Business Law [Udai Goswami]

11.Types of offers
►Offer may be of the following types: -
There are 4 types of offers
1.General and Special offers.
2.Express and implied offers
3.Positive and Negative.
4.Cross offers
1.General and special offers:
General offer means an offer made. To the world at large, while a specific offer
means offer made to some specific individual on individuals. General offer can
be accepted by any person having notice of the offer by doing what is required.
Under the offer However, specific offer can be accepted only by the persons to
whom it has been made and by no one else. Thus, it follows that an offer need
not be made to an ascertained person, but it must be accepted by a definite
person.
2. Express and implied offers:
When an offer is expressed by words spoken or written it is termed as an
express offer. Implied offer means an offer made by conduct.
Example: A might ask B if he wants to sell his house fort X dollars “
Example: A person who buys a product from a seller assumes that the product
functions properly without a seller explicitly claiming that the product works.
3. Positive and Negative offers:
The offer to do some thing is a positive offer on not to do something is a
negative offer. When an offer with the intention to not to do or abstain from
doing. Something this offer is known as negative offer.
4. Cross offer:
As per section 2(b). when a person to whom proposal (offer) is made signifies
his assent, the proposal is said to be accepted. Thus, assent can be only to a
“proposal”. If there was no proposal, the question of its acceptance cannot arise.

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Example: If a makes a proposal to B to sell some goods at a Specified price and

B. without knowing proposal of A, makes a proposal to purchase the same
goods at the price specified in the proposal of A, it is not an. Acceptance, as B
was not aware of proposal made by A.

11.Defination of offer.
►An offer is a proposal by one person to another to enter into o contract. The
team offer is defined under section 2(a) as under: ‘when one person signifies to
another, his willingness to do are abstain from doing anything with a view to
obtaining the assent of the offer, to such an act or abstinence, he is said to make
a proposal’.

12.Defination of Acceptance.
►Acceptance can be given only by the person to whom offer has been made.
Example: If someone gives a gift and another receives it, then they have
accepted the gift; therefore, having acceptance.

13.Essential of valid acceptance.

►1. Acceptance may be express on implied:
Acceptance given by words spoken on written is express acceptance, while that
given by conduct is termed as implied acceptance. Implied acceptance may be
given:
a. by doing some particular act, the doing of which by the terms of the offer
is made in evidence of assent.
b. by accepting a service or benefit offered by the person making the offer.
2.Acceptance must be absolute and unqualified:
It must Correspond with all the terms of the offer. Offer must be accepted into
to. Conditional acceptance is no acceptance. It will not give rise to any contract.
It will be a counter offer. which the proposer may or may not accept.
Example: An offer of land by M for £280 was accepted by N, who closed £80
with his letter on acceptance and promised to pay the balance by monthly

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instalments of £50. N cannot bind M by his acceptance for it has not been
unqualified It does not be any contract into existence.
3.Acceptance must be in the mode prescribed:
The proposer may by down the manner of acceptance in his offer. In case the
acceptance is not given in the prescribed mode, the proposer may reject the
acceptance and inform the offeree within a reasonable time.
Example: An offer is made to take shares indicating that the answer is to come
by a telegram. It is accepted. But the acceptance is sent by an ordinary letter.
The offeror can reject the acceptance as not being in the prescribed mode.
4.Silence cannot be prescribed as mode of acceptance:
Proposer has the right to prescribe the manner in which the proposal may be
accepted. But not the manner in which it may be refused. The offeror cannot
impose. This burden on the person to whom the offer is made. That he will have
to reply to the offer under all circumstances.
5.Acceptance can be given only fan that offer which has been
communicated:
There can be no acceptance of an uncommunicated offer. Acts done in
ignorance of proposal will not amount to acceptance of the offer. Acceptance
cannot precede on offer.
Example: X. the captain of a ship, after resigning, from This post during the
course of a voyage changed his mind. And continued to be in charge of the ship.
His resignation however was accepted. It was hold that the captain could not
recover remuneration for the period subsequent. To his resignation as the offer
to serve had not been. Communicated by the captain.
6.Acceptance must be communicated:
Acceptance must be communicated to the offeror to create a binding contract.
Mere mental acceptance not evidenced by words on conduct. Is in the eyes of
low no acceptance.
Example: “The manager of a railway company received a draft agreement
relating to the supply of cool, wrote the word “approved” on it and kept it in his
drawer. It was held that there was no contract as the acceptance had not been
communicated.

