Salient Features Of The Indian Contract Act

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Salient Features Of The Indian Contract Act

  1. 1. SALIENT FEATURES OF THE INDIAN CONTRACT ACT, 1872 VIJAY PAL DALMIYA VAISH ASSOCIATES ADVOCATES
  2. 2. INDIAN CONTRACT ACT, 1872 <ul><li>In India, all contracts are covered/governed by the Indian Contract Act, 1872, unless stipulated otherwise by parties </li></ul>
  3. 3. What is a contract?? <ul><li>As per Contract Act, an agreement enforceable by law is a contract. [section 2(h)] </li></ul><ul><li>An agreement is a promise or set of promises: </li></ul><ul><ul><li>Between two or more persons </li></ul></ul><ul><ul><li>To do or refrain from doing a particular thing </li></ul></ul><ul><ul><li>For consideration </li></ul></ul><ul><li>Contract may be oral or written </li></ul><ul><li>NOTE: Special Contracts need to be in writing </li></ul>
  4. 4. ESSENTIALS OF A VALID CONTRACT <ul><li>Offer/Proposal </li></ul><ul><li>Acceptance </li></ul><ul><li>Intention to create Legal relationship </li></ul><ul><li>Consideration </li></ul><ul><li>Consensus ad idem </li></ul><ul><li>Free & genuine Consent </li></ul>
  5. 5. ESSENTIALS OF A VALID CONTRACT <ul><li>Legal Capacity to contract </li></ul><ul><li>Lawful Consideration/Object </li></ul><ul><li>Agreement should not be void or voidable </li></ul><ul><li>Discharge of the Contract </li></ul>
  6. 6. OFFER/PROPOSAL <ul><li>Can be oral, written or through conduct </li></ul><ul><li>Offer and Invitation to offer/treat </li></ul><ul><li>Must be communicated to the offeree </li></ul><ul><li>Counter Offer </li></ul><ul><li>Offer to the whole world </li></ul>
  7. 7. OFFER/PROPOSAL <ul><li>Offer gets terminated by: </li></ul><ul><ul><li>Rejection </li></ul></ul><ul><ul><li>Lapse of time </li></ul></ul><ul><ul><li>Specified Event </li></ul></ul><ul><ul><li>Death </li></ul></ul><ul><ul><li>Retraction/Withdrawal of Offer </li></ul></ul>
  8. 8. ACCEPTANCE <ul><li>Can be oral, written or through conduct </li></ul><ul><li>Must be communicated to the offeror </li></ul><ul><li>Must be absolute and unqualified </li></ul><ul><li>Must be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. </li></ul><ul><li>Acceptance by performing conditions of an offer </li></ul><ul><ul><li>Carlill vs. Carbolic Smoke Ball Co. </li></ul></ul>
  9. 9. LEGAL RELATIONSHIP <ul><li>Intention to enter into a legal relationship </li></ul><ul><li>Social engagement are not binding, for example; </li></ul><ul><ul><li>An agreement to have lunch at a friend’s place. </li></ul></ul>
  10. 10. CONSIDERATION <ul><li>An act, abstinence or promise </li></ul><ul><li>Must be at the desire of the promisor </li></ul><ul><li>May be from the promisee or any other person </li></ul><ul><li>Can be past, present or future </li></ul><ul><li>Must be something of value (in the eyes of law) </li></ul><ul><li>It may be adequate or not </li></ul>
  11. 11. CONSIDERATION <ul><li>Examples: </li></ul><ul><ul><li>Money </li></ul></ul><ul><ul><li>Property </li></ul></ul><ul><ul><li>Actionable Claim </li></ul></ul><ul><ul><li>Anything of Value </li></ul></ul><ul><li>Performance of a legal duty is no consideration </li></ul>
  12. 12. FREE CONSENT <ul><li>Consent is said to be free when it is not caused by: </li></ul><ul><ul><li>Coercion </li></ul></ul><ul><ul><li>Undue Influence </li></ul></ul><ul><ul><li>Fraud </li></ul></ul><ul><ul><li>Misrepresentation </li></ul></ul><ul><ul><li>Mistake </li></ul></ul>
  13. 13. CONSENSUS AD IDEM <ul><li>Both the parties to a contract must agree to same thing at the same time. </li></ul><ul><li>The contract may become void if it turns out that the parties were of a different understanding. </li></ul>
  14. 14. COMPETENCY TO CONTRACT <ul><li>Every person is competent to contract who is of: </li></ul><ul><ul><li>Age of majority </li></ul></ul><ul><ul><li>Sound mind </li></ul></ul><ul><ul><li>Someone not disqualified under Indian laws </li></ul></ul><ul><ul><li>Examples: </li></ul></ul><ul><ul><ul><ul><li>Alien enemy </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Foreign sovereigns and ambassadors </li></ul></ul></ul></ul><ul><li>Both individual and companies having legal competency have the capacity to contract. </li></ul>
