c
c 

       :
 , "A law is a rule of conduct imposed and enforced by
the Sovereign".
 , "Law is the body of principles recognized and
applied by the State in the administration of justice³.
 defines law as " a general rule of external human action
enforced by a sovereign political authority, i.e., the State".
The  
  the term '! means "
"   ##   
    ".
In the words of $%, "Law in its most general and
comprehensive sense signifies a rule of action and is applied
indiscriminately to all kinds of actions, whether animate or inanimate,
rational or irrational³.
'   defines law as "that portion of the established habit
& thought of mankind which has gained distinct and formal
recognition in the shape of uniform rules backed by the authority and
power of the Government´.
' rom these definitions, it is clear that  refers to 
" " &'
##(    
 ' )
' In other words,  " #  #
 *" &' to regulate the
external human action and conduct of individuals in there dealings
with other individuals and with the State (the Government).
' In short, means the  *" 
 for regulating the rights and obligations of the people for
securing justice, peaceful living and social security.

c#+
The nature of concept of law is indicated by its   .
The    of law are:
1. Law is a    (i.e., a set of rules) relating to human
action.
2. Law attempts to        " 
( Man's contacts, associations, dealings or relationships with
others and with the State).
3. Law is  *   "   &'..
4. It is  "   on the people so as to   
, (   '          
5. No doubt, the law is recognized and enforced by the State. But
the       (i.e, regulated) " 2
 . That
means, law applies to all without discrimination. In fact, law attempts
to achieve   it in its application.
6.      #. (The supremacy of law is
technically called the rule of law.)
c
c $-.


    $  :
, "The phrase ! ! is generally used to denote
³ #    
"     " 
#³.
rom this definition, it is clear that ³"  
  "   /"  
  "  "" 0)
In other words, business law is that branch of law which # "
   
  between (a) businessmen themselves, (b) businessmen and
their customers, dealers and suppliers and (c) businessmen and the
state. In short, it is that part of the general law or civil law which
regulates and governs trade, commerce and industry.
 #$ :
The scope of business law is fairly wide and comprehensive. It is, generally,
understood to include laws relating to contracts,partnerships,companies,sale of
goods, negotiable instruments, insurance, insolvency, arbitration, carriage of
goods,etc.
1.     :
Indian Mercantile Law or business law is largely based on the English Mercantile
Law. Many rules of the English Mercantile Law have been incorporated (include)
in the Indian Mercantile Law.
urther, even now, Indian courts of law, generally take recourse to the English
Mercantile Law, whenever an Act is silent on any point or when there is ambiguity.
It is true that Indian mercantile law is largely based on the English Mercantile Law.
'However, certain deviations have been made in the Indian Mercantile Law to
provide for local customs or usages of trader the peculiar conditions prevailing in
India.
2)  + Statute law refers to the various Statutes or Acts passed by the
Legislature (i.e. by the Parliament or State Legislature).
The statute law is the most important source of the Indian Mercantile Law.
The bulk of the Indian Mercantile Law is statute, law. The Indian Contract
Act,1872,The Indian Negotiable Instruments Act, 1881, 2
Sale of Goods
Act,1930, the Indian Partnership Act,1932,
The Companies Act, 1956, etc. are examples of statute law.
:)3  
  ( c:
Judicial decisions are one of the important sources of the Indian
Mercantile Law. Judicial decisions or precedents refer to previous
judicial decisions (i.e,previous decisions of judges) which will be
followed in similar future cases or circumstances.
4)c-:
Customs and usages are one of the important sources of the Indian
Mercantile Law.
Customs and usages refer to those mercantile customs and usages
(i.e., customs and usages of a particular trade) which are
established by long usage and recognized
and incorporated by courts in judicial decisions.
   c
5c

           c:
   c  "   6  "  (
     (    "  
  0) .  (    "  (  
     (       # 
 "  #       "  "    )
.         ' "     ( 
  ' #    #     #   #
 the contract, and the conditions under which the remedies are
available.

urther,   

 "( ))( 
#  "  )
 (##  2( 
"  "# 2(
 )
 c
5c

    c+
 2 %%(6' # 
" )6
 3(7  
  "  "# 0)
$%  6(#(
  c  (22#  7)

     (6 "  

"#"   
8 " 2"#
)

7" +6 "

#   2"" 
 " #" # 2
 " # 2"  6)
   2 9:  2
.  c , 1872 defines a contract as
"an 'agreement enforceable by law".
rom the above definitions, it is clear that a contract is an agreement
between two or more parties which is enforceable at law. In other words,
a contract is a legally binding agreement between two or more parties.
   c:
On an analysis of the meaning ` a contract, it is quite clear that a,
contract essentially consists of two elements, viz.,
(a)an agreement and (b) vinculum juries or legal Obligation (i.e., an
obligation created by an agreement and enforceable at law).
9: :
An  is defined in Section 2(e) ` the Indian
Contract Act, 1872 as "every promise and every set of promises, forming
consideration for each other". According to this definition, an agreement
is a promise or a set of promises (reciprocal or mutual promises).
That is, it is the promise made by one or more persons to the other or
others, to do or not to do something.
  # ;) #  is defined in Section 2(b) of the
Indian Contract Act, 1872 thus:
"When the 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".
As per this definition, #  ###

 ##;) ## is defined in Section 2 (a) of the

Indian Contract Act, 1872 thus:
"When one person signifies to another his willingness to do or
abstain from doing anything with a view to obtaining the assent of the
other to such act or abstinence, he is said to make a proposal".
According to this definition a proposal is   " #
   
(#  )
 It is clear that an agreement come into existence only when one
party makes a proposal or offer to the other Party to do or not to do
something, and the other party signifies his assent, (i.e., gives his
acceptance or consent) to that effect. In other words, it constitute an
agreement, there must be a proposal or offer by one party, and an
acceptance of that proposal or offer by the other.

In short,          #.

That is, an  is Î  < #.
9": "   9 ))( "   "  ):
It is true that, to form a contract, there must be an agreement
between two parties. Between agreement alone cannot constitute a
contract.The agreement must create legal obligation (an obligation
enforceable at law). In short, the agreement must be legally
enforceable. So, the second essential element of a contract is legal
obligation or "   "  )
:
It is true that an agreement may create a legal obligation or a social
obligation. But, to become a contract, an agreement must give rise to
a legal obligation   
"  ". On the other hand, an agreement
which cannot create a legal obligation ( an agreement which creates
only on obligation of  ,  ,    or )
cannot constitute a contract. That means, all agreements are not
contracts. Only those agreements which give rise to legal obligations
(legal agreements) are contracts.
"   +
No doubt, legal obligations (i.e., obligations enforceable at law) may
arise from agreements. But all legal obligations do not necessarily
arise from agreements. There are certain legal obligations (i.e.,
obligations imposed by law), such as (1) obligations created by 
or  ' ( (2) obligations Created by 8 , (3)
obligations imposed by ,,(4) obligations imposed
by status, Say, obligations of trustees to beneficiaries,etc,
 which do not arise from agreements. That means, all legal
obligations do not constitute contracts only those legal obligations,
which arise from agreements constitute contracts.

c : All agreements are not contracts.

.    ' "  
 "c.
Again,   "   9"   "  : 
   )
.     "  (   ( 
9 ))     :   .

"c:
The 2
'' and '' are not one and the same.
They differ from each other in some respects.
1. Every promise or every set of promises, forming    `
each other is an agreement, on the other hand, an agreement
" is a contract.
2 .An agreement is the   #. But a
contract are the  "   
(i.e., the sum total of offer, its acceptance and the enforceability of the
obligation at law).
3. An agreement may or may not   #, whereas
a contract necessarily   #.
4. An agreement is a . But a contract is a #  of an
agreement. That means an agreement is a wider concept than contract.
5. (
.
6. An agreement is , where as a contract
implies a )
 
. =.
c
5c
. 
According to Section 2(h) of the Indian Contract Act, 1872, "   
 " " ". To be enforceable by law, an agreement must
satisfy certain conditions.
These conditions are called essentials of a valid contract.
The essentials of a valid contract are laid down in Section 1> of the . 
c ( 1?@2.
"    if they are made by the  ,
of the parties #  , for a     and with a
 ", and are  #   " ' ". The essentials or
essential elements of a valid contract,
as laid down in Section 10 of the Indian Contract Act, 1872, are as follows
1)  # :
As stated earlier,  "" . An agreement
is constituted by means of an " # #
" # . That means there must be plurality of parties for a valid
contract. In other words, there must be at least  #  for a valid contract, 
% and the #.
2) #+
An agreement is a preliminary to a contract. That is, to
constitute a valid contract ""
 # )
To constitute an agreement, "' " 
# (' #" # .
:). "  :
The agreement between the contracting parties must be intended to
create legal obligation or legal relationship between them. In other
words, when two parties enter into an agreement, their intention
must be to create legal obligations legal consequences or legal
relations between them.
Balfour Vs Balfour-> Husband & Wife [30 pounds/month]
Kalai Halder Vs Sheikh [Dinner] [failed to attend]
 4)    :
Section 23 of the Indian Contract Act, 1872, subject to certain exceptions, an
agreement, to be enforceable by law, must be supported by   . That means,
an agreement is legally enforceable only when there is consideration.
     " ## "   (" 
     "   .
A) c#  #    #      :
The #  to an agreement must be #     .That
is, the parties to an agreement must have legal capacity to enter into an agreement.
Otherwise (i.e., if the parties to an agreement do not have legal capacity to. enter in to
an agreement), the agreement cannot be enforced in a court of law.
B)  :
An agreement must be based on the   of the parties thereto. This essential
signifies or implies two things  , the agreement must be based on the consent of the
parties thereto.
Consent of the parties means that the parties to the agreement are   or of the
   on all the material terms of the agreement in other, words, consent of the
parties means that the parties to the agreement  #       
. (Section13of the Indian Contract Act).
 , not only there must be the consent of the parties to the
agreement, but the consent of
the parties to the agreement must also be ) The consent of the
parties to the agreement is said to be free, when their consent is
 by (a) coercion
(b) un due influence,
(c) misrepresentation,
(d) fraud &
(e) mistake.

