The main object of Contract Act is to introduce clarity in business transactions.

The law of contracts differs from other branches of law. It determines the circumstances in which promises made by parties to a contract shall be legally binding on them.

When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a PROPOSAL or OFFER A proposal, when accepted, becomes a PROMISE of the offerer When a person to whom the proposal is made, signifies his assent thereto, the PROPOSAL is said to be ACCEPTED The person making the proposal is called the "PROMISOR", and the person accepting the proposal is called "PROMISEE

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, something, such act or abstinence or promise is called a CONSIDERATION for the promise !very promise and every set of promises, forming the consideration for each other, is an AGREEMENT; "romises which form the consideration or part of the consideration for each other are called RECIPROCAL PROMISES

An agreement enforceable by law is a CONTRACT Therefore CONTRACT # Agreement $ !nforceability by %aw. AGREEMENT # &ffer $ Acceptance $ !nforceability by %aw

'ection ()h* defines+ An agreement enforceable by law is a contract.

Therefore there must be + An agreement The agreement should be enforceable by law.

, ,

All agreements are not contracts. Only those agreements enforceable by law are contracts.

!very promise and every set of promises, forming the consideration for each other, is an AGREEMENT.

-inds of Agreements

Valid agreements

Invalid agreements

The one which is enforceable by law.

!g+ A contract which is done in par with a legal agreement. 'ale deed.

Invalid agreements

.oid

.oidable

/nenforceable

Illegal

.alidity

0ode of formation

"erformance

VOIDABLE CONTRACT: An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidab ! "o#$ra"$. VOID AGREEMENT: An agreement not enforceable by law is said to be void. A void agreement does not create any legal right or obligation. 'uch agreement is void-ab-initio from the beginning itself. A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.1 In this case when the contract was entered into, may be valid and binding on the parties as per law, but subse2uently it has become void. !.g., in the case of import contract, the agreement is enforceable, but if subse2uently war brakes out then the agreement becomes void contract.

ILLEGAL AGREEMENTS: an illegal agreement is one, which transgresses )against* some basic rule of "ublic "olicy or is of criminal in nature or is immoral. ALL ILLEGAL AGREEMENT IS VOID, BUT ALL VOID AGREEMENTS ARE NOT ILLEGAL. An illegal agreement is not only void between the immediate parties but has its further effect that even the collateral transactions to it become tinted with illegality. A collateral transaction is one, which is subsidiary, incidental or au3iliary to the principal contract. %NENFORCEABLE CONTRACT: An unenforceable contract is one which cannot be enforced in a court of law because of some technical defect such as absence of consideration or absence of contract in writing. The parties to the contract may fulfill their obligations but in the event of breach of contract the other party cannot enforce it.

E&'r!(( "o#$ra"$(: If the terms of the contract are e3pressly agreed upon )whether by words spoken or written* at the time of formation of contract. I)' i!d "o#$ra"$(: in this case the contract comes into e3istence by the acts or conducts of the parties 4!.g., 5etting into a "ublic bus.

*+a(i "o#$ra"$: strictly speaking 2uasi contracts are not contracts. A contract is one, which is entering into with the consent of the parties to the contract. A quasi contract is one, which is created by law. It is based on the principle that 6a person shall not be allowed to enrich himself unjustly at the e3pense of another.1
E.g., Mr. A contracts to pay B Rs.20000 if Bs ho se is ! rnt. "his is a contingent contract.

Co#$i#,!#$ Co#$ra"$: a type of contract4 to do or not to do something, if some event, collateral to such contract does not happen

E&!"+$!d "o#$ra"$+ An e3ecuted contract is one in which both the parties have performed their respective obligation. 7 E&!"+$or- "o#$ra"$+ An e3ecutory contract is one where one or both the parties to the contract have still to perform their obligations in future. Thus, a contract which is partially performed or wholly unperformed is termed as e3ecutory contract.

%#i a$!ra "o#$ra"$+ A unilateral contract is one in which only one party has to perform his obligation at the time of the formation of the contract, the other party having fulfilled his obligation at the time o the contract or before the contract comes into e3istence. Bi a$!ra "o#$ra"$+ A bilateral contract is one in which the obligation on both the parties to the contract is outstanding at the time of the formation of the contract. 8ilateral contracts are also known as contracts with e3ecutory consideration

All agreements are contracts if they are made with+ &ffer and Acceptance Intention to create a legal relationship %awful Consideration Capacity of the "arties 9ree Consent %awful &bject Certainty and "ossibility of "erformance %egal formalities If any of the above is missing, the contract becomes void

E.g., Mr. A has # cars. $e as%ed Mr. B &are yo ready to p rchase my car for Rs. 2 la%hs.

There must be minimum two parties to an agreement.

I.e. one party making the offer )also called as offerer:proposer:promisor* and the other accepting it )also called as offeree:proposee:promisee:acceptor* The terms of offer must be definite Acceptance must be unconditional.

A person is said to have made a proposal:offer, when he signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence

E.g., 'hen A says to B, &'ill yo p rchase my ho se at (hennai for Rs. # la%hs. .

E&'r!(( o..!r 4 When offer is made by e3press spoken or written words

E.g., 'hen a transport company r ns a ! s on a partic lar ro te, there is an implied offer !y the transport co. to carry passengers for a certain fare. "he acceptance of the offer is complete as soon as a passenger !oards the ! s.

I)' i!d o..!r / An offer may also be implied from the conduct of the parties or the circumstances of the case.

E.g., If Mr. A as%s to B, for his !l e car for Rs. 2,00,000)*, Mr. ( cannot accept the offer.

'pecific offer 4 When an offer is made to a definite person, it is said to be 'pecific &ffer. It can be accepted by the person to whom it is made. 5eneral offer ; When an offer is made to the world at large .

T0! o..!r )+($ b! ,iv!# 1i$0 a# i#$!#$io# $o "r!a$! !,a r! a$io#(0i' / A social invitation even if it is accepted, does not create a legal relationship because it is not intended so. T0! $!r)( o. $0! o..!r )+($ b! d!.i#i$!+ the terms of the offer must be definite and certain and must not be ambiguous or vague.

O..!r )+($ b! "o))+#i"a$!d+ an offer to be complete must be communicated to the person to whom the offer is made. 0ere by acting to the terms of the offer without knowledge, the offer cannot be treated as accepted. An acceptance of offer in ignorance of offer is no acceptance and does not confer any right on the acceptor.

