CONTRACT

CONTRACT

Under section 2(h) of the Indian Contract Act, 1972, “An agreement enforceable by law is a contract”.

A contract must have :- (a) an agreement (b) the agreement should be enforceable

by law.

Offer +Acceptance Contract

Agreement : every promise and every set of promises forming the consideration for each other.

What is a Promise? A proposal when accepted becomes a promise

example:- “X” offers to sell his car to “Y” for Rs. 1,00,000. “Y” accepts this offer. This offer after acceptance becomes promise and this promise is treated as an agreement between “X” and “Y”

Enforceable by law: an agreement is regarded as a contract when it is enforceable by law.

A legally enforceable contract requires:1. An Offer (I’ll mow your lawn this weekend, if you pay me $30)

2. An Acceptance (You’ve got a deal)

3. Consideration (The value received and given – the money and the lawn mowed)

Thus, every contract is an agreement, but every agreement is not a contract.

Essential elements of contract:

i. Valid offer and its proper acceptanceii. Intention to create legal relationshipiii. Free consentiv. Capacity or competency of partiesv. Lawful consideration

What is Proposal (Offer)?

'When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal’.

Promisor PromiseePerson making the proposal or offer is called promisor and the

person accepting it is called the Promisee.

Offer

Communication of Proposal An offer can be made by any act which has

the effect of communicating it to another person.

Offer types:1. Express offer: an offer which is made by

words spoken or written.2. Implied offer: an offer which is made by

conduct . Eg. A bid at an auction is an implied

offer to buy.

An offer may be:1. Specific offer: made to one person or group of

people. Then only that particular person or group of people can accept.

2. General offer – made to the whole world at large, particularly seen in the cases of rewards and other public advertisements. Contract made only with that person who comes forward and performs the conditions of the proposal.

general offer of continuing nature- a general offer will be open for acceptance by any number of person until it carries a closing date, but where an offer requires some information about a missing thing, it is closed as soon as the first information comes in.

General offer case: Carlill V Carbolic Smoke Ball Company (1893)

Mrs Carlill acquired a smoke ball from her chemist. The smoke ball failed to prevent her from getting influenza (despite its use as directed from November to January), Mrs Carlill claimed her £100. When the company refused to pay she sued them. It was held that Mrs Carlill could successfully recover the £100. An offer to the whole world was possible, becoming a contract with any person(s) who accepted the offer before its termination. Mrs Carlill had accepted by her actions, and had turned the offer to the world into a contract with her personally. The Carbolic Smoke Ball Company were therefore bound to give her the money promised in the advertisement.

Acceptance

According to Section 2(b): When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.

A proposal when accepted becomes a promise.

Communication of Acceptance By external manifestation or overt act- assent

should be signified. Signified through any act. Eg. Fall of hammer in an auction.

Acceptance by conduct Communication to offeror- acceptance must be

communicated to the offeror. Communication from acceptor When communication not necessary

Eg. Announcement to pay reward for discovering a lost thing.

When no manner is prescribed Eg. E-mail.

When contract is concluded?Communication is complete when posted-

according to Adams Vs Lindsell case Complete contract arises on the date when the

letter of acceptance is posted in due course.However, According to Indian contract act,

in section 4- when a letter of acceptance is posted and is out of the power of the acceptor, the proposer becomes bound. But the acceptor will become bound only when the letter is received by the proposer.

Conditions of valid acceptance

1. Absolute and unqualified 2. Manner in which acceptance is to be

given3. Communication4. By whom5. To whom6. Time limit

1. Absolute and unqualified:- according to section 7(1) of Indian contract act , “in order to convert a proposal into a promise, the acceptance must be absolute and unqualified”. i.e. offer must be accepted as it is without variation or condition.

Example: x offered to sell 2 plots of land to y at certain price. Y accepted the offer for 1 plot. It was held that the acceptance was not valid because it was not for the whole of the offer. [ bhawan vs sadula].

2. Manner- According to section 7(2) of Indian contract act 1872, the acceptance of an offer must be given in the following manner.

(A) If the proposal does not prescribe the manner in which it is to be accepted.

The offer must be accepted in some usual and reasonable manner

(B) If the proposal prescribes the manner in which it is to be accepted.

The offer must be accepted in the prescribed manner.

3. Communication – The acceptance is said to be complete only when it has been communicated to the offerer.

Example: x offered to supply coals to railway company. The manager of the company accepted the offer and put it in the drawer of his table and forgot all about it. It was held that no contract was made because acceptance was not communicated .

