CONTRACT LAW

 Promisor - Person making the proposal

 Promisee - Person accepting the proposal
 Promise - Proposal when accepted becomes a promise

Note: Acceptance of proposal or acceptance of promise can be made orally or written

Social Agreements – Not legal agreements

eg. - Family matters

Consideration - When promisee does or promises to do something for promisor

 Agreement - Not legally enforceable by law

 Contract - Enforceable by law

Privity of Contract - 3rd person cannot sue any party in contract

i.e. Only parties under contract on sue each other

Competent Party - Competent to Contract

i.e. A person who can lawfully sign a contract

eg. Major; Sound Mind; Non-Defaulter

 Free Consent - Sign contract by own will

 Coercion - Force a person to come in contract by criminal ways
 Misrepresentation - Misleading someone and causing them to make mistake
intentionally

Coercion; Misrepresentation; Influence; Fraud; Mistake - Not by free consent (against the will)

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Note: When consideration is unlawful - agreement is void

Void Agreement - Which shouldn’t take place in the first place because of their unlawful nature

 Ignorance of Law - No excuse

 Ignorance of Fact - Can be an excuse

Valid Contract - Enforceable by law

Void Contract - Not enforceable by law because the contract itself is not legal from the
beginning
eg. Contract with minor (void contract)

 Ab intio - From beginning

 Voidable Contract - Contract declared to be void by the court when one party does
wrong to another party

Contingent Contract - Conditional Contract

i.e. if something happens only then contract is valid otherwise void or if something does not
happen only then contract is valid otherwise void

 Novation - When old contract is substituted by new contract

 Rescission - Cancellation of terms of contract
 Alteration - Modification of terms of contract

Quantium Meruit - On merit basis

i.e. As much a earned or in proportion to work done
eg. Injured party gets compensation according to work done by it

Quasi Contract - Partial Contract (does not come under contract or tort)

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Things to Remember:

 Contract - Agreement enforceable by law

 Void Contract - Not enforceable by law
 Voidable contract - Void at the option of one party

Minor and Guardian - Minor is considered major at 21 years of age with guardianship

Bailment - Temporary transfer of possession of property from bailer to bailee without transfer of
ownership

Note: All agreements are not contracts but all contracts are agreements

 Proposal plus Acceptance is Promise

 Promise from both sides is Agreement
 Proposal - When one party show willingness to do something and ask to obtain assent of
another party
 Acceptance - To accept proposal
 Consideration - Legal Bargaining (something in return for promise)

eg. Consideration

A gives Rs.10,000 to B
Rs. 10,000 - Promise

B - OK! I’ll give my phone in return for Rs.10,000

Phone - Consideration

 Consideration - Given at desire of promisor

 Consideration - Given by promisee

Free Consent - Free Consent is important in contract

Unlawful Act - Void

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Proposal when accepted - Becomes a promise

 Coercion - Committing or treating to commit an offence with intention of causing a

person to enter into agreement i.e. to threaten to make another sign agreement
 Undue Influence - To manipulate wrongly
 Fraud - To lie or not telling truth

Difference between - Fraud and Misrepresentation

 Fraud - Person knows the statement made by him is not true

 Misrepresentation - Person thinks statement made by him is true

Note: When there is no consideration in agreement - void agreement

Free Consent - Required most in agreement and contract

Betting - Void (not a contract)

i.e. When there is uncertainly – there is no agreement

Note: Parties must agree on same thing in same sense for a valid contract

Bonded Labour - Against law in India

i.e. No bond is valid for employment

Caveat Emptor - Buyer Beware

Note: Time is important in contract

Consenses ad idem - Parties must agree or disagree on same facts

i.e. if there is no Conseneus ad idem - contract is void

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Restraint - To stop someone from doing something

Vakalatnama - A document by which party authorizes the advocate to represent on their behalf

Note: An advocate under Vakalatnama could not sue his dient

Contract between A and B

 A made proposal to B
 B informs A that he has accepted the offer from his side
 Contract is valid between A and B

Contract:

 Void - Minor; Unsound Mind; Unlawful (illegal)

 Voidable - Fraud; Misrepresentation; Undue Influence; Coercion

Note: If no legal obligation - Then no agreement or contract

Discharge of Contract:

 By - Performance
 By - Impossibility (contracts end due to impossibility of performance)
 By - Agreement

Important Terms:

 Novation - New agreement

 Rescission - Cancellation of agreement
 Alteration - Modification of agreement

Breach of Contract:

Note: Remedy - Compensation

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Damages - Compensation

 Liquidated
 Unliquidated
 Quantum Meruit - According to proportion of work done i.e. compensation accordingly

Contract - Right in Personam

i.e. Against specific individual

Tort - Right in Rem

i.e. Against the world at large

Gratuitous Act - Done for free

Marriage of two unsound mind people - Valid with consent of guardians

Remember:

 Offer + Acceptance = Promise

 Promise + Consideration = Agreement
 Agreement (Enforceable by Law) = Contract

Note: All contracts are agreements. All agreements are not contracts.

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