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Last date for submission of projects

May 05

1. No extension of time on any pretext forsubmission of research cards in proper packetseach card duly signed by the researcher.

2. Projects to be submitted to the Academiccommittee under signature.

3. The academic committee in consultation withthe teacher will prepare presentation schedule.

4. Presentations to be finished before May 205. Research cards and reports to be received byAcademic Committee Between 4PM to 5PM.

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Instructions for projects for third

semester.

1. Project performance not up to the mark exceptfew.

2. Deficient data collection: Gender biasincompetence: No less than 300 RCindividually. Credit will start for more than 150RC.

3. May raise new RQs if data is complete with theexisting RQs.

4. Procedure ,quantity, quality and merit of work.

5. No re-submission in the next semester.

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TRANSFORMATION IN TEACHER STUDENT RELATIONSHIP:CHANGE

TOWARDS CAPITALIST PRODUCTION NATURE:CONTRACT

Regulated by legal education service market. Teacher a legal education service provider

: Seller of the legal education process product.

Student a legal education service consumer

: Buyer to be the consumer of service to transform himself in toa seller of legal service in the legal service market.

Purpose of the contract: To create a legal knowledge andskill-product in the buyer which should be in demand in thelegal service market.

Teaching objective: Creation of a legal knowledge and skill-product in the buyer(student)which satisfy the demand oflegal service market.(R&D for Curriculum)

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Legal education process contract between the teacher and the

student

Market centric curriculum

Student: BuyerTeacher: Seller



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Special about the contract

1. The consumer or buyer or student is a

Party to the contract and also

becomes the part of Purpose of thesubject matter of the contract.

2. Therefore the stakes of the buyer are

very high in terms of quality ofproduct than the seller.



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Legal education product

(Market centric)

1. The student, the buyer, gets the career inlegal service market which makes him

happy.

2. The teacher, the seller, gets the satisfactionwhich makes him happy.



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INDIAN TEACHER STUDENT RELATIONSHIP:PRIMITIVE

SOCIALIST PLUS SOME KIND OF FEUDALISTIC

1. Student (faithful disciple) education seeker.

2. The education provision to be made through commandsystem.

3. Teacher (guru) education service provider.

4. The faithful students were subject to uniformcommand system during the term of educationwithout discrimination.

5. The system survived during the substantial period of

feudal production relations in India.6. The transformation in production relation from

feudalism to capitalism transformed the teachertaught relationship from command to demand andsupply (market) relationship.



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EFFICIENT CONTRACT FORMATION

IMPERATIVES

1. Inquisitive, alert, and absolutely honest withreference to legal education market forces.

2. Ego-centricity in the parties is dangerous to

the quality of the subject matter of contractbetween the teacher and the student.

3. How to deal with ego-virus.?

4. Ubemarrie fidie contract?



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Basic reading material

1. Theory of knowledge. (Bertrand Russell)

2. Epistemology.

3. Origin of private property, family and state.

(Fredrick Angel)

4. Marriage and Morals. (Bertrand Russell)



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LAW:A REFLECTION OF PRODUTION RELATIONS

(ECONOMIC SYSTEM)

1. Primitive tribal communist production ( socialist economic

resources only) relations reflected the corresponding laws.

(Instinctive mutual co-operation in the tribe was the basis of

law)

2. Feudal production (origin of privatization of economicresources) relations. (Feudal administrative laws.)

3. Capitalist production (Public, Privatization of E.R):Contract

laws.

4. Socialist production (Socialization of E.R):Socialistadministrative laws.

Conclusion: Law is the super-structure of the economic system,

and the economic system is infrastructure of law.



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ECONOMIC RESOURCES

(MEANS OF PRODUCTION)

1. EARTH:ANYTHING IN OR OVER IT

2. AIR AND SPACE3. LIFE IN ANY FORM

4. KNOWLEDGE:OF ALL KINDS

5. LABOUR:OF ANY KIND AND FORM

ETC.3/18/2012 11Contract Law -1


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ECONOMIC SYSTEMS

(METHOD OF RESOURCES ORGANISATION)

1.SOCIALIST ECONOMIC SYSTEM:ADMINISTRATIVE

LAW

2.CAPITALIST ECONOMIC SYSTEM:CONTRACT LAW

3.MIXED ECONOMIC SYSTEM:MIXTURE OF CONTRACTLAW AND ADMINISTRATIVE LAW


The proportions of mixture of economic systems in a

society reflects the proportions of the administrativeand contract law applicable


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GROWTH OF CAPITALIST MODE OF PRODUCTION:

SIGNIFY GROWTH OF CONTRACT LAW

1. Privatisation in the country signify the growth of capitalistmode of production in the country.

2. Globalisation signify :1. Globalisation of markets.

2. Globalisation of all other eco-resources and

3. Globalisation of market leads to globalisation contract law. (WTO)

3. Rich capital-resource countries by and large have becomepoor labour-resource countries.

4. What needs to be globalised for the normal growth ofcapitalist mode of production: Globalisation of bothcapital markets and labour markets ?



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GLOBALISATION IMPERATIVES :LEVEL

PLAYING FIELD ?

1. Uneven or non-capitalist mode of development in

the different nations creates conflicts of interest

amongst the nations: a centripetal force forglobalisation.

2. Mutuality of interests in the capitalist mode of

production across the nations: a centrifugal force

for globalisation.

3. Conflict of interest in the capitalist mode of

production: a centripetal force for globalisation.



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LAW OF CONTRACT

(LEGAL METHOD OF ECONOMIC RESOURCES ORGANISATION)

LAW:THE REFLECTION AND REGULATION OF ECONOMICSYSTEM

CONTRACT LAW:REFLECTION AND REGULATION OF CAPITALISTECONOMIC SYSTEM



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CAPITALIST ECONOMIC SYSTEM :CONTRACT LAW SYSTEM

CO-RELATION

1. CAPITALISM AND MARKET FORCES.

2. CONTRCT LAW AND MARKET FORCES CONTRACTCONCEPTS.

3. CONFLICT BETWEEN STATUTORY CONTRACT LAW ANDMARKET FORCES.

4. ECONOMIC SYSTEM AS INFRASTRUCTURE AND CONTRACTLAW AS SUPERSTRUTURE OF SOCIETY.



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SPECIAL ABOUT CONTRACT LAW

CONTRACT LAWS

1. Legal regulation by private

legislation, creating rights

and duties.2. Direct interface with

economic system.

3. Method of learning has to

be different than general.4. Contract legal language:

Very important.?

OTHER LAWS

1. Public law creates rights

and duties.

2. Not so direct interface

with economic system.

3. General method of

learning.4. Important ?



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Assumption- basis of Contract law

Principles

1. Freedom of contract of parties.(Laissez-faire.)

2. Equality of bargaining power.

1. Intensity of need of the parties for exchange ofeconomic resources.

2. Level of information of market forces of theparties.

3. Symmetry of information of market forces.

Are these assumption true or not?

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PRINCIPLES OF LAW OF CONTRACT

1.GENERAL PRINCIPLES:CONTRCT-1

(Sections 1 to 75 of Indian Contract Act).

2.SPECIAL PRINCIPLES:CONTRACT-2(Remaining sections of Indian Contract Act and few other Acts

dealing with special contracts).

