The Contract Act 1872

Index

Definitions Classifications of Contracts Essential Elements of a Valid Contract Discharge of a Contract Breach of Contract and its Remedies Law Relating to Agency, Guarantee and Pledge.

Definitions

When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a PROPOSAL or OFFER A Offer when accepted, becomes a PROMISE of the offerer When a person to whom the proposal is made, signifies his assent thereto, the PROPOSAL is said to be ACCEPTED

The person making the proposal is called the "PROMISOR", and the person accepting the proposal is called "PROMISEE

Definitions

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, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a CONSIDERATION for the promise; Every promise and every set of promises, forming the consideration for each other, is an AGREEMENT; Promises which form the consideration or part of the consideration for each other are called RECIPROCAL PROMISES

Definitions

FUTURE When, at the PRESENT the promisor, the promisee or desire of Consideration Consideration any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a CONSIDERATION for the promise;

PAST Consideration

Every promise and every set of promises, forming the consideration for each other, is an AGREEMENT;

Definitions

An agreement enforceable by law is CONTRACT Therefore CONTRACT = Agreement Enforceability by Law. AGREEMENT = Offer + Acceptance The law of contract is not the whole law agreements.(Balfour vs. Balfour) The law of contract is not the whole law obligations.

a +

of of

Classifications of Contracts - An agreement becomes a

contract when all the essential elements of a contract are present. In such case such agreement becomes a contract. If anyE.g., agreement with minor orthen such contact is without void, of the essential elements are missing an agreement voidable, illegal or unenforceable

BASED ON THE VALIDITY:

consideration is void-ab-initio

VOIDABLE CONTRACT: An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract. VOID AGREEMENT: An agreement with an alien to import be void. A void agreement does contract not enforceable by law is said to prohibited goods. Mr. A not create any legal right or obligation. Such agreement is void-ab-initio from the beginning itself.
Ex:

Mr. B borrows Rs.5,000 from Mr. A and enters into a

knows of the purposes of agreement. The transaction between ceases to and Mr. A law becomes void when it main VOID CONTRACT: A contract whichMr. B be enforceable by is collateral to the ceases to agreement. It is illegal entered into, may agreement is illegal. be enforceable. In this case when the contract was since the main be valid and binding on the

parties as per law, but subsequently it has become void. E.g., in the case of import contract, the agreement is enforceable, but if subsequently war brakes out then the agreement becomes void contract.

ILLEGAL AGREEMENTS: an illegal agreement is one, which transgresses (against) some basic rule of Public Policy or is of criminal in nature or is immoral. ALL ILLEGAL AGREEMENT IS VOID, BUT ALL VOID AGREEMENTS ARE NOT ILLEGAL. An illegal agreement is not only void between the immediate parties but has its further effect that even the collateral transactions to it become tinted with illegality. A collateral transaction is one, which is subsidiary, incidental or auxiliary to the principal contract. UNENFORCEABLE CONTRACT: An unenforceable contract is one which cannot be enforced in a court of law because of some technical defect such as absence of consideration or absence of contract in writing. The parties to the contract may fulfill their obligations but in the event of breach of contract the other party cannot enforce it.

Classifications of Contracts

Case Law: a fire broke out in Ss firm. He called upon the upton fire brigade to put out the fire which the latter did. Mr. S firm did not come under the free service zone although he believes to be so. BASED ON FORMATION: Held, he was liable to pay for the service rendered, since the services was rendered on the implied promise to pay (Upton Rural District Council vs. Powell)

Express contracts: If the terms of the contract are expressly agreed upon (whether by words Example or written) at the goods at Mr. A s house by spoken Trader leaves the time of formation of contract. mistake. Mr. A treats the goods as his own. Mr. A is
bound to pay for the goods.

Implied contracts: in this case the contract comes into existence by the acts or conducts of the parties -E.g., Getting into a Public bus. Quasi contract: strictly speaking quasi contracts are not contracts. They are called Quasi because the obligations associated with such transactions are neither contractual nor tortious. A quasi contract is one, which is created by law. It is based on the principle that a person shall not be allowed to enrich himself unjustly at the expense of another.

Classifications of Contracts

BASED ON PERFORMANCE:

Example Mr. A entered into a contract with the porter for lifting his 5 bags. Porter agreed and lifts all the 5 bags for Rs. 100. So here the porter has lifted the bags and Mr. A has paid him.

Example Mr. A entered into a contract with the porter for lifting his 5 Executed Contract: A contract bags. Porter bothhasto lift lifted the bags in which agreed not all theto bags the parties 5 the for Rs. 100. So here the porter contract have completelyAperformed their share of obligation and and Mr. has not paid him.

nothing remains to be done by either of the parties

Executory Contract: A contract in which both the parties or any one party to the contract has to still perform their share of obligation

Unilateral Contract where any one party to the contract has to still perform their share of obligation Bilateral Contract - where any both the parties to the contract has to still perform their share of obligation

Essential Elements of a Valid Contract

All agreements are contracts if they are made with:

Offer and Acceptance Intention to create a legal relationship Lawful Consideration Capacity of the Parties Free Consent Lawful Object Certainty and Possibility of Performance Legal formalities

If any of the above is missing, the contract becomes void.

Mr. are Essential E.g., Mr. A has 3 cars.myaaskedRs. 2 lakhs.you ready Elements ofHecarValidB Contract to purchase for

Offer and Acceptance

There must be minimum two parties to an agreement.

I.e. one party making the offer (also called offerer/proposer/promisor) and the other accepting it (also called offeree/proposee/promisee/acceptor) The terms of offer must be definite Acceptance must be unconditional.

as

as

Essential Elements of a Valid Contract

Offer Meaning:
A

person is said to have made a proposal/offer, when he signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence

Offer - Kinds of offer:

E.g., When A says to B, Will you purchase my house at Chennai for Rs. 3 lakhs. . E.g., When a transport company runs a bus on a particular route, there is an implied offer by the transport co. to carry passengers for a certain fare. The acceptance Expressed the offerWhen offer as soon as a passenger boards or written offer - is complete is made by express spoken of words the bus.

