contract act & sale of goods actfor ib & retail 26.11

8/6/2019 Contract Act & Sale of Goods Actfor IB & Retail 26.11

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Contract Act,1872Contract Act,1872



Definition of ContractDefinition of Contract

According to section 2(h) According to section 2(h) a contracta contractis an agreement enforceable byis an agreement enforceable by

lawlaw

Offer + Acceptance = AgreementOffer + Acceptance = Agreement



Types of contractTypes of contract

On the basis of formationOn the basis of formation

Expresscontract

Impliedcontract

Quasi Contract




On the basis of performance On the basis of performance

ExecutedContract

ExecutoryContract




On the basis of validityOn the basis of validity

ValidContract

VOID ABLEContract

Unenf-orableContract

VoidContract

IllegalContract



Essential element s of valid contract Essential element s of valid contract

Free ConsentFree Consent

Lawful ObjectLawful Object

Possibility of performancePossibility of performance

Not expressly declared voidNot expressly declared void

Certainty in the Certainty in the meningmening of of agreementagreement

..Contd



Definition of Offer(proposal)Definition of Offer(proposal)

As As perper sectionsection 22(a)when(a)when oneone personpersonsignifiessignifies toto anotheranother hishis willingnesswillingness toto

dodo oror toto abstain,abstain, fromfrom doingdoing anythinganythingwithwith aa viewview toto obtainingobtaining ,the,the assentassentofof thatthat otherother toto suchsuch actact oror

abstinence,abstinence, hehe saidsaid toto makemake aaproposalproposal



RULES REGARDING A VALID RULES REGARDING A VALID

OFF

ER

OFF

ER

May be Express or ImpliedMay be Express or Implied

Give rise to legal consequencesGive rise to legal consequences

Invitation to offer is not an offerInvitation to offer is not an offer

Must be communicatedMust be communicated



Classification of an OFFERClassification of an OFFER

Specific offerSpecific offer

General offerGeneral offer

Cross offCross offerer



RULES REGARDING A VALID RULES REGARDING A VALID ACCEPT ANCE ACCEPT ANCE

Must be communicat ed by the acceptorMust be communicat ed by the acceptor

Given only to the person making off erGiven only to the person making off er

Must be absolut e and unqualifiedMust be absolut e and unqualified(qualified acceptance is a count er off er)(qualified acceptance is a count er off er)

Must be given within reasonable Must be given within reasonable timetime inin

usual and reasonable usual and reasonable mannermanner Reject ed off ers can be accept ed only if it Reject ed off ers can be accept ed only if it

is renewedis renewed



WHAT IS CONSIDERATIONWHAT IS CONSIDERATION



Definition of considerationDefinition of consideration

As As perper sectionsection 22(d)when(d)when atat thethe

desiredesire ofof thethe promisor,promisor, thethe promiseepromisee oror

anyany otherother personperson hashas donedone ororabstainedabstained fromfrom doingdoing ,or,or doesdoes ororabstainsabstains fromfrom doingdoing somethingsomething ,such,suchactact oror abstinenceabstinence oror promisepromise isis calledcalled aa

considerationconsideration



ESSENTIALS OF CONSIDER ATIONESSENTIALS OF CONSIDER ATION

Form of considerationForm of consideration

Must move at the desire of the promisorMust move at the desire of the promisor

May move from promisee or any other person

May move from promisee or any other person

May be past, present or f ut ureMay be past, present or f ut ure

Need not be adequat eNeed not be adequat e

Must be realMust be real

Must be lawf ulMust be lawf ul



No Consideration No ContractNo Consideration No ContractExceptionsExceptions

A greement made out of nat ural love and A greement made out of nat ural love andaff ection (if regist ered)aff ection (if regist ered)

A greement to compensat e for past voluntary A greement to compensat e for past voluntaryservicesservices

A greement to pay for time A greement to pay for time--barred debt barred debt

Complet ed gift and donationComplet ed gift and donation

A greement For creating an agency A greement For creating an agency



No Consideration No ContractNo Consideration No Contract: : ExceptionsExceptions

For accepting lesser part of a debt or forFor accepting lesser part of a debt or forincreasing credit period there need not be anyincreasing credit period there need not be anyconsideration.consideration.

A promise to contribut e to charity would be A promise to contribut e to charity would be enforceable if, on the strength of the promise,enforceable if, on the strength of the promise,the promisee undertakes some liability.the promisee undertakes some liability.

to the ext ent of liability incurred but not to the ext ent of liability incurred but not exceeding the amount promised.exceeding the amount promised.



