INDIAN CONTRACT

ACT
AGREEMENT Sec 2(e )
“Every set of promises, forming consideration for each
other”
Essentials:
 Two parties

 competent to contact

 Consideration

 Free consent

Contract: Sec 2(b): enforceable by law

Essentials of a valid contact:
 Agreement, Capacity of parties,

 Free Consent,

 Lawful Consideration,

 Lawful Object,

 Agreement not expressly declared as void,

 Legal formalities
Type of Contract:
 Void
 Voidable

 Illegal

 Un-enforceable Contract

 Unilateral

 Bilateral

 Express

 Implied

 Executed

Offer: Signifies to another his willingness to do or to

abstain from doing anything
Acceptance: expression of consent to offer
 Competence of Parties: Age of majority, Sound
Mind, Not disqualified by any law
 Free Consent: Consent is free when it is not caused
by the coercion, undue influence, Misrepresentation,
Fraud and mistake
 Coercion: Use of Force or threat to enter an
agreement
 Undue influence: One party is in a position to
dominate the will of the other person
 Mis-representation: the person making the
statement believes the same to be true, contract is
voidable at the option of the party where consent has
been to obtained but no such remedy is available if
the party seeking to avoid the contract had the means
of discovering the truth with ordinary diligence
 Fraud: when a false statement is made with the
knowledge that it is false,
 Mistake: If one or both of the contracting parties
enter into a contract under some misunderstanding,
 Adequate Consideration: Only requirement of law is
that there must be consideration, it is not necessary
that it must be sufficient or adequate consideration,
 Lawful Considerations: for making agreement a
valid agreement there must be lawful consideration.
CONTRACTS EXPRESSLY
DECLARED AS VOID
“Contracts obstructing the marriages, Contracts
obstructing the trade, Contracts obstructing the legal
Proceeding, Contracts of uncertainty, Contracts of
wager, Contracts for getting the impossible acts done”
 Contingent Contract: Contracts under which, on the
happening or non happening of any probable event,
promise is made for doing or obtaining from doing any
act, there lies a condition in these contracts, hence
these are also known as contracts with condition
 Difference between wagering agreement &
contingent Contract: A wagering agreement is void
whereas a contingent contract is valid, wagering
agreement consists of reciprocal promises whereas a
contingent contract may not contain reciprocal
promises
 Agreement in Restraint of trade: Section 27
“every agreement by which any one is restrained
from exercising a lawful profession, trade or business
of any kind, is to that extent void,
 Exceptions: Sale of Goodwill, Exceptions under the
partnership act, restraint by a contact of service,
trade combinations, Sole agreement
 Methods for discharge of contracts:
 By Impossibility of performance
 By operation of law
 By performance
 By mutual Agreement:-
 by novation
 by Rescission
 by Alteration
 by Remission
 by Lapse of time
 by breach of contract
Remedies available to the
aggrieved party for breach of
contract
 Right for damages,

 Injunction, Specific Performance,

 Declaratory Suit,

Kinds of Damages: Nominal Damages,

 General

 Specific

 Remote & indirect Loss

 Contract of Indemnity:“A contract by which one

party promises to save the other from loss caused to
him by the conduct of the promiser himself or by the
conduct of any other person, is called a contract of
indemnity”
 Rights of Indemnity holder when he is
compelled to pay: All damages which he may be
compelled to pay, all costs which he may be
compelled to pay, all sums which he may have paid in
compromise of any such suit
 Contract of Guarantee: Sec 126: “A contract of

guarantee is a contract to perform the promise or

discharge the liability of a third person in case of his
default.”
Kinds of Guarantee:
 Specific or simple guarantee,
 Continuity Guarantee :“A guarantee which extends to
a series of transactions, is called a continuing
Guarantee”
 Revocation of Continuing Guarantee: By notice
of revocation, By death of surety, By discharge of
surety in various circumstances
 Discharge of surety from Liability:
 By Revocation:
 Notice by surety
 Death of surety
 Novation
 By Conduct of the creditor:
 Variance i.e.; charge in terms on the contract
 Discharge of principal debtor
 Loss of security
 By Invalidation of contract of Guarantee:
 Misrepresentation

 Guarantee obtained by concealment

 Failure Co-surety to join a surety

 Rights of the Surety:

Rights against the principal debtor:

 Right of subrogation

 Right of indemnity

Right Against the creditor:

 Right to securities

 Right to claim set-off

Right against the Co-sureties:

