Offer or Proposal: 1. An offer must disclose an intention to create legal relations and must be capable of creating legal relationship. 2. It must be certain and capable of performance. 3. It may be a general or a specific offer positive or a negative offer. 4. It may be open to the whole world. 5. It must be communicated to another person. 6. It cannot be accepted unless the person knows about it. 7. It must be made with a view to obtain the consent of the other party. 8. It differs from an answer to a question, an invitation to an offer and a statement of intention. Acceptance: 1. It may be express or implied. 2. It must be absolute and unqualified. 3. A counter offer is not an acceptance. 4. It must be communicated. Unless it is communicated to the other party, it will not be a valid acceptance. 5. It must be expressed in some usual and reasonable manner. Silence cannot be prescribed as a mode of acceptance. 6. Offer once rejected cannot be accepted, unless the same is renewed. 7. It must be given within a stipulated time or a reasonable time before the lapse of offer. The offer must be accepted by a specific person. 8. Acceptance of the proposal means an acceptance of all its terms. Anything done in ignorance of the proposal will not amount to the acceptance of the offer. Acceptance must indicate that the proposer is ready and willing to fulfill the terms of the proposal.
The acceptance to do some thing, which a person has no intention to perform, shall not be valid.
Communication of offer and acceptance
1.
Communication of an offer is complete when it comes to the knowledge of the person to whom it is made. Communication of acceptance is complete: (i) as against the proposer when it is put in course of transmission to him and (ii) as against the acceptor, when it comes to the knowledge of the proposer. Communication of revocation is complete as against the person who makes it, when it is put in the course of transmission to the person to whom it is made and as against the person to whom it is made, when it comes to his knowledge.
Revocation of offer and acceptance 1. An offer cannot be revoked after it has been accepted. 2. Acceptance cannot be revoked after its communication is complete as against the acceptor. 3. The offer may be revoked by notice, by lapse of stipulated time or a reasonable time, by failure of the acceptor to fulfill a condition precedent to the acceptance, by death; or insanity of the proposer before the acceptance. Delay or lapse of time in the post will not affect the validity of the agreement.
Case Study-1: Is there any agreement in the following cases? (i) Agreement by A to come to the house of B for a dinner at B's request. (ii) Agreement by A to draw two parallel lines in such a way so as to cross each other (iii) A promises to pay a sum of Rs. 100 to B, if he beats C. (iv) A agrees to pay B a sum of Rs. 100. if it rains tomorrow. (v) A takes a seat in a bus. (vi) A sends parcel of fruits to his friend B, the parcel is mis-delivered to C, who takes it as a birthday present from his friend. Case Study-2: Is there a valid offer in the following cases? A makes a contract with B and promises that, if he is satisfied with him as a customer, he will favorably consider his application for the renewal of the contract. (ii) A bus company runs a mini bus service between Red Fort to Maurice Nagar. (iii) A shopkeeper displays goods for sale in a shop with price list attached to each item. (iv) A person makes an announcement inviting tenders, but he does not declare that the goods will be sold to the highest bidder.
(i)
Case Study-3: X telegraph to F “will you sell us white car, telegraph lowest cash price.” F telegraphs in answer “lowest cash price for white car is Rs.9000.” X telegraphs again “we agree to buy white car for Rs.9000 asked by you, please send us your title deed”. To this, X received no reply. Will it constitute a valid contract? Case Study-4: X says in conversation to Y that he will give Rs.1000 to a person whosever marries his daughter. Z marries X’s daughter and files a case against X claiming the payment of Rs.1000 to him. Will he succeed? Case Study-5: Carbolic Smoke Ball Company advertises in the newspapers that whosoever takes their smoke-balls according to the printed instructions will get an award of £100 if he contracts influenza. Mrs. Carlill, on the faith of the advertisement purchases and uses smoke balls for a fortnight as directed. She suffers from influenza and sues against the company for the advertised reward. Will she succeed in her claim? Case Study-6: P a nephew of Q escapes from his house. Q sends his muneem R to find out the missing nephew. In the meantime Q also announces a reward of Rs.500/- to anyone who finds out the missing boy. R finds out the missing nephew without having any knowledge of the reward and brings the nephew back to Q. Subsequently R comes to know about the reward
and sues against Q for its payment. Will he succeed in his claim? Case Study-7: A an illiterate person purchased a Railway ticket on the front of which is printed “for conditions seek back”. One of the conditions is that the Railway Company would not be liable for personal injuries to the person. An accident causes an injury to A. A files a suit for the recovery of compensation. Will he succeed?
