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Essentials of valid contract

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Essentials of valid contract PPT presentation for under graduate students

Essentials of valid contract

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NAGARAJU V
ASSISTANT PROFESSOR,
DEPARTMENT OF COLLEGIATE EDUCATION.
KARNATAKA, INDIA.
A contract must
have two
components
1) Existence of an
agreement and
2) its enforceability.
These are not only
the requirement of
a valid contract.
There are few
essentials of a valid
contract which laid
down in sec10of
the Act.
An agreement must
have essential
qualities given in
the chart.
Offer or proposal :
The offer and proposal is
defined in sec2(a) of the
Indian contract Act, ‘’when
one person signifies to
another his willingness to do
or to abstain from doing
anything with a view to obtain
the assent of that other to
such act or abstinence, he is
said to make a proposal’’.
An offer may be specific or
general.
The person making the proposal
or offer is called proposer, offeror
or promisor.
The person to whom the offer or
proposal is made is called the
propose or offeree.
When the offeree accepts the
offer, he is called promise or
acceptor.
A specific offer is one which is
made to an ascertained person.
And
A general offer is one which is
not made to a specific person,
but to the public at large.
Intention to create legal relations.
Offer must be definite and certain.
Offer must be communicated to offeree.
Statement of intention and invitation to offer.
Conditional offer to be made known
An offer may be Specific or general.
Two identical cross offer do not result in a contract.

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Essentials of valid contract