Implied offerE.g., If Mr. A asks to B, for his blue carfrom the conduct of - An offer may also be implied for Rs. the parties or the circumstances cannot case. the offer. 2,00,000/-, Mr. C of the accept Specific offer - When an offer is made to a definite person, it is said to be Specific Offer. It can be accepted by the person to whom it is made. General offer When an offer is made to the world at large

Case Law: A hotel put a notice in a bed room, exempting the proprietor from liability Case clientsE.g., Mr. A has 3 cars. He was Mr. Bservant as it came to the for loss of Law: Lalmann v/s Gauri Dutt- E.g.asked not effective L ready to of his goods. Held, the notice G sent his are you in search missing nephew. Subsequently contract to The reward for informationbeen knowledge of the purchase my car for Rs. announced aoffer is not definite. client only when the G 2 lakhs. take a room had already The offer concerning the boy. with an intention to create legal relationship A social invitation entered into. must be givenL brought back the missing boy, without- the knowledge even if it is accepted, does not create a legal relationship because it is not intended so. of reward. It was held that there was no contract between L & G and the reward cannot be claimed. P deposited a bag in the cloak room of a railway station. On the face of the ticket, The terms of the offer must be definite: the terms of the offer must be definite and certain issued tomust not be ambiguoussee back. One of the printed conditions limited the and him, was written or vague. liability of the company for loss of a package to Rs.10/- The bag was lost and P claimed Rs. 24.50/-communicated: Held, P to be bound by the be communicated to back Offer must be as its value. an offer was complete must conditions on the the of theperson even if he had not read. Mere by acting to the terms of the offer without ticket to whom the offer is made.

Legal rules to offer

Eg: A offers his black kinetic to B for Rs. 20,000/- and tells him that if I dont hear anything from you within 15 days, I will assume that you Offer may be conditional: When the offer is subject to conditions, they must be clearly have accepted the person accepts the offer valid communicated to the offeree. Ifmy offer. This offer is notwithout the knowledge of the
conditions the offeror cant claim the fulfillment of conditions. But the conditions are clearly expressed, then offeree can plead ignorance.

knowledge, the offer cannot be treated as accepted. An acceptance of offer in ignorance of offer is no acceptance and does not confer any right on the acceptor.

Offer must not contain a term that non-compliance of which may be assumed to amount to acceptance: the person making the offer cannot say that if acceptance is not communicated by a certain time, the offer would be considered as accepted
statement of price is not an offer: a mere declaration of intention or a a mere statement of price is not construed as an offer to sell.

Offer and other forms

There is a clear difference between offer, invitation to offer or an announcement: An announcement: a declaration by a person that he intends to do something gives no right of action to another. Such a declaration only means that an offer will be made or invited in the future and not that an offer is made now. E.g., Auction sale, will, etc. An invitation to make offer: display of goods by the shopkeeper with a price marked on it does not makeA invites but merely gives supply of 100 bricks. X, Y, and Zan Eg: an offer, tenders for the an invitation to the public to make Eg; a railway Co. invited on it. E.g., quotations, catalogues, Iron which offer to buy the goods atTender. A accepts tender for certainby X. articlesis submit the the price marked the tender given There it might require over a year. Ws tender was accepted. He advertisements, prospectus issued by the company, etc. binding contract between A and X

supplied goods for some time. He refused to supply at a later time. But the contract is binding ad). Tender is an offer to the invitation of an offer. (public on W

Tender can be definite offer to supply specified goods and services. Tender can be standing offer.

Essential Elements of a Valid Contract Acceptance Meaning:

When a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise Acceptance may be implied or expressed. In express acceptance, while that given by conduct is termed as implied acceptance.

Legal rules to acceptance

Eg; A offers his car to B for Rs. 50,000/- B accepted the offer and paid Rs. 49,000/- cash down and promised to pay balance of Rs. 1,000/- by tomorrow. This is no acceptance Case Law: on 08th June, Mr. M offered to take shares in R Co. He received a letter of acceptance makes an offerNovember 23. He you accepttake offer Eg: a from R Co. on to B and says if refuses to the the shares. Unconditional was entitled to refuse, as his offer hasmust be absolute/complete An acceptance in order Held, Mr. M, - reply by wire. B sends to be bindingpost. It isas the valid lapsed reasonable the reply servant L search Case Law: Lalmann v/s Gauri Dutt -be to all terms of offer. in not a of his G sent his by and unconditional. The acceptance must period during which it could be accepted had elapsed (Ramsgate Victoria acceptance. missing nephew. Subsequently G announced a reward for information Communicated to the offeror Hotel Co., vs. Monteflore) concerning thein theL brought back theifmissing boy, without according to mode Must be given boy. prescribed mode - the acceptance is not the knowledge of reward. It was held or reasonable, there is no contract. prescribed, or some usual that there was no contract between L & G and the reward cannot limit is specified, the acceptance must be Given in a reasonable time - if any time be claimed.
given within that time. If no time limit is specified by the offeror, then it must be given within a reasonable time and allotted the shares toof the case who had not Company it depends on the facts a person Must be given by the parties, to whom the Subsequently,When an offer is made to applied for them. offer is made - when he applied for a particular person, itshares he was unaware alone. If it is accepted by another can be accepted by him about previous allotment. Thus, person, there is no valid acceptance previous allotment is void. Must be given before the offer lapses or withdrawn It cannot precede an offer Once the offer is rejected it cannot be accepted by the offeree, unless the offeror

renews the offer

It cannot be implied for the silence - the acceptance of an offer cannot be implied from the silence of the offeree, unless the offeree has, by his previous conduct inducted that his silence means the acceptance.

Lapse or termination of offer

I. By communicating the notice of revocation - Offeror can give notice of revocation to offeree but before the acceptance is complete as against him.

e.g., At an auction sale, A makes the highest bid of Bs goods. He withdraws the bid before the fall of the hammer. The offer has been revoked before its acceptance.

II. Lapse of Time - If the time is fixed in the offer then offer revokes when the fixed time is over, otherwise after the reasonable time.

e.g., A seller on Thursday offered wool to a purchaser and gave him 3 days time to accept. The purchaser accepted the offer on Monday, by that time A had sold the wool. Held, the offer had lapsed.

III. By non-fulfillment by the offeree of a condition precedent to acceptance

E.g., S a seller agrees to sell certain goods subject to the condition that B, the buyer, pays the agreed price before a certain date. S had sold the wool. If before the date buyer did not pay then the offer is revoked.

IV. By death or insanity of the offeror provided the offeree comes to know it before acceptance. But If he accepts an offer in ignorance of the death or insanity of the offeror, the acceptance is valid.

Lapse or termination of offer

V. By counter offer - When offer is accepted with some modifications in the terms of the offer, then it amounts to counter offer. By putting counter offer the original offer comes to an end.