Case Study-8: R puts up a notice offering to pay a reward of Rs.10 to any student to find out his lost book and return it to him. T, a student reads the notice and brings the book to R. Would he legally be entitled to claim the reward? Case Study-9: Two firms each in ignorance of what the other had done, exchanged letters on the same day. The one offering to sell and the other offering to purchase an identical quality of goods at the same price. The two letters cross each other in the post. Will it constitute a valid contract? Case Study-10: A finds an article in B’s shop marked Rs.5/-. A offers Rs.5/- to B and expresses his willingness to purchase the article. B refuses to sell the article. Can A compel B to sell the article? Case Study-11:
A makes an offer to sell certain shares clearly indicating that the acceptance must be given by telegram. B sends his acceptance of the offer by an ordinary letter. Will it constitute a valid contract? Case Study-12: X was a candidate for a post. The selection committee for the appointment selected him for the post but they had not informed X about his selection. Subsequently, the selection committee cancelled his selection. X filed a suit for the declaration of the appointment to be valid. Will he succeed? Case Study-13: B offers to purchase A’s house upon certain terms. The possession to be given on or before 25th July. A agreed with the terms, but said that he would give possession on First of August. Does it constitute a valid contract? Case Study-14: A offers to sell a house to B for Rs.7000, B offers to purchase it for Rs.5000. After some consideration, A refused to accept Rs.6000. Subsequently B agrees to give Rs.7000, which A refuses to accept. B sues A for the specific performance of the contract. Will he succeed? Case Study-15: X makes an offer to take shares in a company. He receives no reply for five months, after which period a letter of allotment is sent to him. Is X bound to accept it?
Capacity of Parties
For the establishment of a valid contract, parties must be major in age of sound mind and not disqualified by law. Ordinarily a person becomes major on the completion of 18 years of age. Position of Minor’s Contracts 1. A contract with a minor is void ab-initio. 2. A minor’s agreement cannot be ratified by the minor on attaining majority. 3. A minor cannot be asked to refund any benefit received under a void agreement. 4. A minor is not stopped to plead minority even where he falsely represents himself to be full age. 5. A minor cannot be a partner in a partnership firm. He may, however, be admitted to the benefits of an already existing partnership. 6. A minor can, however, be a promise or beneficiary. 7. A minor’s estate is liable to a person who supplies necessaries of life to a minor. 8. Minor’s parents/guardians are not liable to a minor’s creditor for the breach of contract by a minor. 9. A minor can act as agent. Case Study-1 A, a minor borrows Rs.5000 from B and executes a promissory note in B’s favour. After attaining majority, A executes a fresh promissory note in favour of B for this amount. Can B claim to recover the amount of promissory note from A? Case Study-2
A father of the minor girl on her behalf entered into a contract with X, whereby X promised to marry the girl. Subsequently, X refuses to marry the minor girl. Can the father of the girl claim damages from X for breach of contract?
Case Study-3 A sold some articles from his shop to B on credit, not knowing that B was a minor. The time fixed for the payment of the price expired and no payment was realized. Some time later, when B attained majority, A files a suit against him for the recovery of the price. Will he succeed? Case Study-4 A, a minor, executes a mortgage for Rs. 20,000 and receives Rs. 8,000 from the mortgagee. The minor sues for the setting aside of the mortgage. The mortgagee wanted to obtain refund of the sum, which he had actually paid i.e. Rs. 8000. Will he succeed in his claim? Case Study-5 A, a minor, takes a loan of Rs. 5000 from B during his minority. On attaining majority, he applies to B for a further loan of Rs. 5000. He gives this loan and obtains a combined promissory note of Rs. 10000 for the two loans. Can A be held liable for this promissory note? Case Study-6 A minor borrows Rs. 1000 on a fraudulent representation that he was a major. Can the creditor sue for the return of amount advanced? Case Study-7 X, a minor obtains loan from Y by falsely representing his age. Can Y recover the loan from X ? Case Study-8 A, advanced money to his son B during his minority, On attaining majority, A obtains a bond from B for greater amount than the sum due by misuse of parental influence. Is A entitled to recover the sum?
