSI ASC X12 (X12) is predominant in North America.The TRADACOMS standard developed by the ANA (Article NumberingAssociation) is predominant in the UK retail industry.

The ODETTE standard used within the European automotive industry


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THE CONSUMER PROTECTION (DISTANCE SELLING)REGULATIONS 2000 UKThe cooling-off period and cancellations

W hen selling to consumers by mail order, phone, fax, Internetor digital T V you must give them a cooling-off period duringwhich they have an unconditional right to cancel the contract.In the case of services , the cooling-off period normally endsseven working days after the day the order was made - or after

written confirmation is received.In the case of goods , the cooling-off period normally endsseven working days after the day the goods are received.Consumers must inform ExpresslyConsumers' money should be reimbursed (Max 30 days)

Y our contract with the consumer should also specify who paysany postage necessary to return unwanted goods.Exception: Perishable/ time specific items


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Offer

2(a) W hen one person signifies to another hiswillingness to do or to abstain from doinganything, with a view to obtaining the assent of that other to such act or abstinence, he is saidto make a proposal:Balfour v. Balfour (1919) 2 KB 571( Intention to formcontract)

Upton R ural district Council v. Powell (Implied Offer)Carlill v Carbolic Smoke Ball Co [1893] 1 QB256.(Unilateral Offer


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Types of Offer

General Offer: Lalman v. G auri Dutt(1913)1QB256General Offer of continuing nature : Carlill v

Carbolic Smoke Ball Co [1893] AC552Specific Offer:Cross Offer: T inn v Hoffman (1873) 29 L T 271.

Cross-offers do not make a binding contract.Invitation to offer/Treat:Impossible/Unenforceable Offer:


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Invitation to Offer/treat

AUCTIONSDISPLAY OF GOODSADVERTISEMENTSTENDERSCOMPANY PROSPECTUSPayne v Cave (1789) 3 T erm R ep 148Fisher v Bell [1960] 3 All E R 731 Partridge v Crittenden [1968] 2 AllER 421.Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.

Blackpool Aero Club v Blackpool Borough Council [1990] 3 All ER

25.


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Rules of Offer

1. Must be made with a view to obtainacceptance.2. Must be made with the intention of creatinglegal relations. [Ba lfour v. Ba lfour (1919) 2 K.B. 571.]3. T erms of offer must be definite, unambiguousand certain or capable of being made certain.H a rvey v. F a cie, Bumper H a ll Pen C as e

4. It must be distinguished from meredeclaration of intention or an invitation to offer.5. It must be communicated to the offeree.[La lma n Shukl a v. Ga uri Dutt, II, A.L.J. 489].


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6. T he offer must not contain a term the non-compliance of which may be assumed to

amount to acceptance.7. A tender is an offer as it is in response to aninvitation to offer.

8.T

he Special terms , forming part of the offer,must be duly brought to the notice of the offereeat the time the offer is made. [P a rker v. South E as tern Rly.Co. (1877) 2 C.P.D. 416]. Hender s on v. Steven s on (1875) 2 H.L.S.C. 470].

9. T wo identical cross-offers do not make acontract.


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Mode of Making Offer

EXP R ESSOr IMPLIED

R EASONABLE COMMUNICA T ION MODE AND MEDIUM


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Communication, Acceptance and

Revocation of Proposals.Section 3. T he communication of proposals, the acceptance of proposals,and the revocation of proposals andacceptances, respectively, are deemed tobe made by any act or omission of theparty proposing, accepting or revoking, by

which he intends to communicate suchproposal, acceptance or revocation, or which has the effect of communicating it.


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Communication When Complete.

SEC 4 . T he communication of a proposal is completewhen it comes to the knowledge of the person towhom it is made.

T he 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 theknowledge of the proposer.