7. Acceptance of the proposal will mean acceptance of all the teams of the offer.
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8. Acceptance must be given within the time stipulated or within a

reasonable time:
In any case it must proceed before the lapse of the offer on its revocation.

9. If the proposal is made through an agent:

It is enough it the acceptance is communicated to him. If a sends the offer to B
by agency of C, and B in turn gives his acceptance to C. The acceptance is
complete even if C fails to communicate it to his principles.

10. Acceptance in order to be valid must be made under circumstances which

would above that the acceptances are able and willing, then and there to fulfil
the promise. An acceptance to do same thing which a person has no intention to
perform. Shall not be a valid acceptance.

15.Who is minor?
►According to Indian Majority Act, 1873 a person who has not completed his
18th year of age is considered to be a minor.

16.What is capacity to contract?

►Capacity to contract implies competence of the parties to contract section 11
of the contract Act specifies that ‘Every person is competent to contract. Who is
of the age of majority according to the laws to which he is subject and who is of
sound mind and is not disqualified from contracting by any lowe to which he is
subject’. Thus, following persons are incapable of contracting:
1.A minor
2.A person of unsound mind.
3.Persons disqualified from contracting by any other laws.

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17. Law relating to minor’s agreements.

► Indian Contract Act has given a specially privileged position to a minor. He
is allowed to take advantage of his acts but does incur any kind of a ligations.
He cannot be held personally liable for any his wrongs. No legal action can be
taken against him for his misbehaviour on false problems. The parents of a
minor are not legally responsible for his contracts unless he acts as their agent.
Following important provisions govern agreements made with a minor.
1.Absolutely void:
An agreement with a minor has been held to be void ab initio It is not only void,
but is absolutely void. It is considered to be a nullity and non-existent from the
very beginning and is therefore, devoid of any consequences.
2.No Ratification:
Since a contract by a minor is altogether void become ratify contracts entered
into by him during his minority, even after becoming.
3.No Restitution:
A minor is not liable to repay any money or compensation for any benefit that
might have received under a void contract. Count may however, in certain
cases, while ordering for the cancellation of an instrument at the instance of the
minor require him to pay compensation to the other party to the instrument
under sec. 33 of the specific Relief Act.
4.No Estoppel:
A minor is not bound by his misrepresentations. If a minor enters into a contract
by fraudulently representing himself to be a minor, he cannot be prevented from
pleading his minority in defence.
Example: L,a minor induced J to purchase property from him. J did not know
about L’s minority and rather he was misled by him. On a suit being filed by, L
to recover back the property sold, it was held that on principles of equally L
must return to J, the consideration received by him for the sale of property.
5.Minor Beneficiary:
All such contracts under which the receive. Some benefit on which are
beneficial to him one valid. But in no case he is personally liable. Only his
property is liable for Liability arising out of such contracts. These contracts
include agreements which provide for the teaching instruction on employment
of a minor, if reasonable and for the benefit of the minor.