O..!r )a- b! "o#di$io#a + When the offer is subject to conditions, they must be clearly communicated to the offeree. If the person accepts the offer without the knowledge of the conditions the offeror can<t claim the fulfillment of conditions. 8ut the conditions are clearly e3pressed, then offeree can plead ignorance

O..!r )+($ #o$ "o#$ai# a $!r) $0a$ #o#/ "o)' ia#"! o. 10i"0 )a- b! a((+)!d $o a)o+#$ $o a""!'$a#"!+ the person making the offer cannot say that if acceptance is not communicated by a certain time, the offer would be considered as accepted. ($a$!)!#$ o. 'ri"! i( #o$ a# o..!r + a mere declaration of intention or a mere statement of price is not construed as an offer to sell

When a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a 'ro)i(! Acceptance may be i)' i!d or !&'r!((!d. In e3press acceptance4 it could be either e3pressed in written or spoken , while that given by conduct is termed as implied acceptance.

%#"o#di$io#a / An acceptance in order to be binding must be absolute:complete and unconditional. The acceptance must be to all terms of offer. Co))+#i"a$!d $o $0! o..!ror M+($ b! ,iv!# i# $0! 'r!("rib!d )od! / if the acceptance is not according to mode prescribed, or some usual or reasonable, there is no contract.

Giv!# i# a r!a(o#ab ! $i)! / if any time limit is specified, the acceptance must be given within that time. If no time limit is specified by the offeror, then it must be given

M+($ b! ,iv!# b- $0! 'ar$i!(, $o 10o) $0! o..!r i( )ad! / When an offer is made to a particular person, it can be accepted by him alone. If it is accepted by another person, there is no valid acceptance M+($ b! ,iv!# b!.or! $0! o..!r a'(!( or 1i$0dra1#

I$ "a##o$ 'r!"!d! a# o..!r O#"! $0! o..!r i( r!2!"$!d i$ "a##o$ b! a""!'$!d b- $0! o..!r!!, +# !(( $0! o..!ror r!#!1( $0! o..!r I$ "a##o$ b! i)' i!d .or $0! (i !#"! / the acceptance of an offer cannot be implied from the silence of the offeree, unless the offeree has, by his previous conduct inducted that his silence means the acceptance

I. B- "o))+#i"a$i#, $0! #o$i"! o. r!vo"a$io# 4 &fferor can give notice of revocation to offeree but before the acceptance is complete as against him. e.g., At an auction sale, A makes the highest bid of 8<s goods. =e withdraws the bid before the fall of the hammer. The offer has been revoked before its acceptance. II. La'(! o. Ti)! / If the time is fi3ed in the offer then offer revokes at a fi3ed time is over, otherwise after the reasonable time. e.g., A seller on Thursday offered wool to a purchaser and gave him > days time to accept. The purchaser accepted the offer on 0onday, by that time A had sold the wool. =eld, the offer had lapsed.

III. B- #o#/.+ .i )!#$ b- $0! o..!r!! o. a "o#di$io#

'r!"!d!#$ $o a""!'$a#"! !.g., ' a seller agrees to sell certain goods subject to the condition that 8, the buyer, pays the agreed price before a certain date. ' had sold the wool. If before the date buyer did not pay then the offer is revoked.

IV. B- d!a$0 or i#(a#i$- o. $0! o..!ror provided the offeree comes to know it before acceptance. 8ut If he accepts an offer in ignorance of the death or insanity of the offeror, the acceptance is valid.

V. B- "o+#$!r o..!r / When offer is accepted with some modifications in the terms of the offer, then it amounts to counter offer. 8y putting counter offer the original offer comes to an end. !.g. A asks 8, Are you ready to purchase my flat for ?@ lakhs. 8 asks A, Are you ready to sell it to As. B lakhs. 8<s 2uestion to A is a counter offer. !.g. An offeree agreed to accept half the 2uantity of goods offered by the offeror on the terms and conditions as would have applied to the full contract. =eld, there was no contract as there was a counter offer to the offer

VI. I. a# o..!r i( #o$ a""!'$!d a""ordi#, $o $0! 'r!("rib!d or +(+a )od! provided the offeror gives notice to the offeree within a reasonable time that the acceptance is not according to the prescribed or usual mode. If the offeror keeps 2uiet, he is deemed to have accepted the acceptance. VII. I. $0! a1 i( "0a#,!d. An offer comes to an end if the law is changed so as to make the contract contemplated by the offer illegal or incapable of performance.

VIII. D!($r+"$io# o. (+b2!"$ )a$$!r+ 4 CA< offers C8< his cow for As. DE@@:4 In the mean time, the cow dies due to snake bite. The offer is lapsed. R!2!"$io# o. o..!r+ 4 An offeree may reject the offer. &nce he does that he cannot subse2uently accept it. Aejection of the offer may be e3press or implied. E&'r!(( R!2!"$io#: The offeree may reject the offer e3pressly, i.e., by words written or spoken. This is effective only when notice of rejection reaches the offeror. I)' i!d R!2!"$io#+ Aejection of the offer is implied by law4 where the offeree makes a counter4offer or where the offeree gives a conditional acceptance

Aevocation means taking back or Withdrawal or cancellation.

The communication of a r!vo"a$io# is complete /as against the person who makes it )i.e. for the revoking party*, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it )i.e. when the letter of revocation is posted.*

E.g., A Proposes, by a letter, to sell a house to B at a certain price. The letter is posted 15th May. It reaches B on 20th May. A re o!es his o""er by a telegra# on 1$th May. The telegra# reaches B on 21st May. The re ocation is co#plete as against A %hen the telegra# is dispatched, i.e., on 1$th May. It is co#plete as against B %hen he recei es it, i.e., on 21st May.

)9or the opposite party* as against the person to whom it is made, when it comes to his knowledge )when the letter reaches him*

E&' Mr. A proposes by a letter sent by post to sell his house to Mr. B. the letter is posted on the 1st o" the #onth. Mr. B accepts the proposal by a letter sent by post on the (th. The letter reaches Mr. A on the )th.

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

Mr. A may revo%e his offer at any time !efore Mr. B posts his letter of acceptance, i.e., +th ! t not after,ards Mr. B may revo%e his acceptance at any time !efore the letter of acceptance reaches Mr. A, i.e., -th, ! t not after,ards

An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

Acceptance is complete as against the offeror as soon as the letter of acceptance is posted. The contract is complete even if the letter of acceptance goes astray or is lost through an accident in the post. 8ut in order to bind the offeror, it is important that the letter of acceptance is correctly addressed, ade2uately stamped and posted, &therwise the acceptance is not complete

A proposal is revoked ; )?* by the communication of notice of revocation by the "roposer to the other party )(* by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance

)>* by the failure of the acceptor to fulfill a condition precedent to acceptance or )D* by the death or insanity of the "roposer, if the fact of the death or insanity comes to the knowledge of the acceptor before acceptance.