T he communication of a revocation is complete,as against the person who makes it, when it is put intoa course of transmission to the person to whom it ismade, so as to be out of the power of the person whomakes it;


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Essentials of a Valid Acceptance

1. Acceptance must be absolute and unqualified.S:7[ U nion of India v. Babulal, A.I.R. 1968 B ombay 294]. House Purchase Case2. It must be communicated.3. It must be according to the mode prescribed.

4. It must be given within the time specified or within reasonable time.

5. It must be in response to offer.6. It must be made before the offer lapses.7. It must be given by the person to whom the

offer is made.


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Revocation of Proposals andAcceptances

Section 5.

A proposal may be revoked at any time beforethe communication of its acceptance iscomplete as against the proposer, but notafterwards.


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General Rules of Communication T he general rule is that an acceptance must be communicated

to the offeror. Until and unless the acceptance is socommunicated, no contract comes into existence: Lord Denningin Entores v Miles Far East Corp. [1955] 2 All E R 493.

T he acceptance must be communicated by the offeree or someone authorised by the offeree. If someone accepts on

behalf of the offeree, without authorisation, this will not be avalid acceptance: Powell v Lee (1908) 99 L T 284. T he offeror cannot impose a contract on the offeree against his

wishes by deeming that his silence should amount to anacceptance: Felthouse v Bindley (1862) 11 CBNS 869.

W here an instantaneous method of communication is used, egtelex, it will take effect when and where it is received. See:Entores v Miles Far East Corp [1955] 2 QB 327 T he Brimnes[1975] QB 929 ,Brinkibon v Stahag Stahl [1983] 2 AC 34.


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EXCEPTIONS TO THE COMMUNICATION RULE

a) In unilateral contracts: Compliance is sufficientb) T he offeror may expressly or impliedly waive theneed for communication of acceptance by the offeree,c) T he Postal R ule - Adams v Lindsell (1818) 1 B &

Ald 681.(d) T he postal rule applies to communications of acceptance by cable, including telegram, but not toinstantaneous modes such as telephone, telex andfax. T he postal rule will not apply:

(i) W here the letter of acceptance has not beenproperly posted, as in R e London and Northern Bank(1900),(iii) W here the express terms of the offer exclude thepostal rule, In Holwell Securities v Hughes (1974, ),


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Revocation of Posted Acceptance.

Can an offeree withdraw his acceptance, after it hasbeen posted, by a later communication, whichreaches the offeror before the acceptance? T here isno clear authority in English law.

T he Scottish case of Dunmore v Alexander (1830)appears to permit such a revocation but it is anunclear decision. A strict application of the postal rulewould not permit such withdrawal.

T his view is supported by decisions in: New Zealandin W enkheim v Arndt (1873) and South Africa in A-ZBazaars v Ministry of Agriculture (1974). However,such an approach is regarded as inflexible


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TERMINATION OF THE OFFER1. ACCEPTANCE2. REJECTION3. REVOCATION Unless and until the revocation is socommunicated, it is ineffective. See: Byrne v Van T ienhoven(1880) 5 CPD 344.4. COUNTER OFFERSee above for Hyde v W rench (1840).5. LAPSE OF TIME R amsgate Victoria Hotel v Montefiore(1866) L R 1 Ex 109.6. FAILURE OF A CONDITIONSee: Financings Ltd v Stimson [1962] 3 All E R 386.7. DEATH T he offeree cannot accept an offer after notice of theofferor's death. However, if the offeree does not know of theofferor's death, and there is no personal element involved, thenhe may accept the offer. See: Bradbury v Morgan (1862) 1 H&C249.


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Instances of void Agreements(a ) Agreements entered into through a mutual mistake of factbetween the parties (Section 20).(b ) Agreements, the object or consideration of which is unlawful(Section 23).(c ) Agreements, part of the consideration or object of which is

unlawful (Section 21).(d ) Agreements made without consideration (Section 25).(e ) Agreements in restraint of marriage (Section 26).(f ) Agreements in restraint or trade (Section 27).

