Classification of Law Constitutional Law Administration Law Civil Law Criminal Law International Law Business Law

Business Law deals with the rights and obligations of of commercial transactions meaning & purpose Remedying of grievances Control of anti-social activities Regulation of harmful activities Law relating to : Contracts Sale of goods Partnership Negotiable Instruments Companies Consumer protection Law of Contracts Indian Contract Act 1872 An agreement enforceable by law is a contract ( Sec. 2(h)) Contract = Agreement + Legal Obligation Agreement ----consists of offer and subsequent acceptance may not create any legal relationship every agreement need not become contract not necessarily enforceable by law persons arising out

Some Agreements by their very nature are not intended to be legally binding eg.agreements of social, moral, religious nature

Agreement Sec. 2(c) Every promise and every set of promises forming the consideration for each other At least two persons required to frame an agreement Parties must agree upon a common purpose Identity of minds regarding the subject matter promise - Sec. 2(b) A proposal or offer when accepted becomes promise Purpose Parties must mean the same thing in the same sense at the same time Case A has two PCs P III and P IV. He offers to sell his P III model to B while B is under the impression that he is buying P IV. How would you deal with this communication gap in the context of the Indian Contract Act? Intention to create legal relation/obligation is a necessary and independent element in the making of a contract Husbands promise to wife or fathers promise to son etc. are not legally binding agreement An invitation to feast is not intended to create legal obligations Examples: Legal Relations

Husband agrees to buy his wife a bracelet if she helps him in completing his project work and later on he did not give. Though this represent consideration but lacking an intention to create legal obligation Case A husband, native of England, was a civil servant and posted out side the country where his wife could not accompany him due to ill health. The husband promised to pay her $100/- every month as maintenance allowance during their stay at two places. But fail to keep his promise. The wife filed a suit against her husband for breach of agreement. Is she eligible to get any relief under Contract Law? Case A invited B and his family to dine with him on a special occasion. B accepted the invitation but failed to turn up. Can A sue B for the damage? Offer Eg -. X offered a reward to anyone who would restore him his lost bag. Y brought the bag to X without any knowledge of the offer or reward. Cam Y claim the reward? Y is not entitled to the reward it was not communicated to the party must intend to create & be capable of creating legal obligation must be definite made to obtain the consent of the offeree duly communicated to the other party may be conditional Offer must be distinguished from queries

Presentation of terms and condition of an offer Case The plaintiff who was illiterate took a railway excursion ticket. The face of the ticket specifically mentioned, For conditions see back. One of the conditions printed on the reverse was that Railway would not be liable for any personal injuries caused to passengers. During his journey with this ticket he got injured due to negligence on the part of the crew. He sued the Railways for damage. Can the plaintiff get compensation/damage under Indian Contract Act? Plaintiff could not recover any damages he is bound by the conditions Case The plaintiff bought a steamer ticket to travel from Cochin to Dubai. The face of the ticket read, Cochin to Dubai only, and on the reverse were printed certain conditions, one of which excluded the liability of the company for loss, injury or delay of the passenger or his/her luggage. The plaintiff lost his luggage during the journey due to the negligence on the part of the crew. He lodged a complaint for damage. Can he succeed in getting the compensation? Yes, the terms are not presented so as to enable the offeree to get to know it Terms should not be such that non compliance of them would amount to acceptance Eg.I offer to sell my car to you for Rs.2.75 lakhs. Please decide and reply by tomorrow morning or else I shall presume that you have accepted my offer. Not a valid offer Firm Offer Vs Invitation to Treat An advertisement of an auction, a request for bids, display of goods for sale in a showroom, invitation to tenders, company prospectus & general advertisement of goods appearing in print or electronic media are not offers

Types of Offers Express offer vs Implied offer Specific offer vs general offer Cross-offers, Standing Offer, Counter offer

Examples: Offer A person steps into a restaurant and consumes some food. This act creates an implied promise to pay A porter picks up your luggage and carries it from the railway platform to a taxi without being asked to do so. It implies that he is offering his services for which he expects to be paid. The situations given above are of implied offers Case A young boy ran away from his home. The father of the missing boy, by issuing an advertisement with the photograph of the boy, offered a reward of Rs.5000/to any one who would bring the boy home. A person named Ramesh spotted the boy at the railway station near to his place and took him to the Police Station. He then informed the boys father. The boy has been taken by the father from the Police Station. Can Ramesh get the reward? If so, why? Ramesh is entitled to the reward this is a general offer Eg. A offers to sell his car to B for Rs. 1.5 lakh. B replies , I can purchase the car for the stated price provided you purchase my house for Rs.2 Lakhs. Does it amount to acceptance of the offer made by A. No. It is only a counter offer

