Indian Contract Act-1872-presentation.pptx

INDIAN CONTRACT
ACT-1872
BY
SAURAV ANAND
EE(QS&C)

PREVIEW
 INTRODUCTION
 DEFINITION
 PROPOSAL
 CONSIDERATION
 ACCEPTANCE
 AGREEMENT
 VALID CONTRACT
 COMPETENT TO CONTRACT
 CONSENT – FREE CONSENT
 DISCHARGE OF CONTRACT

INTRODUCTION
 Comes on Force on 01 Sept 1872
 The Indian contract Act is broadly divided into two parts
General Contract – Section 01 to Section 74
Special Contract – Section 124 to Section 238
The Section 75 to Section 123 has been repealed

DEFINITION
 The person making the proposal is called the “promisor” or “ Offerer” or “Proposer”
 The person accepting the proposal is called the “promisee” or “ Offeree” or “Proposee”
 This is defied at Section 2(c) of ICA.

PROPOSAL
 Defined at Section 2(a)
 When Any person Signify his willingness to do or abstain from doing something in order to obtain
consent from other, then the Person is Making Proposal.
 Essential of Valid Proposal
 Proposal must be definite, clear and certain
 Intention to create a legal relationship
 The proposal must be communicated
 CASE LAW
 Balfor vs Balfor, 1919
 Lalman Shukla Vs Gauri Dutt, 1913
 TYPE OF PROPOSAL
 Express and implied proposal
 Specific and General proposal
 Cross Proposal
 Standing, Open, Continuing Proposal
 CASE LAW
 Carllil vs Carbolic Smoke Ball, 1892
 Invitation to Proposal
 CASE LAW
 Harvy vs Facie 1893

COMMUNICATION OF PROPOSAL
 Section 3 :
The communication of proposals, the acceptance of proposals, and the revocation of proposals and
acceptances, respectively, are deemed to be made by any act or omission of the party proposing,
accepting or revoking, by which he intends to communicate such proposal, acceptance or revocation,
or which has the effect of communicating it.
 A mere mental determination to accept unaccompanied by any external indication will not be
sufficient
 Mere mental determination is not sufficient (Physical manifestation is important).
 Section 4 :
 The communication of a proposal is complete when it comes to the knowledge of the person to
whom it is made.

CONSIDERATION
 Defined at Section 2(d)
 When at the desire of PROMISOR
 The PROMISEE or THE OTHER PERSON
 Has done or abstained from doing – Past consideration
 Does or abstains from doing – Present Consideration
 Will do or abstain from doing – Future Consideration
 Something
 Such act or abstinence or promise is called the CONSIDERATION
 Consideration is “quid pro quo – something for something”
 CASE LAW
 Durga Prasad vs Baldeo, 1880
 Chinnaya vs Rammaya, 1882
 Abdul Aziz vs Masum Ali, 1914
 AGREEMENT WITHOUT CONSIDERATION IS VOID (प्रतिफल क
े तिना तकया हुआ करार शुन्य होिा है)
 Mentioned at Section 25
 This general rule is that any agreement without consideration is void.
 However, there are following exception of the above rule:
 Any written and registered agreement based on NATURAL LOVE & AFFECTION
between near relatives.
 A promise to compensate wholly or in part, a person who has already VOLUNTARILY
done something for the promisor. A promise to pay for past voluntary service is
binding.
 Time barred debt.

ACCEPTANCE
 Defined at Section 2(b)
 When the person to whom the proposal is made signifies his assent thereto, the proposal is
said to be accepted. A proposal, when accepted, becomes a promise .
 Essential of Valid Acceptance
 The essential is mentioned at Section 7.
 1) be absolute and unqualified;
 (2) be expressed in some usual and reasonable manner, unless the proposal prescribes the
manner in which it is to be accepted. If the proposal prescribes a manner in which it is to
be accepted, and the acceptance is not made in such manner, the proposer may, within a
reasonable time after the acceptance is communicated to him, insist that his proposal
shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he
accepts the acceptance.
 The Acceptance must be properly Communicated.
 Acceptance must be communicated in some usual manner & reasonable manner, if mode of
communication is not prescribed.
 Acceptance must be made while the proposal is still subsisting.
 CASE LAW
 Hyde v Wrench (1840) 49 ER 132
 UOI vs Narain Singh, 1953 (Hon’ble Punjab and Haryana High Court)

COMMUNICATION OF ACCEPTANCE
 Section 4 :
 The communication of an acceptance is complete,—
 as against the proposer, when it is put in a course of transmission to him, so as to be out
of the power of the acceptor;
 as against the acceptor, when it comes to the knowledge of the proposer.
 CASE LAW
 Ram Das Chakrabarti vs Cotton Ginning Co. Ltd, 1897
 Еntоrеs Ltd v. Міlеs Fаr Еаst Соrроrаtіоn, 1955