 Equal Contribution

 Liability of co-sureties bond in different sums

 Right to share benefits of securities

BAILMENT
“Delivering of goods by one person (bailer) to another
(bailee) for some purpose, upon a contract that they
shall, when the purpose is accomplished, be returned
on other wise disposed of, according to the direction
of the person delivering them”
 Rights of the Bailer:
 Receive the goods with profit
 Demand the goods back
 Revocation
 Loss caused by bailee
 Combining own goods
 Duties of the Bailor:
 Making payment of necessary expenses
 Declare fault of goods
 Giving delivery of the goods
 Damages to the bailee
 Payment of extraordinary expenses
 Paying remuneration to the bailee
 Rights of Bailee:
 Realizing necessary expenses
 Realizing the damages
 Damages on the non dis-closure of the fault in good
 Taking delivery of goods
 Receiving payment of extra ordinary expenses
 Receiving remuneration from the bailor
 Duties:
 Not mix goods
 Returning the goods Bailed
 Giving the goods with profit
 Not making unauthorized goods,
 Not working against the condition,
 Supervising the goods
Pledge: A bailment of goods as a security for payment
of a debt of performance of a promise is called Pledge.
The Bailor in this case is known as ‘pawnor’ and the
bailee is called ’pawnee’
Right to use: Pawnee does not have any right to use
the goods
Rights of Pawnee:
 Right of Retainer

 Retainer for subsequent advances

 Extraordinary Expenses
Duties:
 Reasonable Case

 No Unauthorized used

 Not to mix

 Not to do any act in violation of the terms of the

contract
 Return the goods Pledge

Right of Pawnor:
 Enfacement of pawnees duties
 Defaulting Pawnor’s right to redeem
Duties:
 To compensate Pawnee for extra ordinary expenses
 To meet his obligation
Agency: An ‘agent’ is that person who is employed
another, to do or to represent another in dealings with
the third person”
Creation of agency:
 By need, Clear cut contract

 Implied contract

 Confirmation

Condition when agency is terminated:

 Termination of agency by law:

 Expiry of the period

 Destruction of the subject matter

 Death of party

 Becoming insolvent

 Becoming insane
 Completion of target
 Principal declared foreign enemy
 Termination by conduct of parties
 Termination by principal
 By agent
 Mutual
CONTRACT OF SALE
“A contract of sale is a contract where by the seller
transfer or agrees to transfer the property in goods to
the buyer, for a price”
 Essentials:

 Buyer and seller

 Goods

 Price

 Transfer of property

 Element of a valid contract

Meaning of ‘agreement to sale’:

“A contract of sale, the property in goods is to take
place at a future time or subject to certain condition, it
is called to be an ‘agreement to sell”
Meaning of condition warranties:
“The stipulations which are quite significant to the
contract of sale and the breach of which is taken as
breach of the contract are known as condition and the
stipulation which are not so vital and breach of which
known as warranties”
Doctrine of ‘caveat emptor’:
“The buyer must be caution us in buying the goods,
should examine the goods as to their fitness to the
purpose before he actually buy them”
Exception to the rule:
 Sale by description

 Implied condition on warrants

 Sale under a trade name

 Merchantable quality

 Usage of trade
Meaning of unpaid seller:
“When the whole of the price has not been paid or
tendered, When a bill of exchange or any other
negotiable instrument has been received as a
conditional payment and the condition on which it was
received has not been fulfilled by reason of dishonor
of the instrument or otherwise”
Rights of an unpaid seller:
 Right of lien
 Stoppage of goods in transit

 Right of re sale

 Detain the delivery of goods

Unpaid seller’s right against the buyer-

 Suit for the price

 Suit for damages

 Suit for interest

Implied conditions-
 Condition as to title

 Sale by description

 Sale by sample

 Samples as well as description

 Fitness of goods and quality

 Usage of trade

 Condition as to wholesomeness

Implied warranties:
 Warranty by quick possession

 Goods being free from encumbrance

Meaning of transfer of ownership:
“When the buyer becomes the owner of the goods only
there the transfer of the ownership of goods
considered to have been established”
Significance:
 Transfer of risk

 Right to file suit

 Accruing of goods by the liquidation

Meaning of sale by auction:

“A sale by auction is a sale among the public, inviting
the price proposal and selling the goods to the person
bidding the highest amount for purchasing”
Rules:
 Treating the different contracts separately

 Right to withdraw the bid bidding by the seller

 Craving no recognition

 Declaring the prescribed price for sale

 Use of pretended bids

Meaning of goods:
“Means every kind of movable property other than
actionable claim and money and includes stock and
shares growing crops and things attached to or
forming part of the land which are agreed to be
severed before sale or under the contract of sale”
Classification of goods:
 Existing goods:

 Specified or ascertained goods

 Unascertained good
 Future goods

 Contingent goods

The price of the goods:

“ Price means the money consideration for a sale of
goods”
Determination of price:
“By the contract of sale, By the manner agreed between
the parties, Course of dealings Reasonable price
Government”
APT Contact
 Landline No. 4082444 / 2445 /
2453
 Mobile No. 9755557307
 Website :
www.aptinfoservices.com
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info@aptinfoservices.com