Indian Contract act ,1872.pptx

7/31/2019 Indian Contract act ,1872.pptx

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Contract

A CONTRACT is an agreement creatingand defining obligations between theparties

An agreement between two or morepersons which is intended to beenforceable at law & is constituted by the

acceptance by one party of an offer madeto him by the other party to do or toabstain from doing some act.


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COMPONENTS OF CONTRACT

An AgreementIt involves proposal or offer by one party and

acceptance of the same by the other party.

AGREEMENT = OFFER + ACCEPTANCE

Enforceable at law

An agreement to become a contract must give rise to legal

obligations. It must create legal relations and not merely socialor domestic relations.

CONTRACT = AGREEMENT+ENFORCEABILITY AT LAW


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DIFFERENCE BETWEEN

AGREEMENT AND CONTRACT

Contract1. Offer and acceptance togetherconstitute an agreement.

2. Agreements may not create

any legal obligation. Allagreements are not contracts.

3. An agreement is a broader

concept.

4. Agreement is not concludingor a binding contract

Agreement1. Agreement and enforceabilitytogether constitute a contract.

2. A contract creates legal

obligation. All contracts areagreements.

3. A contract is a narrower

concept.

4. Contract is concluding andbinding


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Kinds of agreement

1. Valid agreement: An agreement enforceable by law

2. Void agreement: The agreement has no legal existance.

3. Voidable agreement: a voidable agreement is one which is

enforceable by law at the option one or more of the

parties thereto but not at the option of the others.

4. Unenforceable agreement: An unenforceable agreement

is valid but is incapable of proof because of some

technical defect.

5. Illegal agreement: It is void-ab-initio.


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Kinds of Contract

1. Voidable contract: A contract is voidable when one ofthe parties to the contract has not exercised his freeconsent.

2. Void Contract: A contract which ceases to be

enforceable by law3. Unenforceable Contract: An unenforceable contract is

valid but is incapable of proof because of sometechnical defect.

4. Executed Contract: The contract where both partieshave performed their obligation.

5. Executory Contract: The contract where the parties

are yet to perform his share of obligation


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Kinds of Contract

6. Express contract: When the terms of contract areexpressed in writing and spoken words.

7. Implied Contract: The term of a contract areinferred from the conduct or dealings between theparties.

8. Quasi contract: Certain relations resembles thosecreated by contract.

9. Contingent contract : A contingent contract is onein which a promise is conditional and the contractshall be performed only on the happening of somefuture event.


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Kinds of Contract

10. Contract of record: A contract of record is one

which is taken on the records of a court.11.Speciality Contract: A specialioty contract is a

contract which is in writing , signed , sealed and

delivered by the parties. It is also called a contractunder seal.

12.Simple Contract:A contract which is not under a

seal.13.Stautory Contract: When all the terms and

conditions of a contract are statutory.


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ESSENTIALOF A CONTRACT

Proposal

Acceptance Consideration

Capacity to contract

Free consent An agreement

Writing and registration

Legal relationship Certainty

Possibility of performance

Enforceable by law


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ESSENTIALOF A CONTRACT

Proposal

Acceptance Consideration

Capacity to contract

Free consent An agreement

Writing and registration

Legal relationship Certainty

Possibility of performance

Enforceable by law


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PROPOSAL OR OFFER

According to Sec.2(a), when a person

made a proposal, when he signifies to

another his willingness to do or to

abstain from doing something.


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Types Of Offer

Express offer

Implied offer

Specific offer

General offer

Cross offer

Counter offer Standing offer


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Types Of Offer

Express offer - When offer is given to anotherperson either in writing or in oral.

Implied offer - When offer is given to anotherperson neither in writing nor in oral.

Specific offer - When offer is given to a specificperson.

General offer - When offer is given to entire worldat a large.


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Types Of offer

Cross offer -When both the persons are makingidentical offers to each other in ignorance ofothers offer.

Counter offer - When both the persons aremaking offers to each other which are notidentical in ignorance ofothers offer.

Standing offer - An offer which remainscontinuously enforceable for a certain period oftime.


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Legal rules for Offer

Offer must be given with an intention tocreate a legal relationship.

Offer must be definite.

There is a clear cut difference between

offer, invitation to offer.


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According to sec.2(b), when a

person made a proposal to

another to whom proposal is

made, if proposal is assented

there to, it is called acceptance.


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Acceptance must be given as per the modeprescribed by the offerer.

Acceptance must be given before the lapseof time or within reasonable time.

Acceptance must be unconditional.

Acceptance may be given by any person incase of general offer.


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Acceptance may be given by any specificperson in case of specific offer.

