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Every promise and every' set of promises fonning the consideration of each other is an ac:rccmcnt .
Promise is a proposal when accepted.
Proposal when one person signifies to~ciherhis willingness to do or abstain from doing anything with a view to obtaining the assent of tlrat other to such acts or abstinence he is said to ~ake a proposal. Acceptance is when the person to whom the proposal is made signifies his assent thereto the proposal is accepted. Promisor Promisee Making the proposal Accepting the proposal.
Consideration .. when at the desire of the promisor, the promisee or any other person has done or abstained from doing or does or abstains from doing something o~ such act or
Agreement. Intention to create a legal relationship. Free and genuine consent. Parties competent to contract. Lawful Consideration. Lawful object. Agreement not declared void or illegal. t- Certainity of meaning.
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Offer ,acceptance, consensus - ad idem Not social or domestic. Not misrepresentation,fraud,coercion ,mistake,undue influence. Major,sound mind, not disqualified by law. Nudum pactum( a bare promise) Not unlawful
Precision.
Impossible
\Vriting, wherevcr
i Necessary i
Possibility ofper.fonnae.
acts excluded.
registration rcquired. and attestation
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legal formalItIes.
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2 3
4 5 6 7 8 9
1 2 3 4 5 6 7
Acceptance must be absoloute and unaualified. It must be communicated. It must be according to the mode prescribed. It must be given within the reasonable time specified or within reasonable time. It must be in response to an offer. It must be made before the offer lapses. It must be given by the person to whom the offer is made.
TERMINATION OF AN OFFER
I 2 3 4 5 6 7 An offer lapses after stipulated or reasonable time. An offer lapses by the death or insanity of the offeror or the offerree before acceptance. An offer lapses on rejection An offer terminates when rejected It terminates by counter offer It terminates by not being accepted in the mode prescribed or in usual and reasonable manner. A conditional offer tenninates when condition is not accepted--_J
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M i~representation Mistake
Party can sue for damages. Innocent mistake of fact. Consequences are same as fraud except cannot sue for damages. Of fact ( bilateral/unilateral) and oflaw.
RULES REGARDING
CONSIDERATION
Consideration must move art~e desire of the promisor i.e. not at the
may move from the promisor or an need not be adequate. must be real and competent. a contract cannot maintain suit. must be leQal.
DISCHARGE OF CONTR~CTS
~ By performance or tender
/ Rescission
/ Alteration
/ Remission)
,. By subsequent impossibility ( Destruction of subject matter / death or disablement of parties / subsequent illegality / declaration of war / non existence or non occurrence of a particular thing) Exceptions: Difficulty of performance / Commercial impossibility / Strikes; lockouts; civil disturbances (unless contract specifically mentions ). ~ By operation of law ( death; insolvency ~ merger: unauthorised alteration of the terms of contract) y By breach ( anticipatory / actual)
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Undue Influence
Where he holds a real or apparent authority over the other / or where he stands in a fiduciary relationship / where he makes a contract with a person whose mental capacity is affected by age or illness for example: parent/child, guardian/ward; doctor/patient ;guru/disciple . consequences are that contract. is voidable. Burden of proof could lie on the person with
power. Stating of a fact not true deliberately; the active concealment of a fact; a promise made without i intention of perfonning it ; any act litted to deceive;
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Fraud
any.
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:(-)
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BAILMENT Charecteristics
1) Delivery of goods ( actual! constructive) 2) Contract 3) Return of goods Duties of a 8ailor 1) To disclose faults in the goods
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-' 4 5 6 Duties of a Pledgee Taking care of the goods! not putting the goods to unauthorised use! return of goods including accruals Rights and duties of a Pledgor can be drawn from the above duties and rights of a Pledgee.
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Contracts
of (;uarentce
Iindemnitv
1) In a guarentee there is a threeway agreement between the debtor; the creditor and the surety wheras in the case of indemnity there is only the indemni fied and the indemni fief.
Rights and obligations of the creditor in a contract of guarentee : He can claim his dues ITomthe surety as soon as the debtor fails to fulfill his obligations. He need not wait for exhausting all the remedies .
,
However it is expected that the creditor would not change the agreement without due consultation and agreement of the surety. Also he should not release the principal debtor from his debt. Not to infringe on the rights of the surety. Forbearence of action against the debtor does not absolve the surety from his obligations under the contract. Rights of surety Right of subrogation that is when the surety discharges the debts the rights of the creditor pass on to the surety as far as claiming the same from the debtor is concerned .( w.r.t. securities I bonds etc... ) Right to be indemnified ( for sums paid) Rights against co sureties to claim their part of the contribution in case he has paid in excess. Liabilities of surety It is co extensive Withthe debtor. Discharge of Surety I) 2) 3) 4) 5) 6) By notice of revocation By death of surety By variance in terms of contract By release or discharge of the principal debtor By giving time or agreeing not to sue the principal debtor By creditor's act of omission
A(;Ef\;CY
Acent
Duties To conduct the husiness of an agency according to the principal's directions and not deviate even for the benefit of the prin.. To conduct the business with the skill and diligence generally possesed To render proper accounts In case of difficulty to communicate with principal Not to make any secret profits
Rights
Right to retain moneys of the principal towards advances / expenses Right of lien i.e to retain properties of the rincipal for commissiom , expense etc Right of stoppage - in - transit in some cases such as del credere agent Right to be indemnified for all acts done within his ri1!hts.