3.OTHER SPECIAL PRINICIPLES-Other special principles in otherspecial contract courses.



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GENERAL PRINCIPLES OF CONTRCT LAW

(S.1-75)

1. CONTRACT FORMATION PRINCIPLES

2. CONTRACT DISCHARGE PRINCIPLES

3. SOME OTHER PRINCIPLES



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CONTRACT FORMATION PRINCIPLES

Essentials of a valid contract..S.10

1. Competent parties (S.11).

2. Offer(S.2(a),3,4,5,6.).

3. Acceptance(2(b),3,4,5,6,7,8.).

4. Consent(S.13,14,15,16,17,18,19,20-22).

5. Lawful consideration with lawful object (S.23,24.).



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Contract formation process

222222

Promise -iiPromise-i

4. Consent

2. Offer

3.Acceptance

5.Consideration

Agreement Contract

Competent party1.Competent party

Offerer OffereeA B

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COMPETENT PARTIES (Section.11)

1. Majority age (Sec.3,Majority Act XI of1875,Family Law Reform Act 1969..english)

2. Sound mind (Sec.12,Economic rationalbehaviour test)

3. No legal disqualifications with reference tothe specific contract.

(Burden of proof :one who alleges)



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MINORITY OR NO MAJORITY AGE: IMPLICATIONS

1. Mohoribibi Vs Dharmodasghose(1903)..void agreement2. No estoppels against pleading age disqualification.3. No liability in tort law if wrong emerges out of contract

between the parties.Johnson V Pye case4. Doctrine of restitution..not applicable

5. Application of restitution u/s 64(voidable contract)6. Application of restitution u/s 65(contract becomes or

discovered to be void)7. Application of restitution under Specific Relief Act:

Mohoribibi case,Khangul case..distinction

8. Beneficial contract?? Voidable contract?9. Ratification10. Necessaries (sec.68)



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PERSONS OF UNSOUND MIND

Indian law

1.Definition: section 12

2.Nature:void (Inder Singh Vs.

P.Singh AIR 1957 Pat.491.

3.Burden of proof: whoalleges

English law

1.Competent to contract

2.(I)Voidable contract: If

knowledge of defendant is

proved.

(II)Valid contract if the

knowledge defendant is

not proved or if it is

confirmed by the plaintiff.

3.Burden of proof: who

alleges



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PROPOSAL S.2(a)

1. Two competent persons.

2. Communication(S.3)

3. Purpose: to seek the consent of other

4. Intention to make contract1. Balfour V . Balfour(1919)2 KB 571 Indian law:(1973)1.SCC:yes,

(1988)3.SCC.526: Doubtful.

2. Objective theory of intention determination: (Carlill V Carbolic

Smoke Ball Company(1893)1QB 256



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CATEGORISATION OF OFFER

1. Specific 0ffer

2. General offer..Lalman V.Gauridutt (1913) 11,All.L.J.489, and

Carlill case

3. Standing offer(offer stands till accepted):Lalman Shukla

case.

4. Continuing offer: Carlills case.

5. Cross offer.

6. Counter offer. Hyde V.Wrench(1840)Beav 334.($1000-950case)



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INVITATION TO OFFER

Definition of Invitation to offer: Where a party without expressing

his final willingness proposes certain terms on which he is

willing to negotiate the contract he is said to make an invitation

to offer

1. Harvey Vs.Facey (1893) AC 552 :Lowest price for Bumper Hall Pen,$900case

2. McPherson Vs.Appana AIR 1951 SC 184:Plaintiff offered to purchase a

lodge from the def for Rs.6000.If found reasonable he is ready to pay

more.Def.replied,would not sell less than Rs.10,000.Plaintiff accepted

it and brought the suit for specific performance. Decide?



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Comparison

Invitation to offer

1. Not capable of being

accepted.

2. Objective is to seek offer.3. May or may not generate

offer.

4. If offer is generated the

Offeree has the availableoptions under the law.

Offer

1. Capable of being

accepted.

2. Objective is to seekacceptance.

3. May or may not generate

acceptance.

4. If acceptance is generatedthe contract formation

may takes place.



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Acceptance: irreversible happening

1. Offer disappears: Promises emerge.

2. Consent.

3. Reciprocal promises.

4. Consideration.

5. Agreement.

6. Contract.



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ESSENTIAL ELEMENTS OF ACCEPTANCE(Ss.2.b,3,4,5,6,7)

1. Two competent persons: offerer and offeree.

2. Acceptance is acceptance when communicated: Means ofcommunication: General rule and special rule.

3. Express or implied.

4. Absolute and unqualified.5. Mode: usual and reasonable unless prescribed.

6. Mode prescribed: duty of the Offerer

7. Time for acceptance: when prescribed and when not

prescribed.8. Acceptance during subsisting offer



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COMMUNICATION OF ACCEPTANCE

1. By whom.

2. To whom.

3. When communication is complete: Depends on

means of communication.1. Electronic means.

2. Non electronic means.

4. Postal rules of communication: Jurisprudentialcrisis.

5. Jurisdiction



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COMMUNICATION OF OFFER AND ACCEPTANCE WHEN

COMPLETE (S.4)

1. Offer :

When it comes in the knowledge of offeree.

2. Acceptance:1. as against the offerer: When it is put in the course of

transmission so that it is

2. as against the acceptor: When it comes in the

knowledge of the offerer.

3. Jurisprudential problem with acceptance

communication rules.



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REVOCATION OF OFFER AND

ACCEPTANCE(S.5): WHEN ?

1. Offer :May be revoked at any time before

the communication of acceptance is

complete as against the offerer.

2. Acceptance: May be revoked at any time

before the communication of acceptance is

complete as against the acceptor.



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WHEN COMMUNICATION OF ACCEPTANCE

IS DISPENCED WITH ?

1. If offer dispenses with communication

of acceptance .

2. Performance requirement maydispense with the communication of

acceptance .

3. In that case the moment performanceis done offer stand accepted.



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SOME CASES AS REFERENCE POINT OF

DISCUSSION

1. Lalman Vs. Gauri Dutt,(1913) Cal.L.J489

2. Carlill Vs. Carbolic Smoke Ball Co.(1893)

1 QB 2563. Mir Sarwarjan Vs.Fakhruddin Mohd

Chaudhary (1912) 39 Cal.232 :PC 39 IA 1

(The guardian made contract on behalf of minor to purchase landedproperty for which minor filed suit for specific performance held not

maintainable.)



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DISCUSSION

(INVITATION TO OFFER)

3. Harvey Vs.Facey (1893) AC 552Harvey asked: Will you sell us Bumper Hall Pen? Telegram us thelowest price. Facey replied lowest price: Lowest price for bumper hall

is 900 pounds. Harvey said: We agree to buy Bumper Hall Pen for (00pounds ,asked by you. Contract formation ?

4. Pharmaceutical Society of Great Britain Vs.Boots Cash Chemists Ltd.(1952) 2 QB 795.Self serving medicine shop with price written on the product.?

5. Mac Pherson Vs.Appana AIR SC 184A asked B would you sell your house for Rs.6000.B replied that hewill not sell less than Rs.10,000 .A said buy it for Rs. 10,000.Is therecontract formation.



