2. What is a contract ?
Agreement
+
Enforceable
3. What is an agreement ?
Proposal
Acceptance
Consideration
4. When is an agreement
enforceable?
Competent parties
Free consent
Lawful object and consideration
Agreement not expressly declared
void by law
5. Proposal + Acceptance Agreement
Consideration
CONTRACT
Competent parties
Free consent
Lawful object and
consideration
Agreement not expressly
declared void by law
Enforceability
8. Requisites of Proposal
Express or Implied
To whom made ?
Act or abstinence
Assent of offer
Legal obligation
Communication
Proposal (contd…)
10. Invitation to offer
Display of goods in a shop
Catalogue quoting price of goods
Tender notice
Issue of proposal form by insurance company
Auctioneer’s announcement to sell goods by
auction
Proposal (contd…)
12. Communication of proposal
When it comes to the knowledge of the person
to whom it is made
Proposal (contd…)
13. Revocation of the Proposal
Before other party accepts it
Proposal (contd…)
14. Communicating notice of revocation
Lapse of time
Failure to fulfill condition precedent
Death or insanity of proposer
How revoked ?
Proposal (contd…)
17. Essentials
Absolute and unconditional
Mode of Acceptance
Mental Acceptance
Express or Implied
Acceptance of all terms
Acceptance (contd…)
27. WHEN IS AN AGREEMENT
ENFORCEABLE
Competent parties
Free consent
Lawful object and consideration
Agreement not expressly declared void by
law
28. Competent parties
Major Sound mind Not disqualified
Online Contracts
Consequences of entering into a contract
with a minor
COMPETENT PARTIES
30. What is Consent?
Agreeing to the same thing in the
same sense
Meeting of the minds
‘Consensus ad idem’
Free consent
31. Free consent (contd…)
When is consent free?
When not induced by:
Coercion
Undue influence
Fraud
Misrepresentation
Mistake
32. Coercion
Committing or threatening to commit act forbidden by
IPC
OR
Free consent (contd…)
Unlawfully detaining or threatening to
detain property of other to his prejudice
Immaterial whether IPC is/is not in force at
place of coercion
33. AND
Unfair advantage
Burden of Proof
Free consent (contd…)
Domination of Will
Real, apparent authority Fiduciary relation Mental capacity
Undue Influence
34. Fraud
Suggestio falsi
Suppressio Veri
Promise made without any intention of
performing it
Any act fit to deceive
Act/omission declared fraudulent by law
Free consent (contd…)
38. Consideration and object
Consideration and object lawful unless:
Forbidden by law
Defeat any law
Fraudulent
Injury to person or property
Immoral or opposed to public policy
40. VOID AGREEMENTS
Agreements in Restraint of Trade
Exceptions
1. Sale of business along with goodwill.
2. Contracts of service
a. During the continuation of contract
b. After the conclusion of contract
41. Agreements in Restraint of Legal Proceedings
Absolute restraint
Limiting the time
Exception – ADR
Hague Rules Article III Rule 6: Unless notice of loss or damage… is
given in writing at the port of discharge or at the time of removal of
the goods.... Such removal shall be prima facie evidence of delivery
by the carrier of the goods as described in the bill of lading.
In any event the carrier and the ship shall be discharged from all
liability in respect of loss or damage unless suit is brought within 1
year after delivery of goods……
VOID AGREEMENTS (contd…)
48. Damages
Rules governing measure of damages:
Damages for direct loss
Remoteness of damage
Duty to mitigate the loss
REMEDIES FOR BREACH
OF CONTRACT (CONTD…)
50. QUASI CONTRACTS
Based on equitable doctrine of unjust
enrichment
Supply of necessaries to a person incapable of
contracting.
