Professional Documents
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Yash Kumar Nayak 28-7-21
Yash Kumar Nayak 28-7-21
3. Capacity to Contract
If an agreement is entered between parties who are competent enough to contract, then the
agreement becomes a contract.
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.
6. Lawful Consideration
Something in return is Consideration. In every contract, agreement must be supported by
consideration. It must be lawful and real.
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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 affect a sale, lease, mortgage, gift of
immovable property etc.
B) A , a minor, borrow Rs. 5000/- & executes a promissory note for the amount in favour
of B. After attaining majority. A executes another pronote in settlement of the first pronote.
Will B succeed in recovering money from A give reason.
Ans. -. No-B will not succeed in recovering money from A. Although Indian Contact Act
1872 Section 2(d) recognises the concept of past consideration, but it must be something to
which law attaches a value. A contract with a minor is void ab initio. The consideration for
the second pronote is a void agreement and hence of no value. Besides, ratification by a
minor of a contract, on attaining majority is not allowed.
Q. 2 A) What is meaning of Discharge of contract. What are the various ways in which a
contract may be discharged?
2. Discharge of Contract by Agreement:- If either of the person in the contract is not willing
to continue the contract till you date then it is converted to the other party whether they may
accept or not, the discharge of the contract by the agreement will happen. But it occurs in
various situations. They are-
Novation:- Either specify the substitution of either new contract in the place of the original
contract or new members in the place of world one whether it may be a single person or both
the parties it is known as novation, which is a part of the discharge of contract by substitution
of agreement.
Rescission:- Here both the parties agreed to modify certain rules and regulations in the
contract with mutual understanding. It may lead to the cancellation of all the rules or may
cancel partially.
Alteration:- It is another case where the terms of the contract will be modified either entirely
or partially with the consent of both parties. But the parties won't change, and they can enjoy
new benefits either they may less or more than the old contract.
Waiver:- Waiver refers to the abandonment of right. If any of the parties abundance their
rights from the contract, which affects the other party, then it leads to the discharge of the
contract by substitute agreement.
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3. Discharge of Contract by Lapse of Time:- According to the limitation act 1963, it is
specified that if the contract is unable to perform within the specified period, it may affect
the other party and leads to the cancellation of the entire contract. Then it is treated as a
discharge of contract by Lapse of time.
B) A in Delhi rings up to B Bombay offering to sell a machine for Rs. 1,00,000/-. B says
that the he accepts the offer but at the precise moment due to some mechanical defect in
A’s telephone, A does not hear B’s acceptance. Is there binding contract between A& B.
No, there will be no binding contract at that moment between A & B because other
person may not know the precise moment when the line failed. But he will know that the
telephone conversation was abruptly broken off: because people usually say something
to signify the end of the conversation. If he wishes to make a contract, he must therefore
get through again so as to make sure that I heard. Suppose next that the line does not go
dead, but it is nevertheless so indistinct that I do not catch what he says 6 and I ask him
to repeat it. He then repeats it and I hear his acceptance. The contract is made, not on the
first time when I do not hear, but only the second time when I do hear. If he does not
repeat it, there is no contract. The contract is only complete when I have his answer
accepting the offer.
Q3) a) Unpaid Seller
An unpaid seller of the goods, who is in possession of them, is entitled to retain possession, i.e.,
exercise a right of lien over the goods, in the following cases:
➢ Where the goods have been sold without any stipulation of credit.
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➢ Where the goods have been sold on credit, but the term of credit has expired.
Further, an unpaid seller is also entitled to exercise its right of lien if he is in the possession of the
goods as an agent of the buyer or the bailee for the buyer. In addition to an unpaid seller losing the
possession of the goods, the Act also provides for the following specific situations, in which an
unpaid seller loses its right of lien, i.e., when:
➢ The unpaid seller delivers the goods to a carrier or other bailee for the purpose of transmission
to the buyer without reserving the right of disposal of the goods.
➢ The unpaid seller has waived its right of lien over the goods.
b) Future goods are goods that are not yet in existence or that do not yet belong to the seller when
the contract of sale is made. ... This is called an "agreement to sell." Because the milk does not yet
exist at the point of making the contract, it is an example of future goods.
Express conditions and warranties are which, are expressly provided in the contract. Implied
conditions and warranties are those which are implied by law or custom; these shall prevail in a
contract of sale unless the parties agree to the contrary.
i) Condition as to title -- In every contract of sale, unless the circumstances of the contract are such
as to show a different intention, there is an implied condition on the part of the seller, that :
1. In case of a sale, he has a right to sell the goods, and
2. In case of an agreement to sell, he will have a right to sell the goods at the time when the
property is to pass.
The words 'right to sell' contemplate not only that the seller has the title to what he purports to sell,
but also that the seller has the right to pass the property. If the seller's title turns out to be defective,
the buyer may reject the goods.
ii) Condition as to Description -- In a contract of sale by description, there is an implied condition
that the goods shall correspond with the description. The term ' sale by description' includes the
following situation ;
1. Where the buyer has not seen the goods and buys them relying on the description given by
the seller.
2. Where the buyer has seen the goods but he relies not on what he has seen but what was stated
to him and the deviation of the goods from the description is not apparent.
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3. Packing of goods may sometimes be a part of the description. Where the goods do not
conform to be method of packing described (by the buyer or the seller) in the contract, the buyer
can reject the goods.
iii) Condition as to Quality or Fitness -- Where the buyer, expressly or by implication, makes known
the seller the particular purpose for which goods are required, so as to show that the buyer relies on
the seller's skill or judgment and the goods are of a description which it is in the course of the seller's
business to supply (whether or not as the manufacturer of producer), there is an implied condition
that the goods shall be reasonably fit for such purpose. In other words, this condition of fitness shall
apply, if:
1. The buyer makes known to the seller the particular purpose for which the goods are required,
4. The goods supplied are not reasonably fit for the buyer's purpose.
iv ) Condition as to Merchantability -- Where the goods are bought by description from a seller,
who deals in goods of that description (whether or not as the manufacturer or producer) there is an
implied condition that the goods shall be of merchantable quality.
Merchantable quality ordinarily means that the goods should be such as would be commercially
saleable under the description by which they are known in the market at their full value.
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B) State with reason whether the following contracts of sale amount to sale or an agreement
to sell.
i) X entered into a contract for the sale of some goods in a particular ship to be delivered on the
arrival of the ship.
This contract of sale of amount will be “Agreement to sell” because the transfer of
the property in the goods will take place at a future time or subject to some conditions
thereafter to be fulfilled
ii) X purchases books at book stall for Rs. 10,00. And pays cash gets the delivery of books.
This contract of sale of amount will be Sale because here the goods are being
transferred from seller to buyer at the time of cash payment.