Why to learn law?

-The purpose of legislation is to either restrict or promote a set of

habits within society.
- We accept an official body to determine our standards of
acceptability. As a result, we have a sovereign body or a set of rules
to appeal to, of which can manifest in either procedural, remedial, or
protective regulations.
- We are born with law. Eg. Having birth certificate, identity proof,
- By birth we are bound by law of constitution.

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- Portion –
- 1. The Indian Contract Act,1872
- 2. Sales of Goods Act,1930
- 3. The Negotiable Instrument Act,1881
- 4. The company law,2013
- 5.Intellectual property rights
- 6. Consumer Protection act,1986

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Asst. Prof. Anuja
Sahasrabudhe
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Introduction –
- Daily we enter into many contracts, knowingly or unknowingly, by
expressed in words or implied by action.
- Entering the bus, signing the attendance sheet in examination hall
and many more.

- Hence it is important to know about contract.

- In India, all such contracts are govern by Indian Contract Act 1872
And is one of the most important act.

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Indian Contract Act ,1872
Concepts to learn-
• Agreement Vs. Contract
•Essentials of valid Contract
• Meaning of offer/ proposal
•Types of offers
•Acceptance and its essentials
•Communication of offer and acceptance
•Types of contracts
• Consideration and exceptions
•Discharge of contract
•Special contracts
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Came into force- 1st Sept, 1872
Itdeals with the promises which
create, legal obligation.
EXCLUDS,
Those promises which are made in
common life, which may be are
morally binding but creates NO
legal obligation.

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Continued..
B invites a friend S to dinner. B makes
elaborate preparations. S fails to turn up
for dinner and all the preparation made
by B go waste. Since this was a contract
between the parties, B cannot take S to
court for legal action against him for
breaking the commitment to come for
the dinner.
• How could it be said that the above
was not a contact although it was clearly
an agreement between the two friends?
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Agreement = Proposal + their
acceptance –Agreement Must made
by two person, one is making offer and
another is accepting this offer.
2.Intention to create legal relation -
Court would like to measure the
degree of seriousness. –
Not every loose conversation, not any
exchange of pleasantries, not a casual
social commitment, consider as a
contact.
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Lets discuss what do you think?

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Agreement Vs. Contract

Agreement = Offer + Acceptace

Contract = Agreement + enforceability



(Offer + acceptance)
Hence,
contract = offer + acceptance +
enforceability
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 Difference between agreement
and contract
Agreement Contract
1. Every promise and set of 1. Agreement enforceable at
promise forming consideration law
for each other

2. Offer + acceptance 2. Agreement + enforceability

3. May not create legal 3. Create legal obligation

Obligation

4. All agreements are not 4. All contracts are agreements

contracts

5. Not final and binding on 5. Final and binding on parties

parties 11
Essentials of a valid
Contract
1. Two parties –
- Promisor ( who makes promise)
- Promisee ( to whom pomise is
made)
2. Offer + Acceptance ( both lawful )
3. Consensus ad idem or identity of
mind
- Must have agreed on subject
matter of contract in same sense.
e.g. Mumbai and Pune property
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4. Agreement enforceable by law.

5. Must be for Consideration.

- Consideration means something
of a value
- It has to real, lawful , and can be
past /perfect/ future
- It can be in cash or kind ( kind is
nothing but anything other than
cash)

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6. Capacity –
-Person entering into a contract should e
major (age of 18 or more and of a
sound mind i.e. not lunatic)
- Should not be disqualified by law.

e.g. Person who is killer and court has

given the death sentence and has
ordered not to entered into any
contract can’t enter.

7. Free consent – contract should not be

entered by coercion, undue influence,
fraud, misrepresentation, mistake
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Coercion ( at gun point sing someone to
agree to terms of contracts.)
Undue influence – Person overpowering
another person and asking him to enter
into contract irrespective of other
person’s interest.
Fraud – something which is not legal, or
supported by law
Misrepresentation – misleading
sentences or fact
Mistake – Unilateral ( mistake from one
party )
- Bilateral ( mistake from both
parties)
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8. Object of consent lawful
e.g. any agreement which involves
purchase of stolen good is void.
- Its lawful unless its-
1. Forbidden by law
2. Would defeat provision of any
law
3. Fraud
4. Involves injury to person or
property.