@)  ",",:

The object of the agreement must be ). another wards, the
purpose for which the agreement has
been entered into by the parties must be lawful. If the object or
purpose of the agreement is unlawful,
then, the agreement will be void, and so, it cannot be enforced by
law.
 ?) c  :
The agreement must be  . That is, the terms of the agreement must be certain or at
least capable of being made certain. In another wards, it must be # " 
  .

C) "   #:

The agreement must be capable of being performed. That is, the terms of the agreement
must be capable of performance.  # "
(an act impossible of performance either physically or legally) ' )

1>)
 #  ' :

To be enforceable at law, the agreement must not have been #  '  under
the .  c  or under    in force in the country.
If an agreement has been expressly declared to be void under the Indian Contract Act or
under any other law in force in the country, it cannot be enforced at law.

11)           5  :

In cases where the agreements are required to be in writing and registered by law,
the legal formalities as to    and    must be complied with,
if the agreements are to be enforced. If the legal formalities as to writing and
registration are not complied with the agreements cannot be enforced ï

 5   5 5
. 
Sir William Ansan, "Every contract, when carefully analyzed, will resolve itself
in to an  by any party and the # of that offer by the other".

 # +
The terms !##! and !! are considered synonymous, and are used
interchangeably.
!#! in the Indian Law is synonymous with ! ' in the English Law.
Section 2(a) of The Indian Contract Act defines a ## as, "When One
person signifies to another his willingness to do or to abstain from doing anything,
with a view to obtaining the assent of the other to such act or abstinence, he is said to
make a proposal´.

.   #       or     #    

 "       # )

Section 2 (c)of the Indian Contract Act, the #who makes the proposal or
offer is called the ##,  or #  and the person to whom the
proposal is made is called the  or # .
 =  5 = 
:
The fallowing are the essential requirements of a valid offer or the
legal rules relating to a =   as per the Indian Contract Act,
1872:-1. An offer must be an expression, by a party, of his
willingness to do or to abstain from doing something. In other wards,
the offer must indicate clear intention or willingness on the part of
the offeror to be bound by his Proposal or Offer
2. The expression of willingness to do or to abstain from doing
something must be to another person.
3. The expression of willingness to do or to abstain from doing
something must be made with a view to obtaining the assent (consent
or acceptance) of the other person to such act or abstinence, and not
merely with a view to disclosing the intention of the party making the
offer
4. The offer or proposal need not necessarily be for doing
something( an act). It may be for not doing or abstaining from doing
something.
 A. The offer or proposal may be in the 
8 
B. An offer must be       # (
must give rise to legal consequences or must impose legal
obligations an the offeror).
@. The terms of an offer must be   ,  or
" , and not vague, loose or ambiguous.
?. An offer may be #" (#% , or
may be #  of the parties or from the
circumstances of the case.
C. An offer may be #   or )  offer made to a
definite person or class of persons is a specific offer. Such an offer
can be accepted only by the specific person or any of the class of
persons to whom it is made.
An offer made to the general public or public at large is a general
offer. A public advertisement calling for some information is an
example of general offer.
Such an offer can be accepted by any member of the public.
 1>. An offer may be #  ' '. A positive offer is an
offer to do something. A negative offer is, on the other hand, an offer
to abstain from doing something.
11. An offer becomes effective only when it is  
to the offeree. Until the offer is communicated `made known to the
offeree, there can be no acceptance and no contract.
12. It must be an , and not a mere invitation to make offer
or a mere statement of intention, or a mere answer to a question.
1:. An offer can be   , i.e., an offer can be made
subject to any special terms and conditions.
14. No doubt, an offeror can attach any #  and
   to the offer he makes.
1A. An offer should not contain terms, the non-compliance of
which would amount to acceptance.
1B. When two parties make identical offers to each other in
ignorance of each others offer, the offers are known as cross offers.
 V
V

   #:
Section 2(b) of the Indian Contract Act defines an # as:
"When the person to whom the proposal is made      
 , the proposal is said to be accepted". According to this
definition,  #   # ( " the offeree, of his
(      to the terms of the offer and to the
establishment of legal relations. In short,  #  
!     " " "       "
 .
The offeree becomes the #, when he accepts the offer
 = #5= 
#+DTo be legally effective, an. acceptance must satisfy
certain conditions or essentials. The essentials of a valid acceptance
are:
1. As per Section 7 (i) of the Indian Contract Act, the acceptance
must be " and 8   (i.e.  ).
 2.Acceptance must be by the ( the person to whom the offer is
made), and not by anyone else. In other words, an offer can be
accepted only by the person or persons to whom the offer is made.
It cannot be accepted by any other person without the consent of the
offeror.
:. An acceptance should  the offer. It should not
precede the offer.
4.To conclude a contract between the offeror and the offeree, the
acceptance must be   to the offeror in some respectable
form, expressly or impliedly. Mere mental acceptance (i.e., mere
resolve on the part of the offeree to accept an offer) without any
external manifestation ( indication) of his intention to accept the offer
either by speech or by writing or by conduct is no acceptance. In short,
an un communicated acceptance is no acceptance.
A. Communication of acceptance can be waived of dispensed with by
the offeror. As the communication of acceptance is intended for his
benefit, the offeror can waive the communication of the acceptance.
B. The acceptance must be communicated by the offeree in
accordance with the mode prescribed by the offeror
@. No doubt, an offeror has the right to prescribe the manner in which
the offer may be accepted. But the law does not allow an, offeror to
prescribe silence as the mode of acceptance.
?.The acceptance must be given within the prescribed period or
within a reasonable time. That means, if any time limit is specified
by the offeror, the acceptance by the offeree must be within that
specified period. If no time is specified, it must be given within a
reasonable time.
C. Again, the acceptance must be given by the offeree while the offer
in force, i.e., before the offer lapses or before the offer is revoked (
withdrawn) by the offeror .
1>.The acceptance must show an intention on the part of the acceptor
to fulfill all the terms of the promise. If no such intention is present,
the acceptance is, not valid.
11. Acceptance must be the whole of a proposal. That means, when
an offeror makes a composite offer and each part of the offer is
dependent on the other, the offeree must accept the whole of the
offer, and not a part of it, unless the offeror himself accepts a part of
the acceptance. 12.A proposal once rejected, cannot be accepted by
the offeree, unless it is renewed by the offeror.
1:. As per Section 4 of the Indian Contract Act, communication of an
acceptance is complete as against the proposer when it is put in course
of transmission to him so as to be out of the power of the acceptor, and
as against the acceptor, when it comes to the knowledge of the
proposer. 14. #. As
such, under the English Law, acceptance is irrevocable. However,
under the Indian Law, an acceptance can be revoked by the acceptor at
any time before the communication of the acceptance is complete as
against the acceptor ( before the communication of the acceptance
reaches the offeror), and not afterwards.
1A. If an offer is made through an agent, it is enough if the acceptance
is communicated to him.

 "   #:

There are some differences between an offer and an

acceptance. They are:
1. Offer constitutes the first stage in the formation of a
contract, where as acceptance constitutes the second stage in the
formation of a contract.
2. An offer is made by the offeror to the offeree. But an
acceptance is given by the offeree to the offeror.
3. An offer is not held to be made until it is brought to the
knowledge of the offeree (i.e., communicated to the offeree).
4. On the other hand, an acceptance may, in certain
circumstances be held to be made, though it has not come to the
knowledge of the offeror (i.e., though it is not communicated to the
offeror).
 c
.
5.


  c  :
  1> of the Indian Contract Act, 1872 provides that an
agreement " " "         
  )
  2A of the Indian Contract Act, 1872 lays down that, subject to
certain exceptions(         
' ) . is clear that an agreement, which is not supported by
consideration,is nudum pactum (a nude or bare agreement), & ex nudo
pacto non oritur action( no cause of action arises from a nude or bare
agreement). In other words, absence of consideration makes a promise
gratuitous,& a gratuitous promise ( a promise made without any
consideration) is not enforceable at law. It is only when a promise is
made in return of something from the promisee that such promise can
be enforced by law against the promisor. So, barring the exceptions as
laid down in   2A of the Indian Contract Act, as a rule,
       '   of an .In fact,
     '     '  .

