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UNIT 1 Indian Contract Act 1872

UNIT 1 Indian Contract Act 1872

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Published by Rahul Kapale
Indian Contract Act 1872
Indian Contract Act 1872

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Published by: Rahul Kapale on Jul 16, 2012
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 U/S-2(a) PROPOSAL or OFFER:- When one


person signifies his willingness to do or to abstain from doing anything, with a view to obtain the assent of that other to such act or abstinence, he is said to make a proposal.

U/S-2(b) –PROMISE:-When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal ,when accepted becomes a promise. THE INDIAN CONTRACT 7/16/12 22


1.According to mode of communication

a. Express offer: when an offer is put in words. b. Implied offer: inferred from the conduct . . 2.On the basis of offerees: a. Specific offer-to a particular person. b. General offer-to the public at large generally.

This offer is also called continuing offer or open offer THE INDIAN CONTRACT 44 . b. the terms or on conditions.Cont. Counter offer: when an offer is accepted on c. Cross offer: when two persons without having the knowledge of other’s offter made to each other identical offers. on the basis of nature a.. Standing offer: a standing offer is an offer 7/16/12 which is open for aceptance over a period of time. 3. it is not an acceptance but a counter offer.

7/16/12 THE INDIAN CONTRACT 55 .DEFINITIONS U/S-2(C ) PROMISOR AND PROMISEE:-The person making the proposal is called the promisor.forming the consideration for each other. And the person accepting the proposal is called the promisee or (offeror and oferee) § U/S-2 (e):AGREEMENT:-Every promise and every set of promises .is an agreement.

§ U/S-2 (h)-CONTRACT:-A contract is an agreement enforceable by law.Agreement must be enforceable by law.AN AGREEMENT IS A PROMISE AND A PROMISE IS AN ACCEPTED PROPOSAL.” 7/16/12 THE INDIAN CONTRACT 66 . Thus for the formation of a contract: 1. So we can summarise as: “A CONTRACT IS AN AGREEMETN. 2.Cont………….There must be an agreement..

agreement According to sir William Anson “A legally binding agreement between two or more persons by which rights are acquired by one or more to acts or forbearances on the part of the others” According to Salmond “ A contract is an agreement creating and defining obligations between the parties.” 7/16/12 THE INDIAN CONTRACT 77 .

something. Consideration must be at the desire of the promisor b. or abstains from doing or promises to do or to abstain from doing.the promisee or any other person has done or abstained from doing . Essential rules of consideration: a. Its not necessary to benefit oneself only 7/16/12 THE INDIAN CONTRACT 88 . or does. such act or abstinence or promise is called a consideration for the promise.Cont…… u/s-(d) Consideration:-When at the desire of the promisor.

 but when it is given by third party he will entitled to get the benefit only when he is a party because “ stranger to consideration can sue but a stranger to the contractCONTRACT cannot sue” 99 7/16/12 THE INDIAN ..Cont.

Cont. f. It should not be impossible 7/16/12 THE INDIAN CONTRACT 1010 . It must be real. It must not be unlawful i. Consideration need not to be adequate g. It must be certain j. not fanciful or illusory h.

Without consideration.Made on account of natural love and affection between parties standing in near relations. 7/16/12 THE INDIAN CONTRACT 1111 .If an agreement is made a. Agreements without considerations are void but under the following circumstances an agreement may be without consideration.In writing and registered b. NATURAL LOVE AND AFFECTION 1.

The act must have been already done b.A promise for the act done in past a. 7/16/12 THE INDIAN CONTRACT 1212 . d. The act should be done to the promisor. Promisor so promises to compensate in whole or in part. c. The act should have been done voluntarily. 2.FOR PAST ACT.

7/16/12 THE INDIAN CONTRACT 1313 .Promise was made in writing and registered b.TIME BARRED DEBT 3.Promise to pay whole or in part a debt of which the creditor might have taken but unable to do so due to the limitations of suits. a. Past debt.

u/s-2(g)-Void Agreement:-An agreement u/s-2(i) voidable contract:-An agreement which is enforceable by law at the option of one or more of the parties thereto.but not at the option of the other is voidable contract. not enforceable by law is said to be void. THE INDIAN CONTRACT u/s-2(j)void contract:-A contract which 7/16/12 1414 . ceases to be enforceable by law becomes void when it ceases to be enforceable. u/s-2 (f) Reciprocal promises:-Promises which form the consideration for each other are called reciprocal promises.Cont……….

5 lac by letter.COMPLETION OF COMMUNICATION v The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. 7/16/12 THE INDIAN CONTRACT 1515 . Example: A proposes to sell a house to B at Rs.The communication of the proposal is complete when B receives the letter.

Communication of acceptance v The comm. As against B when A receives the letter.when it comes to the Example: B accepts the proposal sent by A by post.of acceptance is complete As against A when the letter is posted.when it is put in a course of transmission to him so as the become out of the power of the acceptor. 7/16/12 THE INDIAN CONTRACT 1616 .of an acceptance is comlete Ø As against the proposer. Ø As against the acceptor.The comm. knowledge of the proposer.

THE INDIAN CONTRACT 1717 v An acceptance may be revoked at any time 7/16/12 . before the communication of the acceptance is complete as against the acceptor.CON… v Revocation of proposals and acceptance:A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer but not afterwards. but not afterwards.

Example A proposes to sell his house to B by a letter. but not afterwards. 7/16/12 THE INDIAN CONTRACT 1818 . B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A. B receives the proposal letter and accepts it by sending a letter of acceptance by post. A may revoke his proposal any time before or at the moment when B posts his letter of acceptance but not afterwards.

7/16/12 THE INDIAN CONTRACT 1919 . By the failure of fulfilling conditions.if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.How revocation to be made By the notice to the other party. By the lapse of the prescribed time. By the death or insanity of the proposer.

4. ALL AGREEMENTS ARE CONTRACTS OF THEY ARE MADE 1.Parties are competent to contract. 2. 7/16/12 THE INDIAN CONTRACT 2020 .WHAT AGGREMENTS ARE CONTRACTS. 5.Not declared to be void.By free consent of the parties.For lawful Consideration.Object is lawful. 3.