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Example: The father of a minor girl on her behalf entered into a contract with
M. whereby M. promised to marry the minor girl, On M’s refusal to marry. It
was held that the contract was for the benefit of and on behalf of the minor and,
therefore she could maintain a suit for damages for breach of the contract.
6. Minor’s liability for Necessities:
All contracts relating to the necessities of the life supplied to a minor are valid.
A person can claim reimbursement out of the property of the minor, the amount
of necessities suitable for the position in life supplied to him on to the memoirs
of his family whom he was bound to support.
Example: A sold some articles from his shop to B on credit, not knowing that B
a minor. The time fixed fast payment. Expired and no. payment was made.
Sometime later, when B attained majority. A sued him for the price. What
remedies should the count give to a under the law.
7.Minor promise:
A minor can be a promise. A promissory note executed in favour of the minor
can be enforced. He can draw, negotiate an endorse a negotiable instrument so
as not to incur any liability upon himself.
8. Minor Agent:
He can A minor can be appointed as an agent. Represent his principal in dealing
with other parties: The principal will be responsible to third parties for the acts
of his minor agent but he cannot hold the minor agent personally responsible for
any wrongful act.
9. Minor Partners:
A minor cannot be a partner. He can however be admitted to the benefits of the
partnership. His liability is limited to the extent of his interest in the partnership.
10. Surety for a minor:
A person who stands as a surety for a loan token by the minor will be liable to
the creditor for payment of the loan, through the minor is not liable.
11. Minor as Member of a company A minor can:
Not become a member of a company since he is incompetent to enter into a
contract. In case a minor inherits certain shares, the name of his lawful guardian
will be entered as a member in the register of members.

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12. A minor cannot be declared as an insolvent:

Because even for necessities of life he is not personally liable.
13. Minor’s liability for Taxi:
In case a minor is found guilty of a tort he can be held liable. However, if a
minor in the course of doing what he is entitled to do under the contract, is
found guilty of negligence, be cannot be made liable for a tant if he is not liable
on the contract.
Example: A minor hired a house for riding. The house was injured on account
of oven riding. It was held that minor was not liable since the injury was due to
his negligence in the course of what he was entitled competence of contracting
parties.

18.What are the persons of unsound mind.

►According to section 12. ‘A person is said to be of sound mind for the
purpose of making a contract if at the time when he makes it’ he is capable of
understanding it and of forming a national judgement as to its effect upon his
interest.
Thus idiots, lunatics and drunkards are not considered to be persons of sound
mind.
●Idiot
A person who is devoid of any faculties of thinking or rational judgement is
called an idiot. All managements other than those for necessities of life, with
idiots are absolutely void.
●Lunatic
A person, whose mental powers are deranged, is called a lunatic. Agreements
made with lunatics, except those made during lucid intervals (period in which
he is in his senses) are void. Agreements for necessities of life one, however
valid.
For necessaries supplied to an idiot on lunatic, the property of such person is
liable. He does not have any personal liability.
Necessities of life to an idiot on to a lunatic also include necessities of life to his
wife and children. However, an agreement entered into by a person of unsound.
Mind for his benefit can be enforced

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●Drunkards
A person under the influence of drink or drug stands on the same footing as a
lunatic. An agreement made during drunkenness is void. But it should be shown
that at the time of contracting, the person pleading drunkenness was so drunk
that temporarily he was deprived of reason, and therefore could not give valid
consent to the contract.
Example: A patient in a lunatic asylum, who, at intervals is of sound mind, may
contract during those lucid intervals.
A contract made during mental disability. Jean be ratified during a lucid
interval.

19.Define Consideration.
Consideration is an essential element of a valid contract. An agreement without
consideration is a bare promise and is not binding on the parties (ex nudo pacto
non antic actio). Consideration broadly speaking, is the price said by the
promise for the obligation of the promisor. The team is used in the sense of quid
pro quo i.e., something in return: According to Six F. Pollock. It is the price for
which a promise is bought”.
In an English case: Currie v. Misa the term consideration was defined as ‘some
right’ Interest, profit on benefit, accruing to one party or some forbearance
detriment loss on responsibility given on undertaken by the other’.
Thus, consideration need not be a benefit to the promisor. If the promise has
suffered some loss on detriment, it will be token as a sufficient consideration for
the promisor to fulfil his promise.

20.Essential elements of Consideration.