Acceptance must be communicated. Mental acceptance is no acceptance oracceptance must not be derived from silence.

Acceptance must not be precedent to offer.


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CONSIDERATION


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According to sec 2(d) consideration is defined as

when at the desire of the promisor , or 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 an act or

abstinence or promise is called a consideration for the

promise .

CONSIDERATION


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1)It must move at the desire of the promisor.

2)It may move by the promisee .

3)It must be past ,present or future .

4)It need not be adequate .

5)It must be real .

6)It must not be illegal , immoral or opposed to

public policy .


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TYPES OF CONSIDERATION

Executed consideration

Executory consideration

Past consideration Unreal consideration

Unlawful consideration


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STRANGER TO CONTRACT

It is general rule of contract that only parties to

contract can sue & be sued on that contract . Thisrule is known as Doctrine ofprivity i.e relationshipbetween the parties to contract .

Exceptions

1)A trust or a charge .2)Marriage settlement , partition or other family

arrangements .

3)Estoppel(rule of evidence eg: minors age)

4)Assignment of contract (gift)

5)Contract with agent .

6)Covenants running with land (trust).


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Following are the condition for a personto enter into contract

He must be major

He must be sound mind He must not be disqualified by any

other law.


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a) Minor

b) unsound person

c)others

i.e alien enemy,

insolvent,

convict,

company/corporation against MOA / AOA .


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According to Indian majority act sec(3)minor is defined as any person under theage of 18 years . In the following cases aperson is said to be minor if he doesnot complete the age of 21 years

a) any person under the guardian & wardsact ,1890

b)any person which comes undersuperintendence of law/legal representative


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An agreement with minor is void ab

initio

Minor can be promisee

Minor cannot ratify his agreement on

attaining the age of majority


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Minor as a shareholder , Minor as a partner,

Minor as a agent , Minor as a member of trade union ,

No estoppel against minor ,

He can plead his minority ,

He can enter into contract for hisnecessary

On behalf of minor his parents ,

guardian or any other person canenter into void contract to acquiremovable property.


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According to sec(12) a person

generally sound , occasionallyunsound can enter into a contract

when he of sound mind

A person generally unsoundoccasionally sound can enter onto

contract when he is sound mind .


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1)Lunatic ,

2)Idiots ,3)Drunken or intoxicated persons .


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FREECONSENT


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According to Sec 10 of the Indian Contract Actone of the essentials of a valid contract is FreeConsent

Sec 13 defines consent as Two or morepersons are said to consent when they agreeupon the same thing in the samesense.According to Sec 14, consent is said tobe free when it is not caused by:

1.Coercion2.Undue influence3.Fraud4.Misrepresentation

5.Mistake


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According to Sec 15 coercion meansCommitting or threaten to commit any actforbidden by Indian Penal Code 1860 or unlawfuldetaining or threating to detaining any other

persons property with a view to enter into anagreement. It is immaterial whether the IPC is or isnot in force where the coercion is employed

The threat amounting to coercion need notnecessarily be from a party to contract , it mayalso proceed from a stranger to the contract.


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CoersionConsent is said to be caused by coercion when obtained by:

1.The committing or threatening to commit any act forbiddenby the Indian Penal Code

2.The unlawful detaining or threatening to detain any

property

It is not important whether the IPC is or not in force wherethe coercion is taking place.

For example A and B , both Indians are on a voyage trip to

America when the ship is on the Atlantic ocean B threatens a

that if doesnt transfer his property to Bs name then he will

push him into the water.now though the IPC is not in force on

the Atlantic ocean it is still considered a coercion.


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Sometimes a party is compelled to enter into a contract

against his will as a result of unfair persuasion by the other

party.

Section 16 defines undue influence as follows

A contract is said to be induced by undue influencewhere

the relations subsisting between the parties are such that one

of the parties is in a position to dominate the will of the other

and uses that position to obtain an unfair advantage over the

other


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1. There are two persons

2. The relations are satisfying between them

3. One must dominate the other

4. There must be unfair advantage

5. It involves the moral pressure


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UNDUE INFLUENCE

There is an undue influence between the following

persons:-Principal and agent

-Superior and and subordinate

- Doctor and patient

- Father and son

- Teacher and student

- Promoter and company

- Master servant- Spiritual advisor and devotee


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Exceptions to undue influence

Among the following relations there is no undue

influence

1.wife and husband

2.landlord and tenant

3.debtor and creditor


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According to Sec 17 fraud means and includes any of those actscommitted by a party to contract or with his connivance or by hisagent with an intent to deceive or induce a person to enter a

contract:

1. The suggestion that a fact is true when it is not true and theperson making it does not believe in it to be true

2. The active concealment of a fact by a person having

knowledge or belief of the fact

3. A promise made without any intention of performing it

4. Any other act fitted to deceive

5. Any such act or omission as the law specially declares to befraudulent


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The essentials of fraud are:1. There must be a representation or assertion

and it must be false2.The representation must relate to a fact

3.The representation must have been made

with the intention of inducing the other partyto act upon it

4.the representation must have been made

with a knowledge of its falsity

5.the other party must have subsequently

suffered some loss


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What is not fraud

Negligence

IgnoranceWaiver

No deceive is done


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Positive assertion of what is not true, though he believes it

to be true.According to Sec 18 there is misrepresentation:

1. When a person positively asserts a fact is true when hisinformation does not warrant it to be so, though he

believes it to be true2. When there is any Breach of duty by a person which

brings an advantage to the person committing it bymisleading another to his prejudice

3. When a party causes however innocently the other partyto the agreement to make a mistake as to the substanceof the thing which s the subject of the agreement


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DIFFERENCE BETWEEN

MISREPRESENTATION AND FRAUD

MISREPRESENTATION

1. No intention to deceive.

2. A false statement without

the intention to deceive.

3. The person believes it to

be true .

4. It makes contract voidablewith the consent of

affected party.

FRAUD

1. Intention to deceive

2. Deliberate statement to

deceive

3. The person knows its not

true.

4. Voidable contract and itgives a right to and

independent action


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MISTAKE

An erroneous belief about something is called

mistake.

Mistakes are of 2 types-

1. Mistake of fact

2. Mistake of law


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If the object of an agreement is the

performance of an unlawful act, the

agreement is unenforceable.

For a contract to be valid only if the object and

the consideration should be legal.

The word object means purpose or design.

UNLAWFUL OBJECT

Void Agreement


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Void Agreement1. Agreement made by incompetent persons

2. Agreement made under mutual mistake

3. Agreement made under mistake not enforceable in India4. Agreement made by consideration which is unlawful

5. Agreement made without consideration

6. Agreement in restraint of marriage

7. Agreement in restraint of trade8. Agreement in restraint of legal proceedings

9. Agreement the meaning of which is uncertain

10. Agreement by way of wager

11. Agreement to do an impossible act12. Agreement to do an act which subsequently becomes impossible

13. Agreement contingent on an impossible event

14. Agreement contingent on an uncertain future event if the event

becomes impossible.


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There are two persons.

There must be an uncertain future event.

No control over the event by both the parties.

There must be a reciprocal promise.

Others are not interested in the contract.


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Wager Contract (Sec 30)

A wager contract is a contract in which one

person promises to another to pay money or

moneys worth by the happening of an

uncertain future event in consideration forother persons promise to pay if the event

does not happen.

E ti l El t f W i


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Essential Elements of Wagering



No control over the event by both the parties.

There must be a reciprocal promise.

Others are not interested in the contract.


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CONTINGENT

CONTRACTS


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Contingent Contract(sec 31)

A contingent contract is a contract to do or not

to do something, if some event, collateral to

such contract, does or does not happen. It is

also called a conditional contract.

E ti l El t f C ti t


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Essential Elements of a Contingent

Contract:



Some control over the event but not absolute

control. There is no reciprocal promise between the

persons.

Others may be interested in the contract.

It is a valid contract.


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Rules Regarding Contingent Contracts

Contingent contracts dependent on happening of an uncertainfuture event cannot be enforced until the event hashappened.( Sec 32 )

Where a contingent contracts is to be performed if a particularevent does not happen, its performance can be enforced whenthe happening of that event becomes impossible.( Sec 33 )

If a contract is contingent upon how a person will act at anunspecified time, the event shall be considered to becomeimpossible when such person does anything which renders it

impossible that he should so act within any definite time, orotherwise than under further contingencies.( Sec 34)


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Contingent contracts to do or not to do

anything, if a specified uncertain event

does not happen within a fixed time, maybe enforced if the event does not happen

or its happening becomes impossible

before the expiry of that time.( Sec 35 )

Contingent agreements to do or not to do

anything, if an impossible event happens,are void, whether or not the fact is known

to the parties. (Sec 36)

Differences Between a Wagering


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g g

Agreement and a Contingent

Agreement:

Wager agreement

There is a reciprocal

promise. It is a void contract.

Others are not

interested in the

contract.

It is contingent in

nature.

Contingent agreement

There is no reciprocal

promise. It is a valid contract.

Others are interested in

the contract.

It may not be wagering

in nature.

Documents

Indian Contract act ,1872.pptx