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Offer
Promisor Promisee
Person making the proposal or offer is called promisor and the
person accepting it is called the Promisee.
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An offer can be made by any act which has the
effect of communicating it to another person.
Offer types:
1. Express offer: an offer which is made by words
spoken or written.
2. Implied offer: an offer which is made by
conduct .
Eg. A bid at an auction is an implied offer to
buy.
An offer may be:
a
: made to one person or group of
people. Then only that particular person or group
of people can accept.
² made to the whole world at large,
particularly seen in the cases of rewards and other
public advertisements. Contract made only with
that person who comes forward and performs the
conditions of the proposal.
a general offer
will be open for acceptance by any number of
person until it carries a closing date, but where an
offer requires some information about a missing
thing, it is closed as soon as the first information
comes in.
reneral offer case:
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(B) If the proposal The offer must be accepted
prescribes the manner in in the prescribed manner.
which it is to be accepted.
² The acceptance is said to be
complete only when it has been communicated
to the offerer.
Example: x offered to supply coals to railway
company. The manager of the company
accepted the offer and put it in the drawer of
his table and forgot all about it. It was held that
no contract was made because acceptance was
not communicated .
[ Brogden Vs ·etropolitan railway Co.]
acceptance must be communicated by the
offeree himself or by a person who has the authority to
accept.
.
àn act i.e.. *oing of something
The act must not however be one is under a legal duty to perform.
àn abstinence or forbearance
Here consideration is in a negative form.
à promises B not to file a suit against him if he pays him Rs.500. The abstinence of à
is the consideration for B¶s payment
à return promise
à agrees to sell his horse to B for Rs.10,000. Here B¶s promise to pay the
sum of Rs.10,000 is the consideration for à¶s promise to sell the horse
and à¶s promise to sell the horse is the consideration for B¶s promise to
pay the sum of Rs.10,000
.
rratuitous or voluntary promises are often made
rashly and without due deliberation.
If there is ³something for nothing´ it supplies no
means and not affords any remedy to compel the
performance of an agreement made without
sufficient consideration
.
1. It must move at the desire of the promisor
If it is done at the instance of a third party or without the
desire of the promisor, it will not be a good consideration
.
It should be noted that the following are the
good consideration for a contract:
´Ñorbearance to sue
´Compromise of a dispute claim
´Composition with creditors
.
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.
ëhe claim should be reasonable and the person
claiming should honestly believe that it is a valid
claim. He should also act bona fide (genuine)
If it turns out that the claim was frivolous (playful)
and the claimant was not acting bona-fide, the
other party can claim compensation.
.
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.
Past consideration
When consideration by a party for a present promise was given in
the past i.e. before the date of the promise, it is said to be past
consideration
E.g. : A renders some service to B at latter·s desire. After a month
B promises to compensate A for the services rendered to him. It is
past consideration
Present consideration
When consideration is given simultaneously with promise, at the
time of the promise, it is said to be present consideration
Eg : Cash Sale
Ñuture consideration
When consideration from one party to the other is to pass
subsequently to the making of the contract, it is future contract
Eg : D promises to deliver certain goods to P after a week; P
promises to pay the price after a fortnight. ëhe promise of D is
supported by the promise of P
.
´Something in returnµ need not necessarily equal to value
of ´something givenµ
Case : HAIGH VS. BROOKS
B promised to pay certain bills if H would hand over a
guarantee to him. H handed over the guarantee but it
turned out to be unenforceable. Held, as B received
what he had asked for there was consideration for his
promise, although guarantee was of smaller value than
he had supposed
.
:
Physical impossibility
It must be real, competent and of some value n the eyes of the law.
ëhere is no real consideration in the following cases
Hall Vs. Cazenove
A promises to put life into B·s dead wife should B pay him
Rs.500. A·s promise is physically impossible of
performance
Legal impossibility
Harvey Vs. Gibbons
A owes Rs.100 to B. He promises to pay Rs.20 to C, the
servant to B, who in return promises to discharge A from
the Debt. ëhis is legally impossible because C cannot give
discharge for a debt due to B, his master
.
ncertain consideration
A engages B for doing a certain work and promises to pay
a reasonable sum. ëhere is no recognized method of
ascertaining the ´reasonableµ remuneration. ëhe promise
is unenforceable as consideration is uncertain.
