CONTRACT ACT Basics of Contract Act

CONTRACT Meaning and definition of Contract & other relative terms such as Offer, Acceptance etc as per Contract Act,1872. Elements and classification of Contracts Relevant provisions of the Act & cases Communication & Revocation Discharge of Contract Remedies for breach of Contracts Precautions Special Contracts – agency; Contingent , minor, quasi, mortgage,

Meaning and definition of Contract & other relative terms such as Offer, Acceptance etc as per Contract Act,1872.

Elements and classification of Contracts

Relevant provisions of the Act & cases

Communication & Revocation

Discharge of Contract

Remedies for breach of Contracts

Precautions

Special Contracts – agency; Contingent , minor, quasi, mortgage,

CONTRACT Agreement in daily life An Agreement is defined in section 2 (e) of the Act is - a promise . Promise – a proposal when accepted , becomes a promise. ( Sec 2 b). Agreement = Offer + Acceptance

Agreement in daily life

An Agreement is defined in section 2 (e) of the Act is - a promise .

Promise – a proposal when accepted , becomes a promise. ( Sec 2 b).

Agreement = Offer + Acceptance

CONTRACT ACT Every Agreement is not a Contract. AGREEMENT ENFORCEABLE IN LAW IS CONTRACT. Contract : Agreement + enforceable by law. i.e. legal obligations to do or abstaining from doing anything. ( Social, illegal) All contracts are agreement but all agreements are not contracts

Every Agreement is not a Contract.

AGREEMENT ENFORCEABLE IN LAW IS CONTRACT.

Contract : Agreement + enforceable by law. i.e. legal obligations to do or abstaining from doing anything. ( Social, illegal)

All contracts are agreement but all agreements are not contracts

CONTRACT ACT The Contract Act is the law of those agreements which create obligation and there is a legal remedy for the breach thereof. Legal Contracts creates “Rights in Personam” as distinguished from Rights in Rem i.e. Rights against the whole world. Consensus-ad-idum

The Contract Act is the law of those agreements which create obligation and there is a legal remedy for the breach thereof.

Legal Contracts creates “Rights in Personam” as distinguished from Rights in Rem i.e. Rights against the whole world.

Consensus-ad-idum

CONTRACT ACT Essential of Contract: Agreement & Legal Obligation ; Section 10 : states elements of Contract which are Agreement ( Offer+ Acceptance) Two parties ( Promisor & Promisee) Intention to create legal relationship Free Consent ( Sec 13,14) Coercion(15), Undue Influence(16), Fraud(17), Misrepresentation (18) or Mistake ( 21-22)

Essential of Contract:

Agreement & Legal Obligation ;

Section 10 : states elements of Contract which are

Agreement ( Offer+ Acceptance)

Two parties ( Promisor & Promisee)

Intention to create legal relationship

Free Consent ( Sec 13,14)

Coercion(15), Undue Influence(16), Fraud(17), Misrepresentation (18) or Mistake ( 21-22)

CONTRACT ACT Elements of Contract : Parties competent to Contracts Minor, unsound mind, disqualified by law Lawful consideration ( Past , present, future, cash, kind, act, abstinence) Lawful Object ( Not illegal/immoral) Agreements not declared void or illegal ( S 24-30) Certainty of Meaning (29) Possibility of performance Necessary Legal Formalities

Elements of Contract :

Parties competent to Contracts

Minor, unsound mind, disqualified by law

Lawful consideration

( Past , present, future, cash, kind, act, abstinence)

Lawful Object ( Not illegal/immoral)

Agreements not declared void or illegal ( S 24-30)

Certainty of Meaning (29)

Possibility of performance

Necessary Legal Formalities

CONTRACT ACT Classification/Types of Contracts: Classification according to Enforceability : Valid, Void & Voidable, Illegal, Unenforceable Valid = section 10 elements Enforceable at the option of one or more parties = Voidable Section 23-30 = Void Classification according to Formation Express, Implied & Quasi Judicial Classification according to Performance : Executed, Executory, Unilateral, Bilateral

Classification/Types of Contracts:

Classification according to Enforceability :

Valid, Void & Voidable, Illegal, Unenforceable

Valid = section 10 elements

Enforceable at the option of one or more parties = Voidable

Section 23-30 = Void

Classification according to Formation

Express, Implied & Quasi Judicial

Classification according to Performance :

Executed, Executory, Unilateral, Bilateral

CONTRACT ACT Precautions : Elements of valid contract DATE & Place Name of the Parties & status thereof Signed by the Same Person or POA = Free consent. Sign on each page. Terms and consideration to be clearly defined All column to be filled up Modification or Over-writing to be initialed

Precautions :

Elements of valid contract

DATE & Place

Name of the Parties & status thereof

Signed by the Same Person or POA = Free consent. Sign on each page.

