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Edit Comment Close Premium member Presentation Transcript Contract Act 1872 : Contract Act 1872 November 26, 2010 1 Law of contracts : Law of contracts Applicable in daily lives Contract An agreement enforceable by law is a contract Section 2(h) Elements of a contract Agreement Enforceability of the agreement 2 Agreement : Agreement Every promise and every set of promises forming the consideration for each other is an agreement Promise A proposal when accepted becomes a promise Agreement = Offer + Acceptance 3 Enforceability of a contract : Enforceability of a contract An agreement is said to be enforceable by law if it creates legal obligation Ex Lunch invitation 4 Classification Of Contracts : CREATION EXECUTION ENFORCEABILITY Express contract By words – written or spoken Ex. Sale of house Implied contract Depends on conduct of a person or circumstances Ex. Metro Executed contract where the performance of parties gets completed Executary contract Where the performance of parties are not complete or obligation is not yet completed Valid contract where all essentials of contract are present Void contract valid at the time of entrance but due to happening or non happening of certain events they become void Ex. Death before marriage Void agreement Agreements that are void abinitio Ex. Marriage with minor Voidable contract Where consent of parties are obtained by undue influence , fraud or misrepresentation Classification Of Contracts 5 Essentials of Valid Contract : Essentials of Valid Contract 1. Proper offer and acceptance presence of two parties Offer and acceptance should be valid Offer and acceptance should create legal obligation for all Offer and acceptance should be properly communicated 6 Essentials of Valid Contract : Essentials of Valid Contract 2. Intention to create legal obligation Social and domestic agreements : the presumption is that they do not create any legal relationship. example: dinner invitations Commercial and business agreements: presumptions is that they create a legal relationship. 7 Essentials of Valid Contract : Essentials of Valid Contract 3. Free consent : consent should not be taken by i) undue influence. ii) coercion. iii) fraud iv) misrepresentation v) mistake Example: X threatens Y to sell his house to X . Y agrees to sell his house to X. in this case y’s consent is obtained by coercion. . 8 Essentials of Valid Contract : Essentials of Valid Contract 4: capacity of parties: the parties should be competent to contract the person must be major and of sound mind. Example: contract with minor . 9 Essentials of Valid Contract : Essentials of Valid Contract 5: law full consideration: consideration means something in return. An agreement should be supported by lawful consideration Example: sale of car . promise to gift diamond ring. . 10 Exception to the rule -No consideration no contract : Exception to the rule -No consideration no contract Q. A Hindu husband by registered document promised to pay his wife Rs 1000 per month as her pocket money. If husband does not pay, can wife go to court NO Agreement made on account of natural love and affection section 25 (1) Is valid if It is expressed in writing Registered under law Made on account of love and affection Where parties are in relation to each other 11 Exception to the rule -No consideration no contract : Exception to the rule -No consideration no contract Q. X finds Y’s purse and gives it to him. Y promises to give X Rs 500. Is this a valid contract. Yes Promise to compensate Section 25 (2) It is valid if Promise to compensate wholly or in part person has done something voluntarily or on the behalf of promiser who is legally bound to do 12 Exception to the rule -No consideration no contract : Exception to the rule -No consideration no contract Q. X’s wife Y on his behalf issues a promissory note to a debtor Z to pay X’s time barred debt. Can Z enforce it No ( Case: Pestonjee vs Bai. Meharbai) Promise to pay time barred debt Section 25(3) It is valid if Made in writing Signed by debtor and/or his agent/s Relates to a debt which could not be enforced by creditor because of limitation act Limitation act says that if the debt remains unclaimed within 3 years, the right to sue in court gets waived but right to recover the debt remains 13 Exception to the rule -No consideration no contract : Exception to the rule -No consideration no contract Q. X’s transferred some property to Y which is duly registered and written. No consideration was mentioned. Is this a valid contract Yes. Completed gift (Sec 25) It is valid because Gift was actually made by donor and accepted by donee 14 Void