Consideration No consideration, no contract. An agreement without consideration is void. Consideration is a legal evidence of the intention of the parties to effect their legal relations. Rules Regarding Consideration 1. Consideration must move at the desire of the promisor. 2. Consideration may move from the promise or any other person, i.e. a stranger to consideration may maintain a suit. 3. A stranger to the contract cannot maintain a suit. 4. Consideration need not be adequate. 5. Consideration must he real and competent. 6. Consideration must be legal. Agreement Agreements which are valid even without consideration: 1. Agreements in writing, registered, out of natural love and affection between parties standing in near relation to each other. 2. Agreement to compensate the promise for any act done voluntarily by him. 3. Written agreement to pay time-barred debts. 4. Agreements creating agency. 5. Agreement relating to completed and executed gifts.
Case Study-1 Upon A’s marriage his father and father-in-law entered into a contract to contribute a certain sum of money to be given to A after his marriage. A’s father paid his contribution but his fatherin-law failed to pay. Held, A could not sue his father-in-law since he (A) was a stranger to the contract. Case Study-2 X was requested by the Collector of the city to spend some money for the improvement of the market. Shopkeepers of the same market later on promised to give X a commission on the articles sold by them. Will X be entitled to claim commission from the shopkeepers? Case Study-3 A and B are neighbours in Delhi. During the summer, A locked his house in Delhi and went to Madras on holiday. While A was at Madras, his house at Delhi caught fire. B, the neighbor at Delhi, extinguished the fire incurring an expense of Rs.500. On A’s return from Madras, he came to know the services rendered by B and hence, promises to pay B Rs.10,000. Will this promise be enforceable? Case Study-4 A, a lawyer acting for his client B in a suit asks B to give him 30% of the amount that he may be able to recover from the defendant C in execution of the decree, that may be passed in the suit, in addition to his usual fees, as the case is a very complicated one. B agrees to A’s demand. After the successful termination of the suit, B recovers from C Rs.1000 in execution of the decree. B pays the usual fees to the lawyer and refuses to pay 30% amount realized by him as additional fees to which he had agreed earlier. Can A claim the additional amount from B?
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The acceptance to do some thing, which a person has no intention to perform, shall not be valid.
Communication of offer and acceptance
1.
Communication of an offer is complete when it comes to the knowledge of the person to whom it is made. Communication of acceptance is complete: (i) as against the proposer when it is put in course of transmission to him and (ii) as against the acceptor, when it comes to the knowledge of the proposer. Communication of revocation is complete as against the person who makes it, when it is put in the course of transmission to the person to whom it is made and as against the person to whom it is made, when it comes to his knowledge.
Revocation of offer and acceptance 1. An offer cannot be revoked after it has been accepted. 2. Acceptance cannot be revoked after its communication is complete as against the acceptor. 3. The offer may be revoked by notice, by lapse of stipulated time or a reasonable time, by failure of the acceptor to fulfill a condition precedent to the acceptance, by death; or insanity of the proposer before the acceptance. Delay or lapse of time in the post will not affect the validity of the agreement.
Case Study-1: Is there any agreement in the following cases? (i) Agreement by A to come to the house of B for a dinner at B's request. (ii) Agreement by A to draw two parallel lines in such a way so as to cross each other (iii) A promises to pay a sum of Rs. 100 to B, if he beats C. (iv) A agrees to pay B a sum of Rs. 100. if it rains tomorrow. (v) A takes a seat in a bus. (vi) A sends parcel of fruits to his friend B, the parcel is mis-delivered to C, who takes it as a birthday present from his friend. Case Study-2: Is there a valid offer in the following cases? A makes a contract with B and promises that, if he is satisfied with him as a customer, he will favorably consider his application for the renewal of the contract. (ii) A bus company runs a mini bus service between Red Fort to Maurice Nagar. (iii) A shopkeeper displays goods for sale in a shop with price list attached to each item. (iv) A person makes an announcement inviting tenders, but he does not declare that the goods will be sold to the highest bidder.
