“w € Essential Elements of Contract and E-Contract Dr Venudher Routiya = Lesson! + May 5, 202NTA UGC NET Batch Course on Law fa el ee Unit 06 (Commercial Law) . Essential Elements of Contract and E-Contract | Dr. Venudhar Routiya Assistant Professor (Law)Contract 21@e 20% A2Cb 2 (Barter ser eer et meet ir ear Ge ob Fre oer eh, were ce are ot AY rer see, iar ger TR ae a er A me | eee seem ae C1) An accepted proposal is a promise and a promise which is a considered for each other, is an agreement and an agreement which is enforceable by law is a contract. In this way, the agreement is also called a promise, or accepted proposal is an agreement.Contract 2d) ‘ontra wee (aes offs ( Proposal Sy Cepia icpisnit- Cie eet) Eaaori | —Aareement | “Acceptance is to offer what a lighted match is to a train of gunpowder. It produces something which cannot be recalled or undone.*) SS (an This statement jade lace holds good under English law. ae Her, Gunpoude = Ger and ihied maid) ae oe When a lighted match is shown to a train of gunpowder, it explodes and something happens which cannot be undone. Similarly, and offer once accepted cannot be revoked. But so long a lighted match is sak ™ not shown, the gunpowder remains inert and can be removed, similarly an offer can be revoked before itis acceptedAn agreement becomes a contract if @) Contract A) It is by free consent of the parties 7 ok ) B) Parties are competent. aor eed go Itis enforceable by law. D) None of the aboveY The correct sequence in the formation of a contract is : A) Offer, acceptance, agreement, consideration. B) Agreement, consideration, offer,acceptance. C) Offer , Consideration, acceptance, agreement. D) Offer, ees ration, agreement. ? pyropasieetelbitlanien &. Ge lust be absolute and unqualified) —? > Must be communicated to the ene ‘The communication of acceptance may oe Xpress or a G mere resol or mental determina) on the part of the offeree to accept an offer, when there is no external manifestation of the intention to do so, is not sufficient. A communication to any other person is.an ineffectual as if no communication has been made. amas The offer must be accepted according to the mode prescribed and if no mode is prescribed , the offeror may intimate to the offeree within a reasonable time that the acceptance is not according to the mode prescribed and may insist that the offer must be accepted in the prescribed mode only. If he does not inform the offeree, he is. deemed to have accepted the acceptance.Contract ptance must be given within a/specified time) Jf time is not mentioned then it should be given within a reasonable time,~ Acceptance cannof presedslan offs)“ It must show an intention on the part of the acceptor to fulfill the terms of the promise. Acceptance must be only by the party or parties to whom the offer is made. Acceptance must be made before the offer lapse or before the offer is withdrawn Silence cannot be the mode of acceptance} Acceptance may be expressed or implied. eeeContract eet ea how e(Communication cceptan ee 3n gnified: The communication, acceplance, and revocation are deemed to(be made by an act or omission of the pal proposing, accepting, or revoking, by which he intends to communicate such proposal, acceptance, or revocation, ee ee oh he intends to communica Ishaq vs Mohd Iqbal SCC 1978, the defendants accepted the goods supplied by the plaintiff through a go between Peat ii man and also paid part of the price. It was held that the defendants were liable to pay the remaining balance because the proposal and its acceptance were signified(b R rt Us) wsContract (Section a)specities when a communication is complete: + Communication of a proposal is complete when it comes to the knowledge of the party to whom the proposal is made. For example, if A sends a proposal in the mail to B and if the mail is lost, it can be held that the communication of the proposal is not complete. In the case it was held fon who traced the child without any knowledge of the announcement. There was no contract betwgen the two in the first place because the that the reward for the missing child cannot be claimed by a ps proposal never came to the knowledge of the person whg found the child and thus he could never SD > @ re 4) as ¢ e se oe accept it.Contract In the case shaman it was es that a contract arose as soon as the acceptance was posted by the acceptor. In this case, the plaintiff received the offer to sell wool on Sth and they posted an acceptance, which was received on 9th by the defendants. The defendants, however, had already sold the wool_on 8th) The court observed that the-contract-must arise as soon as the acceptance is posted and is gone out of the reach of acceptor otherwise this will result in an infinite OO loop)Contract wz Section 5 specifies when & propos be revoked: er . A proposal can be revoked anytime before the communication oft acceptance is complete as against the proposer but not afterwards. For example, if A propose to B through a letter, A can reyoKé the proposal as long as B has not posted a letter of acceptance to A. In the case of Henthom vs Fraser) 1862, an offer to sell a property was made to a person. This person was to reply to it within He lived in another town and he posted an