(g ) Agreements in restraint of legal proceedings (Section 28).(h) Uncertain agreements (Section 29).(i ) W agering agreements (Section 30).( j ) Impossible agreements (Section 56).(k ) An agreement to enter into an agreement in the future.


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Currie v. Misa (1875)L R 10 Ex 153A valuable consideration in the sense of

law may either consist some right, interest,profit or benefit accruing to one party,or some forebearance, detriment, loss or responsibility given, suffered or undertaken by the other.It is the price of the contract- Pollock

Consideration: Sec 2(d)


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Sec 2 ( d) W hen, at the desire of the promisor,the promisee or any other person has

done or abstained from doing, or does or abstains from doing, or

promises to do or to abstain from doing,something,such Act or abstinence or promise

is called a consideration for the promise :


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R ules of Consideration1. It must move at the desire of the promisor

Durga Prasad v. Baldeo (1880) All 2212. It may move from the promisee or any other person

Chinnaya v. Ramaya (1882) 4 Mad 137 3. It may be act ,obstinence or forbearance or return

promise forbearance to sue Compromise of disputed claims Composition with creditors4. It may be past, present, or future5. It need not be adequate

Sec 25 expl 2 inadequecy of consideration


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6. It must be real and not illusory Physical impossiblity Legal Impossibility Uncertain consideration Illusory consideration7 It must be some thing which the promisor is not already

bound to do8. It must not be illegal, immoral or opposed to public policyAgreement without consideration is voidExceptions

G ift Sec 25 (1)Compensation for voluntary services Sec 25 (2)Promise to pay time barred debt Sec 25 (3)

Agency Sec 185


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What Agreements are Contracts

All agreements are contracts if they are madeby

the free consent of partiescompetent to contract,for a lawful consideration and

with a lawful object, and are not herebyexpressly declared to be void. [section 10].


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Consent is said to be free when it is not causedby

(1) coercion, as defined in section 15, or (2) undue influence, as defined in section 16, or (3) fraud, as defined in section 17, or (4) misrepresentation, as defined in section 18, or (5) mistake, subject to the provisions of sections 20,

21 and 22. - -

Consent is said to be so caused when it would not have been given but for the existence of suchcoercion, undue influence, fraud, misrepresentationor mistake. [section 14].


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Who are competent to contract

Every person is competent to contract who is of theage of majority according to the law to which he issubject, and who is of sound mind, and is notdisqualified from contracting by any law to which he is

subject. [Section 11].Minor Persons of Unsound mindAlien enemies

Foreign sovereignsCorporationsInsolventsConvict


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Minority (Sec3 Indian Majority Act 1875)1. An Agreement with minor is void ab initio

2. He can be a promisee or beneficiary3. His Agreement can not be ratified onattainment of majority

4. If he has received any benefit under voidagreement he shall not indemnify

5. He can always claim minority6. No specific performance of contract

7. Can not enter in to contract of Partnership8. Can not be declared as Insolvent9. Parents are not liable for minors contract

10.Minors are liable for necessities


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Free Consent

Consent of both parties must be free.Consent obtained through coercion, undueinfluence, fraud, misrepresentation or mistake isnot a free consent.

T wo or more persons are said to consent whenthey agree upon the same thing in the samesense. [section 13]Con s en s us a d idem


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Coercion (Section15)

W hen a person is compelled to enter in toa contract by use of force by the other party or under threat coercion is said tobe employed


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Undue influence (Sec 16) (1) A contract is said to be induced by "undue influence

where the relations subsisting between the parties are suchthat one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantageover the other.

(2) In particular and without prejudice to the generality of theforegoing principle, a person is deemed to be in a position todominate the will of another-

(a) where he holds a real or apparent authority over the other or where he stands in a fiduciary relation to the other; or (b) where he makes a contract with a person whose mental

capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress .


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Legality of ObjectIn the following circumstances consideration or object isunlawful

1. Forbidden bylaw2. Defeat the provisions of law (Nandlal v. T homas 171 IC948)3. If it is fraudulent4. If it involves or implies injury to the person or property of

another( G herulal Parakh v. Mahadeo Dass, AI R 1959)SC781

5. If the Court regards it as immoral(Baivavijili v. Nansa Nagar

,1885 Bom 152)6. Court considers it as opposed to public policy

T rading with Enemy, commit crime , stifling of prosecution,sale of public office, In restraint of trade, parental and marital

rights


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Contingent Contract

A contingent contract, is a contract to do or not to dosomething, if some event, collateral to such contract does or does not happen.( Sec 31)Contracts of Insurance, Indemnity and Guarantee are someexamples of contingent contracts .

A contract may be absolute or contingentEssentials of a Contingent Contract1. T he performance of a contingent contract is made dependentupon the happening or non-happening of some event.2. T he event on which the performance is made to depend, isan event collateral to the contract, i.e., it does not form part of the reciprocal promises which constitute the contract.3. T he contingent event should not be the mere will of thepromisor.


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R ules of Contingent Contract

1. It depends upon the happening of the futureuncertain event . So, the contract can beenforced only if the uncertain event hashappened and if it becomes impossible it isvoid (Section 32).

2. It depends upon the non happening of thefuture uncertain event. So, the contract can be

enforced only if the happening of the futureuncertain event becomes impossible as thatevent can not happen (Section 33).


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4. It depends upon the happening of a specifieduncertain event within a fixed time . So, the contractcan be enforced only if the uncertain event happenswithin the fixed time (Section 35 para 1).

5. It depends upon the non happening of a specifieduncertain event within a fixed time So, the contractcan be enforced only if the uncertain eventimpossible within the fixed time as that event can nothappen (Section 35 para II).

6. Contingent agreements to do or not to do anything, if

an impossible event happens, are void, whether theimpossibility of the event is known or not to theparties to the agreement at the time when it is made.


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If the contract iscontingent upon

It canot be enforced unless that event

happened

If it becomesimpossible it is void

can be enforced whenthe happening of thatevent becomes

impossible, and notbefore.

(Section 33)

Contractscontingent upon

non-happening of anuncertain future event

Happening of auncertain futureevent

If a contract iscontingent upon

as to how a personwill act at anunspecified time,

the event shall beconsidered to becomeimpossible when such

person does anything,which renders it impossiblethat he should so act withinany definite time, or otherwise than under further contingencies

(Section 32). (Section 34)


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If the contract iscontingent upon

at the expiration of thetime fixed, such event has not happened or

if, before the time fixed,such event becomesimpossible

when the time fixed hasexpired and such eventhas not happened, or,

before the time fixedexpired, if it becomescertain that suchevent will not happen

Contractscontingent upon

the non-happening of aspecified event within afixed time may be enforced by law

the happening of aspecified uncertainevent within a fixed time become void

if

Agreement s arevoid when

They arecontingent onimpossible events,

Whether or not the fact isknown to the parties at thetime of making the contract

(Section 35 para I) (Section 35 para II)


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Q UASI CONTRACTS(Certain R elations resembling those created by contracts)

[Sections 6872]

Quasi Contracts are so called because theobligations associated with such transactionscould neither be referred as tortious nor contractual, but are still recognised asenforceable, like contracts, in Courts.

According to Dr. Jenks, Quasi-contract is asituation in which law imposes upon oneperson, on grounds of natural justice, anobligation similar to that which arises from atrue contract, although no contract, express or

implied, has in fact been entered into by them.