(i)
Case Study-3: X telegraph to F “will you sell us white car, telegraph lowest cash price.” F telegraphs in answer “lowest cash price for white car is Rs.9000.” X telegraphs again “we agree to buy white car for Rs.9000 asked by you, please send us your title deed”. To this, X received no reply. Will it constitute a valid contract? Case Study-4: X says in conversation to Y that he will give Rs.1000 to a person whosever marries his daughter. Z marries X’s daughter and files a case against X claiming the payment of Rs.1000 to him. Will he succeed? Case Study-5: Carbolic Smoke Ball Company advertises in the newspapers that whosoever takes their smoke-balls according to the printed instructions will get an award of £100 if he contracts influenza. Mrs. Carlill, on the faith of the advertisement purchases and uses smoke balls for a fortnight as directed. She suffers from influenza and sues against the company for the advertised reward. Will she succeed in her claim? Case Study-6: P a nephew of Q escapes from his house. Q sends his muneem R to find out the missing nephew. In the meantime Q also announces a reward of Rs.500/- to anyone who finds out the missing boy. R finds out the missing nephew without having any knowledge of the reward and brings the nephew back to Q. Subsequently R comes to know about the reward
and sues against Q for its payment. Will he succeed in his claim? Case Study-7: A an illiterate person purchased a Railway ticket on the front of which is printed “for conditions seek back”. One of the conditions is that the Railway Company would not be liable for personal injuries to the person. An accident causes an injury to A. A files a suit for the recovery of compensation. Will he succeed?
Case Study-8: R puts up a notice offering to pay a reward of Rs.10 to any student to find out his lost book and return it to him. T, a student reads the notice and brings the book to R. Would he legally be entitled to claim the reward? Case Study-9: Two firms each in ignorance of what the other had done, exchanged letters on the same day. The one offering to sell and the other offering to purchase an identical quality of goods at the same price. The two letters cross each other in the post. Will it constitute a valid contract? Case Study-10: A finds an article in B’s shop marked Rs.5/-. A offers Rs.5/- to B and expresses his willingness to purchase the article. B refuses to sell the article. Can A compel B to sell the article? Case Study-11:
A makes an offer to sell certain shares clearly indicating that the acceptance must be given by telegram. B sends his acceptance of the offer by an ordinary letter. Will it constitute a valid contract? Case Study-12: X was a candidate for a post. The selection committee for the appointment selected him for the post but they had not informed X about his selection. Subsequently, the selection committee cancelled his selection. X filed a suit for the declaration of the appointment to be valid. Will he succeed? Case Study-13: B offers to purchase A’s house upon certain terms. The possession to be given on or before 25th July. A agreed with the terms, but said that he would give possession on First of August. Does it constitute a valid contract? Case Study-14: A offers to sell a house to B for Rs.7000, B offers to purchase it for Rs.5000. After some consideration, A refused to accept Rs.6000. Subsequently B agrees to give Rs.7000, which A refuses to accept. B sues A for the specific performance of the contract. Will he succeed? Case Study-15: X makes an offer to take shares in a company. He receives no reply for five months, after which period a letter of allotment is sent to him. Is X bound to accept it?