Not to deal on his own account Not entitled to remuneration for bad business conduct
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Titansues\ \
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I TITAN
I
j pany. . i The company bas obtained a I stay from a civil court. restraining i Vasanth Nangia. its former chief Ioperating -officer (jeweDery diviI
sian),fromWodangasthe CEO of I Oyzterbay, Bangalore-based a jeweUery ston: start-up, as it violated an employment contract signed by Nangia with Titan. Nangia resigned with two others last year and !\et up Oyzterbay in June 2000. Oyzterbay specialises in designer jeweDery aimed at youngsters. a segment which Titan's jewellery brand Tanishq has not ventured into till now. The stay order becomes significant as Titan is planning in the next two weeks to ('orne out with its own range of jewellery ('atering to the younger segynt'flt of the Indian populac<" in din"\'t c()mpt~ tition with O)'z1erbay. Ineidt'ntally, Oyzterbay\ jew. dlery is priced in the ,Wt'rag-t.
rdnge of Rs 2()O to Rs ;-,...JO.'\lit' av-
restraint.
under Indian taw.is in vio1ation Section 'Zl of ~ of the Contract Act, Such contracts are Wr t- cnforceable. void. and 3j.f<\insthe public t
eraRt:' price band of the Tanishq rang-eof jewellery is arotlnd Ihrt"\, limes more'\lIt:' case says that the emplo\'ment contrxt sig-nedby
-CONTINUED ON PAGE 12
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: 1 he CommIssionobserved t
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: the parking ;u'ca has : handedby uverIAA to the llcen : ment the under the. ilgT
: nn the temls and condilion
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: whl,'h w~re p;trked o~. payll:Z : ul pr."SCnhedcharges. .documents are required to stake ~ DSMehta : In"ixinglheprieeufcar~ ; the claim for the loss?: : ;-':;ltinn;.1Cllmmis..;iun diffem Airport Authurity W;ISas much with the St:lle Commission; 1 . National Cpnsumer Disputes Redressal Commission, in Ma- : responsihle for taking can: of VI:- : hdd th;lt the price shown for ~ hesh Enterprises vs Arun Ku- hide entrusted to its licens.:e as purpose uf the insurance nuj mar Gumber has givendear rul- : the licensee him.-.clf.It directed: nut he ;1 currect market pnC!'
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by.
the
~ontra,ctor
Consumer Corner
: the
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: The ar
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some of these issues. The ruling is of considerable interest to all vehicle owners. The o,m-:
1.35.972 heing the amount shown for th.: purpose of iosur-: ancc of the C:IT and Rs 5000 on
i..'h.641S.
tional Airport to see off his: District Forum. IAA as wdl as brother. He parked his Maruti the Mahesh Entcipriscs fikd;1I1 car in the authorised parking: 'appeal before the State Com- : area. The complainanton t.is re- : mission.The Intern;ltion;11 Air-: turn found that the carwasmiss- port Authority urged that the
~ ~ ~ ~
: : tion
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TIlc cllmplainantused tl c.lr for almost four years. 11 Commissiun held that dedt
'10 .lCcount of dcpreciatil
: hadto be made{or-I)'ears,
nut {or une YC41r held by as
: :
~
trict Forum impleading the Indira Gandhi International Air- : complainant. : the name :lOdaddn..-sses 0 of port Authority and Mahesh ~ The State Commission. on ur two p.:rsuns available on
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entire managemcnt of the parking was handed over tll th~ licensce. Mah\.'Sh Enterpn:;es: urged that the facts alleged by the complainant did not consti. tute bailment and the contr.lctor was not liable to indemnify the: appraisal of the evidence: :lOd in
: ownct!?kthy.vchiclehow(
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: : the
~
: spot
~
'\,\'ho if necessary
could,
account of compensation. International Airpon Authority (IAA) argued that the: complainant did not hire the ser.
: constitute bailment and the per- : the st:mJ in lerms of receiPt : son responsible for thc manage- : sued to him hy the cuntractor
~
ment of the parking are was liable to make good the loss. The: the finding that lAA was not liablctosatisfythedaiminview:
is 1,
considerable significance to a
~
: of aause
~
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: hide for parking on payment.1 : port Authorityand Mahesh En- : parking fees:lOdissuesa recell : terprises. : is hailce in tcrms of Section I.
entered into betWeen the AirIt held that lAA was not li~ ~
;Iuthorily.whichreceivesIhe ",
IndianContr;..-I Aclandis r .
\':::oJ\. ,.1' :~;~ C'~ ;: IiI': tJU'Lh;t~
abk 10 pay any amount h~ Ihe ~lx'n~lhle Ic~r I~e ;-..f. "'!'':: ;"::1 complamant. The State (01- : \eh:::~.: ;" In.: balkr. .\ I".. .....
mi~sion fix~li ;>ricc," !!:~ ;,jarull 1,22.375, Sol ,c":~"G.; pc:liuon. Ihe J\:a-
: C.-.r ai ~s
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lkpr':Clauon.
On -., -
Ihe : Fmtl/r.l."''''Ir:''_'~'III(''.\<lI/l)(J.clJ''
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Given below is a no',v chart enlHJ!.cratl"<' as per the definitions ghr~n under
the essential
of a contract
Contrad
i
Enforceable
I by law (5.10)
An offer
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Capacity (55.11-12)
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1
Acceptance (5 2b)
Consideralioo (ss.23-25)
Minol" (s.lI)
Unsound mind
Lunatics
LC:fal L'
r
Coercion (s.15)
incapacit.y (under particular laws lil-:c Insurance, Company Law (3:::.nking; etc.) ,--I Undue Fraud Misreprcsentation Inf1\1enc~ (s.17) (s.18) (s.16)
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Mistake (s.20)
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ofbolh pa':i~
(S.2~J
G![,let (s5.20,22)
oflaw (s.21)
"---,
in restraint oi trade (5.27)
-f
ambiguous agrecmcnt (s.2a)
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