Unit 1 Indian Contract act Flashcards
1
Q
Business
A
All profit seeking activity
2
Q
Law
A
Body of principles recognised and applied by the state in administration of justice
” Ignorance of law excuses no one”
Law is not static.
3
Q
Nature of mercentile law
A
Deals with all mercentile transaction.
Mercantile can be a single/larger organisation
4
Q
Sources of Indian mercentile law
A
English mercentile law
Precedents
Indian statue law
Local customs and usages
5
Q
Indian contract act 1872
A
Based on English law of contract
Came into force from 1st sept 1872
Extend to whole of India
6
Q
Indian contact law table
A
1-75(general principles)
76-123(sales of goods)
124-147(Indemnity and guarantee)
148-181(bailment and pledge)
182-238(Agency)
239-266(partnership)
7
Q
Contract act features
A
Jus in personam
Jus in rem
8
Q
Jus in personam
A
Right against a person
9
Q
Jus in rem
A
Right against a thing
10
Q
Contract
A
Sec 2(h)
Agreement enforceable by law
11
Q
Agreement
A
Sec 2 (e)
Promise forming consideration with each other
12
Q
Promise
A
Sec 2 (b)
Accepted propsal
Promise= proposal by one person+ acceptance by another
13
Q
Agreement
A
Promise+ Reciprocal promise+ consideration
14
Q
Contract chart
A
Proposal ->promise 2b->consideration ->Agreement 2e->enforceable by law->contract 2 h
15
Q
Essential elements of contract
A
1.Offer and acceptance
2.Intention to create legal relation
3.Lawful consideration
4.Capacity of parties
5.Free and genuine consent
6.Lawful object
7.Agreement not declared void
8.Certainty and possibility of performance
9.Legal formalities
16
Q
Offer and acceptance
A
Offeror/promisor-offer->offeree/promisee
Offeree/promisee-acceptance->offeror/promisor
2 parties to agreement
1 making and 1 accepting offer
17
Q
Essential elements of offer
A
2 parties
Offer communicated to offeree, offer must show
Willingness of offeror
Must be made with a new view to obtain assent of offeree
Offer may involve doing or not doing something
18
Q
Types of offer
A
Express
Implied
Specific
General
Cross
Counter
19
Q
Express offer
A
Offer is written or oral
20
Q
Implied offer
A
Offer neither written nor oral
21
Q
Specific offer
A
Offer given to a specific person
22
Q
General offer
A
Offer given to entire world at large
23
Q
Cross offer
A
2 identical offers ignorant of each other
24
Q
Counter offer
A
Offer made in return of original offer
25
Intention to create legal relation
All contracts are agreements but all agreements are not contracts
26
Lawful consideration
Something in return (quid pro quo)
Consideration may be of doing or not doing an act
27
Types of lawful consideration
Past
Present
Future
28
Capacity of parties
Must be capable of entering into a valid contact
Sec 11- every person is competent to contract if he/she is
-age of majority
- sound mind
-not disqualified from contacting by any law to which he is subjected to
29
Free consent
2 person agree same thing in same sense(consensus-ad-idem).
Absence of consent->agreement void.
Consent is free when it is not obtained by
-coercion
-undue influence
- fraud
-Misrepresentation
-mistake
30
Coercion
Act forbidden by IPC.
Detention or threat to retain properties.
Kill, beat, interfere in personal freedom.
Threats to kill B, if B does not agree to sell his property to A
31
Undue influence
Relations substituting between parties are such one of the parties is in a position to dominate the will of other.
Uses position to obtain unfair advantage.
32
Fraud(Sec 17)
Fraud->intentional, deliberate or wilful misstatement of facts, which are a Material for the formation of contract.
33
Misrepresentation(Sec 18)
False representation of the fact made innocently which is a material fact of contract.
Maybe innocent/intentional deliberate with intent to deceive the other party.
34
Lawful object
Must not be illegal or unlawful.
ACC to Sec 23, consideration or object of an agreement must not be
- illegal
-immoral
-opposed to public policy
35
Certainty and possibility of performance
-terms of agreement must be certain and not vague or indefinite Sec 29
-if not possible to ascertain meaning, not enforceable by law
- Act impossible to perform, cannot be enforced
36
Legal formalities
- contract->made by words spoken or written
- If a particular type of contract is required by law to be writing, it must comply with the necessary formalities as to writing, registration and attestation if necessary.
Eg., Government contacts, tenders
37
Performance of contract
A contract creates an obligation which continues till the contract has not been discharged.
Performance of contract takes place when parties to the contract fulfill their respective obligation under contract.
Contract comes to a happy ending.
38
Act
When you do the promise
39
Who can perform contract?
Promisor->the agent->3rd Party ->legal representative->Joint Promisers (every promisee is responsible for the money)
40
Types of performance of a contract
Actual
Attempted/ Tenders
41
Actual performance
- Performing all the promises and fulfilling all the liabilities by all parties
- The natural method of discharge of contract
- For eg. A agrees to deliver 10 bags of cement @ B's factory and B promises to pay the price on delivery. A delivers the cement and B makes the payment.
42
Attempted performance
- Promisor- had made an offer to perform a promise to the promisee but it has not been accepted.
-ACC to Sec 38, where a promisor has made an offer of performance to the promises and offer has not been accepted, the promiser is not responsible for non performance, nor does he/she thereby lose his rights under the contract.
