The document discusses the changing nature of teacher-student relationships from traditional to modern capitalist systems. It notes that historically in India, the relationship was based on a primitive socialist model where the teacher was seen as a guru and students were disciples under their command. However, with the transformation to capitalism, the relationship has changed to one governed by contract law and market forces. Now, teachers are considered education service providers selling their product to student-consumers. The goal of the legal education contract is to create skilled legal professionals demanded by the legal services market.

1. TRANSFORMATION IN TEACHER STUDENT RELATIONSHIP:CHANGE
TOWARDS CAPITALIST PRODUCTION NATURE:CONTRACT
• Regulated by legal education service market.
• Teacher a legal education service provider
: Seller of the legal education process product.
• Student a legal education service consumer
: Buyer to be the consumer of service to transform himself in to
a seller of legal service in the legal service market.
• Purpose of the contract: To create a legal knowledge and
skill-product in the buyer which should be in demand in the
legal service market.
• Teaching objective: Creation of a legal knowledge and skill-
product in the buyer(student)which satisfy the demand of
legal service market.(R&D for Curriculum)
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2. Legal education process contract between the teacher and the
student
Market centric curriculum
Student: BuyerTeacher: Seller
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3. Special about the contract
1. The consumer or buyer or student is a
Party to the contract and also
becomes the part of Purpose of the
subject matter of the contract.
2. Therefore the stakes of the buyer are
very high in terms of quality of
product than the seller.
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4. Legal education product
(Market centric)
1. The student, the buyer, gets the career in
legal service market which makes him
happy.
2. The teacher, the seller, gets the satisfaction
which makes him happy.
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5. INDIAN TEACHER STUDENT RELATIONSHIP:PRIMITIVE
SOCIALIST PLUS SOME KIND OF FEUDALISTIC
1. Student (faithful disciple) education seeker.
2. The education provision to be made through command
system.
3. Teacher (guru) education service provider.
4. The faithful students were subject to uniform
command system during the term of education
without discrimination.
5. The system survived during the substantial period of
feudal production relations in India.
6. The transformation in production relation from
feudalism to capitalism transformed the teacher –
taught relationship from command to demand supply
(market) relationship.
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6. EFFICIENT CONTRACT FORMATION
IMPERATIVES
1. Inquisitive, alert, and absolutely honest
with reference to legal education market
forces.
2. Ego-centricity in the parties is dangerous to
the quality of the subject matter of contract
between the teacher and the student.
3. How to deal with ego-virus.?
4. Ubemarrie fidie contract?
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7. Basic reading material
1. Theory of knowledge. (Bertrand Russell)
2. Epistemology.
3. Origin of private property, family and state.
(Fredrick Angel)
4. Marriage and Morals. (Bertrand Russell)
5. Global business regulation. (Johan Braithwaite and
Peter Drahos)
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8. LAW:A REFLECTION OF PRODUTION RELATIONS( ECONOMIC
SYSTEM)
1. Primitive tribal communist production ( socialist economic
resources only) relations reflected the corresponding laws.
(Instinctive mutual co-operation in the tribe was the basis of
law)
2. Feudal production (origin of privatization of economic
resources) relations. (Feudal administrative laws.)
3. Capitalist production (Public, Privatization of E.R):Contract laws.
4. Socialist production (Socialization of E.R):Socialist
administrative laws.
Conclusion: Law is the super-structure of the economic system,
and the economic system is infrastructure of law.
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9. ECONOMIC RESOURCES
(MEANS OF PRODUCTION)
1. EARTH:ANYTHING IN OR OVER IT
2. AIR AND SPACE
3. LIFE IN ANY FORM
4. KNOWLEDGE:OF ALL KINDS
5. LABOUR:OF ANY KIND AND FORM ETC.
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10. ECONOMIC SYSTEMS
(METHOD OF RESOURCES ORGANISATION)
1.SOCIALIST ECONOMIC SYSTEM:ADMINISTRATIVE LAW
2.CAPITALIST ECONOMIC SYSTEM:CONTRACT LAW
3.MIXED ECONOMIC SYSTEM:MIXTURE OF CONTRACT LAW
AND ADMINISTRATIVE LAW
…………………………………………………………........................................
The proportions of mixture of economic systems in a society
reflects the proportions of the administrative and contract
law applicable
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11. GROWTH OF CAPITALIST MODE OF PRODUCTION: SIGNIFY
GROWTH OF CONTRACT LAW
1.Privatisation in the country signify the growth of capitalist
mode of production in the country.
2.Globalisation signify :
• Globalisation of markets.
• Globalisation of all other eco-resources and
• Globalisation of market means globalisation contract law.
(WTO)
Rich capital-resource countries by and large have become poor
labour-resource countries.
3.What needs to be globalised for the normal growth of
capitalist mode of production: Globalisation of capital
market and labour market ?
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12. GLOBALISATION IMPERATIVES :LEVEL
PLAYING FIELD ?
1. Uneven or non-capitalist mode of development in
the different nations creates conflicts of interest
amongst the nations: a centripetal force for
globalisation.
2. Mutuality of interests in the capitalist mode of
production across the nations: a centrifugal force
for globalisation.
3. Conflict of interest in the capitalist mode of
production: a centripetal force for globalisation.
12/15/15 12Contract-i

13. LAW OF CONTRACT
( METHOD OF ECONOMIC RESOURCES ORGANISATION)
LAW:THE REFLECTION AND REGULATION OF
ECONOMIC SYSTEM
CONTRACT LAW:REFLECTION AND
REGULATION OF CAPITALIST ECONOMIC
SYSTEM
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14. ECONOMIC SYSTEMS
(METHOD OF RESOURCES ORGANISATION)
1.SOCIALIST ECONOMIC SYSTEM:ADMINISTRATIVE LAW
2.CAPITALIST ECONOMIC SYSTEM:CONTRACT LAW
3.MIXED ECONOMIC SYSTEM:MIXTURE OF CONTRACT LAW
AND ADMINISTRATIVE LAW
…………………………………………………………..
The proportions of mixture of economic systems in a society
reflects the proportions of the administrative and contract
law applicable
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15. CAPITALIST ECONOMIC SYSTEM :CONTRACT LAW SYSTEM
CO-RELATION
1. CAPITALISM AND MARKET FORCES.
2. CONTRCT LAW AND MARKET FORCES.
3. CONFLICT BETWEEN ‘STATUTORY CONTRACT LAW’ AND
MARKET FORCES.
4. ECONOMIC SYSTEM AS INFRASTRUCTURE AND CONTRACT
LAW AS SUPERSTRUTURE OF SOCIETY.
12/15/15 15Contract-i