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9. Agreement must not be expressly
declared void
- Agreement in restraint of marriage
- Agreement in restraint of trade
- Wagering Agreement i.e something
lost or won on doubtful event where in
2 people are holding opposite views
and where person has no other
interest except sum that he win or
lose.
- Agreement contingent ( unknown
event) on impossible event.
10. all other necessary formalities
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Cases for discussion
Case 1 –
Arjun enters into an agreement
with Bala. Agreement was, Arjun
will pay Rs. 1 lakh to Bala for not
getting married with Komal.
Bala did so and later Arjun denied
to pay.
Bala files the case, will he
succeed?
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Case 2
Priya, the owner of business
appoint an employee for monthly
salary. She further wants to enter
into contract with that employee,
by which she enforces the terms
wherein employee must have his
daily meals only in hotel which is
run by her friend. Can the
agreement be executed? Can it
be legally enforceable?
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Case 3
Manas paid rs. 20 lakhs to Ramesh to
secure job for his son in Govt. medical
hospital. In consideration of said
amount Ramesh was to influence
selection committee.
An advance amount of Rs. 5 Lacs was
paid but Ramesh couldn’t secure the
job
1. Can Manas go to court for
enforcement?
2. If answer to above question is No,
then can he claim refund of advance
payment? 20
Meaning and types of
offers
Sec 2(a) “when one person will signify to another person
his willingness to do or not do something (abstain)
with a view to obtain the assent of such person to
such an act or abstinence, he is said to make a
proposal or an offer.”

1. Express Offer:
 When an offer is made by words spoken or written it is called an
express offer.
2. Implied Offer:
 When an offer is implied by conduct of parties or circumstances of
the case it is called an implied offer.
e.g. – Bus stopping at particular stop
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Meaning and types of
offers
3. General Offer:
 When an offer is made to the public at large it is called general offer. This
offer may be accepted by anyone. For example, an offer to give reward to
anybody who finds the lost horse is a general offer.
 Though the general offer is made to the public at large, the contract in this
case comes to an end when any person acts upon the conditions of the
offer.
 E.g - fashion sale
4. Specific Offer:
 Specific offer is an offer, which is made to a specific or an ascertained
person. In this case, the person to whom the offer is made is only liable to
accept the offer.
e.g – I make an offer to your class, offer is – any one from your class with
attendance above 75% can take the responsibility and apply for post of
College representative . Roll no 10 submits the form for the same. Then
this is specific offer
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Meaning and types of
offers
5. Counter Offer:
 Counter offer by the offeree terminates the original offer. When in
place of accepting the terms of an offer as they are, the offeree
accepts the same subject to certain condition or qualification, then
a counter offer is said to be made.
 Original lapse and results in new

6. Cross Offer:
 Where two parties make identical offer to each other, in ignorance
of each others offer, this offer is termed as cross offer. In this case,
there is no contract because out of the two parties no one can be
called for acceptance.
7. Standing Offer:
 When an offer is allowed to remain open for acceptance over a
period of time, it is called standing, open or continuing offer.
Tenders are the example of standing offer.
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 Acceptance – ( to take something that is
offered)

Essentials-
1. Absolute and unconditional
2. Expressed in reasonable time
and manner
3. Must be communicated to
offeror
4. Can’t be implied by silence
5. Acceptance by conduct

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Communication of offer and acceptance

 When is communication of offer is complete?

- When it comes to the knowledge of a person
whom offer is made.

 When is communication of acceptance is

complete?
- As against offeror – when letter of
communication actually posted / sent
- As against acceptor- when offeror comes to 25
Example-

 Tanvi proposes by letter, sell of her house to Jay

for Rs. 1 cr. The letter is posted on 1.1.19 at 11
a.m.
 It reaches to Jay on 5th Jan 2019 at 5 p.m
 Jay accepts Tanvi’s offer by sending letter on
10th Jan 2019, he handed over the letter to peon
at 2 p.m but peon posted it at 3.00 pm on 10th
Jan 2019.
 Letter reaches to Tanvi on 15thJan 2019 at 11
a.m.
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 Types of Contract -
1. Express – Written / spoken

Its said to be expressed when it is entered into

by words spoken or written

2. Implied – terms of contract inferred from

act, conduct i.e. otherwise than in words.

3. Executed – Where nothing remains to be

done by either parties. Transaction is
complete. Parties have performed their duties

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4. Executory – something yet to be done

5. Quasi – Created by law ( not entered intentionally

), out of obligation.