C APA CITY OF PARTIESC APA CITY OF PARTIES

As per Section 11 Every person is competent to As per Section 11 Every person is competent tocantractcantract (a) who is the age of majority and (b)(a) who is the age of majority and (b)

who is of sound mind and (c) who is notwho is of sound mind and (c) who is notdisqualified from contracting by any law to whichdisqualified from contracting by any law to which

he ishe is sujectedContractsujectedContract??

It s mean that every person is compet ent to contract It s mean that every person is compet ent to contract except :except :

A minor A minor

A person of unsound mind A person of unsound mind

A person disqualified by law A person disqualified by law



Minor s A greement Minor s A greement

Void and inoperative Void and inoperative Minor can be a beneficiaryMinor can be a beneficiary

No ratification on attaining ma jorityNo ratification on attaining ma jority

Rule of Rule of estoppelestoppel does not apply to a minordoes not apply to a minorMinor s liability for necessitiesMinor s liability for necessities

Specific performanceSpecific performance

Minor as PartnerMinor as Partner

Minor as A gent Minor as A gent

Minor and insolvencyMinor and insolvency



A person of unsound Mind A person of unsound Mind

A ) Lunatics : A person who is mentally A ) Lunatics : A person who is mentallyderanged due to some mental strain or otherderanged due to some mental strain or otherpersonal experience. He suff ers from personal experience. He suff ers from

int ermitt ent int ervals of int ermitt ent int ervals of scanityscanity and insanity.and insanity. Idiot s : A person who has complet ely lost his Idiot s : A person who has complet ely lost his

mental powers. Idiocy is permanent whereas mental powers. Idiocy is permanent whereas lunacy denot es periodical insanity.lunacy denot es periodical insanity.

Drunken : A drunken person suff ers from Drunken : A drunken person suff ers from t emporary incapacity to contract.t emporary incapacity to contract.



A person disqualified by law A person disqualified by law

A lien enemies A lien enemies

Foreign Sovereigns, Diplomat s ,Foreign Sovereigns, Diplomat s , A

mbassadors H

igh Commoners A

mbassadors H

igh Commoners Insolvent Insolvent

Convict s Convict s

CorporationsCorporations



Free consent Free consent

Consent is said to be free when it is not Consent is said to be free when it is not caused by any of the following:caused by any of the following:

a.a. CoercionCoercionb.b. Undue influenceUndue influence

c.c. MisrepresentationMisrepresentation

d.d. FraudFraude.e. mistakemistake



RepresentationRepresentation means a stat ement of fact means a stat ement of fact made by one party to the other, eithermade by one party to the other, either

before or at the time of contract, with anbefore or at the time of contract, with anint ention to induce the other party to ent erint ention to induce the other party to ent erinto a contract.into a contract.

A wrongly made representation is t ermed as a A wrongly made representation is t ermed as amisrepresentationmisrepresentation

an int entional misrepresentation is t ermed as an int entional misrepresentation is t ermed as fraud.fraud. It includes all act s int ended toIt includes all act s int ended to

deceive another persondeceive another person a deceit which does not deceive gives no a deceit which does not deceive gives noground for actionground for action



Can silence be Fraudulent?Can silence be Fraudulent?

NoNo

Y es, when duty to speak Y es, when duty to speak Y es, where silence = speech Y es, where silence = speech

Effects of fraud:Effects of fraud:

i)i) Voidable Voidableii)ii) A sk for restit ution (position as if no fraud) A sk for restit ution (position as if no fraud)

iii)iii) Claim damagesClaim damages

MistakeMistake::

Mistake may be defined as an erroneous belief about Mistake may be defined as an erroneous belief about something . It may be a mistake of law or a mistake of fact something . It may be a mistake of law or a mistake of fact



Legality of ObjectLegality of Object

A ccording to section 23 , A ccording to section 23 ,Consideration or ob ject of an agreement is Consideration or ob ject of an agreement is unlawf ul under the following sit uation:unlawf ul under the following sit uation:--

It is forbidden by lawIt is forbidden by law It Def eat s the provision of any other lawIt Def eat s the provision of any other law

It is Fraudulent It is Fraudulent

It involves an in jury to a person or property of It involves an in jury to a person or property of otherother

It is immoralIt is immoral

It is against the public policyIt is against the public policy



Agreement Expressly Declared Void Agreement Expressly Declared Void

A greement in restraint of marriage A greement in restraint of marriage

A greement in restraint of Trade A greement in restraint of Trade

A greement in restraint of Legal proceedings A greement in restraint of Legal proceedings A greement meaning of which is uncertain A greement meaning of which is uncertain

A greement by way of Wager A greement by way of Wager

A greement to do impossible act A greement to do impossible act



QUASI CONTR ACTSQUASI CONTR ACTS

In some cases there is no off er, noIn some cases there is no off er, noacceptance and in fact no int ention on the acceptance and in fact no int ention on the part of the parties to ent er into a contract part of the parties to ent er into a contract and still by their conduct they are into aand still by their conduct they are into acontract.contract.

