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Contract Act ASSIGNMENT

Contract Act ASSIGNMENT

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Published by: shahnawaz on Dec 14, 2009
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02/20/2013

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INDIAN CONTRACT ACT, 1872Definition of Contract
An agreement enforceable by law is a contract. Thus to make a contract, there must be [I] anagreement [ii] agreement should be enforceable by law.
Definition of Agreement
Every promise and every set of promises forming the consideration for each other.
Definition of promise
Promise is defined as an accepted proposal.Thus- A contract is an agreement, an agreement is a promise and a promise is an accepted proposal.Thus every contract is an agreement but every agreement is not a contractAn agreement grows into a contract when following conditions are satisfied :-1]There is some consideration for it.2]Parties are competent to contract.3]Their consent is free.4]Their object is lawful.
Proposal or offer 
– Proposal is the starting point.
DEFINITION:
When one person signifies to another his willingness to do or abstain from doinganything, with a view to obtaining the assent of that other to such act or abstinence, he is said tomake a proposal.The person who makes the proposal is called “offerer” and the person to whom it ismade is called the “offeree”
Communication of proposal
The first part of the definition of “proposal” lays emphasis upon the requirement that thewillingness to make a proposal should be ‘signified’. To signify means to indicate or declare. It further means that the proposal should be communicated to the other party. The process of making aproposal is completed by the act of communicating it to the other party. The communication may bemade by words of mouth or by writing or by conduct. The communication of the proposal is completewhen it comes to the knowledge of the person to whom it is made.
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ACCEPTANCEDefinition.
When the person to whom the proposal is made signifies his assent thereto, the proposal issaid to be accepted. A proposal when accepted becomes promise. Thus, ‘acceptance’ is the assentgiven to a proposal and it has the effect of converting the proposal into promise.
Communication of Acceptance
The definition clearly requires that the assent should be signified. It may be oral or written or by conduct. The acceptance must be communicated to the offerer himself. A communication to anyother person is as ineffectual as if no communication has been made.Ex. – B had been supplying coal to railway company without any formal agreement. B suggested thata formal agreement should be drawn up. The agents of both the parties met and drew up a draft of agreement. It had some blanks when it was sent to B for his approval. He filled up the blanksincluding the name of arbitrator and then returned it to the company. The agent of the company putthe draft in his drawer and it remained there without final approval having been signified. B kept up hissupply of coals but on the new terms and also received the payments on new terms. A dispute havingarisen, B refused to be bound by the agreement.The conduct of company’s agent in keeping the agreement in his drawer was an evidence of the fact that he had mentally accepted it. But he had not expressed his mental determination andtherefore the mere putting of agreement was not a sufficient acceptance. But the subsequent conductof the parties in supplying and accepting coal on the basis of the proposed agreement was a conductthat evidenced their intention. The final acceptance was clearly given when the company commenceda course of dealing.
Mode of Communication
Acceptance has to be made in the manner prescribed or indicated by the offerer. Anacceptance given in any other manner may not be effective. When no mode of acceptance isprescribed, acceptance must be expressed in some usual and reasonable manner.
When communication of acceptance is complete
– When a letter of acceptance is posted and isout of power of the acceptor, the proposer becomes bound. But the acceptor will become bound onlywhen the letter is received by the proposer.
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Revocation of Acceptance
– An acceptance may be revoked at any time before the communicationof the acceptance is complete as against the acceptor, but not afterwards.Thus the communication of revocation should reach earlier than the acceptance itself. Whatwill be the result if they reach together. The section does not make this point clear. Ex. – A proposesby letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post. B mayrevoke his acceptance at any time before or at the moment when the letter communicating it reachesA, but not afterwards.
CONSIDERATION
(Examine the role of consideration in a contract. State the exceptions to the rule Noconsideration, No Contract. Define and analyse consideration)
Definition
 – When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstain 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.
At the desire of the promisor 
– The definition clearly emphasises that an act or abstinence which isto be a consideration for the promise must be done or promised to be done in accordance with thedesire of the promisor. In other words, the act shall not be a good consideration for a promise unless itis done at the desire of the promisor.Ex. – The Plaintiff, on the order of Collector of a town, built at his own expense, certain shops in abazar. The shops came to be occupied by the defendants who, in consideration of Plaintiff havingexpended money in the construction, promised to pay him a commission on articles sold through their agency in the bazar. The Plaintiff’’s action to recover the commission was rejected. The court heldthat the only ground for making of the promise is the expenses incurred by Plaintiff in establishing themarket but it is clear that anything done in that way was not “at the desire” of the defendants, so as toconstitute consideration. The act was the result not of the promise but of the collector’s order.
Promisee or any other person
Consideration be done by “the promisee or any other person”. It may move from the promiseeor if the promisor has no objection, from any other person.Ex. – A person had a daughter to marry and in order to provide her a marriage portion he intended tosell a wood of which he was possessed at the time. His son (the defendant) promised that if *the
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