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CONTRACT LAW ON CONSENT

(Ss.13 to 19)

Contract law definition of consent:Section 13:

When two or more person agree on the same

thing in the same sense.Meeting of minds of two or more competent

persons on three points

1. On the identity of the persons.

2. On the identity of the subject matter.

3. On the identity of the transaction.



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CONSENT

Consent elements

Meeting of minds on

three pointsIdentity of

parties

Identity of

subject

matter

Identity of

nature of

transaction



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Some cases

1. Cundy V.Lindsay 1878 (3) AC 459:Respectable company Blenkiron& Co,37 Wood Street, London and Blenkarn

& Co,37 Wood Street, London(cheat). case.

(Mistake of identity exists if particular identity exists in the knowledge of party to the contract)

King's Norton Metal Co Vs Edridge,Merrett & Co Court of Appeal(1897)14TLR98: A namedWallis adopted the name of Hallam & Co,a fictitious name ordered goods which were

supplied and immediately sold, consent was held to be present

2. Raffles Vs.Wichelhaus(1864):133 RR 853.Ex Peerless from Bombay(October-November)



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FREE CONSENT(S.14,19)

Consent is free if it is not caused by;

1. Coercion.(S.15)

2. Undue influence.(S.16)

3. Fraud.(S.17)

4. Mis-representation.(S.18)

5. Mistake.? x .x ?.Can there be consensus adidem if there is mistake?



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COERCION(S.15)

ESSENTIAL ELEMENTS

1. Committing or threatening to commit

an act forbidden by Indian Penal Code.2. Detaining or threatening to detain the

property.

3. To the prejudice of any person( not theparties only) whatever.



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DISCUSSION

1. Chikham Amiraju V.Chikham Seshamma (1917)14 Mad

33.Wallis,CJ,Seshagiri,J.Mojority judgment for coercion,

Oldfield . dissented.

2. Askari Mirza V.Bai Jai kishori(1912)16 IC 344: A minor

borrowed on two mortgages by misrepresenting his ageand agreed to compromise decree and subsequently

pleaded that the compromise was under threatened

prosecution ,hence his consent is obtained under

coercion, if true charge is not forbidden if false it isforbidden. Hence referred back for retrial.

3. Andhra Sugars Ltd.V.State of A.P. A.I.R.1968.S.C.599



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COERCION:DURESS OR MENACE

The Madras High Court spelled out the distinctionbetween the two in the case:

K.Ammal V. K.Pillai (1987)1 Mad.L.J.138.

1. Re.Essentils.( Actual imminent violence or

imprisonment of party or close relatives.)

2. Re.Origin.

3. Re.direction.(near relatives)

4. Re.Property.(Duress of goods:1989.1Lloyd Rep.138.)

5. Re.Economic duress .(trade union unlawful threat, tobreak contract if not re-negotiated )

6. Re.Tort.



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UNDUE INFLUENCE(S.16)16.1:Definition.two parameters.

(a) Dominant position. (de-facto or de-jure )

(b) Misuse of the position to seek consent.

16.2:Presumtions of dominant position( de-jure)

(a) Real or apparent position, fiduciary relation.(de-jure

dominant position)

(b) Affected mental capacity due age,illness, distress mental or

bodily.(de-jure dominated position)

16.3:Presumtion of undue influence.

1. (a) Dominant position. (de-facto or de-jure )

(b) Unconscionable transaction.

2. Contract with Pardanashin lady. (through precedent)



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Definition of Undue influence under section

16(1) of Indian Contract Act

Section 16(1) lays down two parameters:

1. Subsisting relation of dominance betweenthe parties at the time of contract

formation. Dominant position?2. Misuse thereof: If used for meeting of minds

on any of the three points:

1. Choice of parties.2. Choice of subject matter, and

3. Choice of nature of transaction.

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DISCUSSION

1. Mannu Singh Vs. Umadat Pandey (1890) 12 All 532. Old personliving alone on the advice of spiritual guru..?

2. Raghunath Prasad Vs. Sarju Prasad, AIR 1924 PC 60: Exorbitantrate of interest on money borrowed ( Rs.10,000 at 24%,becomes Rs.1,12,885 after 11 years) to defend a

prosecution.(Held not to be in mental distress).No3. Ranee Annapurni Vs. Swaminathan (1910) 34 Mad 7 Poor

widow, seeking to establish right to maintenance loan at100% interest.(Mental distress) Yes

4. Chand Singh Vs. Ram Kaur (1987)2 Punj. L.J 70: 70 years ,a

pardanashin widow,3 Daughters ,gifts land to tenant inpossession of land.



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DISCUSSION

5) Hodges Vs. Delhi & London Bank (1901) 27 IA (PC)168. definition of Pardanashin lady, quasi-Pardanashin.

6) Kalibaksh Singh Vs. Ram Gopal Singh (1913) 41 IA(PC) 23. Pardanashin gifted half of her property tothe son of her paramour case.

7) Andhra Sugars Ltd. Vs. State of AP. AIR 1968 SC599. Consent under statutory compulsion : Held tobe free.Can Statutory compulsion be a mental distress.?



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COERCION Vs. UNDUE INFLUENCE

1. Re subsisting relation.

2. Re dominant position.

3. Re special rules of evidence.

4. Re commission or threatened commission of

acts forbidden by IPC.

5. Re detention of property.6. Re tort or crime as well.



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Fraud and Misrepresentation (Ss.17,18,19)

Derry Vs. Peek (1889)14 A.C 337

Elements of fraud:

1. Statement.

1. Statement (communication)

2. Silence if statement. (Can silence communicate ?)2. Statement must be of fact and not of opinion.

1. Statement of fact.

2. Statement of opinion.

3. Fact in the statement must be false.

4. Person making the statement either knows the fact to be false ordo not believe the fact to be true.

5. To cause the consent.



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Statement of fact not opinion

Opinion statement has two parts.

(a) Fact part.

(b) Opinion part.

1. Fact part is representation of factual

situation which may be false or true.

2. Opinion part represent the assessment onthe factual situation by the opinion holder

which may be true or false.



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Statement: if silence is statement

1. Statement.1. Express or2. implied statement. Is silence a statement: It is implied

statement.

2. If there is a duty to speak, silence may

amount to statement. When there is a dutyto speak.?1. Fiduciary relationship.

2. Uberrima fides contract. Insurance contracts

3. Context may create duty to speak.4. Change of circumstances.

5. Disclosure of half truth obligates to speak

the whole truth.



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Continued..

3. If the silence makes the false statement.1. Intentional or

2. Innocent4. Cause consent.

5. Fraud or misrepresentation.

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FRAUD Vs. MISREPRESETATION

1. Regarding intention.2. Regarding tort and crime.3. Regarding discovering truth with ordinary diligence

defense applicable in case of misrepresentation.

4. Regarding rescission and compensation in both thecases.(S.75,and The (English) misrepresentationAct,1967)

5. Regarding communication of rescission orrevocation of rescission.(S. 66 read with S.3)

6. If notice is not possible for want of address the FIRfor fraud has also been treated as notice .7. Regarding application restitution for both.(S.64.)