ACCEPTANCE
 THE ACCEPTANCE CAN BE EXPRESSED OR IMPLIED. :- SECTION-9
 The express acceptance means through word of mouth or by piece of writing.
 The implied acceptance means to infer from the conduct of parties.
 It is termed as proposal acceptable by conduct i.e. Acceptance by Performance.
 The communication of acceptance is not necessary as it is required for the benefit of the
person who makes the offer/proposal and he may dispense the communication.
 SECTION 8: Acceptance by performing conditions, or receiving consideration.—
 Performance of the conditions of a proposal, or the acceptance of any consideration for a
reciprocal promise which may be offered with a proposal, is an acceptance of the proposal
 CASE LAW
 Вrоgdеn v. Меtrороlіtаn Rаіlwау Со.,1877
 Mere silence to a proposal is not termed as acceptance i.e. not consider as a valid acceptance.
However, mere silence to a proposal coupled with conduct of parties will make the acceptance as a
valid acceptance under Section 8 of ICA, 1872.
 CASE LAW
 Felthouse v Bindley [1862] EWHC CP J35

REVOCATION
 Defined at Section 5
 REVOCATION OF PROPOSAL:
 A proposal may be revoked at any time before the communication of its acceptance is
complete as against the proposer, but not afterwards.
 REVOCATION OF ACCEPTANCE:
 An acceptance may be revoked at any time before the communication of the acceptance
is complete as against the acceptor, but not afterwards.

REVOCATION
 MODE OF REVOCATION OF PROPOSAL : SECTION 6
 A proposal is revoked-
 by the communication of notice of revocation by the proposer to the other party;
 The proposal must be revoked by the Promisor or its Authorised Agent.
 The communication by the promisor to the other party must be complete.
 The revocation must be known to other party.
 Method of revocation must be expressed and should not be implied.
 Must be done before the acceptance of proposal by the promisee i.e. acceptor as
against promisor is complete.
 The implied acceptance means to infer from the conduct of parties.
 It is termed as proposal acceptable by conduct i.e. Acceptance by Performance.
 The communication of acceptance is not necessary as it is required for the benefit
of the person who makes the offer/proposal and he may dispense the
communication.
 by the lapse of the time prescribed in such proposal for its acceptance or, if no time is so
prescribed, by the lapse of a reasonable time, without communication of the
acceptance;
 by the failure of the acceptor to fulfil a condition precedent to acceptance; or
 by the death or insanity of the proposer, if the fact of his death or insanity comes to the
knowledge of the acceptor before acceptance.
 Insanity means unsound mind – A person of unsound mind has not had natural
understanding of terms and condition of proposal.
 If the fact of insanity or death is not known to promisee i.e. acceptor then
revocation is not made.

COMMUNICATION OF REVOCATION
 Section 4 :
 The communication of a revocation is complete,—
 as against the person who makes it, when it is put into a course of transmission to the
person to whom it is made, so as to be out of the power of the person who makes it;
 as against the person to whom it is made, when it comes to his knowledge.

AGREEMENT
 Defined at Section 2(e)
 Every promise and every set of promises, forming the consideration for each other, is an
agreement;
 AGREEMENT WITHOUT CONSIDERATION IS VOID (प्रतिफल क
े तिना तकया हुआ करार शुन्य होिा है)
 Mentioned at Section 25
 This general rule is that any agreement without consideration is void.
 However, there are following exception of the above rule:
 Any written and registered agreement based on NATURAL LOVE & AFFECTION
between near relatives.
 A promise to compensate wholly or in part, a person who has already VOLUNTARILY
done something for the promisor. A promise to pay for past voluntary service is
binding.
 Time barred debt.
 WILLINGNESS TO OBTAIN CONSENT = PROPOSAL + Assent = Promise + Consideration =
Agreement + Enforceability = Contract
 CONTRACT
Defined at Section 2(h)
Agreement ENFORCEABLE by law is called CONTRACT.

ESSENTIAL OF VALID CONTRACT
 All agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object, and are
not hereby expressly declared to be void.
All agreements are contract.
If the parties to agreements are COMPETENT TO CONTRACT. (Section 11)
If the agreements are made by FREE CONSENT. (Section 13 and Section 14)
If the agreements have lawful consideration and object. (Section 23)
If the agreements are nor expressly declared VOID.

COMPETENT TO CONTRACT
 Every person is competent to contract who is of the age of majority according to 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.
The followings are competent to contract:
The person who has attained the age of majority according to the law he is subjected to.
The person is not of unsound mind
The person is not disqualified from contracting by any law he is subject too.
Such as Enemy Alien, Foreign Diplomat/Ambassador/head of Other Country, Convicts etc

MINOR AND LAW
 Mohori Bibee vs Damodar Das, 1903
 FACT OF CASE:
Dharmodas Ghose was a young person under 18 years old, which means he couldn’t
legally make contracts. He owned some land and his mother was in charge of it legally. He
used his land as collateral for a loan from Brahmo Dutta, agreeing to pay Rs.20,000 with a
20% interest rate every year. At the time, Brahmo Dutta has a money lender and Kedar
Nath managed his business on his behalf. Kedar Nath acted as Brahmo Dutta’s
representative. Dharmodas Ghose’s mother informed Brahmo Dutta that her son was a
minor and couldn’t make contracts regarding his land. Kedar Nath, acting on behalf of
Brahmo Dutta, knew about Dharmodas Ghose’s age and incapacity to enter such
contracts. On September 10th, 1895, Dharmodas Ghose and his mother filed a lawsuit
against Brahmo Dutta, claiming that Dharmodas had been a minor when he made the
mortgage, rendering it invalid and improper. They wanted the contract to be cancelled.
During the legal proceedings, Brahmo Dutta had passed away, so his representatives took
over the case. The plaintiffs argued that the contract should be cancelled because the
defendant, Dharmodas Ghose, had been deceitful about his age when he made the
mortgage request. Mohori Bibee is the person appealing the case, but she’s the
representative of Brahmo Dutta who had passed away.