Illusory consideration
â Stilk Vs. Myrick
ëwo of the crew of a ship deserted it half way through a
voyage. ëhe captain thereby promised to divide the
salary of the deserters among the rest of the crew if they
worked the vessel home. Held, they could not recover
the amount as the consideration was illusory. ëhey
were already under an obligation to bring the vessel
home.
.
Ô. It must be something which the promisor is
already bound to do.
.
.
Cà :
B and C get into an agreement where B will
write a Book for C and C will pay Rs.10,000 to
A.
B wrote a book for C but C failed to give the
money to A.
A is claiming to recover Rs.10,000 from C.
.
1. A person who is not a party to a contract
cannot sue upon it even though the contract
is for his benefit and he provided
consideration.
2. A contract cannot confer rights or impose
obligations arising under it on any person
other than the parties to it. ëhus, if there is
a contract between A and B, C cannot
enforce it.
.
S bought tyres from the Dunlop Rubber Co,
and sold them to D, a sub-dealer, who agreed
with S not to sell these tyres below Dunlop·s
list price and to pay the Dunlop Co. $5 as
damages on every tyre D undersold.
D sold two tyres at less than the list price and
there upon the Dunlop Co. sued him for the
breach. Held, the Dunlop Co, could not
maintain the suit as it was a stranger to the
contract.
.
1. à trust or charge.
2. Marriage settlement, Partition or other family
arrangements.
3. àcknowledgement or ³estoppel´
4. Contracts entered into through an agent
5. Covenants running with the land.
.
1. Trust or Charge:
.
.Acnowledgement or ´estoppelµ:
.
5.Covenants running with the land: In cases
of transfer of immovable property, the
purchaser of land with notice that the owner
of the land is bound by certain conditions of
covenants created by an agreement affecting
the land shall be bound by them although he
was not party to the original agreement which
contained the conditions or covenants.
.
V Natural love and affection
V Time-barred debt
V Completed gift
.
who is of the age of majority
of sound mind, and
not forbidden under any other law
V Who is a Minor?
V What happens to a contract with or by a
minor?
Contract is void-ab-initio, i.e., neither the
other party nor the minor can enforce.
V Case law : Mohiri Bibi vs. *harmdas
rhose.
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V Minor can be a promisee/beneficiary.
( ec 18)
V When there is no between the parties(
It can be only when there is a Mistake of fact
and not mistake of Law ( ecs 20-22)
V àct Prohibited under Indian Penal Code or *etention of
property ± *uress in nglish Law
V Committing or threatening to commit any act under the
Indian Penal Code
V Mistake of the both the parties- º
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signing a separation deed , when actually not married(
ralloway V ralloway)
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mistake of one party
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V ·ost contract suits are not brought over
questions regarding the formation of a contract;
they are brought because of what one party
considers to be an improper termination of a
contract.
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V A contract can be discharged through the
performance of its terms.
V A discharged contract is a nullity.
A contract may be discharged ²
1. By performance.
2. By agreement or consent
3. By impossibility or performance
4. By lapse of time
5. By operation of law
6. By breach of contract.
DISCHARrE OF CONTRACT
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$ When both the
parties perform their promises, the contract
is discharged. Performance should be
complete, precise and according to the
terms of the agreement. ·ost of the
contracts are discharged by performance in
this manner.
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Tender is not actual performance but is only
an offer to perform the obligation under the
contract. Where the promisor offers to perform
his obligation, but the promisee refuses to
accept the performance, tender is equivalent
to actual performance.
The effect of a valid tender is that the contract
is deemed to have been performed by the
tenderer. The tenderer is discharged from the
responsibility for non-performance of the
contract without in any way prejudicing his
rights which accrue to him against the
promisee.
V A party to a contract is under a legal obligation
to perform.
V rood faith is a requirement of all parties to a
contract.
V The party is only required to perform the
actions contemplated in the contract, and any
assumed duties, as well.
V ·any contracts contain provisions allowing the
parties to terminate the contract under certain
conditions.
V These are called ´termination provisions.µ
V Contracts cannot last forever.
V Contracts without termination dates are
revocable by either party after reasonable
notice.