agreements : Void agreements A void agreement which is not enforceable by law right from the time they are made. They are void ab initio Agreements expressly declared void are Where person/s are incompetent to contract Where mutual mistake of facts between the parties Where the object or consideration is unlawful Where the object or consideration is partly unlawful Those made without consideration Those in restraint of marriage Those in restraint of trade Those in restraint of legal proceedings Wagering agreements 15 Void Agreements : Void Agreements Q. X promises to marry Y only and none else and to pay Rs 2000 in default but marries Z . Can Y sue X for recovery of Rs 2000. No. agreement was in restraint of marriage (Case : Lowe vs Peers) Agreement in restraint of marriage (Section 26) Only exception to this rule is in case of minors 16 Void Agreements : Void Agreements Agreements in restraint of trade: every agreement by which anyone is restrained from exercising a lawful profession trade or business of any kind is void. Q. In Patna city, 29 out of 30 manufacturers of combs agreed with R to supply him combs and not to anybody else. R was free to reject goods if he found that there was no market for them. Is this a valid contract No. It is void because agreement was in restraint of trade ( Section 27) (Case : Shaikh Kalu vs Ram Saran Bhagat) 17 Agreements in restraint of legal proceedings : Agreements in restraint of legal proceedings Section 28: (i) Agreements restricting enforcement of rights: If under any contract anyone of the party is being restricted from enforcing his legal rights is void to an extent. Example: if under any contract both the parties decides that they will not go in court for any dispute arisen out of breach of contract is void. (ii) Agreements limiting the period of limitation: An agreement which limits the time given under limitation act is illegal. Example: if under an contract its written that no action can be taken after two year’s is not valid. 18 Exceptions to the rule agreements in restraint of trade. : Exceptions to the rule agreements in restraint of trade. Sale of goodwill of a business – following conditions are justified There must be similar business Business must not be within specified local limits The seller cannot do similar business within specified limits where the buyer of goodwill is running his business on similar pattern 19 Exceptions to the rule : Exceptions to the rule Partners agreement –following conditions or agreements on restraint of trade are valid Restriction on existing partner – he cannot carry out any other business than this firm Restriction on outgoing partner – he cannot carry on business similar to that of existing firm within specified limits and timeframe Restriction on partners upon or in anticipation of dissolution of the firm – they will not carry on business within local limits and specified time only when these restrictions are reasonable 20 Anticipatory breach of contract : Anticipatory breach of contract It occurs when the party declares his intension of not performing the contract before the performance is due. It can be done in two ways i)When a party to a contract has refused to perform his promise. Ex:X a farmer agrees to sell to Y his entire crop of 10 tons of wheat @ rs 8000 per ton to be delivered on 20th octuber. on 1st oct, X informs Y that he is not going to supply the goods .X has committed anticipatory breach of contract by express repudiation. 21 Anticipatory breach of contract : Anticipatory breach of contract ii. when party to a contract has disabled himself from performing his promise in its entirety. Example: X a farmer agrees to sell to Y his entire crop of 10 tons of wheat @ Rs 8000 per ton to be delivered on 20th October. on 1st Oct, X sold entire crop to Z @RS 10000 per ton. .X has committed anticipatory breach of contract by implied repudiation. 22 Actual breach of contract : Actual breach of contract On the due date of performance During the course of performance Example: X a farmer agrees to sell to Y his entire crop of 10 tons of wheat @ rs 8000 per ton to be delivered in two equal instalments on 20th october. on21st Oct, X refuse to deliver the goods. it is an actual breach of contract. Example: X a farmer agrees to sell to Y his entire crop of 10 tons of wheat @ rs 8000 per ton to be delivered in two equal instalments on 20th october. On 21st oct, X delivered 5 tons and refuse to deliver remaining 5 tons. it is an actual breach of contract. 