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Grounds of rescission right loss

1. Affirmation of the transaction.( Long

V.Lloyd,(1958)2All.ER 402.Lorry in excellent

condition case)

2. Lapse of reasonable period of time.

3. Subsequent sale in good faith.



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MISTAKE

1. Mistake as to the identity of the parties.

2. Mistake as to the identity of subject matter.

3. Mistake as to the identity of transaction.

4. Mistake as to the law applicable. (S.21)

5. Mistake as to the law not applicable. (S.21:fact -

Subject matter)

6. Unilateral mistake of fact does (no effect oncontract formation S.22)?.



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Mistake Vs Misrepresentation

Mistake(no communication of mistake)

1. Miss+ take=Mistake

2. Missing the take.

3. Mistake :No consent

4. Affect presence orabsence of consent

Misrepresentation( communication of mistake)

1. Mistake+Representation

=Misrepresentation.

2. Making falsecommunication.

3. Misrepresentation: No

free consent

4. Affect freedom of consentnot existence.



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Effect of mistake as to law: Ss 21,22.

1. Mistake as to any law in force in India.

(No effect: Ignorance of law no excuse)

2. Mistake as to the law not enforce in India

(Effect as a mistake as to the matter of fact)

3. Unilateral mistake as to the matter of fact:22 .?

(No effect on contract formation)




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DISCUSSION

1. Cundy V. Lindsay(1878)3AC459. Blenkarn& Co(Blenkiron& Co) Pl.persue developments.

2. Raffles Vs.Wichelhaus(1864):133 RR 853.ExPeerless from Bombay(October-November)

3. Pratap Vs.Puniya,AIR 1977 MP 108.Old illiteratelady and uterine brother case. Fraudulentmisrepresentation .Void.

4. Dularia Devi V. J.Singh AIR 1990S SC 1173216.Void.




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DISCUSSION

1. Krishnan Vs.Kurukshetra University, AIR 1976 SC

376

2. P.Sarojam Vs.LIC AIR1986 201

3. Long Vs.Lloyd:1958 All ER 402

Decent condition car case



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CONSIDERATION (Ss.2.d,23,25)

1. Definition :S.2(d)2. Forbidden considerations in contract

formation:S.23

3. Relevance of consideration in contractformation:S.25

4. Consideration for the promise of the

promisee who may dispense or remitperformance of promise of promisor .S.63



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Consideration:S.2(d)

Definition :S.2(d)When,

1. at the desire of the promisor,

2. the promisee or any other person3. has done or abstained from doing or

4. does or abstains from doing, or

5. promises to do or to abstain from doing,

6. something,

such act or abstinence or promise is called aconsideration for the promise.



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When, at the desire of the promisor

1. Durga Prasad Vs. Baldeo(1880) 3All.E.R 221The Plaintiff on the order of collector constructed aGanj,def. promised to pay commission on items sold in lieuhis construction of the shop:

2. Kedar NathVs.Gouri Mohamed 1886 ILR 14Cal 64Commissioners of Howrah sought charitable subscriptionto construct Town Hall at Howrah . Charitable subscriptionRs.100.Contract for the work awarded.

3. Abdul Aziz Vs. Masum Ali AIR1914 All 22Charitable subscription Rs.500 for Mosque repair. Repairsnot started as yet.



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THE PROMISEE OR ANY PERSON

1. The party to the contract need not be party toconsideration . Promisee or any person.

2. But the contract can be enforceable only by the partyto the contract.

English law:Dutton Vs. Poole (1677) 83 ER 523

If father forebear to sell the wood to give portion to hisdaughter the son promised to his father to pay $1000 to his

sister. Sister neither party to the consideration nor contract.Brother held liable in a suit to sister?.

Overruled in Tweddle Vs. Atkinson (1861) 123 ER 762 after 200years.


CASES AS REFERENCE POINT FOR


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DISCUSSION

Tweddle Vs. Atkinson (1861) 123 ER 762

The plaintiff was to be married to the daughter of one G and in

consideration of this intended marriage G and the plaintiff s

father entered in to a written agreement by which it was agreed

that each would pay the Plaintiff a sum of money. G failed to do

so and the plaintiff sued his executors. Whitman J considered it tobe an established principle that a person can not take advantage

of a contract, who is stranger to the contract.

Basic propositions of English law:

1. Consideration must move from promisee only.

2. Stranger to contract can not enforce the contract.? Benefit to third

party (Law revision committee 1937)

3. Jamana Das V.Ram Autar (1911)39 IA 7 :PC extended this rule to

India.3/18/2012 67Contract Law -1


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Continued

Tweddle rule stranger to the contract have no cause

action is applicable in India.

Indian exceptions:2 kinds

1. Statutory :Negotiable Instrument Act, Contract of

Agency ,TPA, Bill of lading, Railway receipt, trust

beneficiary etc.

2.Judicial:marriage,partition or other familyarrangements, estoppel,covenents running with

land.



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Has done or abstained from doing

Executed consideration:There can be two situations:

1. Promisee or any other has done or abstained from doing

on the request of promisor

2. Promisee has done or abstained from doing without therequest of promisor. No consideration for the promise.

This promise though without consideration is enforceable u/s25(2) not for the reasons of contract but law.



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PRESENT CONSIDERATION

Does or abstains from doing

The point of time of furnishing the

consideration is the same as that ofmaking the promise by the promisor

for the consideration.



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FUTURE OR EXECUTORY CONSIDERATION

Promises to do or to abstain from doing

The consideration for the promise is in the form of promise.

The obligations are due from both the sides of the contracting

parties. The reciprocal promises forming consideration for

each other.



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SOMETHING: SOME VALUE IN THE EYE OF LAW?

1. Consideration must have some value in the eye of law . ?Value in the eye of law

1. Social value.

2. Emotional value.

3. Economic value.

Note: Value need not adequate.

2. Doctrine of Laesio enormous ( less but enough) in civil legal system.

3. Promise to forbear or forbearance to sue.

4. Promise to compromising (before the court) of dispute irrespective ofits merits.

5. Promise to perform or the performance of pre-existing of legal duty.?1. Contractual legal duty.

2. Non-contractual legal duty.



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Pre-existing contractual duty. English law

5. Promise to pay amount less than due. No considerationEnglish (Pinnell) rule (1602) 5 Co Rep 117a. Indian law

different under section 63 ,Indian Contract Act .

Exceptions to the Pinnell rule:

(a) Part payment by third party.

(b) Payment before due time.

(c) Payment at different place or different mode

(c) Promissory Estoppel.



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Promises without consideration valid

Two categories:

1. Under section 25:In the making process.

2. Under section 63 at the instance of

promisee. Subsequent to the making of

contract.

3/18/2012 Contract Law -1 74

Promises without considerations valid


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Promises without considerations valid

under section 63

Indian law ,Section 63 :Makes promiseswithout consideration valid.

Every promisee may

(i) dispense with or remit,

(ii) wholly or in part,

(iii) the performance of the promise made to him, or

(iv) may extend the time for such performance ,or

(v) may accept instead of it any satisfaction which he thinksfit

Such promise is valid even without consideration.




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May 05

1. No extension of time on any pretext forsubmission of research cards in proper packets

each card duly signed by the researcher.

2. Projects to be submitted to the Academiccommittee under signature.

3. The academic committee in consultation with

the teacher will prepare presentation schedule.4. Presentations to be finished before May 20


Exceptions to the consideration


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Exceptions to the consideration

requirements for enforceable promise

1.English law.1. Contracts signed under seal ,attested and delivered.