Intention to create legal relationship

When two parties enter into an agreement their intention must be to create a legal relationship between them.

In 8alfour v 8alfour,a husband agreed to pay F(@ to his wife every month while he was abroad. &n failure of pay the wife sued him for the recovery of amount. It was held that it was a domestic agreement which do not intend to create legal relations

If there is no such intention to create legal relationship , there can be no contract between the parties.

%awful Consideration
E.g., A agrees to sell his car to B for Rs../000)*, for As promise the consideration is Rs../000)* and for Bs promise the consideration is the car.

G G

When a party to an agreement promises to do something, he must get something in return. This 6something in return1 is defined as consideration.

Mov! a$ $0! d!(ir! or r!3+!($ o. 'ro)i(or 4 An act constituting consideration must have been done at the desire or re2uest of the promisor, if it is done at the desire of the third party or without the desire of the promisor it will not be a good consideration. I$ )a- )ov! .ro) $0! Pro)i(!! or a#- o$0!r P!r(o# ; This means that as long as there is a consideration for a promise it is immaterial who has furnished it. 8ut a stranger to the consideration will be able to sue only if he is a party to the contract

E.g., A !orro,s Rs. 20,000)* from B at a rate of .00 p.a. ! t A fails to pay the amo nt. B

is no, a!o t to file a s it and A agrees no, to pay a higher rate of interest. B agrees for not filing a s it. "his for!earance is a valid consideration.

I$ )a- "o#(i($ o. a# A"$ or Ab($i#!#"! 4)!a#( #o$ doi#, (o)!$0i#,5 Co#(id!ra$io# "a# b! 'a($, 'r!(!#$ or .+$+r!

I$ #!!d #o$ b! ad!3+a$! / Consideration as said 6something in return1 and something this something in return need not be e2ual in value to 6'omething given1. The law re2uires that the contract must be supported by consideration and not the ade2uate consideration. M+($ b! r!a 6 #o$ i +(io#ar- / There is no real consideration in the following cases+ P0-(i"a i)'o((ibi i$-+ A promises to put life into 8<s dead wife on the consideration of As.HHH. A<s promise is physically impossible to perform. L!,a i)'o((ibi i$-+ A owes As.E@@ to 8, he promises to pay As.E@ to C, the servant of 8, who inreturn promise to discharge A from the liability. This is legally impossible, because C cannot discharge A from the debt due to 8. %#"!r$ai# "o#(id!ra$io#+ A engages 8 for doing certain work and promises to pay a 6Aeasonable some1. There is no recogniIed method of ascertaining the 6Aeasonable 'ome1. The promise is unenforceable due to uncertainty.

S0o+ d #o$ b! i !,a / the consideration given for an agreement must not be unlawful. A consideration to the contract must not be against "ublic "olicy, Immoral and illegal

(12 "here ,as a promise to pay to the va%il an additional s m if the s it ,as s ccessf l. $eld, the promise ,as void for the ,ant of consideration. "he va%il ,as nder a pre*e3isting contract al o!ligation to render the !est of his services nder the original contract. 4Ramachandra (hintaman vs. 5al Ra6 7

I$ )+($ b! (o)!$0i#, 10i"0 $0! 'ro)i(or i( #o$ a r!adbo+#d $o do: a promise to do what one is already bound to do, either by general law or under an e3isting contract, is not a good consideration for the new promise, since it adds nothing to the pre4e3isting legal or contractual obligation.

Eg2 8n a !irthday party of A, his father Mr. B promises to give him Rs. .0000)*. Mr. B p ts his promise in ,riting and gets it registered it. It is a valid consideration.

Where an a,r!!)!#$ is e3pressed i# 1ri$i#, and r!,i($!r!d +#d!r $0! a1 for the time being in force for the registration of the documents and is made on a""o+#$ o. #a$+ra a1 a#d a..!"$io# between parties standing to the near relation to each other, it is enforceable even if there is no consideration

Pro)i(! $o 'a- a $i)!/bar!d d!b$: A promise to pay a time4bared debt by the debtor is enforceable provided it is made in writing and signed by the person to be charged therewith or by his agent. The debt must be such 6of which the creditor might have enforced payment but for the law for the limitation of suits1 Completed gifts Compensation for the past voluntary services Charitable subscription

!.g. " finds '<s purse and gives it to him. ' promises to give " As. ?@@:4 This is a contract i.e., A promise, to compensate, wholly or in part, a person, who has already voluntarily done something for the promisor, is enforceable, even though without consideration

Compensation for the past voluntary services 4 is binding.

0eaning+ The general rule is that only the parties to a contract can sue and be sued upon the contract. In other words, if a person is not a party to the contract )i.e., a stranger to contract*, he cannot sue. It implies the mutuality of will and legal bonding between the parties. It refers to the relationship between the parties who have entered into a contract. 'tranger to Contract .. 'tranger to Consideration
A ,ho is inde!ted to B, sells his property to (. ( promises to pay off the de!t to B. 'hen ( fails to pay9 B has no right to s e (, !eca se he is a stranger to contract.

!very person is competent to contract who is of+ the age of majority according to the law to which he is subject, sound mind, and is not dis2ualified from contracting by any law to which he is subject. 'ection ?? declares the following persons to be incompetent to contract. 0inors "ersons of unsound mind "ersons dis2ualified by any law for the time being in force. Idiot %unatic with unsound mind Alien enemy Convicts

According to 'ection > of the Indian 0ajorities Act, ?BJE, a minor is a person who has not completed eighteen years of age. In the following two cases, he attains majority after twenty one years of age+

Where a guardian of a minor<s person or property has been appointed under the guardian and wards Act, ?BH@, or Where the superintendence of a minor<s property is assumed to be court of wards.

The rules governing minor<s agreements are based on two fundamental rules+

The first rule is that the law protects minors< against their own ine3perience and against the possible improper designs of those more e3perienced. The second rule is that, in pursuing the above object, the law should not cause unnecessary hardship to person who deals with minors.