E.g. A asks B, Are you ready to purchase my flat for 10 lakhs. B asks A, Are you ready to sell it to Rs. 8 lakhs. Bs question to A is a counter offer. E.g. An offeree agreed to accept half the quantity of goods offered by the offeror on the terms and conditions as would have applied to the full contract. Held, there was no contract as there was a counter offer to the offer.

VI. If an offer is not accepted according to the prescribed or usual mode provided the offeror gives notice to the offeree within a reasonable time that the acceptance is not according to the prescribed or usual mode. If the offeror keeps quiet, he is deemed to have accepted the acceptance.

VII. If the law is changed. An offer comes to an end if the law is changed so as to make the contract contemplated by the offer illegal or incapable of performance.
VIII. Destruction of subject matter: - A offers B his cow for Rs. 4500/- In the mean time, the cow dies due to snake bite. The offer is lapsed. Rejection of offer: - An offeree may reject the offer. Once he does that he cannot subsequently accept it. Rejection of the offer may be express or implied.

Express Rejection: The offeree may reject the offer expressly, i.e., by words written or spoken. This is effective only when notice of rejection reaches the offeror. Implied Rejection: Rejection of the offer is implied by law- where the offeree makes a
counter-offer or where the offeree gives a conditional acceptance

Communication of Offer.

E.g., A Proposes, by a letter, to sell a house to B at a certain price. The letter is posted 10th July. It reaches B on 12th July. The communication of the offer is complete when B receives the letter, i.e., on 12th July.

E.g., in the above case, when B accepts As Proposal, by a letter sent by post on 13th instant. The letter reaches on 15th instant. The communication of acceptance is complete, as against A, when the letter is posted, i.e., on 13th, as against B, when the letter is received by A, i.e., on 15th. (Case of NT Rama Rao)

The communication of a proposal is complete- when it comes to the knowledge of the person to whom it is made.

The communication of an acceptance is complete as against the Proposer, when it is put in a course of transmission to him so at to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the Proposer

Revocation of Offer
Revocation means taking back or Withdrawal or cancellation.

Communication of Revocation of Offer

E.g., A Proposes, by a letter, to sell a house to B at a certain price. The letter is posted 15th May. It reaches B on 20th May. A revokes his offer by a telegram on 19th May. The telegram reaches B on 21st May. The revocation is complete as against A when the telegram is dispatched, i.e., on 19th May. It is complete as against B when he receives it, i.e., on 21st May.

The communication of a revocation is complete -as against the person who makes it (i.e. for the revoking party), when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; (i.e. when the letter of revocation is posted.) (For the opposite party) as against the person to whom it is made, when it comes to his knowledge (when the letter reaches him)

Ex: Mr. A proposes by a letter sent by post to sell his house to Mr. B. the letter is posted on the 1st of the month. Mr. B accepts the proposal by a letter sent by post on the 4th. The letter reaches Mr. A on the 6th.

Time for Revocation of Proposals and Acceptance

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not Mr. A may revoke his offer at any time before Mr. B posts his letter of acceptance, i.e., 4th but not afterwards afterwards.
Mr. B may revoke his acceptance at any time before the letter of acceptance reaches Mr. A, i.e., 6th, but not afterwards

An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

Loss of letter of acceptance in postal transit:

Acceptance is complete as against the offeror as soon as the letter of acceptance is posted. The contract is complete even if the letter of acceptance goes astray or is lost through an accident in the post. But in order to bind the offeror, it is important that the letter of acceptance is correctly addressed, adequately stamped and posted, Otherwise the acceptance is not complete

Revocation how made

A proposal is revoked (1) by the communication of notice of revocation by the Proposer to the other party; (2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance; (3) by the failure of the acceptor to fulfill a condition precedent to acceptance; or (4) by the death or insanity of the Proposer, if the fact of the death or insanity comes to the knowledge of the acceptor before acceptance.

Essential Elements of a Valid Contract Consideration Meaning:

When a party to an agreement promises to do something, he must get something in return.

E.g., A agrees to sell his car to B for Rs.15000/-, for As promise the consideration is Rs.15000/- and for Bs promise the consideration is the car.

This something in return is defined as consideration. .

Legal Rules to Consideration

Move at the desire or request of promisor - An act constituting consideration must have been done at the desire or request of the promisor, if it is done at the desire of the third party or without the desire of the promisor it will E.g.,not be a good consideration. A borrows Rs. 20,000/- from B at a rate of 10% p.a. but A fails to pay the amount. B

is now about to file a Promisee orA agreesPerson toThis means that asrate as there is a consideration for a suit and any other now pay a higher long of interest. B agrees for It may move from the not filing a it is immaterial who has furnished it. But aconsideration. promise suit. This forbearance is a valid stranger to the consideration will be able to sue only if he is a
party to the contract

It may consist of an Act or Abstinence (means not doing something) Consideration can be past, present or future It need not be adequate - Consideration as said something in return and something this something in return need not be equal in value to Something given. The law requires that the contract must be supported by consideration and not the adequate consideration. Must be real & not illusionary - There is no real consideration in the following cases: Physical impossibility: A promises to put life into Bs dead wife on the consideration of Rs.999. As promise is physically impossible to perform. Legal impossibility: A owes Rs.500 to B, he promises to pay Rs.50 to C, the servant of B, who inreturn promise A from the CL: There to dischargepromise liability. This is the vakil an because C cannot dischargethe suit was was to pay to legally impossible, additional sum if A from the debt due to B. a Uncertain E.g., supari toA engages for doing certain theand promises consideration. some. successful.noconsideration: promiseB was void forwork Some. The promise isaunenforceableThetovakil Held, the kill someone. the Reasonable want of to pay Reasonable due There is recognized method of ascertaining uncertainty. was under a pre-existing contractual obligation to render the best of his services

under the original- contract. (Ramachandra Chintamanbe unlawful. A consideration to the Should not be illegal the consideration given for an agreement must not vs. Kalu Raju)
contract must not be against Public Policy, Immoral and illegal It must be something which the promisor is not already bound to do: a promise to do what one is already bound to do, either by general law or under an existing contract, is not a good consideration for the new promise, since it adds nothing to the pre-existing legal or contractual obligation.

Exception to theA,rules of considerationRs. Eg: On a birthday party of his father Mr. B promises to give him
10000/-. Mr. B puts his promise in writing and gets it registered it. It is a valid consideration.