Essential elements of a valid contract Two or more parties. 7/16/12 THE INDIAN CONTRACT 2121 . Certain and possibility of performance. Offer and acceptance Lawful consideration Intention to create legal relationship Capacity of parties Free consent Lawful object Agreement not declared to be void.

CONSENSUS AD IDEM 7/16/12 THE INDIAN CONTRACT 2222 .Consent u/s-13 Two or more person are said to consent when they agreed upon the same thing in the same sense.

7/16/12 THE INDIAN CONTRACT 2323 .22.21.Free consent-u/s-14  A consent is said to be free when it is not caused by v COERCION as defined in sec-15 v UNDUE INFLUENCE as defined in sec- 16 v FRAUD as defined in sec-17 v MISREPRESENTATION as defined in sec-18 v MISTAKE as given in sec-20.

of the age of majority according to law in existence. and not disqualified by law for the time being in forece. of sound mind 3. 2.Competency or capacity to contract u/s-11 Every person is competent to contract who is 1. 7/16/12 THE INDIAN CONTRACT 2424 .

but 7/16/12 occasionallyTHE INDIAN CONTRACT of sound mind. he is capable of understanding it and of forming a rational judgment as to its effect upon his interest. may make a contract when he is of sound mind. he is capable of contract if. at the time when he makes it. occasionally of sound mind.Persons of unsound mind u/s-12 A person is said to be of sound mind for the purpose of making a contract if at the time when he makes it. may not make2525 a . A person who is usually of unsound mind. but A person who is usually of unsound mind.

e. with the intention of causing any person to enter into an agreement.ThisCONTRACT agreement of execution 7/16/12 THE INDIAN 2626 .g.or the unlawful detaining or threatening to detain.Coercion u/s-15 Coercion is the committing or threatening to commit any act forbidden by the IPC. A.a wife said to her husband to execute the property of house to her brother’s name if he does not do so she will commit suicide. Husband execute. any propertyto the prejudice of any person whatever.

UNDUE INFLUENCE-u/s16 A contract is said to be induced by undue influence where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other. dominating the will of other One person is deemed to be in a position of --where one has real or apparent authority over the other or where one is in fiduciary relationship with INDIAN CONTRACT other. 7/16/12 THE 2727 .

so B declines to give money to him except on high rate of interest. . A goes to B to to have some money. But at that time there is stringency in the market .This transaction is in the ordinary course of business and the contract is not induced by 7/16/12 THE INDIAN CONTRACT 2828 undue influence. It lies on B to prove that the contract was not induced by undue influence.examples A being in debt to B.A accepts this. the money lender of his village. contracts a fresh loan on terms which appear to be inconscionable.

The suggestion. as a fact. him to enter into the contract.The active concealment of a fact by one having knowledge or belief of the fact 7/16/12 THE INDIAN CONTRACT 2929 . or to induce.of that which is not true .FRAUD Fraud means and includes any of the following acts Committed by a party to contract or with his connivance or by his agent. 1. with intent to deceive another party thereto or his agent. by one who does not believe it to be true. 2.

A promise made without any intention of performing it 4. 7/16/12 THE INDIAN CONTRACT 3030 . This is not a fraud. Any other act which law specially so declares.Mere keeping silence to the fact is not a concealment amounted to fraud untill there is not a duty to speak or to reply.Cont… 3. Explanation:. Examples:--A sells by auction a horse which A knows to be of unsound of mind. 5.Any other act fitted to deceive. A says nothing to B about the horse.

Examples B is a daughter of A and has just come of age.enter upon a contract.A’s silence is equivalent to speech. I shall assume A and B being trader. A has private information of a change in price which would affect B’swillingness to proceed with the contract. Here.the relation between the parties would make it A’s duty to tell B if the horse is unsound. A is not bound to inform. B says to A ‘if you do not deny. 3131 7/16/12 THE INDIAN CONTRACT . that the horse is sound” A said nothing. Here.

Misrepresentation means and includes

1.The positive assertion, in a manner not warranted but the information of the person making it, of that which is not true, though he believes it to be true. 2.Any breach of duty which without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice or to the prejudice of anyone claiming under him
7/16/12 THE INDIAN CONTRACT 3.Causing, however innocently, a party to an 3232



Where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. But merely an erroneous opinion as to the value of the thing which forms the subject matter of the agreement is not to be deemed a mistake as to a matter of fact.

A agrees to buy from B a certain horse. It

turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement is void. to be on its way from Delhi to Bareilly, But before the time of bargaining the goods were fired

A agrees to sell to B specific good supposed




FACT OF ONE PARTY: A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.Cont… EFFECT OF MISTAKES AS TO LAW: A contract is not voidable because it was caused by a mistake as to any law in force in India. THE INDIAN CONTRACT 3535 EFFECT OF MISTAKES AS TO MATTER OF 7/16/12 . but a mistake as to a law not in force in India has the same effect as a mistake of fact.

It is not fraudulent. It does not involves injury to the person or property of another person. It is not immoral. 7/16/12 THE INDIAN CONTRACT 3636 .3.LAWFUL OBJECT & LAWFUL CONSIDERATION v If  It is not forbidden by law.  It is permitted it does not defeat the provision of law.

who owes that sum to B.A agrees to sell his house to B for 10.000 rupees. These are lawful considerations. Here the promise-of each party is 7/16/12consideration for the promise of the other THE INDIAN CONTRACT 3737 the . A promises to pay B 1. Here B's promise to pay the sum of 10. fails to pay it.000 rupees. if C.000 rupees is the consideration for A's promise to sell the house.000 rupees at the end of six months. and A's promise to sell the house is the consideration for B's promise to pay the 10. 2.illustration 1. B promises to grant time to C accordingly.