MINOR AND LAW
 Mohori Bibee vs Damodar Das, 1903
The Judgements in the court of law
 1st Argument is LAW OF ESTOPPEL - The law of estoppel states that you cannot deny the previous said.
The law of estoppel states that if a person incurs liability based on another person’s representation, they
cannot later change their position. However, the Court said that this principle shall only to apply to valid
contract or for a person who has attained the age of majority and shall not be applicable to minor. The
Minor in the eye of court of law has not understanding of material term and conditions of contract.
 Even if a minor intentionally misrepresents their age, they can still plead minority as a defence to
avoid liability. This approach is taken to protect minors from incurring liabilities, as the law deems them
incompetent to contract. Applying estoppel against a minor would defeat the purpose of Section 11 of the
Contract Act, which renders minor’s incompetent to contract.
 2nd Argument is DOCTRINE OF RESTITUTION – This is mentioned at Section 64 and Section 65 of ICA.
The meaning of doctrine of restitution is to restore back to its previous position as existing before the
entry of contract i.e. status quo. The Section 64 and 65 deals with restitution of benefit for void and
voidable contract. The court in this case noted that these sections apply to contracts between
competent parties that have been declared void or voidable. However, since the parties in this case
were not competent due to the respondent’s minority, these provisions for the restoration of
benefits under the Contract Act would not apply.
 However, the court had agreed for equitable doctrine of restitution for minors. The Court said that if
the MINOR misleads i.e. fraudulently represent himself as major and the other party had acted in
good faith, the equitable restitution of benefits can be carried out. However, the court had
restricted it that the minor shall not be in any case held personally liable. The recover shall be made
from the property of minor. If minor do not have any property then he will be not held liable.
 Further, the court had established the legal principle that agreements with minors are
void ab initio, meaning void from the very BEGINNING.

UNSOUND MIND
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 judgment
as to its effect upon his interests.
A person who is usually of unsound mind, but occasionally of sound mind, may make
contract when he is of sound mind.
A person who is usually of sound mind, but occasionally of unsound mind, may not
make a contract when he is of unsound mind.
 The state of mind is only observed at the time of entering into contract.
 If the person is capable to understand the material terms and conditions of agreements,
he must be able to form rational judgement to give effects all the terms and conditions
of agreements.
 The person can be considered of sound mind in their LUCID INTERVAL. The lucid interval
means that when a person has good state of mind in that interval of his whole period of
unsoundness.

CONSENT
Two or more persons are said to consent when they agree upon the same thing in the
same sense.
 It means to agree the same thing in a same sense. Also known as CONSENSUS-AD-IDEM.
 It is also meant the meeting of mind of two people.
 Consent should be real consent i.e. voluntarily consent.
 Each and every point must be known to promisee to have proper and real consent. So that the
acceptor may make a balance judgement to enter upon a contract.

FREE CONSENT
 Consent is said to be free when it is not caused by—
(1) Coercion, as defined in Section 15, or
(2) Undue Influence, as defined in Section 16, or
(3) Fraud, as defined in Section 17, or
(4) Misrepresentation, as defined in Section 18, or
(5) Mistake, subject to the provisions of Sections 20, 21 and 22.
Consent is said to be so caused when it would not have been given but for the existence of
such coercion, undue influence, fraud, misrepresentation or mistake.

COERCION
 “Coercion” is the committing, or threatening to commit, any act forbidden by the Indian
Penal Code (XLV of 1860), or the unlawful detaining, or threatening to detain, any
property, to the prejudice of any person whatever, with the intention of causing any
person to enter into an agreement.
 Explanation.—It is immaterial whether the Indian Penal Code (XLV of 1860), is or is not in
force in the place where the coercion is employed.
It means
Committing or threatening to commit any act forbidden by IPC-1860
Unlawful detaining or threatening to detain any property
Moreover, such acts are to the prejudice (harm) of anyperson whatever
With an intention to cause any person to enter into contract
 CASE LAW
 Chikkan Ammiraju vs Chikkan Sheshma, 1918
 Ranganayakamma v Alwar Setti,1889
 Burden of proof
The burden of proof lies with the party defending the coercion. The burden of proof is heavier on
him. This is because pure probability or fear is not a threat. In order to create coercion, a person must
show that there was a risk that was prohibited by law and that forced him to enter into a contract
that he would not otherwise have.
Effect – As per Section 19
Coercion has the effect of making the contract voidable. It implies that at the discretion of the party
whose consent was not free, the contract is voidable. The aggravated party will, therefore, determine
whether to enforce the contract or to cancel the contract.