L!,a r+ !( o. Mi#or(:

A minor mortgaged his ho se in favo r of a money lender to sec re a loan of Rs.20, 000)* : !se; ently the minor s ed for setting a side the mortgage, stating that he ,as nderage ,hen he e3ec ted the mortgage. $eld, the mortgage ,as void and, therefore, it ,as cancelled. < rther the money lender re; ested for the repayment of the amo nt advanced to the minor as part of the consideration for the mortgage ,as also not accepted 4Mohiri Bi!i vs. =haramodas >hose7

An agreement with minor is void4 ab4initio

(ase la,2 M, Aged .?, agreed to p rchase a second hand scooter for Rs./000)* from @. he paid Rs.200)* as advance and agreed to pay the !alance the ne3t day and collect the scooter. 'hen he came ,ith the !alance money ne3t day, @ told him that he has changed his mind and offered to ret rn the advance. @ cannot avoid the contract, tho gh M may, if he li%es. 4:harafat Ali v)s @oor Mohd7

7! "a# b! a Pro)i(!! or a B!#!.i"iar-: incapacity of minor to enter into a contract means incapacity to bind him4self by a contract. There is nothing that debars him from being a beneficiary. 'uch contract may be enforced at the option of the minor and not the other party.

Case

law+ 0, A minor, borrowed As.E@@@:4 from % and e3ecuted a "romissory note in favour of %. after attaining the majority, he e3ecuted another "romissory note in settlement of the first note. The second "romissory note is void for the want of consideration. )Indran Aama 'wamy v:s Anthiappa Chettiar*

7! "a# a 1a-( ' !ad )i#ori$-: even if he has, by misrepresenting his age, induced the other party to contract with him, he cannot be sued either in contract or in tort for fraud because if the injured party were allowed to sue for fraud, it would be giving him an indirect means of enforcing the void agreement.

E32 Mr. M, a minor, o!tains a loan !y mortgaging his property. $e is not lia!le to ref nd the loan not only that, even his mortgaged property cannot !e made lia!le to pay the de!t.

I. 0! 0a( r!"!iv!d a#- b!#!.i$ +#d!r a void a,r!!)!#$, 0! "a##o$ b! a(8!d $o "o)'!#(a$! or 'a.or i$+ section KE which provides for restitution in case of agreements discovered to be void does not apply to the minor

T0!r! "a# b! #o ('!"i.i" '!r.or)a#"! o. $0! "o#$ra"$ 1i$0 )i#or, (i#"! a,r!!)!#$ 1i$0 )i#or i( void/ab/i#i$o: Can<t file a suit for specific non performance. B+$ i. a "o#$ra"$ i( entered into on his behalf by his "arents : guardian then the same can be enforced by or against the minor provided the contract is + )a* within the scope of the authority of the "arent : guardian, and )b* for the benefit of the minor.

7! "a##o$ !#$!r i#$o a "o#$ra"$ o. Par$#!r(0i': a minor can be admitted as a beneficiary of "rofits of a "artnership firm already in e3istence, with the consent of all the e3isting "artners. 8ut he cannot be admitted as a "artner 7! "a# b! a# a,!#$: an agent is merely connecting link between "rincipal and third "arty. The movement the "rincipal and third party comes into contract with each other, the agent drops out with any personal liability, hence a minor can act as agent.

7i( Par!#$( 9 ,+ardia# ar! 9 i( #o$ iab ! .or $0! "o#$ra"$( o. $0! )i#or: the e3emption to this rule is that where the minor act as an agent of his "arent : guardian, the "arent : guardian shall be liable for his acts. 7! "a##o$ b! ad2+d,!d a( a# i#(o v!#$. 7! "a##o$ b! a (0ar!0o d!r i# a Co)'a#-. 7! "a# b! )!)b!r i# a Trad! +#io#: A "erson who attained the age of ?D years can be admitted as a member.

(ase

la,2 >, a minor, entered into a contract ,ith R, a noted !illiards player, to pay him certain s m of money to learn the game and play matches ,ith him d ring his ,orld to r. R spent time and money in ma%ing arrangements for !illiards matches. $eld, > ,as lia!le to pay as the agreement ,as one for necessaries as it ,as in effect &for teaching, instr ctions and employment and ,as reasona!le and for the !enefit of the infant.A 4Ro!arts v)s >ray7

Mi#or:( iabi i$- .or #!"!((ari!(: a minor is liable to pay out of his property for 6necessaries1 supplied to him or to anyone whom he is legally bound to support )'ection KB*. The claim arises not out of contract but out of what are called Luasi4Contracts. Again it is only the property of the minor, which is liable for meeting the liability arising out of such contracts. =e is not personally liable.

A person is said to be of sound mind for the propose of making a contract, if, at the time when he makes it, he is capable of understanding the terms of the contract and To form a rational judgment as to its effect upon his interest. Therefore, if both of the above is not satisfied, then is a person suffering of unsound mind.!g+ Idiots %unatics Mrunkards A person, who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind

Alien !nemy. Insolvent. 9oreign 'overeigns, their diplomatic staff and accredited representatives of the foreign states. Corporations )beyond 0&A and A&A*. Convicts

According to section ?D, an agreement can be treated as a valid contract when the consent of the parties are free and not under any undue influence, fear or pressure etc. The consent of the parties must be genuine and free consent.

A consent is said to be free when it is not ca sed b! "i# coercion, "ii# nd e inf$ ence "iii# fra d, .itiating elements in Contract "i%# &isre'resentation, or "%# &ista(e)
If the contract made by any of the above four reason, at the option of the aggrieved party it could be treated as a void contract. If the agreement induced by mutual mistake the agreement would stand void or canceled

E.g.

Coercion

CoercionN is the committing, or threatening to commit, any act:crime or the unlawful detaining, or threatening to detain, any property or any act forbidden by the Indian "enal Code ?BK@ with the intention of causing any person to enter into an agreement. Threat to commit 'uicide amount to Coercion

A threatens B to shoot him if he does not release him from de!t ,hich A o,es to B. "his is coercion.

When a special kind of relationship e3ists between the parties such that one party is in a position to e3ercise undue influence over the other. And such party uses his position to dominate the will of the other party to obtain an unfair advantage over the other party E((!#$ia (: There must be two persons. The relationship should satisfy between them. &ne should dominate the other. There must be unfair advantage. It is a moral character

'ome of the e3amples where undue influence e3ists between the following relations+ 'uperior and subordinate "rincipal and agent Case %aws+ A 'piritual guru induced his devotee Moctor and "atent to gift him the whole of his "romoter and Company property in turn of a promise of salvation of the 'olicitor and Client devotee. =eld, the consent of the devotee was given 9ather and 'on under the undue influence. )0annu 'ingh v:s /madat Teacher and 'tudent "anday* 'piritual guru and devotee

!ssentials+ There must be a representation There must be two persons There must be an active concealment of the fact The person making the representation does not believe it to be true There must be an intention of the proposer or the promiser to deceive the other person The other person must have relied upon the representation and must have been deceived and suffered loss The representation must have been made before the Commencement of the contract The representation must relate to a material fact which e3ists now or e3isted in the past

!ssentials+

It must be representation of material fact It must be made before the conclusion of the contract It must be wrong but the person making it believes it to be true It must have been made without any intention of deceiving the other "erson It need not be made directly made to the "laintiff

0istake may be defined as an erroneous belief about something.