A promises.000 rupees yearly for the purpose. A.3838 them of gains to . A promises to maintain B's child and B promises to pay A 1. 5. 3. 4..Cont. Here A's promise is the consideration for B's payment and B's payment is the consideration for A's promise and these are lawful considerations. or. Here the promise of each party is the consideration for the promise of the 'other party. B and C enter into an agreement for the 7/16/12 THE division amongINDIAN CONTRACT acquired. to make good to B the value of his ship if it is wrecked on a certain voyage. for a certain sum paid to him by B. They are lawful considerations.

Cont. on his principal 7. The agreement is void. as the consideration for it is unlawful.000 rupees to A. to obtain for B a lease of land belonging to his principal. The agreement between A and B is void. by A. and B promises to pay 1. agrees for money. as it implies a fraud by concealment.. being agent for a landed proprietor.A promises to obtain for B an employment in the public service. without the knowledge of his principal. 7/16/12 THE INDIAN CONTRACT 3939 . 6. A.

Cont. and B promises to restore the value of the things taken. 9. though the letting may 7/16/12be punishable under the Indian Penal THE INDIAN CONTRACT 4040 not . because it is immoral.A promises B to drop a prosecution which he has instituted against B for robbery. The agreement is void. as its object is unlawful. with B in favour of C. who is B's mukhtar. A agrees to let her daughter to hire to B for concubinage.000 rupees to A. The agreement is void. and C promises to pay 1. because it is immoral. The agreement is void. 10. as such..A. promises to exercise his influence. 8.

Example: A.DECLARED TO BE VOID BY LAW Agreements void. The agreement is void. 7/16/12 THE INDIAN for B’s 4141 and the consideration CONTRACT promise being in . B promises to pay to A a salary of 10. is unlawful. the object of A’s promise. the agreement is void.000 rupees a year. and an illegal traffic in other articles.a legal manufacture of indigo. if considerations and objects unlawful in part: If any part of a single consideration for one or more objects or any one or any part of any one of several considerations for a single object.promises to superintend on behalf of B.

7/16/12 THE INDIAN CONTRACT 4242 . is void. other than a minor.Agreement in restraint of marriage voidu/s-26 Every agreement in restraint of the marriage of any person.

trade or business of any kind. is to that extent void.Agreement in restraint of trade void. 7/16/12 THE INDIAN CONTRACT 4343 .u/s-27  Every agreement by which any one is restrained from exercising a lawful profession.

or any person deriving title to the good-will from him. carries on a like business therein.Exception 1. provided that such limits appear to the Court reasonable. 7/16/12 THE had to the 4444 regard beingINDIAN CONTRACT nature of the . One who sells the good-will of a business mayagree with the buyer to refrain from carrying on a similar business. so long as the buyer.within specified local limits.

(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract. or which limits the time within which he may thus enforce his rights. by the usual legal proceedings in the ordinary tribunals.Agreements in restraint of legal proceedings void u/s-28 Every agreement. or 7/16/12 THE INDIAN CONTRACT 4545 .

under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights 7/16/12 Is void to that CONTRACT THE INDIAN extent. 4646 . or discharges any party thereto from aby liability. (b) which extinguishes the rights of any party thereto.Cont..

There CONTRACT . There is nothing whatever to show what kind of oil was intended.Agreements void for uncertainty u/s-29 Illustrations: . b) A agrees to sell to B one hundred tons of oil of a specified' description. The agreement is void for uncertainty. are void. the meaning of which is not certain. or capable of being made certain.-Agreements. known as an article 7/16/12 THE INDIAN is no uncertainty here to 4747 of commerce. (a) A agrees to sell to B " a hundred tons of oil ".

7/16/12 THE INDIAN CONTRACT 4848 . (c) A. There is no uncertainty here to make the agreement void.. who is a dealer in cocoanut-oil only. (d) A agrees to sell to B " all the grain in my granary at Ramnagar ". agrees to sell to B "one hundred. tons of oil". and A has entered into a contract for the sale of one hundred tons of cocoanut-oil.Cont. The nature of A's trade affords an indication of the meaning of the words.

there is no uncertainty here to make the agreement void. prices was to be CONTRACT The 4949 . (e) A agrees to sell B " one thousand maunds of rice at a price to be fixed by C ". As the price is capable of being made certain. 'There I is nothing to show which of the two 7/16/12 THE INDIAN given. (f) A agrees to sell to B " my white horse for rupees five hundred or rupees one thousand"..Cont.

u/s--30 Agreements by way of wager are void .Agreements by way of wager void. or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made. and no suit shall be brought for recovering anything alleged to be won on any wager. 7/16/12 THE INDIAN CONTRACT 5050 .

made or entered into for or toward any plate. of the value or amount of five hundred rupees or upwards. This section shall not be deemed to render unlawful a subscription or contribution. prize or sum of money. to be awarded to the winner or winners of any horse-race 7/16/12 THE INDIAN CONTRACT 5151 .Exception.or agreement to subscribe or contribute.

collateral to such contract. 10. This is a contingent contract. A contracts to pay B Rs. does or does not happen.000 if B's house is burnt."Contingent contract" u/s-31 Illustration A " contingent contract " is a contract to do or not to do something. if some event. 7/16/12 THE INDIAN CONTRACT 5252 .

contingent on an event happening u/s-32 Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened. such contracts become void. 7/16/12 THE INDIAN CONTRACT 5353 . If the event becomes impossible.

to whom the horse has been offered. C dies without being married to B.illustrations A makes a contract with B to buy B's horse if A survives C. refuses to buy him. THE INDIAN CONTRACT 7/16/12 5454 . The contract cannot be enforced by law unless and until C refuses to buy the horse.  A makes a contract with B to sell a horse to B  A contracts to pay B a sum of money when B marries C. if C.This contract cannot be enforced by law unless and until C dies in A's lifetime. at a specified price. The contract becomes void.

THE INDIAN CONTRACT 5555 7/16/12 . and not before.Enforcement of contracts contingent on an event not happening. The ship is sunk. The contract can be enforced when the ship sinks. Illustration A agrees to pay B a sum of money if a certain ship does not return.-u/s-33 Contingent contracts to do or not to do anything if an uncertain future event does not happen can be enforced when the happening of that event becomes impossible.

the event shall 7/16/12 THE INDIAN CONTRACT 5656 .When event on which contract When event on which is contingent to be deemed impossible.-If the future event on which a be deemed-u/s-34 contract is contingent is the way in which a person will act at an unspecified time . if contract is contingentliving to it is the future conduct of a person.