     c  :
The term !  ! has been defined in various ways by
different authorities) In the case of
#  c)
)=) /c).
J Justice Pollock defines consideration as "The price for which
the promise of the other is bought". According to this definition,
   # # .
In the case of =), Justice Patterson has defined
consideration as "   '  
. It may be some benefit to the plaintiff or some detriment to the
defendant".
According to this definition, µconsideration is something
of value, which results in some benefit to the promisor, or
detriment (loss) to the promisee¶.
In the English case of c = , consideration was defined as
"some right, interest, profit or benefit accruing to one party, or some
forbearance, detriment, loss or responsibility given, suffered or
undertaken by the other".
 According to this definition also,    
   ', which results in some benefit to the plaintiff or
the promisor, and some detriment to the defendant or the promisee or
detriment to both
Section 2 (d) of the Indian Contract Act, 1872 defines   
thus: "When at the desire of the # , the #  or any other
person has done or abstained to do doing, or promises to do or
abstains from doing, something, such act or abstinence or promise is
called a consideration for the promise". According to this definition,
   is (a) an act or doing something (doing an act
which one is not already legally bound to perform), (b) an abstinence
or forbearance (not doing something) or a promise (a promise to do
or not to do something) in return for a promise.
It is 8  # 8     "  (something received in
return for something given).
c  c  :
Section 2(d) of the Indian Contract Act, 1872,   
 of consideration. They are:
l. Consideration need not necessarily be in cash or in kind. It maybe
even an act, or abstinence or forbearance, or a promise to do or not
to do something.
2. It must be something to which the law attaches value. That is, it
must be something which has some value in the eyes of law.
3. It must be present in the sense of benefit to one party, and a
detriment (loss) to the other party or a detriment to both.
4. It is quid pro quo, i.e,something in return for something.
5. It may have been already executed or it may be in the process of
being done or it may be still executory.In other words, it may be past
or present or future.
6. Consideration is given at the desire of the promisor.
7. It may be given by the promisee or by any other person.
  = c  5 = 
c  :
The essentials of valid consideration or the legal rules regarding valid
consideration are:
)c    ' +
A bare promise(an agreement not supported by consideration) cannot be
enforced by law.
In the words a promise without consideration is a gratuitous undertaking and
cannot create any legal obligation, while a promise supported by consideration is a
bargain and can create legal obligation
Abdul Aziz Vs. Masum Ali. In this case, A promise B, the secretary of a Mosque
Committee, 2` subscribe a sum of Rs.500 for rebuilding a mosque
# 5 ´¶No consideration No contract¶ .
(1) Contracts arising out of natural love and affection
(2) Promise made to compensate for past voluntary services.
(3) Promise to pay a time-barred debt.
(4) Completed gift.
(5)Promise to contribute to Charity.
(6) Compromising or remission of a due debt and extending the time for the
performance of a contract by the promisee .
(7) Contract of agency.
2)c  ' # )
:)c   '#  
#)
4)c   "#(#)
A)c   "  '
 ')
B)c  "8)
@)c  "/ # "( )
?)c  " )
 c       "       :

1.When it is forbidden by law.

2. When it is of such a nature that, if permitted, it would defeat the

provisions of law.

:) When it is fraudulent.

4. When it involves or implies injury to the person or property of another.

A. When it is immoral.

B. When it is opposed to (i.e., against) public policy.

 cc.E  5.  c
5c
. :
The parties who enter into a contact must have the capacity to
contract.
Section10 of the Indian Contract Act, 1872 lays down that an
agreement becomes a contract only if it is entered into between parties
who are competent to contract. Contracts entered into by persons
who are not competent to contract are void. So, #   
#    is an essential element of a valid contract.
   c#   c:
Capacity to contract means the competence or competency or the
parties to enter into a valid contract.
Section 11 of the Indian Contract Act, 1872, which deals with the
capacity of the parties to contract, provides that every person
(1) who is of the age or major according to the law to which he is
subject, (2) who is of sound mind and (3) who is not disqualified
from contracting by any law to which he is subject( who is not subject
to legal disqualifications) is competent to enter into contract.
.#c:
As per the provisions of Section 11 of the Indian Contract Act,
1872, the following persons are incompetent to contract:
(1) Minors.(2) Persons of unsound mind.(3) Persons disqualified
by any law to which they are subject.
.) .
5
  :
According to Section 3 of the . ,  (1?@A, a
minor is a person who is not a major.
(A person attains majority, i.e., becomes a major, on completing
his 21st year under the English Law).
Under the Indian Law, a person domiciled in India attains majority
on complet1ng his 18th year. However, if the superintendence (i.e.,
management) of a minor's property is assumed by a court of wards,
or if a guardian of a minor's person or property is Capacity of
Parties to contract appointed by a court of law, he attains majority
only on his completing his 21st year
 5  !:-

The law (i.e., the rules) governing minor's agreements is based on

two fundamental principles.They are:-
91: The law protects minors against their own inexperience and
against the possible improper designs of those of more experienced
years. This is clear from the following statement:.
"The law protects their (minors) persons, preserves their rights and
estates, excuses their mistakes (negligence, undue delay, etc.) in
order to disentitle a person to a certain remedy) and assists them in
their pleadings, the Judges are their Counselors the Jury are their
Servants and Law is their Guardian. "
92: In pursuing the above objective (i.e., in protecting the
minors), the law should not cause unnecessary hardship to persons
who deal with minors. The law (i.e., the rules) relating to a minor's
agreements may be summarised as follows :-
1) !' "   +
Section11 of the Indian Contract Act, 1872 has laid down that   
# .
But the Indian Contract Act of 1872 has not made it clear whether a contract
entered into by a minor is void or voidable. It was in the famous case of
  $ " =)
&, made it perfectly clear that a minor was not
competent to contract, and an agreement entered into by a minor was void ab initio
( ' "  ).
2) !"  "     ,  :
Since a minor's agreement is void ab initio (right from the very beginning), it
cannot be ratified by him later on his attaining majority.
This is based on the principle that an agreement which was void at the time when it
was entered into cannot be made valid by subsequent ratification, &  
 '       .So, a minor cannot ratify his
agreement, even after attaining majority.
:)
8 #  # !:
As a minor's agreement is void ab initio (right from the very beginning), there can
be no question of #  # !.
4)
##  :
There can be no estoppels against a minor. In other words, a minor cannot be
estopped ( #') from pleading minority as a defence to avoid a contract. He
can always plead minority. As such, even if a minor has, by fraudulently
misrepresenting his age, induced the other party to enter in to contract with him, such
a contract will be void and he(the minor) cannot be made liable on the same.

A) 5           : Sections B4 and BA of the Indian
Contract Act, which deal with restitution, apply only to contracts between competent
parties. As such, ordinarily, there can be no restitution against a minor, who is
incompetent to contract. That is, ordinarily, a minor cannot be made liable to repay
any money received by him or to compensate for any benefit received by him under a
void agreement.It is     ' #      (there can be no
restitution against a minor).But     '    #  ) 9 
   " % :

B)c  '  "     '  +

A contract of service entered into by a minor is void. A contract of ##  #
by a minor is '   "   on him, provided he is    14  
. So, a contract for apprenticeship is enforceable against a minor, if it is
"      " .
@)"   "  :
No doubt, a minor is incompetent to contract. But the incapacity of a
minor to enter into a contract made by means his incapacity to bind
himself by a contract. It does not incapacitate him from enforcing a
contract in his favour. In other words, there is nothing which debars
a minor from enforcing a contract in which he is the beneficiary (the
payee or promisee of a contract). That means, a contract wherein the
minor is the beneficiary can be enforced at his option, but not at the
option of the other party.
?)  :
A loan to a minor is void. As such, if an adult stands surety for a
loan to a minor, the guarantee of the loan must also be void. But, in
some Indian cases, it has been held that the surety must be primarily
liable. So, in India, if, in a contract of guarantee, an adult knowingly
stands surety for a minor, although the minor is not liable on the
contract, the adult surety is liable under the contract as a surety. This
is because, in a contract of guarantee, there is a separate and direct
contract between the surety and the third party
 C)c "  ,  :
Where a minor and an adult jointly enter into a contract with another person, the
minor is not liable on the contract. But the contract as a whole can be enforced
against the adult.
1>)     " :
A minor can draw, make, endorse and deliver negotiable instruments so as to
bind all parties except himself.That means, he cannot be held liable to others on the
negotiable-instruments to which he becomes a party.But he can enforce the
negotiable instruments in his favour against others.
11)  !  "    :
A minor is liable for his tort (civil wrong like assault), conversion ( wrongful use
of another persons property),Trespass over an immovable property, negligence.
A minor is liable for his tort which is independent of the contract.
12) c   "      "    #   :
A minor's parents or guardians are not liable for the contracts entered into by the
minor, even if the Contracts are for the supply of necessaries to the minor. However,
if the minor is acting as an agent of the parents or guardians, the parents or
guardians are liable for the minor's acts.
1:) ! "     ##  :
As per Section 68 of the Indian Contract Act, 1872, if a person
supplies necessaries of life or renders necessary services to a minor
or his dependants (persons whom the minor is legally bound to
support) or lends money to a minor to buy necessaries of life or to
obtain necessary services for himself or his dependants, he is entitled
to be reimbursed for the same out of the minor's property. That
means, a    "  ## 
 '    #(and he is
also liable or loans taken by him to obtain necessaries of life or
necessary services for himself or his dependants.
14)c "  !#( 
" :
Contracts, entered into by the parents or guardians of a minor or
manager or the minor's estate on behalf of the minor are binding on
the minor, provided the contracts are within the authority of the
parents, guardians or manager, and they are made for the benefit of
the minor.
 1A)  "  ' :
A contract to marry in future entered into by a minor is void.
1B)     :
A minor  " appointed as an  of a principal. When a minor
acts as an agent of a principal, all contracts entered into by the minor
in the course of agency are binding on the principal, and not on the
minor.It may be noted that, though the contracts entered into by a
minor as an agent of a principal are binding On the principal, the
minor cannot be held personally liable to the principal ` his
negligence or breach of duty. That means, in appointing a minor as an
agent, a principal runs a great risk.
1@) ",  '+ A minor
cannot be adjudicated (adjudged) as an insolvent. This is because he
is incapable of contracting any debts.
1?)  # #:
As a minor has no capacity to enter into a contract, he cannot enter into a contract of
partnership.
In other words, a minor "# .
Section 30 of the Indian Partnership Act, a minor can be admitted to the benefits of
partnership by an agreement executed, through his guardian, with the other partners.
When a minor is admitted to the benefits of a partnership, he will have a righ2to such
share ` the property and profits of the firm as may be agreed upon. Again, as regards
his liability, the minor is not personally liable for the debts of the firm. Only his share
in the partnership property will be 1iable, and that too up to his share in the
partnership property. Of course, a minor may accept personal liability the debts or
obligations of the firm after attaining majority, if he wishes to do so.

