SECTION B

2.Legal rules of acceptance

i) Acceptance must be given only by the person to whom the offer is made: An offer can be accepted
only by the person or persons to whom it is made and with whom it imports an intention to contract. It
cannot be accepted by another person without the consent of the offer. The rule of law is if you propose
to make a contract with them B cant substitute himself for A without your consent. An offer made to a
particular person can be validly accepted by him alone.

ii) Acceptance must be absolute and unqualified: In order to be effective, it must be absolute and
unqualified acceptance of all the terms of the offer. Even the slightest deviation from the terms of the
offer makes the acceptance. In effect a derivate acceptance is regarded as a counter offer in law. E.g. L
offered to M his scooter for Rs. 4000 M accepted the offer and tendered Rs. 3900 cash down,
promising to pay the balance of Rs. 100 by the evening. There is no contract, so the acceptance was not
absolute and unqualified.

iii) It should be in a reasonable mode: Unless the proposal prescribes the manner in which it is to be
accepted. If the offeror prescribes no mode of acceptance the acceptances must be communicated
according to some usual and reasonable mode. The usual modes of communication are by spoken or
written or by conduct, it is called an implied acceptance. E.g. If the offeror prescribes acceptance by
telegram and the offered sends acceptance through a messenger, there is no acceptance of the offer.

iv) Acceptance must be communicated by the acceptor: for an acceptance to the made it should to be
made by the offer but also be communicated by, or will the authority of offered to the offeror.

v) Acceptance must be given within a reasonable time and before the offer lapses: Acceptance must be
given within the specified time limit , if any and if no time is stipulated, acceptance must be given
within a reasonable time because an coffer cannot be kept open indefinitely.

vi) Acceptance must succeed the offer: Acceptance must be given after receiving the offer. It should not
precede the offer. In a company share were allotted to a person who had not applied for them
subsequently he applied for shares living unaware of the previous allotment. It was held that the
allotment of shares previous to the application was invalid.

vii) Rejected offer can be accepted only, if renewal: offer once rejected cant be accepted again unless a
fresh offer is made.

3. Discharge of a contract means termination of the contractual relations between the

parties to a contract. A contract is said to be discharged when the rights and obligations of the parties
under the contract come to an end. Modes of discharge of contract

Discharge by Performance
A contract can be discharged by performance in any of the following ways:

(a) By Actual Performance A contract is said to be discharged by actual per-formance when the parties
to the contract perform their promises in accordance with the terms of the contract.
(b) By Attempted Performance or Tender A contract is said to be discharged by attempted performance
when the promisor has made an offer of performance to the promisee but it has not been accepted by
the promisee.

Discharge by Mutual Agreement

Since a contract is created by mutual agreement, it can also be discharged by mutual agreement. A
contract can be discharged by mutual agreement in any of the following ways:

a) Novation [Section 62] Novation means the substitution of a new contract for the original contract.
Such a new contract may be either between the same parties or between different parties. The
consideration for the new contract is the discharge of the original contract.

(b) Rescission [Section 62] Rescission means cancellation of the contract by any party or all the parties
to a contract.

(c) Alteration [Section 62] Alteration means a change in the terms of a contract with mutual consent of
the parties. Alteration discharges the original contract and creates a new contract. However, parties to
the new contract must not change.

(d) Remission [Section 63] Remission means acceptance by the promisee of a lesser fulfillment of the
promise made. According to Section 63, Every promisee may dispense with or remit, wholly or in
part, the performance of the promise made to him, or may extend the time for such performance, or
may accept instead of it any satisfaction which he thinks fit.

(e) Waiver Waiver means intentional relinquishment of a right under the con-tract. Thus, it amounts to
releasing a person of certain legal obligation under a contract.

Discharge by Operation of Law

A contract may be discharged by operation of law in the following cases:

(a) By Death of the Promisor A contract involving the personal skill or ability of the promisor is
discharged on the death of the promisor.

(b) By Insolvency When a person is declared insolvent, he is discharged from his liability up to the date
of his insolvency.

(c) By Unauthorised Material Alteration If any party makes any material alteration in the terms of the
contract without the approval of the other party, the contract comes to an end.

(d) By the Identity of Promisor and Promisee When the promisor becomes the promisee, the other
parties are discharged.

Discharge by Impossibility of Performance

The effects of impossibility of the performance of a contract may be discussed under the following two
heads:

(a) Effects of Initial Impossibility

(b) Effects of Supervening Impossibility

(c) Declaration of War The pending contracts at the time of declaration of war are either suspended or
declared as void.

(d) Change of Law The contract is discharged if the performance of the contract becomes impossible or
unlawful due to change in law after the formation of the contract.

Discharge by Lapse of Time

A contract is discharged if it is not performed or enforced within a specified period, called period of
limitation. The Limitation Act, 1963 has prescribed the different periods for different contracts, e.g.
period of limitation for exercising right to recover a debt is 3 years, and to recover an immovable
property is 12 years. The contractual parties cannot exercise their rights after the expiry of period of
limitation.