C marries D. 7/16/12 THE INDIAN CONTRACT 5757 . although it is possible that D may die and that C may afterwards marry B. The marriage of B to C must now be considered impossible.Illustration: A agrees to pay B a sum of money if B marries C.

at the expiration of the time fixed. or if. such event has not happened.contingent on happening of specified event within fixed time u/s-35 Contingent contracts to do or not to do anything if a specified uncertain event happens within a fixed time become void if. such event 7/16/12 5858 becomes THE INDIAN CONTRACT impossible. before the time fixed. .

before the time fixed has expired. if it 7/16/12 5959 becomesTHE INDIAN CONTRACT such event certain that .Cont… Contingent contracts to do or not to do anything if a specified uncertain event does not happen within a fixed time may be enforced by law when the time fixed has expired and such event has not happened or.

'and becomes void if the ship is burnt within the year. The contract may be enforced if the ship returns within the year. The contract may be enforced if the ship does not 7/16/12 THE INDIAN CONTRACT 6060 return within the year. (b) A promises to pay B a sum of money if a certain ship does not return within a year. or is burnt .Illustration: (a) A promises to pay B a sum of money if a certain ship returns within a year.

if an impossible event happens. 7/16/12 THE INDIAN CONTRACT 6161 . are void. whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made.Agreement contingent on impossible events void u/s--36 Contingent agreements to do or not to do anything.

Illustrations: (a) A agrees to pay B 1. The agreement is void. The agreement is void.000 rupees if B will marry A's daughter C.000 rupees if two straight lines should enclose a space. (b) A agrees to pay B 1. 7/16/12 THE INDIAN CONTRACT 6262 . C was dead at the time of the agreement.

certain day.000. THE INDIAN CONTRACT 6363 (b) A promises to paint a picture for B by a 7/16/12 . A dies before that day. at certain price. A's representatives are bound to deliver the goods to B. The contract cannot be enforced either by A's representatives or by B.000 to A's representatives.Illustrations (a) A promises to deliver goods to B on a certain day on payment of Rs. A dies before the day. and B is bound to pay the Rs. 1. 1.

conditions:- Every such offer must fulfil the following (1) it must be unconditional. 7/16/12 THE INDIAN CONTRACT 6464 . and the offer has not been accepted.Effect of refusal to accept offer of performance u/s. nor does he thereby lose his rights under the contract.-Where a promisor has made an offer of 38 performance to the promisee. the promisor is not responsible for nonperformance.

.Cont…. and under such circumstances that the person to whom it is made may have a reasonable opportunity of ascertaining that the person by whom it is made is able and willing there and then to do the whole of what he is bound by his promise to do (3) if the offer is an offer to deliver anything to the promisee. (2) it must be made at a proper time and place. the promisee must have a reasonable opportunity of seeing that the thing offered is the thing which the promisor 7/16/12 6565 is bound by THE INDIAN CONTRACT his promise to deliver.

on the 1st March.Illustration contracts to deliver to B at his warehouse. 100 CONTRACT 7/16/12 THE 6666 . under such circumstances that B may have a reasonable opportunity of satisfying himself that the thing offered is cotton of the quality contracted for. 100 bales of cotton of a particular quality. 1873. and that there are INDIAN bales. on the appointed day. In order to make an offer of a performance with the effect stated in this section. A must bring the cotton to B's warehouse.

to sing at his theatre two nights in every week during the next two months. or u/s-39 from performing. the 7/16/12 manager of a theatre. his acquiescence in its continuance. the promisee may put an end to the contract. B is at liberty to put an end to the contract. and B engages to pay her 100 rupees for each night's performance. enters into a contract with B. by words or conduct. a singer. On the sixth night A wilfully absents herself from the theatre. THE INDIAN CONTRACT 6767 . his promise in its disabled himself entirety. unless he has signified. (a) A.Effect of refusal of party to perform promise wholly Party to a contract has refused to perform.

On the sixth night A wilfully absents herself. a singer. With the assent of B. and B engages to pay her at the rate of 100 rupees for each night. enters into a contract with B. B has signified his acquiescence in the continuance of the contract. week during the next two months. A sings on the seventh night. to sing at his theatre two nights in every.Illustrations (b) A. but is entitled to compensation for the damage sustained by him A's failure to sing on the sixth 6868 7/16/12 throughTHE INDIAN CONTRACT . the manager of a theatre. and cannot now put an end to it.

In other cases. such promise must be performed by the promisor.Person by whom promise is to be performed-u/sIf it appears from the nature of the 40 that it was the intention of the case parties to any contract that any promise contained in it should be performed by the promisor himself. the promisor or his representatives may employ a competent person to 7/16/12 6969 perform itTHE INDIAN CONTRACT .

Illustrations (a) A promises to pay B a sum of money. if A dies before the time appointed for payment. A must perform this promise personally THE INDIAN CONTRACT 7/16/12 7070 . or employ some proper person to do so. A may perform this promise. and. either by personally paying the money to B or by causing it to be paid to B by another . his representatives must perform the promise. (b) A promises to paint a picture for B.

he cannot afterwards enforce it against the promisor. 7/16/12 THE INDIAN CONTRACT 7171 .Effect of accepting performance from third person u/s-41 When a promisee accepts performance of the promise from a third person.

all such persons. his representative jointly with the survivor or survivors. the representatives of all jointly. after the death of any of them.Devolution of joint liabilities.-When two or more persons have made a joint promise. during their joint lives. then. and. after the death of the last survivor. unless a contrary intention appears by the contract. must fulfil the promise 7/16/12 THE INDIAN CONTRACT 7272 . and.u/s-42 .

Any one of joint promisors may be compelled to perform When two or.to perform the whole of the promise. Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise. in the absence of promise. more persons make a joint u/s-43 promisee may. unless a contrary intention appears from the contract 7/16/12 THE INDIAN CONTRACT express agreement to the contrary. compel any 1*[one or more] of such joint promisors. 7373 . the ----Each promisor may compel contribution.