16. SPECIAL ABOUT CONTRACT LAW
CONTRACT LAWS
1. Legal regulation by private
legislation, creating rights
and duties.
2. Direct interface with
economic system.
3. Method of learning has to
be different than general.
4. Contract legal language:
Very important.?
OTHER LAWS
1. Public law creates rights
and duties.
2. No direct interface with
economic system.
3. General method of
learning.
4. Important ?
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17. PRINCIPLES OF LAW OF CONTRACT
1.GENERAL PRINCIPLES:CONTRCT-1
(Sections 1 to 75 of Indian Contract Act).
2.SPECIAL PRINCIPLES:CONTRACT-2
(Remaining sections of Indian Contract Act and few other Acts
dealing with special contracts).
3.OTHER SPECIAL PRINICIPLES-Other special principles in other
special contract courses.
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18. GENERAL PRINCIPLES OF CONTRCT LAW
(S.1-75)
1. 1.CONTRACT FORMATION PRINCIPLES
2. 2.CONTRACT DISCHARGE PRINCIPLES
3. 3.SOME OTHER PRINCIPLES
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19. CONTRACT FORMATION PRINCIPLES
(Essentials of a valid contract..S.10)
1. Competent parties (S.11).
2. Offer(S.2(a),3,4,5,6.).
3. Acceptance(2(b),3,4,5,6,7,8.).
4. Consent(S.13,14,15,16,17,18,19,20-22).
5. Lawful consideration with lawful object
(S.23,24.).
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20. Contract formation process
202020
Promise -iiPromise-i
4. Consent
2. Offer
3.Acceptance
5.Consideration
Agreement Contract
Competent party
1.Competent party
Offerer OffereeA B
20Contract-i12/15/15

21. COMPETENT PARTIES (Section.11)
1. Majority age (Sec.3,Majority Act xi
of1875,Family Law Reform Act
1969..english)
2. Sound mind (Sec.12,Economic rational
behaviour test)
3. No legal disqualifications.
4. (Burden of proof :one who alleges)
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22. NO MAJORITY AGE: IMPLICATIONS
1. Mohoribibi Vs Dharmodasghose(1903)..void agreement
2. No estoppels against pleading age disqualification.
3. No liability in tort law..Johnson V Pye case
4. Doctrine of restitution..not applicable
5. Application of restitution u/s 64(voidable contract)
6. Application of restitution u/s 65(contract becomes or
discovered to be void)
7. Application of restitution under Specific Relief Act:
Mohoribibi case,Khangul case..distinction
8. Beneficial contract?? Voidable contract?
9. Ratification
10. Necessaries (sec.68)
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23. PERSONS OF UNSOUND MIND
Indian law
1.Definition: section 12
2.Nature:void (Inder Singh Vs.
P.Singh AIR 1957 Pat.491.
3.Burden of proof: who
alleges
English law
1.Competent to contract
2.(I)Voidable contract: If
knowledge of defendant is
proved.
(II)Valid contract if the
knowledge defendant is
not proved or if it is
confirmed by the plaintiff.
3.Burden of proof: who
alleges
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24. PROPOSAL S.2(a)
1.Two competent persons.
2.Communication(S.3)
3.Purpose:to seek the consent of other
4.Intention to make contract(Balfour V . Balfour(1919)2 KB
571 :Indian law:(1973)1SCC:yes,(1988)3SCC526: Doubtful ?
Objective theory of intention determination: (Carlill V Carbolic
Smoke Ball Company(1893)1QB 256
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25. CATEGORISATION OF OFFER
1.Specific 0ffer
2. General offer..Lalman V.Gauridutt (1913) 11,All.L.J.489, and
Carlill case
3.Standing offer:Lalman Shukla case.
4.Continuing offer: Carlill’s case.
5. Standing and continuing offer. Carlill’s case
6.Cross offer.
7.Counter offer. Hyde V.Wrench(1840)Beav 334.($1000-950
case)
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26. INVITATION TO OFFER
Definition. where a party without expressing his final willingness
proposes certain terms on which he is willing to negotiate the
contract he is said to make an invitation to offer
Harvey Vs.Facey (1893) AC 552
Lowest price for Bumper Hall Pen,$900 case
McPherson Vs.Appana AIR 1951 SC 184
Plaintiff offered to purchase a lodge from the def for Rs.6000.If found reasonable
he is ready to pay more.Def.replied,”would not sell less than
Rs.10,000”.Plaintiff accepted it and brought the suit for specific performance.
Decide?
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27. Comparison
Invitation to offer
1. Not capable of being
accepted.
2. Objective is to seek offer.
3. May or may not generate
offer.
4. If offer is generated the
Offeree has the available
options under the law.
Offer
1. Capable of being accepted.
2. Objective is to seek
acceptance.
3. May or may not generate
acceptance.
4. If acceptance is generated
the contract formation
takes place.
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28. Acceptance: irreversible happening
1. Offer disappears.
2. Consent.
3. Reciprocal promises.
4. Consideration.
5. Agreement.
6. Contract.
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29. ESSENTIAL ELEMENTS OF ACCEPTANCE(Ss.2.b,3,4,5,6,7)
1. Two competent persons: offerer and offeree.
2. Acceptance is acceptance when communicated: Means of
communication: General rule and special rule.
3. Express or implied.
4. Absolute and unqualified.
5. Mode: usual and reasonable unless prescribed.
6. Mode prescribed: duty of the Offerer
7. Time for acceptance: when prescribed and when not
prescribed.
8. Acceptance during subsisting offer
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30. COMMUNICATION OF ACCEPTANCE
1.By whom.
2.To whom.
3.When communication is complete: depends on means of
communication.
(a) Electronic means.
(b) Non electronic means.
4.Postal rules of communication: jurisprudential crisis.
5.Jurisdiction
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31. COMMUNICATION OF OFFER AND ACCEPTANCE WHEN
COMPLETE (S.4)
1.Offer : when it comes in the knowledge of offeree.
2.Acceptance:
(a) as against the offerer..When it is put in the course of
transmission so that it is…
(b) as against the acceptor.. When it comes in the knowledge
of the offerer.
3.Jurisprudential problem with acceptance communication rules.
12/15/15 31Contract-i

