Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
2Activity
0 of .
Results for:
No results containing your search query
P. 1
Contract Act 1872

Contract Act 1872

Ratings: (0)|Views: 94|Likes:
Published by Vishal Gattani

More info:

Published by: Vishal Gattani on Aug 13, 2011
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

09/25/2014

pdf

text

original

 
MERCANTILE
LAW
I
I
UNIT-I
CONTRACT
CHAPTER
-
1
Meaning
and
Essentials
of Contract
INTRODUCTION]\-hat is LawLaw means a 'set of mles"
Brozdly
speakins, it ma? be defined
as
the rules sf conductrecognized
and
enforced by the state
ae.
Ccr,+m!and rcguIate
the
csaduct
of
peaple. ta. Prctect theirproperty and contractual ri@ts
nith
a vie\\
to.
Securing ustice. peaceful
li\
jng
and
social security.Since the value system
of
satiety
keeps
en
changing,
tht
:a\\
also. Keeps changing accordingto.
the
changi~gequirements
of
rhe
society.There are sebenl branches
of
!aa\ such as IntemationaC hv, Constitutional ia\v, Criminal law,
Ci\
il
law etc. E\-ery branch of la\\ rezu!ddts and controls a particular field of'zctibity.
Why
Should One Know LawOne sbmld
kns~
he Banto nhich he Is subject because ignorance
cf
?an
is no. excuse.
For
example.
if
S
is caught traveling
in
a
train avithout ticket, fie cannot plead that he \\-as not aware of therule rcgsrding
the
purchase of ticket and &erefore, he may be escus?d.
In
ansther example, if
Y
scausht driving scooter \vithout
drib
ing license, he cannot plead that he uas net aware of the traffic ruleregarding the cbtaininy
of
a dri\ing license
and
therefore, he
ma);
be excused.What is Mercantile Law (or Commercial Law)hlercantile la\\ is not a separate bnnch of law.
BxicalIy.
it
is
a part
of
civil Ian \fich dealswith
the
rights and cbii~ations f
naercanrile
loerson&ngout
of
mercantile transacti@_nsn r-sptof
--
nerca-dbudesrelating to. Various
_---
ontracts. eartnerlip.
-
omp&es,negtiable, instrument_s, nsufa_rge, arriage
&-
ofms,arbhatinn ek.What are the Sources of JIercantile Law?
In
Indis. mercantile la\\ is
b~ii3lly
n ada~tation
f
tfre
EngIish
La\\
\\ith
some xodificationsand reser\ations. mhieh are necessitated b- he pecnli~r ccdiricas
pmailing
in India. The mainsources
of
the Indian mercantile la\\ arc shlsnn below
in
Fig.
:.I.
1
Sources of SlermntiIe
Law
in India
Lit$
1
I
Indian
Z
Jlldicirll
"omsandStatus Law Decisions Usages
2
1
*
Fig.
1
I
Snurces of Mercantile
Law
in
IndiaLet
us
discuss
rhem ose
b)
one.
(a) English Mercantile Law
English
!ans
are
the
p;irr.nrj
sGxrcr5
cf
Indim
llercantiiz
Law.
Englishian
i
z;n
k;?sr'd
L'Z-L~I~LOIR~
d
bsages
3f
merch3~ts
n
Er;glar?s.
(b)
Indizn
Statute
Law
The
variocs Acts passed
b>
:he
Ir,JIrlp Legislature
,re
the main sources ofmeicvltilr la\\
in
India, e.g. lndian Conuact Act,
iS72,
The Sale
of
Gods
Acts,
1930. The lndianPartnership Act, 1932, The Kegotiable Instrunrents Act 1881, The Companies Act, 1956.TOPPER'S INSTITUTEPh:224419 14.65255572
1
English
1
\[ereantile
Lmc
 