-Nothing in this section shall 7/16/12 .-If any one of two or more joint promisors makes default in such contribution. payments made by the surety on behalf of the principal.Cont… Sharing of loss by default in contribution. the remaining joint promisors must bear the loss arising from such default in equal shares. or entitle the principal to recover anything from the surety on account of payments made by the principal THE INDIAN CONTRACT 7474 Explanation. prevent a surety from recovering from his principal.

C is entitled to receive 500 rupees from A's estate. D may compel either A or B or C to pay him 3. B and C jointly promise to pay D 3.250 rupees from B. C is compelled to pay the whole. (b) A. and 1. A is insolvent.000 rupees.000 rupees. but his assets are sufficient to pay one-half of his debts.000 rupees. THE INDIAN CONTRACT 7575 7/16/12 . B and C jointly promise to pay D the sum of 3.Illustrations (a) A.

A is entitled to receive 1. A and B are compelled to pay the whole sum.000 rupees. C fails to pay. pay D 3. (d) A.Cont… (c) A. C is unable to pay anything. A and B being only sureties for C. B and C are under a joint promise to 7/16/12 THE INDIAN CONTRACT 7676 . They are entitled to recover it from C.000 rupees. and A is compelled to pay the whole. B and C are under a joint promise to pay D 3.500 rupees from B.

neither does it free the joint promisors so released from responsibility to the other 7/16/12 THE INDIAN CONTRACT 7777 joint promisor or joint promisors. .Effect of release of one joint promisor u/s-44 Where two or more persons have made a joint promise. a release of one of such joint promisors by the promisee does not discharge the other joint promisor or joint promisors .

u/s-45. after the death of the last survivor. and. with them during their joint lives. unless a contrary intention appears from the contract. after the death of any of them. with the representative of such deceased person. as between him and them. then. with the representatives of all jointly 7/16/12 THE INDIAN CONTRACT 7878 . Jointly with the survivor or survivors. and.Devolution of joint rights When a person has made a promise to two or more persons jointly. the right to claim performance rests.

in consideration of 5. B dies. lent to him by B and C.Illustration A. and after the death of C with the representatives of B and C jointly 7/16/12 THE INDIAN CONTRACT 7979 . promises B and C jointly to repay them that sum with interest on a day specified.000 rupees. The right to claim performance rests with B's representative jointly with C during C's life.

Time by the contract. question of specified u/s-46 7/16/12 THE INDIAN CONTRACT 8080 .-The questionand is a reasonable time " is. must be performed within a reasonable is to be made " what no Explanation. in each particular case. a promisor is to of Where. and no time for performance is specified. the engagement application time. for performance perform his promise without application by promise.when no the promisee. a time is fact.

Time and place for performance of promise. perform it without application by the promisee. 7/16/12 THE INDIAN CONTRACT 8181 . where time is specified and no application to be madeWhen promise is to be performed on a certain 47 and the promisor has undertaken to day. the promisor may perform it at any time during the usual hours of business on such day and at the place at which the promise ought to be performed.

A has not performed his promise. and they are not received. 7/16/12 THE INDIAN CONTRACT 8282 .Illustration On that day A brings the on the first January. A promises to deliver goods at B's warehouse goods to B's warehouse. but after the usual hour for closing it.

. promisee to apply for performance at a proper place and within the usual hours of business THE INDIAN CONTRACT 8383 7/16/12 . Application for performance on certain day to be at proper u/sWhen a promise is to be performed 48 on a certain day. and the promisor has not undertaken to perform it without application by the promisee. it is the duty of the.

where no application to be made and no place fixed When a promise is to be performed for performance u/s-49 without application by the promisee. and no place is fixed for the performance of it. it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise. and to perform it at such place. THE INDIAN CONTRACT 8484 7/16/12 .Place for performance of promise.

Illustration A undertakes to deliver a thousand maunds of jute to B on a fixed day. and must deliver it to him at such place. 7/16/12 THE INDIAN CONTRACT 8585 . A must apply to B to appoint a reasonable place for the purpose of receiving it.

Performance in manner or at time prescribed or sanctioned by promisee u/s-50 The performance of any promise may be made in any manner. or at any time which the promisee prescribes or sanctions 7/16/12 THE INDIAN CONTRACT 8686 .

Illustrations. (b) A and B are mutually indebted. and this is done by C. B owes A 2. orders the amount to be transferred from his account to A's credit. This amounts to a payment by A and B. A and B settle an account by setting off one item against another. and B pays A the balance found to be due from him upon such settlement. Afterwards. of the sums which 8787 7/16/12 THE INDIAN CONTRACT .respectively. B.000 rupees. and before A knows of the transfer. C fails. A desires B to pay the amount to A's account with C. There has been a good payment by B. who also banks with C. a banker.

B accepts some of A's goods in reduction of the debt.illustrations (c) A owes B 2.000 rupees. The debt is discharged as soon as B puts into thepost a letter containing the note duly addressed to 7/16/12 THE INDIAN CONTRACT 8888 A. 100 by post. who owes him Rs. to send him a note for Rs. 100. (d) A desires B. . The delivery of goods operates as a part payment.

7/16/12 8989 . unless reciprocal promisee ready and willing to perform. When a contract consists of reciprocal promises to be simultaneously performed.Performance of reciprocal promises u/s51-55 .Promisor not bound to u/s-51 perform. no promisor need perform his promise unless the promisee is ready and willing to perform his reciprocalTHE INDIAN CONTRACT promise.

(b) A and B contract that A shall deliver goods to B at a price to be paid by instalments. ---A need not deliver the goods. unless A is ready and willing to deliver them on payment. unless B is ready and willing to pay for the goods on delivery.illustration (a) A and B contract that A shall deliver goods to B to be paid for by B on delivery. the first instalment to be paid on delivery. unless B is ready and 7/16/12 9090 . THE INDIAN CONTRACT ---A need not deliver. ---B need not pay for the goods.

and. where the order is not expressly fixed by the contract. they shall be performed in that order. they shall be performed in that order which 7/16/12 nature of the transaction THE INDIAN CONTRACT 9191 the .Order of performance of reciprocal promises u/s52 Where the order in which reciprocal promises are to be performed is expressly fixed by the contract.