Where an agreement is expressed in writing and registered under the law for the time being in force for the registration of the documents and is made on account of natural love and affection between parties standing to the near relation to each other, it is enforceable even if there is no consideration Promise to pay a time-bared debt: A promise to pay a timebared debt by the debtor is enforceable provided it is made in writing and signed by the person to be charged therewith or by his agent. The debt must be such of which the creditor might have enforced payment but for the law for the limitation of suits Completed gifts Compensation for the past voluntary services Charitable subscription

Exception to the rules of consideration

Completed gifts

The rule No consideration, no contract does not apply to completed gifts. In order to attract this exception there need not be natural love and affection or nearness of relationship between donor and donee. The gift must, however, be complete.

Compensation for the past voluntary services - is binding.

E.g. P finds Ss purse and gives it to him. S promises to give P Rs. 100/- This is a contract i.e., A promise, to compensate, wholly or in part, a person, who has already voluntarily done something for the promisor, is enforceable, even though without consideration.

Exception to the rules of consideration

Contribution to Charity:

A person to contribute to charity , though gratuitous, would be enforceable, if on the faith of the promised subscription, the promisee takes definite steps in furtherance of the object and undertakes a liability, to the extent of liability incurred, not exceeding the promised amount of subscription. E.g. The defendant had agreed to subscribe Rs. 100/- towards the construction of a Town hall at Howrah. The plaintiff (secretary of the town hall) on the faith of the promise entrusted the work to a contractor and undertook liability to pay him. The defendant was held liable. But where the promisee had done nothing on the promise, a promised subscription is not legally recoverable. E.g. The defendant promised to subscribe Rs. 500/- to a fund started for rebuilding a Mosque but no steps had been taken to carry out the repairs. The defendant was held not liable and the suit was dismissed.

Doctrine of Privity of Contract

Meaning:

Dunlop Pneumatic Tyre Co. V Selfridge and Co. # D entered into a contract of sale of certain tyres to P.

# The contract provided that P shall not sell the tyres below the list price. Also, the contractis that that P shall, at time of resale, The general rule provided only the parties to impose a condition on the retailer that sale by retailer shall not be contract can sue and be sued upon the contract. made below the list price.

In other words, if a person is not a party to the # P sold certain tyres to S. S resold certain tyres below the list contract (i.e., a stranger to contract), he cannot price. sue. # In a suit instituted by D against S, the court held that such suit was not maintainable since there was no Privity of legal bonding It implies the mutuality of will and contract between S and D. parties. between the A who is indebted to B, sells his property to C. C promises to pay off the debt to B. When C fails to pay; B has no right to sue C, because he istostranger to contract. It refers a the relationship between the parties who have entered into a contract. Stranger to Contract V. Stranger to Consideration

Exceptions whose favour a to Contract has the Stranger Trust or` other interest in some Beneficiary, in immovable property has been created can enforce it, even rightthough he isin the following (Madhu Trading Co. V to sue not a party to the Contract cases: UOI).

husband whoCharge A Trust or was separated from his wife executed a separation deed
by which he promised to pay to the Trustees all the expenses for her maintenance. Held, the agreement created a trust in favour of his wife and could be enforceable by her (Gandy V. Gandy). X receives money from Y for paying it to Z. X admits the receipt of that amount to Z. Z can recover the amount from X, even though the money is due from y.

Marriage Settlement, Partition and other family arrangements; and such agreements is reduced to writing. Acknowledgement ofto the amount on a Negotiable liability; by past A holder in due course is entitled The Purchaser of though there is no agreement between him and Instrument, even immovable property performanceby certain conditionswho has notice that the owner of thereof the land is bound or covenants created by an the maker/drawer. agreement affecting Assignmentaofthe land, shall be bound by such conditions, even a Contract though he is not party to the original agreement containing those conditions or covenants. Contracts entered into through an Agent Covenants running with land

Essential Elements of a Valid Contract Free consent Meaning

The consent of parties are said to be free when they are of same mind on all material terms of contract. The parties are said to be of same mind when they agree on 3s Same subject matter Same sense Same time If any one of the following elements are in agreement, we can say that there is absence of free consent Coercion Undue Influence Fraud Mistake Misrepresentation

Coercion
E.g.

Coercion" is the

A threatens B to shoot him if he does not release him from debt which A owes to B. This is coercion.

committing, or threatening to commit, any act/crime or the unlawful detaining, or threatening to detain, any property or any act forbidden by the Indian Penal Code 1860 with the intention of causing any person to enter into an agreement.

Threat to commit Suicide amount to Coercion

Undue Influence

Undue Influence means: When a special kind of relationship exists between the parties such that one party is in a position to exercise undue influence over the other. And such party uses his position to dominate the will of the other party to obtain an unfair advantage over the other party Essentials: There must be two persons. There must be a relationship between them. One should dominate the other. There must be unfair advantage. It is of moral character.

Undue Influence
Some of the examples where undue influence exists between the following relations: Superior and subordinate Principal and agent Doctor and Patient Promoter and Company Case Laws: A Spiritual guru induced his devotee to gift him the whole of Solicitor and Client his property in turn of a promise of salvation of the devotee. Held, the consent of the devotee was given under the undue influence. (Mannu Father and Son Singh v/s Umadat Panday) Teacher and Student Spiritual guru and devotee

Undue Influence

Under the following relationship there is no assumption of undue influence.

Husband and Wife Landlord and tenant Debtor and Creditor

COERCION
Consent is given under threat

UNDUE INFLUENCE
The consent is given by a person who is so situated in relation to another that the other person is in a position to dominate his will

Coercion need not proceed from Undue influence is between the parties to the contract but can be parties to the agreement done thro/by a stranger Contract is voidable at the option The contract is either voidable or of one of the parties of the contract the court may enforce it in a modified form Coercion is mainly of physical Undue influence is of moral and nature psychological nature

Fraud

Essentials:

There must be a representation There must be two persons There must be an active concealment of the fact The person making the representation does not believe it to be true There must be an intention of the proposer or the promiser to deceive the other person The other person must have relied upon the representation and must have been deceived and suffered loss The representation must have been made before the Commencement of the contract The representation must relate to a material fact which exists now or existed in the past

Fraud

The party defrauded has the following remedies:

The contract can be rescinded within reasonable time limit He can insist on the performance of the contract on the condition that he shall be put in the position in which he would have been if the representation made had been true He can sue for damages

Misrepresentation
CL: A companys prospectus contains a representation that it has Essentials:
statutory powers to run its tramways by steam provided that the consent of It must be was obtained. The directors issuedfact the government representation of material prospects stating therein that the company had the right to use steam power. They honestly believed must be made for the use of conclusion would be It that the permission before the steam power of the granted. The permission was refused. The company was wound up. Held, the directors were guilty of misrepresentation (Derry vs. Peek) contract

It must be wrong but the person making it believes it to be true It must have been made without any intention of deceiving the other Person It need not be made directly made to the Plaintiff

MISREPRESENTATION

FRAUD

It is a false statement It is a false statement without any intention to deliberately, or recklessly deceive made to deceive another It is also called innocent It is also called intentional misrepresentation misrepresentation It makes the contract Besides avoiding the voidable at the option of contract, the aggrieved the party injured party also has right to sue for damages

Mistake

Mistake may be defined as an erroneous belief about something.