acceptance at 3.50PM, which reached the offere Ml) Meanwhile, the offerer posted the revocation letter at 1 PM/ which reached the person at 5.30PM) Thus, the revocation did not reach the offeree before the communication of the acceptance was complete as against the afferer—Fhus, the revocation was held ineffective. = oDContract For example, B can revoke his acceptance that was sent by letter, by a telegram that reaches A before the acceptance letter. In the case of Union of India vs Bhimsen Walaiti Ram)1969, the defendant won an auction for a liquor shop and paid 1/6 of the c@st upfront. However, the bid was supposed to be finalized by the financial commissioner, which he had not done. Meanwhile, the defendant failed to pay the remaining amount and the commissioner ordefed a re-auction. In the re-auction, less money was realized and the plaintiff sued to recover the shorffall. Howevet_SC held that sinc jioner had not given is final approval for the bid, the communication of acceptance was not complete against the defendant, thustthe defendant was free to withContract Eoin specifies how esncation canbe ads) ‘A proposal is revoked ee ° the communication of the notice of revocation by the proposer to the other nary) ° by the lapse of prescribed time in the proposal for acceptance or if no time is prescribed, by the by ihe lapse of prescribed’ time Fi.the proposal pr acceptance ort lapse of a reasonable time in communication of the acceptance OS cation of the acceptance)Sat a OS 5. soso) Contract oo a Section 7 specifies that an acceptance must be absolute and unqualified,)A partial acceptance or a roposal, or specifying a condition on acceptance is no acceptance.) In the case le vs Wrench)! 840, an offer was made to sell a farm for #1000, which was rejected by an plaintiff, who"counter offered #950 ffor it. This was rejected by the defendant, upon which the plaintiff agreed to pay #1000) However, it was held than the defendant was not bound by any such second acceptance. clarification regardingContract Section 7 further says that the acceptance must be in some usual and reasonable manner, unless the proposal prescribes the manner in which the acceptance should be made. In the case of Elliason vs Henshaw 1819, it was held that an acceptance sent by mail instead of through the wagon that brought the offer, was not valid. Section 8 specifies that a proposal is accepted when the acceptor performs conditions prescribed for the acceptance or when he accepts the consideration given along with the offer for a reciprocal promise. When acceptance consists of an act as in the case of State of Bihar vs Bengal C & P Works 1954, it was held that, when an order is sent for goods, the posting of goods itself is equivalent to acceptance. No further communication of acceptance is necessary. In the case of Carlill vs Carbolic smoke ball co 1893, it was held that, purchasing and consuming the medicine performs the condition of the proposal.Contract Requirements for an acceptance 1. Acceptance must be from a person to whom the proposal was made. In the case of Powel vs Lee 1908, it was held that communication of an acceptance from an unauthorized person is invalid. 2. Acceptance must be signified to the proposer. In the case of Felthouse vs Bindley 1863, it was held that unless an acceptance is given to the offerer, it is no acceptance. 3 It is required that there be an act that signifies the acceptance. As held in the case of Bhagvandas Goverdhandas Kedia vs Girdharilal Pursottamdas & Co SC AIR 1966, for an acceptance to be completed, a mere mental decision is not sufficient. An external manifestation of the decision is a must.Contract Communication and acceptance of General Offers A general offer, such as an advertisement for the sale of an article at a fixed price, or to give prize to the one that does something first, is not made to a particular person. Whoever the contract is done with the person who responds or who does the task first. Communication of such as offer is done through public media such as a newspaper. S general offer can be perpetual or end as soon as the condition is fulfilled. No explicit acceptance of such offers is usually required. Performing the conditions specified in the offer acts as the acceptance of the offer. For example, in the case of Carlill vs Carbolic Smoke Ball Company 1893, it was held that it was a general offer and anybody who fulfilled the condition was eligible for the $100 compensation as advertisedContract an advertisement for the sale of an article at a fixed price, or to give prize to the one that does something first, is not made to a particular person. Whoever the contract is done with the person who responds or who does the task first. Communication of such as offer is done through public media such as a newspaper. S general offer can be perpetual or end as soon as the condition is fulfilled. No explicit acceptance of such offers is usually required. Performing the conditions specified in the offer acts as the acceptance of the offer. For example, in the case of Carlill vs Carbolic Smoke Ball Company 1893, it was held that it was a general offer and anybody who fulfilled the condition was ease ; ; eligible for the $100 compensation as stverioad—,Contract A