Class note on law of contract

Class Note on
Law of Contract

Objects of Contract Act

(a) To define certain part of law of contract.
(b) To amend certain part of law relating to contract.

Types of contract law

(a) General laws relating to contract
1) Formation of contract
2) Performance of contract
3) Breach of contract and remedies
(b) Laws relating to some particular types of contract.
1) Contract of indemnity and guarantee
2) Contract of bailment and Pledge
3) Contract of Agency

Definition of Contract
An Agreement which is enforceable by law is a contract. There are two
agreement legal points of view. Such as
(a) An agreement enforceable by law
(b) An agreement not enforceable by law

Essential requisites/elements/requirements or criteria of an agreement

(a) Parties (offeror, offeree and acceptor)
(b) Communication (express, implied, tacit, written and verbal)
(c) Consideration (without consideration a contract is void. Consideration
must be legal.)
(d) Legal relationship (contract creates legal relationship between offeror and
offeree or acceptor)
(e) Capacity or competency of parties (sound mind and majority: parties
must be competent to enter into contract))

Usually unsound mind, sometimes sound mind, when contract is formed he was
sound mind, contract is valid.
Usually sound mind, sometimes unsound mind, when contract is formed he was
unsound mind, contract is void.
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Class note on law of contract

Minor’s contract is void ab initio.

All contracts are agreement but all agreements are not contract.

Types of contract as regards mode of creation (S-9)

(a) Express contract
(b) Implied contract
1) Written contract
2) Oral contract

Types of contract as regards the enforceability and validity

(a) Valid contract: A valid contract is a contract which fulfills all the
requirements of a contract.
(b) Voidable contract: If a contract is vitiated by coercion, fraud, undue
influence or misrepresentation is a voidable contract.
(c) Void contract: A void contract is a contract which does not fulfill all the
requirements of a contract.

Types of contract as regards the enforceability and validity

(a) Executed contract
(b) Executory contract

Circumstances when a contract becomes void

Difference between offer and invitation to offer

Offer is the willingness to do something or refrain from doing something. Offer
creates legal relationship. But invitation to treat does not create legal
relationship. Display of goods is an example of invitation to treat. Invitation to
treat may become offer after negotiation. Examples of invitation to treat are
tender, advertisement, display of goods. Advertisement with additional
information or statement is an offer.

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Class note on law of contract

Rules regarding a valid offer or proposal

1. Invitation of creating legal relationship.
2. Offer must be communicated to offeree.
3. Offer must be definite
4. An offer may be made to a specific person, a class of persons or the world
at large.
5. Offer may be conditional or unconditional.
6. Acceptance must be accepted as it is. Acceptance cannot be conditional. A
conditional acceptance is a counter offer.
7. Offer may be express or implied
8. There must be promise to perform.
9. Mere offer is not an offer.
10.Primary discussion is not offer.
11.Intention of creating legal relationship.
12.Offer may for a particular /specific time period.
13.There must be legal binding in the offer.
14.Offer may be revocable.
15.Offer and invitation to treat is different.

List of void contracts (Void ab initio)

1. Contract by incapable person
2. Unlawful consideration and objects. (s-23)
3. Agreement made under a mistake (s-20)
4. Agreement without consideration. (s-25)
5. Agreement to do impossible things.(s-56)
6. Agreement for uncertainty. (s-29)
7. Agreement in restraint of legal proceedings. (s-28)
8. Agreement in restraint of marriage. (s-26)
9. Agreement in restraint of trade. (s-27)
10.Agreement by way of wager. (s-30)

Doctrine of supervening impossibility or doctrine of frustration

Definition of Offer (s-2-a)

Revocation of offer

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Class note on law of contract

Acceptance of an offer (s-7)

Who can accept offer?

(a) Sound mind
(b) Majority
(c) No third party

Rules regarding acceptance

1. Acceptance must be unconditional. Offer must be accepted as it is.
2. Acceptance must come to the knowledge of the offeror.
3. Mere acceptance is not an acceptance.
4. Procedure of accepting offer promised by offeror must followed by the
acceptance.
5. Acceptance must be informed in reasonable format.
6. Acceptance may be by act or by conduct.
- Acceptance must be informed to offeror.
- Acceptance by fulfilling conditions of offer
- Reciprocal promise or consideration
7. Only offeree can accept the offer.
8. Procedure of accepting offer must be followed
9. Acceptance must be within limited time period.
10.Revocation of offer must be before acceptance.

An acceptance is to offer what a lighted match is to a train of gun powder.

Accidental offer
Accidental offer is a situation when both acceptance letter and revocation letter
reaches offeror at the same time,

Consideration
Consideration means to give something to get something. It means something
which has some value in the eye of law.

Importance of consideration
Without consideration contract is void.

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Class note on law of contract

Rules regarding consideration

1. Consideration must be as per the intention of the promisor.
2. Consideration may come from promisee or third party.
3. Consideration must have value.
4. Consideration need not be adequate.
5. Consideration must be free from undue influence.

Coercion

Undue influence

Fraud
Fraud is a false representation of fact made with knowledge of falsehood.

Essential requirements or elements of Fraud

(a) Misrepresentation facts
(b) Concealment of any information
(c) Fraudulent activities
*** Is mere silence fraud? (s-17)
Mere silence is not fraud. When
(a) Silence is equivalent to speech
(b) When speaking is not duty
Silence is fraud if
(a) Being silent when duty is to speak
(b) When silence is deceptive
(c) Change of circumstances
Essential elements of coercion

Essential elements of undue influence

Effects or consequence of fraud

Performance of contract
*** Offer to perform contract (s 40-43)
(a) Offer must be unconditional
(b) Tender must be at proper time and place.
(c) Providing reasonable opportunity.