23 Remedies for breach of contract : Remedies for breach of contract 1.Recission of contract :(taken back) or right not to perform obligation. In this case the aggrieved party is discharged from all the obligation and is entitled to claim compensation for the damages due to non performance of contract. Example: Ex: X a farmer agrees to supply 10 tons of wheat to Y on 20th oct. y promises to pay the goods on its receipt. X does not supply goods on due date. y is entitled to rescind the contract. 24 Remedies for breach of contract : Remedies for breach of contract 2. Suit for damages: are monetary compensation. The object of awarding damages is not to punish party at fault but compensate the party for the financial loss he has faced. Case:( Hadley vs Baxendale ) 25 Remedies for breach of contract : Remedies for breach of contract 3. Suit for specific performance: means demanding the courts direction to the defaulting party to carry out the promise according to the terms of contract. EX: X agreed top sell an old painting to Y for RS 50,000 .Than refuses to sell the painting. Here Y may file a suit against X for specific performance. 26 Remedies for breach of contract : Remedies for breach of contract 4. Suit for injunction: means demanding courts stayorder. where the party to a contract does something which is promised not to do, the court may issue an order from prohibiting him from doing so. Ex: case ( lurnely vs wagner) W agrees to sing at Ls theatre only during the contract period and during the same period . W made contract with Z to sing at another theatre and refuse to perform to contract to L. 27 Remedies for breach of contract : Remedies for breach of contract Suits for Quantum meruit.: means a right to claim the compensation for the work already done. Ex (planche vs calbum) C an owner of magazine engaged P to write a book to be published by instalments in his magazine . After a few instalments were published , the publication of magazine was stopped. It was held that P could claim payment for part already published. 28 You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
Contract Act 1872 preetialug Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 525 Category: Entertainment License: All Rights Reserved Like it (3) Dislike it (0) Added: November 26, 2010 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... By: klsv_kathaian (9 month(s) ago) The presentation is good.Can you help to down load it.pl send to my e mail klsv_kathaian@yahoo.co.in Saving..... Post Reply Close Saving..... Edit Comment Close By: furry124 (13 month(s) ago) Can ya please send me this presentation, as i desperately need it. My email ID is farhan1299@yahoo.com Thanks a zillion Saving..... Post Reply Close Saving..... Edit Comment Close By: anjaneyaawasthi (14 month(s) ago) can you please send this presentation to my ID anjaneyaawasthi@gmail.com as i require it for teaching purpose, Thanks Saving..... Post Reply Close Saving..... Edit Comment Close By: mak39056 (15 month(s) ago) great work budy i want it to download plz Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Contract Act 1872 : Contract Act 1872 November 26, 2010 1 Law of contracts : Law of contracts Applicable in daily lives Contract An agreement enforceable by law is a contract Section 2(h) Elements of a contract Agreement Enforceability of the agreement 2 Agreement : Agreement Every promise and every set of promises forming the consideration for each other is an agreement Promise A proposal when accepted becomes a promise Agreement = Offer + Acceptance 3 Enforceability of a contract : Enforceability of a contract An agreement is said to be enforceable by law if it creates legal obligation Ex Lunch invitation 4 Classification Of Contracts : CREATION EXECUTION ENFORCEABILITY Express contract By words – written or spoken Ex. Sale of house Implied contract Depends on conduct of a person or circumstances Ex. Metro Executed contract where the performance of parties gets completed Executary contract Where the performance of parties are not complete or obligation is not yet completed Valid contract where all essentials of contract are present Void contract valid at the time of entrance but due to happening or non happening of certain events they become void Ex. Death before marriage Void agreement Agreements that are void abinitio Ex. Marriage with minor Voidable contract Where consent of parties are obtained by undue influence , fraud or misrepresentation Classification Of Contracts 5 Essentials of Valid Contract : Essentials of Valid Contract 1. Proper offer and acceptance presence of two parties Offer and acceptance should be valid Offer and acceptance should create legal obligation for all Offer and acceptance should be properly communicated 6 Essentials of Valid Contract : Essentials of Valid Contract 2. Intention to create legal obligation Social and domestic agreements : the presumption is that they do not create any legal relationship. example: dinner invitations Commercial and business agreements: presumptions is that they create a legal relationship. 