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Contract Act

Before
Contract
After

Definition
Section

2(h)
An agreement enforceable by law is a
contract.

Formulae
Agreement

Contract

= Proposal + Acceptance

= Agreement + Enforceability By
Law

Kinds Of Contract
Valid

Contract
Voidable Contract
Void Contract
Contingent Contract
Unenforceable Contract
Executed Contract
Executory Contract
Express Contract
Implied Contract
Quasi Contract

Essentials Of Valid Contract section


10
Offer

Acceptance

Consideration

Free

Consent

Competent
Lawful

parties

object

Agreements

not declared as void

Legal

formalities

Certainty

and possibility of performance

Intention

to create legal relations

Enforceability

by law

Offer / Proposal
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 is said to have made a
proposal.

Promisor / Promisee
The

person making an offer or proposal is


called offerer or proposer . sec 2(c) calls
such a person making the proposal the
promisor. The person who accepts the
proposal is called the promisee.

Essential of valid offer


Express

or Implied
Must contemplate to give rise to legal
consequences and capable of creating
legal relations
Certain not loose or vague
Invitation to offer is not an offer

May

be general or specific
Must be communicated to the offeree
Can be made subject to any terms and
conditions
Should not contain term the non
compliance of which amount to
acceptance
two identical cross offers do not constitute
a contract

Lapse of offer
not

accepted in the mode specified


after a stipulated or a reasonable time
by revocation- before the expiry of time,
offeree fails to perform certain conditions,
death, insanity
illegality or destruction of the subject
matter
by rejection

Acceptance
Sec2(b)when

a person to whom the


proposal is made signifies his assent
thereto, the proposal is said to be
accepted.

Essentials of a valid acceptance


must

not be qualified
express or implied
must be communicated to the offeror
acceptance cannot precede offer
must be made within a reasonable time
acceptance cannot be implied from
silence

Consideration
Consideration

is the price for which the


promise of the other party is brought.

Benefit

to one party and detriment to


another.

Agreement

without consideration is void .

Essentials of Valid Consideration


An

act to do something or abstinence of


doing something
Past present or future
Real not illusory
Move at the desire of the promisor
Move from any person
Need not be adequate
Valuable in the eyes of law.

Exceptions
Agreement

on account of love and

affection
Promise to compensate past voluntary
services.
Promise to pay time barred debt- fresh
agreement is made without consideration
Agency
Gift

Free Consent
Consent

is not free
when it is obtained by
Coercion
Undue influence
Fraud
Misrepresentation
Mistake

Competent Parties
Following

are NOT Competent Parties

Minors
Persons

of unsound mind

Idiots
Lunatics
Drunkards
Persons

expressly disqualified by law

Legality Of Object
It

must not be forbidden by law


It should not defeat the purposes of law
It should not be fraudulent
It should not be something which causes
injury to person or property
It should not be immoral or opposed to
public policy.

Void Agreements
Expressly

declared void agreements


Agreements in restraint of marriage
Agreements in restraint of Trade
Agreements in restraint of Legal
Proceedings
Agreements the meaning of which is
uncertain

Agreements

by way of wager
Agreements contingent on impossible
events
Agreements to do impossible acts

Wagering Agreement
One

party promises to pay money or moneys


worth on happening of some uncertain event
and the other party has to pay if the event does
not happen.
There are reciprocal promises always.
Future event is the sole determining factor.
Parties have no interest in the subject matter
It is a game of chance
Parties do not intend to perform the contract.

Contingent Contract
It

is a contract to do something if the event


collateral to the contract does or does not
happen.

The future event is collateral.


Parties to the contingent contract have interest in
the subject matter.
They intend to perform the contract.

Quasi Contract
Obligation

created by law
Implied contracts
Types
Claim for supply of neccesities
Reimbursement of money paid
Obligation of person to pay for enjoying
benefit of non gratuitous act
Finder of goods

Discharge Of Contract

By performance
By death
By refusing tender of performance
By breach of contract
By impossibility of performance
By agreement
novation
accord / satisfaction
remission
recession
By promisee failing to offer facilities
By operation of law
insolvency
merger
By unauthorised material alteration
By lapse of time

Remedies For Breach Of Contract


Suit

for specific performance

Suit

for injunction

Suit

for damages

Quantum

Merit

Types Of Damages
Compensatory
Nominal

Damages

Exemplary
Special

Damages

Damages

Damages

Rules For Ascertaining Damages


1]

When a contract is broken the


aggrieved party is entitled to receive
compensation for loss or damages
2]No compensation for any remote and
indirect loss
3]Party suffering must have taken steps to
minimize the loss

Contract Of Indemnity
A contract

of indemnity is a contract by
which one party promises to save the
other from a loss caused to him by the
conduct of the promisor himself or by the
conduct of any other person

Parties
Promisor

: indemnifier

Promisee

: Indemnityholder/ Indemnified

Essentials
Essentials

Promisee

loss.

of valid contract.

/ Indemnity Holder must suffer a

Rights of indemnity holder


Suit

for damages.

Claim

for cost.

Other

sums

Suit

for specific performance

Agency
An

agent is a person employed to do an


act for another or to represent another in
dealing with third person.

The

person so represented is called as


the principal.

The

person who represents is called as an


agent.

Agent
Any

person of sound can be an agent.

A minor

can be an agent, but minors are


not personally liable.
An agent is not a servant as a servant is
told what to work and how to work. But an
agent is not.

Principal
Attained

Sound

majority

mind

Test of Agency
Whether

a person can bind another


person by his acts

Whether

contract

a person can establish privity of

Creation of an Agency
By

agreement
Express , Implied
By necessity
By estoppel or holding out
By operation of law
By ratification

Types of Agents
Specific

Agent
General Agent
Mercantile Agent
Broker
Commission Agent
Factor
Auctioneer
Del-Credere Agent

Sub

Agent

Co-Agent
Substitute

Agent

Duties Of Agent
Proper

conduct of business.
Render proper accounts.
Pay the sums to the principal.
Communicate and inform .
Not to deal on own account.
Proper use of information.
No secret profits or adverse title.
Not to delegate.
Name sub agent & liable for his acts.

Rights of Agent.
Retainer

.
Remuneration.
Lien.
Indemnity.
Compensation .
Renounce agency.
Emergency decision making.

Agent Personally Liable


Principal is a :
foreigner .
undisclosed .
cannot be sued.
Agent makes himself expressly liable.
Agency coupled with interest.
Usage and custom.
Agent acts beyond authority
Pretending agent.
Responsible for fraud or misrepresentation.

Duties of Principal
Indemnify

the agent.
Compensate the agent for any loss or
injury caused.
Pay remuneration
Liable for acts of agents to the third party.
Give notice to the agent.

Rights of Principal.
Repudiate

the contract.
Claim benefits.
Ratify or disown the acts of the agent
Revoke agents authority.
Claim for loss or profits
Demand accounts.
Refuse remuneration.