indian contract act – some important issues

8/9/2019 INDIAN CONTRACT ACT SOME IMPORTANT ISSUES

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06/06/10 www.afterschool.tk

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INDIAN CONTRACT ACT SOMEIMPORTANT ISSUES

by :

DR. T.K. JAIN

AFTERSCHOOL

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My words....

Here I present a few questions about Indiancontract Act.


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3

What are the cases when

agreement is not a valid contract ?


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Answer

When there is no consideration

when the object is illegalwhen there is illegal consideration

when there is no intention to create a legally

binding mistakewhen there is lack of common understanding


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5

Give examples of agreements

which are not contracts ?


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6

Answer

Agreements relating to social matters

Domestic arrangements between

husband and wife


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7

What was the matter ofBalfour

v. Balfour(1919) case?


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Answer

a husband working in Ceylone, had agreed inwriting to pay a housekeeping allowance to

his wife living in England. On receivinginformation that she was unfaithful to him, hestopped the allowance: Held, he was entitled

to do so. This was a mere domestic

arrangement with no intention to createlegally binding relations. Therefore, there was

no contract.


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What are the essential elements of

a valid contract ?


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Answer

An offer or proposal by one party and acceptance of that offer by anotherparty

An intention to create legal relations or an intent to have legalconsequences.

lawful consideration.The parties to the contract are legally capable of contracting.

Genuine consent between the parties.The object and consideration of the contract is legal and is not opposed to

public policy.The terms of the contract are certain.

The agreement is capable of being performed


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11

What was the matter of(Harris v.

Nickerson (1873) ?


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Answer

a person who attended the advertised placeof auction could not sue for breach of contract

if the auction was cancelled


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What was the matter of(Harveyv.

Facey(1893) ?


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Answer

Merely a statement of the price at whichone is prepared to consider negotiatingthe sale of piece of land is not an offer.


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What was the matter in Felthouse v.

Bindley (1865)?


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Answer

Felthouse offered by letter to buy his nephewshorse for 30 saying: If I hear no more abouthim I shall consider the horse is mine at 30".The nephew did not reply, but he told an

auctioneer who was selling his horses not tosell that particular horse because it was sold

to his uncle. The auctioneer inadvertently soldthe horse. The court held that Felthouse hadno claim against the auctioneer because the

horse had not been sold to him


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What was the matter in Lalman

Shukla v. Gauri Dutt(1913)?


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Answer

A servant brought the boy without knowingof the reward, he was held not entitled to

reward because he did not know about the

offer.


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What is a standing offer?


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Answer

Where a person offers to another tosupply specific goods, up to a statedquantity or in any quantity which may berequired, at a certain rate, during a fixed

period, he makes a standing offer


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What was the matter of Dunlop Pneumatic TyreCo. v. Selfridge Ltd. (1915) A.C. 847?


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Answer

Dunlop supplied tyres to a wholesaler X, oncondition that any retailer to whom X re-suppliedthe tyres should promise X, not to sell them to

the public below the list price. X supplied tyres toS upon this condition, but nevertheless S sold

the tyres below the list price. Held: There was acontract between D and X and a contract

between X and S. Therefore, D could not obtaindamages from S, as D had not given any

consideration for S's promise to X nor was heparty to the contract between D and X.


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When can a stranger sue for

enforcement of a contract ?


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Answer

A BeneficiaryAn assignee under an assignment

in case of family arrangement for the

marriage / maintenance expenses offemale members of the family

when a person has made a contract for

the benefit of a 3

rd

party, the 3

rd

party cansue


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What are the kinds of

consideration?


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Answer

There are 3 types of consideration :1. future

2. present

3. past


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What are the rules governing

consideration?


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Answer

Consideration need not be adequate

consideration may be an act or an abstinance ofan act

consideration must be real

Consideration must be legalConsideration must be mutual


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What are the cases, when

consideration is not required ?


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Answer

1. natural love

2. agency (read sec. 185)3. past event where a person has helped /

supported

4. time barred debt5. gift


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When can gratuitous promise be

enforced ?


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Answer

A gratuitous promise to subscribe to a charitablecause cannot be enforced, but if the promisee isput to some detriment as a result of his acting onthe faith of the promise and the promisor knewthe purpose and also knew that on the faith of

the subscription an obligation might be incurred,the promisor would be bound by promise (Kedar

Nath v. Gorie Mohan)


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What are the flaws in a contract ?


