Communication, acceptance and revocation of proposals
Communication of proposal/ revocation/acceptance are vitalto decide validity of a contract. A ‘communication’ is complete only when other party receives it.Acceptance must be absolute
In order to convert a proposal into a promise, the acceptance must - (1) be absolute andunqualified; (2) be expressed in some usual and reasonable manner, unless the proposal prescribed the manner in which it isto be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such amanner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposalshall be accepted in the prescribed manner, and not otherwise; but if he fails to do so, he accepts the acceptance.[section 7].Acceptance of offer is complete only when it is absolute and unconditional. Conditional acceptance or qualified acceptance isno acceptance.Promises, express or implied
Insofar as the proposal or acceptance of any promise is made in words, the promise is said tobe express. Insofar as such proposal or acceptance is made otherwise than in words, the promise is said to be implied.[section 9]. - - For example, if a person enters a bus, there is implied promise that he will pay the bus fair.
- An agreement which is enforceable by law at the option of one or more of the parties thereto, but not atthe option of the other or others, is a voidable contract. [section 2(i)]. - - (a) When consent is obtained by coercion, undueinfluence, misrepresentation or fraud is voidable at the option of aggrieved party i.e. party whose consent was obtained bycoercion/fraud etc. However, other party cannot avoid the contract. (b) When a contract contains reciprocal promises andone party to contract prevents the other from performing his promise, the contract becomes voidable at the option of the partyto prevented. (section 53). Obvious principle is that a person cannot take advantage of his own wrong (c) When time isessence of contract and party fails to perform in time, it is voidable at the option of other party (section 55). A person whohimself delayed the contract cannot avoid the contract on account of (his own) delay.
- A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. [section2(j)]. - - Thus, initially a contract cannot be void, i.e. a contract cannot be void
The simple reason is that in such acase, it is not a contract at all to begin with. Hence, only a valid contract can become void contract due to some subsequentevents. e.g. the person dies or property is destroyed or Government imposes a ban etc. - - A void agreement is void
.It never becomes a contract. It is nullity and cannot create any legal rights.
What agreements are contracts
All agreements are contracts if they are made by the free consent of parties competent tocontract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing hereincontained shall effect any law in force in India and not hereby expressly repealed, by which any contract is required to bemade in writing or in the presence of witnesses, or any law relating to the registration of documents. [section 10].
Who are competent to contract
Every person is competent to contract who is of the age of majority according to the lawto which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject.[section 11].
– Consent of both parties must be free. Consent obtained through coercion, undue influence, fraud,misrepresentation or mistake is not a ‘free consent’. -
Two or more persons are said to consent when they agree upon thesame thing in the same sense. [section 13]. - - Consent is said to be free when it is not caused by - (
) coercion, as definedin section 15, or (
) undue influence, as defined in section 16, or (
) fraud, as defined in section 17, or (
) misrepresentation,as defined in section 18, or (
) mistake, subject to the provisions of sections 20, 21 and 22. - - Consent is said to be socaused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentationor mistake. [section 14].
- An agreement not enforceable by law is said to be void. [section 2(g)]. - - Note that it is
‘voidcontract’, as an agreement which is not enforceable by law does not become ‘contract’ at all. Following are void agreements -* Both parties under mistake of fact (section 20) * Unlawful object or consideration (section 24) * Agreement withoutconsideration (section 25) * Agreement in restraint of marriage (section 26) * Agreement in restraint of trade (section 27) *Agreement in restraint of legal proceedings (section 28) * Uncertain agreement (section 29) * Wagering agreement (section29) * Agreement to do an impossible Act (section 56). - - These are discussed below.
Obligation of person who has received advantage under void agreement or contract that becomes void
When anagreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.
- A “contingent contract” is a contract to do or not to do something, if some event, collateral to suchcontract, does or does not happen.
A contracts to pay B Rs. 10,000 if B’s house is burnt. This is a contingentcontract. [section 31].
SHEFEEK.M.S, Menon & Ayyar, Chartered Accountants, Ernakulam. Mob: 09947377257, Email: email@example.com