Description
Essentials of valid contract
Offer and acceptance
Consideration, Capacity to contract
Free consent, discharge of contract
Breach of contract; remedy of breach of contract.
Business Law Module 2
Module II: Contract Act, 1872
•
Essentials of valid contract Offer and acceptance Consideration, Capacity to contract Free consent, discharge of contract
5/29/12 Breach 11 of contract; remedy of breach of contract.
•
•
•
•
Law of Contracts
Contract is an agreement enforceable by law. Indian Contract Act 1872. ---Agreement = Offer + Acceptance (agreement is an accepted proposal) ---Enforceability by law Features of an agreement: ---Consensus ad idem ---Obligation ---Agreement –a wide term—social agreement not a contract
5/29/12 22
Law of Contracts
Essentials of valid contract:
•
Offer and Acceptance Intention to create legal relationship Lawful consideration (something in return) Capacity of parties—competency Free and genuine consent Lawful object (purpose) Agreement not declared void (Sec 24 to 30 and56)** Next slide Certainty and possibility of performance Legal formalities ( like documentation, registration 5/29/12 33 where necessary, witnessing, statutory compliance
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Law of Contracts Agreements specifically declared void:
• •
Agreement by incompetent parties Agreements under mutual mistake of fact material to the agreement (Sec20) Agreements with unlawful consideration or object (Sec 23) Agreements unlawful in part (Sec 24) Agreements without consideration (Sec 25) 5/29/12 44
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• •
Law of Contracts
Legality of Object: Opposed to Public policy—examples
Agreements of trading with enemy • Agreement to commit a crime • Agreement which interfere with administration of justice • Agreement in restraint of legal proceedings 5/29/12 55
•
Law of Contracts
Offer and Acceptance Offer: Signifying to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other.
•
Offeror or Proposer or Promisor Vs Offeree, or proposee When the offer is accepted, he becomes ACCEPTOR or promisee Offer should show a obvious intention to be bound by it Offer should be with an intention to obtain an assent of the other Offer 5/29/12 must be definite
66
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•
Law of Contracts
Offer and Acceptance Legal rules as to Offer:
•
Offer must be one which is capable of being accepted and giving legal relationship Terms of offer must be certain and definite and not loose and vague An offer is different from a declaration of intention and an announcement An offer is different from an invitation to make an offer Offer must be communicated
5/29/12
•
•
•
•
•
A statement of price is not an offer
77
Law of Contracts
Offer and Acceptance
Acceptance:
• •
Giving assent is acceptance Acceptance can be express or implied. Particular offer must be accepted by the person to whom it is made. Acceptance must be absolute and unqualified (conform with the offer) It must be communicated It must be according to the mode 5/29/12 88
•
• •
Law of Contracts
CONSIDERATION: (Sec 2(d) ) and Sec 25
•
Ex nudo pacto non oritur actio:- nobody would part with anything unless he gets a proper price Past Consideration Executed or Present Consideration Executory or Future Consideration Must move at the behest of the promisor May move from the promisee or on the desire of the promisor or from any other person Need not be adequate
5/29/12
•
•
•
•
•
•
•
Must be real and not illusory
99
Law of Contracts
CONSIDERATION: (Sec 2(d) ) and Sec 25 Exceptions to the rule of consideration:
•
Love and affection Voluntary services Time-barred debt Gift Agency Charitable subscriptions
•
•
•
•
•
5/29/12
1010
Law of Contracts
Capacity to Contract INCOMPETENT TO CONTRACTS: Minors (immature mind) Persons of unsound mind –Idiot, Lunatic, drunkard Persons disqualified by lawInsolvent, Convict Alien Enemy,
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•
•
5/29/12
1111
Law of Contracts
Incompetent to contracts:---MINORS
•
Sec 3 of the Indian Majority Act:- 18 years Court guardianship---21 years No estoppel Doctrine of Restitution does not apply to minors No ratification on attaining the majority No liability for breach or for tort arising out of contract Minor can be a promisee
5/29/12
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•