Following are the essential of Consideration:

1.Consideration should be furnished at the desire of the promisor
The first essential element in the definition of consideration is that the act on
forbearance of the promise on any other person must be done at the desire. On
request of the promisor. The desire of the promisor can be implied from the
conduct of the panties.

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Example: A’s son is lost and B voluntarily gees in search for him: 8. Cannot
claim any remuneration or reward for finding out Bb son. Because he had not
done it at A’s request.
2.Consideration may move from the promise or any other person:
It is not necessary that consideration should proceed only from the promise.
Consideration furnished by a third party will also be valid if it has been done at
the desire of the promisor. This is termed as ‘Doctrine of Constructive
consideration’.
Example: A’s father B gives an ambassador can to C.C in consideration of this
promise promises with A to him a Fiat car. On c’s refusal to give can to A. B.
cannot. Take any give action against him because he not a party to the contract.
Thus, it follows that a stranger to the consideration can only sue another party to
a contract to enforce the contract provided he is a party to the contract. A
stranger to the contract, however, cannot enforce the promise.

3.Consideration may be a promise to do something for a abstain from

doing something:
Consideration may be either negative on positive. i.e., an act to do on not to do
something.
Example: B files a suit against A for his failure to pay a sum. of Rs. 1000 on
the due date. C agrees to pay this amount if B withdraws the suit. The suit is
withdrawn C is liable to pay the money to B.

4.Consideration may be past, present on future:

Where the promisor had received consideration before the date of the promise,
the consideration is termed as “past Consideration”.
Example: A agrees to sell his can to B for a sum of Rs. 10,000 B Pays money
to A at the time of maxing of the contract.
Consideration will be taken as present for A.
Where the promisor has to receive consideration in future for his promise, the
consideration is said to be future consideration.

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5.There must be an independent consideration to support each independent

promise:
A single consideration cannot support. Two agreements between the same
parties unless one of the agreements is a gratuitous promise. There must be as
may considerations as the number of contracts. Each agreement in order to be
binding must be supported by an independent consideration of its own. It is
immaterial that the contract is between the same parties.
6.Consideration must be real and not illusory, illegal, impossible uncertain,
ambiguous, fraudulent immoral on opposed to public policy:
On to exercise a Compromising disputed claim, forbearing to sure actually
existing and enforceable night one all ad considerations for fresh promises. But
when there is a pre-existing legal obligation o on the part of the promises. By
which he is bound to do something and does it, that act cannot be a competent
consideration for a promise. Consideration must be something more than the
promise is already bound to do. On the promisor.
Example: A threatens to sue B. B promises to pay A Rs. 1000 in consideration
of A agreeing not to sue. A had no cause of action against B. Is it a valuable
consideration in the eyes of low?
Yes. The promise by B to pay. A Rs. 1000 in consideration of agreeing not to
sue is a good consideration irrespective of the fact that A had no cause of action
against B. If B feels himself aggrieved, he has the night to proceed against A to
test his claim. Refraining of A is a valuable consideration to support the promise
of B.
7. Consideration must be valuable in the eyes of law:
It must be capable of being valued in terms of money or money’s worth. It must
result in gain to one and loss to other. Sand near the river bank. Has no value
but the moment it is brought near the (building site. & Acquires value. Oxygen
is a free gift It of nature and therefore, has no value. But the moment fit is
packed in gas cylinders and is supplied to the hospitals it acquires value.

21.Refine Breach of contract.

►A Breach of Contract occurs when one of the parties of the contract do not
abide by the terms of the contract.

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There are 3 Condition to Breach of Contract-

●If party fail to delivers certain conditions in a certain duration of time.
●If the party does not meet the terms of the contract.
●If the party fails to perform.

22.Remedies for the Breach of contract / Explain the remedies

available to an aggrieved party in case of breach of contract.