It may be of two kinds mistake of law

Law of own country Law of foreign country

mistake of fact
A bilateral mistake Unilateral mistake

Mistake of law

Mistake of law of the country is no excuse, is a well-settled rule of law. A Party to the contract cannot be allowed to ask for relief on the ground that the act was done in E.g. A purchases and B sells a plot of land of 195 sq.mts. in Dublin, believing that a house can be constructed over it. Actually in Dublin ignorance of law. house cannot be constructed on a plot less than 200 sq.mts. The contract

can be avoided.

Mistake of law of a foreign country: such mistake is treated as mistake of fact, and such agreement is treated as void.

E.g. A person was induced Mistake attorney. to sign a gift deed (will), on the presentation that it of fact was a power

Unilateral Mistake - Unilateral means only one party to a contract is under a mistake of E.g. X goes to a avoided on the ground of unilateral mistake, if it can be shown that fact. A contract can be shop and introduces himself as Y and purchases some goods mistakecredit. The by Fraud or misrepresentation. on was caused contract is void. Types: A unilateral mistake may be

Mistake as to the nature of transaction Mistake as to identity of party

Bilateral Mistake E.g. X goes to a-

Where both the parties an agreement and purchases as to shop and introducestohimself as Y are under a mistakesome a matter of fact, the agreement is void. void. goods on credit. The contract is Types Mistake as to existence of subject-matter Identity of subject-matter Title of subject-matter Quality of subject-matter Quantity of subject-matter Price of subject-matter E.g. A agrees to buy a horse from B at certain price. The horse was dead at the time of bargain and neither party was aware about the fact. Held, the agreement is void.

Essential Elements of a Valid Contract Capacity To ContractMeaning

Every person is competent to contract who is of:

the age of majority according to the law to which he is subject, sound mind, and is not disqualified from contracting by any law to which he is subject.

Section 11 declares the following persons to be incompetent to contract.

Minors Persons of unsound mind Persons disqualified by any law for the time being in force. Idiot Lunatic with unsound mind Alien enemy Convicts

Minor - Meaning

Minors: according to Section 3 of the Indian Majorities Act, 1875, a minor is a person who has not completed eighteen years of age. In the following two cases, he attains majority after twenty one years of age:

Where a guardian of a minors person or property has been appointed under the guardian and wards Act, 1890, or Where the superintendence of a minors property is assumed to be court of wards.

The rules governing minors agreements are based on two fundamental rules:

The first rule is that the law protects minors against their own inexperience and against the possible improper designs of those more experienced. The second rule is that, in pursuing the above object, the law should not cause unnecessary hardship to person who deals with minors.

Remember in the case we discussed, a minor mortgaged his house in favour of a money lender to secure a loan of Rs.20, 000/- Subsequently the minor sued for Case law: M, side the mortgage, stating that he was underage when he executed the for Rs.5000/setting a Aged 17, agreed to purchase a second hand scooter mortgage. Held, the mortgage was void and agreed was cancelled. Further from N. he paid Rs.200/- as advance and, therefore, it to pay the balance the next day the the scooter. When he came with the amount advanced next and collectmoney lender requested for the repayment of thebalance moneyto the day, N told him minor as part of the consideration for the mortgage was also not accepted (Mohiri that he has changed his mindvs. Dharamodas Ghose) the advance. N cannot avoid the Bibi and offered to return

Legal rules of Minors:

contract, though M with minor is void- ab-inito: v/s Noor Mohd) An agreement may, if he likes. (Sharafat Ali Case law: be a Promisee or a Beneficiary: incapacity of executed enter into a He can M, A minor, borrowed Rs.5000/- from L and minor to a Promissory notecontract means incapacity to bind him-self by a contract.anotherisPromissory in favour of L. after attaining the majority, he executed There nothing notethatsettlement of the being a beneficiary. Such contract may beis void forat in debars him from first note. The second Promissory note enforced the want of option of the minor and not the other party. the consideration. (Indran Rama Swamy v/s Anthiappa Chettiar) Minor cannot ratify his contract, on attaining majority: Consideration which passed under earlier contract cannot be implied into the contract which the minor enter on attaining the majority. Thus consideration given during the minority is no consideration. If it is necessary a fresh contract may be entered into by the minor on attaining the majority provided it is supported by a fresh consideration He can always plead minority: even if he has, by misrepresenting his age, induced the other party to contract with him, he cannot be sued either in contract or in tort for fraud because if the injured party were allowed to sue for fraud, it would be giving him an indirect means of enforcing the void agreement.

Legal rules of Minors:

Ex: Mr. M, a minor, obtains a loan by mortgaging his property. He is not liable to refund the loan not only that, even his mortgaged property cannot be made liable to pay the debt.

If he has received any benefit under a void agreement, he cannot be asked to compensate or pay for it: section 65 which provides for restitution in case of agreements discovered to be void does not apply to the minor There can be no specific performance of the contract with minor, since agreement with minor is void-ab-inito: Cant file a suit for specific non performance. But if a contract is entered into on his behalf by his Parents / guardian then the same can be enforced by or against the minor provided the contract is (a) within the scope of the authority of the Parent / guardian, and (b) for the benefit of the minor. He cannot enter into a contract of Partnership: a minor can be admitted as a beneficiary of Profits of a Partnership firm already in existence, with the consent of all the existing Partners. But he cannot be admitted as a Partner He can be an agent: an agent is merely connecting link between Principal and third Party. The movement the Principal and third party comes into contract with each other, the agent drops out with any personal liability, hence a minor can act as agent.

