Contract Act,1872

Definition of Contract
 According

to section 2(h) a contract

is an agreement enforceable by law

 Offer

+ Acceptance = Agreement

Types of contract
On the basis of formation

Express contract

Implied contract

Quasi Contract

Types of contract
On the basis of performance

Executed Contract

Executory Contract

Types of contract
On the basis of validity

Valid Contract

Void Contract

VOIDABLE Contract

Illegal
Contract

Unenforable
Contract

Essential elements of valid contract

 Agreement  Intention

to create legal

relations  Lawful consideration  Capacity of Parties

Contd

..Contd

Essential elements of valid contract

Consent  Lawful Object  Possibility of performance  Not expressly declared void  Certainty in the mening of agreement
 Free

 Definition

of Offer(proposal)

As per section 2(a) 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 said to make a proposal

RULES REGARDING A VALID OFFER

 May  Give

be Express or Implied rise to legal consequences to offer is not an offer

 Invitation  Must

be communicated

Classification of an OFFER
 Specific  General  Cross

offer offer

offer offer

RULES REGARDING A VALID ACCEPTANCE

be communicated by the acceptor  Given only to the person making offer  Must be absolute and unqualified (qualified acceptance is a counter offer)  Must be given within reasonable time in usual and reasonable manner  Rejected offers can be accepted only if it is renewed
 Must

WHAT IS CONSIDERATION

Definition of consideration
As per 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 something ,such act or abstinence or promise is called a consideration

ESSENTIALS OF CONSIDERATION
of consideration  Must move at the desire of the promisor  May move from promisee or any other person  May be past, present or future  Need not be adequate  Must be real  Must be lawful
 Form

No Consideration No Contract Exceptions

made out of natural love and affection (if registered)  Agreement to compensate for past voluntary services  Agreement to pay for time-barred debt time Completed gift and donation  Agreement For creating an agency
 Agreement

No Consideration No Contract: Contract: Exceptions

accepting lesser part of a debt or for increasing credit period there need not be any consideration.  A promise to contribute to charity would be enforceable if, on the strength of the promise, the promisee undertakes some liability. to the extent of liability incurred but not exceeding the amount promised.
 For

CAPACITY OF PARTIES
As per Section 11 Every person is competent to cantract (a) who is the age of majority and (b) who is of sound mind and (c) who is not disqualified from contracting by any law to which he is sujected Contract? Contract? Its mean that every person is competent to contract except: A minor  A person of unsound mind  A person disqualified by law


Minor s Agreement
Void and inoperative Minor can be a beneficiary No ratification on attaining majority Rule of estoppel does not apply to a minor Minor s liability for necessities Specific performance Minor as Partner Minor as Agent Minor and insolvency

A person of unsound Mind



A) Lunatics : A person who is mentally deranged due to some mental strain or other personal experience. He suffers from intermittent intervals of scanity and insanity. Idiots : A person who has completely lost his mental powers. Idiocy is permanent whereas lunacy denotes periodical insanity. Drunken : A drunken person suffers from temporary incapacity to contract.

A person disqualified by law

enemies  Foreign Sovereigns, Diplomats , Ambassadors High Commoners  Insolvent  Convicts  Corporations
 Alien

Free consent
Consent is said to be free when it is not caused by any of the following: a. Coercion b. Undue influence c. Misrepresentation d. Fraud e. mistake


(i) (ii)

Coercion : (use of physical force) committing or threatening to commit any act forbidden by IPC, or unlawful detaining or threatening to detain any property with the intention of causing a person into agreement (voidable) Undue Influence : (use of mental force) Taking unfair advantage of such a relationship where one person is in a position to dominate the will of the other (voidable)

Representation means a statement of fact made by one party to the other, either before or at the time of contract, with an intention to induce the other party to enter into a contract. A wrongly made representation is termed as a misrepresentation an intentional misrepresentation is termed as fraud. It includes all acts intended to deceive another person a deceit which does not deceive gives no ground for action

Can silence be Fraudulent?  No  Yes, when duty to speak  Yes, where silence = speech
Effects of fraud:
i) ii) iii)

Voidable Ask for restitution (position as if no fraud) Claim damages Mistake: Mistake: Mistake may be defined as an erroneous belief about something . It may be a mistake of law or a mistake of fact

Legality of Object
According to section 23 , Consideration or object of an agreement is unlawful under the following situation:situation: It is forbidden by law  It Defeats the provision of any other law  It is Fraudulent  It involves an injury to a person or property of other  It is immoral  It is against the public policy

Agreement Expressly Declared Void

 Agreement  Agreement  Agreement  Agreement  Agreement  Agreement

in restraint of marriage in restraint of Trade in restraint of Legal proceedings meaning of which is uncertain by way of Wager to do impossible act

QUASI CONTRACTS
In some cases there is no offer, no acceptance and in fact no intention on the part of the parties to enter into a contract and still by their conduct they are into a contract. It rests upon the doctrine a person shall not be allowed to enrich himself at the expense of another.

QuasiQuasi-contractual obligations obligations

    

Claim for necessaries to persons incapable of contracting Payment by interested parties Obligation of person enjoying benefit of non gratuitous act Rights and duties of finder of lost goods Liability of a person to whom money is paid or goods are delivered by mistake or under coercion

Contingent contract
A per section 31

A contingent contract is a contract to do or not to do some thing, if some event ,collateral to such contract does or does not happen.

Discharge of Contracts
By Performance a- Actual performance b- Attempted performance By Mutual Agreement a-Novation b-Alteration c- Rescission d- Remission cont..

 By Supervening Impossibility By Operation of Law By Lapse of Time By Breach of Contract

Performance
 Who must perform Who can demand performance Time and place of performance  Assignment of contract Contract which need not to be performed

Breach of contract

 

Actual Breach

Anticipatory Breach

Legal remedies for Breach of contract

 Rescission of the contract  Suit for damages  Suite for specific performance  Suit for injunction  Suit upon Quantum Merit

Types of Damages 
Ordinary Damages

Special Damages Exemplary or Vindictive Damages Nominal Damages  Liquidated Damages

CONTRACT OF SALE OF GOODS ACT:1930

As per Section 4(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property to goods to the buyer for a price . Essentials of contract of sale of goods: 1. Two parties 2. Transfer of property 3. Goods = movable property other than actionable claims and money 4. Price 5. Includes both sale and agreement to sell 6. No formalities to be observed

Conditions and warranties

Conditions Essential to the main purpose On breach: cancellation Breach can be treated as breach of warranty Warranties Collateral to the main purpose On breach: damages Breach cannot be treated as breach of condition

Voluntary waiver and acceptance of goods

Implied conditions
Condition as to title Condition in sale by description Condition in sale by sample Condition in sale by sample as well as description Condition as to fitness or quality Condition as to merchantability Condition as to wholesomeness

Implied warranties
Warranty of quiet possession Warranty of freedom from any charge Warranty to disclose dangerous nature of goods to the ignorant buyer

Nemo Det Quod Non Habet

      

No one can give what one has not got Unauthorized sale by mercantile agent Transfer of title by estoppel Sale by joint owner Sale by person in possession under voidable contract Sale by seller in possession after sale Sale by buyer in possession after agreement to buy Resale by unpaid seller

Rights of an unpaid seller

Against goods 1. Right of lien 2. Right of stoppage of goods in transit 3. Right of resale
1. 2. 3.

Against buyer Suit for price Suit for damages for non acceptance Suit for special damages and interest