[ Brogden Vs Metropolitan railway Co.]

4. By whom- acceptance must be communicated by the offeree himself or by a person who has the authority to accept.

5. To whom- Acceptance must be communicated to the offerer himself.

Example: F offered by a letter to buy his nephew’s horse for $30 saying “if I hear no more about him, I shall consider the horse mine.” The nephew sent no reply at all but told B his auctioneer, not to sell that particular horse as he intended to sell that horse to F. B sold the horse by mistake. It was held that F will not succeed because his nephew had not communicated acceptance to him. [ Felthouse Vs Bindley case]

Contracts over telephone/ telex/ fax- These type of contracts is treated on the same principal as an oral agreement between 2 parties.

Revocation of Offer and Acceptance

Revocation means ‘ taking back’ or ‘withdrawal’ According to section 5 of the Indian Contract

act, “an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards”. i.e. before the letter of acceptance is duly posted by the acceptor.

Example: x of Agra offers by a letter dated 1st January sent by post to sell his car to Y of Delhi for Rs. 100000. Y accepts the offer on 7th Jan at 1pm. By letter sent by post. Here X may revoke his offer at any time before 1 pm. On 7th Jan. but not afterwards.

Note Revocation must always be expressed. Revocation must move from the offerer

himself or a duly authorized agent. Offer cannot be revoked if the letter of

acceptance is lost or delayed in transit.

Revocation of acceptance

English law says an acceptance once made is irrevocable whereas Indian law states that acceptance is generally revocable. An acceptor may cancel his acceptance by a speedier mode of communication which will reach earlier than the acceptance itself.

However in case the letter of acceptance and telegram containing revocation of acceptance are delivered to the proposer at the same time. Then the formation of contract depends upon the fact which one is read first by the offerer. Generally assumed that telegram is read first.

CONSIDERATION

Definition : Pollock“Consideration is the price for which the promise of the other is bought and the promise thus given for value is enforceable”

Example: A agrees to sell his car to B for Rs.1,00,000. Car is the consideration for B and price is the consideration for A

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According TO Section 2(d)When 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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ANALYSIS OF DEFINITION

An act i.e.. Doing of somethingThe act must not however be one is under a legal duty to perform.

A promises B to guarantee payment of price of the goods which B sells on credit to C. Here selling of goods by B to C is consideration for A’s promise

An abstinence or forbearanceHere consideration is in a negative form.

A promises B not to file a suit against him if he pays him Rs.500. The abstinence of A is the consideration for B’s payment

A return promise A agrees to sell his horse to B for Rs.10,000. Here B’s promise to pay the

sum of Rs.10,000 is the consideration for A’s promise to sell the horse and A’s promise to sell the horse is the consideration for B’s promise to pay the sum of Rs.10,000

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Need for consideration

Gratuitous or voluntary promises are often made rashly and without due deliberation.

If there is “something for nothing” it supplies no means and not affords any remedy to compel the performance of an agreement made without sufficient consideration

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Legal rules as to consideration

1. It must move at the desire of the promisorIf it is done at the instance of a third party or without the desire of the promisor, it will not be a good consideration

Example: A sees B’s house on fire and helps in extinguishing it. B did not ask for A’s help.

A cannot demand payment for his service.

CASE : Durga Prasad Vs. BaldeoB spent some money on the improvement of a market at the desire of the Collector of the District. In consideration of this D who was using the market promised to pay some money to B.Held, the agreement was void being without Consideration as it had not moved at the desire of D

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2. It may move from the promisee or any other personKNOWN AS THE

“DOCTRINE OF CONSTRUCTIVE CONSIDERATION”

Under Indian Law, Consideration may move from the promisee or any other person, i.e. even a strangerThis means as long as there is consideration for a promise it is immaterial who has furnished it but the stranger to consideration will be able to sue only if he is a party to the contract

CASE : Chinnayya( Aunty) Vs. Ramayya(Daughter)

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3. It may be an act, abstinence or forbearance or a return promise

It should be noted that the following are the good consideration for a contract:

Forbearance to sue Compromise of a dispute claimComposition with creditors

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a. Forbearance to sue

If a person who could sue another for the enforcement of a right agrees not to pursue his claim, this constitutes a good consideration for a promise by the other person. This results in a benefit to the person not sued and a detriment to the person who could sue.