UNDUE INFLUENCE
 (1) A contract is said to be induced by “undue influence” where the relations subsisting
between the parties are such that one of the parties is in a position to dominate the will
of the other and uses that position to obtain an unfair advantage over the other.
 (2) In particular and without prejudice to the generality of the foregoing principle, a
person is deemed to be in a position to dominate the will of another—
(a) where he holds a real or apparent authority over the other or where he
stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is
temporarily or permanently affected by reason of age, illness, or mental or
bodily distress.
 (3) Where a person who is in a position to dominate the will of another, enters into a
contract with him, and the transaction appears, on the face of it or on the evidence
adduced, to be unconscionable, the burden of proving that such contract was not
induced by undue influence shall lie upon the person in a position to dominate the will
of the other.
 Nothing in this sub-section shall affect the provision of Section 111 of the Indian
Evidence Act, 1872 (I of 1872).

UNDUE INFLUENCE
 It means persuading other person wrongfully to enter into contract.
 Essentials as mentioned at first paragraph of Section 16
RELATIONSHIP is such that one party
DOMINATE the will of Other Party
For getting UNFAIR advantage - unfair advantage is the advantage or enrichment
which is obtained through unrighteous or unjust means.
 The types of relationship is mentioned at second paragraph of Section 16
Fiduciary Relationship – Relationship is of utmost good faith and confidence.
Real Authority – eg Master-servant relationship
Apparent Authority – Family of Master over servant
Mental Incapacity
 Relationship between parties so as to enable one of them to dominate the will of
other is a sine qua non for constitution of undue influence.
However, the urgent need of money is no distress and shall not be considered under
the category of undue influence. This will not considered a sufficient evidence of mental
distress. A mere distressed state of mind cannot amount to undue influence until the
defendant has used this opportunity to his advantage.

UNDUE INFLUENCE
 CASE LAW
Mannu Singh vs Umadat Pande, 1888-1890
Raghunath Prasad Sahu vs Sarju Prasad Sahu, 1924
Burden of proof
This aspect has mentioned in third paragraph of Section 16
In this case the Court makes a presumption that the DOMINANCE had come
into effect.
The party on which the charge of undue influence had been made to make
rebuttal of ibid presumption.
The burden of proof lies with the party defending the undue influence.
 Effect – As per Section 19A
The different section has been mentioned for the contract formed bby
inducing UNDUE INFLUENCE. It is because the burden of proof in this lies with
the party who had dominated the will on other. However, in case with
Coercion, fraud and misrepresentation, the burden of proof lies with those
party whose consent was so caused.
The nature of contract was voidable at the option of the party whose consent
was so caused.
However, as per 2nd paragraph of Section 19A states that the Court can set
aside whole of the contract caused by UNDUE INFLUENCE. Also, the court has
the option to bring the party to its original position.

FRAUD
 (1) “Fraud” means and includes any of the following acts committed by a party to a
contract, or with his connivance, or by his agent , with intent to deceive another party
thereto or his agent, or to induce him to enter into the contract—
(1) the suggestion, as a fact, of that which is not true, by one who does not
believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the
fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
 Explanation.—Mere silence as to facts likely to affect the willingness of a person to enter
into a contract is not fraud, unless the circumstances of the case are such that, regard
being had to them, it is the duty of the person keeping silence to speak , or unless his
silence is, in itself, equivalent to speech.
 In the case of Bhaurao Dagdu Paralkar v. State of Maharashtra (2005), the Supreme Court,
while observing the detailed ingredients relating to fraud, held that fraud is defined as having the
aim to deceive; it is irrelevant whether this intention originates from an expectation of personal
gain for one party or from ill feelings toward another.

FRAUD
 FALSE STATEMENT AS A MATTER OF FACT - SECTION 17(1)
Making false statement by one who knows it to other party in such an manner that it is believed to be
true by the other party in good faith.
It is false representation of the facts by knowing that it is false. This is made with an intention to deceive.
 CASE LAW
Edgington v. Fitzmaurice, 1885
Bisset vs Wilkinsion,1927 – Exception of Section 17(1)
 ACTIVE CONCEALMENT OF FACT HAVING KNOWLEDGE – SECTION 17(2)
An active concealment of material facts is considered a fraud. The concealment of only
those material facts which are known to the party or his agents.
When one party actively conceals vital contract-related information despite having a duty to
disclose it, this is known as active concealment.
However, the passive concealment is not amounting to fraud, passive concealment is simply
remaining silent about relevant facts.
 MERE SILENCE is considered in no fraud.
 It is because of the maxim “ CAVEAT EMPTOR” means “Buyer beware” – it is duty of buyer
to properly check the goods/materials/items before purchasing it. (This is only applicable
to movable property). The buyer by using prudence as of ordinary prudent man shall check
the items properly. The buyer cannot be allowed to take advantage of his own mistakes.