Revocation of Offer An offer can be withdrawn at any time before the offeree has accepted it A offers, by a letter sent by post, to sell his house to B. A may revoke his offer at any time before B posts his letter of acceptance X makes an offer by a letter to Y on a particular day. Two days later , X revokes his offer by a telegram. The telegram reaches the offeree Y, after the letter. Will the offer be deemed to have been revoked. the notice of revocation must be delivered through the same channel by which the original offer was made Circumstances leads to cancellation of Offers : Communication of notice of revocation lapse of time failure to fulfill a condition to acceptance death / insanity of either of the party refusal or counter offer acceptance differs from the prescribed one subsequent illegality or the destruction of the subject matter Revocation by post is ineffective until it reaches the Acceptance Acceptance : should be made by offeree should be unconditional should be communicated to the offeror may be in any form is an assent to the terms of the offer be made while the offer is in force may be oral or written offeree

as prescribed by offeror should be given within reasonable time should be given while the offer is in force Case. Ms Geetha applied for the post of a headmaster in a school. The selection committee passed a resolution appointing her to the post but the decision was not communicated to her. One of the members of the committee, however, in his personal capacity and without any authority, informed Ms Geetha about the decision. Subsequently, the managing committee cancelled the resolution and appointed someone else instead of Ms Geetha. Ms Geetha filed a petition against the decision. What could be the courts decision in this case? Communication of acceptance was not by authorised person Case A sold his business to B. C, an old customer of A who had some problem with A, sent an order for goods to A addressing explicitly to A. B supplied the goods thinking that C would not care from where he obtained the items. C refused to make the payment. Can B sue C for the price. There was no contract between B and C and hence C is not liable to pay for goods Acceptance should be unconditional Eg.A offer to sell his car to B for 7 lakhs. B replies, I can purchase the car for the stated price provided you purchase my house for 25 lakhs. It is a counter offer, not acceptance Eg.A offers to sell his pet to B for Rs.1500/-. B says he would buy the pet for Rs.1200/-. part acceptance of offer is no acceptance Acceptance is communicated by third party will not give rise to legal relations should be communicated to the offeror

Case Brogden Vs Metropilitian Railway Co. Performance of conditions of an offer without the knowledge of the specific offer is no acceptance Silence is not Acceptance Communication of Offer, Acceptance And their Revocation The proposer , when it is put in a course of transmission to to be out of the power of the acceptor The acceptor, when it comes to the knowledge of the case Household Fire Insurance Co Vs Grant The defendant applied for 100 shares in the plaintiff company. The company received his application form, and its secretary in consequently completed and posted a letter of allotment to the defendant, and entered the name of the defendant in the register of the shareholders. The letter, however, never received by the defendant. Some time later the company went into liquidation and the liquidator claimed the payment outstanding on the shares from the defendant. He refused to pay the amount. Decide. Consent --means meeting of minds no contract arises in the absence of consent Consent is not free if i. ii. iii. Coercion Undue influence Fraud him, so as

proposer

iv. v.

Misrepresentation Mistakes Coercion

void (Sec.20)

committing any act forbidden by IPC threatening to commit any act forbidden by IPC unlawful detaining of any properety threatening to detain any property Case A Tamil man died leaving behind a young widow of 20 years of age. The relatives of the deceased forced the widow to adopt a child or they would not allow her to have her husbands body cremated . The widow forced to adopt the child. Subsequently, she applied for cancellation of the adoption. Can she get favorable verdict from the court? In Ammiraju Vs Seshamma the husband threatened that he will commit suicide ,induced his wife and son to execute a bond

Undue influence A devotee induced by his spiritual advisor (guru), gifted his entire property to the guru through an agreement . An illiterate elderly woman gifted all her properties to her nephew who was managing her estates who was in a position to dominate his aunts will. Case-- A advanced money to his son, B, during his minority. Upon Bs coming of age, A obtained, by misuse of parental influence, a bond from B of a greater amount than the sum due in respect of the advance. Can B claim any relief? Case Romesh threatens to shoot Shyam if he does not sell his imported car to him for a small amount. Shyam signs the necessary documents to the effect the sale of the car. Advise Shyam. Case

An elderly poor widow, who was in great need of money to establish her right of maintenance , borrowed a sum of money at 20% rate of interest. This is a clear instance of undue influence being exerted upon a distress person Case As son has forged Bs name to a promissory note. B threatens to prosecute the son and obtain a bond from A for the amount of the forged note. Misrepresentation Refers to a misstatement of fact made by one party to the other, which induces the other party to enter the contract Unwarranted statement of material facts amounts to misrepresentation