It may be of two kinds mistake of law

0istake of own country 0istake of foreign country

mistake of fact
A bilateral mistake /nilateral mistake

Mi($a8! o. a1 o. $0! "o+#$r- is no e3cuse, is a well4settled rule of law. A "arty to the contract cannot be allowed to ask for relief on the ground that the act was done in ignorance of law.

!.g.

A O 8 purchases and sells a plot of land of ?HE s2.mts. in Mublin, believing that a house can be constructed over it. Actually in Mublin house cannot be constructed on a plot less than (@@ s2.mts. The contract can be avoided.

Mi($a8! o. a1 o. a .or!i,# "o+#$r-+ such mistake is treated as mistake of fact, and such agreement is treated as void

E.g. A person ,as ind ced to sign a gift deed 4,ill7, on the presentation that it ,as a po,er attorney. E.g. B goes to a shop and introd ces himself as C and p rchases some goods on credit. "he contract is void.

%#i a$!ra Mi($a8! / /nilateral means only one party to a contract is under a mistake of fact. A contract can be avoided on the ground of unilateral mistake, if it can be shown that mistake was caused by 9raud or misrepresentation.
T-'!(:

A unilateral mistake may be4 Mi($a8! a( $o $0! #a$+r! o. $ra#(a"$io# Mi($a8! a( $o id!#$i$- o. 'ar$-

a$!ra Mi($a8! / Where both the parties to an agreement are under a mistake as to a matter of fact, the agreement is void. T-'!( 0istake as to e3istence of subject4matter Identity of subject4matter Title of subject4matter Luality of subject4matter Luantity of subject4matter "rice of subject4matter !.g. A agrees to buy a horse from 8 at certain price. The horse was dead at the time of bargain and neither party was aware about the fact. =eld, the agreement is void.

Bi

T0! ob2!"$ o. $0! a,r!!)!#$ )+($ #o$ b! i !,a or +# a1.+ I$ i( .orbidd!# b- a1 4 An act is forbidden by law when it is punishable under the criminal law or is prohibited by special legislation or regulations made by the competent authority. i( o. (+"0 #a$+r! $0a$, i. '!r)i$$!d i$ 1o+ d d!.!a$ $0! 'rovi(io#( o. a#- a1

Q i(

.ra+d+ !#$ 4 an agreement if any made for any fraudulent purpose is void. Thus, an agreement with an intention of fraud of creditors with a view to defeat their right is void. Q of involves or implies, injury to the person or property of another 4 injury means wrong, harm or damage. "erson means ones body, property includes both movable and immovable.

$0! Co+r$ r!,ard( i$ a( i))ora 4 an agreement, the consideration or object of which is immoral, e.g., agreement between husband and wife for future separation, is unlawful 4S+)i$ra D!vi v9( S+ !80a ;+#d+5 o''o(!d $o '+b i" 'o i"- < An agreement which is injurious to the general public or is against the interest of the society

R Agreement not declared void or illegal+ Agreements which have been e3pressly declared void or illegal by law are not enforceable at law hence does not constitute a valid contract.

The terms of agreement must be certain and not vague. If it is not possible to ascertain the meaning of the agreement, it is not enforceable at law. Also, agreements to do impossible acts cannot be enforced

A contract may be oral or in writing. If, however, the law re2uires for a particular contract, it should comply with all the legal formalities as to writing, registration and attestation.

The contract act does not insist that the agreement must be in writing, it could be oral. 8ut, in some cases the law strictly insist that the agreement must be in writing like agreement to sell immovable property must be in writing and should be registered under the Transfer of "roperty Act, ?BB(. These agreement are valid only when they fulfill the formalities like writing, registration, signing by the both the parties are completed. If these legal formalities are not completed, it cannot be treated as a valid contract.

It means fulfilling of their respective legal obligations created under the contract by both the promisor and promisee. "erformance by all the parties of the respective obligations is the normal and natural mode of discharging or terminating a contract.

I +($ra$io#( )a* A promises to deliver goods to 8 on a certain day on payment of As. ?,@@@. A dies before that day. A<s representatives are bound to deliver the goods to 8, and 8 is bound to pay As. ?,@@@ to A<s representatives. )b* A promises to paint a picture for 8 by a certain day, at a certain price. A dies before the day. The contract cannot be enforced either by A<s representative or by 8 Ssection >JT. The performance can be Cactual performance< or Cattempted performance<, i.e. Coffer to perform<.

'ection >B specifies that where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, the promisor is not responsible for non4performance, nor does he thereby lose his rights under the contract.

A person cannot ac2uire rights under a contract to which he is not a party. ) T)G Ven(atara&an %s) State of Madras*

It is only the promisee who can demand performance of the promise under a contract .

8y the promisor himself 8y the promisor or his agent 8y the legal representatives "erformance by a third person

'ection D@ specifies+ That if it appears from the nature of the case that it was the intention of the parties to any contract that any promise contained in it should be performed by the promisor himself, such promise must be performed by the promisor. In other cases, the promisor or his representatives may employ a competent person to perform it.

&bligations of "arties to Contracts Actual "erformance+ If the promisor makes an offer of performance to the promisee and the offer to perform is accepted by the promisee.

Attempted "erformance+ If the promisor makes an offer of performance to the promisee but the offer to perform is not accepted by the promisee )also called offer to perform or tender*.

Uointly and severally liable unless otherwise provided Claim from other joint promisors, if he is compelled to perform the whole promise or makes a default in performance of his promise Where one of the joint promisors is released, other joint promisors shall continue to be liable.

Mischarge 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.

"erformance

%apse of time

Agreement

Mischarge of contract

&peration of law

Impossibility

8reach

)a* B- A"$+a P!r.or)a#"!+ A contract is said to be discharged by actual per4formance when the parties to the contract perform their promises in accordance with the terms of the contract. )b5 B- A$$!)'$!d P!r.or)a#"! or T!#d!r+ 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.

'ince 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* Vovation b* Aescission c* Alteration d* Aemission

Nova$io# =S!"$io# >?@ Vovation means the substitution of a new contract for the original contract. 'uch 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.

E&a)' ! i* A owes money to 8 under a contract. It is agreed between A, 8and C that 8 shall henceforth accept C as his debtor, instead of A. The old debt of A to 8 no longer e3ists and a new debt from C to 8 has been contracted.