1C) +

Since the membership of a joint stock company arises on the basis of a contract, a
minor, being incompetent to contract,  apply for the shares of a company and
be a shareholder or member ` a company. In ,case a minor has been registered in the
register of the company as a member by mistake, the company can   the
transaction and remove his name from the register of members. The minor also can
repudiate the transaction and get his name removed from the register.
 2) 5
  -
 -

.

   #    : Section 12 ` the Indian

Contract Act, 1872 deals with the question as to what is a sound mind
for the purpose of entering into a contract. It lays down as follows:
6 #     "        ## 
%   (        % (   #"
           ,   
 #   0) rom this, it is clear that a person is said
to be of unsound mind, if at the time when he makes a contract, he is
incapable of understanding the terms of a contract & forming a
rational judgment as to its effect up on his interests.
 #+
There are two tests of soundness of mind of a person. They
are:
91: Capacity to understand the terms of the contract.
92: Ability to form a rational judgment as to its effect upon his
interests.
c :
Unsoundness of mind arises from  (   (% or
other factors, such as  # (causing temporary unsoundness of
mind) and  brought about by old age or disease
 :
  and   are regarded as persons of unsound mind.

%# also are regarded as persons of unsound mind
Even persons who have been  # *,
# * persons who are   
' and persons who have suffered mental decay on account
of  or   become persons of unsound mind.
$# :
Whether a party to a contract is of sound mind or of unsound mind is
a question of fact to be decided by the 
. However, there is a
presumption in favor of soundness of mind. So, if a person relies on
unsoundness of mind to set aside a contract, he must prove it
sufficiently to the satisfaction of the court.
 c#   #        :
A person who is usually of unsound mind, but occasionally of sound mind
may make contracts when he is of sound mind.
A person who is usually of sound mind, but occasionally of unsound mind
may make contracts when he is of sound mind. .
A person who is usually of sound mind, but occasionally of unsound mind
cannot make contracts when he is of unsound mind.
A person who is usually of unsound mind, but occasionally of sound mind
cannot make contracts when he is of unsound mind.
:)
8   5

Meaning of disqualified persons:
Disqualified persons refer to persons who are disqualified from
Contracting by any law in force in the country. Such persons include:-
(1)   
  .
(2)  ' 
 ' , " and their
# 

# .
(3) c' 
c' .
(4) .' or $%#
$%#.
Besides the above persons,    and #  also fall under
this category.
 5 c

 :-. 
. ::
Section 10of the Indian Contract Act, 1872 lays down that an
agreement is a contract, if it is made up by the free consent of the
parties to the agreement. That means free consent of the parties to an
agreement is an essential element of a valid contract. or the
enforceability of an agreement, it is not only necessary that the parties
to the agreement should have given their consent, but their consent
should also be free.

    c: Section 13 of the Indian

    c
Contract Act defines consent as "two or more persons are said to
consent when they agree upon the same thing in the same sense".
According to this definition, consent involves consensus ad idem or
perfect identity of minds between the contracting parties regarding the
subject matter of the agreement. That is, the contracting parties must
agree upon the same thing in the same sense at the same time for
whatever reason, there is no consensus ad idem between the
contracting parties, there is no real consent, and so, there cannot be
any valid contract

    c+

    c+

The consent of the contracting parties may be free or unfree (i.e.,
subject to flaw). It is the free consent that is necessary for the validity
of a contract. So, it is necessary to know the meaning of 'free
consent'. ree consent is the consent which is given by the free will
of the parties of their own accord..
Section 14 of the Indian Contract Act,  is said to be is one,
  " :
(1) Coercion, as defined in Section 15 of the Indian Contract Act OR
(2) Undue influence, as defined in Section' 16 of the Indian Contract
Act OR
(3) raud, as defined in Section 17 of the Indian Contract Act OR
(4) Misrepresentation, as defined in Section 18 of the Indian
Contract Act OR
(5) Mistake, subject to the provisions of Sections 20, 21, and 22 of
the Indian Contract Act
If the consent or a party is obtained by any or the above causes, the
consent is said to be not free or unfree (i.e., there is said to be flaw in
consent).
 c8 c
c8 c:
When there is no free consent of the parties (i.e., when there is flaw in consent),
the contract may turn out to be voidable or void, depending upon the nature of the
flaw in the consent. When the consent to an agreement is caused by coercion, undue
influence, fraud or misrepresentation, there is no free consent, and so, the contract is
voidable at the option of the party whose consent is so caused (at the option of the
aggrieved party). But when the consent is caused by bilateral mistake as to a matter
of fact essential to the agreement, there is no agreement at all, and so, the agreement
is absolutely void
1) c 5c.


        c :
Section 15 of the Indian Contract Act defines coercion as "the committing or
threatening to commit any act forbidden by the Indian Penal Code, or the unlawful
detaining or threatening to detain any property, to the prejudice of any person
whatever with the intention of causing any person to enter into an agreement."
According to this definition,   means the committing or threatening
to commit any act forbidden by the Indian Penal Code, or the unlawful detaining or
threatening to detain any property, with the intention of obtaining the consent of any
person to an agreement.
 c :
1. Coercion includes threat, physical compulsion and menace (injury)
to property.
2. To constitute coercion there must be a clear utterance of threat or
commission of an act.
3. The threat or act constituting coercion must amount to an offence
punishable under the Indian Penal Code. Threat to shoot, threat to
cause hurt, rape, intimidation, defamation, giving wrong evidence,
instigating to commit crime, theft, attempt to commit suicide, etc. are
of the examples of acts forbidden under the Indian Penal Code. Any
act which is not punishable under the Indian Penal Code say, a threat
to charge high prices for the goods, a threat to charge high rate of
interest on the amount due, a threat to prosecute or a threat to file a
suit will not amount to coercion, as these threats are not offences
punishable under the Indian Penal Code.
 4. The act amounting to coercion must be committed with the intention of causing
any person to give his consent to, the agreement.
A. It is not necessary that the act amounting to coercion must be committed by a
party to the contract. It may proceed from (i.e., it may be committed by) any party,
even from a stranger to the contract.
B. It is not necessary that the threat or act amounting to coercion must be directed
against the other contracting party. It may be directed against any person, even
against a third person.
@. As per Section 15 of the Indian Contract Act, it is not necessary that the
coercion must be committed in a place where the Indian Penal Code is in force. In
other words, it is immaterial whether the Indian Penal Code is of is not in force in
the place where the coercion is employed
  c :
As per Section 19 of the Indian Contract Act, when the consent of a party to an
agreement is obtained by coercion, the consent of the party cannot be regarded as
free. So, in such a case the contract becomes voidable at the option of the party
whose consent is so obtained. That means, .the aggrieved party can set aside the
contract OR refuse to perform his part of obligation on the contract.
$' c 
$' c :
The burden of proving the fact that his consent has been obtained by
coercion lies on the party who seeks to avoid the voidable contract on
the ground of coercion.
5    ' +
As per Section 64 of the Indian Contract Act, 1872, if the aggrieved
party opts to rescind or avoid voidable contract on the ground of
coercion, he must restore (to return) the benefit, if any, received by
him under the contract to the other party ( the guilty party).