Illustration. (b) A and B contract that A shall make over his stock-in-trade to B at a fixed price. . and B promises to give security for the payment of the money. (a) A and B contract that A shall build a house for B at a fixed price. for the nature of the transaction requires that A should have security before he delivers up his 7/16/12 THE INDIAN CONTRACT 9292 stock. A's promise to build the house Must be performed before B's promise to pay for it. A's promise need not be performed until the security is given.

When a contract contains reciprocal promises.Liability of party preventing event on which the contract is to take effect. and he is entitled to compensation from the other party for any loss which he may sustain in consequence of the non-performance of the contract. and one party to the contract prevents the other from performing his promise. the contract becomes voidable at the option of the party so prevented.U/S-53. THE INDIAN CONTRACT 7/16/12 9393 .

he is entitled to recover from A compensation for any loss which he 7/16/12 incurredINDIANits non-performance. if he elects to rescind it. and. THE by CONTRACT 9494 has .Illustration. B is ready and willing to execute the work accordingly. but A prevents him from doing so. A and B contract that B shall execute certain work for A for a thousand rupees. The contract is voidable at the option of B .

and must make compensation to the other party to the contract for any loss which such other party may sustain by the non7/16/12 THE INDIAN CONTRACT 9595 . such promisor cannot claim the performance of the reciprocal promise.in contract consisting of reciprocal promises-u/s-54 When a contract consists of reciprocal promises. and the promisor of the promise last mentioned fails to perform it.Effect of default as to that promise which should be first performed. such that one of them cannot be performed. or that its performance cannot be claimed till the other has been performed.

from Calcutta to the Mauritius.illustations (a)A hires B's ship to take in and convey. A cannot claim the performance of B's promise. a cargo to be provided by A. (b)A contracts with B to execute certain builder's work for a fixed price. A does not provide any cargo for the ship. B receiving a certain freight for its conveyance. and must make compensation to B for the loss which B sustains by the nonperformance of the contract. and THE INDIAN CONTRACT be executed. A the work cannot . B refuses to furnish any scaffolding or 7/16/12 9696 timber. B supplying the scaffolding and timber necessary for the work.

certain merchandise on board a ship which cannot arrive for a month. B does not pay within the week. at a specified price. and B must make compensation. and B promises A to pay for them within a month. 9797 to INDIAN CONTRACT . (d)A promises B to sell him one hundred bales of merchandise. to be delivered next day. and B engages to pay for the merchandise within a week from the date of the contract. A does not deliver according to his promise. A's promise to deliver need not be performed. 7/16/12 B's promise THE pay need not be performed.illustration (c)A contracts with B to deliver to him.

Effect of such failure when time is not essential the intention of the If it was not parties that time should be of the essence of the contract. but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure 7/16/12 THE INDIAN CONTRACT 9898 . the contract does not become voidable by the failure to do such thing at or before the specified time .

or so much of it as has not been performed. becomes voidable at the option of the promisee. or certain things at or before specified times. if the intention of the parties was that time should be of the essence of the contract. 7/16/12 THE INDIAN CONTRACT 9999 . the contract.Effect of failute where time is essential u/s-55 When a party to a contract promises to do a certain thing at or before a specified time. and fails to do any such thing at or before the specified time.

Effect of acceptance of performance at time other than that agreed upon. If, in case of a contract voidable on account of
the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed,unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.


Contract to do impossible or unlawful afterwards-u/s--56

A contract to do an act which, after

the contract is made, becomes impossible, or, by reason of some event which the Promisor could not prevent, unlawful, becomes void when the act becomes impossible orunlawful

Compensation for loss non performance

Where one person has promised to

do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non7/16/12 THE INDIAN CONTRACT 102 performance of the promise

(a) A agrees with B to discover treasure by

magic. The agreement is void,

(b) A and B contract to marry each other.

Before the time fixed for the marriage, A goes mad. The contract becomes void.
(c) A contracts to marry B, being already

married to C, and being forbidden by the law to Which he is subject to Practise polygamy, A must make compensation to B for the loss caused to her by the non-performance of his promise. 7/16/12 THE INDIAN CONTRACT 103

(d) A contracts to take in cargo for B at a

foreign port. A's Government afterwards declares war against the country in which the port is situated. The contract becomes void when war is declared.
(e) A contracts to act at a theatre for six

months in consideration of a sum paid in advance by B. On several occasions A is too ill to act. The contract to act on those occasions becomes void.


or any one whom he is legally bound to support.  If a person. person with necessaries suited to his condition in life. is supplied by another. the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person. CONTRACT 7/16/12 THE INDIAN 105 .DOCTRINE OF UNJUST ENRICHMENT OR U/S-68-Claim for necessaries supplied to QUASI CONTRACT: person incapable of contracting. incapable of entering into a contract. or on his account.

with necessaries suitable to his condition in life. A is entitled to be reimbursed from B's property. with necessaries suitable to their condition in life.illustration (a) A supplies B. A is entitled to be reimbursed from B's property. THE INDIAN CONTRACT 106 . a lunatic. a lunatic. (b) A supplies the wife and children 7/16/12 of B.

in payment of which he is interested A person who is interested in the payment of money which another is bound by law to pay. and who therefore pays it. 7/16/12 THE INDIAN CONTRACT 107 .Implied and quasi contract u/s-69.Reimbursement of person paying money due by another. is entitled to be reimbursed by the other.

the consequence of such sale will be the annulment of B's lease. The revenue payable by A to the Government being in arrear. B. A is bound to make good to B the amount soCONTRACT paid 7/16/12 THE INDIAN 108 . to prevent the sale and the consequent annulment of his own lease. on a lease granted by A.illustration. his land is advertised for sale by the Government. Under the revenue law. the zamindar. pays to the Government the sum due from A. B holds land in Bengal.

and such other person enjoys the benefit thereof. or delivers anything to him. not intending to do so gratuitously.Obligation of person enjoying benefit of nongratuitous act u/s-70-Where a person lawfully does anything for another person. the latter is bound to make compensation toCONTRACT the former in 7/16/12 THE INDIAN 109 .

a tradesman. He is bound to pay A for them. B treats the goods as his own. (b) A saves B's property from fire. leaves goods at B's house by mistake. A is not entitled to compensation from B. if the circumstances show that he intended to act gratuitously 7/16/12 THE INDIAN CONTRACT 110 .illustrations (a) A.