CASE : Debi Radha Rani Vs. Ram Dass D is ready to sue her husband for maintenance allowance. On husband’s agreeing to pay her a monthly allowance by way of maintenance, she forbears to sueHeld, the wife’s forbearance to sue amounts to consideration for the husband's agreement for payment of maintenance allowance

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b. Compromise of a disputed claim:

The claim should be reasonable and the person claiming should honestly believe that it is a valid claim. He should also act bona fide (genuine) If it turns out that the claim was frivolous (playful) and the claimant was not acting bona-fide, the other party can claim compensation.

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c. Composition with creditors

A debtor who is financially embarrassed may call a meeting of his creditors and request them to accept a lesser amount in satisfaction of their debt.

If the creditors agree to it, the agreement is binding upon the debtor and the creditors and this amounts to a compromise of the claims of the creditors

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4. It may be Past, Present or Future (sec (d)):

Past considerationWhen consideration by a party for a present promise was given in the past i.e. before the date of the promise, it is said to be past considerationE.g. : A renders some service to B at latter’s desire. After a month B promises to compensate A for the services rendered to him. It is past consideration

Present considerationWhen consideration is given simultaneously with promise, at the time of the promise, it is said to be present considerationEg : Cash Sale

Future considerationWhen consideration from one party to the other is to pass subsequently to the making of the contract, it is future contractEg : D promises to deliver certain goods to P after a week; P promises to pay the price after a fortnight. The promise of D is supported by the promise of P

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5. It need not be adequate

“Something in return” need not necessarily equal to value of “something given”Case : HAIGH VS. BROOKS

B promised to pay certain bills if H would hand over a guarantee to him. H handed over the guarantee but it turned out to be unenforceable. Held, as B received what he had asked for there was consideration for his promise, although guarantee was of smaller value than he had supposed

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6. It must be real and not Illusory

:Physical impossibilityIt must be real, competent and of some value n the eyes of the law. There is no real consideration in the following cases

Hall Vs. CazenoveA promises to put life into B’s dead wife should B pay him Rs.500. A’s promise is physically impossible of performance

Legal impossibilityHarvey Vs. Gibbons

A owes Rs.100 to B. He promises to pay Rs.20 to C, the servant to B, who in return promises to discharge A from the Debt. This is legally impossible because C cannot give discharge for a debt due to B, his master

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Continued…

Uncertain consideration A engages B for doing a certain work and promises to

pay a reasonable sum. There is no recognized method of ascertaining the “reasonable” remuneration. The promise is unenforceable as consideration is uncertain.

Illusory consideration Stilk Vs. Myrick

Two of the crew of a ship deserted it half way through a voyage. The captain thereby promised to divide the salary of the deserters among the rest of the crew if they worked the vessel home. Held, they could not recover the amount as the consideration was illusory. They were already under an obligation to bring the vessel home.

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7. It must be something which the promisor is already bound to do.

Cases: 1.Chintamana vs. Kalu Raju(advocate) 2. Collins vs Godefroa( witness)

8. It must not be illegal, immoral or opposed to public policy.

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DOCTRINE OF PRIVITY OF CONTRACT

CASE:

B and C get into an agreement where B will write a Book for C and C will pay Rs.10,000 to A. B wrote a book for C but C failed to give the money to A.A is claiming to recover Rs.10,000 from C.

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CONSEQUENCES OF THE DOCTRINE OF PRIVITY OF CONTRACT

1. A person who is not a party to a contract cannot sue upon it even though the contract is for his benefit and he provided consideration.

2. A contract cannot confer rights or impose obligations arising under it on any person other than the parties to it. Thus, if there is a contract between A and B, C cannot enforce it.

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CASE : DUNLOP PNEUMATIC TYRE CO. LTD. VS SELFRIDGE & CO LTD.

S bought tyres from the Dunlop Rubber Co, and sold them to D, a sub-dealer, who agreed with S not to sell these tyres below Dunlop’s list price and to pay the Dunlop Co. $5 as damages on every tyre D undersold.D sold two tyres at less than the list price and there upon the Dunlop Co. sued him for the breach. Held, the Dunlop Co, could not maintain the suit as it was a stranger to the contract.

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EXCEPTIONS TO THE RULE THAT “ A STRANGER TO CONTRACT CANNOT SUE”

1. A trust or charge.

2. Marriage settlement, Partition or other family arrangements.

3. Acknowledgement or “estoppel”

4. Contracts entered into through an agent

5. Covenants running with the land.

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1. Trust or Charge:

CASE : M.K. RAPAI VS. JOHN,A.I.R.