FRAUD
 However, the silence is considered fraud in following few cases.
 The circumstances are such that there becomes duty bound to speak (uberrima fides)
 Duty to speak arises where one contracting parties repose trust and confidence in the other
– e.g. Fiduciary relationships
 The duty to disclose the truth will arise I all cases where one party reposes, and the other
accepts, confidence. e.g – Marriage act, Insurance act etc.
 Where silence is equivalent to speak
 Sometimes silence is equivalent to speech. In such case the silence constitute fraud.
 In this case the person has duty to speak up. If the person doesn’t fullfill his duty then it
amounts to fraud.
 Change of circumstances
 Sometimes a representation is true when made, but it may, on account of a change of
circumstances, become false when it is actually acted upon by the other party. In such
circumstances, it is the duty of the person who made the representation to communicate
the change of circumstances.
 Truth is not revealed fully
-- If someone freely exposes information even when they are under no obligation to do so, they may still be guilty
of fraud by using methods of non-disclosure where they are disclosing something but then stopping halfway.
Nevertheless, if he speaks, he is obligated to tell the complete truth.
CASE LAW
With vs O’Flanagan 1936

FRAUD
 PROMISE MADE WITHOUT ANY INTENTION TO PERFORM – SECTION 17(3)
AT THE TIME OF CONTRACT, there was no intention to oblige the obligation of contract is considered a
fraud. E.g. purchase of goods without intention of paying the price, builder taking money at the time of
booking nearly three times the available unit of accommodation.
 CASE LAW
DDA v. Skipper Construction Co. (2005)
 ANY OTHER ACT FITTED TO DECEIVE – MEANS ANY ACT WHICH IS DONE WITH OBVIOUS
INTENTION OF COMMITTING FRAUD – SECTION 17(4)
 As per interpretation of the statute, two kinds of fraud are mentioned,
 (i) actual or positive fraud which includes cases of intentional and successful employment of any
cunning, deception, or artifice, used to circumvent, cheat or deceive another; and
 (ii) constructive or legal fraud which includes such contracts or acts as though not originating in
any actual evil design or contrivance to perpetrate a fraud yet, by their tendency to deceive or
mislead others, or to violate private or public confidence,
CASE LAW
Santosh vs Jagat Ram, 2010
Kiran Bala vs Bahire Prasad Srivastava, 1982
 ANY SUCH ACT OR OMISSION AS THE LAW SPECIALLY DECLARES TO BE FRAUDULENT –
SECTION 17(5)

MISREPRESENTATION
 (1) “Misrepresentation” means and includes—
(1) the positive assertion, in a manner not warranted by the information of
the person making it, of that which is not true, though he believes it to be
true;
(2) any breach of duty which, without an intent to deceive, gains an
advantage to the person committing it, or any one claiming under him, by
misleading another to his prejudice, or to the prejudice of any one claiming
under him;
(3) causing, however innocently, a party to an agreement, to make a mistake
as to the substance of the thing which is the subject of the agreement.
 This section includes following types of MISREPRESENTATION:
 Positive Assertion of statement based on Unwarranted Information – Section 18(1)
 This is considered as Fraudulent misrepresentation
 The false statement made without any intention to deceive. Such statement is made by
person who himself believes to be true statement. The person is stating the statement
innocently.
 A statement is said to be warranted by the information of the person making it when he
receives the information from a trustworthy source. It should not be a mere hearsay.
 Despite the fact that he believes it to be true, he does not guarantee it.
CASE LAW
Bimla Bai v. Shankarlal (1958)

MISREPRESENTATION
 Breach of Duty – Section 18(2)
 This is considered as Negligent misrepresentation - A party that is trying to induce
another party to enter into a contract has a duty to ensure that reasonable care is
taken as regards the accuracy of any representations of fact that may lead to the
other party entering the contract.
 It should be done innocently i.e. innocent breach
 The person who misrepresented got some advantage
 The other person had got some prejudice.
CASE LAW
Khandu Charan Polley v. Chanchala Bhuniya (2003)
Inducing mistake about subject matter – Section 18(3)
 This is also considered as Innocent misrepresentation
 Making a factual error entails inducing a mistake about the subject.
 In the case of Ram Chandra Singh v. Savitri Devi (2003), the Supreme Court observed
that it is also well-established that misrepresentation itself amounts to fraud. Indeed,
innocent misrepresentation may also give reason to claim relief from fraud.

MISTAKE
Defined at Section 20, 21 & 22
Where both the parties to an agreement are under a mistake as to a matter of
fact essential to the agreement, the agreement is void.
Explanation.—An erroneous opinion as to the value of the thing which forms the
subject-matter of the agreement, is not to be deemed a mistake as to a matter of
fact.
 Section 20 comes into play
 When Both the parties to an agreement are mistaken – BILATERAL Mistake
 Their mistake is as to matter of fact,
 The fact about which they are mistaken is essential to agreement
 The nature of promise (consideration) is naturally linked with the facts of essential to
agreement. Since the consideration is under mistake, there is no agreement on same
thing in same sense i.e. absence of consensus -ad- idem.
 It is already been explained that absence of consensus -ad- idem means absence of
FREE CONSENT and in that absence the agreement is not enforceable thus it is an
VOID AGREEMENT.
 Bilateral mistake of fact is VOID AB-INITIO.

