3. CONTRACT ( DEFINITION )
A contract is an agreement having a lawful
object entered into voluntarily by two or more
parties, each of whom intends to create one or
more legal obligations between them.
4. Disqualified by Law
Who Lacks the
Capacity of Contract?
According to Sec 11
Minors
Mental Incapacity
6. Minors Have No Capacity to Contract
Persons under 18 years of age.
Contract with minors is void and inoperative ab
initio.
Age of majority is 21 in following 2 cases :
a) Guardian appointed to minor or his property.
b) Minor’s property is under supervision.
7. Agreement with minors
Can be a promisee or beneficiary.
Cannot rattify his agreement on attaining the age
of majority.
Cannot be asked to compensate or pay for the
benefit received from a void agreement.
Can plead for minority in case of mistake or
representation.
Can enter into a contract for his own necessities.
Minor’s guardians or parents are not liable for the
contracts entered by him.
8. Case :
• Mohiri Bibi vs. Dharmdas Ghose.
• In this case a minor enters into a contract for Rs 20,000
with a money lender and mortgaged the property in favour
of money lender.
• The money lender paid the minor Rs 8000. Later the minor
wanted to set aside the mortgage.
• The money lender wanted refund of the said amount.
• The court said that agreement with minor is void-ab-initio,
and question of refunding does not arise.
9. Mental Incapacity [Unsound mind]
Party should be of sound mind before entering into a contract.
A person is said to be of sound mind if at the time of entering the
contract he is capable of understanding it & forming a rational
judgement as to its effects upon his interests. [Sec 12]
It includes :
a) Idiots
b) Lunatics
c) Drunken or Intoxicated
10. Disqualified by LAW
Alien Enemies : unhealthy relations with the country.
An alien enemy cannot sue or cannot be sued in Indian
court.
Foreign sovereigns : can enter into contracts and also
enforce them.
They can be sued only after the approval of the State
Government.
Corporations : Cannot enter into contract of personal
nature.
11. Contd….
Insolvents : Property of the insolvent vests with the
official receiver.
He cannot enter into a contract but his official receiver
can do so.
Convicts : Incapable to enter into a contract while
undergoing imprisonment.
Can enter into a contract after expiry of sentence or in
case of pardon.
12. CONTINGENT CONTRACTS
According to Sec. 31 of Indian Contracts Act, a Contract performance of which depends
upon happening or non happening of an un-certain event is called Contingent Contract.
It is a contract based on the presence of conditions.
Example: There is a Contract between A and B according to which A has to sell his goods
which are in voyage, to B if the ship reaches the harbour safely.
All indemnity, guarantee and insurance contracts are contingent contracts.
13. TYPES:
Depending Upon Happening of an Uncertain Event
Example: A has to sell goods to B, if ship comes there safely, their Contract is valid and if the
ship gets drowned, their Contract is void
Depending upon non-happening of an uncertain event
Example: A has to sell goods to B, if the ship does not come back. Here, if the ship comes
back, the Contract is void and if the ship gets drowned away, then it is valid
Depending upon happening of an Uncertain event in a fixed period
Example: A has to sell goods to B, if the ship comes back within 10 days, else it is void.
Depending upon non-happening of an uncertain event in a fixed period
Example: A has to sell goods to B if the ship does not come back within 10 days.
Depending upon an Impossible Event
Example: there is a contract between A and B where A will pay Rs.100000/- to B if B marries
C. Assume that C was dead 5 years ago. Hence their contract is abinitio void
14. Essential / Characteristics of Contingent Contract of
Contingent Contracttial / Characteristics of
Contingent Contract1. The performance of the contract depends upon
the happening or non-happening of an event in
future
2. The event must be uncertain
3. The uncertain event must be collateral or
incidental to the contract
15. Rules Regarding Contingent Contract
Uncertain event (Sec.32):
Contingent contract to do or not to do anything, if an uncertain future event
happens, it cannot be enforced by law unless and until that event has happened. If
event become impossible, such contract become void
Impossible event (Sec.33):
Contingent contracts to or not to do anything,
if an uncertain future event does not happen can
be enforced when the happening of that event
becomes impossible, and not before
16. Cont’d
Performance dependent on non-happening of event (Sec.34):
When performance depends on non-happening of an event, the contract
shall not be performed unless the happening of that event becomes impossible
Performance dependent on particular individual (Sec.35(1)):
Contingent contracts to or not to do anything, if a specified uncertain event
happens within a fixed time become void, if at the expiration of the time fixed,
such event has not happened, or if before the time
fixed, Such event becomes impossible
17. Cont’d
Event within fixed time(Sec.35(2)):
Contingent contract to do or not to do anything, if a
specified uncertain event does not happen within fixed
time, may be enforced by law when the time fixed has
expired and such event has not happened, or before the
time fixed has , if it becomes certain that such event will
not happen
Dependence on impossible event (Sec.36):
Contingent contract to do or not to do anything if impossible
event happens, are void whether the impossibility of event of
the event is known or
not to be parties to the agreement at the time
when it is made
18. Types of Quasi Contract
ypes of Quasi Contract Claim for necessaries supplied to persons
incapable of contracting. Sec—68
Right to recover money paid for another
person. Sec—69
Obligation of person enjoying benefits act.
Sec—70
Responsibility of finder of goods. Sec—71
Liability for money paid or thing delivered by
mistake or by coercion. Sec—72
Liability for money paid or thing delivered by mistake or by coercion. Sec—72
19. Claim for Necessaries supplied to persons incapable of contracting
If a person,
_incapable of entering into a contract, or
_any one whom he is legally bound to
support
_is supplied by another person with
necessaries suited to his condition in life
_the person who has furnished such supplies
is entitled to be reimbursed from the
property of such.
Illustration
A supplies B, a minor necessary book for
his studies. A is entitled to be
reimbursed from B’s property
A supplies daily ration to the wife and
children of B, a lunatic. A is entitled to
be reimbursed from B’s property.
20. Right to recover money paid for another person
A person,
Who is interested in the
payment of money
Which another is bound by
law to pay, and Who
therefore pay it, Is
entitled to be reimbursed
by the other.(Sec.69)
Illustration
A is tenant of house owned by
B. B has not paid municipal
taxes due to corporation and
corporation has ordered seizure
of the property . A pay the
taxes to corporation. A can
recover this money from B.