A agrees to transfer certain properties to be held by T in trust for the benefit of B. B can enforce the agreement even though he is not a party to the agreement.

2. . Marriage settlement, Partition or other family arrangements:

CASE : SHUPPU AMMAL VS SUBRAMANIYAM

Two brothers, on a partition of joint properties, agreed to invest in equal shares a certain sum of money for the maintenance of their mother.

Held, she was entitled to require her sons to make

the investment.

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3.Acnowledgement or “estoppel”:

E.g.: A receives some money from T to be paid over to P. A admits of this receipt to P. P can recover the amount from A who shall be regarded as the agent of P.

4. Contract agreed into through an agent:

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5.Covenants running with the land: In cases of transfer of immovable property, the purchaser of land with notice that the owner of the land is bound by certain conditions of covenants created by an agreement affecting the land shall be bound by them although he was not party to the original agreement which contained the conditions or covenants.

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Exceptions to consideration under sec 25

Natural love and affection Past voluntary services

Time-barred debt

Completed gift

Capacity to Contract

Only a person:who is of the age of majorityof sound mind, andnot forbidden under any other law

Minor

Who is a Minor? What happens to a contract with or by a

minor?

Contract is void-ab-initio, i.e., neither the other party nor the minor can enforce.

Case law : Mohiri Bibi vs. Dharmdas Ghose.

Minor cannot be asked to refund the benefits received.

However, Minor can be a promisee/beneficiary. Minor cannot ratify even after attaining

majority. What about a situation where minor

represents to be of the age of majority?

Contract still void

If benefits received can be traced in the same or altered form, Minor liable to restore.

Minor liable for necessaries supplied to him or any loan for necessaries to him or to any of his dependants.

However, only properties of the minor, if any shall be liable.

Case: Raj Rani V Prem Adib

Mental Incompetence

Idiots Lunatics Intoxicated persons

Contract void-ab-initio except for necessaries as in the case of Minor.

Section 12

Person usually of unsound mind but occasionally of sound mind can make a contract when of sound mind.

Person usually of sound mind but occasionally of unsound mind cannot make a contract when of unsound mind.

(Inder Singh V Parmeshwardhari Singh)

Consent Means ( Sec 13)

Consent- two or more persons are said to consent when they agree upon the same thing at the same sense-

When is a consent said to be free?

When it is not made under Coercion (Sec15) When not made under undue influence

( Sec 16) When consent is not given under fraud (Sec

17) When it is not by misrepresentation ( Sec 18) When there is no mistake between the parties(

It can be only when there is a Mistake of fact and not mistake of Law (Secs 20-22)

Coercion –Sec 15

Act Prohibited under Indian Penal Code or Detention of property – Duress in English Law

Committing or threatening to commit any act under the Indian Penal Code

Unlawful detaining, threatening to detain, prejudice to any person or property

So that a person enter into an agreement E.g.. Threat to commit suicide, agree on some things so as to

avoid prosecution Voidable

Undue Influence -Sec 16

Some relations between the parties That relationship is of a dominating nature- or where the

person can use his will due to such position and Obtain an unfair advantage over the other party Real and apparent authority- or a fiduciary relationship or the mental capacity of the party is temporarily or permanently

affected due to age, illness, mental or bodily illness. Voidable

Income Tax authority or a Magistrate Doctor Patient, Creditor Debtor, Teacher -Pupil Guardian and Child- It should have a trust and

confidence relations so as not to exploit E.g. Solicitor buying the property or selling his property by under valuing or overvaluing

Mental Distress but not statutory compulsion or urgent need of money

Unconscionable Bargains not allowed Contracts with the pardanashin lady Unequal Bargain, Strindhan given as a security

by the wife when the husband is in debt Remedy-Recission of Contract allowed–Sec 19

A

Fraud- Sec 17

Act committed by a person, or his agent or under his connivance etc with the intent to deceive another party or his agent to induce him to enter into contract

Assertion of Facts without belief in their truth ( Derry V Peek) Active concealment- > But mere silence not fraud------> Until there is a duty to speak , > when silence is deceptive, > change the circumstances,> half truth Promise made without intention to perform Any other act which will deceive or declared to be

fraud------------------ Voidable

Misrepresentation- Sec 18

Positive assertion- Not warranted of the person making- not true, though he believes to be true

e.g. car has traveled only 1000 KM, Mr. Kapil Dev will become the director. But it will be untrue.