It rest s upon the doctrine a person shall not It rest s upon the doctrine a person shall not

be allowed to enrich himself at the be allowed to enrich himself at the expense of another.expense of another.



QuasiQuasi--contractual obligationcontractual obligationss

Claim for necessaries to persons incapable of Claim for necessaries to persons incapable of contractingcontracting

Payment by int erest ed parties Payment by int erest ed parties

Obligation of person en joying benefit of nonObligation of person en joying benefit of nongrat uitous act grat uitous act

Right s and duties of finder of lost goodsRight s and duties of finder of lost goods

Liability of a person to whom money is paid orLiability of a person to whom money is paid orgoods are delivered by mistake or undergoods are delivered by mistake or undercoercioncoercion



Contingent contractContingent contract

A per section 31 A per section 31

A A contingent contingent contract contract isis aa

contract contract toto dodo oror not not toto dodo somesomething,thing, if if somesome event event ,collat eral,collat eral totosuchsuch contract contract doesdoes oror doesdoes not not

happenhappen..



Discharge of Contracts

� By Performancea- Actual performanceb- Attempted performance

�By Mutual Agreementa-Novationb-Alteration

c- Rescissiond- Remission

cont««..



�

By Supervening Impossibility

� By Operation of Law

�

By Lapse of Time

� By Breach of Contract



Performance

Who must perform

Who can demand performance

Time and place of performance

Assignment of contract

Contract which need not to be performed



Legal remedies for Breach of contract

Rescission of the contract

Suit for damages

Suite for specific performance

Suit for injunction

Suit upon ³Quantum Merit´



Types of Damages

Ordinary Damages

Special Damages

Exemplary or Vindictive Damages

Nominal Damages

Liquidated Damages



CONTRA CT OF S A LE OF GOODSCONTRA CT OF S A LE OF GOODS A CT:1930 A CT:1930

A s per Section 4(1) A contract of sale of goods is a contract A s per Section 4(1) A contract of sale of goods is a contract whereby the seller transf ers or agrees to transf er the whereby the seller transf ers or agrees to transf er the property to goods to the buyer for a price.property to goods to the buyer for a price.

Essentials of contract of sale of goods:Essentials of contract of sale of goods:

1.1. Two partiesTwo parties

2.2. Transf er of propertyTransf er of property

3.3. Goods = movable property other than actionable claims andGoods = movable property other than actionable claims andmoneymoney

4.4. PricePrice

5.5. Includes both sale and agreement to sell Includes both sale and agreement to sell

6.6. No formalities to be observedNo formalities to be observed



Conditions and warrantiesConditions and warranties

ConditionsConditions

Essential to the Essential to the

main purposemain purpose

On breach: On breach: cancellationcancellation

Breach can be Breach can be treat ed as breachtreat ed as breachof warrantyof warranty

WarrantiesWarranties

Collat eral to the Collat eral to the main purposemain purpose

On breach: On breach: damagesdamages

Breach cannot be Breach cannot be

treat ed as breachtreat ed as breachof conditionof condition

Voluntary waiver and acceptance of goods



Implied warrantiesImplied warranties

Warranty of quiet possessionWarranty of quiet possession

Warranty of freedom from any chargeWarranty of freedom from any charge

Warranty to disclose dangerous nat ure of Warranty to disclose dangerous nat ure of

goods to the ignorant buyergoods to the ignorant buyer



Nemo Det Quod Non Habet Nemo Det Quod Non Habet

No one can give what one has not got No one can give what one has not got Unauthorized sale by mercantile agent Unauthorized sale by mercantile agent

Transf er of title by estoppelTransf er of title by estoppel

Sale by joint ownerSale by joint owner Sale by person in possession under voidable Sale by person in possession under voidable

contract contract

Sale by seller in possession aft er saleSale by seller in possession aft er sale Sale by buyer in possession aft er agreement Sale by buyer in possession aft er agreement

to buyto buy

Resale by unpaid sellerResale by unpaid seller



Right s of an unpaid sellerRight s of an unpaid seller

Against goods Against goods

1.1. Right of lienRight of lien

2.2. Right of Right of stoppage of stoppage of goods in transit goods in transit

3.3. R

ight of resaleR

ight of resale

Against buyer Against buyer

1.1. Suit for priceSuit for price

2.2. Suit for damages forSuit for damages fornon acceptancenon acceptance

3.3. Suit for specialSuit for special

damages anddamages andint erest int erest

contract act & sale of goods actfor ib & retail 26.11

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