1. Contract by individual :Law of Property (MiscellaneousProvisions) Act 1989,Section 1.Written,signed,attested by twowitnesses.

2. Contract by the company: Deed under Common seal of thecompany, signed by two Directors or one Director and CompanySecretary.

2.Indian law, Section 25.1. Promise in writing, duly registered made on account

of love and affection between parties in near relation.2. Promise to compensate voluntary done service.

3. Promise in writing duly signed to pay time barreddebt.


d l


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Indian law: Section 25

1. Promise is in writing and registered.2. Promise to compensate for

something done.

3. Promise made in writing and dulysigned to pay debt barred bylimitation law.

In any of these cases, such an agreement(2.e) is a contract(2.h).?


Promise expressed in writing..love


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Promise expressed in writing..love

and affection: Section 25(1)

1. It(promise) is expressed in writing and2. registered under the law for the time being in force for

the registration of (documents) , and

3. is made on account of natural love and affectionbetween parties

1. Love and affection which nature of relation warrants.

2. Love and affection not be instinctive.?

3. No clear judicial pronouncement .

4. standing in near relation;

1. No definition of near relation.2. The expression include relation through blood/marriage.

Poonuoo Bibi V. Fyaz Buksh 15 BLR App 5.

3. Complete judicial definition yet to be settled.?


LOVE AND AFFECTION IN NEAR RELATION:


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LOVE AND AFFECTION IN NEAR RELATION:(JUDICIAL UNDERSTANDING WITH REFERENCE TO FAMILY SETTLEMENTS)

1. Rajlukhy Dabee V. Bhootnath Mookerjee (1900)4 Cal.WN488 :husband wife( marriage) case.

2. Bhiwa V.Shivaram (1899)1 Bom.LR 495: two brothers(blood) property sharing case.

3. Manali Singhal V.Ravi Singhal AIR 1999 Del 156:Promise in

family settlement between husband and wife made forproviding maintenance to wife for the sake of peace ofmind.(marriage)

4. See Ram Charan Dass V.Girja Nandini Devi AIR 1966 SC 323.and Maturi Pullaiah V.Maturi Narasimham AIR 1966 SC1836: The court give effect to a family settlement upon abroad and general ground that the object is to settleexisting or future disputes regarding property among thefamily members.


Promise to compensate for something


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Promise to compensate for something

done Section. 25(2)

1. It is a promise to compensate, wholly or in part,2. a person who has already voluntarily done

something for the promisor, orWhether it includes sex services: Courts opinion.S.23

1. Past voluntary sex services.2. Future voluntary sex services.

3. something which the promisor was legallycompellable to do;

Obligation of person enjoying voluntary non-gratuitous act even if there is no promise tocompensate for the same. Section 70


Promise to pay a debt barred by limitation


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Promise to pay a debt barred by limitation

( Section 25.3)

1. It is promise, made in writing and signed by theperson to be charged therewith,

2. or by his agent generally or specially authorised in

that behalf,

3. to pay wholly or in part a debt of which the

creditor might have enforced payment but for the

law for limitation of suits.

In any of these cases, such an agreement(2.e) is a

contract(2.h).?


Promise to pay time barred debt and


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acknowledgement to pay

1. Section 25.3 is applicable in case ofpromise to time barred debt.

2. It is not applicable in case

acknowledgement. Limitation of periodrestarts under the Indian Limitation Act.

3. Difference between promise to pay time

barred debt and acknowledgement.




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acknowledgement

Promise to pay time barred debt.

1. Gives cause of action fresh

period of limitation.

2. Promise is without

consideration.

3. It is not a contract but

administrative action.

4. Action is based on

administrative law.

acknowledgement

1. Give the fresh limitation

period.

2. Promise is with

consideration.

3. It is amounts to revision of

the original contract.

4. Action is based on

contract law.



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SOME CASES AS REFERENCE POINT OF DISCUSSION

Which promisor is bound u/s 25.3:1. Promisor of original promise to pay back the debt.

2. Promisor of the promise who promise to pay the time barred debt.

1. Two conflicting views:1. Bombay High Court. Promisor of original promise to pay back the debt

which has become time barred : P.M.Mody V.Bai Meherbai(1928)30Bom.L.R1407

2. Madras High Court. Any person who promise to pay the time barreddebt who may or may not be the promisor of category 1:P.G.Nair V.P.A.Nair AIR 1940 Mad.678.

2. Reason for this conflicting view lies in the phrase :It is a promise,made in writing and signed by the person to be chargedtherewith, or his

1. Charged there with the debt, or

2. Charged there with promise.


What considerations and objects are lawful, and what


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not ( Section 23)

The consideration or object of an agreement is lawful, unless:1. It is forbidden by law; or

2. Is of such a nature that ,if permitted, it would defeat the provisions ofany law; or

3. Is fraudulent; or

4. Involves and implies injury to the person or property of another; or

5. The court regards it as immoral, or

6. The court regards it to be opposed to public policy.

In each of these cases, the consideration or object of an agreement issaid to be unlawful. Every agreement of which the object orconsideration is unlawful, is void.

1. Difference between consideration or object of agreement unlawful1. Consideration and object of agreement may coincide.

2. Consideration and object of agreement may not coincide.


1 F bidd b l


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1. Forbidden by law

1. Consideration is forbidden by law includes:1. Statutes,

2. Customary law ,

3. Precedent,

4. Rules and regulations, made under the law etc.

2. Objective of consideration is forbidden by law.The object and consideration may in some cases be the same thing butin some cases it may be different.

Chandra Sreenivasa Rao V. Kovapatti Raja Rama Mohana Rao AIR 1952 Mad579

1. Money is borrowed to celebrate the child marriage.Child marriage Restraint Act 1929; to celebrate the marriage of child is offence.

Here debt-consideration for the promise to pay back by itself is not illegal but the objectof debt is illegal.

2. Money borrowed to buy sex services from a prostitute.


2. Is of such a nature that ,if permitted, it


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2. Is of such a nature that ,if permitted, it

would defeat the provisions of any law;

If the agreement defeat the objective of law:1. Objective of law.

2. Objective of consideration.1. Fateh Singh V. Sanwal Singh (1878)1 All. 751

The accused is required under Cr.P.C to surety bond for Rs.5000 for good behavior , he deposits the sum with thedefendant and persuades him to become surety . After the period of surety is over the accused sues the

defendant for the amount.The object of the surety agreement is that surety shall at his risk see to the regular appearances of the accused in thecourt. This objective of the agreement will defeat the purpose of law.

2. Held not recoverable. Nandlal V.Thomas J.William,171 IC 948

The plaintiff was licensed under an Excise Act which forbids1. its sale,

2. sub-lease,but he took the defendant in partnership. Is the consideration for Partnership contract forbidden by law or object of

consideration is unlawful.?

Agreement was held void.


3. Is fraudulent: (If the objective of


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( j

agreement is to defraud third person)

What is fraudulent consideration?1. Fraudulent to the party to the agreement:

1. Can the consideration be fraudulent independent of consent.

2. Can the consideration be fraudulent only if the consent is alsofraudulent under section 17.

3. If proposition 2 is correct than how to harmonise section 19 withsection 24,that is;

1. Agreement is void under section 24 or

2. Agreement is voidable under section 19 of The Indian contract Act 1872.

2. Fraudulent not to party to the agreement but to the third

party to the agreement:A and B agree to collaborate to defraud C and share the proceeds offraud equally. Such agreement is void and not voidable.