►1. Suit for Rescission:

If one party breaches the contract, then the other party need not oblige to the
contract. The contract stands cancelled if the aggrieved party cancels it. The
aggrieved party can. File for the damages. Generally, the suit for the damages
accompanies the cancellation of the contract by the aggrieved party. This suit is
for obtaining the damages of the breach.
2.Suit for injunction:
A restraint order from the count is an injunction. The count has the power to
restrain a person from doing a certain act. If the defendant does something that
he should not perform, then the aggrieved party can file a suit for injunction.
This shall be temporary on permanent.
3.Suit for specific performance:
A remedy which is given by the court to both parties to perform according to
the contract. This is one of the most common suits. The aggrieved party will not
receive adequate relief of the monetary compensation.
4.Suit for Quantum Meruit:
Quantum Meruit for contracts means the reasonable value of services. If a
person hires someone and the contract is incomplete or un-performable then the
employer can sue the defendant for the services and the value of improvements
made. The law states that the employer has to pay the employee an amount that
he deserves for his services. If the employee is under a flex press contract for a
specific amount, then be cannot abandon the contract and suit for the Quantum
Meruit.

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5.Suit for Damages:

a. General damages on ordinary damages:
The damages that come naturally through a breach. The aggrieved party must
prove the damages and also the amount of the damages in the suit.
b. Liquidated damages and penalty –
Some Contract addresses the issue of breaching its consequences and also its
penalty. If such a contract breaks then the party featuring the breach should pay
the stipulated amount. Mentioned in the contract to the other party. The amount
is reasonable compensation, and it should not exceed the amount often in the
contract. The parties. Should not have obstacles to make provisions of the
Liquidated damages.
c. Special damages:
The aggrieved party must. Special loses to claim the special damages. Prove the
special loses to claim the special damages.

d. Exemplary on vindictive damages:

This claim is for the mental suffering on emotional suffering such sufferings
can also be due to the breach. Generally, the count taxes care of such damages.
e. Nominal damages –
A remedy is provided for the breach. Which was not there in the actual. It gives
a small remedy, and it is more technical than the actual.

23. Short Note of Quantum Meruit

Ans: Principle of Quantum Meruit under the contract Act, 1872 Quantum
meruit is a Latin phrase that means “what one has earned” on as much as he has
earned” In clean teams, it refers to the real value of the services performed on
rendered. Quantum meruit is a lawful action that is based on equitable
compensation. It is an alternative remedy to an action on a contract that can be
brought for partial performance. A claim in quantum meruit can at best be
explained as residual equity.

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The Black laws Dictionary states that quantum meruit means “as much as one
deserves” Quantum meruit means payment in proportion to the amount of work
done. Normally, one cannot claim performance from another unless one has
performed his obligation in full. However, in some cases anyone who has
performed some work under a contract can claim remuneration for the work
which he has already done. The right to claim on quantum meruit’ does not
arise out of contract as the night to damage does. It is a claim on quasi
contractual obligation which is implied by circumstances. The claim for
quantum meruit arises only when an actual contract is discharged.
Quantum Meruit covers a case in which the party who gives the service has
fulfilled a part, but not all of the work that he was bound to do and seeks.
Compensation for the value of the work done. There are two essential
conditions that must be met for this rule to be applied.
Contract is discharged the claim is brought by the party who has not defaulted.
The action of Quantum Meruit is allowed in Indian Counts under section 70 of
the Indian Contract Act 1872, which states, “obligation of person enjoying the
benefit of the non-gratuitous act – where a person lawfully does anything for
another person, on delivers anything to him, not intending to do so gratuitously,
and such other person enjoys the benefit thereof, the latter is bound to make
compensation to the former in respect of, or to restore. The thing so done on
delivered”.
Quantum meruit is a claim under a quasi-contract. The claim of quantum meruit
arises when the actual a quasi-contract contract is discharged. The several cases
in which quantum meruit arise are as follows:
In the case of void agreement on contracts that become void [section 651
In case of a gratuitous act [section 70]
In the case of a divisible contract.
In case of act preventing the completion of the contract. In the case of an
indivisible contract performed completely but badly.

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