  15. 15. LAWFUL CONSIDERATION/OBJECT <ul><li>The consideration or object of an agreement is lawful, unless - </li></ul><ul><ul><li>It is forbidden by law; or </li></ul></ul><ul><ul><li>is of such nature that, if permitted it would defeat the provision of any law or is fraudulent; or </li></ul></ul><ul><ul><li>involves or implies, injury to the person or property of another; or </li></ul></ul><ul><ul><li>the Court regards it as immoral, or opposed to public policy. </li></ul></ul><ul><li>In each of these cases, the consideration or object of an agreement is said to be unlawful. </li></ul><ul><li>Every agreement of which the object or consideration is unlawful is void. </li></ul>
  16. 16. VOID AGREEMENT <ul><li>Agreement to do an impossible act </li></ul><ul><li>Agreement without consideration; except for gifts, debt etc. </li></ul><ul><li>If, consideration and object is unlawful </li></ul><ul><li>When both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement </li></ul><ul><li>Agreement in restraint of marriage </li></ul><ul><li>Agreement in restraint of trade </li></ul><ul><li>Agreement in restraint of legal proceedings </li></ul>
  17. 17. VOID AGREEMENT <ul><li>Uncertain Agreement </li></ul><ul><li>Wagering Agreement, except for Horse-racing </li></ul><ul><li>Agreement contingent on impossible event </li></ul><ul><li>When a party to a contract with reciprocal promises is prevented from performing his obligation, the party prevented can void the contract </li></ul><ul><li>In a contract where time is of the essence and a party fails to adhere to the timing schedule, the other party can void the contract. </li></ul>
  18. 18. VOIDABLE AGREEMENT <ul><li>An agreement is voidable at the option of the party giving consent; </li></ul><ul><ul><li>When consent is caused by Coercion </li></ul></ul><ul><ul><li>When consent is caused by Undue Influence </li></ul></ul><ul><ul><li>When consent is caused by Fraud </li></ul></ul><ul><ul><li>When consent is caused by Misrepresentation </li></ul></ul>
  19. 19. Quasi Contracts <ul><li>Claim for necessaries supplied to a person incompetent to contract </li></ul><ul><li>Reimbursement of money paid due by another </li></ul><ul><li>Obligation of person enjoying benefit of non-gratuitous act </li></ul><ul><li>Enjoyment of benefit by the defendant is necessary: </li></ul><ul><li>Finder of Lost goods </li></ul>
  20. 20. DISCHARGE OF THE CONTRACT <ul><li>Performance of contract </li></ul><ul><li>Breach of Contract </li></ul>
  21. 21. PERFORMANCE OF CONTRACT <ul><li>The final step in contract formation is its performance. </li></ul><ul><li>Certainty and possibility of performance </li></ul><ul><li>Every such offer must fulfill the following conditions:- </li></ul><ul><ul><li>it must be unconditional </li></ul></ul><ul><ul><li>it must be made at a proper time and place </li></ul></ul><ul><ul><li>under such circumstances that the person to whom it is made may have a reasonable opportunity for inspection </li></ul></ul><ul><ul><li>An offer to one of several joint promisees has the same legal consequences as an offer to all of them </li></ul></ul>
  22. 22. BREACH OF THE CONTRACT <ul><li>Anticipatory breach </li></ul><ul><li>Actual Breach </li></ul><ul><li>Liability of loss only due to CAUSATION </li></ul><ul><li>Remoteness of damages </li></ul><ul><li>Mitigation of loss </li></ul>
  23. 23. BREACH OF THE CONTRACT <ul><li>Remedies </li></ul><ul><ul><li>Injunction </li></ul></ul><ul><ul><ul><li>Temporary (interim) </li></ul></ul></ul><ul><ul><ul><li>Permanent </li></ul></ul></ul><ul><ul><li>Damages </li></ul></ul><ul><ul><ul><li>Nominal </li></ul></ul></ul><ul><ul><ul><li>Compensatory </li></ul></ul></ul><ul><ul><ul><li>Punitive/Exemplary </li></ul></ul></ul><ul><ul><li>Account of Profits </li></ul></ul><ul><ul><li>Specific performance (where subject matter is unique and money will not adequately compensate.) </li></ul></ul><ul><ul><li>Declaration </li></ul></ul><ul><ul><li>Rectification </li></ul></ul><ul><ul><li>Recission/Substitution/Novation </li></ul></ul>
  24. 24. Thank you. <ul><li>Vijay Pal Dalmia, Advocate Head Intellectual Property & Information Technology Laws Division Vaish Associates, Advocates Flat No 903, Indra Prakash Building, 21, Barakhamba  Road, New Delhi 110001 (India) Phone: +91 11 42492532 (Direct) Phone: +91 11 42492525 Ext 532 Mobile :- 9810081079 Fax: +91 11 23320484 email:- [email_address] </li></ul>

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