Terms and consideration to be clearly defined

All column to be filled up

Modification or Over-writing to be initialed

CONTRACT ACT OFFER & ACCEPTACE : Offer – Section 2 (a) : Proposal ; How an offer is made : Express =spoken, written Implied/by way of Conduct – Act or Omission General and Specific Offer Essential of Valid Offer : Must be made with a view to obtain acceptance Must be made with the intention of creating legal relation Terms of offer must be definite, unambiguous & certain of capable of being made certain

OFFER & ACCEPTACE :

Offer – Section 2 (a) : Proposal ;

How an offer is made : Express =spoken, written Implied/by way of Conduct – Act or Omission

General and Specific Offer

Essential of Valid Offer :

Must be made with a view to obtain acceptance

Must be made with the intention of creating legal relation

Terms of offer must be definite, unambiguous & certain of capable of being made certain

CONTRACT ACT Elements of OFFER: It must be distinguished from mere declaration of intention or invitation of offer. ( A Tender is an offer) It must be communicated to offeree The offer must not be contain a term the non-compliance of which may be assume to amount to acceptance Special Terms Cross offers

Elements of OFFER:

It must be distinguished from mere declaration of intention or invitation of offer. ( A Tender is an offer)

It must be communicated to offeree

The offer must not be contain a term the non-compliance of which may be assume to amount to acceptance

Special Terms

Cross offers

CONTRACT ACT Termination/Lapse of Offer The offer lapses after stipulated or reasonable time Death or insanity of the offeror or the offeree Rejected by offeree Revoked by Offeror Not being accepted in the specified mode or reasonable manner. Counter offer

Termination/Lapse of Offer

The offer lapses after stipulated or reasonable time

Death or insanity of the offeror or the offeree

Rejected by offeree

Revoked by Offeror

Not being accepted in the specified mode or reasonable manner.

Counter offer

CONTRACT ACT ACCEPTACE : Meaning Acceptance how made and by whom Elements of ACCEPTANCE : It must be absolute & Unqualified It must be communicated to the Offeror It must be according to the mode prescribed It must be given in specified time

ACCEPTACE :

Meaning

Acceptance how made and by whom

Elements of ACCEPTANCE :

It must be absolute & Unqualified

It must be communicated to the Offeror

It must be according to the mode prescribed

It must be given in specified time

CONTRACT ACT ELEMENTS OF ACCEPTANCE: It must be in response to the Offer It must be made before the offer is lapses, terminated, withdrawn or revoked It must be given to the Offeror or its Authorized Agents.

ELEMENTS OF ACCEPTANCE:

It must be in response to the Offer

It must be made before the offer is lapses, terminated, withdrawn or revoked

It must be given to the Offeror or its Authorized Agents.

CONTRACT ACT COMMUNICATION of Offer, Acceptance & Revocation thereof. Offer :The communication of offer is complete when it comes to the knowledge of the person to whom it is made. Acceptance : The communication of Acceptance is complete : Against the proposer – when it is put into a course of transmission so as to be out of power of the acceptor Against the Acceptor – when it comes to the knowledge of the Proposer.

COMMUNICATION of Offer, Acceptance & Revocation thereof.

Offer :The communication of offer is complete when it comes to the knowledge of the person to whom it is made.

Acceptance : The communication of Acceptance is complete :

Against the proposer – when it is put into a course of transmission so as to be out of power of the acceptor

Against the Acceptor – when it comes to the knowledge of the Proposer.

CONTRACT ACT Communication of Revocation : The communication of revocation is complete : Against the person who makes it – when it is put into a course of transmission so as to be out of power of the person who makes it. Against the person to whom it is made – when it comes to his knowledge.

Communication of Revocation :

The communication of revocation is complete :

Against the person who makes it – when it is put into a course of transmission so as to be out of power of the person who makes it.

Against the person to whom it is made – when it comes to his knowledge.