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Class note on law of contract

(d) Performance of partial promise.

(e) Opportunity of seeing.

***Who is to perform the contract?

(a) Performance by the promisor himself
(b) Performance agent
(c) Performance of promise by third party.
(d) Performance of promise after the death of promisor.

Legal representative will be bound to perform the contract but they are not
personally liable. Only the property of the deceased person is liable.

*** Contracts which need not be performed?

(a) When promisee excuses the performance of the contract. (s 63)
(b) If time is extended to performer. If promisee gives immunity to performer
(c) If voidable contract is set aside by one party. (s 64)
(d) If a contract is renewed or altered, new contract will substitute to old
contract.
(e) If promisee refuses to give reasonable time.

*** Discharge of contract or termination of contract

A contract can be discharged or terminated by
(a) Performance of contract
(b) Supervening impossibility
(c) By new contract
(d) Breach of contract
(e) Time expiry
(f) Enforcement of law
(g) Death of any party (leaving no legal representative)
(h) Mutual agreement (novation, waiver, accord or satisfaction)

Contingent contract

Wagering contract

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Class note on law of contract

*** Supervening impossibility

Or impossibility of performance
Or doctrine of frustration
(a) Impossibility arising due to change in law
(b) Destruction of an object necessary for the performance of contract.
(c) Frustration of purpose
(d) Personal incapacity or death
(e) Change in circumstances
(f) Declaration of war

Effects of supervening impossibility

Contract will become void automatically if there arises supervening
impossibility.

Different types of breach of contract

(a) Actual breach
(b) Presumed breach

***Remedies for breach of contract

Breach of contract is when one party does not perform the obligation of
contract. There are five types of remedies of breach of contract.
(a) Rescission of contract.
(b) Damages
1) Nominal damages
2) Substantial damages
3) Exemplary damages
4) Liquidated damages
5) Liquidated damages
- General damages
- Special damages
(c) Specific performance
(d) Injunction: injunction is the court’s order not to do certain things.
1) Perpetual injunction
2) Temporary injunction
(e) Quantum Meruit ( )

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Class note on law of contract

Difference between contingent contract and wagering contract

(a) There is mutual promise in wagering contract and vice versa
(b) Contingent contract is a valid and legal contract and vice versa.

*** Features or characteristics of bailment

(a) Delivery should be upon contract
(b) Contractual relationship between bailee and bailor
(c) Delivery of possession
(d) Delivery should be upon some purpose.
(e) There should be consideration
(f) Minor can be bailor or bailee
(g) Goods must be movable property

Rights of Bailor

Duties of Bailee

Definition of agent and principal

Capacity of an agent
Or who can be agent?

Test of agency
Principal is responsible for functions of agent. But in case of absence of agency,
there is no responsibility for principal.
Wife and son cannot be agent of husband and father respectively.

*** Methods of creation of agency

(a) Agency created by expressed authority (with terms and conditions)
(b) Agency created by implied authority
(c) Agency created by estoppel
(d) Agency created by necessity
(e) Agency created by ratification (when agent’s voluntary and legal work is
ratified by principal) s-196
(f) Agency created by law
Codification of valid ratification (s-198)

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Class note on law of contract

Review class or suggestion

== Contract-==
***Definition of contract
Difference between agreement and contract
*** Essential elements/requirements/requisites of a valid contract
***Types of contract
(a) Valid contract
(b) Void contract
(c) Voidable contract
(d) Unenforceable contract
Executed and executory contract

Express and implied contract

Quasi-contract
Unilateral and bilateral contract

On which grounds a contract becomes void?

Or List of void contracts

== offer==
Definition offer
*** Rules regarding offer
Who can make an offer?
To whom an offer be made?
Communication of offer
***When communication of offer is completed?
*** Difference between offer and invitation treat
*** Revocation of offer
*** Rules regarding revocation of offer
Counter-offer
***Rules regarding acceptance
When an acceptance is completed?
*** An acceptance is to offer is like that of a lighted match to a train of gun
powder.

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Class note on law of contract

= Consideration=
Definition of consideration
*** Rules regarding consideration.
Types of consideration
*** Past consideration is no consideration
*** without consideration a contract is void’ discuss with exceptions
Or is it possible to enter into a contract without consideration.

= capacity to contract=
Who is a minor?
Age of minor
Definition of a minor
*** Laws relating to minor’s contract
*** Minor’s contract is void ab initio. Discuss with exceptions

= Free consent=
Definition of consent
*** Definition of free consent
Coercion
Proof of coercion
Effects of coercion
*** Undue influence
***Elements/presumptions of undue influence
***On whom burden of proof of undue influence rest?
***Effects of undue influence

= Fraud=
*** Elements of fraud
***** Mere silence is not fraud
When silence is fraud?
Effects of fraud
*** Difference between fraud and misrepresentation
*** Difference between mistake law and mistake of fact
*** Consequence of mistake
Or effects of mistake

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Class note on law of contract

= Discharge of contract=
When does question of breach of contract arises?
*** Remedies of breach of contract
Methods of termination of contract
*** Doctrine of frustration or supervening impossibility
*** Effects of supervening impossibility
Quasi-contract
Rules regarding quasi-contract
Difference between contingent contract and quasi-contract
***Difference between wagering contract and contingent contract

= bailment=
Define bailment
***Features of bailment
Rights of bailor
Duties of bailee
*** can a bailee transfer the goods to another person other than the bailor?

= agency=
Definition of agent and principal
***Capacity of agent
Test of agency
***Creation of agency
*** Methods of creation of agency
***Conditions of valid ratification (s- 198)
Agent’s authority in an emergency

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