32. REVOCATION OF OFFER AND ACCEPTANCE(S.5): WHEN ?
1.Offer :May be revoked at any time before the communication
of acceptance is complete as against the offerer.
2.Acceptance:May be revoked at any time before the
communication of acceptance is complete as against the
acceptor.
12/15/15 33Contract-i

33. WHEN COMMUNICATION OF ACCEPTANCE IS
DISPENCED WITH ?
1. If offer dispenses with communication of
acceptance .
2. Performance requirement may dispense with
the communication of acceptance .
3. In that case the moment performance is
done offer stand accepted.
12/15/15 34Contract-i

34. SOME CASES AS REFERENCE POINT OF DISCUSSION
4.Lalman Vs. Gauri Dutt,(1913) Cal.L.J489
5.Carlill Vs. Carbolic Smoke Ball Co.(1893) 1 QB 256
6.Mir Sarwarjan Vs.Fakhruddin Mohd Chaudhary (1912) 39
Cal.232 :PC 39 IA 1
12/15/15 35Contract-i

35. SOME CASES AS REFENCE POINT FOR DISCUSSION
(INTENTION TO MAKE CONTRACT)
1.Balfour Vs. Balfour (1919)2 KB 571.
2.Banwari Lal Vs.Sukhdarshan Dayal (1973) 1SCC 294.
3.CWT Vs. Abdul Hussain (1988)3SCC562
12/15/15 36Contract-i

36. SOME CASES AS REFERENCE POINT OF DISCUSSION
(INVITATION TO OFFER)
7.Harvey Vs.Facey (1893) AC 552
8.Pharmaceutical Society of Great Britain Vs. Boots Cash
Chemists Ltd.(1952) 2 QB 795.
9.McPherson Vs.Appanna AIR SC 184
12/15/15 37Contract-i

37. CONTRACT LAW ON CONSENT (Ss.13 to 19)
Contract law definition of consent:
Section 13: Meeting of minds of two or more competent
persons on three points.
1. On the identity of the persons.
2. On the identity of the subject matter.
3. On the identity of the transaction.
12/15/15 38Contract-i

38. CONSENT
Meeting of minds
On
Three points
1
On the identity and
choice
of
Parties
2
On the subject matter
of
Contract
3
On the nature
of
Transaction
12/15/15 39Contract-i

39. Some cases
1.Cundy V.Lindsay 1878 (3) AC 459:Respectable
company Blenkiron& Co and Blenkarn &
Co(cheat). case.
2.Raffles Vs.Wichelhaus(1864):133 RR 853.
Ex Peerless from Bombay(October-November)
12/15/15 40Contract-i

40. FREE CONSENT(S.14,19)
Consent is free if it is not caused by;
1.Coercion.(S.15)
2.Undue influence.(S.16)
3.Fraud.(S.17)
4.Mis-representation.(S.18)
5.Mistake.? x .x ?.Can there be consensus ad idem if there is
mistake?
12/15/15 41Contract-i

41. COERCION(S.15)
ESSENTIAL ELEMENTS
1.Committing or threatening to commit an act forbidden by
Indian Penal Code.
2.Detaining or threatening to detain the property.
3.To the prejudice of any person( not the parties only) whatever.
12/15/15 42Contract-i

42. SOME CASES AS REFERENCE POINT OF DISCUSSION
1.Chikham Amiraju V.Chikham Seshamma (1917)14 Mad
33.Wallis,CJ,Seshagiri,J. Oldfield,J.dissented.
2.Andhra Sugars Ltd.V.State of A.P. A.I.R.1968.S.C.599
12/15/15 43Contract-i

43. COERCION:DURESS
1.Re.essentils.(violence, imminent violence, threat to do
something illegal )
2.Re.origin.
3.Re.direction.near relation.(parents, wife, child and near
relatives)
4.Re.property.
K.Ammal V. K.Pillai (1987)1 Mad.L.J.138.
The High Court spelled out the distinction between the two.
12/15/15 44Contract-i

44. UNDUE INFLUENCE(S.16)
16.1:Definition.two parameters.
(a) Dominant position. (de-facto or de-jure )
(b) Misuse of the position.
16.2:Presumtions of dominant position( de-jure)
(a) Real or apparent position, fiduciary relation.(de-jure dominant
position)
(b) Affected mental capacity due age,illness, distress mental or
bodily.(de-jure dominated position)
16.3:Presumtion of undue influence.
1. (a) Dominant position. (de-facto or de-jure )
(b) Unconscionable transaction.
2. Contract with Pardanashin lady. (through precedent)
12/15/15 45Contract-i

45. SOME CASES AS REFERENCE POINT OF
DISCUSSION
1.Mannu Singh Vs. Umadat Pandey (1890) 12 All 532.
2.Raghunath Prasad Vs. Sarju Prasad, AIR 1924 PC 60: exorbitant
rate of interest on money borrowed(Rs.10,000 at 24%,1,12,885
after 11 years) to defend a criminal case.(S.16.3).No
3.Ranee Annapurni Vs. Swaminatha (1910) 34 Mad 7
Poor widow, seeking to establish right to maintenance , loan at
100% interest.(Precedent) Yes
Is this the situation of mental distress?
4. Chand Singh Vs. Ram Kaur (1987)2 Punj. L.J 70: 70 years ,a parda-
nashin widow,3 Daughters ,gifts land to tenant in possession of
land : Held- Possession of land made the position dominant.
12/15/15 46Contract-i