I
1IERCANTrLE LAW
I
2
I
(c)
Judicial Decisions
The past judicial decisions of English courts and Indian courts are also one of
I
the sources of law. Wherever the
iaw
is
silent on a point,.the judge has to decide the case according tothe principle of equi5- justice
and
good conscience. The past judicial decisions are followed
by
thecourts while deciding similar cases before them.
(d) Customs and
Csages
The
customs and usages of a trade are also one of the sources of mercantilelaw in India. These customs
and
usases govern the merchants of a trade in their dealings with eachother. Some Acts passed b> the Indian Legislature recognizes the importance of such customs andusages.
For
emple. Section
B
~f
che
Indian Contract Act, 1872 provides "nothing contained thereinshaI! affect
an>
usage of custar
oY:r232
.
.
'5Similrrrlq, Section
1
af The Negotiable Instruments Act,
1581
pravides
"n~thing
c?nn:rei
:.7::ein
shall affect an)
local
usaa,e relating to instrument in anoriental language..'
The Law of Contract
The la\\ of contract
is
conrained
ir,
:k
ndian
C::::TZ;I
.Act.
E
S-2
nhich(a)deals
\kith
ltle
general
pr!ric';r[es
of
Pa;\
::ixning
all
cznilnats,
and
,€feaning
and
Essentials
of
Contract
1.3
,
.
16)
caters the
special
pr~ni4:~~~
cl\it~ns
:,
5;c;I31
coztrxts
like Bailment Pledge, Indernni~.Guarantee
and
.4genc>.
The
lau
ofContni~
s
appli:ablt
5-1
:~iy
c
basi~ess
ut
abi.
to all day-to-day personal dealings.
In
hct, each
one
of
us
enter
Zzra
3
~unnhcr
f
CCP+-*---
.-,,rs
fmm sunrise to sunset.For example.
1.
when
you
purzhase
a
nen
spay=r,
cu
rer
Into
a
:ontm:t
\\
ith
the vendor of newspaper.
'7
--
\then
)ou
purchase
milk.
)or?
erter
Zns
2
conmct with the milkman.
3.
nhen
>cu
purchase bread
and
butter-
)ou
znter into a contract with the vendor of bread andbutter.
1.
when
>on
ide a bus.
5ou
enter
into
a
conarict
with
the
transport company. The genera!
law
of
ccntrza
rz!ztes
ta
the essentials
of
a
tz!id
ccnvzct
the rules for performance and discharge of
a
ont tact
3r.J
rhr:
rcmediej
a\i.ibb2e
t:
the
sg~rie~ed
31~-
n case of breach of contract.
IcIEASJSG
OF
COXTRACT
.According
ta
Sectian
2(h)
of
Cs
Indim
Can;rzct
.tat,
IS??,
"An
agreement enforceable
by
la\%
-A
-
is
a ~~7i:tr3ct."
n
cthr;
n,>rJs,
n
ag;c=:-,cnt
\\hi&
5313
e
enforced in a court of Iaw is known as a
--
,-ant-9-r.
On
analkzing
this
defin;rron
c;
zm~rzcr
r
sp~z3rs ltamni~flmitheollowing
T
tho
e.er:rn:s.
(a
.An agrscment.
3~d
I
$
EnforsiabiIir>
of
an
ageerei:r.
In
!he
form
sf
n.eq:quation.
it
csn
be
shm
n
as
under:Ccntract
=
An
.Agreement
+
Enfcrceabiiit) of
an
agrcement
~ai&
question
arises, 'IVhat is
an
dA_erzernent?"aandWhat is Enforceability of an agreement?
.--
is
an
Agreement
.According
to
Seclien
4e)bf
the Indim Contract Act 1872,
"Every
promise and every set ofpromises farming
the
consirlention for each other
is
an
agrcement." Sow the question arises, 'what ispromise?' .Acccrding to Section
2[b)
of the Indian Contract-
Act
1872.
"A
proposal when accepted,becomes
a
promise."
E-unnrple
S
@r\
t:,
>e!l
Fzj5
~ar_tbr
s
i,00,000
o1:
E'
accepts
this
o,yer. This offerajier acceptance
hiecot~:t._,
oli~i.\c
at;tiA13
17r-o!~~i>e
s
trcu~ed
ZS
at3 agreetjletlt hrebr-een
X
md
Y.
-
In
ether
:\,-~ds,
an
agreement
corrsisrs
sf
an
otTer
bj one
party
and its acceptance
by
the other.
In
the
f~i~
?f
eqijzation.
i:
an
be
shonn
as
under:
_
Xg:<cme::i-
Offer
(~lr
rcposal)
-
Acceptansz of Offer
(or
Propos?!)TOPPER'S KSTITbTE Ph:22441911.65255572
 