7 Essentials of Valid Contract : Essentials of Valid Contract 3. Free consent : consent should not be taken by i) undue influence. ii) coercion. iii) fraud iv) misrepresentation v) mistake Example: X threatens Y to sell his house to X . Y agrees to sell his house to X. in this case y’s consent is obtained by coercion. . 8 Essentials of Valid Contract : Essentials of Valid Contract 4: capacity of parties: the parties should be competent to contract the person must be major and of sound mind. Example: contract with minor . 9 Essentials of Valid Contract : Essentials of Valid Contract 5: law full consideration: consideration means something in return. An agreement should be supported by lawful consideration Example: sale of car . promise to gift diamond ring. . 10 Exception to the rule -No consideration no contract : Exception to the rule -No consideration no contract Q. A Hindu husband by registered document promised to pay his wife Rs 1000 per month as her pocket money. If husband does not pay, can wife go to court NO Agreement made on account of natural love and affection section 25 (1) Is valid if It is expressed in writing Registered under law Made on account of love and affection Where parties are in relation to each other 11 Exception to the rule -No consideration no contract : Exception to the rule -No consideration no contract Q. X finds Y’s purse and gives it to him. Y promises to give X Rs 500. Is this a valid contract. Yes Promise to compensate Section 25 (2) It is valid if Promise to compensate wholly or in part person has done something voluntarily or on the behalf of promiser who is legally bound to do 12 Exception to the rule -No consideration no contract : Exception to the rule -No consideration no contract Q. X’s wife Y on his behalf issues a promissory note to a debtor Z to pay X’s time barred debt. Can Z enforce it No ( Case: Pestonjee vs Bai. Meharbai) Promise to pay time barred debt Section 25(3) It is valid if Made in writing Signed by debtor and/or his agent/s Relates to a debt which could not be enforced by creditor because of limitation act Limitation act says that if the debt remains unclaimed within 3 years, the right to sue in court gets waived but right to recover the debt remains 13 Exception to the rule -No consideration no contract : Exception to the rule -No consideration no contract Q. X’s transferred some property to Y which is duly registered and written. No consideration was mentioned. Is this a valid contract Yes. Completed gift (Sec 25) It is valid because Gift was actually made by donor and accepted by donee 14 Void agreements : Void agreements A void agreement which is not enforceable by law right from the time they are made. They are void ab initio Agreements expressly declared void are Where person/s are incompetent to contract Where mutual mistake of facts between the parties Where the object or consideration is unlawful Where the object or consideration is partly unlawful Those made without consideration Those in restraint of marriage Those in restraint of trade Those in restraint of legal proceedings Wagering agreements 15 Void Agreements : Void Agreements Q. X promises to marry Y only and none else and to pay Rs 2000 in default but marries Z . Can Y sue X for recovery of Rs 2000. No. agreement was in restraint of marriage (Case : Lowe vs Peers) Agreement in restraint of marriage (Section 26) Only exception to this rule is in case of minors 16 Void Agreements : Void Agreements Agreements in restraint of trade: every agreement by which anyone is restrained from exercising a lawful profession trade or business of any kind is void. Q. In Patna city, 29 out of 30 manufacturers of combs agreed with R to supply him combs and not to anybody else. R was free to reject goods if he found that there was no market for them. Is this a valid contract No. It is void because agreement was in restraint of trade ( Section 27) (Case : Shaikh Kalu vs Ram Saran Bhagat) 17 Agreements in restraint of legal proceedings : Agreements in restraint of legal proceedings Section 28: (i) Agreements restricting enforcement of rights: If under any contract anyone of the party is being restricted from enforcing his legal rights is void to an extent. Example: if under any contract both the parties decides that they will not go in court for any dispute arisen out of breach of contract is void. (ii) Agreements limiting the period of limitation: An agreement which limits the time given under limitation act is illegal. Example: if under an contract its written that no action can be taken after two year’s is not valid. 