MISTAKE
 Section 21
 A contract is not voidable because it was caused by a mistake as to any law in
force in India; but a mistake as to a law not in force in India has the same effect
as a mistake of fact.
 Section 21 deals with
 Mistake of Law
 There are two types of effect of mistake of law
 Mistake of law not in force in INDIA – This is considered as mistake as to
MATTER OF FACT – Similar to Section 20 – The contract become Void.
 Mistake of law which is in force in INDIA. Then the contract is not voidable.
This is based on the maxim “ignoritia juris non excusat” means ignorance
of law is not excuse. The knowledge of law of land is must.

MISTAKE
 Section 22
 A contract is not voidable merely because it was caused by one of the parties to
it being under a mistake as to matter of fact.
 Section 22 deals with (UNILATERAL MISTAKE)
 Situation where one party is mistaken. It based on the principle that no one
is allowed to take advantage of his own mistake.
 A unilateral mistake is when only one party to the contract is under a
mistake. Just because one party was under a mistake of fact the contract
will not be void or voidable.
CASE LAW
Ayekpam Angahal vs UoI (1970)
 Exception
 When Unilateral Mistake is as to the Nature of the Contract.
 When the Mistake is regarding the Quality of the Promise.
 Mistake of the Identity of the Person contracted with.
CASE LAW
Dularia Devi v. Janardan Singh,1990
Hardman v Booth (1863)
Jaggan Nath v Secy of State for India (1886)

NATURE OF CONTRACT
 (1) “When consent to an agreement is caused by coercion, fraud or misrepresentation,
the agreement is a contract voidable at the option of the party whose consent was so
caused.
 A party to a contract, whose consent was caused by fraud or misrepresentation, may, if
he thinks fit, insist that the contract shall be performed, and that he shall be put in the
position in which he would have been if the representation made had been true.
 Exception.—If such consent was caused by misrepresentation or by silence, fraudulent
within the meaning of Section 17, the contract, nevertheless, is not voidable, if the party
whose consent was so caused had the means of discovering the truth with ordinary
diligence.
Explanation.—A fraud or misrepresentation which did not cause the consent to a contract
of the party of whom such fraud was practiced, or to whom such misrepresentation was
made, does not render a contract voidable.
Section 19-A
 When consent to an agreement is caused by undue influence, the agreement is a
contract voidable at the option of the party whose consent was so caused.
 Any such contract may be set aside either absolutely or, if the party who was entitled to
avoid it has received any benefit thereunder, upon such terms and conditions as to the
Court may seem just.
CASE LAW
Kamal Kant vs Prakash Devi (1976)

LIGALITY OF OBJECTS AND CONSIDERATION
The consideration or object of an agreement is lawful, unless—
a. it is forbidden by law ; or
b. is of such a nature that, if permitted, it would defeat the provisions of any law;
or
c. is fraudulent; or
d. involves or implies injury to the person or property of another; or
e. 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.
 This section covers the illegality/legality of both the object of contract and consideration for it.
 Before be move to bare act language, the difference between objects and considerations must
be explained
 OBJECTS: it is related to purpose of contract.
 CONSIDERATIONS: It is already been explained.
 For Example: Where money is borrowed for the purpose of the marriage of minor, the consideration of
the contract is the loan and the purpose of the contract i.e. object is marriage. Since the object of the
contract is to defeat the purpose of Child Marriage restraint Act. Accordingly, the contract was Void.
 The Calcutta High Court in one of the judgements had stated that the word ‘OBJECT’ in Section 23 was
not used in the same sense as ‘CONSIDERATION’, but was used to distinguished from the consideration
and means purpose or design. If the purpose of the parties was to defeat any provision of statute or
forbidden by law or immoral or specifically said to be unlawful then the contract shall be VOID.

VOID AGREEMENT
Defined at Section 2(g)
An agreement not enforceable by law is said to be void.
It is of Two types
 Known To Be VOID Agreement. – Void ab initio
 Discovered to be Void Agreement.
In case of breach, the court cannot enforce the observation of legal rights and duty of any parties.
Known To Be VOID Agreement. – Void ab initio
 (1) Agreements of which consideration and objects are unlawful in part,[S. 24]
 (2) Agreements without consideration, [S. 25]
 (3) Agreements in restraint of marriage, [S. 26]
 (4) Agreements in restraint of trade, [S. 27)
 (5) Agreements in restraint of legal proceedings, [S. 28]
 (6) Unmeaning/Uncertainty agreements, [S. 29]
 (7) Wagering agreements, [S. 30] and
 (8) Agreements to do impossible acts. [S. 56]

DISCHARGE OF CONTRACT
 After the formation of a contract, the next stage is reached, namely, the fulfilment of
the object the parties had in mind. When the object is fulfilled, the liability of either
party under the contract comes to an end. The contract is then said to be
discharged.
 A contract may be discharged:
 (1) by Performance;
 (2) by Impossibility of Performance;
 (3) by Modification or Novation; and
 (4) by Breach

DISCHARGE OF CONTRACT - PERFORMANCE
 Section 37 to Section 55 deals with Performance of contract.
 SECTION 37
Obligation of parties to contracts. —The parties to a contract must either
perform, or offer to perform their respective promises, unless such performance
is dispensed with or excused under the provisions of this Act, or of any other law.
Promises bind the representative of the promisors in case of the death of such
promisors before performance, unless a contrary intention appears from the
contract.

