Indian Contract Act 1872

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Topic of this presentation is Indian Contract Act.

Nehal A / Delhi

1 year of teaching experience

Qualification: M.A (Amity University, Uttar Pradesh - 2015), B.B.A (Maharshi Dayanand University , Rohtak - 2013)

Teaches: Economics

  1. Indian Contract Act 1872 Dr. Ritu Arora (Associate Professor)
  2. LAW Law is a system of rules, usually enforced through a set of institutions, It shapes politics, economics and society in numerous ways and serves as the foremost social mediator in relations between people, Law governs a wide variety of social activities. Dr. Ritu Arora (Associate Professor)
  3. regulates everything from buying a bus ticl
  4. Definition: "An agreement enforceable by law." Agreement + enforceability by law =contract Agreement must create a legal obligation or duty. Agreement: Sec. 2(e), "Every promise and every set of promises, forming consideration for each other." Social agreements Legal agreements Legal agreements are confla Cts. Dr. Ritu Arora (Associate Professor)
  5. CONTRACT A contract is an exchange of promises between two or more parties to do, or refrain from doing, an act which is enforceable in a court of law, o It is a binding legal agreement, Dr. Ritu Arora (Associate Professor)
  6. Prom ise: Sec,2(b),"When a 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," Agreement = Offer + Acceptance, Dr. Ritu Arora (Associate Professor)
  7. Essentials of a Valid Contract Offer and acceptance Intention to create legal relationship Lawful consideration. Capacity of parties — Competency Free and genuine consent Lawful object Agreement not expressly declared void Certainty and possibility of performance Legal formalities Dr. Ritu Arora (Associate Professor) 7
  8. Classification of Contract According to Valid contract, voidable contract, void contract, IL-legal contract, unenforceable contract. According to form atfion: Express contract, Implied contract, Quasi contract. According to perform ance: Executed contract, Executory contract, Unilateral and bilateral contracts. Dr. Ritu Arora (Associate Professor) 8
  9. Types of Contract Valid Contract: It is a contract which satisfies all the requirements provided for under sec. 10 A void contract: Also known as a void agreem ent, is not actually a contract.A void contract cannot be enforced by law. It creates no rights or obligations. An agreement to carry out an illegal act is an example of a void contract or void agreement. For example, a contract between drug dealers and buyers is a void contract simply because the terms of the contract are illegal. A voidable contract: unlike a void contract, is a valid contract. At most, one party to the contract is bound. For example, depending upon jurisdiction, a minor has the right to repudiate certain contracts. Any contract with a minor is thus a voidable contract. If a minor were to enter into a contract with an adult, the adult would be bound by the contract, whereas the minor could choose to avoid performing the contract. Dr. Ritu Arora (Associate Professor) 9
  10. Types of Contract An illegal agreem ent, under the common law of contract, is one that the courts will not enforce because the purpose of the agreement is to achieve an illegal end. Un Enforceable contract, under the common law of contract, is one that the courts will not enforce because the purpose of the agreement is to achieve an illegal end. Which is valid but for certain reasons such as want of proof, expiry of period within which enforceable etc it becomes unenforceable. Express Contracts: contracts entered into between the parties by words spoken or written; 1m plied contract: Contract which come into being on account of the act or conduct of the parties not by their express words, written or spoken. Executed Contracts: where both the parties to the contract have fulfilled their respective obligations, contract is said to be executed; Executory Contract: Where one or both the parties have still to perform certain things in future. Dr. Ritu Arora (Associate Professor) 10
  11. Offer Or Proposal When one person signifies to another his willingness to do or to abstain anything from doing he is said to mal
  12. Essentials of a Valid Offer An offer may be general or specific An offer should be made with an intention of creating legal obligation An offer must be definite and certain A statement of intention and an invitation to offer are not offers. An offer must be communicated to the offeree. The terms and conditions of offer should also be communicated Two identical offers do not make a contract An offer should not contain any term the non-compliance of which amounts to acceptance Dr. Ritu Arora (Associate Professor)
  13. Rules Regarding Acceptance When one person to whom the proposal is made signifies his willingness thereto the proposal is said to be accepted. Rules: An offer can be accepted only by the person to whom it is made. i: Acceptance should be unconditional and absolute. Acceptance should be communicated i' Acceptance should be according to the prescribe form i' Acceptance must be provoked by an offer i' Silence cannot be prescribed as mode of acceptance. i: Acceptance must be given within the time stipulated or within a reasonable time. kcepänce must be given befae the Her lapses a-is revoked Ptovisiooa/ accepänce is no accepänce. Dr. Ritu Arora (Associate Professor) 13
  14. Free Consent To make a contract valid, not only consent is necessary but the consent should also be free. According to Sec. 14 consent is said to be free when it is not caused by any of the following: O Coercion; Undue Influence; Fraud; Misrepresentation; Mistal