18 Exceptions to the rule agreements in restraint of trade. : Exceptions to the rule agreements in restraint of trade. Sale of goodwill of a business – following conditions are justified There must be similar business Business must not be within specified local limits The seller cannot do similar business within specified limits where the buyer of goodwill is running his business on similar pattern 19 Exceptions to the rule : Exceptions to the rule Partners agreement –following conditions or agreements on restraint of trade are valid Restriction on existing partner – he cannot carry out any other business than this firm Restriction on outgoing partner – he cannot carry on business similar to that of existing firm within specified limits and timeframe Restriction on partners upon or in anticipation of dissolution of the firm – they will not carry on business within local limits and specified time only when these restrictions are reasonable 20 Anticipatory breach of contract : Anticipatory breach of contract It occurs when the party declares his intension of not performing the contract before the performance is due. It can be done in two ways i)When a party to a contract has refused to perform his promise. Ex:X a farmer agrees to sell to Y his entire crop of 10 tons of wheat @ rs 8000 per ton to be delivered on 20th octuber. on 1st oct, X informs Y that he is not going to supply the goods .X has committed anticipatory breach of contract by express repudiation. 21 Anticipatory breach of contract : Anticipatory breach of contract ii. when party to a contract has disabled himself from performing his promise in its entirety. Example: X a farmer agrees to sell to Y his entire crop of 10 tons of wheat @ Rs 8000 per ton to be delivered on 20th October. on 1st Oct, X sold entire crop to Z @RS 10000 per ton. .X has committed anticipatory breach of contract by implied repudiation. 22 Actual breach of contract : Actual breach of contract On the due date of performance During the course of performance Example: X a farmer agrees to sell to Y his entire crop of 10 tons of wheat @ rs 8000 per ton to be delivered in two equal instalments on 20th october. on21st Oct, X refuse to deliver the goods. it is an actual breach of contract. Example: X a farmer agrees to sell to Y his entire crop of 10 tons of wheat @ rs 8000 per ton to be delivered in two equal instalments on 20th october. On 21st oct, X delivered 5 tons and refuse to deliver remaining 5 tons. it is an actual breach of contract. 23 Remedies for breach of contract : Remedies for breach of contract 1.Recission of contract :(taken back) or right not to perform obligation. In this case the aggrieved party is discharged from all the obligation and is entitled to claim compensation for the damages due to non performance of contract. Example: Ex: X a farmer agrees to supply 10 tons of wheat to Y on 20th oct. y promises to pay the goods on its receipt. X does not supply goods on due date. y is entitled to rescind the contract. 24 Remedies for breach of contract : Remedies for breach of contract 2. Suit for damages: are monetary compensation. The object of awarding damages is not to punish party at fault but compensate the party for the financial loss he has faced. Case:( Hadley vs Baxendale ) 25 Remedies for breach of contract : Remedies for breach of contract 3. Suit for specific performance: means demanding the courts direction to the defaulting party to carry out the promise according to the terms of contract. EX: X agreed top sell an old painting to Y for RS 50,000 .Than refuses to sell the painting. Here Y may file a suit against X for specific performance. 26 Remedies for breach of contract : Remedies for breach of contract 4. Suit for injunction: means demanding courts stayorder. where the party to a contract does something which is promised not to do, the court may issue an order from prohibiting him from doing so. Ex: case ( lurnely vs wagner) W agrees to sing at Ls theatre only during the contract period and during the same period . W made contract with Z to sing at another theatre and refuse to perform to contract to L. 27 Remedies for breach of contract : Remedies for breach of contract Suits for Quantum meruit.: means a right to claim the compensation for the work already done. Ex (planche vs calbum) C an owner of magazine engaged P to write a book to be published by instalments in his magazine . After a few instalments were published , the publication of magazine was stopped. It was held that P could claim payment for part already published. 28