4. Involves or implies injury to the


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p j y

person or property ofanother

Who is Another "with reference to theconsideration of the agreement:

1. Another in between the a parties to agreementor

2. Another person means a person other than theparties to agreement.

3. Judiciary is not clear about as to who thisanother person amongst the above two

possibilities.4. In my opinion it should be proposition 2.

3/18/2012 Contract Law -1 90

5. Involves and implies injury to the


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p j y

person or property of another

1. Ram Swarup V. Bansi Mandar (1915) 42cal,742:Borrowed Rs.100 with exorbitantinterest and executed a bond or to work for2 years without salary. Slavery?

2. Beresford V. Royal Insurance Company Ltd.(1917) 2 All.E.R.243: Suicide to help

representative to get money. Therepresentative not allowed to get money.

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6 Th t d it i l


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6. The court regards it immoral

Parameters of immorality:

1. The survey of the judicial decision reflects that

immorality with reference to the consideration is

limited to sexual immorality as of now.2. Sexual immorality is a relative term in relation to

values of the society at particular time and space.

3. The arbiter of consideration if involves sexual

immorality under section 23 is the court.


IN THE OPINION OF COURT IT IS


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O O O COU S

IMMORAL:

Immorality is limited to sex outsidemarriage:

Gherulal V. M.Maiya (1959) 2SCA 342Subba Rao J (after CJ)

The case law in England and in India

confines the doctrine to sexualimmorality


Instances of sexual immorality


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Instances of sexual immorality

1. Interference with matrimonial relations. Bai vijli V. Nansa Nagar (1885) 10Bombay 152 :Money lended to seek divorce, not recoverable.

2. Dealing with prostitutes :Pearce V. Brookes( 1866)LR 1EX 213.Thing sold andhired for prostitution.

3. Cohabitation: Past,present,future.1. Present and future.

2. Past cohabitation.1. Illegal cohabitation.

2. Immoral cohabitation.

3. Past illegal and immoral cohabitation in English law:1. Promise to pay under seal: Enforceable.

2. Promise to pay not under seal: Past consideration ,not enforceable.

4. Past illegal and immoral cohabitation in Indian law:1. Illegal cohabitation.

2. Immoral cohabitation.

D.Nagartnamba v Kunuku Ramayya AIR 1968 SC235:1 SCR 43. BACHAWAT J

Certain properties were gifted by a male of joint Hindu family for pastcohabitation case failed for incompetency of Karta of joint family .But BACHAWAT J recognised the past cohabitation as good consideration.

Pyare Mohan V. Narayani AIR1982 Raj 43A gift deed was executed in favour of a woman with whom he had adulterous relation .Held valid.The word used in S.23

means purpose or desgin.Past cohabitation ,even adultrous ,is no longer the object of the gift.


COHABITATION AS CONSIDERATION


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COHABITATION AS CONSIDERATION

PAST COHABITATION.1. English law under seal valid otherwise it is past consideration.

2. Indian law .1.adulterous or.2. non-adulterous cohabitation.

Dhiraj Kuer V.Bikramji Singh (1831)3All 787 :Past cohabitation held goodconsideration.

Pyare Mohan V. Narayani AIR 1982 Raj.43 :Logic different-gift needs no

consideration logic.

Husseinali Casan V.DinbaiAIR1924 Bom.135:Past cohabitation is illegal

consideration.D.Nagartnamba v Kunuku Ramayya AIR 1968235:1 SCR 43.

Certain properties were gifted my a male of joint Hindu family for past

cohabitation case failed for incompetency but BACHAWAT J recognised the

past cohabitation as good consideration.


7. In the opinion of the court opposed to public


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p pp p

policy

ENGLISH LAW1.Public policy2.Judicial observations on public policyLord Halsbury in Egertone V.Brownlow (1953)4HLC 123

I deny that any court can invent new head of public policy.

Lord Atkin in Fender V.Johan Mildmay (1938) AC.1

The doctrine should be invoked in clear cases in which the

harm to the public is substantially incontestable, and doesnot depend upon the idiosyncratic inference of a few judicialminds


Public policy: Indian Law


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ub c po cy d a a

Subba Rao J( after wards CJI) in Gherulal V.Mahadeodas AIR1959 SC781

Justice Subba Rao blended Halsbury and Atkin to articulate the Indian

position.

the primary duty of the court is to enforce the promise which the parties

have made and to uphold the sanctity of the contract which forms the

basis of the society (capitalist society) : but in certain cases ,the court

may relieve them of their duty on the rule founded on what is called the

public policy; for want of better words Lord ATKIN describes that

something done contrary to public policy is a harmful thing; but the

doctrine is extended to harmful cases but also to harmful tendencies;

the doctrine of public policy is a branch of common law and just like any

other branch of common law, it is governed the precedents; theprinciples have been crystallized under different heads and though it is

permissible for the courts to expound and apply them to different

situations, it should only be invoked in clear and incontestable cases of

harm to the public.


HEADS OF PUBLIC POLICY


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HEADS OF PUBLIC POLICY

1. Trading with enemy.2. Trafficking in public offices.

3. Marriage brokerage agreement.

4. Interference with administration of justice.1. Interference with the course of justice.2. Stifling prosecution.

3. Maintenance and champerty.

5. Unfair deal.

Central Inland Water transport corporation Vs. N Ganguly AIR1986 SC 1571:Termination of service 3 months notice withoutreason .


VOID AGREEMENTS


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VOID AGREEMENTS

1. Illegal agreements.24

2. With out consideration.25

3. Restraint of marriage.26

4. Restraint of trade .27

5. Restraint of legal proceedings.28

6. Uncertain agreements.297. Wagering agreements.30

8. Impossible agreements.56


Agreement in restraint of trade is void


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(S.27)

1. Trade, profession or business are human activities.2. Occupations are also human activities but protection

of Section 27 is not available unless it amounts tobusiness.?

3. Restraint on any human activities can only be interms of two parameters:1. Time restraint.

1. Limited time.

2. Unlimited time.

2. Space restraint.1. Limited space.

2. Unlimited space.

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Agreement in restraint of trade is void


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(S.27)

27.Agreement in restraint of trade void: Every agreement by whichany one is restrained from exercising a lawful profession, trade or

business of any kind, is to that extent void.(Occupation unless

amounts to business not included: smacks class bias.)

Exceptions;

1. Statutory exceptions.

1. Sale of goodwill, limits specified, which is reasonable.

2. Under Indian Partnership Act.

2. Judicial exceptions.

1. Trade combinations.

2. Solus agreements.

3. Service agreements.

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Lawful profession trade or business


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Lawful profession trade or business

One is restrained from exercising lawful1. Profession

2. Trade

3. Business

4. Occupation amounting to business

Occupation not amounting to business can

be restrained under section 27.

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English law: Restraint


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English law: Restraint

Nordenfelt V.Maxim Nordenfelt Guns and Ammunition Co Ltd(1894) AC 535

1.Not to practice the same trade for 25 years (Reasonable)

2.Not to engage in any business for the time being carried on

by the company.( unreasonable)3.He afterwards enters into agreement with another

manufacturer of guns and an action for restrain was filed.