Legal rules for a Minor

His Parents / guardian are / is not liable for the contracts of the minor: the exemption to this rule is that where the minor act as an agent of his Parent / guardian, the Parent / guardian shall be liable for his acts.
Case

law: G, a minor, entered into a contract with R, a noted billiards player, to pay him certain sum of money to learn the game and play matches with him during He cannot be a R spent time and money in making arrangements for billiards his world tour. shareholder in a Company. matches. Held, G was liable to pay as the agreement was one for necessaries as it He can be member in a Trade union: A Person who attained the age ofwas reasonable was in effect for teaching, instructions and employment and 14 years can be admitted as a member. and for the benefit of the infant. (Robarts v/s Gray)

He cannot be adjudged as an insolvent.

Minors liability for necessaries: a minor is liable to pay out of his property for necessaries supplied to him or to anyone whom he is legally bound to support (Section 68). The claim arises not out of contract but out of what are called QuasiContracts. Again it is only the property of the minor, which is liable for meeting the liability arising out of such contracts. He is not personally liable.

Legal rules for a Minor

No rule of Estoppel to minor Estoppel means A person making a statement by words spoken or written which induces others to believe and acted upon. Rule preventing a person from denying the truth of such a statement made previously by words spoken or written, by which he has led another to believe and acted upon. Therefore, he is stopped from denying the said statement. i.e. cant say no, so should act. Minor is liable for Tort Surety for a Minor: a person who stands as surety for a minor can be sued though the minor himself would not be liable

Unsound Mind

A person is said to be of sound mind for the propose of making a contract, if, at the time when he makes it, he is capable of understanding the terms of the contract and To form a rational judgment as to its effect upon his interest. Therefore, if both of the above is not satisfied, then is a person suffering of unsound mind.Eg: Idiots Lunatics Drunkards A person, who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind

Lunatics

Lunatic is a person who suffers from intermittent intervals of sanity and insanity. All agreements made by lunatics during intervals of sanity are valid Property of lunatic is liable for necessities of life contracts but a lunatic cannot be held personally liable

Idiots

Idiot is a person who has completely lost his mental balance. An agreement with an idiot is absolutely void.

Drunkards

A high level of intoxication drunkards contract void

make

A contract made by a person so intoxicated as not to know the consequences of his act is not binding on him

Few other Persons are also Prohibited to enter into a contract.

Alien Enemy. Insolvent. Foreign Sovereigns, their diplomatic staff and accredited representatives of the foreign states. Corporations (beyond MOA and AOA). Convicts

Contract by the other person disqualified by law

Alien enemy Contracts with an alien enemy (who is a citizen of a foreign country which is not in peaceful terms with India) are void on the grounds of public policy. Contracts may be suspended during the war and may be revived after the war is over, provided they are not time-barred. I Position of Contracts during War An alien enemy can neither enter into contract nor can be sued in an Indian Court except by the license by the Government. II Position of contracts during the war:

If such contracts are against the public policy or are such that may benefit the enemy, then such contracts are dissolved. If such contracts are not against public policy, then such contracts are merely suspended for the duration of the war and revived after the war is over unless they have already become time barred under the Law of Limitation.

E.g. X, an Indian citizen, carries on a business in Pakistan. He enters into a contract with Y who carries on business in India. Immediately after the formation of the contract, a war broke out between India and Pakistan. In this case, X becomes an alien enemy though he is Indian and contract between x and y (if not against the public policy) will be suspended for the duration of the war and revived after the war is over.

Few other Persons are also Prohibited to enter into a contract

Foreign Sovereign and Ambassadors: - They can enter contract and enforce those contracts in our courts but they cannot be sued in our courts without the sanction of the Central Govt. Company under the companies act or statutory corporation under the special act of parliament: - The contractual capacity of the company is determined by objects clause of its Memorandum of Association, whereas that of the statutory corporation is determined by the statute creating it. Any act in excess of the power given is ultra vires and hence void. Insolvents - When a person is declared insolvent, it is only the Official Receiver or Official Assignee who can enter into contracts relating to his property and sue and be sued on his behalf. Thus, as soon as a person is declared insolvent, he looses his contractual capacity. Convicts: A convict cannot enter into a contract while he is undergoing imprisonment. Thus, this incapacity is only during the period of sentence. Insolvent after the order of discharge he is competent to enter into contracts.

Lawful objects

The consideration or object of an agreement is lawful, unless

It is forbidden by law; or is of such nature that, if permitted it would defeat the provisions of any law or is fraudulent; of involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy

Every agreement of which consideration is unlawful is void.

the

object

or

Unlawful objects

It is forbidden by law - An act is forbidden by law when it is punishable under the criminal law or is prohibited by special legislation or regulations made by the competent authority.

is of such nature that, if permitted it would defeat the provisions of any law
is fraudulent - an agreement if any made for any fraudulent purpose is void. Thus, an agreement with an intention of fraud of creditors with a view to defeat their right is void. involves or implies, injury to the person or property of another - injury means wrong, harm or damage. Person means ones body, property includes both movable and immovable. the Court regards it as immoral - an agreement, the consideration or object of which is immoral, e.g., agreement between husband and wife for future separation, is unlawful (Sumitra Devi v/s Sulekha Kundu) opposed to public policy An agreement which is injurious to the general public or is against the interest of the society

VOID AGREEMENTS

Agreements by incompetent parties Agreements under mutual mistake of fact material to the agreement Agreement with unlawful consideration or object (a) immoral & illegal agreements (b) agreements opposed to public policy Agreements unlawful in part Agreements without consideration Agreements in restraint of marriage Agreements in restraint of legal proceedings Agreements which are uncertain and ambiguous Agreement by way of wager or wagering agreements Agreements to do impossible acts

Bailment, Bailor and Bailee

Bailment is

The delivery of goods, by one person to another, for some purpose, Upon a contract that they shall, when the purpose is accomplished, Be returned or otherwise disposed of, According to the instructions of the person delivering them. (Section 148)

Bailor

is the person delivering the goods is the person to whom the goods are delivered.

