Understanding Contracts: Meaning, Essentials, and Legal Rules, Slides of Law

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The Indian Contract Act 1872 Docsity.com Contract : An agreement creating and defining obligations between the parties Every Agreement and promise enforceable at a court of law is contract by Pollock 1/23/2013 Prof Navin Shrivastava 2 Meaning of Contract Docsity.com Promise 1/23/2013 Prof Navin Shrivastava 5  A proposal when accepted become a promise Docsity.com Essentials of valid contract 1/23/2013 Prof Navin Shrivastava 6  Offer and Acceptance  Intention to create legal relationship  Lawful consideration  Capacity to contract  Free Consent  Lawful Object  Not expressly declared to be void  Possibility of performance  Legal Formalities Docsity.com Legal rules for Offer 1/23/2013 Prof Navin Shrivastava 7  It must be intended to create legal relations  It must be certain  It must be distinguished from  A) a decleration of intention  B) invitation to make offer  It must communicated to the offeree  It must be made with a view to obtaining the assent of the offeree  It must not contain aterm the non-compliance of which would amount to acceptance  A statement of price is not an offer. Docsity.com Consideration 1/23/2013 Prof Navin Shrivastava 10 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 . Docsity.com Legal rules as to consideration 1/23/2013 Prof Navin Shrivastava 11 1. It essential to support contract 2. It must move at the desire of the promisor 3. It may move from the promisee or any other person 4. It may be past ,present or future 5. It need not be adequate 6. It must be real and not illusionary 7. It must not be something which the promisor is already legally or contractually bound to do. 8. It must not be illegal, immoral or opposed to public policy. Docsity.com Balfour v. Balfour 1919 1/23/2013 Prof Navin Shrivastava 12  A famous English contract law case that held that there is a rebuttable presumption against an intention to create a legally enforceable agreement when the agreement is domestic in nature. Case: Mr. Balfour had agreed to give his wife £30 a month as maintenance for while he was off living in Ceylon. Once he had left, they separated and Mr. Balfour stopped payments. Mrs. Balfour brought an action to enforce the payments. At the Court of Appeal, the Court held that there was no enforceable agreement as there was not enough evidence to suggest that they were intending to be legally bound by the promise. Docsity.com Minor 1/23/2013 Prof Navin Shrivastava 15  According to Section 3 of the Indian Majority Act, 1875, a minor is a person who has not completed 18 years of age. However, in the following two cases, a minor attains majority after 21 years of age: Where a guardian of minor’s person or property has been appointed under the Guardians and Wards Act, 1890, or Where the superintendence of minor’s property is assumed by a Court of Wards. Docsity.com POSITION OF MINOR’S CONTRACTS 1/23/2013 Prof Navin Shrivastava 16 1. A minor’s agreement cannot be ratified by the minor on attaining majority. 2. A contract with a minor is void ab-initio. 3. A minor cannot be asked to refund any benefit received under a void agreement. 4. A minor is not estopped to plead minority even where he falsely represents himself to be of full age. 5. A minor cannot be a partner in a partnership firm. He may, however, be admitted to the benefits of an already existing partnership. Docsity.com POSITION OF MINOR’S CONTRACTS …………..contd 1/23/2013 Prof Navin Shrivastava 17 6. A minor can, however, be a promisee or beneficiary. 7. A minor’s estate is liable to a person who supplies necessaries of life to a minor. 8. Minor’s parents/guardians are not liable to a minor’s creditor for the breach of contract by a minor. 9. A minor can act as agent. Docsity.com Idiots. 1/23/2013 Prof Navin Shrivastava 20 An idiot is a person who is permanently of unsound mind. He does not have lucid intervals. He is incapable of entering into a contract and, therefore, a contract with an idiot is void. However, like a minor, his properties, if any, shall be liable for recoveries on account of necessaries of life supplied. Also he can be a beneficiary. Docsity.com Drunken or Intoxicated Persons. 1/23/2013 Prof Navin Shrivastava 21 A person who is drunk, intoxicated or delirious from fever so as to be incapable of understanding the nature and effect of an agreement or to form a rational judgment as to its effect on his interests cannot enter into valid contracts whilst such drunkenness or delirium lasts. Docsity.com Free Consent 1/23/2013 Prof Navin Shrivastava 22 Coercion Undue influence Mistake Misrepresentation Fraud Docsity.com Fraud (Sections 17 and 18) 1/23/2013 Prof Navin Shrivastava 25 ‘Fraud’ means and includes any of the following acts committed by a party to a contract (or with his connivance or by his agent) with intent to deceive another party thereto or his agent; or to induce him to enter into the contract: Docsity.com Fraudulent Acts 1/23/2013 Prof Navin Shrivastava 26 The suggestion, as a fact, of that which is not true by one who does not believe it to be true; The active concealment of a fact by one having knowledge or belief of the fact; A promise made without any intention of performing it; Any other act fitted to deceive; Any such act or omission as the law specially declares to be fraudulent. Docsity.com Misrepresentation (Sections 18 and 19) 1/23/2013 Prof Navin Shrivastava 27 Misrepresentation is incorrect or false statement but the falsity or inaccuracy is not due to any desire to deceive or defraud the other party. It is innocent. The party making it believes it to be true. Docsity.com Performance of Contract, 1/23/2013 Prof Navin Shrivastava 30 1. It must be unconditional 2. It must be made at the fixed or proper time & Place 3. It must be made by a person who is able and willing 4. In case of tender of goods it must made for the quality and quantity agreed upon 5. In case of tender of goods reasonable opportunity must be given to promisee examine the goods Docsity.com Performance of Contract, 1/23/2013 Prof Navin Shrivastava 31  It must be made to any one of the joint promissors  It may be made to any of the joint promissors  In case of tender of money the payment must me made in legal tender money. Docsity.com QUASI CONTRACTS (Sections 68-72)] 1/23/2013 Prof Navin Shrivastava 32 [Certain Relations resembling those created by Contracts] ‘Quasi Contracts’ are so-called because the obligations associated with such transactions could neither be referred as tortious nor contractual, but are still recognised as enforceable, like contracts, in Courts. Docsity.com Breach of Contract and its Remedies, 1/23/2013 Prof Navin Shrivastava 35  Right of Rescission  Right to claim damages a) Ordinary Damages b) Special damages c) Vindictive or exemplary damages d) Nominal damages  Quantum Meruit  Special Performance sec 10  Injunction order  Cancellation Docsity.com T H A N K Y O U 1/23/2013 Prof Navin Shrivastava 36 Docsity.com