Professional Documents
Culture Documents
Business LAW
Business LAW
Shibu lijack
DEFINITION
What is law?
What is an Agreement?
Every promise and every set of promises forming the
consideration for each other.
Agreement = Offer +Acceptance.
“ Every contract is an agreement, but every agreement is not
Contract”
INTRODUCTION TO CONTRACT
Intention to Contract.
No legal obligation in terms of moral, religious and social
matters.
Business matters (Case: Rose & Frank Co v J R Crompton).
General Offer (Case: Carlill v Carbolic Smoke Ball Co).
INTRODUCTION TO CONTRACT
Acceptance:
When one person to whom the proposal is made signifies his
willingness thereto the proposal is said to be accepted.
Communication regarding acceptance.
An offer can be accepted only by the person to whom it
is made.
Acceptance by conduct – General offer.
Prescribed acceptance.
CASE : BALFOUR VS BALFOUR
Facts:
Mr B promised to pay his wife £30 per month.
Mr B had to return to Ceylon. Mrs B was to remain in
England for medical reasons.
The couple later separated.
Mrs B claimed £30 per month pursuant to Mr B’s promise.
Decision:
An agreement to pay £30 per month existed.
The parties had not intended it to be legally binding.
There is a presumption that domestic arrangements are not
intended to finish up in court.
INTRODUCTION TO CONTRACT
Absolute and unconditional Acceptance:
Counter proposal
Partial Acceptance.
Inquiry into terms of proposal.
Acceptance of counter - proposal.
Acceptance and withdrawal of tender.
Termination of an offer:
Party A Party B
Party A Party B
Communication of revocation is completed
when it comes to the knowledge of Party A
through Party B (acceptance)
CONSIDERATION IN A CONTRACT
CONSIDERATION:
Whenever a party to an agreement promises to something,
he must get something in return. This something in return
is called ‘consideration’.
“When at the desire of the promisor, the promise any other
person has done or abstained from during something, such
as or promise is called consideration for the promise” –
Section 2(d).
PRIVITY OF CONTRACT
Doctrine of Privity of contract holds that “ A contract is a
contract only between the parties and no third person can
sue upon it even if it is made for his benefit.
Exceptions to Privity rule:
Trust or charge
Marriage settlement, Partition or other family
arrangements
Acknowledgement or estoppel
CASE – TWEDDLE vs ATKINSON
Facts:
John Tweddle (the Plaintiff's father) agreed with William
Guy (the Plaintiff's father in law) for the latter to pay money
to the Plaintiff upon marriage. Guy died before making
payment and the Plaintiff (William Tweddle) sued the estate
(Akinson was the executor) for the promised sum.
Decision:
No consideration moved from the plaintiff to Guy and
therefore the plaintiff had no right to sue on the contract.
Natural love and affection is not good consideration
CASE – Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd.
Facts:
Dunlop sold its tires to a wholesaler(Dew & co) on the
condition that they were sold to retailers who agreed to sell
at the specified prices. Selfridge was one such retailer and
they sold at prices below the specified prices
Decision:
The doctrine of privity requires that only a party to a
contract can sue.
The doctrine of consideration requires a person with whom a
contract not under seal is made is only able to enforce it if
there is consideration from the promisee to the promisor.
The doctrine of agency requires that the principal not named
in the contract can only be sued if the promisee was
contracted as an agent.
CAPACITY TO CONTRACT
Capacity to contract.
Capacity means competence of the parties to enter into
a valid contract.
Following persons are incompetent to contract:
Minor.
Mental Disability and intoxication ( But need to prove).
Contract by disqualified persons.
Minor:
According to the Indian majority Act, 1875 a minor is
one who has not completed his /her 18 years of age.
Contracts with minors can be
1.Valid 2.Voidable 3.Void
MINOR
Valid contract with minor:
Contracts for Necessaries.
Beneficial Contracts of Service.
Voidable Contract:
A voidable contract is binding on the minor unless he/she
takes action to declare it void.
Apply to contracts to buy shares in companies, leases of
property and partnerships.
Doctrine of restitution.
Void Contract:
Ratified means that the minor confirms that the contract
is valid when s/he reaches 18.
This applies to loans and contracts for non-necessary
goods.
FREE CONSENT
Free consent:
Section 13 of the act defines consent as “ two or more
persons are said to consent where they agree upon the
thing in the same sense”.
Consent is said to be free when it is not caused by
Coercion
Undue influence.
Fraud.
Misrepresentation
Mistake.
Consent caused by the coercion:
Committing, Compelling and threatening to act.
Unlawfully detaining or threatening to detain any property.
FREE CONSENT
Undue influence:
Section 13 of the act defines consent as “ two or more
persons are said to consent where they agree upon the
thing in the same sense”.
It is also referred to as ‘EQUITABLE FRAUD”. It creates
a mental or moral fear as against physical fear created by
coercion.
Exemption of undue influence
Real or apparent authority.
Fiduciary relations.(Parent-child, Guardian - ward,
Doctor-patient, Solicitor-client, Fiancé-fiancée)
Mental distress.
MISREPRESENTATION
Misrepresentation:
It means a false statement of fact made by one party to
another party, which has the effect of inducing that party
into the contract.
Essential of fraud:
Making a false suggestion.
The active concealment of a fact by a person who has
knowledge or belief of the fact.
A promise made without performing it.
The party acting on the representation should have
been deceived and suffered damage.
Active concealment of the facts amounts to fraud.
LEGALITY OF OBJECT
Legality of object
Sec 23 declares three important factor
Consideration for the agreement
Object for the agreement.
Agreement.
Unlawful agreement
If it is forbidden by law.
If it is of such a nature that, if permitted, it would
defeat the provisions of any law.
If it is fraudulent.
If it involves or implies injury to the person or property
of another.
If the court regards it as immoral.
If the agreement opposed to public policy.
DISCHARGE OF CONTRACT
Discharge of contract
A Contract may be discharged either by an act of parties or
by an operation of law.
By performance.
By impossibility of performance
1. Initial 2. Subsequent
By Agreement.
By breach.
Discharge by performance:
Contingent contracts
condition is uncertain in nature.
Happening and non happening of event.
Time bound contingency.
DISCHARGE OF CONTRACT
Discharge by agreement.
Novation: Existing contract for a new contract.
Involving change of parties.
Substitution of new agreement .
Discharge by breach.
Anticipatory Breach
Present breach
Damages for breach
It means monetary compensation( General + Special).
The two problem are
Remoteness of damage
Measure of damage
Click icon to add picture