  • 1. NAGARAJU V ASSISTANT PROFESSOR, DEPARTMENT OF COLLEGIATE EDUCATION. KARNATAKA, INDIA.
  • 2. A contract must have two components 1) Existence of an agreement and 2) its enforceability. These are not only the requirement of a valid contract. There are few essentials of a valid contract which laid down in sec10of the Act. An agreement must have essential qualities given in the chart.
  • 3. Offer or proposal : The offer and proposal is defined in sec2(a) of the Indian contract Act, ‘’when one person signifies to another his willingness to do or to abstain from doing anything with a view to obtain the assent of that other to such act or abstinence, he is said to make a proposal’’. An offer may be specific or general.
  • 4. The person making the proposal or offer is called proposer, offeror or promisor. The person to whom the offer or proposal is made is called the propose or offeree. When the offeree accepts the offer, he is called promise or acceptor.
  • 5. A specific offer is one which is made to an ascertained person. And A general offer is one which is not made to a specific person, but to the public at large.
  • 6. Intention to create legal relations. Offer must be definite and certain. Offer must be communicated to offeree. Statement of intention and invitation to offer. Conditional offer to be made known An offer may be Specific or general. Two identical cross offer do not result in a contract.
  • 7. Intention to create legal relations. An offer will not become a promise even after it has been accepted unless it has been made with a view to create legal relations. An offer with social or religious connotation, does not constitute a valid offer. Ex: A invited B for dinner and B Failure to attend. Offer must be definite and certain. The offer must not be ambiguous, uncertain and vague. The terms of the offer must be definite, unambiguous and certain. If the offer is indefinite or vague, it will not be regarded as offer. Ex: X purchased a horse from Y and promised to buy another, if the first one proves lucky. 2. A offered to sell his car to B for ₹40000 or ₹45000. this offer cannot be accepted as it is not clear about price.
  • 8. Offer must be communicated to offeree. According to sec4 of the Act “ the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made”. Ex: Lalman shukala Vs Gauri Dutt(1913). G’s nephew had absconded from his home. He sent his servant to search his missing nephew. When the servant had left, G then announced that anybody who discovered the missing boy would be given the reward of 500. the servant discovered the missing boy without knowing the reward. When the servant came to know about the reward, he brought an action but it failed. Statement of intention and invitation to offer. A mere statements of intention does not constitute a offer. Similarly an invitation to offer does not constitute a valid offer. Pricelist, catalogues, advertisements, window display, invitation by a company to public to subscribe to shares these are the merely statement of intention and hence do not form a valid contract.
  • 9. Conditional offer to be made known If there are special terms or conditions in an offer, these must be brought to the notice of the offeree at the time of making a proposal. A condition offer lapses when the condition is not accepted by the offeree. An offer may be Specific or general. A specific offer is one which is made to an ascertained person. And A general offer is one which is not made to a specific person, but to the public at large. Two identical cross offer do not result in a contract. When parties make identical offers to each other in ignorance of each others offer, the offers are said to be cross offers. A counter offer is a rejection of original offer. It is a new offer which needs acceptance by the original promisor before a contract is made.
  • 10. An offer terminates when revoked by notice of revocation. An offer lapses after stipulated or reasonable time. A conditional offer terminates when condition is not accepted. It terminates by not being accepted in the mode prescribed or in usual and reasonable manner. An offer lapses on rejection by counter offer or conditional offer. It terminates by subsequent illegality or destruction of subject matter. An offer lapses by the death or insanity of the offeror or offeree before acceptance.
  • 11. Sec2(b) defines acceptance as ” when one person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted . A proposal when accepted becomes promise”
  • 13. Essentials of valid acceptance Must be Absolute and unqualified . Must be communica ted to the offeror Must be in the prescribed manner Must be in Response to offer Must be by the offeree Must be given before the offer lapses or is revoked. Must be express or implied
  • 15. Capacity to contract is defined in sec 11 of the Indian contract Act as under “ every person is competent to contract who is of the age of the majority according to the law to which he is subject and who is of sound mind, and is not disqualified from contracting by any law to which he is subject”. In other words all persons are competent to make contract except the following. 1. Minor 2. Persons of unsound mind 3. Persons disqualified by any law to which they are subject.
  • 16. The term minor is explained in section 3 of the Indian Majority Act1875, as under “ A minor is a person who has not completed 18years of age” In the following two cases, a person becomes major on completion of 21 years: 1. Where a guardian of a minor person or property has been appointed under the Guardians and wards Act1890, and 2. Where the superintendence of minor property is assumed by a court of wards.
  • 17. Rules Regarding Minor Contract Can be promise or beneficiary Agreement void ab initio No insolvency Minor cannot be a Surety. Liability for necessaries No ratification No estoppel Liability for torts Doctrine of restitution