4.New law laid down:

(a) In the interest of parties.(b) In the interest of society as well.

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Restraint in terms of time and space


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before 1894

Restraint: Four kinds

Unreasonable :

Three kinds.

2.Unlimited in

time and space3.Unlimited

in time and

limited in

space

4.Limited in

time and

unlimited in

space

3/18/2012 104Contract Law -1

Reasonable:

1.Limited in

time and

space.

li h l bl i i ibl


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English law: Reasonable restraint permissible

Two parameters:

1.Reasonable with reference to the interest of parties.

2.Reasonable with reference to the public interest.

1. The restriction should be framed and guarded as toafford adequate protection the party in whose favor it

is imposed while at the same time it is no way injurious

to the public interest. Justiciable question.

2. Judicial balancing of private and public interest iscontemplated as the new norm.

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Indian law: All restraints covered


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Indian law: All restraints covered

Madhub Chander V.Raj Coomar (1874)14 Bengal LawReporter 76. Two rival shopkeepers in a locality

case.

Couch .J .held;

The words restraint from exercising a lawful

profession, trade or business, do not mean an

absolute restriction, and are intended to apply to a

partial restriction limited to some place.

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Profession trade or business


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Profession, trade or business

1. Rewashanker Samji Vs. Vedji AIR 1951 Kutch 56:Agreement to monopolize the work to perform the

religious services: held void? Religious services if

trade, business or profession ?

2. Pothi Ram Vs. Islam Fatima AIR 1915 All.94

Two landlord in the neighbourhood,in order to

avoid competition agreed to hold cattle mela on

different dates in the same neighborhood . Heldbinding.? Is it an occupation?

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Statutory exceptions


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Statutory exceptions

A. Under section 27.1. Sale of goodwill: Definition of goodwill: Lord Eldon

(Cruttwell Vs. Lye Ves.335) :The goodwill which has been

the subject of sale is nothing more than the probability that

the old customer will resort to old place (name?)" (oldname of business which attracts the old customers ).

Two conditions for application:

1. Local limits are prescribed.

2. Limit appear to be reasonable, regards being had to the nature ofbusiness. Justiciable question.

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Continued


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Continued.

B. Under Indian Partnership Act.1. Section 11:During the continuance of partnership none

will any business other than that of partnership.

2. Section 36 : Out going partner.1. Limits are specified or

2. The time is specified and

3. The same are reasonable

3. Section 54: In anticipation of dissolution of partnershiprestriction may be agreed that any or none will carry onthe business the partnership was carrying on.

1. Limits are specified or

2. The time is specified and

3. The same are reasonable

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Judicial exceptions


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Judicial exceptions

1. Trade combinations.S.B.Fraser and Co.Vs. Bombay Ice Mfg.Co. (1904)29 ILR

Bom.107 (Regulation not restrain)

2. Solus or exclusive dealing agreements.

Carliles Nephews and Co.Vs.Ricknauth Buttermull ILR (1882)

8 Cal 809

Agreement to sell 1,36,000 dhotis of certain description

to the defendant only for certain period of time.

(Assuring market not restraint)

3/18/2012 110Contract Law -1

Continued.


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Continued.

3. Service agreements with restraint onemployees:

1. Restraint during employment period.

Charles worth V. MacDonald2. Restraint beyond employment period.

Niranjan Shankar Vs.Century Spinning and

Manufacturing (1967) SC 1098

The appellant torn the agreement to pieces only because

he has been offered higher salary by the other

company.

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Agreement by way of wager


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Agreement by way of wager

Definition of agreement by way of wager:1. Interpretation clause ,Section 2: No definition.

2. General Clauses Act: No definition.

3. Indian Judicial precedent definition: Nodefinition.

4. English Judicial precedent: Justice Hawkins inCarlill Vs. Carbolic Smoke Ball Company(1892)2QB484

5. Why the Common law definition applicable :The Indian Contract Law is not exhaustic code.

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Agreement by way of wager is void.

(Section 30)


112/137

(Section 30)Definition: Justice HAWKINS in Carlill V. Carbolic Smoke Ball

Co.(1892)2QB484A wagering contract is one by which two persons professing

to hold opposite views touching the issue of a futureuncertain event , mutually agree that, dependent on thedetermination of that event, one shall pay or hand over to

him, a sum of money or other stake; neither of thecontracting parties having any other interest in thatcontract than the sum or stake he will win or loose, therebeing no other real consideration for the making of suchcontract by either of the parties. It is essential to wageringcontract that each party may under it either win or lose,whether he will win or lose being dependent on the issueof the event, and,therefore,remaining uncertain until thatissue is known. If either of the parties may win but cannotlose, it is not a wagering contract

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ESSENTIAL ELEMENTS OF WAGER


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ESSENTIAL ELEMENTS OF WAGER

1. The parties holding opposite views.2. About a (future) uncertain event.

3. Mutually agree to pay a certain sum of money orother stake.

4. On the determination of the uncertain event.1. Uncertain (future)therefore unknown event.2. Certain(past) but unknown event.

3. Relation between uncertain and unknown event.

5. The parties are interested in money or stake only and

not in the event otherwise.6. Mutual chances of gain or loss of certain sum of

money or stake.

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Exception u/s 30


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Exception u/s 30

1. Horse racing with Rs.500 and above.

Note: Nothing in this section shall be deemed to

legalize any transaction where section 294-A of

Indian Penal Code is applicable.

2. Horse racing exception U/S 30 :

Mr.Hasan Ali law.

Section 30 is used to make black money white.

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Examples


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Examples

1. Lottery.2. Life Insurance contracts: Provided the insurer

have insurable interest "in the subject matter ofinsurance contract it is a wagering agreement.

3. Gambling in differences in the value of shares, orSatta or Teji -mandi transactions .

Sukhdevadas V.Govind Dass ILR 51 Mad.96(PC)

1. Illegal wagers:1. When Section 294-A is applicable in the place.

2. When the wagering agreements are declared illegal by the Statutesuch as in case of Forward Contract (Regulation) Act 1962

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Grounds of discharge of Contract


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Grounds of discharge of Contract

A contract may be discharged through thefollowing methods:

1. Performance (Ss.31-67)

2. Impossibility of performance.

3. Contract to discharge the contract.

4. Breach of contract.

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Impossibility of performance,S.56


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Impossibility of performance,S.56

Section 56

1. Existing impossibility: void agreement.

2. Supernuing impossibility: void contract.

3. The commercial impossibility :No effect.

4. Compensation for loss through non

performance of act known to the promisor

to be impossible.

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Meaning of impossibility


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Meaning of impossibility

Satyabrata V.Mugneeram AIR 1954 SC 44:1954 SCR 310

(a) This much is clear that the word

impossible has not been used here in thesense of physical or literal impossibility.

(b) It should be impracticable and useless fromthe point of view of the object and purposeof the contract.

(c) Commercial impossibility ?

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English law: The doctrine of

f i


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frustration

1. The of implied term. Lord Loreburn in F.A.TamplinSteamship company .

2. Theory of just and reasonable solution.Denning LJBritish Movies News Ltd V.London and District

Cinemas Ltd.(1951) 1KB 1903. Foundation loss theory.