46. SOME CASES AS REFERENCE POINT OF DISCUSSION
5.Hodges Vs. Delhi & London Bank (1901) 27 IA (PC) 168.
definition of Pardanashin lady, quasi-Pardanashin.
6.Kalibaksh Singh Vs. Ram Gopal Singh (1913) 41 IA (PC) 23.
Pardanashin gifted half of her property to son of her
paramour case
7.Andhra Sugars Ltd. Vs. State of AP. AIR 1968 SC 599.
Consent under statutory compulsion : Held to be free.
Is Statutory compulsion a mental distress.?
12/15/15 47Contract-i

47. COERCION Vs. UNDUE INFLUENCE
1.Re subsisting relation.
2.Re dominant position.
3.Re special rules of evidence.
4.Re commission or threatened commission of acts forbidden by
IPC.
5.Re detention of property.
6.Re tort or crime as well.
12/15/15 48Contract-i

48. Fraud and Misrepresentation (Ss.17,18,19)
Derry Vs. Peek (1889)14 A.C 337
Elements of fraud:
1.Statement of fact not opinion.
(a) Statement (communication)
(b) Silence if statement. Can silence communicate ?
2.Fact in the statement must be false.
3.Person making the statement either knows the fact to be false
or do not believe the fact to be true.
4.To cause the consent.
12/15/15 49Contract-i

49. Statement of fact not opinion
Opinion statement has two parts.
(a) Fact part.
(b) Opinion part.
1. Fact part is representation of fact of situation.
2. Opinion part represent the assessment on the fact part of
the opinion holder which may be true or false.
12/15/15 50Contract-i

50. Statement: if silence is statement
1.Statemen.Express or implied statement.
(a)Is silence a statement: It is implied statement.
(b)If there is a duty to speak, silence may amount to
statement.
(c)When there is a duty to speak.
(i) Fiduciary relationship.
(ii) Uberrima fides contract. Insurance contracts
(iii) Context may create duty to speak.
(iv) Change of circumstances.
(v) Disclosure of half truth obligates to speak
the whole truth.
3.If the silence makes the false statement.
(a) Intentional or (b) Innocent
3.Cause consent.
4. Fraud or misrepresentation.12/15/15 51Contract-i

51. FRAUD Vs. MISREPRESETATION
Regarding intention.
Regarding tort and crime.
Regarding discovering truth with ordinary diligence defense.
Regarding rescission and compensation (S.75,and The (English)
misrepresentation Act,1967)
Regarding communication or revocation of rescission.(Ss.3,66)
Regarding consequences of rescission. (S.64.Restitution
applicable)
12/15/15 52Contract-i

52. Grounds of rescission right loss
Affirmation.( Long V.Lloyd,(1958)2All.ER 402.Lorry in excellent
condition case)
Lapse of reasonable period of time.
Subsequent sale in good faith.
Mode: Notice, if not traceable ,FIR may work as notice of
intention to rescind the contract
12/15/15 53Contract-i

53. MISTAKE
Mistake (M)as to the identity of the parties.
Mistake(M) as to the identity of subject matter.
Mistake(M) as to the identity of transaction.
Mistake(M) as to the law applicable. (no excuse)
Mistake(M) as to the law not applicable. (fact: Subject matter)
Mistake(M) as to the foreign law. (fact: Subject matter)
Unilateral mistake of fact does (no effect on contract
formation)?.
12/15/15 54Contract-i

54. Mistake Vs Misrepresentation
Mistake(no com)
1. Miss+ take=Mistake
2. Missing the take.
3. Unilateral..No effect on
consent.
4. Bilateral..No consent
5. Affect presence or absence
of consent
Misrepresentation( com)
1. Mis-take+Representation
=Misrepresentation.
2. False communication.
3. Intentional..Fraud
4. Innocent..Misrepresen..
5. Affect freedom of consent
not existence.
12/15/15 55Contract-i

55. Effect of mistake as to law: Ss 21,22.
1. Mistake as to any law in force in India. (No
effect: Ignorance of law no excuse)
2. Mistake as to the law not enforce in India
(Effect as a mistake as to the matter of fact)
3. Unilateral mistake as to the matter of fact
(No effect on contract formation)
12/15/15 56Contract-i

56. SOME CASES AS REFERENCE POINT OF DISCUSSION
1.Cundy Vs. Lindsay(1878)3AC459. Blenkarn& Co (Blenkiron&
Co) Pl.persue developments.
2.Raffles Vs.Wichelhaus(1864):133 RR 853.
Ex Peerless from Bombay(October-November)
3.Pratap Vs.Puniya,1977MP108.
Old illiterate lady and uterine brother case.
12/15/15 57Contract-i

57. SOME CASES AS REFERENCE POINT OF DISCUSSION
Krishnan Vs.Kurukshetra University, AIR 1976 SC 376
P.Sarojam Vs.LIC AIR1986 201
Long Vs.Lloyd:1958 All ER 402
Decent condition car case
12/15/15 58Contract-i

58. CONSIDERATION (Ss.2.d,23,25)
1. Definition :S.2(d)
2. Forbidden considerations in contract
formation:S.23
3. Relevance of consideration in contract
formation:S.25
12/15/15 59Contract-i

59. Consideration:S.2(d)
Definition :S.2(d)
When,
1. at the desire of the promisor,
2. the promisee or any other person
3. has done or abstained from doing or
4. does or abstains from doing, or
5. promises to do or to abstain from doing,
6. something,
7.such act or abstinence or promise is called a
consideration for the promise.
12/15/15 60Contract-i

60. When, at the desire of the promisor
1.Durga Prasad Vs. Baldeo(1880) 3All.E.R 221.
The Plaintiff on the order of collector constructed a Ganj,def.
promised to pay commission on items sold in lieu his
construction of the shop:
2.Kedar NathVs.Gouri Mohamed 1886 ILR 14Cal 64
Commissioners of Howrah sought charitable subscription to
construct Town Hall at Howrah . Charitable subscription
Rs.100.Work started. Promissory Estoppel?. Held liable.
3.Abdul Aziz Vs. Masum Ali AIR1914 All 22
Charitable subscription Rs.500 for Mosque repair. Repairs not
started as yet. Held not liable.
12/15/15 61Contract-i