-A person who finds goods belonging to another. 7/16/12 THE INDIAN CONTRACT 111 . He put it in his pocket showing that he has found nothing. is subject to the same responsibility as a bailee. and takes them into his custody.Responsibility of finder of goods u/s-71. Illustration A goes to a shop where on the floor he finds a note of rupee one thousand knowing that note is of one person who is at that time at the shop.

-A person to whom money has been paid .  must repay or return it. 7/16/12 THE INDIAN CONTRACT 112 .Liability in case of goods delivered by mistake or coerscion u/s-72. Ø by mistake or Ø under coercion.or anything delivered.

7/16/12 THE INDIAN CONTRACT 113 . Actual or present breach of contract. B. it is called breach of contract. Anticipatory breach of contract. It may be: A.Breach of contract After formation of contract this is the time to perform the duties underlying therein but before the time of performance or at the time of performance either of the party refuses to perform duties on his part or make it himself unable to perform the contract.

But during the Dec.2010.Cont. A contract to B that on 1st july.2010 A says that he will not give him appointment. Anticipatory breach is that breach where a party to the contract declared his intention of not performing the contract before the performance is due. so repudiates the contract. that on 7/16/12 THE INDIAN CONTRACT 114 . the 1st july 2011 he will appoint B as senior HR in his company.This repudiation before the actual time of performance is anticipatory breach of contract..

If X does not sing for second week. give his performance for two days every week. theatre owner.Actual or present breach Actual or present breach of contract may be either on the date of performance or during the performance. Illustration X a famous singer enter into contract with Y. Here Y has two options: Y may rescind contract and claim 7/16/12 THE compensation INDIAN CONTRACT 115 . This is breach of contract.

Remedies for breach of contract Rescision of contract u/s-39 Suit for damageSuit for specific performance Suit for injuction Suit for quantum damage 7/16/12 THE INDIAN CONTRACT 116 .

when they made contract to be likely to result from breach. These can be recovered if the damages are direct and aggrieved party suffered.Damage caused by breach u/s-73 If the contract is breached or not performed the party who is at loss can claim the following damages: Ordinary damages: those damages which naturally arise in usual course of things from such breach. 7/16/12 THE INDIAN CONTRACT 117 . Special damages: Such damages which the parties how.

7/16/12 THE INDIAN CONTRACT 118 .illustrations A contracts to pay a sum of money to B on a day specified. A does not pay the money on that day. is unable to pay his debts. and is totally ruined. B. in consequence of not receiving the money on that day. together with interest up to 'the day of payment. A is not liable to make good to B anything except the principal sum he contracted to pay.

Acontracts to sell and deliver 500 bales of cotton to B on a fixed day. is obliged to close his mill. A breaks his promise. having no cotton.Cont. A knows nothing of B's mode of conducting his business. A is not responsible to B for the loss caused to B by the closing of the mil 7/16/12 THE INDIAN CONTRACT 119 .. and B.

C fails to perform his contract so A purchase A can claim 50K rupees from C as 7/16/12 compensation if he could not THE INDIAN CONTRACT have perform 120 .40K per set. A contracts with C.A. an agency owner of Dell to supply 10 set of dell laptops informing C that these sets are to be supplied to his customer at so and so date at Rs. showroom owner of Dell computers.45K per set to fulfill his promise to A. contracts with B to supply 10 sets of laptops at the rate of 50K per set at a specified date. those set from another agency holder at Rs.

The consignee pays the sum charged in order to obtain the goods. A alone pays the amount to C. (b)A railway company refuses to deliver up certain goods to the consignee. pays 100 rupees over again to C.illustrations (a)A and B jointly owe 100 rupees to C. not knowing this fact. and B. C is bound to repay the amount to B. He is 7/16/12 THE INDIAN so much 121 entitled to recover CONTRACT of the charge . except upon the payment of an illegal charge for carriage.

The person who gives the indemnity is called 7/16/12 A contracts THEindemnify B against the to INDIAN CONTRACT 122 . the indemnifier. is called a contract of Indemnity.Contract of indemnity U/S-124 A contract by which one party promises to save the other from the loss caused to him by the conduct of the promisor himself or by the conduct of any other person.and the person for whose protection it is given called the indemnity holder.

Rights of indemnity holder All costs and expenses. All damages within the scope contract. All sums which he has made under the term of any compromise of any such suit. 7/16/12 THE INDIAN CONTRACT 123 .

7/16/12 . of a third person in case of his fault. the " surety“ The person who gives the guarantee is called The person in respect of whose default the guarantee is given is called the " principal debtor ". THE INDIAN CONTRACT 124  A guarantee may be either oral or written. or discharge the liability.Contract of guarantee u/s-126 A "contract of guarantee " is a contract to perform the promise. and the person to whom the guarantee is given is called the " creditor ".

C will pay for them in default of payment by B.illustrations B requests A to sell and deliver to him goods on credit. and promises that. A agrees to do so. A agrees to forbear as requested. C promises to guarantee the payment in consideration of A's promise to deliver the goods. C afterwards requests A to forbear to sue B for the debt for a year. if he does so. This is a sufficient consideration for C's promise. provided C will guarantee the payment of the price of the goods. (b) A sells and delivers goods to B. ThisINDIAN sufficient consideration125 7/16/12 THE is a CONTRACT .