R!("i((io# =S!"$io# >?@

Aescission means cancellation of the contract by any party or all the parties to a contract. !3ample W promises X to sell and deliver ?@@ 8ales of cotton on ?st &ct. at his godown and X promises to pay for goods on ?st Vov. W does not supply the goods. X may rescind the contract.

Alteration S'ection K(T 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. =owever, parties to the new contract must not change. !3ample W promises to sell and deliver ?@@ bales of cotton on ?st &ct. and X promises to pay for goods on ?st Vov. Afterwards, W and X mutually decide that the goods shall be delivered in five e2ual installments at Y<s godown. =ere, original contract has been discharged and a new contract has come into effect.

Aemission S'ection K>T Aemission means acceptance by the promisee of a< lesser fulfillment of the promise made. According to 'ection K>, 6!very promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may e3tend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.1 !3ample i* A promises to paint a picture for 8. 8 afterwards forbids him to do so. A is no longer bound to perform the promise.

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

D 8y

Meath of the "romisor D 8y Insolvency D 8y /nauthorised 0aterial Alteration D 8y the Identity of "romisor and "romisee

!3ample+ W draws a bill receivable on X who accepts the same. W endorses the bill in favour of Y who in turn endorses in favour of X. =ere, X is both promisor and promisee and hence the other parties are discharged.

The effects of impossibility of the performance of a contract may be discussed under the following two heads+ )a* !ffects of Initial Impossibility )b* !ffects of 'upervening Impossibility

E..!"$( o. I#i$ia I)'o((ibi i$- =S!"$io# A>@ Initial impossibility means the impossibility e3isting at the time of making the contract. The effects of initial impossibility are as under.

 E E E Z Z Z

Ca(!+ Where both the promisor and promisee know about the initial impossibility. E..!"$: 'uch agreement is void ab initio. !3ample W undertakes to put life into the dead wife of X. This agreement is void. Ca(!: Where both the promisor and promisee do not know about the initial impossibility E..!"$: 'uch agreement is void on the ground of mutual mistake. !3ample W agrees to sell his horse to X. /nknown to both the parties the horse was dead at the time of making the agreement. This agreement is void.

 Z Z

Case+ Where the promisor alone knows about the initial impossibility !ffect+ 'uch promisor must compensate for any loss which such promisee sustains through the nonperformance of the promise. !3ample A contracts to marry 8, being already married to C, and being forbidden by the law to which he is subject to practise polygamy. A must make compensation to 8 for the loss caused to her by the non4performance of his promise.

E..!"$( o. S+'!rv!#i#, I)'o((ibi i$- =S!"$io# A>@ 'upervening impossibility means impossibility which does not e3ist at the time of making the contract but which arises subse2uently after the formation of the contract.

Case+ Where an act becomes impossible after the contract is made. !ffect+ The contract to do such an act becomes void when the act becomes impossible. Case+ Where an act becomes unlawful by reason of some event beyond the control of promisor. !ffect+ The contract to do such an act becomes void when the act becomes unlawful.

Case+ Where the promisor alone knows about the impossibility. !ffect+ 'uch promisor must compensate the promisee for any loss which such promisee might have suffered on account of non4performance of the promise.

Case+ Where an agreement is discovered to be void or where a contract becomes void. !ffect+ Any person who has received any benefit under such agreement or contract is bound to restore it or to make compensation for it, to the person from whom he received it. S'ection KET !3ample+ W contracts to sing for X at a concert for As ?,@@@, which is paid in advance. W is too ill to sing. W must refund As ?,@@@ to X.

A contract is discharged if it is not performed or enforced within a specified period, called period of limitation. The %imitation Act, ?HK> has prescribed the different periods for different contracts. !.g+ "eriod of limitation for e3ercising right to recover a debt is > years, and to recover an immovable property is ?( years. The contractual parties cannot e3ercise their rights after the e3piry of period of limitation.

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#$i"i'a$or- Br!a"0 o. Co#$ra"$: Anticipatory breach of contract occurs when party declares his intention of not performing the contract before the performance is due. A"$+a Br!a"0 o. Co#$ra"$ +Actual breach of contract occurs in the following two ways+ )i* On D e Date of *erfor&ance+ If any party to a contract refuses or fails to perform his part of the contract at the time fi3ed for performance, it is called an actual breach of contract on due date of performance.

D rin+ the ,o rse of *erfor&ance+ If any party has performed a part of the contract and then refuses or fails to perform the remaining part of the contract, it is called an actual breach of contract during the course of performance.

Aemedies for 8reach

Remedies

Common law

Equitable remedies

Damages

Recission

Restitution

Specific Performance

Injunction

Quantum meruit

Anton Piller order

0ain purpose of damages is to enable the innocent party to receive 0&V!TAAX C&0"!V'ATI&V. Mamages are a common law remedy and awarded as of right. They are calculated on the basis of looking at what the position of the plaintiff would have been if the contract had been properly performed. They are assessed on a once and for all basis at the date of breach.

'teps in determining an award of damages

Causation Is there a causal connection between the breach and the loss suffered[ The plaintiff must show that the breach of contract by the defendant was the cause of the loss. The general test used by the courts is the same as that used in assessing damages in general ; the Cbut for< test CA'!+ A$e-ander % ,a&brid+e ,redit ,or'oration Ltd "in rec# )?HBJ* Vote the Cbut for< test is not an e3clusive test, e.g. there is the Ccommon sense< test, which was approved in+ CA'!+ ,ha''e$ % .art )?HHB*

Aemoteness The loss or injury must not be too remote, i.e. losses must be reasonably related to the contract. .ad$e! % Ba-enda$e )?BED* indicates ( types of loss are recoverable+ loss arising from the breach in the usual or normal course of things and loss arising from special or e3ceptional circumstances where it can be shown that the defendant had actual knowledge of the plaintiff<s needs CA'!+ Victoria La ndr! % New&an Ind stries S?HDH* CA'!+ ,o&&onwea$th of A stra$ia % A&ann A%iation *t! Ltd )?HH?*

Mamages

The aim of damages is to put the injured party back as close to the position they would have been in had the breach never occurred. Mamages are recoverable for provable or economic loss as well as+ e3pectation losses reliance losses CA'!+ ,o&&onwea$th of A stra$ia % A&ann A%iation *t! Ltd )?HH?* distress and disappointment CA'!+ /ar%is % Swan To rs S?HJ(T CA'!+ /ac(son % .ori0on .o$ida!s S?HJET CA'!+ Ba$tic Shi''in+ ,o Ltd % Di$$on )?HH>* physical injury CA'!+ Grant % A stra$ian 1nittin+ Mi$$s Ltd S?H>KT Mifficulty in calculation is not a ground for disallowing a claim CA'!+ .owe % Teef! )?H(J*

0itigation of damages

The plaintiff must take reasonable steps to minimise or mitigate their loss. 9ailure to do so can result in a reduction of damages.
CA'!+ *a!0 % Sa nders S?H?HT

0itigation is a 2uestion of fact and the onus of proof is on the defendant.