61. “THE PROMISEE OR ANY PERSON”
1.The party to the contract need not be party to
consideration . “Promisee or any person”.
2.But the contract can be enforceable only by the
party to the contract and not party to the
consideration.
English law:
Dutton Vs. Poole (1677) 83 ER 523
If father forebear to sell the wood to give portion to his daughter the son
promised to his father to pay $1000 to his sister. Sister neither party to
the consideration nor contract. Brother held liable in a suit to sister?.
Overruled in Tweddle Vs. Atkinson (1861) 123 ER 762 after 200 years.12/15/15 62Contract-i

62. CASES AS REFERENCE POINT FOR DISCUSSION
Tweddle Vs. Atkinson (1861) 123 ER 762
The plaintiff was to be married to the daughter of one G and in
consideration of this intended marriage G and the plaintiff ‘s
father entered in to a written agreement by which it was
agreed that each would pay the Plaintiff a sum of money. G
failed to do so and the plaintiff sued his executors. Whitman J
considered it to be an established principle that a person can
not take advantage of a contract, who is stranger to the
contract.
Basic propositions of English law:
1. Consideration must move from promisee only.
2. Stranger to contract can not enforce the contract.? Law
revision committee 1937.(Benefit to third party)12/15/15 63Contract-i

63. Continued
Tweddle rule stranger to the contract have no cause action is
applicable in India.
Indian exceptions:2 kinds
1. Statutory :Negotiable Instrument Act, Contract of Agency
,TPA, Bill of lading, Railway receipt, trust beneficiary etc.
2.Judicial:marriage,partition or other family arrangements,
estoppel,covenents running with land.
12/15/15 64Contract-i

64. .”Has done or abstained from doing":
(On request of the promisor the consideration is furnished first and
thereafter the promise is made)
Executed and consideration:
There can be two situations.
(a) has done or abstained from doing on the request of promisor
(b) has done or abstained from doing without the request of
promisor.
Promise is without consideration but enforceable u/s 25(2)
12/15/15 65Contract-i

65. PRESENT CONSIDERATION
“Does or abstains from doing”
The point of time of furnishing the consideration is the same as
that of making the promise by the promisor for the
consideration.
12/15/15 66Contract-i

66. FUTURE OR EXECUTORY CONSIDERATION
“Promises to do or to abstain from doing”
The consideration for the promise is in the form of promise.
The obligations are due from both the sides of the contracting
parties. The reciprocal promises forming consideration for
each other.
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67. SOMETHING: SOME VALUE IN THE EYE OF LAW
1. Some (economic)value in the eye of law and value need not
adequate. Doctrine of Laesio enormous ( less but enough) in
civil legal system.
2. Promise to forbear or forbearance to sue.
3. Promise to compromise or compromising of dispute
irrespective of its merits.
4. Promise to perform or the performance of pre-existing of
legal duty.?
i. Contractual legal duty.
ii. Non-contractual legal duty.
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68. Pre-existing contractual duty. English law
1.Promise to pay amount less than due. No consideration
English (Pinnell) rule (1602) 5 Co Rep 117a.
2.Exceptions:
(a) Part payment by third party.
(b) Payment before due time.
(c) Payment at different place or different mode
(c) Promissory Estoppel.
12/15/15 69Contract-i

69. Continued…
Indian law, Section 63
“Every promisee may
(i) dispense with or remit,
(ii) wholly or in part,
(iii) the performance of the promise made to him, or
(iv) may extend the time for such performance ,or
(v) may accept instead of it any satisfaction which he thinks fit”
Such promise is valid even without consideration.
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70. Exceptions to the consideration requirements
1.English law.
(a) Contracts under seal.
(b) Simple contract.
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71. Indian law: Section 25
Section 25,read with Section 2.e)
1.Promise is in writing and registered.
2.Promise to compensate for something done.
3.Promise to pay debt barred by limitation law.
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72. Promise expressed in writing..love and affection
Section 25(1)
1.It is expressed in writing and
2.registered under the law for the time being in force for the
time being and
3.is made on account of natural love and affection
4.between parties standing in near relation;
12/15/15 73Contract-i

73. CASES AS REFERENCE POINT FOR DISCUSSION
1.Rajlukhy Dabee V. Bhootnath Mookerjee (1900)4 Cal.WN
488 :husband wife case.
2.Bhiwa V.Shivaram (1899)1 Bom.LR 495: two brothers property
sharing case.
12/15/15 74Contract-i

74. Promise to compensate for something done
Section. 25(3)
1.It is a promise to compensate, wholly or in part,
2.a person who has already voluntarily done something for the
promisor, or
3.something which the promisor was legally compellable to do;
12/15/15 75Contract-i

75. Is a promise to pay a debt barred by limitation
( Section 25.3)
1. It is promise, made in writing and signed by the person to be
charged therewith,
2. or by his agent generally or specially authorised in that
behalf,
3. to pay wholly or in part a debt of which the creditor might
have enforced payment but for the law for limitation of suits.
In any of these cases, such an agreement is a contract.
12/15/15 76Contract-i

76. Promise to pay time barred debt and
acknowledgement to pay
1.Section 25.3 is applicable in case of promise to time barred
debt.
2.It is not applicable in case acknowledgement. Limitation of
period takes place under the Indian Limitation Act.
12/15/15 77Contract-i

77. SOME CASES AS REFERENCE POINT OF DISCUSSION
Which promisor is bound u/s 25.3
Bombay High Court. original time barred debtor only,
P.M.Mody V.Bai Meherbai(1928) 30Bom.L.R1407
Madras High Court. Any person who promise to pay the time
barred debt
P.G.Nair V. P.A.Nair AIR 1940 Mad.678
??
12/15/15 78Contract-i