While in contract of indemnity there are only two parties i. indemnifier and indemnity holder.e.Difference between contract of guarantee and contract of indemnity There are three parties in contract of guarantee i.e. But in indemnity liability of indemnifier is primary and secondary.principal debtor and surety. in contract of guarantee and surety’s liability is secondary.creditor. THE INDIAN CONTRACT The primary liability is of the principal debtor 7/16/12 126 .

In contract of guarantee it is necessary that Liability in contract of guarantee is existing one but in contract of indemnity it is contingent upon some happenings. surety should guarantee at the request of debtor but in indemnity indemnifirer should give the indemnity on the request of indemnity holder. In contract of guarantee at the same time there are three contracts whereas in contract of indemnity there is only one contract.Cont.. 7/16/12 THE INDIAN CONTRACT 127 .

when the purpose is accomplished. “The delivery of goods by one person to another for some purpose. upon a contract that they shall. be returned or otherwise disposed of according to the conditions of the persons delivering them” As per Indian contract Act Bailment means The person who delivers the goods is called 7/16/12 Bailor and the person to whom goods are THE INDIAN CONTRACT 128 .Contract of Bailment (u/s-148) The term bailor has been derived from the french word ‘baillier’ which means to deliver.

There must be delivery of goods from one person to another. Contract must be to deliver some movable goods. 7/16/12 THE INDIAN CONTRACT Examples bailment may be for deposit. Goods delivered must be returned when the purpose is fulfilled.Essential elements of Bailment There must be a contract. Goods must be delivered for some specific purpose. for 129 .

Rights of bailor To claim damage. To claim compensation for unautthorised use of goods. To claim profit if any is there from the 7/16/12 THE INDIAN CONTRACT 130 . To claim compensation for the loss caused due to mixup with other goods.—151 To receive the delivered goods back.

To pay the expenses. THE INDIAN CONTRACT 131 . To disclose the fault if any in the goods.Duties of bailor Duty to deliver the goods. To receive back the goods or to give 7/16/12 diretion for its disposal. To indemnify the bailee for breach of warrants.

To return the goods to bailor or as directed. 7/16/12 THE INDIAN CONTRACT 132 . To give back profit or increase in the goods. Not to do anything with the goods against the conditions. Mixture of goods when separable or non- separable. Not to make unauthorised use of goods. Not to mix goods with others.Duties of Bailee To take care of the goods as his own.

To recover goods due to defects of the goods. To claim necessary expenses. 7/16/12 THE INDIAN CONTRACT 133 . To return goods.Rights of Bailee To claim damage. To exercise lien on goods. Right to be indemnified.

Contract of Pledge-u/s172 In this case the ‘bailor ‘is called The bailment of goods as security for payment of a debt or performance of a promise is called ‘pledge’. the bailment of watch is a THE INDIAN CONTRACT 134 . “pledger” and the ‘bailee’ is called “pawnee” A borrows Rs 300 from B and keeps his watch as security for payment of the 7/16/12 debt.

Difference between pledge and bailment Purpose: The bailment may be for any purpose but pledge is only for the security for payment of debt or performance of promise. Right to use: Bailee may according to the conditions of bailment. use the goods bailed but pledgee can not use the pledged goods. Right to sell: the bailee can not sell the 7/16/12 goods THE INDIAN CONTRACT 135 but if pawner default then pawnee .

7/16/12 THE INDIAN CONTRACT 136 .Cont… Discharge of contract: a contract of bailment is discharged when the purpose is accomplished or after specified time but a contract of pledge is discharged when the payment of debt is made or the promise is performed or the goods bailed as security are sold due to default.

Rights & duties of pawner/pledger RIGHTS To get back the goods. 7/16/12 THE INDIAN CONTRACT 137 . To redeem the goods To take care and preserve the goods To receive increase or profit from the goods To exercise rights of a debtor.

To pay the debt interest and other expenses or perform the promise any time specified. 7/16/12 THE INDIAN CONTRACT 138 . is there with the pawnee To pay extraordinary expenses if no contrary To redeem the goods pledged before sale To pay additional expenses arise due to default.Duties of pawner To disclose the defects in the goods pledged.

7/16/12 THE INDIAN CONTRACT 139 . To sue against the pawner To sell the goods.Rights and duties of Pawnee Rights---To retain the goods untill payment is not made To retain goods for subsequent advances To receive extraordinary expenses.

duties To take care of the goods Not to use the goods Not to mix the gods with his own goods To return the goods after payment of debt or performance of the promise To give notice before sale of the goods To return the increase or profit from the goods pledged To pay surplus of the proceeds of the sale of 7/16/12 the goods pledged THE INDIAN CONTRACT 140 .

Agency Agency is a contract where one person called agent. is permitted to do any act for his principal or to represent his master in dealings with the third persons. or who isINDIAN CONTRACT so represented is called the141 7/16/12 THE . So agency is a medium of executing things by Agent:-u/s-182 “ An agent is a person employed to do any act for another . one person to another.or to represent another in dealings with third persons. The person for whom such act is done.

Cont. he is authorised to do it through agency.He who does his act throught other is considered as he has does it himself. The essence of the matter is that the principal authorised the agent to represent ro act for him in bringing the principal into contractual relation with a third person. 2. 7/16/12 THE INDIAN CONTRACT 142 . Two principles govern the law of agency are: 1.Whatever a person can do personally..

By implied agreement Agency by ratification Agency by operation of law 7/16/12 THE INDIAN CONTRACT 143 .Creation of agency By express agreement.

7/16/12 THE INDIAN CONTRACT 144 .Termination of agency By the principal revoking agent’s authority By the agent renouncing the business of the agency By the business of the agency being completed By either the principal or agent dying or becoming of unsound mind.

7/16/12 THE INDIAN CONTRACT 145 .Rights of agent Rights of retainer Right to receive remuneration Right to lien Right of indemnification Right of compensation Right of stoppage in transit.

Duties of agent To carry out the work undertaken according to the directions given by the principal skill and deligence. 7/16/12 THE INDIAN CONTRACT 146 . To carry out the work with reasonable care To communicate with the principal Not to deal on his own account To pay sums received for the principal Not to make secret profit from agency.

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