Mamages
Damages

Nominal
(No actual loss suffered)

rdinar! ("sual remed!)

E#emplar! (puniti$e)

%eneral

Special

The type of damages that will be awarded will be determined by the seriousness of the breach and whether the contract has specified the amount of damages to be paid in the event of breach+

nominal damages ; plaintiff<s legal rights have been infringed but they have suffered no actual loss CA'!+ ,harter % S $$i%an S?HEJT ordinary damages ; loss suffered by the plaintiff as a result of the breach and can be either general or special damages e3emplary damages ; punitive and may be awarded for non4economic loss CA'!+ /ac(son % .ori0on .o$ida!s S?HJET

%i2uidated damages Awarded where a plaintiff is able to sue for a specified sum, which must be a genuine or bona fide pre4estimate of the actual loss that will flow from the breach. /nli2uidated damages Awarded where an injured party has no fi3ed sum in mind and leaves the court to decide the amount. "enalty A threat to ensure performance and not enforceable because they are not a genuine pre4estimate of the damage that will result from the breach CA'!+ D n$o' *ne &atic T!re ,o % New Gara+e and Motor ,o Ltd S?H?ET

!2uitable Aemedies
Equitable Remedies

Recission

Restitution

Specific Performance

Injunction

Quantum meruit

&nton Piller rder

These are discretionary remedies at e2uity and are only granted where damages are not an ade2uate remedy.

Aescission A right available to an injured party. Moes not re2uire the intervention of the court. !ntitles the injured party to set the contract aside and is only available for breach of a condition. 'ubstantial restoration must be possible as the injured party is restored to their pre4contractual position.

The right to rescission is lost if the injured party+ continues with the transaction fails to act or act within a reasonable time or if an innocent third party ac2uires an interest in the
subject matter.

Aestitution

Is based on the concept of unjust enrichment and sometimes referred to as 2uasi4contract. The plaintiff must establish+ the benefit was at the plaintiff<s e3pense it would be unjust to allow the defendant to keep that benefit or enrichment and CA'!+ *a%e! 2 Matthews *t! Ltd % *a $ )?HBJ* the defendant must obtain a benefit or enrichment the defendant has no defences to rely upon.

Aestitution can be used if+ the defendant has received a sum of money from the plaintiff and there has been a total failure of consideration or a mistake of fact CA'!+ Mc,or&ac( % ,o&&onwea$th )?HBD* under a mistake of law CA'!+ Da%id Sec rities *t! Ltd % ,o&&onwea$th Ban( )?HH(* under duress or compulsion. Aestitution makes use of the doctrine of 3 ant & &er it CA'!+ *a%e! 2 Matthews *t! Ltd % *a $ )?HBJ* CA'!+ *$anche % ,o$b rn )?B>?* CA'!+ S &'ter % .ed+es S?BHBT

'pecific "erformance

A remedy compelling performance. It is only granted at the court<s discretion where the court can supervise the implementation of the contract. It is not available in contracts involving personal services because the court is unable to ade2uately supervise the task CA'!+ R!an % M t a$ Tontine 4est&inster ,ha&bers Assoc S?BH>T

Injunction

It is a restraining order which prevents a person from breaking a contract. It is a discretionary remedy and aims at enforcing negative promises. It normally cannot be used where it would achieve the same result as specific performance.

0areva Injunction "revents the defendant from removing assets from the court<s jurisdiction. CA'!+ Mare%a ,o&'ania Na%iera SA % Internationa$ B $( ,arriers SA, The Mare%a S?HJET Anton "iller &rder "revents a defendant from disposing of any evidence before trial. CA'!+ Anton *i$$er 1G % Man fact rin+ *rocesses Ltd S?HJKT 5 ant & Mer it Arises where there has been part4performance, and only where it can be implied that payment would be made.

An injured party can loose their right to an action unless they act within a certain time period. The statutes of limitations of the 'tates and Territories determine the time limits within which an injured party must take action. "revents actions remaining open indefinitely.

Agreements by incompetent parties Agreements under mutual mistake of fact material to the agreement Agreement with unlawful consideration or object ; )a* immoral O illegal agreements )b* agreements opposed to public policy Agreements unlawful in part Agreements without consideration Agreements in restraint of marriage Agreements in restraint of legal proceedings Agreements which are uncertain and ambiguous Agreement by way of wager or wagering agreements Agreements to do impossible acts

!3ample+ " and L enter into an agreement Mefinition+ that if Australia<s team wins the test match, Agreement between two parties " will pay As. ?@@ and if it loses L will pay As. ?@@ to to " &ne promises pay money or money<s worth &n happening of some uncertain event In consideration of other party<s promise to pay If that event does or does not happen

Bai )!#$ is The delivery of goods, by one person to another, for some purpose, /pon a contract that they shall, when the purpose is accomplished, 8e returned or otherwise disposed of, According to the instructions of the person delivering them. )'ection ?DB* Bai or is the person delivering the goods Bai !! is the person to whom the goods are delivered.

Contract Melivery of the 5oods ; Melivery of possession of goods by 8ailor to 8ailee "ossession )not ownership* is transferred 0odes of Melivery "urpose )goods must be returned after a specific purpose is accomplished* Consideration )generally in the form of money payment*

Misclose faults in goods )'ec ?E@* 8ear !3penses )'ec ?EB* Indemnify)secure in respect of harm* 8ailee )'ec ?EH O 'ec ?KD* Aeceipt of 5oods back on termination of bailment

Care of 5oods )'ec ?E>* To act consistently with the terms )'ec ?E>* Compensation for damage to goods )'ec ?ED* Vot to mi3 goods bailed with others With bailor<s consent )'ec ?EE* Without bailor<s consent Aeturn of the goods bailed )'ec ?K@* Compensation for failure to return )'ec ?K?* Increase or profit from goods bailed )'ec ?K>* Melivery of goods to Uoint 8ailors )'ec ?KE*

!nforcement of 8ailor<s duties Melivery of goods to Uoint 8ailors Melivery of goods when 8ailor<s title is defective )'ec ?KK* Aight of %ien )'ecs ?J@ O ?J?* Wrongful deprivation of goods )'ecs ?B@ O ?B?*

"ledge is a 8ailment of goods as security for payment of a debt or performance of a promise "awnor is the 8ailor of such goods "awnee is the 8ailee of the goods !g., A borrows As.(@@ from 8 and keeps his watch as security for payment of the debt, the bailment of watch is a pledge.