78. What considerations and objects are lawful, and what
not ( Section 23)
The consideration or object of an agreement is lawful, unless-
1.It is forbidden by law; or
2.Is of such a nature that ,if permitted, it would defeat the
provisions of any law; or
3.Is fraudulent; or
4. Involves and implies injury to the person or property of
another; or
5.The court regards it as immoral, or opposed to public policy.
In each of these 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.
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79. Illegality of consideration or illegality of object of
consideration
The “object” and “consideration” may in some cases be the
same thing but usually they are different.
Chandra Sreenivasa Rao V. Kovapatti Raja Rama Mohana Rao
AIR1952 Mad 579
Money is borrowed to celebrate the child marriage.
Child marriage Restraint Act 1929; to celebrate the marriage of
child is offence.
Here debt-consideration itself is not illegal but the object of debt
is illegal
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80. 1.Forbidden` by law
Law includes: Statutes, Customary law , Precedent, rules and
regulations, etc.
Nandlal V.Thomas J.William,171 IC 948
The plaintiff was licensed under an Excise Act which forbids its
sale, sub-lease, but he took the defendant in partnership.
Partnership held void
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81. 2.Is of such a nature that ,if permitted, it would defeat
the provisions of any law;
Fateh Singh V. Sanwal Singh (1878)1 All. 751
The accused is required under Cr.P.C to surety bond for Rs.5000
for good behavior for certain period, he deposits the sum
with the defendant when period is over refused to pay. Held
not recoverable.
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82. 3.Is fraudulent;
12/15/15 83Contract-i

83. 4.The court regards it immoral
Parameters of immorality:
1. Immorality is a relative term in relation to values of the
society at particular time and space.
2. The arbiter of the standard is the court.
3. The survey of the judicial decision reflects that immorality is
limited to sexual immorality as of now.
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84. IN THE OPINION OF COURT IT IS IMMORAL:
Immorality is limited to sex outside marriage
Gherulal V. M.Maiya (1959) 2SCA 342
Subba Rao J (after CJ)
The case law in England and in India confines the doctrine to
sexual immorality
D.Nagartnamba v Kunuku Ramayya AIR 1968235:1 SCR 43.
BACHAWAT J
Certain properties were gifted my a male of joint Hindu family
for past cohabitation case failed for incompetency but
BACHAWAT J recognised “the past cohabitation as good
consideration.”
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85. Instances of sexual immorality
1. Interference with matrimonial relations. Bai vijli V. Nansa
Nagar (1885) 10 Bombay 152 :Money lended to seek
divorce, not recoverable.
2. Dealing with prostitutes :Pearce V. Brookes( 1866)LR 1EX
213.Thing sold and hired for prostitution.
3. Illegal cohabitation: Past,present,future.?
12/15/15 86Contract-i

86. COHABITATION AS CONSIDERATION
PAST COHABITATION.
1. English law under seal valid otherwise it is past consideration.
2. Indian law .1.adulterous or.2. non-adulterous cohabitation.
Dhiraj Kuer V.Bikramji Singh (1831)3All 787 :Past cohabitation held good
consideration.
Pyare Mohan V. Narayani AIR 1982 Raj.43 :Logic different-gift needs no
consideration logic.
Husseinali Casan V.DinbaiAIR1924 Bom.135:Past cohabitation is illegal
consideration.
D.Nagartnamba v Kunuku Ramayya AIR 1968235:1 SCR 43.
Certain properties were gifted my a male of joint Hindu family for past
cohabitation case failed for incompetency but BACHAWAT J recognised “the
past cohabitation as good consideration.”
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87. In the opinion of the court opposed to public policy
ENGLISH LAW
1.Public policy
2.Judicial observations on “public policy”
Lord Halsbury in Egertone V.Brownlow (1953)4HLC 123
“I deny that any court can invent new head of public policy.”
Lord Atkin in Fender V.Johan Mildmay (1938) AC.1
“ The doctrine should be invoked in clear cases in which the
harm to the public is substantially incontestable, and does
not depend upon the idiosyncratic inference of a few judicial
minds”
12/15/15 88Contract-i

88. Public policy: Indian Law
Subba Rao J( after wards CJI) in Gherulal V.Mahadeodas AIR1959 SC781
Justice Subba Rao blended Halsbury and Atkin to articulate the Indian
position.
“the primary duty of the court is to enforce the promise which the parties
have made and to uphold the sanctity of the contract which forms the
basis of the society : but in certain cases ,the court may relieve them of
their duty on the rule founded on what is called the public policy; for want
of better words Lord ATKIN describes that something done contrary to
public policy is a harmful thing; but the doctrine is extended to harmful
cases but also to harmful tendencies; the doctrine of public policy is a
branch of common law and just like any other branch of common law, it is
governed the precedents; the principles have been crystallized under
different heads and though it is permissible for the courts to expound
and apply them to different situations, it should only be invoked in clear
and incontestable cases of harm to the public.
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89. 4. Involves and implies injury to the person or
property of another
1. Ram Swarup V. Bansi Mandar (1915) 42 cal,742:Borrowed
Rs.100 with exorbitant interest and executed a bond or to
work for 2 years without salary. Slavery?
2. Beresford V. Royal Insurance Company Ltd. (1917) 2
All.E.R.243: Suicide to help representative to get money.
The representative not allowed to get money.
12/15/15 90Contract-i

90. HEADS OF PUBLIC POLICY
1.Trading with enemy.
2.Traffiking in public offices.
3.Marriage brokerage agreement.
4.Interference with administration of justice.
(a) Interference with the course of justice.
(b) Stifling prosecution.
(c) Maintenance and champerty.
5.Unfair deal; Central Inland Water transport corporation Vs. N
Ganguly AIR 1986 SC 1571
Termination of service3months notice without reason .
12/15/15 91Contract-i

91. VOID AGREEMENTS
1.Illegal agreements.24
2.With out consideration.25
3.Restraint of marriage.26
4.Restraint of trade .27
5.Restraint of legal proceedings.28
6.Uncertain agreements.29
7.Wagering agreements.30
8.Impossible agreements.56
12/15/15 92Contract-i

