CONTRACT LAW. Promisor - Person making the proposal Promisee - Person accepting the proposal Promise - Proposal when accepted becomes a promise

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Laurel Stanley
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1 CONTRACT LAW Promisor - Person making the proposal Promisee - Person accepting the proposal Promise - Proposal when accepted becomes a promise Note: Acceptance of proposal or acceptance of promise can be made orally or written Social Agreements Not legal agreements eg. - Family matters Consideration - When promisee does or promises to do something for promisor Agreement - Not legally enforceable by law Contract - Enforceable by law Privity of Contract - 3 rd person cannot sue any party in contract i.e. Only parties under contract on sue each other Competent Party - Competent to Contract i.e. A person who can lawfully sign a contract eg. Major; Sound Mind; Non-Defaulter Free Consent - Sign contract by own will Coercion - Force a person to come in contract by criminal ways Misrepresentation - Misleading someone and causing them to make mistake intentionally Coercion; Misrepresentation; Influence; Fraud; Mistake - Not by free consent (against the will) 1

2 Note: When consideration is unlawful - agreement is void Void Agreement - Which shouldn t take place in the first place because of their unlawful nature Ignorance of Law - No excuse Ignorance of Fact - Can be an excuse Valid Contract - Enforceable by law Void Contract - Not enforceable by law because the contract itself is not legal from the beginning eg. Contract with minor (void contract) Ab intio - From beginning Voidable Contract - Contract declared to be void by the court when one party does wrong to another party Contingent Contract - Conditional Contract i.e. if something happens only then contract is valid otherwise void or if something does not happen only then contract is valid otherwise void Novation - When old contract is substituted by new contract Rescission - Cancellation of terms of contract Alteration - Modification of terms of contract Quantium Meruit - On merit basis i.e. As much a earned or in proportion to work done eg. Injured party gets compensation according to work done by it Quasi Contract - Partial Contract (does not come under contract or tort) 2

3 Things to Remember: Contract - Agreement enforceable by law Void Contract - Not enforceable by law Voidable contract - Void at the option of one party Minor and Guardian - Minor is considered major at 21 years of age with guardianship Bailment - Temporary transfer of possession of property from bailer to bailee without transfer of ownership Note: All agreements are not contracts but all contracts are agreements Proposal plus Acceptance is Promise Promise from both sides is Agreement Proposal - When one party show willingness to do something and ask to obtain assent of another party Acceptance - To accept proposal Consideration - Legal Bargaining (something in return for promise) eg. Consideration A gives Rs.10,000 to B Rs. 10,000 - Promise B - OK! I ll give my phone in return for Rs.10,000 Phone - Consideration Consideration - Given at desire of promisor Consideration - Given by promisee Free Consent - Free Consent is important in contract Unlawful Act - Void 3

4 Proposal when accepted - Becomes a promise Coercion - Committing or treating to commit an offence with intention of causing a person to enter into agreement i.e. to threaten to make another sign agreement Undue Influence - To manipulate wrongly Fraud - To lie or not telling truth Difference between - Fraud and Misrepresentation Fraud - Person knows the statement made by him is not true Misrepresentation - Person thinks statement made by him is true Note: When there is no consideration in agreement - void agreement Free Consent - Required most in agreement and contract Betting - Void (not a contract) i.e. When there is uncertainly there is no agreement Note: Parties must agree on same thing in same sense for a valid contract Bonded Labour - Against law in India i.e. No bond is valid for employment Caveat Emptor - Buyer Beware Note: Time is important in contract Consenses ad idem - Parties must agree or disagree on same facts i.e. if there is no Conseneus ad idem - contract is void 4

5 Restraint - To stop someone from doing something Vakalatnama - A document by which party authorizes the advocate to represent on their behalf Note: An advocate under Vakalatnama could not sue his dient Contract between A and B A made proposal to B B informs A that he has accepted the offer from his side Contract is valid between A and B Contract: Void - Minor; Unsound Mind; Unlawful (illegal) Voidable - Fraud; Misrepresentation; Undue Influence; Coercion Note: If no legal obligation - Then no agreement or contract Discharge of Contract: By - Performance By - Impossibility (contracts end due to impossibility of performance) By - Agreement Important Terms: Novation - New agreement Rescission - Cancellation of agreement Alteration - Modification of agreement Breach of Contract: Note: Remedy - Compensation 5

6 Damages - Compensation Liquidated Unliquidated Quantum Meruit - According to proportion of work done i.e. compensation accordingly Contract - Right in Personam i.e. Against specific individual Tort - Right in Rem i.e. Against the world at large Gratuitous Act - Done for free Marriage of two unsound mind people - Valid with consent of guardians Remember: Offer + Acceptance = Promise Promise + Consideration = Agreement Agreement (Enforceable by Law) = Contract Note: All contracts are agreements. All agreements are not contracts. 6

CHAPTER 2 CONTRACT LAWS INDIAN CONTRACT ACT, A contract is an agreement made between two or more parties which the law will enforce.

CHAPTER 2 CONTRACT LAWS INDIAN CONTRACT ACT, 1872 Definition of Contract A contract is an agreement made between two or more parties which the law will enforce. Sec 2(h) defines contract as an agreement