 SECTION 38
Effect of refusal to accept offer of performance. —Where a promisor has made an
offer of performance to the promisee, and the offer has not been accepted, the
promisor is not responsible for non-performance, nor does he thereby lose his
rights under the contract.
Every such offer must fulfil the following conditions—
(1) it must be unconditional;
(2) it must be made at a proper time and place, and under such circumstances
that the person to whom it is made may have a reasonable opportunity of
ascertaining that the person by whom it is made is able and willing there and
then to do the whole of what he is bound by his promise to do;
(3) if the offer is an offer to deliver anything to the promisee, the promisee
must have a reasonable opportunity of seeing that the thing offered is the
thing which the promisor is bound by his promise to deliver.
An offer to one of several joint promisees has the same legal consequences as an
offer to all of them.

 SECTION 40
Person by whom promise is to be performed. —
If it appears from the nature of the case that it was the intention of the parties to
any contract that any promise contained in it should be performed by the promisor
himself, such promise must be performed by the promisor.
In other cases, the promisor or his representative may employ a competent person
to perform it.

 SECTION 41
Effect of accepting performance from third person. —
When a promisee accepts performance of the promise from a third person, he
cannot afterwards enforce it against the promisor.
 PERFORMANCE OF JOINT PROMISES
 In this section we will discuss about followings
 DEVOLUTION OF LIABLITIES
 DEVOLUTION OF RIGHTS
 SECTION 42: Deals with liabilities of Joint Promisors
Devolution of joint liabilities. —
When two or more persons have made a joint promise, then, unless a contrary
intention appears by the contract, all such persons, during their joint lives,
and, after the death of any of them, his representatives jointly with the
survivor or survivors, and, after the death of the last survivor, the
representatives of all jointly, must fulfil the promise.

 SECTION 43: - Joint and Several
Any one of joint promisors may be compelled to perform. —
When two or more persons make a joint promise, the promisee may, in the absence
of express agreement to the contrary, compel any [one or more] of such joint
promisors to perform the whole of the promise.
Each promisor may compel contribution. —Each of two or more joint
promisors may compel every other joint promisor to contribute equally with
himself to the performance of the promise, unless a contrary intention appears
from the contract.
Sharing of loss by default in contribution. —If any one of two or more joint
promisors makes default in such contribution, the remaining joint promisors must
bear the loss arising from such default in equal shares.
Explanation. —Nothing in this section shall prevent a surety from recovering,
from his principal, payments made by the surety on behalf of the principal, or
entitle the principal to recover anything from the surety on account of
payments made by the principal.

 SECTION 44: -
Effect of release of one joint promisor. —
Where two or more persons have made a joint promise, a release of one of such
joint promisors by the promisee does not discharge the other joint promisor or
joint promisors; neither does it free the joint promisor so released from
responsibility to the other joint promisor or joint promisors
 SECTION 45: - Deals with rights of Joint Promisees
Devolution of joint rights. —
When a person has made a promise to two or more persons jointly, then, unless a
contrary intention appears from the contract, the right to claim performance rests,
as between him and them, with them during their joint lives, and, after the death
of any of them, with the representative of such deceased person jointly with the
survivor or survivors, and after the death of the last survivor, with the
representatives of all jointly.

TIME AND PLACE OF PERFORMANCE
 SECTION 46:
Time for performance of promise, where no application is to be made and no time
is specified. —
Where, by the contract, a promisor is to perform his promise without application by
the promisee, and no time for performance is specified, the engagement must be
performed within a reasonable time.
Explanation. —The question “what is a reasonable time” is, in each particular
case, a question of fact.
 SECTION 47:
Time and place for performance of promise, where time is specified and no
application to be made –
When a promise is to be performed on a certain day, and the promisor has
undertaken to perform it without application by the promisee, the promisor may
perform it at any time during the usual hours of business on such day and at the
place at which the promise ought to be performed.

 SECTION 48:
Application for performance on certain day to be at proper time and place –
When a promise is to be performed on a certain day, and the promisor has not
undertaken to perform it without application by the promisee, it is the duty of the
promisee to apply for performance at a proper place and within the usual hours of
business.
Explanation. —The question “what is a proper time and place” is, in each
particular case, a question of fact.
 SECTION 49:
Place for performance of promise, where no application to be made and no place
fixed for performance. —
When a promise is to be performed without application by the promisee, and no
place is fixed for the performance of it, it is the duty of the promisor to apply to the
promisee to appoint a reasonable place for the performance of the promise, and to
perform it at such place.

