Contract Act 1872new

Contract Act

Before

Contract

After

Definition

Section 2(h)An agreement enforceable by law is a

contract.

Formulae

Agreement = Proposal + Acceptance

Contract = 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 parties

Lawful 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 ImpliedMust 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 specificMust be communicated to the offereeCan be made subject to any terms and

conditionsShould 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 timeby 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 qualifiedexpress or impliedmust be communicated to the offeroracceptance cannot precede offermust be made within a reasonable timeacceptance 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 futureReal not illusoryMove at the desire of the promisorMove from any personNeed not be adequateValuable 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

AgencyGift

Free Consent

Consent is not freewhen it is obtained byCoercionUndue influenceFraud MisrepresentationMistake

Competent Parties

Following are NOT Competent PartiesMinorsPersons 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 agreementsAgreements in restraint of marriageAgreements in restraint of TradeAgreements in restraint of Legal

ProceedingsAgreements the meaning of which is

uncertain

Agreements by way of wagerAgreements contingent on impossible

eventsAgreements to do impossible acts

Wagering Agreement

One party promises to pay money or money’s 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 contractsTypes Claim for supply of neccesitiesReimbursement of money paidObligation of person to pay for enjoying

benefit of non – gratuitous actFinder 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 Damages

Nominal Damages

Exemplary Damages

Special 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 of valid contract.

Promisee / Indemnity Holder must suffer a loss.

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 majority

Sound mind

Test of Agency

Whether a person can bind another person by his acts

Whether a person can establish privity of contract

Creation of an Agency

By agreementExpress , ImpliedBy necessity By estoppel or holding outBy operation of lawBy ratification

Types of Agents

Specific AgentGeneral AgentMercantile 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 authorityPretending agent.Responsible for fraud or misrepresentation.

Duties of Principal

Indemnify the agent.Compensate the agent for any loss or

injury caused.Pay remunerationLiable 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 agentRevoke agents authority.Claim for loss or profitsDemand accounts.Refuse remuneration.