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Act, 1872
Chapter 1
Business Law
Business Law
Business Law
3.Competentnce of Parties
4.Consideration
Something in Return
e.g. B promise to S that He will buy his bike for
Rs.35000.
5.Free Consent
Business Law
e.g. I will kill you Mr. if you will give mw 100 bottle
wine.
8.Certain Formalities
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Case Law
A invite B to out for dinner together. B accepts the offer. A hires a taxi
but B does not turn up. A has to give the dinner some compensation.
Can A recover it from B?
V offer to donate Rs. 11000 to hospital. The hospital accept the offer.
Can it recover the amount ?
Business Law
Chapter 2
OFFER
AND
ACCEPTANCE
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The Proposal or
or Offer
Offer
Sec.
Sec. 2
2 (a)
(a) define
define an
an offer
offer in
in these
these words:
words:
When one person signifies
signifies to
to another
another
his willingness
willingness to
to do
do or
or to
to abstain
abstain from
from doing anything,
with aa view
view to obtaining
obtaining the
the assent
assent (acceptance)
(acceptance) of
of that
that
other to such act or abstinence, he is said to
to make a
proposal
proposal
e.g. R tells
tells S : I am ready to
to sell
sell my
my machine
machine for
Rs.9000,are you ready
ready to
to buy.
buy.
This is clear offer
offer from R to S.
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The Acceptance
Sec. 2 (b) When a person to whom the proposal is made ,
signifies his assent thereto, the proposal is said to be
acceptance.
A proposal , when accepted become a promise.
Requirements for Valid Acceptance
1.By a proper person-The proper person to accept the offer is the one to
whom it is targeted.
-Offeror cannot be forced to be bound in a contract
with a person with whom he did not want to be involved.
2..Within proper time
Time specified by Offeror.
e.g. Advertisement of IPO
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4.Must be Communicated
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2.Communication of Acceptance
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1.
2.
3.
4.
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Consideration
-Something in Return
Sec. 2 (d) defines consideration as follow : When at the
desire of the promisor, the promisee or any other person
has done or abstained from doing, or does or abstains from
doing, or promises to do or to abstain from doing,
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Capacity to Contract
Capacity means Competency of the parties to enter into a valid contract.
Sec.11 declares the following persons to be incompetent to contact:
i. Minor
ii. Persons of Unsounded Mind
iii. Persons disqualified from any other law.
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Minor
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34
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37
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Continued
Contracts by person of unsound mind
Contracts by lunatics
Contracts by drunkards
Free Consent
According to Sec. 13 Two or more person are said to consent when
they agree upon the same things in the same sense.
This mean that there should be perfect identity of mind
(consensus ad idem) regarding the subject-matter of contract.
According to Sec. 14 consent is said to be free when it is not caused
by any of the following :
1. Coercion
2. Undue Influence
3. Fraud
4. Misrepresentation
5. Mistake
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Undue Influence
Undue influence is the improper use of any power
possessed over the mind of the contracting party.
According to Sec. 16 a contract is said to be affected by
undue influence when:
-(a) the relation subsisting between the parties are such
that one of the parties is in a position to dominate the
will of the other, and
(b) Use that position to obtain an unfair advantages over
other.
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Burden of Proof
The person who claim undue influence has to prove
that it was the cause of contract. He has to prove
that pre-existing relationship, the position of
domination, and the misuse of the position.
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FRAUD
Fraud means method of misleading a person deliberately
to cause in him a wrong understanding of so as to
obtaining thats persons consent for a contact.
E.g. M falsely tells R that the car that he was offering to
sell was once owned by Sachin Tendulkar. This is a fraud
against R committed to obtain his consent to purchase
the car.
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MISREPRESENTATION
Misrepresentation is a false representation made
innocently without any intention of deceiving the other
party. It may include two things:
(a) Wrong statement of a material facts not known to be
false
(b) Non-disclosure of the facts where there is a large
duty to disclose without any intention to deceive.