 SECTION 50:
Performance in manner or at time prescribed or sanctioned by promisee. —
The performance of any promise may be made in any manner, or at any time which
the promisee prescribes or sanctions.
PERFORMANCE OF RECIPROCAL PROMISES
 Before we move forward, we should discuss what is RECIPROCAL PROMISES?
 The reciprocal promise is defined at Section 2(f)
 Promises which form the consideration or part of the consideration for each other, are
called reciprocal promises
 It means when a contract consists of an exchange of promises, they are called as reciprocal
promises.
 Such promises shall have to be performed SIMULTANEOUSLY; the promisor is not bound to
perform unless the promisee is ready and willing to perform his promise.
 No separate consideration has to be shown in such cases because such promises constitute the
consideration for each other.

 SECTION 51:
Promisor not bound to perform, unless reciprocal promisee ready and willing to
perform. —
When a contract consists of reciprocal promises to be simultaneously performed,
no promisor need perform his promise unless the promisee is ready and willing to
perform his reciprocal promise.
 SECTION 52:
Order of performance of reciprocal promises.—
Where the order in which reciprocal promises are to be performed is expressly
fixed by the contract, they shall be performed in that order; and where the order is
not expressly fixed by the contract, they shall be performed in that order which the
nature of the transaction requires.
 SECTION 53:
Liability of party preventing event on which contract is to take effect.—
When a contract contains reciprocal promises, and one party to the contract
prevents the other from performing his promise, the contract becomes voidable at
the option of the party so prevented; and he is entitled to compensation from the
other party for any loss which he may sustain in consequence of the non-
performance of the contract.

 SECTION 54:
Effect of default as to that promise which should be first performed in contract
consisting of reciprocal promises.
When a contract consists of reciprocal promises, such that one of them cannot be
performed, or that its performance cannot be claimed till the other has been
performed, and the promisor of the promise last mentioned fails to perform it, such
promisor cannot claim the performance of the reciprocal promise, and must make
compensation to the other party to the contract for any loss which such other party
may sustain by the non -performance of the contract.
 CASE LAW
 Nathulal vs Phoolchand,1969

TIME FOR PERFORMANCE
 Sometimes the parties to a contract specify the time for its performance.
Ordinarily it is expected that either party will perform his obligation at the
stipulated time.
 But if one of them fails to do so, the question arises what is the effect upon the
contract.
 The answer of this question is very well articulated in Section 55, which we are
going to discuss.
 SECTION 55:
Effect of failure to perform at fixed time, in contract in which time is essential.—
When a party to a contract promises to do a certain thing at or before a specified
time, or certain things at or before specified times, and fails to do any such thing at
or before the specified time, the contract, or so much of it as has not been
performed, becomes voidable at the option of the promisee, if the intention of the
parties was that time should be of the essence of the contract.
Effect of such failure when time is not essential.—
If it was not the intention of the parties that time should be of the essence of the
contract, the contract does not become voidable by the failure to do such thing at
or before the specified time; but the promisee is entitled to compensation from the
promisor for any loss occasioned to him by such failure.

 SECTION 55:
Effect of acceptance of performance at time other than that agreed upon.—If, in
case of a contract voidable on account of the promisor's failure to perform his
promise at the time agreed, the promisee accepts performance of such promise at
any time other than that agreed, the promisee cannot claim compensation for any
loss occasioned by the non-performance of the promise at the time agreed, unless,
at the time of such acceptance, he gives notice to the promisor of his intention to
do so.

SER NO RAR AMOUNT PAID REMARKS
1. 1ST RAR DT 26.02.2018 14.25 LAKHS -
2. 2ND RAR DT 11.04.2018 11.04 LAKHS -
3. 3RD RAR DT 11.09.2018 14.76 LAKHS -
4. 4TH RAR DT 29.01.2019 16.51 LAKHS -
TOTAL AMOUNT 56.56 LAKHS AS ON DATE
PAYMENT DETAILS

NOTICE ISSUED
 The firm is banned in Work Load Return due to slow progress of
subject work since QE Dec 2020
 The Slow progress and Final Notices vide GE/CWE letter No.
• 8216/18/111/E8 dt 11 Jul 2019
• 83093/69/E8 dt 09 Sep 2019
• 83093/77/E8 dt 05 Mar 2020
• 83093/89/E8 dt 16 Aug 2021
• 8216/18/185/E8 dt 07 Jan 2023
• 8216/18/188/E8 dt 16 Mar 2023
• 83093/97/E8 dt 24 Mar 2023
• 8216/18/190/E8 dt 04 Sep 2023
• 8216/18/192/E8 dt 19 Oct 2023
• 83093/97/E8 dt 07 Feb 2024
 Contractor was requested to be present at HQ CWE (AF) Tkd for
discussion before cancellation of contract
 Caveat to be filed at appropriate court of law.

MISC
 NO OVERPAYMENT DONE
 NO DEFECTIVE WORK NOTIFIED
 REMAINING WORK – 10%
 CAVEAT TO BE FILED AT APPROPRIATE COURT OF LAW
 NO DECISION PENDING FROM THIS OFFICE
 USER BEING APPRISED FOR CANCELLATION OF CONTRACT

Indian Contract Act-1872-presentation.pptx

Recommended

Recommended

More Related Content

Similar to Indian Contract Act-1872-presentation.pptx

Similar to Indian Contract Act-1872-presentation.pptx (20)

Recently uploaded

Recently uploaded (20)

Indian Contract Act-1872-presentation.pptx