Effects of frustration

1. Frustration should not be self-induced.

2. Frustration operates automatically.

Theory of frustration is not applicable in India ?

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Specific grounds of impossibility


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Specific grounds of impossibility

1. Destruction of subject matter.

2. Change of circumstances.

3. Non occurrence of contemplatedevent.

4. Death or incapacity of party.

5. Governmental administration.6. Intervention of war.

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Discharge by breach of contract


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Discharge by breach of contract

Definition of breach of contract:When a party to the contract either refuses to

perform or fails to perform or incapacitates

himself to perform his part of the contractobligation he beaches the contract.

Kinds of breach:

The breach of contract is two kinds:

1. Anticipatory breach.

2. Breach.

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Anticipatory breach of contract


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Definition:

It is the breach of the contract by the party to contract in anticipationof the date of the performance of the contract.

Effects:

1. The aggrieved party is excused of the performance of contract.

2. The choices of action of the aggrieved party.1. Right of Immediate action. Implications? Rochester V.De La Tour

(1853) 95 RR 747. Courier hiring case.

2. Anticipatory breach of contingent contract. Frost V.Knight (1872) L.R.7

Exch.111. Engagement promising to marry on fathers death but

refused to marry before fathers death, immediate action ismaintainable.

Continued..

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Continued


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Continued

3. Right of action on due date of performance.Consequences:1. The anticipatory breacher may opt to

perform the contract on due date.2. Damages shall be calculated on the current

market rate if market principle is applicable.

3. Discharge by any other event(like frustration) may benefit the parties.

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Breach of contract :Section73


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reach of contract :Section73

When a contract has been broken, a party whosuffers by such breach is entitled to receive,from the party who has broken thecontract,

1. Compensation for any loss or damage causedto him thereby ,which naturally arose in theusual course of things from such breach,(general damages)

2. Or which the parties knew, when they madethe contract, to be likely to result from the

breach of it.( special damages )Hadley V. Baxendale (1854)9 Ex 341 Alderson B

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Consequences of breach: Remedies


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q

Remedies:1. General remedy: Suit forcompensation,S.73

1. Identification of the loss or losses for which the

compensation is awardable to the aggrieved.

2. Conversion of loss in to money compensation.

2. Exceptional remedy: Suit for specific

performance under Specific Relief Act.

3/18/2012 126Contract Law -1

Principles of Identification of the

l l S ti 73


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loss or losses. Section 73

Section 73 provides two rules for theidentification of the loss or losses to be

compensated.

1. Any loss or damage caused to him thereby,which naturally arose in the usual course of

things from such breach.(general loss) :General

damages.

2. Any loss which the parties knew at the time of

contract making as likely to result from the

breach. (Special loss): Special damages.

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Mitigation of

damage?

Hadley Vs.Buxandale

Conversion principles of loss or


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losses (damage) in to damages

There are two principles for converting the loss

or losses (damage) in to damages.

1. Market principle if applicable: Market forces

will play a decisive role.

2. Evaluation principle if market principle is not

applicable: The opinion of the evaluation-

experts will guide the judge in the conversionof loss or losses (damage) in to damages.

3. Agreement principle.

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Damages computation rules


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a ages co putat o u es

1. General damages Rule(Market rule): General loss.2. Special damages Rule(Knowledge rule) : Special

loss.

3. Exceptional exemplary damages Rule (Punitivedamages rule): Exception to the general rule,

emotional/reputational loss as well.

4. Nominal damages Rule: Injury but no loss. (Injuria

sine Damnum )5. Agreement damages.?

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Agreement damages :Liquidated

d


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damages.

1. Q:Parties agree to make the contract canthey agree to make the resolution ofcompensation in case of breaking thecontract?

1. Ans:Yes and no.

2. Q: Can the answer to the question be

possible in Yes and No?

2. Ans:Yes, let us discuss.

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Maula bux Vs.

Union of India

Agreement damages: Earnest money,

penalty


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penalty

Difference: Earnest money and penalty :1. To be adjusted in price contract performed.

2. To be confiscated if contract not performed.

3. In case of confiscation it may either beliquidated damages or penalty.

4. If liquidated damages permissible if penalty not

permissible.

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Certain relations resembling those

t d b t t(S 68 72)


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created by contract(Ss.68-72)

English law1. Three kinds of earlier common law

actions.

1. Contractual: Contract action.

2. Delictual: Tort action.

3. Quasi contractual.

2. Juridical basis of quasi-contract.1. Unjust enrichment.

2. Implied promise to pay.

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S.68:Claim for necessaries


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Meaning of necessaries: Alderson B in Chappel V.Cooper

(1844)13 LJ(Ex)268Things necessary are those with out which an individual cannot reasonably

exist. In the first place, food, raiment, lodging and the like. About thesethere is no doubt. Again, as the proper cultivation of the mind is asexpedient as the support of the body ,instruction in art or trade, orintellectual ,moral and religious education may be necessary also . . .

Then the classes being established, the subject and extent of the contractmay vary according to the state and condition of the infant himself. Hisclothes may be fine or coarse according to his rank; his education mayvary according to the station he is to fill; and the medicines will dependon the illness with which he is afflicted, and the extent of his probablemeans when of full age. . . But in all these cases it must first be made out

that the class itself is one in which the things furnished are essential tothe existence and of reasonable advantage and comfort of the infantcontractor. Thus articles of mere luxury are always excluded, thoughluxurious articles of utility are in some cases allowed.

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Nature of liability


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y

Indian law1. Not personal.2. To the extent of property.

English law1. Based on the doctrine of unjust enrichment and

enforced accordingly.

2. Liability not personal but of the property if any.

Nash Vs. Inman (1908 (2) KB 1)

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Section 69:Reimbursement of a person payingmoney due by another, in the payment of


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which he is interested.

1. The person must be interested in the payment2. Another person must be bound to pay by law

3. Person paying is entitled for reimbursement

Govindram Gordhandas Seksaria V.State of GondalAIR 1950 PC 99

Maharaja having sold certain mills without paying

overdue municipal taxes, was sued by the buyerwho has to pay to save the property from beingsold.

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Section 70:Obligation of a person

enjoying benefit of non gratuitous act


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enjoying benefit of non-gratuitous act

1. The service or act must be non-gratuitous2. The other person must enjoy the benefit

3. The person enjoying the benefits needs to pay

compensation for the same

State of West Bengal V.B.K.Mondal & sons AIR 1962 SC 779

The plaintiff on the request of the officer of the State of

West Bengal constructed a Kutch road,guard room,

office, ,kitchen, room for clerks and storage sheds forthe use of the civil supply department of the

Government.

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Section 71 :Responsibility of finder

of the goods


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of the goods

1. A person is a finder of the goods2. The finder takes the goods in his custody

3. Finders responsibility is that of bailee

Section 168 :Right of the finder of goods.Section 169: When finder of thing commonly on sale

may sell it.

(a) When the thing is perishable

(b) When the lawful charges of finder, in respect of

the thing found, amount to two third of its value

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Section 72


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Liability of a person to whom money is paid

or thing delivered by mistake or under

coercion

1. Mistake of fact or law.

2. Coercion.

Sales Tax Officer, Banas V. Kanhaiya Lal Mukund

Lal Saraf AIR 1959 SC 135Tax was paid on its forward transactions which

contrac law -1

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