2)-

-.
-
c
Definition and Meaning of Undue Influence:
Holland has defined undue influence as "the un conscientious use of
power over another person, such power being obtained by virtue of
present or previously existing dominating control, arising out of
relationship between the parties.'
 Section 16(1) of the Indian Contract Act, 1872 defines undue influence as "an
influence exercised by one party on the other where the relations subsisting
between the parties are such that one of the parties is in a position to dominate the
will of the other and uses that position to obtain an unfair advantage over the
other;³.
5  #  c     - .   "

As per Section 16(2) of the Indian Contract Act, 1872, the law presumes
a person to be in a position to dominate the will of the other:
(1) Where he holds a real or apparent authority over the other; e.g., where there is
the relationship of master and servant ,police officer and accused, etc.
(2)Where he stands in a fiduciary relation to the other. iduciary relation means a
relation of mutual trust and confidence. Such a relation is supposed to exist il1 the
relationship between a father and a son, solicitor and client, doctor and patient,
trustee and beneficiary, spiritual or religious adviser and disciple, etc.
(3) Where he makes a contract with a person whose mental capacity is
temporarily or permanently affected by reason of old age, illness, etc., e.g., when
there is a contract between a medical attendant and a patient.
As per the provision of Section 16(2) of the Indian Contract Act,  #
        #,
  #   
 (examples )
(a) ather and son, (b) Guardian and ward. (c) Master and servant.
(d) Doctor and patient. (e) Solicitor (i.e., advocate) and client. (t)
Trustee and beneficiary. (g) Promoter and company.
(h) Teacher and student (i) Religious or spiritual adviser and disciple(
j) Police officer and accused .
(k) Income-tax officer and assessee. (l) iance and fiancée. (m)
Husband and an illiterate wife.
(n) Pardanashin woman and any other contracting party.(0) Illiterate
lady and any other contracting party.
-.: According to Section 19A of the Indian
-.
Contract Act, 1872, a contract procured by undue influence is
voidable at the option of the party whose consent was obtained by
undue influence. When a contract procured by undue influence is
sought to be rescinded or set aside by the aggrieved party, the court
has the discretion to set aside the contract

 " c   - .:
1.In coercion committing or threatening to commit an act forbidden by law or
detaining or threatening to detain the property unlawfully obtains the consent of the
aggrieved party.
On the other hand, in the case of undue influence, the consent ` the aggrieved
party is obtained from the domination of the will ` one party over the other.
2, Coercion is mainly of physical character, involving mostly the use of physical
force.
But undue influence is ` moral character, involving mostly the use ` moral force
or mental press
:. In the case ` coercion, the threat may be directed against the person or the
property ` a man,
In the case of undue influence, the threat is against the person, and. not against
the property ` the man.
4. In the case of coercion, there may be no relationship between the contracting
parties,
In the case ` undue influence, there is some sort ` relationship between the
contracting parties.
A. In the case of coercion, the consent ` the aggrieved party is obtained under the
threat ` an offence.
In the case of undue influence, the consent ` the aggrieved party is obtained
without any threat of an offence.
B. Coercion may be committed outside India, i.e. anywhere in the
world.
But undue influence should have been committed in India, if it is to
be taken notice of by Indian L
@. Coercion may be directed against the `2
contracting party or
against a third party.
But undue influence is, generally, directed against the other
contracting party.
?. Coercion may proceed either from a third party `from the other
contracting party.
But undue influence is generally, exercised by the other contracting
party.
C. There is no presumption of coercion by law under any
circumstances.ie,aggrieved party has to prove that coercion had been
committed. But in the case ` undue influence, there is the¶
presumption ` undue influence by law in certain relations,
circumstances or cases, and in such cases, the aggrieved party need
not prove that undue influence had been employed on him
 1>. In the case of coercion there is criminal liability, besides an
action on the contract.
On the other hand, in the case of undue influence, there is no
criminal liability. There is only an action on the contract.
11. In the case of coercion, the aggrieved party can not only set
aside the contract but also claim compensation.
But in the case of undue influence, there is no liability on the guilty
to pay compensation to the aggrieved party.
12. When a contract induced by coercion is rescinded or avoided by
the aggrieved party, the aggrieved party is always required to
surrender or restore the benefit received to the other party.
On the other hand, when a contract caused by undue influence is
sought to be rescinded or avoided by the aggrieved party, the
aggrieves party mayor may not be directed by the court to return the
benefit received to the other party.
:).55
.
+D
+D . :
A representation is a statement of act relating to some matter
essential to the formation of the contract, made by one party to the
other, either before or at the time of the contract, with an intention to
induce the other party to enter into a contract. It may be expressed by
words, written or spoken, or implied from the act or conduct of the
parties. If #  " #  , it is called
 # )
  # :
  # 
In ordinary sense, misrepresentation 
 made by a party innocently without any-intention of
deceiving the other party.
  # :.
1. There must be a representation or assertion made by one party to
the other.
2. The representation must relate to some material fact essential to
the formation of the contract. It must not be a mere expression of
opinion or words of commendation
:. The representation must not relate to the  of the country.
4. The representation must have been made either " or  the time of the
contract.
A. The representation must be or must have become )
B. The representation must have been made innocently without intent to  '
the other party.
6h
 representation must
 been  
  to u
 the other
party to enter into the contract.
?. The representation must have been   in influencing the other
party to enter into the contract
 # :
 # 
As per Section 19 of the Indian Contract Act, 1872, a contract, which is vitiated by
misrepresentation, is ' " at the option of the aggrieved party.
As per the provision of Section 19 of the Indian Contract Act, when a contract is
vitiated by misrepresentation,the aggrieved party can    '  the
contract, treating the contract, as voidable.
Alternatively, he can accept the contract and insist that he should be put in the
position in which he would have, been, if the representation made had been true.
 4)5-

    :

    

Lord Herschell defined fraud in the case of Derry Vs. Peek as "
%  ( "   (
% (  ")6
According to Section 17 of the Indian Contract Act, 1872, fraud means
and includes any of the following acts committed by a party to a
contract, or with his connivance, or by his agent, with intent to deceive
another party thereto or his agent or induce him to enter in to a
contract:
(a) The suggestion as to a fact, of that which is not true, by one who
does not believe it to be true
(b) The active concealment of a fact by one having knowledge or
belief of the fact
(c) A promise made without any intention of performing it.
(d) Any other act fitted to deceive.
(e) Any such act or omission as the law specially declares to be
fraudulent
In short, fraud includes all acts committed by a party to a contract or by anyone
with his connivance or by his agent to induce the other party to enter into a contract
or to deceive the other party.
   
:
1.The fraud must have been committed by a party to the contract or by anyone with
his connivance or by his agent.
2. There must be anyone of the following ingredients or things in the act of fraud ,
(a)knowingly-intentionally (b)recklessly (c)active concealment (d)A promise made
without any intention of performing it.(e)any act which is made to cheat a person.
:.The act of fraud must have been committed by a party with a view to induce the
other party to enter into the contract or to deceive him.
4.The other 'party must have acted upon that fraud, i.e., the act of fraud must have
been instrumental in inducing the other party to enter into the contract.
A. The other party must have been actually deceived by the act of fraud.
An act of fraud which does not deceive the other party is no fraud
B. The other contracting party, who has been deceived by the act of fraud, must
have suffered some loss or damage
c8
c8:
1.He can avoid (cancel) contract within reasonable time.
2.Insists to perform the contract.
3.He can also sue for damage.

" # :

1. . :-In the case of misrepresentation, there is no intention to
deceive the other party, whereas in the case of fraud, there is a clear
intention to deceive the other party.
2.
:-While misrepresentation is innocent, fraud is willful or
deliberate.
:)$ :-In the case of misrepresentation, the person making -the
representation believes it to be true.
But in the case of fraud, the person making the representation does
not believe it 2`be true.
 4) 5   
:
In the case of misrepresentation, the aggrieved party can either
rescind (avoid) the contract or can insist on its performance. He
cannot sue for damages ordinarily.
On the other hand, in the case of fraud, the aggrieved party can not
only rescind the contract but can also sue for damages.
A) 5      when the means of discovering the
truth are available:
In the case of misrepresentation, the aggrieved party cannot avoid
the contract, if he had the means of discovering the truth with
ordinary diligence.
But in all cases of fraud, except fraud by silence the aggrieved
party can avoid the contract, even if he had the means of discovering
the truth with ordinary diligence.
A).F
  %:
  %
Mistake may be defined as µ"   ¶. It is a
misrepresentation or an error committed while entering into an agreement.
 %:
An agreement becomes a valid contract only when there is consensus ad
idem or #    , only when there is real and free consent.
Consent cannot be said to be real and free, when an agreement is entered into under
a mistake. That means, if the consent of the parties to an Agreement is obtained
under a mistake there is no real and free consent, and as such, the agreement cannot
become a valid contract. It will be void.
F  %+ Mistake is of two kinds. They are: (1) Mistake of Law &
(2)Mistake of act.
9.:.F  Mistake of law is of three types. They are:1.Mistake of
general law of the country.2. Mistake of foreign law.:. Mistake of private rights.
1.  %&c :
Every citizen of a country is deemed to be conversant with the general or ordinary
law of the country.
Ignorantia juris non excusat, i.e.,  . As such, a
party to a contract is not allowed to avoid the contract on the ground that he had
done the act in ignorance of the law of the country.
 2)  %    : -Though ignorance of the law of the country is not
excusable, ignorance of foreign law is excused; as an individual is not expected to
know foreign law.Mistake of foreign law is treated as a mistake of fact, and so, an
agreement based on the mistake of foreign law is considered void.
It may be noted that an agreement based on the mistake of foreign law becomes
void, only when there is a bilateral mistake (i.e., only when both the parties to the
agreement are under mistake).
:) % '5 :
:) % '5 
Mistake of private rights of a party relating to property is treated as a mistake of
fact,& so,an agreement based on the mistake of private rights is considered void
9..: .F  c:- c Mistake of fact is of two types. They are
(a) Bilateral mistake,(b)Unilateral mistake .
: $.5 .F .F:- When both the parties to an agreement
misunderstand each other, there is said to be bilateral mistake or mutual mistake. In
other words, when each party to an agreement understands it in a different way,
there is said to be bilateral mistake. In. short, when both the parties to an agreement
commit mistake, there is said to be bilateral mistake.
": -
.5 .F 5 .F 
 5E
Where only one of the parties to a contract is under a mistake, the mistake is
called unilateral mistake.
In the case of unilateral mistake, a mistake (of fact) takes place in the mind of
only one of the contracting parties.
 &.E  $3c

c
.
5.