Any breach of duty- without the intention to deceive and gives an advantage (gaining) to the person committing it or any other person claiming under him ( constructive fraud)

e.g. Conceal the content of the document

Misleading others to his or someone else’s prejudice. By Inducing mistake about subject matter, suppression of vital facts which are material facts ---

but not expression of opinion– change of circumstances to be stated,

Causing however innocent a party to agreement might have been ------to make mistake as to the substance of the thing which is the subject matter of the agreement

In all the above instances the consent must have been given by misrepresentation, which has caused to agree to give consent to the contract- Voidable

Mistake- Sections 20 -22

When parties are under the mistake as to the matter of fact essential to agreement – may be as to the

a) Mistake as to Subject matter Horse dead while the parties are agreeing, ship is sunk while contracting Different subject matter in mind b) Mistake as to the Identity of the Person Mistake as to the identity caused by Fraud

Mistake as to the Nature of Promise e.g.. Thinking that A is signing a power of

attorney, while it was a gift deed Mistakenly signing wrong documents Consequences Mistake of the both the parties- Void-

Bilateral Mistake- perished goods signing a separation deed , when actually not

married( Galloway V Galloway) Unilateral Mistake- Not just because it is

mistake of one party Mistake of Law – Not voidable ( Law force

in India) Mistake of fact – only allowed

LEGALITY OF OBJECT

Forbidden by law Defeat any law Fraudulent Injurious to person or property Immoral Public Policy

Void Agreement

When and how does the contract end?

Most contract suits are not brought over questions regarding the formation of a contract; they are brought because of what one party considers to be an improper termination of a contract.

Discharge Of Contract

Discharging a Contract Through Performance

A contract can be discharged through the performance of its terms.

A discharged contract is a nullity.

A contract may be discharged –

1. By performance.

2. By agreement or consent

3. By impossibility or performance

4. By lapse of time

5. By operation of law

6. By breach of contract.

DISCHARGE OF CONTRACT

Actual performance : When both theparties perform their promises, the contractis discharged. Performance should becomplete, precise and according to theterms of the agreement. Most of thecontracts are discharged by performance inthis manner.

Attempted performance or tender :Tender is not actual performance but is onlyan offer to perform the obligation under thecontract. Where the promisor offers to performhis obligation, but the promisee refuses toaccept the performance, tender is equivalent

to actual performance.The effect of a valid tender is that the contractis deemed to have been performed by thetenderer. The tenderer is discharged from theresponsibility for non-performance of thecontract without in any way prejudicing hisrights which accrue to him against the

promisee.

Duty to Perform

A party to a contract is under a legal obligation to perform.

Good Faith

Good faith is a requirement of all parties to a contract.

What Duties Are Required?

The party is only required to perform the actions contemplated in the contract, and any assumed duties, as well.

Discharging By Termination

Many contracts contain provisions allowing the parties to terminate the contract under certain conditions.

These are called “termination provisions.”

Contracts Without Termination Dates

Contracts cannot last forever. Contracts without termination dates are

revocable by either party after reasonable notice.

Automatic renewal

Contracts can contain provisions that automatically renew the contract for another term.

Termination For “Good Cause”

When a contract contains a clause stating that it may only be terminated for good cause it is usually construed to be terminable at will by the parties.

Termination for Any Reason

A contract is valid if it contains a provision stating that either party can revoke it at any time, for any reason.

Notice of Termination

The method used to provide notice of termination can be set out in the contract.

Effect of Termination

Once the contract terminates, the legal obligations of the parties are extinguished.

Ending a contract through other means

Many contracts are not successfully discharged, leading to disputes between the parties.

Agreement

After creating a contract, the parties are free to mutually abandon, modify or rescind the contract.

Abandonment

When the parties abandon a contract, they are, in effect, agreeing to rescind the contract.

Rescission

Rescission does not modify the contract terms; it eliminates them.

The Elements of Rescission

In order to demonstrate a valid rescission, there must be a demand or tender of full performance.

There must also be an unambiguous, affirmative act by a party showing the intention to rescind the contract.

Agreement to Rescind the Contract

When the parties agree to abandon or rescind the contract, the agreement must be mutual and must be made prior to either party actually performing any actions

Who May Rescind

Only the parties to the contract may rescind it.

What Types of Contracts May be Rescinded

A fully discharged contract cannot be rescinded.

Many jurisdictions also have a rule that prevents partially executed contracts from being rescinded.

Cancellation versus Rescission

Canceling a contract is a formal declaration that a contract is legally ineffective and cannot form the basis of a legal duty.