-Promiser not required to perform his promise again
- promiser not responsible for non performance
- promiser does not lose his right under control
Eg. A contract to deliver B, 100 kg of sugar @ his new warehouse, on 1st Sept 2020, A takes the goods to B's place on the due date during business hours, but B without assigning any good reason.
43
Essentials of attempted or valid tender
Must be conditional
Must be made at proper time and place
Must be made to the proper person
Must give a reasonable opportunity to the promisee
Must be of the whole obligation
May be made to one of the several joint promisee
44
Types of tender
Tender of goods and services
Tender of money
45
Who can demand performance?
-Promisee
-Legal representative can demand performance of promise except contract of personal nature (in case of death)
-Joint promisee:
All promises are alive-jointly demand performance.
Death of any joint promises- representative of deceased promisee + surviving promisee
Death of all promisee- legal representative of all
46
Contract need not be performed when
- performance of contract becomes impossible.
- parties to contract agree to change
- becomes illegal
- promisee waive promiser
- promise rejects a valid trend of performance
47
Time of performance
Time mentioned- as per time.
No time mentioned- reasonable time. (depends on facts of the case)
Hour not mentioned - business hours eg. 10 am to 5 pm.
48
Time as the essence of the contract
When time is essence- scheduled contracts.
When time is not of essence- non emergency, may give competition.
49
Mode of discharge of contract
1. By performance - actual, attempted
2. Impossibility of performance
3. Operation of law
4. Lapse of time
5. Mutual agreement
6. Breach of contract - actual, anticipatory
50
Discharge by impossibility of performance
Initial impossibility- known, unknown
Subsequent impossibility
51
Initial impossibility
An agreement to do an act that is impossible from the very beginning whether the parties were aware of such impossibility or not the agreement will be void.
52
Subsequent impossibility
Act becomes impossible/unlawful after formation of contract.
53
Post contractual impossibility/ subsequent contract case study
Destruction of subject matter.
Incapacity or death of promiser and contract is for personal service or skill.
Change in law or circumstances.
Declaration of war.
54
Discharge of contract by lapse of time
A contract is discharged
- if it is not performed or enforced within specified period called period of limitation.
- period of limitation for recovering debt is 3 years and 12 years for recovering immovable property.
55
Discharge of contract by operation of law
Death
Insolvency
Unauthorised material alteration
56
Discharge by mutual agreement
Sec 62&63( Indian contract act)
Novation
Alteration
Rescission
Remission
Merger
57
Novation
New contract substituted for existing contract.
Between same or new parties.
Eg. A owed Rs. 100 to B, under contract. B owed Rs. 100 to C. It was agreed among A, B and C that A would pay.
58
Alteration
Change in one or more terms of contract with mutual consent of the parties
59
Rescission
Cancellation of contract
- with mutual consent of parties
- one party - rescind if breach by other party.
60
Remission
Acceptance of lesser sum than what was contracted for, or a lesser fulfilment of the promise made.
A owes 5000 to B.
B satisfied with 2000. Debt discharged
61
Merger
Conversion of the inferior right into superior right
Eg. A person holds property under lease, purchases the property. On purchase, his lease agreement is discharged.
62
By breach of contract
Actual breach
Anticipatory breach
63
Actual breach
a. On due date of performance
b. During the course of performance of contract
64
Anticipatory breach
a. Express refusal
b. Making the performance of promise become impossible by doing some act.
65
Remedies for breach of contract
- Contract is broken -> Injured parties has one or more remedies
Rescission
Suit for damages
Suit for quantum merit
Suit for specific performance
Suit for injunction
66
Rescission
Sec 39
When a party to a contract has refused to perform, or disabled itself from performing in its entirety, the promisee may put an end to the contract.
Aggrieved party- discharged from his liabilities and entitled to claim compensation for damages.
Eg, promise to deliver a pc to B's office on COD. A fails to deliver. B is discharged from price.
67
Suit for damages
Sec 73
Damages are monetary compensation allowed to the injured party for the loss suffered.
The object of awarding damages is not to punish the party at fault.
Hadley vs Baxendale
- inconvenience caused by the non performance.
- motive of breach
- manner of breach
68
Types of damages
Ordinary
Special
Nominal
Vindictive or exemplary
69
Suit of quantum meruit
Means "as much as earned"
It is the actual value of services rendered or performed.
Arises only when the original contract is discharged.
The claim on quantum meruit can be claimed by the party at fault and by the party at default.
70
Special performance
Means demanding an order from court that the promise shall be carried out.
And court may direct the defaulting party to carry out his obligation acc to the terms of contract.
In the discretion of court, specific performance can be enforced:
- where there is no standard for ascertaining the actual damage caused by non performance.
- where compensation in money for non performance would not afford adequate releif.
71
Suit of injunction
Stay order granted by court.
Prohibits a person to do a particular act.
Only granted at discretion of court.
Eg. Film actor agreed to act only for W, but acted in with Z
72
Quasi contract
68-72
Not a real or true contract at all in the sense of law.
Created by law without any enforceable agreement.
Based on the expressed or implied intentions of the party.
Does not arise from any formal agreement but is imposed by law.
Principle of equity.
73
Case of quasi contract
Supply of necessaries to incompetent persons.
Obligation of a person enjoying benefit of non gratuitous act.
Finder of goods.
Money paid under the mistake or delivery of goods under mistake.
74
Contract of indemnity
-A contract by which 1 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
- Sec 124
- Indemnifier (Promisor)
- Indemnified or indemnity holder (Promisee)
Eg. All insurance companies except life
75
Essential elements of indemnity contract
- loss to one party
- Reasons for loss
- Indemnity by the promisor