Case A while entering into an agreement with B for the sale of his car correctly stated that the car runs 15km/lr of petrol. Negotiations lasted for a month and when the delivery of the car was affected the mileage was dropped to 10 km/lr. Can B back out from the agreement signed? Suppressing or hiding facts is misrepresentation Case A, by misrepresentation, leads B erroneously to believe that 500 tons of sugar is produced annually at As factory. After this B buys the factory. Then he realised that the factory could produce only 300 tons. Can B repudiate the contract? B should have examines the accounts of the factory which could have disclosed that only 300 tons of sugar is being produced. Misrepresentation generally does not entitle the aggrieved party to claim damages. Exceptions are applicable Mistake mistake of law mistake of law of the country

mistake of foreign law mistake of facts bilateral mistake unilateral mistake bilateral mistake Mistake as to existence of subject matter Mistaken identity Mistake as to quantity Mistake as to quality Mistake as to price Mistake as to title renders a contract void

in case of a bilateral mistake, there is virtually no consent Bilateral mistake as to the possibility of performance An artist entered into an contract with a organizing committee of a entertainment programme for staging a concert on a particular day to be organised by the latter. But the artist could not participate in the programme due to illness on that day. The organising committee had to cancel the programme. Can the committee claim damage from the artist due to nonperformance of the artist? Unilateral Mistake is generally of no effect unless it concerns some fundamental fact the other party has the knowledge of the mistake Unilateral mistake as to identity of the person contracted with, the contract is void Case An woman went to a Jewellery shop and introduced herself that she is married to Mr. X (with whom she was living as his mistress) who is known to the shop, and her husband wanted to present her a necklace which he wished to buy on approval. The shop keeper let her have possession of the item and entered in his book as being out on approval to Mr.X. She pledge the necklace with a broker and in good faith the broker paid her some money. Later on the shop keeper realised that he was cheated by the woman and approached the broker for the necklace. Can the shop keeper succeed.

yes, there was no contract between shop keeper & the woman since there was no consensus. Mistake of law of the country will not invalidate a contract Mistake of foreign law renders contract void Consideration means that both the contracting parties are bound to give something (of value) to each other Consideration agreement must be supported by consideration need not be always be in terms of money may be an act -- doing or not doing something a promise to do or not to do something

Note -- all acts should be lawful Illegal consideration renders the Contract invalid A promise to maintain Bs child and B promises to pay Rs.1000/- annually for the purpose The promise of each party is the consideration for the promise of the other party Case X applies for a loan from Y who is unwilling to advance the amount unless another person say W guarantees the repayment of the loan if X defaults, thereupon Y advances money to X money to X the benefit conferred on X by Y at the surety of W is sufficient consideration on the part of Y as against the promise of W to repay the loan. Case A contractor has constructed, at his own expense a shopping mall at the instance of the Dist. Collector. The occupants of the shop in the mall promised

to pay a commission of 5% on the articles sold through their shops. Subsequently the shopkeepers refused to pay the commission to the contractor. Can the contractor sue the shopkeeper against their alleged default? Consideration at desire of third person not valid Case Jaison, by a deed of gift to his son, handed over certain property to the son with a direction that the son should pay an annuity to Jaisons brother. The same day the son executed a document in favour of Jaisons brother agreening to pay annuity. But he declined to fulfill his promise later on saying, that Jaisons brother had not furnished the consideration and hence need not pay. Is this argument justifiable? Consideration from a third party is valid A is indebted to B. A sells his property to C who undertakes to discharge As debt to B. C fails to keep his promise. Can B sue C? C is a stranger to contract, B cannot sue C There can be stranger to consideration but not to contract A, having contracted with B to supply with 1000 m.tons of iron bars at Rs.45000/ ton, to be sold at a stated time. A contracts with C for the purchase of 1000 m.tons at Rs.44000/-, telling C that he does so for the purpose of performing his contract with B. C fails to deliver the item to A as agreed upon, and hence A lost the business with B. Can A claim the loss incurred due to non performance of the contract by C. Yes, Consequential damage A obtain a personal loan amounting Rs.50,000/- from a bank with out any security. He later obtained another loan of Rs. 1.5 lakhs from the same bank for which A has pledged jewelery as security. A has paid back the second loan earlier than the first one and approached the bank for releasing the gold pledged for obtaining the 2nd loan. The bank refused to release the gold. Can A challenge this?