92. Agreement in restraint of trade is void(S.27)
27.Agreement in restraint of trade void-Every agreement by
which any one is restrained from exercising a lawful
profession, trade or business of any kind, is to that extent
void.
Exceptions;
1.Statutory.
(a). Sale of goodwill, limits specified, which is reasonable.
(b). Under Indian Partnership Act.
2.Judicial.
12/15/15 93Contract-i

93. Lawful profession trade or business
One is restrained from exercising lawful
1.Profession
2.Trade or
3.Business
4.Occupation amounting to business
5.Occupation is not covered
12/15/15 94Contract-i

94. English law: Restraint
Nordenfelt V.Maxim Nordenfelt Guns and Ammunition Co Ltd
(1894) AC 535
1.Not to practice the same trade for 25 years (Reasonable)
2.Not to engage in any business for the time being carried on
by the company.( unreasonable)
3.He afterwards enters into agreement with another
manufacturer of guns and an action for restrain was filed.
4.New law laid down (a) In the interest of parties. (b) In the
interest of society as well.
12/15/15 95Contract-i

95. Restraint in terms of time and space before 1894
1.Lt Ls
Reasonable
2.Ut Us 3.Lt Us 4.Ut Ls
12/15/15 96Contract-i

96. English law: Reasonable restraint permissible
Two parameters:
1.Reasonable with reference to the interest of parties.
2.Reasonable with reference to the public interest.
The restriction should be framed and guarded as to
afford adequate protection the party in whose favor
it is imposed while at the same time it is no way
injurious to the public interest
12/15/15 97Contract-i

97. Indian law: All restraints covered
Madhub Chander V.Raj Coomar (1874)14 Bengal Law Reporter
76. Two rival shopkeepers in a locality case.
COUCH J held;
“ The words ‘restraint from exercising a lawful profession,
trade or business’, do not mean an absolute restriction, and
are intended to apply to a partial restriction limited to some
place.”
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98. Profession, trade or business
1.Rewashanker Samji V. Vedji AIR 1951 Kutch 56: agreement to
monopolize the work to perform the religious services: held
void? Religious services if trade, business or profession ?
2.Pothi Ram V.Islam Fatima AIR 1915 All.94
Two landlord in the neighbourhood,in order to avoid
competition agreed to hold cattle mela on different dates in
the same neighborhood . Held binding.? If occupation?
12/15/15 99Contract-i

99. Statutory exceptions
A. Under section 27.
1.Sale of goodwill.
Definition of ‘goodwill’: Lord Eldon (Cruttwell V.Lye Ves.335)
“The goodwill which has been the subject of sale is nothing more
than the probability that the old customer will resort to old
place" (old name of business)
Local limits are prescribed.
Limit appear to be reasonable, regards being had to the nature
of business.
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100. Continued….
(B).Under Indian Partnership Act.
1. Section 11:During the continuance…
2.Section 36 : Out going partner….
3.Section 54: In anticipation of dissolution…
For sections 36 and 54,local limits or period be specified ,which
should be reasonable.
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101. Judicial exceptions
1.Trade combinations.
S.B.Fraser and Co.V. Bombay Ice Mfg.Co. (1904)29 ILR Bom.107
(Regulation not restrain)
2.Solus or exclusive dealing agreements.
Carliles Nephews and Co.V.Ricknauth Buttermull ILR (1882) 8 Cal
809
Agreement to sell 1,36,000 dhotis of certain description to the
defendant only for certain period of time. (Assuring market
not restraint)
12/15/15 102Contract-i