. ++
. 
Section 10 of the Indian Contract Act, 1872 specifically provides that ³
 "  '             
     ",0) That means, both the consideration and the object of an
agreement must be lawful so as to make the agreement - a valid contract. If either
the consideration or the object of an agreement is unlawful for one reason or the
other, the agreement becomes void. or instance if the consideration of an
agreement is lawful but its object is unlawful agreement is void. So also, if the
object of an agreement is lawful, but its consideration is unlawful, the agreement
becomes void.
It may be noted that the Indian Contract Act has provided that both the
consideration and the object of an agreement must be lawful to make an agreement
a valid contract, because the terms, '  
  ' and '",
",' do not mean the
same thing. They refer to different things. The term 'consideration' means 
  # , whereas the term 'object' means  ## or design.
In this context, it may be noted that, in many cases, the object and the
'Consideration are different.
But, in some cases, both the object and the consideration may be the same.
 /    ",-;
The unlawful considerations and objects are specified in Section 23
of the, Indian Contract Act, 1872.
As per Section 23 of the Indian Contract Act, the object or the
consideration of an agreement is unlawful in the following cases, and
in those cases, the agreement becomes void:
1..  " " : When law forbids an act, the act or
agreement becomes unlawful and void.
Law forbids an act: 9: When it is punishable by the criminal law
of the country or 9": When it is prohibited by any special legislation
or regulation made by a competent authority under power derived
from the legislature.
2. If it¶s of such a nature that, if permitted, it would defeat the
provision of any law:
:. If it is fraudulent.
4. If it involves or implies injury to the person or property of
another:
A. If the court regards it as immoral.
 B)If the agreement is regarded by the court as opposed to public
policy .
An agreement opposed to public policy is unlawful and is void.
###" #  +D 9: 
  9":   
, 9:    # (9for
preventing criminal proceedings already instituted from running
their normal course:
 1 # ###" #  (
' 
9: # 9Champerty is an agreement
whereby a person #'      or any
other assistance, say, professional assistance, to another person
involved in litigation in exchange for his promise to hand over a
portion of the gains of the litigation. In other words, when a
person agrees to help another person involved in litigation with
financial or any other assistance in exchange for his promise.
9: %  #"  ( )
9:   # " 
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9:  ## )
9:  #  )
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9,:  "%
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9: # )
9:  )
9:  #"  )
9: )
9#:'  )
 -
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. 
. +
The Indian Contract Act, 1872, does not make any distinction between
unlawful agreements and illegal agreements. Section 23 of the Indian Contract
Act, 1872 only uses the term "unlawful object or consideration". However, in the
context of the study of legality of object and consideration, it is better to know the
distinction between unlawful agreements and illegal agreements. Before we take
up the study of the distinction between unlawful agreements and illegal
agreements, let us have some ideal about the meanings ` unlawful agreements
and illegal agreements

   - 

:
Unlawful agreements are agreement which are not enforceable by law.Unlawful
agreements are less vigorous in effect and involve non-criminal breach of
law.They do not affect public morals, nor do they result in the commission of a
crime. They are simply disapproved on some ground of public policy.
They include agreements in restraint of trade, agreements in restraint of
marriage, agreements in restraint of legal proceedings, etc.
Effect of Unlawful Agreements :
An unlawful agreement is void ab initio, and is without any legal
effects. However, an unlawful agreement affects only the main
transaction (i.e., the transaction between the immediate parties), i.e.,
it makes only the main transaction void. It does not affect the
collateral transactions, i.e., it does not make the collateral
transactions void.
 .:
 .
Illegal agreements are agreements or acts which are
tortuous or criminal in nature.
They result in commission of a crime or affect public morals.
Illegal agreements include acts forbidden by law and acts opposed to
public morals. They also include some of the acts which are opposed
to public policy. Trading with alien enemies, an agreement to assault
somebody, an agreement to publish a libel against some body,
granting of loans to procure smuggled. goods, granting of loans for
financing the marriage of a minor, etc. are examples of illegal
agreements.
 .
.:
1. An illegal agreement makes the main transaction illegal and void.
2. An illegal agreement makes not only the main transaction illegal and void, but
also taints the collateral transaction.
3. In the case of an illegal agreement, no restitution is allowed. That is, nothing
can be recovered under an illegal agreement, and if something has already been
paid, it cannot be recovered, whether the illegal
object has been carried out or not.
= .
&5

. +
One of the essentials of a valid contract is that the agreement must not have been
expressly declared to be void by law. If an agreement has been expressly declared to
be void by law, it becomes void, and cannot be enforced by law. So, it is necessary
to have knowledge of agreements, which have
been expressly declared to be void by law, i.e., void agreements.
 = :
 = 
As per Section 2(g) of the Indian Contract Act,´ an agreement not enforceable by
law is said to be void".
So, a void agreement is an agreement, which cannot be enforced by law .
=  :
A void agreement is void ab initio. That is, it is no agreement at all
right from its very inception.
So, it does not give rise to any legal consequences. That is, it confers
no legal rights on one person, and creates no legal obligations on the
other.
# 
"= " . 
c
Certain agreements have been expressly declared to be void by the
Indian Contract Act, 1872. Such agreements (i.e., the agreements
which have been expressly declared to be void by the Indian Contract
Act) are,
1. Agreements made by incompetent persons, such as minors, lunatics,
idiots, etc. (Section 11).
2. Agreements made under a  % also a matter of fact, i.e.,
where both the parties to the agreement are under a mistake as to a
matter of fact essential to the agreement. (Section 20),
:. Agreements, the object or consideration of which is unlawful. (Section 23).
4. Agreements, the object or consideration of which is unlawful in part, and the
unlawful part cannot be separated from the lawful part. (Section 24).
A. Agreements made without consideration. (Section 25)
B. Agreements in restraint of marriage. (Section 26).
@. Agreements in restraint of trade. (Section 27),
?. Agreement in restraint of legal proceedings. (Section 28).
C. Agreements, the meaning of which is uncertain or not capable of being made
certain, (Section 29 of the Indian Contract Act).
1>. Agreements by way of wager.
11. Agreements to do impossible acts, i.e., acts impossible in themselves (Section
56 ).
12. Agreements contingent on impossible events. (Section 56).
1:.1n case of reciprocal promises to do things legal and also other things illegal,
the second set of reciprocal promises is a void agreement. (Section 57).
   +
Meaning of Wagering Agreement:
Literally, the term "wager" means a " (i.e., something staked to be
lost or won on the result of a doubtful issue) .So, a wagering
agreement is nothing, but an ordinary betting agreement.
In law, a wagering agreement or a betting agreement is an agreement
between two parties by which one party promises to pay money or
money's worth on the happening of some uncertain event in
consideration of the other party's promise to pay, if the event does
not happen. In other words, it is an agreement between two parties to
the effect that if a given uncertain event is determined one way, one
of them shall pay a sum of money or money's worth to the other.
 c
.
&
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5c
A contract may be an absolute contract or a contingent contract.

"c
"c:
An absolute contract (also known as an    contract) is a contract in
which the promisor undertakes to perform the contract in any case or circumstance
without any conditions. When a promisor undertakes to perform the contract in any
case or circumstance, the promise is absolute or unconditional.

         c  c
c:
Section 31 of the Indian Contract Act, 1872 defines a contingent contract thus:
"A contingent Contract is a contract, to do or not to do something, if some event,
collateral to such contract, does or does not happen".
According to this definition, if the performance of a, contract depends ( if the
promisor binds himself to perform the contract)only on the happening or non
happening of some future uncertain event, collateral ( incidental) to the contract,the
contract is called a contingent contract.
 c  c c
 c  c c:
A contingent contract has certain    .
They are:-1. The performance of a contingent contract depends upon a
contingency (the happening or non-happening of a certain event in
future). It is this dependence on a future event which distinguishes
contingent contract from an absolute contract.
2. The contingency (the future event) must be uncertain. If the event,
on the happening of which the contract is to be performed, is certain,
then, it is not a contingent contract. In other words, if the contingency
or future event is bound to happen, and the contract is to be performed,
as in the case of life insurance, then, it is not a contingent contract.
3. The future uncertain event must be collateral (incidental) to the
contract.:-A collateral event is an event which is independent of the
contract and which does not form part of the consideration of the
contract.
4. If the contingency (the performance of the promise) is contingent
upon the discretion (i.e., will and pleasure) of the promisor, it will not
be a contract at all
 5      c  c
c:
Sections 32 to 36 of the Indian Contract Act contain the rules
regarding the performance of contingent contracts. Those rules are:
1.As per Section 32 of the Indian Contract Act; a contingent
contract, contingent upon (dependent upon) the happening of an
uncertain future event, cannot be enforced by law unless and until
that event happens. If the event becomes impossible, the contingent
contract becomes void.2. Under Section 33 of the Indian Contract
Act,a contingent contract, contingent upon the non-happening of an
uncertain future event, can be enforced, when that event does not
happen or if that event becomes impossible, and not before.
:.Under Section 34 of the Indian Contract Act, if a contingent
contract is contingent upon how a person will act at an unspecified
time, the event shall be considered to become impossible when such
person does anything which renders it impossible that he should so
act within any definite time, or otherwise than under further
contingencies.
4. Under Section 35(1) of the Indian Contract Act, a contingent
contract, contingent upon the happening of a specified uncertain
event within a fixed time, becomes void, if, at the expiration of the
time fixed, such event has not happened, or if, before the time
expires, such event becomes impossible.
A. Under Section 35(2) of the Indian Contract Act, a contingent
contract to do or not to do anything, if a specified uncertain event
does not happen within a fixed time, may be enforced, if the event
does not happen or if its happening becomes impossible before the
expiry of the fixed time.
B. As per Section 36 of the Indian Contract Act, a contingent
agreement to do or not to do anything, if an impossible event
happens, is void, whether the impossibility of the event is known or
not known to the parties to the agreement at the time when it is made.