Payment by interested person
Liability to pay for non-gratuitous act
Finder of goods
Payment or delivery under mistake or
coercion
52. The Act codifies the law relating
to sale of goods which was
contained in sections 76 to 123
of Contract Act. Those sections
have been repealed by the SGA
53. Parties are at a liberty to subject
the contract of sale
to
the law of the country of their
choice
54. Choice may be expressly stated
by parties
or
determined by Court
55. Two important presumptions made
by Courts:
Law of the place of making the contract -
lex loci contractu
Law of the place of performing the contract -
lex loci solutions
56. Transfer of property in goods under
sales made in foreign countries is
in general regulated by the law of
the place where goods are situated
at the time of sale
60. Formalities
Formation
Offer
Acceptance
Provision for delivery of goods
Provision for payment of price
How made?
Writing
Oral
Partly written and partly oral
Implied from conduct of parties or course of their
business
62. Goods perishing before making of
contract
Goods perishing before sale but after
agreement to sell
EFFECT OF GOODS PERISHING
63. BEFORE MAKING OF
CONTRACT
Contract for specific goods only
Goods damaged, destroyed, seller deprived
Before contract of sale is made
Without knowledge of seller
Void Agreement
64. BEFORE SALE BUT AFTER
AGREEMENT TO SELL
Specific goods
Goods perishing
Perishing after agreement but before sale
Without fault of seller or buyer
Agreement can be avoided
65. PRICE
Ascertainment of price
Fixed by contract
Left to be fixed in agreed manner (market price)
Course of dealings between parties
Reasonable price
Price fixed by valuation of third party.
Unless different intention appears, stipulations as
to time of payment not deemed to be essence of
contracts.
Whether any other stipulation as to time is of
essence of contract or not depends on terms of
contract.
66. CONDITIONS AND
WARRANTIES
Condition
A stipulation essential to main purpose of contract,
breach gives rise to a right to repudiate contract.
Warranty
A stipulation collateral to main purpose of contract,
breach gives rise to claim for damages.
67. implied conditions and
warranties
Implied undertaking as to title, etc.
Implied conditions when sale is by description
No implied conditions as to quality or fitness
Implied conditions when sale is by sample
68. IMPLIED
CONDITIONS/WARRANTIES AS TO
TITLE
Seller has/will have right to sell– condition
Enjoy quiet possession of goods – warranty
Goods free from any charge or encumbrance
- warranty
69. IMPLIED CONDITIONS WHEN
SALE BY DESCRIPTION
Goods shall correspond with description
If sale is by sample as well as by description,
it is not sufficient that the bulk corresponds with
sample if goods do not also correspond with
description
Description includes quality or fitness, place of
shipment, time of dispatch or delivery, time of
shipment, mode of packing.
70. NO IMPLIED
CONDITION/WARRANTY AS TO
QUALITY OF FITNESS
Exception 1
Implied condition as to quality/fitness when:
Buyer expressly/impliedly makes known to seller the purpose
Buyer shows he relies on seller’s skill and judgment
And
Goods are of a description dealt with by seller (manufacturer or not)
Exception to Exception 1
No implied condition when article sold under its patent or trade name
71. NO IMPLIED CONDITION/WARRANTY AS
TO QUALITY OF FITNESS
Exception 2
Implied condition as to merchantableness when :
Goods bought by description
From seller who deals in goods of that description (manufacturer
or not)
Exception to Exception 2
If buyer has examined the goods, no implied condition as regards
defects which examination ought to have revealed
72. NO IMPLIED CONDITION/WARRANTY AS
TO QUALITY OF FITNESS
Exception 3
An implied warranty or condition as to quality or
fitness for a particular purpose may be annexed by
usage of trade.
73. IMPLIED CONDITIONS WHEN
SALE BY SAMPLE
Bulk shall correspond with sample in quality
Buyer to have reasonable opportunity of
comparing bulk with sample
Goods free from defect, rendering them
unmerchantable, which would not be apparent
on reasonable examination of sample.