V Contracts can contain provisions that
automatically renew the contract for another
term.
V When a contract contains a clause stating that it
may only be terminated for good cause it is
usually construed to be terminable at will by
the parties.
V A contract is valid if it contains a provision
stating that either party can revoke it at any
time, for any reason.
V The method used to provide notice of
termination can be set out in the contract.
V Once the contract terminates, the legal
obligations of the parties are extinguished.
V ·any contracts are not successfully
discharged, leading to disputes between the
parties.
V After creating a contract, the parties are free to
mutually abandon, modify or rescind the
contract.
V When the parties abandon a contract, they are,
in effect, agreeing to rescind the contract.
V ½ does not modify the contract terms;
it eliminates them.
V In order to demonstrate a valid rescission, there
must be a demand or tender of full
performance.
V There must also be an unambiguous,
affirmative act by a party showing the
intention to rescind the contract.
V When the parties agree to abandon or rescind
the contract, the agreement must be mutual
and must be made prior to either party actually
performing any actions
V Only the parties to the contract may rescind it.
V A fully discharged contract cannot be
rescinded.
V ·any jurisdictions also have a rule that
prevents partially executed contracts from
being rescinded.
V Canceling a contract is a formal declaration that
a contract is legally ineffective and cannot form
the basis of a legal duty.
V Rescission restores the parties to their positions
prior to the creation of the contract.
V Judges will usually not order rescission when
the contract is illegal, or where the parties are
equally at fault, or where someone other than
the parties to the contract is seeking rescission.
V When a party breaches a contract, he or she
violates some contractual duty.
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The first paragraph
pre-contractual or initial
impossibility.
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Impossibility which arises
subsequent to the formation of a
contract (which could be performed
at the time when the contract was
entered into) is called post-
contractual or supervening Impossibility.
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2. Non-existence or non-occurrence of a
5. Outbreak of war.
V The parties are free to negotiate the possible
remedies for a breach of a contract, and even to
stipulate what types of actions will be
considered a breach.
V When one party commits a breach the other
party is not relieved of all contractual
obligations.
V In some cases, a party may bring suit for a
breach before the other party has actually
committed one.
V ·aterial breach gives the other party the right
to rescind the contract.
V A material breach is the failure of one party to
do some act that is so central to the agreement
as to actually defeat the reason for having the
contract in the first place.
V Impossibility
V Subsequent Illegality
V Acts of rod/Nature
V Death of a Party
V Destruction
V War
V There are two types of impossibility: subjective
impossibility and objective impossibility.
V Under subjective impossibility, a party states
that he or she cannot perform the duties
outlined in the contract.
V In most jurisdictions, this claim is not a legal
defense.
V Objective impossibility is a claim that the
action itself cannot be done by anyone.
V When performance under a contract is
impossible, a party cannot attempt to substitute
a different type of performance.
V When the subject of the contract is ruled to be
illegal after the contract was created, the courts
have ruled that failure to perform in this
situation is excusable.
V When the performance under a contract is
made impossible by an act of rod, the
performance is excused.
V Death of the party who was to perform the
duty under the contract usually results in a
legal excuse.
V When the contract is based on the continued
existence of a particular item and that item is
destroyed, the obligation to perform under the
contract is destroyed along with it.
V A contract may be cancelled when war breaks
out in the country where the contract is to be
performed.
A hires B' s ship to go to Bombay, and there take on board, on the first
of January, a cargo which A is to provide and to bring it to Calcutta,
the freight to be paid when earned. B' s ship does not go to Bombay,
but A has opportunities of procuring suitable conveyance for the
cargo upon terms as advantageous as those on which he had
chartered the ship. A avails himself of those opportunities, but is put
to trouble and expense in doing so. A is entitled to receive
compensation from B in respect of such trouble and expense.
A,- having contracted with B to supply B with 1, 000 tons of iron at 100
rupees a ton, to be delivered at a stated time, contracts with C for the
purchase of 1, 000 tons of iron at 180 rupees a ton, telling C that he
does so for the purpose of performing his contract with B. C fails to
perform his contract with A, who cannot procure other iron, and B, in
consequence, rescinds the contract. C must pay to A 20, 000 rupees,
being the profit which A would have made by the performance of his
contract with B.