.c5& 5 5.
.
  c
5c
  
   c:
Discharge or termination of a contract means the    of the
contractual relationship between the contracting parties. A contract is
said to be discharged or terminated, when the rights and the obligations
of the contracting parties arising out of the contract, are extinguished.
(Come to an end).

    " +
A contract may be discharged in any one of the following ways:
1. By performance - actual performance or attempted performance.
2. By mutual agreement or mutual consent of the parties to terminate
the contract.
3. By impossibility of performance.
4. By lapse of time.
5.By operation of law.
6.By breach of contract.
1)
" #:
#
Discharge by performance is the most usual method of discharging a
contract. The performance of a contract may be: 9:
#. (b) ## or )
9:#: ³When both the parties to a contract
fulfill their respective promises or obligations under the contract within
the time at the place it in the manner prescribed, the contract is said to
have been discharged by actual performance. "
In this context, it may be noted that, if only one party performs his
promise or his part of the obligations, he alone is discharged, and he
also gets a right of action against the other party who is guilty of
breach.
(b) Attempted performance or tender:
When a party to a contract (i.e., the promisor) offers to perform
his part of the, obligations under the contract, but his offer of
performance is not accepted by the other party to the contract (the
promisee), it is called ##(
#(#
 .  "       #. It is only an offer to
perform one's obligation. But, in law,  '      8 ' 
 #. That is, a valid tender has the same effect as actual
performance as far as the tenderer or promisor ( the party who offers to perform
his part of obligations under the contract) is concerned. So, when there is a valid
tender (when the promisor offers to perform his part of the obligations under the
contract, and his offer of performance is not accepted by the promisee), the contract
is deemed to have been performed by the promisor or tenderer, and as such, the
promisor is discharged from his ob1igation without losing his right. of action
against the promisee. (Section 38 of the Indian Contract Act).

2)
 "     c c:
Since a contract is created by means of an agreement, it may also be discharged by
mutual agreement or mutual consent between the contracting parties .The parties to
a contract may agree to terminate their contract either #  #  .That
means, a contract may be discharged by mutual agreement or mutual consent, and
the discharge of contract by mutual agreement or consent may be express or
implied.
Sec62 and 63 of the Indian Contract Act, 1872 deal with the various methods of
discharging a contract by mutual agreement or mutual consent.
'   " 
:
9:$
9:$ 
' 

' :
A Contract may be discharged by novation. :- "  a
  , known as novation.The new
contract may be between the same parties or between different
parties. (If the new contract is between the same parties then,
material terms of law contract must be altered .substantially in the
new substituted contract. On the other hand, if the new contract is
between new parties, the terms of the contract can remain the same).
The consideration for novation, i.e. for the new contract, is the
discharge of the old contract.
When there is novation, i.e., substitution of a new contract for an
existing contract, the old contract is extinguished or discharged, and
it new contract is created.
9: Novation cannot be compulsory. It can be only with the mutual
or tripartite consent of all the parties concerned.
 9": The new contract must be valid and enforceable. If the new
contract suffers from any legal flaw, such as, want of stamp or want of
registration, and consequently, becomes unenforceable, then, the
original contract revives.

9: Novation should take place before the expiry of the time of
performance of the original contract.
In other words, novation should take place when the original
contract is subsisting.

9: or a valid novation, when the parties are not changed, then, the
nature of the obligation (the material returns of the contract) must be
altered substantially in the new substituted contract.
Mere variation of some of the terms of the contract, while the parties
remain the same is not novation. It is only an alteration.
 9":$  
9":$  ++
 " "  .:-Alteration of a contract
means change of one or more of the material terms of a contract with the consent
of all the parties to the agreement. It maybe noted that, in the case of alteration,
only the material terms of the contract are changed, but the parties continue to be
the same. It may also be noted that   (
    % 
#)
9:$ 5  +
 " "   )Rescission means the  
of all or some of the terms of the original contract by the consent of all the parties
to the contract. (It may be noted that, in the case of rescission, the existing contract
is cancelled by mutual consent without substituting a new contract in its place).
A contract may be discharged before the date of performance by agreement
between the contracting parties to the effect that it should be no longer bind them
(it should be rescinded or cancelled).
9 :5   "# )+DTotal rescission is the cancellation or
discharge of the whole contract.     is the variation of the original
contract (a) by rescinding or canceling same of the terms of the original contract or
(b) By substituting new terms far those which are rescinded or
(c) By adding new terms without rescinding (any of the terms of the original
contract).
 #  Rescission may be implied from the
9 : 5    " #  # .
conduct of the parties,
or instance where both the parties fail to perform the contract for a long
time without complaint, it amounts to an implied rescission.
: 5    % #   "     #   "
    #   "   "    #    )
9: $ 5  +
  . Section 63 of the Indian
   "   "   
Contract Act provides for discharge of a contract by remission. 5    
#         , or a lesser fulfillment
of the promise made in discharge of the whole debt or obligation.
9: $  '+
 '+
Waiver is one of the methods of discharge of a contract by mutual
agreement or mutual consent.  '   "   
", relinquishment or  '  #    , which a person is entitled to
under a contract.
 9: +
Merger is also one of the methods of discharge of a contract by mutual
agreement or mutual consent.
Merger takes place (there is said to be merger) when an inferior right
accruing to a party under a contract merges into a superior right
accruing to him under the same or any other contract by the mutual
agreement between the parties to the contract.

:)
" .# "   :


Section 56 of the Indian Contract Act lays down that 6
  # "   ' ". rom this provision, it is
clear that impossibility of performance makes a contract void, and the
parties to the contract will be discharged from their obligations. In
short, a contract is discharged when its performance becomes
impossible.
  # # "   #
Impossibility of performance may be of  types. They are:
1. Impossibility of performance existing at the time of the
formation of the contract and known to both the parties to the
agreement.
2. Impossibility of performance existing at the time of the
formation of the contract but unknown to both the parties to the
contract.
3. Impossibility of performance existing at the time of the
formation of the contract but known to only one of the parties to
the contract.
4. Impossibility of performance arising after the formation of the
contract .
.# "   #   
.

9:).# "   #   
 %"# 
) (Absolute Impossibility) (Void ab initio).
9":).# "   #   
 ("%"# 
)9= :)9:).# "   #  
  ("% 
#  .(Void) (Compensate).
9:).# "   #   
#' "8 # "   
#)
9.: Destruction of the subject matter of the contract .
Ö..: ailure of the ultimate purpose or object of the contract, or
non- recurrence or non-existence of a particular state of things.
9...: Death of a personal incapacity of a contracting party (the
promisor) 9.=:Change of law. 9=:Outbreak of war.
 4)
 " #   :
As per the     , every contract must be performed
within the specified period called the period of limitation. All such, if
a contract is not performed by the promisor, and if no action is taken
by the promisee against the promisor, in a court of law, within the
period of limitation, the contract is discharged, and the promisee is
deprived of his remedy (i.e., right of action) under the law against
the promisor.
A)
"  # :
# 
A contract comes to an end (i.e., gets discharged) also by operation
of law.
91: $ :
In the case of a contract involving Personal skill, ability or
qualifications.The contract is terminated or discharged on the death
of the promisor; Of course, in the case of other contracts (" contracts
which do not involve personal skill, ability or qualification), the
contracts remain un discharged and the rights and liabilities of the
deceased under the contracts pass on to his legal representatives.
92: $  ' : Under the law of insolvency, when a person is
adjudicated insolvent, his rights and liabilities are transferred to the
official assignee or official receiver as the case may be, and when he is
discharged by the insolvency court he will. be discharged from all the
liabilities arising from the contracts entered into by him during his
solvency. That means, the insolvency of a party to the contract
discharges a contract
9::$ : When an inferior right accruing to a party under a
contract merges into a superior right accruing to the same party under
the same or some other contract, the process is known as merger. When
there is a merger, the original contract gets discharged.
94: $  *   
: A material alteration is an alteration or change in the terms of
a written contract or document, which affects, in a significant manner,
the rights and liabilities of the parties to the contract. +Damount to be
paid, time of payment, place of payment, rate of interest, party to
whom the payment is to be made, etc. in the case of a debt, and the
quality, quantity, the make, the place of delivery, etc: in the case of
goods.
 9A: $     "    "  '    # :
When the rights and liabilities under a contract are vested in the
same party, the other party or parties to the contract are discharged
from their obligations. That means the contract is discharged
9B:)
 " $  c :    "
  : When a party to a contract     " himself to
perform the contract, there is said to be a breach of contract. In other
words, there is said to be a breach of contract, when a party to a
contract either fails or disables himself to perform his obligations
under the contract .
Kinds of breach of contract: Breach of contract may be:
9:".
9":  #  '".
 "  +
Actual breach of a contract occurs when a party to a contract fails to
perform his obligations under the contract on the date when the
performance is due or during the time of the performance of the
contract.
  # c '$c:
Anticipatory breach of a contract occurs when a party to the contract
declares his intention of not performing the contract before the time
fixed for its performance (before the due date of the performance of
the contract), or by his own voluntary act, disables him self from
performing the contract before the time fixed for its performance. In
the former case, there is said to be an express anticipatory breach of
contract, and in the latter case, there is said to be an implied
anticipatory breach of contract.