CONTRACT ACT Section 5 : Revocation of Offer & Acceptance : Offer : An offer may be revoked at any time before the communication of its acceptance is complete as against the Proposer. Acceptance : An Acceptance may be revoked at any time before the communication the acceptance is complete as against the Acceptor.

Section 5 : Revocation of Offer & Acceptance :

Offer : An offer may be revoked at any time before the communication of its acceptance is complete as against the Proposer.

Acceptance : An Acceptance may be revoked at any time before the communication the acceptance is complete as against the Acceptor.

CONTRACT ACT Contract with MINOR : A Minor is not competent to contract, hence a contract with Minor is Void. The agreement cannot be ratified by the Minor on attaining majority. Minor can be beneficiary Minor can not be asked to refund the benefit, profit enjoyed by him. (s65)

Contract with MINOR :

A Minor is not competent to contract, hence a contract with Minor is Void.

The agreement cannot be ratified by the Minor on attaining majority.

Minor can be beneficiary

Minor can not be asked to refund the benefit, profit enjoyed by him. (s65)

CONTRACT ACT A Minor can always plead minority. A Minor cannot be a partner in any Partnership Firm A Minor can act as Agent. Minor’s parent cannot be liable to Minor’s creditor for the breach of contract. A Minor’s estate is liable to a person who supplies necessaries of life to a Minor.

A Minor can always plead minority.

A Minor cannot be a partner in any Partnership Firm

A Minor can act as Agent.

Minor’s parent cannot be liable to Minor’s creditor for the breach of contract.

A Minor’s estate is liable to a person who supplies necessaries of life to a Minor.

CONTRACT ACT Discharge of Contract : By Performance By Mutual Consent : Novation Rescission Alteration Remission Waver Merger

Discharge of Contract :

By Performance

By Mutual Consent :

Novation

Rescission

Alteration

Remission

Waver

Merger

CONTRACT ACT By Subsequent Impossibility i.e. Doctrine of Frustration: Destruction of subject matter By Death or disablement of the parties Subsequent illegality Declaration of war Non existence or non occurrence of a particular state of things

By Subsequent Impossibility i.e. Doctrine of Frustration:

Destruction of subject matter

By Death or disablement of the parties

Subsequent illegality

Declaration of war

Non existence or non occurrence of a particular state of things

CONTRACT ACT Exception to the Doctrine of Frustration : Difficulty of Performance Commercial Impossibility Dependency on Third party ( Job Work) Strikes, lock out and civil disturbance, unless there a force majure clause. Failure of one of the objects.

Exception to the Doctrine of Frustration :

Difficulty of Performance

Commercial Impossibility

Dependency on Third party ( Job Work)

Strikes, lock out and civil disturbance, unless there a force majure clause.

Failure of one of the objects.

CONTRACT ACT Discharge by Operation of Law: By Death : ( Personnel skill) By Insolvency By merger By Breach of Contract Anticipatory Breach – repudiates before time Actual Breach – repudiates at or during the time

Discharge by Operation of Law:

By Death : ( Personnel skill)

By Insolvency

By merger

By Breach of Contract

Anticipatory Breach – repudiates before time

Actual Breach – repudiates at or during the time

CONTRACT ACT Remedy for Anticipatory breach Rescind and damages Specific performance & Injunctions Remedy for Actual breach Damages Time is the essence

Remedy for Anticipatory breach

Rescind and damages

Specific performance &

Injunctions

Remedy for Actual breach

Damages

Time is the essence

CONTRACT ACT Remedies for Breach of Contract : Recession of the Contract Damages Ordinary Damages – Usual course of business; Diff. bet. contract price and market price Special Damages-Loss of profit Vindictive Damages – to punish the defaulter. ( Marriage and S138 of NIA) Nominal Damages – only technical violation but no loss

Remedies for Breach of Contract :

Recession of the Contract

Damages

Ordinary Damages – Usual course of business; Diff. bet. contract price and market price

Special Damages-Loss of profit

Vindictive Damages – to punish the defaulter. ( Marriage and S138 of NIA)

Nominal Damages – only technical violation but no loss

CONTRACT ACT Liquidated Damages – predetermined amount Interest Specific performance Injunctions Quantun Meruit

Liquidated Damages – predetermined amount

Interest

Specific performance

Injunctions

Quantun Meruit

CONTRACT ACT Quasi Contract

Quasi Contract