Bailee

Essentials of Bailment

Contract Delivery of the Goods Delivery of possession of goods by Bailor to Bailee Possession (not ownership) is transferred Modes of Delivery Purpose (goods must be returned after a specific purpose is accomplished) Consideration (generally in the form of money payment)

Duties of the Bailor

Disclose faults in goods (Sec 150) Bear Expenses (Sec 158) Indemnify(secure in respect of harm) Bailee (Sec 159 & Sec 164) Receipt of Goods back on termination of bailment

Duties of Bailee (or) Rights of Bailor

Care of Goods (Sec 153) To act consistently with the terms (Sec 153) Compensation for damage to goods (Sec 154) Not to mix goods bailed with others

With bailors consent (Sec 155) Without bailors consent

Return of the goods bailed (Sec 160) Compensation for failure to return (Sec 161) Increase or profit from goods bailed (Sec 163) Delivery of goods to Joint Bailors (Sec 165)

Rights of Bailee

Enforcement of Bailors duties Delivery of goods to Joint Bailors Delivery of goods when Bailors title is defective (Sec 166) Right of Lien (Secs 170 & 171) Wrongful deprivation of goods (Secs 180 & 181)

Pledge

Pledge is a Bailment of goods as security for payment of a debt or performance of a promise Pawnor is the Bailor of such goods Pawnee is the Bailee of the goods Eg., A borrows Rs.200 from B and keeps his watch as security for payment of the debt, the bailment of watch is a pledge.

Essential Elements of a Contract of Pledge

Delivery of Goods (may be actual or constructive) Security Goods Only goods can be pledged. Goods includes Shares, Documents, Promissory Notes, Bills of Exchange or Valuable things. However, money i.e., currency notes, cannot be pledged.

Rights of a Pawnee/Pledgee

Right of Retainer (Sec 173) Retainer for subsequent advances (Sec 174) Reimbursement of Expenses (Sec 175) Rights in case of default by Pawnor (Sec 176)

Suit Retention/Sale of Goods Surplus/Deficit on Sale No Notice

Right against true owner (Sec 178A)

Rights of a Pawnor

To get back goods To redeem goods before sale (Sec 177) Right to Notice of Sale Goods in proper condition

Pledge V. Bailment

Pledge

Bailment

Purpose: specific Sale of goods: Pledgee has a right of sale of pledged on default of pawnor Use of goods: No right

Purpose: other purposes like repairs, safe custody, etc., Sale of goods: No right Use of goods: Can use as per the terms of the contract

Law of Agency

Definitions (Sec 182)

Agent Is a person employed

To do any act for another, or To represent another in dealings with third parties

Principal

Is the person

For whom such act is done, or Who is so represented

Who can appoint Agent (Sec 183)

Any person who

Has attained the age of majority and Is of sound mind, can appoint another person as his agent to act on his behalf with an authority to bind him.

Who may become Agent (Sec 184)

As between Principal and the third party, any person can become an Agent. Even a person who

Has not attained majority; or Is of unsound mind, can become an agent of another.

Essentials of a Contract of Agency

Test for Agency Rules as to Agency (Maxim: qui facit per alium facit per se) Elements of Agency

Intention Express/Implied Agreement Consideration not necessary Capacity to employ agent Capacity to be employed as agent

Kinds of Agents

Based on Authority

Universal Agent General Agent Special Agent

Commercial or Mercantile Agents Non-mercantile Agents

Based on Nature of Work

Duties of an Agent/Rights of the Principal

The Principal instructed his agents to deliver goods only against cash but agent delivered them on credit. Held Agent was liable for the price which the purchaser failed to authority to sell on credit, A, an agent for sale of goods, having pay (Paul Bier V. Chottalal) sells to B on credit, without making proper and usual enquiries as to his solvency. B, at the time of such sale is insolvent. A must make compensation to his principal in respect of any loss thereby sustained.

To act as per Principals directions (Sec 211) Skill and diligence (Sec 212) Render proper Accounts (Sec 213) Communicate with Principal (Sec 214) Not to deal on Rs. 1 lac from accountBs misconduct & his own C. Through (Secs 215 A employs B to recover the money is not recovered from C. B is not entitled to 216) remuneration for his services, and shall make good the loss sustained. Pay all sums received (Sec 218) No remuneration for business misconducted (Sec 220)

Contd.,

Not to make secret profits Not to disclose information Upon termination of agency (Sec 209) Not to delegate authority (Sec 190) Liable to pay damages

Rights of an Agent/Duties of the Principal

Right of Retainer (Sec 217) Right to Remuneration (Secs 219 & 220) Right of Lien (hold property to recover debt Sec 221) Right to be indemnified (Secs 222, 223, & 224) Right to compensation (Sec 225) Right of stoppage in transit Liability of Principal inducing others (Sec 237)

Mode of in Delhi and has aof AgencyHe creation house at Kolkata. A residing
appoints B in Kolkata, by a Power of Attorney, as a caretaker of his Noida A owns a shop inhouse. but lives in Delhi. He visits the shop occasionally which is managed by B. B usually orders from C in As name for the shop, and paysinstantly if Asof perishable nature funds with As * Agent may have to sell goods them out of knowledge. withstandimplied authority fromit is from Principal.from A to and cannot B has an until further instructions order goods CA horse sent for rail was not taken delivery at the destination. The * in his name by the shop. station master has to feed the horse. The Station master becomes AMeaning:by necessity anddoes some owner B sells of another on his without When a buys goods, for B. Later behalf them to C an Agent authority,person hence the act on shall compensate him. own account; by conduct implies a ratificationbe ratified(to made for without suchBs Estoppel Agency others knowledge, the act may of purchase him by A. or sanction or confirm) or disown by the other person. approve When he opts to Holding Out is bound by the acts as if he Agency by ratify the same, he Phad expressly authorised instructions notdo theother andfixed price. J consigns goodsconsidered asperson to each act on a also of the * Partners are to N with the Agents of to sell below his behalf enters 196).an agreement with N (who also does not indicate the reserve Firm. into (Sec for the purchase of of Necessity below reserve price. P keeps Agency in case entire lot at ais considered to act as an price) management of a Company sum * The quiet. his servant Company.goods for that N did not have theand pays to P allows P is stopped from later denying him on credit from C authority for Agents of the A to buy sell below the reserve occasion, P pays A cash to purchase goods. A them regularly. On one price. purchases goods on credit and pockets the money. C can recover the price from P since through previous dealings, P has held out A as his Agent.

Express Agreement Implied Agreement

Agency by Ratification By operation of Law

Conditions for a Relationship to be an agency by necessity:

Agent should neither be in a position nor have any opportunity to communicate with his Principal within the time available. Actual and definite commercial necessity to act promptly. Acted bonafide and for the benefit of his Principal. Adopted the most reasonable and practicable cause. Possession of the goods belonging to his principal and which are subject of contract.