Capacity of Parties
For the establishment of a valid contract, parties must be major in age of sound mind and not disqualified by law. Ordinarily a person becomes major on the completion of 18 years of age. Position of Minor’s Contracts 1. A contract with a minor is void ab-initio. 2. A minor’s agreement cannot be ratified by the minor on attaining majority. 3. A minor cannot be asked to refund any benefit received under a void agreement. 4. A minor is not stopped to plead minority even where he falsely represents himself to be full age. 5. A minor cannot be a partner in a partnership firm. He may, however, be admitted to the benefits of an already existing partnership. 6. A minor can, however, be a promise or beneficiary. 7. A minor’s estate is liable to a person who supplies necessaries of life to a minor. 8. Minor’s parents/guardians are not liable to a minor’s creditor for the breach of contract by a minor. 9. A minor can act as agent. Case Study-1 A, a minor borrows Rs.5000 from B and executes a promissory note in B’s favour. After attaining majority, A executes a fresh promissory note in favour of B for this amount. Can B claim to recover the amount of promissory note from A? Case Study-2
A father of the minor girl on her behalf entered into a contract with X, whereby X promised to marry the girl. Subsequently, X refuses to marry the minor girl. Can the father of the girl claim damages from X for breach of contract?
Case Study-3 A sold some articles from his shop to B on credit, not knowing that B was a minor. The time fixed for the payment of the price expired and no payment was realized. Some time later, when B attained majority, A files a suit against him for the recovery of the price. Will he succeed? Case Study-4 A, a minor, executes a mortgage for Rs. 20,000 and receives Rs. 8,000 from the mortgagee. The minor sues for the setting aside of the mortgage. The mortgagee wanted to obtain refund of the sum, which he had actually paid i.e. Rs. 8000. Will he succeed in his claim? Case Study-5 A, a minor, takes a loan of Rs. 5000 from B during his minority. On attaining majority, he applies to B for a further loan of Rs. 5000. He gives this loan and obtains a combined promissory note of Rs. 10000 for the two loans. Can A be held liable for this promissory note? Case Study-6 A minor borrows Rs. 1000 on a fraudulent representation that he was a major. Can the creditor sue for the return of amount advanced? Case Study-7 X, a minor obtains loan from Y by falsely representing his age. Can Y recover the loan from X ? Case Study-8 A, advanced money to his son B during his minority, On attaining majority, A obtains a bond from B for greater amount than the sum due by misuse of parental influence. Is A entitled to recover the sum?
Consideration No consideration, no contract. An agreement without consideration is void. Consideration is a legal evidence of the intention of the parties to effect their legal relations. Rules Regarding Consideration 1. Consideration must move at the desire of the promisor. 2. Consideration may move from the promise or any other person, i.e. a stranger to consideration may maintain a suit. 3. A stranger to the contract cannot maintain a suit. 4. Consideration need not be adequate. 5. Consideration must he real and competent. 6. Consideration must be legal. Agreement Agreements which are valid even without consideration: 1. Agreements in writing, registered, out of natural love and affection between parties standing in near relation to each other. 2. Agreement to compensate the promise for any act done voluntarily by him. 3. Written agreement to pay time-barred debts. 4. Agreements creating agency. 5. Agreement relating to completed and executed gifts.
Case Study-1 Upon A’s marriage his father and father-in-law entered into a contract to contribute a certain sum of money to be given to A after his marriage. A’s father paid his contribution but his fatherin-law failed to pay. Held, A could not sue his father-in-law since he (A) was a stranger to the contract. Case Study-2 X was requested by the Collector of the city to spend some money for the improvement of the market. Shopkeepers of the same market later on promised to give X a commission on the articles sold by them. Will X be entitled to claim commission from the shopkeepers? Case Study-3 A and B are neighbours in Delhi. During the summer, A locked his house in Delhi and went to Madras on holiday. While A was at Madras, his house at Delhi caught fire. B, the neighbor at Delhi, extinguished the fire incurring an expense of Rs.500. On A’s return from Madras, he came to know the services rendered by B and hence, promises to pay B Rs.10,000. Will this promise be enforceable? Case Study-4 A, a lawyer acting for his client B in a suit asks B to give him 30% of the amount that he may be able to recover from the defendant C in execution of the decree, that may be passed in the suit, in addition to his usual fees, as the case is a very complicated one. B agrees to A’s demand. After the successful termination of the suit, B recovers from C Rs.1000 in execution of the decree. B pays the usual fees to the lawyer and refuses to pay 30% amount realized by him as additional fees to which he had agreed earlier. Can A claim the additional amount from B?
doc_230718190.doc