•
•
•
•
•
Contract of marriage
1212
Law of Contracts
Incompetent to contracts:---MINORS
•
Minor as an agent Specific performance Can be admitted to the benefits of partnership ( liability limited to his share in the Pp Not a debtor under insolvency Cannot be a shareholder in a company (except through lawful guardian)-cannot be liable for payment of call money Under NI Act, he may draw, endorse, deliver 5/29/12 negotiate so as to bind all parties except 1313 and
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•
•
Law of Contracts
Incompetent to contracts
ERSONS OF UNSOUND MIND If at the time of making a contract, he is not capable of forming a rational judgement as to its effect upon his interests. Mere weakness of mind is not enough. Permanent unsoundness of mind Temporary unsoundness of mind IDIOT: one who is devoid of the ability to think LUNATIC: One whose mental power has been damaged
1414
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•
5/29/12
Law of Contracts
Incompetent to contractsERSONS DISQUALIFIED BY LAW: Alien Enemy—on the grounds of public policy may hamper the economic interests Insolvent—one who is unable to discharge his liabilities. However, after of discharge he is competent to enter into contracts Any other person expressly disqualified from entering into any legal act
5/29/12 1515
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•
•
Law of Contracts
Free consent,
CONTRACT- Free Consent Sec 14
Consent is said to be free when it is not caused by
•
Coercion Undue Influence Fraud Misrepresentation Mistake
•
•
•
•
5/29/12
1616
Law of Contracts
Discharge of contract:
•
By performance: actual or attempted By agreement or consent (novation—new agreement in lieu of the old ones) By impossibility and supervening impossiblity (destruction of the subject matter, non-existence or non-occurrence, death or incapacity for personal service, change of law or outbreak of war By lapse of time By Operation of Law; merger acquisition, insolvency etc By breach of contract
5/29/12 1717
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•
•
•
•
Law of Contracts Remedies for breach of contract
•
Sec 73—compensation for loss or damage caused by breach of contract—Proximate losses not remote/indirect losses Sec 74 –compensation for breach of contract where penalty specifiedSec 75: Party who is rightfully rescinding is entitled for compensation
5/29/12
•
•
•
Suit for Rescission
1818
doc_942174190.pptx
Essentials of valid contract
Offer and acceptance
Consideration, Capacity to contract
Free consent, discharge of contract
Breach of contract; remedy of breach of contract.
Business Law Module 2
Module II: Contract Act, 1872
•
Essentials of valid contract Offer and acceptance Consideration, Capacity to contract Free consent, discharge of contract
5/29/12 Breach 11 of contract; remedy of breach of contract.
•
•
•
•
Law of Contracts
Contract is an agreement enforceable by law. Indian Contract Act 1872. ---Agreement = Offer + Acceptance (agreement is an accepted proposal) ---Enforceability by law Features of an agreement: ---Consensus ad idem ---Obligation ---Agreement –a wide term—social agreement not a contract
5/29/12 22
Law of Contracts
Essentials of valid contract:
•
Offer and Acceptance Intention to create legal relationship Lawful consideration (something in return) Capacity of parties—competency Free and genuine consent Lawful object (purpose) Agreement not declared void (Sec 24 to 30 and56)** Next slide Certainty and possibility of performance Legal formalities ( like documentation, registration 5/29/12 33 where necessary, witnessing, statutory compliance
•
•
•
•
•
•
•
•
Law of Contracts Agreements specifically declared void:
• •
Agreement by incompetent parties Agreements under mutual mistake of fact material to the agreement (Sec20) Agreements with unlawful consideration or object (Sec 23) Agreements unlawful in part (Sec 24) Agreements without consideration (Sec 25) 5/29/12 44
•
• •
Law of Contracts
Legality of Object: Opposed to Public policy—examples
Agreements of trading with enemy • Agreement to commit a crime • Agreement which interfere with administration of justice • Agreement in restraint of legal proceedings 5/29/12 55
•
Law of Contracts
Offer and Acceptance Offer: Signifying to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other.