  # ":

Section 32 of the Indian Contract Act, 1872 provides that ,³Where
party to a contract has refused to perform, or disabled himself from
performing his promise in its entirety, the promisee may put an
end to the contract unless he has signed, by words or conduct, his
acquiescence in its continuation´.
 5
.  5 $5c  c
5c
   $  c :
The parties to a contract are required to perform or fulfill their
respective promises. But, sometimes, one of the parties to the
contract may break the contract,i.e. may      #
  # , this is known as "  . (The person
breaking the contract is called the  or    , and the
other party to the contract, is called the  ' party or the
, party).
Breach of contract may be, committed by anyone of the parties to
the contract, i.e., either by the promisor or by the promisee.
5  ' "    '    $ 
c: Whenever there is a breach of contract by one party, the
other party (the aggrieved party) is entitled to one or more of the
following remedies against the defaulter or the guilty:
1. Rescission of the contract
2. Suit for damages.
 3. Suit upon quantum meruit.
4. Suit for specific performance of the contract.
5. Suit for the injunction.
It may be noted that the Indian Contract Act,1872 regulates the first
 remedies, and the last,  remedies are regulated by the
Specific Relief Act, 1963.

5  c: Rescission of the contract means

1)5  c
  :
When there is a breach of contract by one party, the other
party may rescind (set aside) the contract. When the aggrieved party
rescinds the contract, he is absolved (freed) from all his obligations
under the contract. He need not perform his part of the contract.( his
part of the obligation under the contract).
When an aggrieved party decides to rescind the contract, he may
carry out the rescission of the contract in anyone of the following,
  :
9: He may rescind the contract by     his
decision to rescind the contract to the guilty or the defaulter
immediately   %      against the   .
In this case, he is, no doubt, freed from all his obligations under the
contract. But he will not be entitled to compensation for any damaged
which he might have suffered through the breach of contract.
9":Alternatively, if he desires  %    against the guilty
(if he desires to sue the guilty for damages for breach of contract), he
has to         of law (or rescission of the contract.)
At the option of the aggrieved party, damages for breach of contract
can be claimed even without a suit for rescission of the Contract by
merely communicating the rescission of the contract to the guilty.
2)  :
When there is a breach of contract by one party, the other party (the aggrieved
party) has not only the right to rescind (set aside) the contract, but it also entitled to
 . As such, when there is a breach of contract by one party, the other
party (the aggrieved party) may  the other party for damages for breach of
contract.

 #  allowed by the court to the aggrieved
party for the loss or injury suffered by him as a result of the breach of contract.

:. #G :
The term "quantum meruit³, literally means as much as merited or "as
much as he deserved" or "". In other words it means
#  ## '%. In
law suit upon quantum meruit means suing on its own merit, i.e., suing for the
value of such' part 'or # % . When a contract has been
partly performed by one party and has become discharged by the breach by the
other party to the contract, the party who has partly performed his part of promise
or circumstances file quantum meruit against the other party (the guilty),   
# for the portion of work done or goods supplied before the breach of
contract.
  ' #       # 8      
+
1) Where work has been done in pursuance of a contract, which has been discharged
by the breach of contract or default by the defendant.
2) Where work has been done in pursuance of a contract, which is discovered to be
void or becomes void for some reason, the person who has done something under it
can claim reasonable payment upon quantum meruit in spite of the fact that the
agreement has become void. (Section 65 of the Indian Contract Act.)
:) Where a person lawfully does something for another person or delivers
something to him without any intention to do so gratuitously and the other person
enjoys the benefits thereof, the latter is bound to pay to the former in respect of the
act so done or restore the thing so delivered.

.  "       #  # 8       

   :
1.When a contract is   '  "   # and a lump sum of money is proposed
to be paid for the entire work, part performance does not entitle a party to claim
payment upon quantum meruit.
2. If a definite job is agreed to be done for a lump sum,   
"#  ," , and therefore, the question of
quantum meruit does not arise.
:. Nothing can be recovered upon quantum meruit when there is 
express or implied # # for work already done.
4.  #  c :
In certain situations or cases of breach of contract, damages may not
be an adequate remedy. In such cases the court may direct the party
in breach for the specific performance of the contract. specific
performance of a contract means the # of the
promise by the party in breach exactly according to terms of the
contract as agreed upon.
A) ., 
A) ., +D(.,  #' ' :.
It is particularly useful in cases of anticipatory breach of contract,
where damages could not be an adequate relief. .,  
 restraining a party from doing a particular act
which he promised not to do. It is a mode or method of securing the
specific performance of the negative terms of the contract
Where it party is in breach of a negative term of the contract, the court
may issue an injunction and restrain the party from doing what he
promised-(not to do).
Injunction is, generally, granted by the court where damages would be
inadequate, and at the same time, enforcement of the contract, under
the Specific Relief Act, is also difficult.
Injunction may be (a) #  , or (b) ## or
# , )
# ,  is a provisional injunction which, prohibits a
partly from doing some act for the time being till the question of the
right of the aggrieved party is settled. This is issued to ensure that
much harm is not done to the aggrieved party by the other party
before the question of the right of the aggrieved party is settled,
# ,  is a permanent injunction which restrains a
party permanently from doing some act.
It is granted only when the aggrieved party has established his right
to the satisfaction of the court.

& 5$5c c
5c
. )
When there is a breach of contract, the aggrieved party can claim
damages from the defaulting party.
 
:
Damages are ³ #  allowed by the court to the
aggrieved party´ for the injury or loss suffered by him as a result of
the breach of contract.
  #- 
+
The fundamental principle underlying ³the award of damages by the
court is #  to the aggrieved party, but #  of
the guilty or the defaulting party´. Damages are awarded to the
injured party so as to put him in the same financial position in which
he would have been, had there been the performance of the contract,
and not its breach.
F 
: Damages awarded by a court for breach of contract are of
different kinds.
The various kinds of damages are:
1)   (# )
2) #  )
:)# ('   '#  ')
4)
   # .
1)   ( &  c#
+
When a party breaks a contract, the injured party can, as a rule, always
recover from the defaulting party ordinary, general or compensatory damages.
Ordinary damages are damages awarded to the aggrieved party, for    
    , in the usual course of things from the breach of contract
itself. In other words, these are damages allowed to the injured party for the losses
sustained by him from direct and proximate consequences of the breach of
contract. It may be noted that in the awarding of ordinary damages, remote or
indirect losses, which are not the natural and probable consequences of the breach
of contract (i.e., losses resulting from the remote or indirect consequences of the,
breach of contract) are not taken into account.
These damages are allowed    '   #   #  
   "   from the breach of contract. or this reason, ordinary
damages are also known as # )
2)# 
:
Special damages are those damages, which are allowed to the
injured party for losses arising from the # 
  when there is a breach of contract. In other words,
they are damages allowed to the aggrieved party for the losses
suffered by him from  8, and not
the direct and proximate consequences of the breach of contract.
Unlike ordinary damages, special damages "  
  i.e., as a general rule.
They can be claimed only when both the parties to the contract know
the special circumstances, which would result in the special loss, and
the special damages are in the contemplation of the contract in parties
at the time of entering into the contract. It may be noted that
subsequent knowledge of the special circumstances by the defaulting
party will not give rise to special damages.
 # ( =   '    '
:
:.#

Exemplary damages are those damages,which are awarded with a
view to #     #   "  ,
and not with a view to compensate the injured party for the loss
suffered by him. These damages are called exemplary damages, as
the object is to set an example to others that they would be punished
in case they commit a breach of contract. These damages are not just
restricted to the actual loss suffered by the injured party.
However, there are  #    or cases in
which vindictive, damages are awarded.
The two exceptional cases in which vindictive or exemplary
damages are awarded are:
1.In the case of breach of    , the injured party
is entitled to exemplary damages.
In this case, the amount of exemplary damages awarded to the
injured party would depend upon the extent of injury caused to the
  of the injured party and also upon his # .
2) In the case of  8 by a banker, the
aggrieved customer is entitled to exemplary damages. In this case,
the amount of exemplary damages awarded to the injured customer
would depend upon the #  and #  resulting to
him from the wrongful. Dishonor and his status

4)
 c#

:
Nominal damages are damages, which are awarded only for 
%) These are damages of ' , say, a rupee or a
few paise. The other party awards nominal damages to a party, when
there is a breach of contract, but the plaintiff has not suffered any real
loss.

  are, awarded  "  # 
#  "   #   ; but just to
establish the right of the plaintiff to claim damages for breach
of contract, when he has   .