75. Property passes when intended to pass
Specific goods in a deliverable state
Specific goods to be put into a deliverable state
Specific goods in a deliverable state, when the
seller has to do anything in order to
ascertain price
TRANSFER OF PROPERTY – SPECIFIC
GOODS
76. Contract for sale of unascertained or future goods by
description
Goods in a deliverable state
Goods unconditionally appropriated to contract by
delivery to buyer or carrier
Appropriation by seller with assent of buyer or by
buyer with assent of seller
Assent express or implied
Assent before or after appropriation
TRANSFER OF PROPERTY
Sale of unascertained goods and appropriation,
Delivery to carrier
Property passes on appropriation
77. WHEN UNCONDITIONAL
APPROPRIATION?
Seller delivers goods to buyer/carrier/
bailee (whether named by buyer or not)
Delivery is pursuant to the contract
Delivery is for purpose of transmission to
buyer
Seller does not reserve the right of disposal
78. CONDITIONAL
APPROPRIATION
Where seller will not part with the goods
until he is paid.
Where seller ships goods as per contract
but takes out bill of lading to his own
order or to the order of his agent.
(reserving the right of disposal)
79. PASSING OF PROPERTY –
APPROVAL BASIS OR SALE OR
RETURN
Property passes when buyer :
Signifies his approval/acceptance to seller
Does any act, adopting the transaction
Retains goods without giving notice or
rejection.
80. TRANSFER OF TITLE
Nemo dat quod non habet- No one can give
what he does not possess
Sale by person not owner – Exceptions
Title by estoppel
Sale by mercantile agent
Sale by one of the joint owners
Sale by a person in possession under voidable contract
Sale by a seller in possession after sale
Sale by a buyer in possession before sale
81. Performance of contract
Duties of seller and buyer
Payment and delivery are concurrent conditions
Delivery
Effect of part delivery
Buyer to apply for delivery
Rules as to delivery
Delivery of wrong quantity
Installment delivery
Delivery to carrier or wharfing
Risk where goods are delivered at distant place
Acceptance
Buyer not bound to return rejected goods
Liability of buyer for neglecting or refusing delivery of goods.
82. RIGHTS OF UNPAID SELLER
AGAINST GOODS
Rights of Unpaid Seller
Against Goods
LIEN
Lien, When?
Part Delivery
Termination of Lien
STOPPAGE IN TRANSIT
Right, When?
Duration of Transit
How effected?
RESALE
Who is a seller?
When is seller unpaid?
What are his rights vis-à-vis goods?
84. Ex-Works or Ex-Factory………………….. Free delivered
In between host of contracts
Most important FOB, CIF
FOB AND CIF CONTRACTS
85. FOB CONTRACTS
Pyrene V/s Scindia Navigation 1945 QB,
All. E. R.
Flexible instrument- not susceptible to rigid definition
Central idea-price paid to seller includes all costs up
to loading in a ship nominated by buyer.
Normally property and risk passes when goods cross
the ship’s rail
Incidents can be varied without losing its essential nature.
87. Seller’s duties
FOB CONTRACTS (contd…)
Ship free on board goods as described in contract of
sale on the nominated vessel at the port of loading
Pay all costs for handling and transport till goods on
board
88. The Buyer’s duties
FOB CONTRACTS (contd…)
Advise seller in good time on what ship goods are to
be shipped
Designate/nominate a ship
Secure shipping space
Obtain export license
Enter and declare the goods with customs authorities
89. Goods
Port of loading
Nomination of ship
Delivery
Loading
Passing of Property
Administrative duties and payments
Brandt & Co. V/s Morris (1917) KB,
Pound & Co. V/s Hardy & Co., (1956) AC (HL)
Payment
FOB CONTRACTS (contd…)
90. CIF CONTRACTS
Classical judicial definition of CIF given by Atkinson
in Johnson V/s Taylor Bros. [1920] AC 144.