102. Continued….
3.Service agreements with restraint on employees:
(a) Restraint during employment.
Charlesworth V. MacDonald
(b) Restraint beyond employment period.
Niranjan Shanker V.Century Spinning and Manufacturing (1967)
SC 1098
The appellant torn the agreement to pieces only because he has
been offered higher salary by the other company.
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103. Agreement by way of wager is void. (Section 30)
Definition: Justice HAWKINS in Carlill V. Carbolic Smoke Ball Co.
(1892)2QB484
“A wagering contract is one by which two persons professing to hold
opposite views touching the issue of a future uncertain event ,
mutually agree that, dependent on the determination of that
event, one shall pay or hand over to him, a sum of money or
other stake; neither of the contracting parties having any other
interest in that contract than the sum or stake he will win or
loose, there being no other real consideration for the making of
such contract by either of the parties. It is essential to wagering
contract that each party may under it either win or lose, whether
he will win or lose being dependent on the issue of the event,
and,therefore,remaining uncertain until that issue is known. If
either of the parties may win but cannot lose, it is not a wagering
contract”
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104. ESSENTIAL ELEMENTS OF WAGER
1. The parties holding opposite views.
2. About a (future) uncertain event.
3. Mutually agree to pay a certain sum of money or other
stake.
4. On the determination of the uncertain event.
5. The parties are interested in money or stake only and not in
the event otherwise.
6. Mutual chances of gain or loss of certain sum of money or
stake.
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105. Exception u/s 30
1.Horse racing with Rs.500 and above.
Note-Nothing in this section shall be deemed to legalize any
transaction where section 294-A is applicable.
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106. Examples
1.Lottory in Subhash Kumar Manwani V. State of M.P. AIR 2000
MP 109.
2.Life Insurance contract
If the insurer does not have ‘insurable interest” it is a wagering
agreement.
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107. Discharge of Contract
A contract may be discharged through the following methods:
1.Performance (Ss.31-67)
2.Impossibility of performance.
3.Agreement.
4.Breach.
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108. Impossibility of performance,S.56
Section 56
1.Existing impossibility: void agreement.
2.Supernuing impossibility: void contract.
3.Compensation for loss through non performance of act known
to the party to be impossible.
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109. SOME CASES AS REFERENCE POINT OF DISCUSSION:
Meaning of impossibility
1.Satyabrata V.Mugneeram AIR 1954 SC 44
:1954 SCR 310
(a) This much is clear that the word “impossible” has not used
here in the sense of physical or literal impossibility.
(b) It should be impracticable and useless from the point of
view of the object and purpose of the contract.
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110. English law: The doctrine of frustration: theories
1. The of implied term. Lord Loreburn in F.A.Tamplin
Steamship company .
2. Theory of just and reasonable solution.Denning LJ British
Movies News Ltd V.London and District Cinemas Ltd.(1951)
1KB 190
Effects of frustration
1. Frustration should not be self-induced.
2. Frustration operates automatically.
The frustration is not applicable in India ?
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111. Specific grounds of impossibility
1. Destruction of subject matter.
2. Change of circumstances.
3. Non occurrence of contemplated event.
4. Death or incapacity of party.
5. Governmental administration.
6. Intervention of war.
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112. Discharge by breach of contract
Definition of breach of contract:
When a party to the contract either refuses to perform or fails
to perform or incapacitates himself to perform his part of
the contract obligation he beaches the contract.
Kinds of contract breach:
The breach of contract is two kinds:
1. Anticipatory breach of contract.
2. Breach
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113. Anticipatory breach of contract
Definition:
It is the breach of the contract by the party to contract in
anticipation of the date of the performance of the contract.
Effects:
1. The innocent party is excused of the performance of
contract.
2. The choice of action of the aggrieved party.
• Right of Immediate action. Hochester V.De La Tour (1853) 95
RR 747. Courier hiring case.
• Anticipatory breach of contingent contract. Frost V.Knight
(1872) L.R.7 Exch.111. Engagement promising to marry on
father’s death but refused to marry before father’s death,
immediate action is maintainable.
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114. Continued…
• Right of action on due date of performance.
Consequences:
• The anticipatory breacher may opt to perform the contract
on due date.
• Damages shall be calculated on the current market rate if
market principle is applicable.
• Discharge by any other event may benefit the parties
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115. Breach of contract Section73
• When a contract has been broken, a party who suffers by
such breach is entitled to receive, from the party who has
broken the contract,
a. Compensation for any loss or damage caused to him
thereby ,which naturally arose in the usual course of things
from such breach, (general damages)
b. Or which the parties knew, when they made the contract,
to be likely to result from the breach of it.( special
damages )
Hadley V. Baxendale (1854)9 Ex 341 Alderson B
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116. Two steps in compensation determination
1. Identification of the loss or losses for which the
compensation is awardable to the aggrieved.
2. Conversion of loss in to money compensation.
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117. Identification of loss or the losses to be compensated in
case of breach
Section 73 provides two rules for the identification of the loss or
losses to be compensated.
(1) Any loss or damage caused to him thereby ,which naturally
arose in the usual course of things from such breach.
(2) Any loss which the parties knew at the time of contract
making as likely to result from the breach.
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118. Conversion principles of damage in to damages
There are two important principles for converting the damage in
to damages.
1.Market principle if applicable.
Market forces will play a decisive role.
2.Evaluation principle if market principle if market principle is
not applicable.
The opinion of the experts will be important for the judge to
make the judgment.
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119. Certain relations resembling those created by
contract(Ss.68-72)
Rationale: English law
1.Theory of unjust enrichment.
Lord Mansfield in Moses V.Macferlan (1760) All.E.R 581
2.Theory of “Implied-in-fact” contract
Lord Mansfield in Sinclair V. Brougham (1914) AC 398
12/15/15 120Contract-i

120. S.68:Claim for necessaries
• Meaning of necessaries: Alderson B in Chappel V.Cooper (1844)13 LJ(Ex)268
“Things necessary are those with out which an individual cannot reasonably exist.
In the first place, food, raiment, lodging and the like. About these there is no
doubt. Again, as the proper cultivation of the mind is as expedient as the
support of the body ,instruction in art or trade, or intellectual ,moral and
religious education may be necessary also . . . Then the classes being
established, the subject and extent of the contract may vary according to the
state and condition of the infant himself. His clothes may be fine or coarse
according to his rank; his education may vary according to the station he is to
fill; and the medicines will depend on the illness with which he is afflicted, and
the extent of his probable means when of full age. . . But in all these cases it
must first be made out that the class itself is one in which the things furnished
are essential to the existence and of reasonable advantage and comfort of the
infant contractor. Thus articles of mere luxury are always excluded, though
luxurious articles of utility are in some cases allowed.”
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121. Continued.
Nature of liability :
Indian law
1.Not personal.
2.To the extent of property.
English law
12/15/15 122Contract-i

122. Nature of Liability
1. Not personal
2. To the extent of property
3. English Law
Nash vs Inman (1908 (2) KB 1)
12/15/15 123Contract-i

123. Section 69
Reimbursement of a person paying money due by another, in
the payment of which he is interested.
1. The person must be interested in the payment
2. Another person must be bound to pay by law
3. Person paying is entitled for reimbursement
Govindram Gordhandas Seksaria V.State of Gondal AIR 1950 PC
99
Maharaja having sold certain mills without paying overdue
municipal taxes, was sued by the buyer who has to pay to
save the property from being sold.
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124. Section 70:Obligation of a person enjoying benefit of
non-gratuitous act
1. The service or act must be non-gratuitous
2. The other person must enjoy the benefit
3. The person enjoying the benefits needs to pay
compensation for the same
State of West Bengal V.B.K.Mondal & sons AIR 1962 SC 779
The plaintiff on the request of the officer of the State of West
Bengal constructed a Kutch road,guard room, office,
,kitchen, room for clerks and storage sheds for the use of
the civil supply department of the Government.
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125. Section 71 :Responsibility of finder of the goods
1. A person is a finder of the goods
2. The finder takes the goods in his custody
3. Finders responsibility is that of bailee
Section 168 :Right of the finder of goods.
Section 169: When finder of thing commonly on sale may sell it.
(a) When the thing is perishable
(b) When the lawful charges of finder, in respect of the thing
found, amount to two third of its value
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126. Section 72
Liability of a person to whom money is paid or thing delivered
by mistake or under coercion
1. Mistake of fact or law.
2. Coercion.
Sales Tax Officer, Banas V. Kanhaiya Lal Mukund Lal Saraf AIR
1959 SC 135
Tax was paid on its forward transactions which was held ultra-
vires
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