Discharge by Breach of Contract

A contract is said to be discharged by breach of contract if any party to the contract refuses or fails to
perform his part of the contract or by his act makes it impossible to perform his obligation under the
contract. A breach of contract may occur in the following two ways:

(a) Anticipatory Breach of Contract Anticipatory breach of contract occurs when party declares his
intention of not performing the contract before the performance is due.

(b) Actual Breach of Contract Actual breach of contract occurs in the follow-ing two ways:

(i) On Due Date of Performance: If any party to a contract refuses or fails to perform his part of the
contract at the time fixed for performance, it is called an actual breach of contract on due date of
performance.

7. According to Section 10, All agreements are contracts if they are made by the free consent of the
parties competent to contract, for a lawful consideration and with a lawful object and are not hereby
expressly declared to be void.

The analysis of the provisions of Section 10 shows that a valid contract musthave the following
essential elements:

. Offer and Acceptance: Basically, a contract unfolds when an offer by one party is accepted by the
other party . The accepted offer should be without any qualification and be definite. An offer needs to
be clear, definite, complete and final. It should be communicated to the offeree. A proposal when
accepted becomes a promise or agreement. The offer and acceptance must be consensus ad idem
which means that both the parties must agree on the same thing in the same sense i.e. identity of wills
or uniformity of minds.

2. Intention to Create Legal Relationship: The intention of the parties to a contract must be to create a
legal relationship between them. Agreements of social nature, as they do not contemplate legal
relationship, are not contracts. For instance, if a father fails to give his daughter the promised pocket
money, the daughter cannot sue the father, because it was purely a domestic arrangement. Thus, it is
clear that all agreements, which do not result in legal relations, are not contracts.

3. Capacity to Contract: If an agreement is entered between parties who are competent enough to
contract, then the agreement becomes a contract.

4. Genuine and Free Consent: Free consent is another essential element of a valid contract. An
agreement must have been made by free consent of the parties. The contract would be void in case of
mutual mistakes. When consent is obtained by unfair means, the contract would be voidable.

5. Lawful Object: Objectives of an agreement should be lawful. It must not be illegal or immoral or
opposed to public policy. It is lawful unless it is forbidden by law. When the object of a contract is not
lawful, the contract is void.

6. Lawful Consideration: Something in return is Consideration. In every contract, agreement must be

supported by consideration. It must be lawful and real.

7. Certainty and Possibility of Performance: The agreements, in which the meaning is uncertain or if
the agreement is not capable of being made certain, it is deemed void. T&C of the contract should
always be certain and cannot be vague. Any contract that are uncertain are considered void. The terms
of the agreement must also be capable of performance and should not enforce impossible act.

8. Legal Formalities: Legal formalities if any required for particular agreement such as registration,
writing, they must be followed. Writing is essential in order to effect a sale, lease, mortgage, gift of
immovable property etc. Registration is required in such cases and legal formalities in the relevant
legislation should be strictly followed.

8. According to Contract Act, bailment means delivery of goods by one person to another for some
purpose upon a contract that they these goods shall be returned or disposed of according to the
directions of the person delivering them when the purpose will be accomplished.

Explanation
Under Contract Act, bailment is considered a contract. Such contract is consisted of following
essentials

i. Delivery of Goods
For a valid bailment, it is essential that goods should be delivered from one person to another person. It
means that possession of goods should be changed.

ii. Delivery for Some Purpose

It is necessary for a valid bailment that goods should be delivered for some purpose.

iii. Return or disposing of Goods

For a valid bailment, it is also essential that goods should be returned or disposed off according to
directions of bailor when purpose is accomplished.

3. Definition of Bailor
In bailment, the person, who delivers goods, is call bailor.

4. Duties and Liabilities of Bailor

Following are duties and liabilities of bailor;

i. Disclosing of defects of goods bailed

It is duty of bailor to disclose any defects, which are present in goods, which are being bailed.

ii. Repayment of expenses

It is liability of bailor to repay all those expenses, which bailee spends for purpose of bailment.

iii. Bailors Responsibility to Bailee

Bailor is liable to bailee for any loss, which the bailee bears in the following situations;

a. No right to make bailment

Bailor is responsible to bailee for any loss, which bailee bears because bailor was not entitled to make
bailment.

b. No Right to get back bailed goods

Bailor is responsible to bailee for any loss, which bailee bears because bailor was not entitled to get
back bailed goods.

c. No right to give Directions

Bailor is responsible to bailee for any loss, which bailee bears because bailor was not entitled to give
directions.

Conclusion

To conclude, it can be stated that bailment is the process of placing personal property or goods in the
temporary custody or control of another. However, such temporary custody originates very strong
duties and liabilities for both the bailor and bailee.