"The
.alv
of contracts
is
not the whole law of agreements."
The Ian*of contracts is the
!aw
of onlythose agreements which create leg{ sblisations (i.e.
an
obligation which is enforceable
by
law). Anobligation is the duty to do~n~t6doertain act. In other uords, the law of contract is concernedwith only those agreements whtre the parties ha\-e the intention to create legai obligations (i-e. theparties are bound to do or not to do certain act). In business or cornmcrciat agreements. the usualpresumption is that
the
parties intend to create
:ezai
obIigatiq~s.
E.vantple Xoflers to sell
his
car to YJir
Rs
1.bO.OGiI.
Y
aceepfs
rltiv
q&?r-
t1
thi~greetne~zr
lt'r~>li'
.>
o'efault by either party* an action for brenc11
of
conrract
C~III
bt?
etzjhrced throrrgh a colu-t
clf
hnt
provided all the essential elenretats of
a
valici cori~ract re presetit
itz
this ngreert~en_t,--
The law of contract
is
not the
law
of those agreements
\\
hich
do r;ot create legal oblizrations. Inother words, the law of contract is not concerned ~ithhose agreerne~tswhere the parties do nct havethe intention to create legal obligations. In social, domestic, rncral or religious agreements.
[At
usualpresu~nption s that the parties do not intend to create legal obiigations.
E.varztple X irnlites
Y
to dinner.
Y
accepts the insitr~iior? utf~i.'~~
n
tzm
~lp.
cru,
Sca?!l:cr
1-
ordantages because t;zeparties to this agreement do ,tot irzle1:d
ro
e-rcnte
kga!
o5!'igontiot?.\.
MERCANTILE
&J$
3
[
\vJM<
~n
forceability of Agreement
-r
-
An agreement is said to bT-i?iforceable by law if it creates some legal obligation.
In
otherwords, the parties to an agxernent must be bo$~d o perfoh their promises and in case of default byeither'of them, must intend to sue e.g. in caSe of social-or domestic agreements, the usual presumption
it
that the parties~do ot intend to create legal relations.
Ejcample
X
nvites his riend
Y
to o dinner md
Y
accepts the insitation.
if
Y
ails to turn up or dinner.
X
cannot go to the couri? o claim his loss.
Similarly, in case of domestic arrangements, parties to a_pement do not intend to sue eachother so as to make such agreements unenforceable by la\< e.g.
in
Ba@ur. Bauour
(1919)
2
K.B.
571.a promise by the husband to pay his wife
f
30
every month
\&
held unenforceable
as
the partiesnever intended it to be attended
by
legat obligations.
'
In commercial or business agreements the usual presumption is that the parties intend
to
createlegal relations.
Es-ample
X
offers to sell
his
car to YYkr
s
1,00,0013.
Faccepts 111:sofler. Szrch ml agreetttent benveen
X
and
Y
is
a
contract becozlse it creates Pegal obligatio~z-n this agreement, flX refuses to sell or
Y
refuses to bziy, the other party confile a stiit in the cozrrt of lmr for the breach of the colttract.
Thus, in the forrn of
a
graphic representation, the contract can be expressed as under:
Contract
1
$
1
t
Thus, the whole position
may
be summarized as under.
Agreement
Type of agreerne~zf
/*
WJtefJ~erhe law of cor~fracfovers slfclr agr~*e~~~enfs
8.
Agreements where the parties intend
to
"
Yes
f
EnforceabiIi@ of an agreement
create legal obligations, e.g. businessagreements.
\
El.
Agreements where the parties do not
So
intend to create
any
legal obligation, e.g.
'
I
I
social agreements
I
I
k
I
I
Proposal),
TOPPER'S INSTITUTE Ph:2243f 914.65255573

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->