•
Offeror or Proposer or Promisor Vs Offeree, or proposee When the offer is accepted, he becomes ACCEPTOR or promisee Offer should show a obvious intention to be bound by it Offer should be with an intention to obtain an assent of the other Offer 5/29/12 must be definite
66
•
•
•
•
Law of Contracts
Offer and Acceptance Legal rules as to Offer:
•
Offer must be one which is capable of being accepted and giving legal relationship Terms of offer must be certain and definite and not loose and vague An offer is different from a declaration of intention and an announcement An offer is different from an invitation to make an offer Offer must be communicated
5/29/12
•
•
•
•
•
A statement of price is not an offer
77
Law of Contracts
Offer and Acceptance
Acceptance:
• •
Giving assent is acceptance Acceptance can be express or implied. Particular offer must be accepted by the person to whom it is made. Acceptance must be absolute and unqualified (conform with the offer) It must be communicated It must be according to the mode 5/29/12 88
•
• •
Law of Contracts
CONSIDERATION: (Sec 2(d) ) and Sec 25
•
Ex nudo pacto non oritur actio:- nobody would part with anything unless he gets a proper price Past Consideration Executed or Present Consideration Executory or Future Consideration Must move at the behest of the promisor May move from the promisee or on the desire of the promisor or from any other person Need not be adequate
5/29/12
•
•
•
•
•
•
•
Must be real and not illusory
99
Law of Contracts
CONSIDERATION: (Sec 2(d) ) and Sec 25 Exceptions to the rule of consideration:
•
Love and affection Voluntary services Time-barred debt Gift Agency Charitable subscriptions
•
•
•
•
•
5/29/12
1010
Law of Contracts
Capacity to Contract INCOMPETENT TO CONTRACTS: Minors (immature mind) Persons of unsound mind –Idiot, Lunatic, drunkard Persons disqualified by lawInsolvent, Convict Alien Enemy,
•
•
•
5/29/12
1111
Law of Contracts
Incompetent to contracts:---MINORS
•
Sec 3 of the Indian Majority Act:- 18 years Court guardianship---21 years No estoppel Doctrine of Restitution does not apply to minors No ratification on attaining the majority No liability for breach or for tort arising out of contract Minor can be a promisee
5/29/12
•
•
•
•
•
•
•
Contract of marriage
1212
Law of Contracts
Incompetent to contracts:---MINORS
•
Minor as an agent Specific performance Can be admitted to the benefits of partnership ( liability limited to his share in the Pp Not a debtor under insolvency Cannot be a shareholder in a company (except through lawful guardian)-cannot be liable for payment of call money Under NI Act, he may draw, endorse, deliver 5/29/12 negotiate so as to bind all parties except 1313 and
•
•
•
•
•
Law of Contracts
Incompetent to contracts
ERSONS OF UNSOUND MIND If at the time of making a contract, he is not capable of forming a rational judgement as to its effect upon his interests. Mere weakness of mind is not enough. Permanent unsoundness of mind Temporary unsoundness of mind IDIOT: one who is devoid of the ability to think LUNATIC: One whose mental power has been damaged1414
•
•
•
•
•
5/29/12
Law of Contracts
Incompetent to contracts
ERSONS DISQUALIFIED BY LAW: Alien Enemy—on the grounds of public policy may hamper the economic interests Insolvent—one who is unable to discharge his liabilities. However, after of discharge he is competent to enter into contracts Any other person expressly disqualified from entering into any legal act5/29/12 1515
•
•
•
Law of Contracts
Free consent,
CONTRACT- Free Consent Sec 14
Consent is said to be free when it is not caused by
•
Coercion Undue Influence Fraud Misrepresentation Mistake
•
•
•
•
5/29/12
1616
Law of Contracts
Discharge of contract:
•
By performance: actual or attempted By agreement or consent (novation—new agreement in lieu of the old ones) By impossibility and supervening impossiblity (destruction of the subject matter, non-existence or non-occurrence, death or incapacity for personal service, change of law or outbreak of war By lapse of time By Operation of Law; merger acquisition, insolvency etc By breach of contract
5/29/12 1717
•
•
•
•
•
Law of Contracts Remedies for breach of contract
•
Sec 73—compensation for loss or damage caused by breach of contract—Proximate losses not remote/indirect losses Sec 74 –compensation for breach of contract where penalty specifiedSec 75: Party who is rightfully rescinding is entitled for compensation
5/29/12
•
•
•
Suit for Rescission
1818
doc_942174190.pptx