Melivery of 5oods )may be actual or constructive* 'ecurity 5oods ; &nly goods can be pledged. 5oods includes 'hares, Mocuments, "romissory Votes, 8ills of !3change or .aluable things. =owever, money i.e., currency notes, cannot be pledged.

Aight of Aetainer )'ec ?J>* Aetainer for subse2uent advances )'ec ?JD* Aeimbursement of !3penses )'ec ?JE* Aights in case of default by "awnor )'ec ?JK*

'uit Aetention:'ale of 5oods 'urplus:Meficit on 'ale Vo Votice

Aight against true owner )'ec ?JBA*

To get back goods To redeem goods before sale )'ec ?JJ* Aight to Votice of 'ale 5oods in proper condition

"ledge P+r'o(!+ specific Sa ! o. ,ood(+ "ledgee has a right of sale of pledged on default of pawnor %(! o. ,ood(+ Vo right

8ailment P+r'o(!+ other purposes like repairs, safe custody, etc., Sa ! o. ,ood(+ Vo right %(! o. ,ood(+ Can use as per the terms of the contract

Mefinitions )'ec ?B(* Agent Is a person employed To do any act for another, or To represent another in dealings with third parties "rincipal Is the person 9or whom such act is done, or Who is so represented

Any person who =as attained the age of majority and Is of sound mind, can appoint another person as his agent to act on his behalf with an authority to bind him.

As between "rincipal and the third party, any person can become an Agent. !ven a person who

=as not attained majority or Is of unsound mind, can become an agent of another.

Test for Agency Aules as to Agency )0a3im+ 2ui facit per alium facit per se* !lements of Agency

Intention !3press:Implied Agreement Consideration not necessary Capacity to employ agent Capacity to be employed as agent

8ased on Authority

/niversal Agent 5eneral Agent 'pecial Agent Commercial or 0ercantile Agents Von4mercantile Agents

8ased on Vature of Work

To act as per "rincipal<s directions )'ec (??* 'kill and diligence )'ec (?(* Aender proper Accounts )'ec (?>* Communicate with "rincipal )'ec (?D* Vot to deal on his account )'ecs (?E A employs B to recover Rs.own . lac from (. "hro gh Bs miscond ct O the (?K* money is not recovered from (. B is not entitled to rem neration for his "ay all and sums (?B* services, shall received ma%e good the)'ec loss s stained. Vo remuneration for business misconducted )'ec ((@*

"he Frincipal instr cted his agents to deliver goods only against cash ! t agent delivered them on credit. $eld Agent ,as lia!le for the price ,hich p rchaser to pay 4Fa l a Bier V. (hottalal7 A, anthe agent for salefailed of goods, having thority to sell on credit, sells to B on credit, ,itho t ma%ing proper and s al en; iries as to his solvency. B, at the time of s ch sale is insolvent. A m st ma%e compensation to his principal in respect of any loss there!y s stained.

Vot to make secret profits Vot to disclose information /pon termination of agency )'ec (@H* Vot to delegate authority )'ec ?H@* %iable to pay damages

Aight of Aetainer )'ec (?J* Aight to Aemuneration )'ecs (?H O ((@* Aight of %ien )hold property to recover debt 'ec ((?* Aight to be indemnified )'ecs (((, ((>, O ((D* Aight to compensation )'ec ((E* Aight of stoppage in transit %iability of "rincipal inducing others )'ec (>J*

A residing in =elhi and has a ho se at 5ol%ata. $e appoints B in 5ol%ata, !y a Fo,er of Attorney, as a careta%er of his ho se. a shop in @oida ! t lives in =elhi. $e visits the shop A o,ns occasionally ,hich is managed !y B. B s ally orders from ( in As name formay the shop, and pays them o t of As f nds ,ith As %no,ledge. H Agent have to sell goods instantly if it is of perisha!le nat re and B has an implied a ntil thority from A to orderfrom goods from ( in his name for cannot ,ithstand f rther instr ctions Frincipal. the shop. sent !y rail ,as not ta%en delivery at the destination. "he station H A horse master has to feed the horse. "he :tation master !ecomes an Agent !y A ,itho t aand thority, ys goods, B.compensate 1ater B!ehalf sellshim. them to ( on his o,n Meaning2 'hen a! person does for some act on of another ,itho t necessity hence the o,ner shall acco nt9 Bs cond ct implies a ratification of p rchase made for him !y A. !stoppel sAgency ch others by %no,ledge, the act may !e ratified4to approve or sanction or confirm7 or diso,n !y the other person. 'hen he opts to ratify the same, he is !o !y the acts&ut as if he had e3pressly a thorised the Agency bynd =olding Fperson consigns H Fartners goods are considered to @ ,ith instr as Agents ctions not each to other sell !elo, and also a fi3ed of the price. <irm. G to do the act on his !ehalf 4:ecof .I-7. into anin agreement @ 4,ho does not indicate the reserve H "he management ofof a ,ith (ompany is also considered to act as an Agents of enters Agency case Vecessity price7 for the p rchase of entire lot at a s m !elo, reserve price. F %eeps the (ompany. F allo,s ; iet. his F isservant stopped denying did not have a thority Afrom to !later y goods for that him @ on credit from the ( and pays to for themsell !elo, the reserve price. reg larly. 8n one occasion, F pays A cash to p rchase goods. A p rchases goods on credit and poc%ets the money. ( can recover the price from F since thro gh previo s dealings, F has held o t A as his Agent.

!3press Agreement Implied Agreement

Agency by Aatification 8y operation of %aw

Agent should neither be in a position nor have any opportunity to communicate with his "rincipal within the time available. Actual and definite commercial necessity to act promptly. Acted bonafide and for the benefit of his "rincipal. Adopted the most reasonable and practicable cause. "ossession of the goods belonging to his principal and which are subject of contract.

8y Act of "arties Agreement )mutual agreement* Aevocation by "rincipal thro notice Aenunciation by Agent thro reasonable notice 8y &peration of %aw Completion of 8usiness Impossibility of performance !3piry of fi3ed period of time Insanity or death of "rincipal or Agent Mestruction of subject matter Insolvency of "rincipal Termination of 'ub4agent<s authority Missolution of a Company "rincipal or Agent becoming Alien enemy