standard form contract is a contract between two parties that does not allow for negotiation, i.e. take it or leave it WH AMG WA oegde al all & ata Uw orga g ot aera fare ornare oar ¢, sala ga a aT BIS S In Henderson v. Stevenson the plaintiff bought a steamer ticket on the face of which was these words only: “Dublin to Whitehaven"; on the back were printed certain conditions one of which excluded the liability of the company for loss, injury or delay to the passenger or his luggage. The plaintiff did not see the back of the ticket, nor was there any indication on the face about the conditions on the back. The plaintiff's luggage was lost in the shipwreck caused by the fault of the ‘company's servants. This was laid down by the House of Lords that the plaintiff is entitled to recover the loss which he suffered from the ‘company in spite of the exemption clauses.Contract A standard form contract is a contract between two parties that does not allow for negotiation, i.e. take it or leave it Wh AIT WA oie St Tall oe ata Uae angele & oH arate fore orafa ret ear 6, sala ga a aT Bis S In Parker v. South Eastern Rail Co, the plaintiff deposited his bag at the cloakroom at a railway station and received a ticket. On the face of the ticket it was printed: “See back”; and on the back there was a notice “the company will not be responsible for any package ‘exceeding the value of £ 10°. A notice to the same effect was also hung up in the cloakroom. The plaintiffs bag was lost and he claimed the full value of his bag which was more than £ 10. The company relied upon the exemption clause. The plaintiff contended that although he knew there was some writing on the ticket, he did not see what it was as he thought that the ticket was a mere receipt of the money he paid.Contract A standard form contract is a contract between two parties that does not allow for negotiation, i.e. take it or leave it WH AMG Waa ordeal all & ata Uw organ g ot aera fore arate el ear ¢, sala ga a aT BIS S In M/s Prakash Road Lines (P) Ltd v. HMT Bearing Ltd, In Olley v. Marlborough Court Ltd, plaintiff and her husband hired a room in the defendant's hotel for one week's boarding and lodging in advance. When they went to occupy the room they found a notice displayed there stating “proprietors will not hold themselves responsible for articles lost or stolen, unless handed to the management for safe custody.” Due to the negligence on the part of the hotel staff, plaintiff's property was stolen from the room.Contract A standard form contract is a contract between two parties that does not allow for negotiation, i.e. take it or leave it WH AMG Waa oie a all & ata Uw oral g ot arate fore orate ret ear ¢, sala ga a aT BIS S In Alexander v. Railway Executive, the plaintiff deposited his luggage in defendant's cloak-room and in return received a ticket. A term printed on the ticket exempted the defendant from liability for loss or mis delivery of luggage. Plaintiff's luggage was delivered to an unauthorized person without the production of the ticket. It was held that non-delivery of luggage to the plaintiff amounted to fundamental breach of contract for which the defendant was liableContract A standard form contract is a contract between two parties that does not allow for negotiation, i.e. take it or leave it Wh ATG WA ogee SI Tall & ata Uae orga & oH arate ferg orate rel aa ¢, sala ga a aT Bis S In White Vs John Warwick & Co Ltd, plaintiff hired a cycle from the defendant. The defendant agreed to maintain the cycle in working condition and a clause in the agreement provided: “nothing in this agreement shall render the owners liable for any personal injuries..” while plaintiff was riding the cycle saddle titled forward and he was thrown and injured.a tned ca & Ina standardized contract y= wad A) The individual has no choice but to accept and sign on the dotted dine. ft B) The ir idual must be protected in contract. C) The agreement is without consideration. D) None of the above. Contract—, 22d) “a Contract ane sna * This is a Latin maxim. The meaning of this is “consideration’, i e yaoi sense. The literal meaning of the maxim “quid pro quo’ is :"something ‘eer 3 7 at) 3 in return of something” or ‘something in exchange of something’ or 2 eo (“ “0 simply “something for something” \ ais Yy y1m ‘Quid Pro Quo in India under Indian Contract Act, 1872 ? Hat Ti ‘Sec 2(d) of the Act defines consideration, g aint ‘4. Sreenivasa General Traders & Ors. .. vs State Of Andhra Pradesh Contract & Ors. Etc on 6 September, 1983 There should be an element of quid pro quo present for each service rendered in the sphere - ofa contractual relationship. 2. Krishi Upaj Mandi Samiti vs Orient Paper & Industries Ltd on 9 November, 1994 There is no quid pro quo between the taxpayer and the public authority: There must be an element of quid pro quo between the person who pays it and the public. Supreme Court of India- Cites 25 - Cited by 39 -1995 SCC (1) 655.3. Jaganmohan Reddy and N. Srinivasan case In September 2013, Contract the Central Bureau of Investigation summonsed Jaganmohan Reddy and N. Srinivasan, by holding a special court, to appear before o1 November 2013 in the "Quid Pro Quo case". On 12 February 2014, N. Srinivasan appeared before the court.