Basic principle of quasi contract- One person should

not become rich out of other person’s loss.

e.g. Jwellery forgotten at B’s house originally of A.

6. Void – Not enforceable. They are void – ab- initio

i.e can’t be made valid by consent.

7. Voidable- Free consent is missing

Contract which can be rejected by one party on

legal grounds

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8. Contingent – Promisor performs his
obligations only when certain conditions met.

e. g. – LIC

9. E – contract – by software system

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Consideration -
 Quid – Pro – Quo Something in return of something.
 Legal rules/ Elements of consideration

1. Must move at the desire of promisor.

2. May move from promisee or any other person.

3. Past, Present, future

4. Something in return

-Need not be adequate

- Contract with free consent is not void merely because of

inadequacy

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5. Must be real and valid

6. Must not be illegal, immoral and opposed to public

policy.
 Exception to rule – ‘ No consideration, No contract’

1.Natural love and affection

e.g. – ‘A’ out of natural love and affection promises to

give his son ‘B’ Rs. 10,000/-. A puts it in writing and
make it a registered contract.

Nearness however doesn’t necessarily impart love and

affection

Essentials in this case are – In writing + Registered

+natural love+ between parties in near relationship
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2. Compensation for past voluntary services.
- A Promise to compensate fully or in part a person who has already
voluntarily done something or something he was legally bound to do
without consideration.
- Rendered to promisor

e.g – returning purse.

3. Promise to pay time barred debts.

- In writing
- Signed by debtor
- May be for full or in part
- Law of limitation

E.g- T owes to S Rs 10,000/- but debt is barred by law of limitation

( Prescribed time is over). Now T signs written promise to pay rs 5000/-
on account of time barred debt contract

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4. Completed gifts –

e.G – Ajay transfers flat to Vinay by duly written and

registered ‘ deed of sight ‘. This is valid even though no

consideration.

5. Agency –

No consideration requires to create agency.

Agency – where one person authorizes other to act on

his behalf.
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Discharge of Contract
 Contract brings with it certain rights and duties, when
such rights and duties come to an end or put to an
end- discharge or termination.

 6 modes of discharge –

1. By performance

2. By mutual agreement

3. By operation of law

4. By lapse of time

5. By breach of contract

6. By impossibility of performance 34
1. By performance –
- Most usual mode
- When both the parties perform their duties.

2. By Mutual agreement –

a. Accord and satisfaction – Less amount accepted as full

and final settlement. Hence new contract – Accord,
new payment – Satisfaction

b. Waiver and remission – Abandoning rights ,

Intentional ,Knowledge to both

c. Novation – New, substituting contract , change in

terms or parties

d. Rescission – Cancellation, base is missing free consent.

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3. By operation of law
- Insolvency
- death
- Refusing tender of performance

Eg- A offered B, B refused to accept. Hence A is not liable

for non performance.
-Facilities not provided-
e. A wanted Finished goods for from B. A was to supply RM
for the same but failed- then B is not liable
- Accepting performance from 3rd party –
- If promisee accepts from 3rd party – promisor is then cant
be held.
- - performance executed.

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Discharge by breach of contract
Breach- party refuses to perform
 Actual breach – either on due date of performance or
during course of performance.
 E.g - Anil promises to supply 100 bags of rice to Bala on
1.10.20. If on that day he fails to supply or supplies less
quantity it will amount to actual breach of contract.

 Anticipatory breach – Before performance date. Promisor

declares his inability to perform. In such cases aggrieved
parties can –
1. Immediate discharge + claim damages
2. Keep operative and wait till due date.

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 Discharge by lapse of time
- Specific or reasonable time period is over.
- Damages +claim – for non performance and non payment.

 Discharge by impossibility of performance

- Known to parties
- Unknown to parties
- Supervening impossibility

1. Destruction of subject matter

2. death
3. War
4. Change of law
- Impossibility cant be claimed in any and every
circumstances.
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Remedies for breach of contract

 Purpose – To put innocent party in position he/she

would have been if contract had been performed.
1. Suit for specific performance
2. Suit for injunction
Court may direct person to do or restrain from doing
something
Discretionary power of court

--------------------END---------------

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7. Consensus ad idem = _____

Answer in one sentence

1. What is the basic principle of
quasi contract?
2. When is the communication of
offer is complete?
3. When is the communication of
acceptance is complete?
4. name 6 modes of discharge of
contract
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