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Answer

IncapacityMistake

MisrepresentationFraud

Undue InfluenceCoercionIllegality

Impossibility.


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How can payment be recoveredregarding necessities supplied to a

minor ?


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Answer

A minors estate is liable to pay a reasonableprice for necessaries supplied to him or to

anyone whom the minor is bound to support(Section 68 of the Act).


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Can a lunatic person, whobecomes normal sometimes, make

a contract when he is sane?


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Answer

Yes

A person unsound mind cannot enter into acontract. A lunatics agreement is therefore void.But if he makes a contract when he is of sound

mind, i.e., during lucid intervals, he will be boundby it.


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Give examples of void contracts ?


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Answer

Agreement in restrain of parental rightin restraint of marriage

in restraint of trade

in restraint of personal freedom

Marriage brokerage Agreements


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What are the cases whenagreements in restraint of trade is

valid ?


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Answer

Sale of goodwillagreement between partners (not to enter into

competing business)


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Can employment bond be a valid

contract ?


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Answer

Yes,

In Niranjan Shanker Golikari v. The Century Spinningand Manufacturing Co. Ltd., AIR 1967 S.C. 1098

Niranjan entered into a bond with the company toserve for a period of five years. In case, N leaves hisjob earlier and joins elsewhere with companys

competitor within five years, he was liable fordamages. N was imparted the necessary training but

he left the job and joined another company. The formeremployer instituted a suit against N. The SupremeCourt, held that the restraint was necessary for the

protection of the companys interests


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Can you mention a few cases on

restraint of trade ?


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Answer

In Nordenfelt v. Maxim Nordenfelt Guns Co.,

(1894) A.C. 535 Nordenfelt was an inventorand a manufacturer of guns and ammunition.

He sold his world-wide business to Maxim andpromised not to manufacture guns anywhere in

the world for 25 years. The House of Lordsheld that the restraint was reasonable


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What is restitution ?


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Answer

When a contract becomes void, it is not to beperformed by either party. But if any party has

received any benefit under such a contractfrom the other party he must restore it or make

compensation for it to the other party


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What are the principles of quasi

contract ?


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Answer

A quasi-contract rests on the equitable principlethat a person shall not be allowed to enrichhimself unjustly at the expense of another.


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What are the cases of quasi

contract ?


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Answer

Necessaries supplied to person incapable of

contracting .Suit for money had and received

Quantum MeruitObligations of a finder of goods .

Obligation of person enjoying benefit of a non-gratuitous act


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What is the meaning of quantum

meruit ?


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Answer

as much as earned

or

reasonable remuneration.


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What constitutes a valid offer ?


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Answer :

Clear

definite

complete

final

not be vaguecommunicated


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How can offer be communicated?


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Answer

Verbally or

orgally


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What types of offers are

possible ?


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Answer

General offer to everyone

specific offer (to a particular person)


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What was the matter in Carlill v.Carbolic Smoke Ball Co. case?


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Answer

The company offered by advertisement, a reward of100 pounds to anyone who contacted influenza afterusing their smoke ball in the specified manner. Mrs.Carlill did use smoke ball in the specified manner,but was attacked by influenza. She claimed the

reward and it was held that she could recover thereward as general offer can be accepted by

anybody. Since this offer is of a continuing nature,more than one person can accept it and can even

claim the reward.


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What was the matter in Harbhajan Lal v.Harcharan Lal(AIR 1925 All. 539)?


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Answer

In this case, a young boy ran away from his fathers home.The father issued a pamphlet offering a reward of Rs. 500 to

anybody who would bring the boy home. The plaintiff saw theboy at a railway station and sent a telegram to the boys father.It was held that the handbill was an offer open to the world at

large and was capable to acceptance by any person whofulfilled the conditions contained in the offer. The plaintiff

substantially performed the conditions and was entitled to thereward offered.


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Is it an offer ?

display of priced goods in a self- servicestore


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Answer

No


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Is it an offer ?

a shopkeepers catalogue of prices


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Answer

No

it is an invitation to offer


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When will an offer lapse?


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Answer

If it is not accepted within the specified time (if any) or after areasonable time, if none is specified.

it is not accepted in the mode prescribed or if no mode is prescribedin some usual and reasonable manner, e.g., by sending a letter by

mail when early reply was requested;the offeree rejects it by distinct refusal to accept it;

either the offeror or the offeree dies before acceptance;

the acceptor fails to fulfill a condition precedent to an acceptance.the offeree makes a counter offer,


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indian contract act – some important issues

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