Indian Contract Act, 1872 (2)

7/28/2019 Indian Contract Act, 1872 (2)

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Consideration, Free consent , Capacities of

Parties


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Group Members

Kunal Jadhav (M1225)

Manasi Bunde (M1227)

Mansi Sata (M1229)

Nikhil Tambe (M1231)

Nisha Raina (M1233)

Pankaj Shivde (M1235)


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Consideration defined.

Section 2(d) of the Indian Contract Act, 1872

defines consideration as when at the

desire of the promisor, the promisee or

any other person has done or abstainedfrom doing, or does or abstains from

doing, or promises to do or to abstain

from doing, something such act orabstinence or promise is called a

consideration for the promise.


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Rules Governing Consideration

Simple contracts must be supported by

consideration.

Consideration may move at the desire of thepromisor.

It must have some value.

Consideration may move from the promisee or anyother person.


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Rules

Consideration must be defined as benefit or

detriment.

Consideration must be defined as past,

present, or future consideration.

Consideration must not be adequate, but it

must be sufficient. Consideration must be legal.


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Privity Of Contract

The Doctrine of Privity implies that, ingeneral a person who is a third party, van

neither sue nor be sued on the contract. Exceptions:

- Trust or charge

- Assignment

- Family settlements & MarriageSettlements

- Agency


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Validity of Agreements without Consideration

If made out of natural love and affection

and if:

- Made in writing

- Registered- Promise to pay a debt barred by

limitation law


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FREE CONSENT

DEFINITION:

According to section 13 of the act two or morepersons are said to consent when they agree uponthe same thing in the same sense. The whole

agreement must be consented to in the same sense.

ADDIDEM:When both parties agree upon the same thing in the

same sense, then they are said to be ad-idem.Where both the parties are not ad-idem then there isno consent.


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FREE CONSENT WHEN?

Section 14 of the act proceeds to define free consent asunder:

Consent is said to be free when it is not caused by-

1. Coercion (sec.15)

2. Undue influence (sec.16)

3. Fraud (sec.17)

4. Misrepresentation (sec.18)

5. Mistake (sec.20-22)


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COERCION

Coercion is committing ,or threatening to commit,any act forbidden by the Indian penal code, or theunlawful detaining , or threatening to detain anyproperty to any person with the intention of

causing any person to enter into an agreement.

EFFECTS OF COERCION:

Contract voidable at the option of the party.

Money or anything must be returned if paid.

Cancellation of contract in reasonable time underthe Specific Relief Act,1963.


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FRAUD (Section 17)Includes any of the following acts committed by

a) A party to a contract

b) With his connivance

c) By his agent

With intent to deceive another party or his agent, or to

induce him to enter into the contract.

ESSENTIALS OF FRAUD:

1.There must be an intention to deceive.

2.Act must be done by a party to a contract, or by hisagent.3.Suggestio falsi

4.Suppressio veri

5.There must be false promise.

6.Cause injury to the person deceived.


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MISREPRESENTATIONA statement made which In fact is not true, under thebelief that it is true, is misrepresentation.

According to sec.18 of the act it means and includes-

A positive assertion of what is not true, even thoughthe person making might believe it to be true.

Committing any breach of duty, by which the

person committing it gains an advantage to theprejudice of other.

Causing party to the contract to commit a mistake.


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If there is no intention to deceive, it is misrepresentation.

If there is intention to deceive, it is fraud.

EFFECTS OF MISREPRESENTATION:

Party whose consent is caused can avoid the contract.

Cancel the contract within reasonable time.

WHEN THE CONTRACT IS NOT VOIDABLE???

If the party whose consent was caused, had the means of discovering the

truth with ordinary diligence.


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MISTAKE

An erroneous belief about something is called mistake.

When agreement is entered into under mistake, consent isnot free.

Two types of mistakes:

1) Mistake of fact:

a. Bilateral or mutual mistake

b. Unilateral mistake.

2) Mistake of law:

a. Mistake as to a law in force in india.

b. Mistake as to law not in force in india


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MISTAKE OF FACT:

When both the parties to an agreement are under mistakeas to a matter of fact essential to the agreement, the

agreement is void.

MISTAKE OF LAW:

Section 21 of the act provides that a contract is not

voidable because it was caused by a mistake as to any law

in force in India; but a mistake as to a law not in force in

India has the same effect as the mistake of fact.


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Capacity to Contract

Person who are incompetent to

contract.

(a) Minor

(b) Person of unsound mind, and(c) Person disqualified by any law to

which they are subject.


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Minor Person

Person under 18 are considered minor. Minor entered into agreement is void.

No estoppel against minor.

Liability for necessaries. Minor cannot get into partnership with any firm.

Contract by minor and adult jointly.


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Person of unsound mind

Definition of unsound mind.

Usually unsound mind but occasionally of sound

mind.

Usually sound mind but occasionally of unsoundmind.

Unsoundness of mind may arise from variousreasons.


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Person disqualified by any law

to which they are subject

Alien enemies.

Foreign sovereigns and ambassadors.

Convict.

Insolvent.

Pardanashin women.

Married women


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Documents

Indian Contract Act, 1872 (2)