Make out an invoice of goods sold
Ship at port of shipment goods of contract description
Procure a contract of affreightment
Arrange for an insurance policy
Forward and tender to the buyer shipping documents
The seller may sell on cif terms goods which he has shipped
or may himself buy goods already shipped and then sell them
cif. Hence he may not be able to plead an export ban as
frustrating his contract as he can buy goods already shipped.
91. Difference between fob with additional
duties and cif contract
CIF CONTRACTS (CONTD…)
93. Documents in CIF contracts
CIF CONTRACTS (CONTD…)
Invoice
Bill of Lading
o Substitute for Bill of Lading
Policy of insurance
o Certificate of Insurance
95. CHARTER PARTY
CONTRACT OF AFFREIGHTIMENT
Charter-Party Bill of Lading
Voyage Demise
Time
Implied undertakings in charter parties
Frustration of charter party
97. Functions
BILL OF LADING (CONTD…)
Receipt- goods received or shipped?
o Leading marks for identification
o No of pieces/packages, quantity, wt
o Apparent order and condition
Document of title to the goods
Quasi – negotiable instrument
Contract or evidence of contract?
98. Section 3 of Bill of Lading Act, 1856
Every bill of lading in the hands of a consignee or endorsee for
valuable consideration, representing goods to have been shipped on
board a vessel, shall be conclusive evidence of such shipment as
against the master or other person signing the same,
notwithstanding that such goods or some parts there of may not
have been so shipped, unless such holder of the bill of lading shall
have had actual notice at the time of receiving the same that the
goods had not in fact been laden on board; Provided that the
master or other person so signing may exonerate himself, in respect
of such misrepresentation by showing that it was caused without
any default on his part, and wholly by the fraud of the shipper, or of
the holder or some person under whom the holder claims.
BILL OF LADING (CONTD…)
99. Section 1 of Bill of Lading Act, 1856
Every consignee of goods named in a bill of
lading and every endorsee of a bill of lading to
whom the property in the goods therein
mentioned shall pass, upon or by reason of such
consignment or endorsement shall have
transferred to and vested in him all rights of suit,
and be subject to the same liabilities in respect of
such goods as if the contract contained in the
bill of lading had been made with himself.
BILL OF LADING (CONTD…)
100. INTERNATIONAL CONVENTIONS
Hague Rules 1924
Hague-Visby Rules 1968 (in force in 1977)
Protocol amending HV Rules 1979 (in force in 1984)
Hamburg Rules 1978 (in force 1992 November)
UN Convention on International Multimodal Transport of
Goods, 1980 (not yet operative)
101. DOMESTIC LAWS
Bill of Lading Act, 1856
Carriage of Goods by Sea Act 1925
Multimodal Transportation of Goods Act,
1993, Amendment in 2000
102. Rules relating to Bills of Lading:
ARTICLE II:
Subject to the provisions of Article VI, under every
contract of carriage…………….. hereinafter set forth.
ARTICLE VI:
Special Conditions:
Notwithstanding the provisions of the preceding Articles,
a carrier…… shall be at liberty to enter into any
agreement in any terms as to responsibility and liability
of the carrier….
Hague/Hague-Visby Rules
103. ARTICLE III:
Rule 1:
The carrier shall be bound before and at the beginning
of the voyage to exercise due diligence to make the ship
seaworthy……
Rule 2:
Subject to the provisions of Article IV, the carrier shall
properly and carefully load, handle ----- the goods.
ARTICLE IV:
Neither the carrier nor the ship shall be liable for loss or
damage arising or resulting from…………..
Hague/Hague-Visby Rules
104. ARTICLE III:
Rule 5:
The shipper shall be deemed to have guaranteed to
the carrier the accuracy at the time of shipment of
the marks, no………
And the shipper shall indemnify the carrier against
all loss….. resulting from inaccuracies.
The right of the carrier to such indemnity shall in no
way limit his responsibility/liability under the
carriage contract to any person other than the
shipper.
Hague/Hague-Visby Rules