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Kinds of Quasi Contract

Supply of Necessities ( section 68) Payment by an Interested Person( section 69) Obligation to pay for Non-gratuitous acts( section 70) Responsibility of Finder of Goods ( section 71) Mistake or Coercion( section 72) Doctrine of Quantum Meruit ( as much as Merited)


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Q uantum Meruit Qua ntum meruit means as much as earned or as much

earned. A contract may come to end bybreach of contractcontract becoming void or

Voidable contract avoided by party.In such case, if a party has executed part of contract, he isentitled to get a proportionate amount i.e. as much as earnedby him.T his is not by way of damages or compensation for loss. - -T he principle is that even when contract comes to a prematureend, the party should get amount proportional to the workdone/services provided/goods supplied by one party. Oneparty should not get enriched at the cost of other.


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Att t d P f T d


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Attempted Performance or T ender It is an offer of performance by the promisor inaccordance with the terms of contract.

If the promisee does not accept performance, thepromisor is not responsible for the non performance,nor does he thereby lose his rights under thecontract.Valid T ender conditions

a) Unconditionalb) It must be in totalityc) It must be by the person in position and willing to

perform the promise

d) with in due time and placee) T ender of G oods-reasonable time for inspectionf) Incase of money- valid legal tender g) If there are multiple promisee- it can be made to any

one of them


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R eciprocal promises:Promises which form the consideration or part

of the consideration for each other are calledreciprocal promises.W ho can perform:

Promisor, AgentBy joint promisor

W ho can demand performancei) Promisee and on event of death his legal

representative

ii) Multiple promisee, all of them


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T ime and Place of performance T ime is the Essence of Contract

Appropriation of Payment( section 59)a) T he debtor has, at the time of payment, the

right of appropriating the payment

b) In default of debtor, the creditor has theoption of election

c) In default of either, law will allow the

appropriation of debts in order of timeR ule in Claytons Case(1816) 1 Mer. 572Rule in re H a llett s E s t a te c as e


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ASSIGNMENT OF CONTRACTS Assignment means transfer. W hen a party to a

contract transfers his right, title and interest inthe contract to another person or other persons,he is said to assign the contract.

Assignment of a contract can take place byoperation of law or by an act of the parties.


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SU B SE Q UENT IMPOSSI B ILITY


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SU B SE Q UENT IMPOSSI B ILITY(W hen does Contract Become Void?)1. By Destruction of subject matter of the contract.

2. By the death or disablement of the parties.3. By subsequent illegality.4. By declaration of war.5. By non-existence or non occurrence of a particular state of things.6. Difficulty of performance does not amount to impossibility.7. Commercial impossibility does not render a contract void.8. Strikes, lock-outs and civil disturbances do not terminatecontracts unless provided for in

the contract.9. Failure of one of the objects does not terminate the contract.10. Non-performance by the third party does not exonerate thepromisor from his liability.


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Consequences of B reach of Contract

Compensation is payable for breach of contract.Penalty is also payable if provided incontract.Breach of contract may be actual or anticipatory.


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Principles of Compensation and Damages

Following points are important:Compensation for loss or damage is payable.Since the word used is compensation, punitivedamages cannot be awarded.

T hese should be in usual course or known toparties i.e. both parties must be awareNo compensation for remote and indirect loss or damageSame principle applies to quas i contr a ct also.


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G ENE R AL DAMA G ES G eneral damages are those which result from

direct and proximate consequences frombreach of contract. Normally, what can beawarded is compensation for loss or damagewhich can be directly or proximately attributed tothe breach of contract.One way of assessing damages is the differencebetween the contract price and the market priceon date of breach of contract, plus reasonableexpenses incurred by him on account of thebreach plus cost of suit in court of law.


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CONSE Q UENTIAL LOSS ORSPECIAL DAMAGE

Special damages or consequential damages arise due toexistence of special circumstances. Such damages canbe awarded only in cases where the specialcircumstances were foreseeable by the party committing

the breach or were specifically known to the party.Consequential losses like loss of profit due to breach,which may occur indirectly due to breach cannot benormally awarded unless there are specialcircumstances which parties were aware. Loss of profit

can be awarded only in cases where seller could haveforeseen those losses and arose directly as result of breach.