Rescission restores the parties to their positions prior to the creation of the contract.

Suits Seeking Rescission

Judges will usually not order rescission when the contract is illegal, or where the parties are equally at fault, or where someone other than the parties to the contract is seeking rescission.

BREACH OF A CONTRACT AND ITS

CONSEQUENCES

Breach of Contract

When a party breaches a contract, he or she violates some contractual duty.

DISCHARGE BY IMPOSSIBILITYOF PERFORMANCE

1. Impossibility existing at the time

of agreement. The first paragraph

of Sec. 56 lays down that “an

agreement to do an act impossible

in itself is void”. This is known as

pre-contractual or initial

impossibility.

2. Impossibility arising subsequent

to the formation of contract.

Impossibility which arises

subsequent to the formation of a

contract (which could be performed

at the time when the contract was

entered into) is called post-

contractual or supervening

Impossibility.

DISCHARGE BY SUPERVENING MPOSSIBILITY

1. Destruction of subject-matter of contract.

2. Non-existence or non-occurrence of a

particular state of things.

3. Death or incapacity for personal service.

4. Change of law or stepping in of a person

with statutory authority.

5. Outbreak of war.

Negotiating Types of Breach

The parties are free to negotiate the possible remedies for a breach of a contract, and even to stipulate what types of actions will be considered a breach.

One Party’s Breach Does Not Relieve the Other Of Legal Duty

When one party commits a breach the other party is not relieved of all contractual obligations.

Anticipatory Breach

In some cases, a party may bring suit for a breach before the other party has actually committed one.

What is a Material Breach?

Material breach gives the other party the right to rescind the contract.

A material breach is the failure of one party to do some act that is so central to the agreement as to actually defeat the reason for having the contract in the first place.

Categories of Legal Excuses

Impossibility Subsequent Illegality Acts of God/Nature Death of a Party Destruction War

Impossibility

There are two types of impossibility: subjective impossibility and objective impossibility.

Subjective Impossibility

Under subjective impossibility, a party states that he or she cannot perform the duties outlined in the contract.

In most jurisdictions, this claim is not a legal defense.

Objective Impossibility

Objective impossibility is a claim that the action itself cannot be done by anyone.

Consequences of Impossibility

When performance under a contract is impossible, a party cannot attempt to substitute a different type of performance.

Subsequent Illegality

When the subject of the contract is ruled to be illegal after the contract was created, the courts have ruled that failure to perform in this situation is excusable.

Acts of God/Nature

When the performance under a contract is made impossible by an act of God, the performance is excused.

Death of a Party

Death of the party who was to perform the duty under the contract usually results in a legal excuse.

Destruction

When the contract is based on the continued existence of a particular item and that item is destroyed, the obligation to perform under the contract is destroyed along with it.

War

A contract may be cancelled when war breaks out in the country where the contract is to be performed.

A hires B' s ship to go to Bombay, and there take on board, on the first of January, a cargo which A is to provide and to bring it to Calcutta, the freight to be paid when earned. B' s ship does not go to Bombay, but A has opportunities of procuring suitable conveyance for the cargo upon terms as advantageous as those on which he had chartered the ship. A avails himself of those opportunities, but is put to trouble and expense in doing so. A is entitled to receive compensation from B in respect of such trouble and expense.

 A, a builder, contracts to erect and finish a house by the first of January, in order that B may give possession of it at that time to C, to whom B has contracted to let it. A is informed of the contract between B and C. A builds the house so badly that, before the first of January, it falls down and has to be re- built by B, who, in consequence, loses the rent which he was to have received from C, and is obliged to make compensation to C for the breach of his contract. A must make compensation to B for the cost of rebuilding the house, for the rent lost, and for the compensation made to C.

A contracts to supply B with a certain quantity of iron at a fixed price, being a higher price than that for which A could procure and deliver the iron. B wrongfully refuses to receive the iron. B must pay to A, by way of compensation, the difference between the contract price of the iron and the sum for which A could have obtained and delivered it.

A,- having contracted with B to supply B with 1, 000 tons of iron at 100 rupees a ton, to be delivered at a stated time, contracts with C for the purchase of 1, 000 tons of iron at 180 rupees a ton, telling C that he does so for the purpose of performing his contract with B. C fails to perform his contract with A, who cannot procure other iron, and B, in consequence, rescinds the contract. C must pay to A 20, 000 rupees, being the profit which A would have made by the performance of his contract with B.