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Mistake
A mistake means an error in understanding the
fact relevant for formation of a contract.
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Case law
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Void Agreement
1. Agreement made by incompetent parties (Sec. 11)
Everybody is able to make contract except
Minor,
Person of Unsounded mind,
Person who are disqualified by any other law.
2. Agree. the consideration or object of which is unlawful
in part. (Sec. 24)
I will kill you Mr. if you will give mw 100 bottle wine.
3. Agree. Made without consideration. (Sec. 25)
4. Agree. in restraint of marriage. (Sec.26)
Freedom of choice in marriage has been guaranteed to
every person who is major in age.
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. Illustrations
(a) A agrees to sell his house to B for 10,000 rupees. Here
B's promise to pay the sum of 10,000 rupees is the
consideration for A's promise to sell the house, and A's
promise to sell the house is the consideration for B's
promise to pay the 10,000 rupees.
(b) A promises to pay B 1,000 rupees at the end of six
months, if C, who owes that sum to B, fails to pay it. B
promises to grant time to C accordingly. Here the
promise-of each party is the consideration for the
promise of the other party and they are lawful
considerations.
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Agreements by way of wager void.A wager agreement between two parties to the
effect that if a given uncertain event happens,
one party shall pay a certain sum to the other
and on the contrary event happening. For eg. If
the event turns out one way, one party shall lose
and the other shall gain.
Agreements by way of wager are void ; and no suit
shall be brought for recovering anything alleged
to be won on any wager, or entrusted to any
person to abide the result of any game or other
uncertain event on which any wager is made.
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CONTINGENT CONTRACTS
"Contingent contract" defined.-A "
contingent contract " is a contract to do or
not to do something, if some event,
collateral to such contract, does or does
not happen. Illustration A contracts to pay
B Rs. 10,000 if B's house is burnt. This is
a contingent contract.
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Enforcement of contracts
contingent on an event happening
Expiry of time
Illustrations
(a) A promises to pay B a sum of money if a
certain ship returns within a year. The contract
may be enforced if the ship returns within the
year, 'and becomes void if the ship is burnt
within the year.
(b) A promises to pay B a sum of money if a
certain ship does not return within a year. The
contract may be enforced if the ship does not
return within the year, or is burnt within the year.
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Agreement contingent on
impossible events void.-
Cases
In carew Co. Ltd v North Bengal, where two sugar
manufactures had entered into an agreement allocating
zones to procure sugar for meeting the needs of their
respective factories and each undertook not to draw any
cane from the zones alloted to the other factory, it was
held that the agreement was in restraint of trade and
therefore void.
Similarly where four ginning factories entered into an
agreement fixing uniform rate for ginning cotton and
pooling their earnings to be divided between them in
certain proportions, it was held that such an agreement
was valid and enforceable.
A combination which tends to create monopoly and
which is against the public interest is void.
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Quasi Contract
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(Sec. 68 to 72)
1. Supply of necessaries
2. Payment by an interested person
3. Obligation to pay for non-gratuitous acts
e.g. Mr. X , a trader, leaves goods at Ys house by
mistake. Y treats the goods as his own. He is bound to
pay for them to X.
4. Responsibility of Finder of Goods
Mr. X picks up a diamond on the floor of Ys shop. He
hands it over to Y to keep it till true owner is found out.
No one appears to claim it for quite some weeks inspite
of the wide advertisement in the newspapers. X claims
the diamond from Y who refuse to return. Y is bound to
return the diamond to X who is entitled to retain the
diamond against the whole world except true owner.
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Quantum Meruit
Quantum Meruit means as much as earned.
When a person has done some work under a contact, and
some event happens which makes the further
performance of the contact impossible, then the party
who has performed the work can claim remuneration for
the work he has already done.
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Kinds of Contracts
(Sec. 68 to 72)
Classification of Contract
Enforceability
Express Contr.
Valid
Extent of
Execution
Mode of
Creation
Illegal
Implied Cont.
Void
Unenforceable
Executed
Executory
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Thank You
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