  15. TERMINATION OF OFFER Lapse Failure to fulfill a condition procedent Rejection Destruction of subject matter Revocation Dr. Ritu Arora (Associate Professor)
  16. WHAT IS PERFORMANCE OF CONTRACT o It tal
  17. OFFERTO PERFORM (Sec,38) Sometimes promisor offers to perform his obligation under the contract at the proper time and place but the promisee does not accept the performance. This is known as " attempted performance" or " tender", 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. Thus, the tender of performance is equivalent to actual performance. ' It excuses the promisor from further performance and entitles him to sue the promisee for the breach of contract. Dr. Ritu Arora (Associate Professor)
  18. l. REQUISITES OF AVALID TENDER It must be unconditional. It becomes conditional when it is not in accordance with the terms of the contract. E.g.: D, a debtor offer to pay to C, his creditor, the amount due to him on the condition that C sells him certain shares at cost. This is not a valid tender. 2. It must be of the whole quantity contracted for or of the whole obligation. E.g.:A tender of an installment when the contract stipulates payment in full is not a valid tender. 3. It must be by a person who is in a position, and is willing, to perform the promise. Dr. Ritu Arora (Associate Professor)
  19. 4, It must be made at the proper time and place.A tender of goods after the business hours or of goods or money before the due date is not a valid tender. E.g.: D owes C Rs. 1 00 payable on the I st of August with interest. He offers to pay on the 1st of July the amount with interest up to the 1st of July. It is not a valid tender as it is not made at the appointed time. Dr. Ritu Arora (Associate Professor)
  20. 5. It must be made to the proper person, i.e., the promisee or his duly authorized agent. It must also be in proper form, 6. It must be made to one of the several joint promisees, In such a case it has the same effect as a tender to all of them, 7. In case of tender of goods, it must give a reasonable opportunity to the promisee for inspection of goods, A tender of goods at such time when the other party cannot inspect the goods is not a valid tender, Dr. Ritu Arora (Associate Professor) 20
  21. But in the following case tender is held to be valid. CASE: STARTVQ Vs MACDONALD The plaintiffs agreed to sell ten tons of linseed oil to the defendant to be delivered" within the last fourteen days of March". Delivery was tendered at 8.30 p.m. on March 3 1, a Saturday. The defendant refused to accept the goods owing to lateness of the hour. Held, though the hour was unreasonable, the defendant could still take delivery before midnight. Dr. Ritu Arora (Associate Professor)
  22. 8, In case of tender of money, the debtor must mal
  23. EFFECT OF REFUSAL OFA PARTY TO PERFORM PROMISEWHOLLY (SEC.39) When a party to a contract refuses to perform, or disables himself from performing, his promise in its entirety, the promisee may put an end to the contract. But if the promisee has signified, by words or conduct, his acquiescence in the continuance of the contract, he cannot repudiate it. E.g.:A, a singer enters into a contract with B, the manager of a theatre, to sing at his theatre two nights in every week during the next two months and B agrees to pay her Rs. 1 00 for each night's performance. On the sixth night A willfully absents herself from the theatre. B is at liberty to put an end to the contract. Dr. Ritu Arora (Associate Professor) 23
  24. CONTRACTSWHICH NEED NOT BE PERFORMED b/hen its performance becomes impossible (sec.56) When the parties to it agree to substitute a new contract for it or to rescind or alter it(sec.62) VYhen the promisee dispenses with or remits. Wholly or in part, the performance of the promise made to him or extends the time for such performance or accepts any satisfaction for it (sec.63) VYhen the person at whose option it is voidable, rescinds it (Sec.") When the promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise(sec.67) E.g.:A contracts with B to repair B's house. B neglects or refuses to point out to A the places in which his house requires repairs. A is excused for the non-performance of the contract, if it is caused such neglect or refusal. When it is illegal Dr. Ritu Arora (Associate Professor) 24
  25. BY WHOM CONTRACTS BE PERFORMED? If there is something in the contract to show that it was the intention of the parties that the promise should be performed by the promisor himself, such promise must be performed by the promisor, E.g.: Contracts which involve the exercise of personal sl
  26. 2.Agent:Where personal consideration is not the foundation of a contract, the promisor or his representative may employ a competent person to perform it. 3. Legal representatives.:A contract which involves the use of personal skill or is founded on personal considerations comes to an end on the death of the promisor. The rule of the law is : ACTIO PERSONALIS MORI TUR CUM PERSONA, i.e., a personal action dies with the person.As regards any other contract, the legal representatives of the deceased promisor are bound to perform it unless a contrary intention appears from the contract. But their liability limited to the value of the property inherit from the deceased. Dr. Ritu Arora (Associate Professor) 26
  27. 4, Third persons: when a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor, 5. Joint Promisors:Where the promise is done by more than one promisee. Dr. Ritu Arora (Associate Professor) 27