No, under general lien the bank can retain the gold. A obtain a personal loan amounting Rs.50,000/- from a bank with out any security. He later obtained another loan of Rs. 1.5 lakhs from the same bank for which A has pledged jewelery as security. A has paid back the second loan earlier than the first one and approached the bank for releasing the gold pledged for obtaining the 2nd loan. The bank refused to release the gold. Can A challenge this? No, under general lien the bank can retain the gold. Agreement expressly declared void Restraint of marriage Trade Legal proceedings Bet agreements Object of the agreement must be lawful (Sec.23) The terms of agreement must be clear Agreement should be capable of being performed (legally & physically) Capacity of parties Legally capable -attained the age of majority having sound mind not disqualified from contracting by any law insolvent and convicts are not competent Agreement with minor Eg. A minor, by misrepresenting himself to be 21 years, obtained a loan of Rs. 50,000/- from a bank stating that the amount was needed for his education. The bank with out making any enquiry released the loan amount. Can the bank recover the amount?

o o o o

No. minor is not capable of entering into a contract Eg.A minor sold some goods on credit to an adult . The buyer on due date refuse to pay the price. Can the minor recover the amount? Yes, a minor can be a promisee Case A film producer engaged a minor girl to act in his film and for this he entered into an agreement with her father. The producer fails to pay the amount agreed upon. The girl in turn sues the producer through her father for the amount. Will she succeed? No, a guardian/parent of a minor person cant enter into a valid contract of service on his/her behalf Case A engages B to assault C. B does so. To pay B, A borrows Rs.5000/- from D who is aware of the purpose of the loan. Can B recover the amount from A? What is the nature of agreement between A and D? Agreements beyond the purview of Contract law of tort, civil wrong, judicial decision, degree of a court etc., Case A agreed to pay B Rs.1,00,000/- if B shifted his real estate business from the area where the former was doing the same business. B promised but later refused to do so. Discuss the validity of the agreement. Void, Restraint of Trade Case A promise to marry B and in case of default, he agrees to pay her Rs.50,000/as compensation. A subsequently marry C and even refuse s to pay B the agreed compensation. Decide. The agreement between A and B being restraint of marriage is void, therefore B cant claim the said compensation

Case A lends Rs.500/- to B to enable him purchase a Manipur lottery ticket. B upon losing in the lottery refuses to repay As money. Can A recover his money from B? Lottery being betting and is void agreement and any void agreement remains valid Sale of Goodwill One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business within a specified local limit is normally held valid agreement. Note: An agreement formed by the members of the associations such as Chamber of Commerce, CII etc. are valid. These associations are functioning for the interest of the industry as well as the society But Court will not allow any restraint under this pretext.

an agreement among some members of a particular cast to carry business with the members of their cast only is a void agreement. Agreement to confine the business of a particular item within a zone allotted to it a void one Eg.An agreement by a manufacturer of some particular type of clothes to supply 1.5 lakhs pairs of that items to one company and not to sell goods of that kind to anybody else for a fixed period valid agreement Eg.whether a manufacturer / supplier after meeting all the requirements of a sole buyer, can sell the surplus to some others party? Yes

Note If in an agreement with more than one condition is given and few are objectionable then the agreement is void Case A a whole sale rice merchant based in Delhi agreed to sell to a store in Lucknow one truck of basmati rice at the rate Rs.1500/- per bag. But before the delivery could take place, the Government imposed a ban on inter-state trading of rice. Explain the state of the contact entered into by the parties? Note: void & illegal agreements void agreement is unenforceable but objects are lawful illegal agreements are both unenforceable & unlawful objects every illegal agreement is void, but a void agreement is not illegal

Agreements enforceable initially and their subsequent unenforceability made them Void contract Eg.Contract between a foreigner and an Indian is enforceable in the ordinary course. But the same may cease to be enforceable in the event of an out break of say war or similar issues through which the relations of both the countries get stained. Such agreements are void Contract -- composed of an agreement & its legal enforceability -- Parties in a contract have a common intention of entering into legal obligation -- is primarily an agreement -- legally enforceable

Writing & Registration of Contract The India Contract Act does not insist upon written contract

Contracts where writing necessary An agreement to pay time barred debt Transfer of share certificate Hire-purchase agreement An assignment of copyright Cheques, bills of exchange & promissory notes Contract for the sale of immovable property Types of Contract quasi contract unilateral contract bilateral contract

Quasi Contract is an act of a person, permitted by law by which another person binds without any agreement between them is not a contract but an obligation created by law Case X, a trader delivered certain goods at Ys house by mistake. Y treated the goods as his own and consumed it. Discuss the remedy available to X. Unilateral contract where one of the parties performs its promises at the time of making

the contract & other party promises to perform in the future Bilateral contract Where both parties are to perform their respective promises / obligations some future time but not necessarily at the same time. Unenforceable Contracts A contract which cant be enforced due to some technical flaw (otherwise it is valid) Eg. Sometimes the law may require that the agreement must be in writing or executed within a fixed period, need registration, payment of stamp fee etc. and if such things are not done then those contracts are unenforceable. Illegal Contracts: Agreements which the law specifically forbids . eg.-A agrees to pay B Rs. 1lakh for killing C. A managed to get the amount by taking a loan from D who is aware of the purpose of the loan. It is an illegal agreement Collateral transactions to a void agreement do not become void but Collateral transactions to an illegal agreement are affected and they also become illegal.