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P R OMISEE SHOULD T AKE S T EPS T OMIT IG AT E T HE LOSS O R DAMAG E

Explanation to section 73 specifically providesthat in estimating loss or damage, the meansavailable for remedying the inconveniencecaused by breach of contract shall be taken intoaccount.T hus, promisee should take all reasonable stepsto mitigate the losses e.g. if promisor does notsupply goods, he should make efforts to procurefrom alternate sources may be even at higher price, to reduce his losses arising out of breachof contract .


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Contract of Indemnity

A contract by which one party promises to savethe other from loss caused to him by the conductof the promisor himself, or by the conduct of anyother person, is called a contract of indemnity.

I llus tr a tion - A contracts to indemnify B against theconsequences of any proceedings which C maytake against B in respect of a certain sum of 200rupees. T his is a contract of indemnity. [section124].

Promisor= Indemnifier Promisee= indemnity holder Indemnity may be express or implied


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Contract of Guarantee

A contract of guarantee is a contract to perform thepromise, or discharge the liability, of a third person incase of his default.T he person who gives the guarantee is called the

surety; the person in respect of whose default theguarantee is given is called the principal debtor, andthe person to whom the guarantee is given is called thecreditor. A guarantee may be either oral or written.[section 126]. - - [Person giving guarantee is also called

as guarantor. However, Contract Act uses the wordsurety which is same as guarantor]. - - T hree partiesare involved in contract of guarantee. Contract betweenany two of them is not a contract of guarantee. It maybe contract of indemnity.

Essentials Characteristics of G uarantee


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Essentials Characteristics of G uarantee1 Concurrence of parties

2. Primary liability on some oneKinds of G uaranteea. Specific G uarantee

b. Continuing G uaranteeR ights of Suretyi) As against the creditor: Before payment of the

principal debt, a surety can file a suit for declaration that the principal debtor shall bethe person liable to pay the amount.

ii) On payment of the principal debt the surety steps in


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ii) On payment of the principal debt, the surety steps into the shoe of the creditor

As Against debtor: T he surety, upon payment or performance of all that is liable for, is invested with allthe rights which the creditor has against the Principaldebtor ( Sec:145) He is also entitled to recover fromthe principal debtor what ever sum he has rightfullypaid under gurantee, but not sums which he has paidwrongfully.

As Against Co-sureties: Equality of burden and benefit

Discharge of SuretyBy revocationBy invalidation of ContractBy conduct of creditor

B il


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B ailmentBailment means act of delivering goods for a specified purpose

on trust.In bailment, possession of goods is transferred, but property i.e.ownership is not transferred.

A bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when thepurpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them.

T he person delivering the goods is called the bailor. T heperson to whom they are delivered is called the bailee. - -Explanation : If a person already in possession of the goods of another, contracts to hold them as a bailee, he therebybecomes the bailee, and owner becomes the bailor, of suchgoods, although they may not have been delivered by way of bailment. [section 148].


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Pledges

Pledge is bailment for security. Commonexample is keeping gold with bank/moneylender to obtain loan. Since pledge isbailment, all provisions applicable to

bailment apply to pledge also. In addition,some specific provisions apply to pledge.T he bailment of goods as security for payment of a debt or performance of apromise is called pledge. T he bailor is inthis case called the pawnor. T he bailee iscalled the pawnee. [section 172].

C f A


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Contract of AgencyT he principles of contract of agency are

(a)Excepting matters of a personal nature, what aperson can do himself, he can also do it throughagent (e.g. a person cannot marry through an agent,

as it is a matter of personal nature)(b)A person acting through an agent is acting himself,

i.e. act of agent is act of Principal.Since agency is a contract, all usual requirements of a valid contract are applicable to agency contractalso, except to the extent excluded in the Act. Oneimportant distinction is that as per section 185, noconsideration is necessary to create an agency.


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Laws of Contract 555

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Transcript of Laws of Contract 555