  28. 41.•56 TIME AND PLACE OF PERFORMANCE Dr. Ritu Arora (Associate Professor) 28
  29. RULES REGARDING TIME AND PLACE OF PERFORMANCE Where no application is to be made and no time is specified.: It has to be performed within a reasonable time What is a reasonable time? It depends on the special circumstances or the case, the usage of trade, or the intention of the parties at the time of entering into the contract. Dr. Ritu Arora (Associate Professor)
  30. 2, Where tüme is specified and no application is to be made: When a prom ise is to be performed on a certain day, the prom isor may undertake to perform it application by the prom isee, In such a case, the prom isor may perform the prom ise at any time during the casual hours of busmess on such day and at the place at which the prom ise ought to be perform ed, prom ises to deliver goods at B's warehouse on the 1st January, On that day A brmgs the goods to B's warehouse, but after usual hour for closing it and they are not received, A has not perform ed ms prom ise Dr. Ritu Arora (Associate Professor) 30
  31. . Application for performance on a certain day and place.: 4.Application by the promisor to the promisee to appoint place. E.g.:A undertakes to deliver I ,000 quintals of jute to B on a fixed day.A must apply to B to appoint a reasonable place for the purpose of receiving it and must deliver it to him at such place. 5. Performance in manner or at time prescribed or sanctioned by the promisee: E.g.:A owes B Rs.2000. B accepts some of A's goods in reduction of the debt. The delivery of the goods operates as a part payment. Dr. Ritu Arora (Associate Professor)
  32. RECIPROCAL PROMISES Dr. Ritu Arora (Associate Professor) 32
  33. WHAT ARE RECIPROCAL PROMISES? Promises which form the consideration or part of the consideration for each other are called "Reciprocal Promises" E.g.: A promises to do or not to do something in consideration of B's promise to do or not to do something, the promises are reciprocal, Dr. Ritu Arora (Associate Professor)
  34. CLASSIFCATION OF RECIPROCAL PROMISES Mutual and Independent : Where each party must perform his promise independently and irrespective of the fact whether the other party has performed, or is willing to perform, his promise or not, the promises are mutual and independent. E.g.: In a contract of sale, B agrees to pay the price of goods on 10th instant. S promises to supply the goods on 20th instant. The promises are mutual and independent. Dr. Ritu Arora (Associate Professor) 34
  35. Conditional and de endent:Where the performance of the promise by one party depends on the prior performance of the promise by the other party, the promises are conditional and dependent. E.g.:A promises to remove certain debris lying in front of B's house provided B supplies him with the cart. The promises, in this case, are conditional and dependent.A need not perform his promise if B fails to provide him with the cart. Dr. Ritu Arora (Associate Professor)
  36. the promises of the both the parties are to be performed simultaneously, they are said to be mutual and concurrent, E.g.: Sale of goods for cash, Dr. Ritu Arora (Associate Professor) 36
  37. APPROPRIATION OF PAYMENTS When a debtor owes several distinct debts to a creditor and mal
  38. RULES REGARDING: l. 2. 3. I .WHERETHE DEBTOR INTIMATES: If it was intimated by debtor, the creditor must do so. If there is no express intimation by the debtor, the law will look to the circumstances attending on the payment for appropriation. RULE : 'FA MOVEY/S PAO /T/S TOBE EXPRESSED MLL G77---/E PAYER REC/VER' Dr. Ritu Arora (Associate Professor) 38
  39. 2, Where the debtor does not intimate and the circumstances are not indicative: The creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, He cannot, however, apply the payment to a disputed or unlawful debt, but he may apply it to a debt which is barred by the Law of Limitation, Dr. Ritu Arora (Associate Professor) 39
  40. 3. Where the debtor does not intimate and the creditor fails to appropriate: The payment shall be applied in the discharge of the debts in chronological order, i.e., in order of time, e If the debts are equal standing, the payment shall be applied in discharge of each proportionately, Dr. Ritu Arora (Associate Professor) 40
  41. ASSIGNMENT OF CONTRACTS o It means transfer of contractual rights and liabilities under the contract to a third party with or without the concurrence of the other party to the contract, It may tal
  42. ASSIGNMENT IS SAID TO TAKE PLACE BY AN ACT OF THE PARTIES WHEN THEY THEMSELVES MAKE THE ASSIGNMENT l. 2. 3. ASSIGNEMNT OF CONTRACTUAL OBLIGATIONS: Contractual obligations involving personal skill or ability cannot be assigned. A promisor cannot assign his liabilities or obligations under a contract. The promisor may transfer his liability with the consent of the promisee and of the transferee. Dr. Ritu Arora (Associate Professor) 42
  43. ASSIGNMENT IS SAID TO TAKE PALCE BY AN ACT OFTHE PARTIES WHEN THEY THEMSELVES MAKE THEASSIGNMENT Assignm ent of Contractual Rights: 2. The rights and benefits under a contract not involving personal sl
  44. Operation of law Assignment by operation of law tal
  45. Remedies for breach of contract Breach means failure of a party to perform his or her obligation under a contract. The major remedies for breach of contract are: Specific performance Cancellation Damages In addition a party may ask for a "declaration of rights". 45

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