  • 18. Can be promise or beneficiary Agreement entered into by a minor for his or her benefit are valid and enforceable. That means minor can get all benefits from the contract. Agreement void ab initio Law acts as a guardian of minor and protect their rights because they don’t possess the capacity to judge what is good and what is bad for them. Thus agreement with a minor is ab initio(absolutely void). No insolvency A minor cant be declared insolvent even though there are payable from the properties of the minor.
  • 19. Minor cannot be a Surety. A minor cannot be a surety as he is not liable to pay or compensate anything under a contract. Liability for necessaries Minor liable for necessaries supplied or necessary services rendered to him or his minor dependents. That means supplier can claim reimbursement from the property of minor person. No ratification The term ratification may be defined as the act of confirming or approving. No ratification implies that an agreement made by a minor cannot be confirmed by him on attaining majority.
  • 20. No estoppel A minor who falsely represents himself to be a major and thereby induces another persons to enter into an agreement with him, can nevertheless plead minority as a defense in an action on the agreement. Liability for torts The minor is liable for his tort, unless the tort is in reality a breach of contract. The tort must be separate from and independent of contract. Doctrine of restitution If minor obtains property or goods by misrepresenting his age, he can be compelled to restore it, if it is traceable in his possession. This is known as the equitable doctrine of restitution. Where minor sold the goods or converted them, he cannot be made to pay the value of the goods.
  • 21. A person is said to be of sound mind for the purpose of making a contract if, at the time when he makes it, he is capable of understanding it and of forming a rational judgement as to its effect upon his interest. Persons of unsound mind includes 1. Idiots: An idiot is a person who has completely lost his mental thinking. Idiocy is a congenital defect caused by lack of development of the brain. 2. Lunatics: Lunatics is a person whose mental thinking is disordered
  • 25. Consideration is what a promisor demands as the price for his promise. Consideration is “which for what” something that a person gives for something he receives. Section2(d) of the Indian contract Act defines consideration as follows: “ when at the desire of the promisor, the promise or any other person has done or abstained from doing, or does or abstains from doing , or promises to do abstain from doing something , such act or abstinence or promise is called a consideration for the promise.”
  • 27. Section 12 defines consent as “ Two or more persons are said to consent when they agree upon the same thing in the same sense”. Consent is free if it is not caused by 1. coercion, 2. Undue influence, 3. Fraud, 4. Misrepresentation and 5. Mistake.
  • 28. Coercion means forcibly compelling a person to enter into contract. Coercion is threat or force used by one party against the other for making him to enter into agreement. Coercion The term undue influence means the unfair use of one’s superior power in order to obtain the consent of a person who is in a weaker position. Undue influenc e• Example: Relationship between police and accused. • Relationship between doctor and patient. • Relationship between Teacher and student. • Relationship between Religious advisor and disciple, etc.
  • 29. The term fraud may be defined as an intentional , deliberate or willful misstatement of facts which are material for the formation of contract. It includes all acts committed by a person with a view to deceive another person. Frauad Misrepresentation is any untrue statement made by a party to the contract to another, Misrepresentation arises when the representation or statement made is inaccurate but the inaccuracy is not due to any desire to defraud the other party. Misrepresenta tion Mistake Mistake may be defined as an incorrect belief which leads one party to misunderstand the other. The mistake takes place where the concerned parties are not aware of the terms of the agreement, and they take the term in a different sense.
  • 30. According to section 23, “ The consideration or object of an agreement is lawful unless: If it is forbidden by law; or Is of such a nature that, if permitted, it would defeat the provisions of any law; or Is fraudulent; or Involves or implies injury to the person or property of another; or The court regards it as immoral, or opposed to public policy. In such cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.”
  • 31. 1. If it is forbidden by law. If the object or consideration of an agreement is the doing of an act forbidden by law the agreement is void . An act or an undertaking is forbidden by law; i. When it is punishable by the criminal law of the country, or ii. When it is prohibited by special legislation derived from the legislature. If it Is of such a nature that, if permitted, it would defeat the provisions of any law This clause refers to cases where the object or consideration of an agreement is of such a nature that, though not directly forbidden by law, it would indirectly lend to a violation of law, whether enacted or otherwise.
  • 32. If it Is fraudulent An agreement enter into between parties with a fraudulent purpose is unlawful within the meaning of section 23 and hence void. If it involves injury to the person or property of another. If the object of an agreement is to cause injury to the person or property of another, it is void, being unlawful agreement. If the court regards it as immoral An agreement whose object or consideration is immoral, is illegal and, therefore, void. An agreement is unlawful for immorality in either of the following cases; 1. Case of sexual immorality, or 2. Furtherance of sexual immorality.
  • 33. FORM A GROUP OF 5 STUDENTS AND TELL TO COLLECT CASE LAWS AND PERFORMED ROLE PLAY..
  • 34. 1. BUSINESS LAW - RSN PILLAI AND BAGAVATHI – S. CHAND PUBLICATION 2. BUSINESS LAW – P. SARAVANAVEL AND S. SUMATHI- HPH 3. BUSINESS LAW – K. ASWATHAPPA AND G. SUDARSANA REDDY- HPH 4.RIGHT TO INFORMATION ACT- P.K. DAS – UNIVERSALPUBLISHING. 5. BUSINESS AND CORPORATE LAW- P.P.S. GOGNA – S.CHAND PUBLICATION. IMAGES COPIED FROM GOOGLE .