Termination of Agency

By Act of Parties

Agreement (mutual agreement) Revocation by Principal thro notice Renunciation by Agent thro reasonable notice Completion of Business Impossibility of performance Expiry of fixed period of time Insanity or death of Principal or Agent Destruction of subject matter Insolvency of Principal Termination of Sub-agents authority Dissolution of a Company Principal or Agent becoming Alien enemy

By Operation of Law

Performance of Contract

Obligations of Parties to Contracts

Actual Performance: If the promisor makes an offer of performance to the promisee and the offer to perform is accepted by the promisee. Attempted Performance: If the promisor makes an offer of performance to the promisee; but the offer to perform is not accepted by the promisee (also called offer to perform or tender)

Persons liable for, and entitled to, Performance (Sec 40 & Sec 42)

Persons liable Performance:

for

Persons entitled Performance:

to

Promisor Agent of Promisor Any of the several joint promisors Legal Representatives of a Promisor

Promisee Agent of Promisee All the joint promisees together Legal Representatives of a Promisee

Performance of Joint Promise

Jointly and severally liable unless otherwise provided Claim from other joint promisors, if he is compelled to perform the whole promise or makes a default in performance of his promise Where one of the joint promisors is released, other joint promisors shall continue to be liable.

Discharge of a Contract

*A agrees to sell his bicycle ofB and to contractual their Means termination contract isboth performedrelations respective obligations, the said to be discharged. * In case the parties to a contract. Performance, since the offer is not between of Attempted party, the promisor is discharged. accepted by the other Modes of Discharge of Contract:

By performance By impossibility of performance By mutual agreement By lapse of time Where the time of performance by a party is due but the party By operation of law fails to perform within the time specified, the contract is discharged by non-performance provided that the contract By breach of contract

contained such specific mentioning.

Discharge by Impossibility of Performance

Meaning:asIf no impossibility existed at the E.g., called Not supervening impossibility: Destruction ofimpossibility of prices, currency fluctuations) Commercial subject matter time of formation (rise inthe contract; but the Incapacity to perform Default by third impossibilitypartya contract ofsubsequent to the arises personal service Outbreak Civil disturbances Strikes, of war Non-existence or of Self induced non-occurrence of things forming the basis a formation impossibility (deliberate act or negligence) ofthe the contract; and contract,failure of objects or partial impossibility Partial etc., impossibility is ofHulton Case law: that it makes Krell V Henry Case Co., V such nature In H.B.Steamboat law: XX agreed to from Y for viewing the coronation process the a room a Y for the thehiredreviewhiretheboat fromcontractking and viewingof Kingor performance ofcoronation purposeimpossible is of for sailing Edward. naval on eve of of The procession was supervening Kings illness around the fleet. illegal is called cancelled because ofimpossibility. Since to Kings illness, onlynaval reviewthe contract was defeated, Due the ultimate and the purpose of was cancelled, but the fleet the contract was SI: may was assembled. Reasons for discharged. arise because of change X used the boat for sailing around the fleet. in Although the primary purpose ofcircumstances beyond law or of change in the contract was defeated, the secondary purpose was of parties. and, therefore, the contemplationfulfilledimpossibility. the contract was not discharged by supervening

means substitution of a new contract in place of the original Discharge by Mutualthe new contract is the contract. The consideration for Agreement

discharge of the original contract. * means a change in one or more of the terms of a contract with mutual consent of parties. * Discharges the original contract and creates a new one Parties remain the same *

Novation Alteration Remission Rescission (cancellation ofwith the performance of one Where a promisee agrees to dispense a contract by a promise made to him or or all thetime of performance due by the promisor or Extend the parties to the contract) Accept any other consideration Merger (conversion ofthan agreed to in the contract, a an inferior right into etc., superior right and the effect is due to conversion inferior right is discharged)

Discharge by operation of law

Death (Contracts involving personal skills, knowledge or ability of the deceased party are discharged automatically on the death of the promisor). Insolvency Unauthorized material alterations

Discharge by Breach of Contract

the promisor declares his intention of not performing the contract even before the time stipulated for performance of contract has arrived, it is called as anticipatory breach. Express Repudiation: If before the time or performance of contract has arrived, a party expressly refuses to perform the contract, it is called as express repudation. Party disables himself: Impossible for him to perform the contract, this is called as anticipatory breach by disablement of The other party is relieved from performing its a party. Effects Option 1: The part of obligation.aggrieved party may wait till the due date, i.e., it may treat the contract as operative. The other party is entitled to proceed against due Option 2: The aggrieved party may decide not to wait till the the date. at fault. party It may immediately rescind the contract and claim damages for breach.
Where

Meaning: Failure of a party to perform his part of contract Consequences:

Actual Breach (on the due date or during performance) Anticipatory Breach

Remedies for breach of a contract

Rescission (means a right available to an aggrieved party to terminate a contract) Effects: - The aggrieved party is not required to perform his part A for damages Suit promises B to perform a concert for 3 weeks continuously. A of obligation; wilfully absents on the third week. B rescinds the contract. B can - The aggrieved party can claim compensation for any loss caused to claim Suit for loss sustained for loss sustained due to nonhim. for specific performances performance. Meaning: Monetary compensation allowed for loss suffered by .Specific performance means seeking an order from the court that breach Suitthe aggrieved party due tocontractof a contract. out. the for injunction the promise specified in shall be carried Object is Not to punish the party at default and To make good . When actual from breach are not lossan order of the suffered by Suitthe financialdamages arisingthe court restraining due to from is for Quantum Meriutaggrieved party measurable Injunction means a party and monetary compensation is not an adequate remedy, then SP
breach e.g., N, a filmcontract. carrying of a particular act. allowed. outstar, agreed to act exclusively for a particular producer,damages are an adequate remedy;contracted performance . The remedyone year. During the year, she where the to act for Where for is available when the court has the discretion whether If orA contracts injunction; where a party to the contract a party prevents the other party him 250 kilos of by before some othergrantwith BHeld, she orfrom completing riceobligation it E.g., contractproducer. numerouscould be restrained his an promises of not to involves to deliver to minute details, and, therefore, under the contract,Bros. V Nelson) before 1claim payment on injunction (Warner the court tokilos to do an act deliver only 130 supervise the may, but afterwards 1st is notA could whichthe aggrieved party performanceand could the may. possible for requires personal may st performance of quantum anything the part of resulting already performed by the contract in breach of date. He is not refusesmeriut forlater. B retains 130 kilos after thatcontract, him. deliver contract.to perform such act court pay restrain the bound to may A for them. defaulting party from performing such act in future.