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Law of Contract. Previous Year Question
Law of Contract. Previous Year Question
While an agreement is a broader concept, a contract holds the force of law, and its breach can
lead to legal remedies.
2. Voidable Contracts
Voidable contracts are those that suffer from a defect allowing one party to choose between
enforcing or voiding the contract. This defect can arise from factors like undue influence,
coercion, fraud, misrepresentation, or the incapacity of a party. The party with the option to void
can either affirm the contract or rescind it. Courts may provide remedies to the aggrieved party,
emphasizing the protection of parties who may have been unfairly influenced or deceived.
3. Acceptance
Acceptance, a pivotal element in contract formation, is the unambiguous and final expression
of agreement to the terms of an offer. It must be communicated to the offeror, creating a binding
contract. The communication can be explicit, through words or actions, and must align precisely
with the terms of the offer. Silence generally does not constitute acceptance unless specified by
the offeror or implied by custom. The postal rule, established in Adams v Lindsell, dictates that
acceptance is effective upon posting, even if the offeror is unaware.
4. Anticipatory Breach
Anticipatory breach occurs when one party, before the agreed-upon performance date,
expresses an intention not to fulfill their contractual obligations. This may be conveyed through
words, actions, or clear conduct. The innocent party can treat the anticipatory breach as an
immediate breach, allowing them to seek remedies for breach of contract, such as damages or
specific performance. The anticipatory breach doctrine provides a mechanism for parties to
address potential breaches before they actually occur.
5. General Offer
A general offer is a widespread invitation to the public or a specific group, and acceptance
typically occurs by fulfilling the conditions stated in the offer. Unlike specific offers, general offers
are open to an indefinite number of people. The classic example is the Carlill v Carbolic Smoke
Ball Co case, where an advertisement promising a reward for using a particular product
constituted a general offer. Fulfilling the conditions outlined in the advertisement resulted in a
binding contract and the enforceability of the reward.
6. Novation of Contract
Novation involves the substitution of one party to a contract with the consent of all involved
parties. It extinguishes the original contract and creates a new one. Novation requires a tripartite
agreement where the original contracting parties and the new party all agree to the substitution.
This process is different from assignment, where the original party remains liable unless
released by agreement. Novation ensures that all parties are on board with the change,
maintaining the integrity of the contractual relationship.
9. Void Agreement
A void agreement is one that lacks legal enforceability from its inception. It is considered
invalid and cannot be enforced by the courts. Such agreements are typically deemed void for
reasons like illegality, impossibility, or being against public policy. Void agreements do not create
legal rights or obligations, and any transactions arising from them are considered null and void.
10. Offer
An offer is a proposal made with the intention to create a legal relationship, indicating the
terms under which the offeror is willing to be bound. It must be communicated to the offeree and
contain clear, definite, and complete terms. An offer can be express or implied, and once
accepted, it forms the basis of a legally binding contract. Certain conditions, like invitation to
treat, are not considered offers, as seen in cases like Fisher v Bell.
Section 29 deals with agreements voidable at the option of one or more parties. It addresses
situations where a contract, though initially valid, becomes voidable due to factors like coercion,
undue influence, fraud, or misrepresentation. The aggrieved party has the option to affirm or
void the contract.
14. Misrepresentation
Misrepresentation involves a false statement made with the intention to deceive, leading
another party to enter into a contract based on the misleading information. It can be innocent,
negligent, or fraudulent. Innocent misrepresentation occurs without intent, negligent
misrepresentation results from careless or reckless statements, and fraudulent
misrepresentation involves deliberate deception. Misrepresentation can render a contract
voidable, and the innocent party may seek rescission or damages.
16. Display of Goods with Prices in a Self-Service Store Is Not a Proposal. Elaborate
The display of goods with prices in a self-service store is typically considered an invitation to
treat rather than a proposal. In such a setting, the customer makes the offer by selecting items
and bringing them to the cashier for payment. The store owner, in this context, has not made a
specific offer but has merely provided an invitation for customers to make offers. This distinction
is crucial in understanding when a contract is formed in a retail setting, and it aligns with the
principle established in the case of Pharmaceutical Society of Great Britain v Boots Cash
Chemists.
19. Coercion
Coercion involves the use of force or threats to compel someone to enter into a contract
against their will. It undermines the voluntary nature of contractual consent. Coerced
agreements are voidable at the option of the coerced party. Coercion may take various forms,
including physical harm, threats of harm, economic duress, or the abuse of authority. Courts
examine the circumstances surrounding the coercion to determine its impact on the fairness of
the contract.
24. Promise
A promise is a commitment or assurance to do or not do something, forming the basis of
contractual agreements. Promises are integral to the offer and acceptance process in contract
formation. When a promise is supported by consideration and meets other legal requirements, it
becomes an enforceable contract. Promissory estoppel may also apply when a promise is made
without consideration but is relied upon by the promisee to their detriment.