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BUSINESS LAWBUSINESS LAW
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AN INTRODUCTION TOAN INTRODUCTION TO
LAW, LEGAL SYSTEMSLAW, LEGAL SYSTEMS
AND GLOBALIZATIONAND GLOBALIZATION
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OBJECTIVESOBJECTIVES
ToTo understandunderstand thethe essentialessential featuresfeatures ofof aalegallegal system,system, includingincluding ourour ConstitutionConstitution
ToTo appreciateappreciate GlobalizationGlobalization asas relevantrelevant totoLawLaw andand LegalLegal InstitutionsInstitutions
ToTo studystudy thethe differentdifferent formsforms andand principlesprinciplesofof CivilCivil andand TortiousTortious liabilitiesliabilities
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LAWLAW
LawLaw is a system of rules, usually enforcedis a system of rules, usually enforcedthrough a set of institutions.through a set of institutions.
It shapes politics, economics and societyIt shapes politics, economics and societyin numerous ways and serves as thein numerous ways and serves as theforemost social mediator in relationsforemost social mediator in relationsbetween people.between people.
Law governs a wide variety of socialLaw governs a wide variety of socialactivities.activities.
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Law :The term `law refers to rules of conduct enforced by the
State to maintain peace and order in the society
Austin has defined law in the following words : `A law is
rule of conduct imposed and enforced by theSovereign.
Salmand defined law as `the body of principles
recognized and applied by the State in theadministration of justice.
Holland defined law as ``rule of external human actionsenforced by Sovereign Political Authority.
Definition of Law :
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MEANING OF BUSINESS LAW
B
usiness law is a branch of General Law. It relates to industry, trade andcommerce. It includes law relating to contracts, sale of goods, partnerships,negotiable instruments, companies, cooperative societies etc. Further,consumers are a special constituent of any business. Consumers Protection Actnot only recognizes the importance of safeguarding the rights and interests of theConsumers but also puts every business on alert and answerable to the consumer
3. SOURCES OF BUSINESS LAW
1. English Mercantile Law
2. Statutes of Indian Legislature
3. Judicial Decisions
4. Customs and Usage
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What is the Role of Law?What is the Role of Law?
ToTo establishestablish andand enforceenforce normsnorms oror societalsocietalmoralsmoralsAchieves justice?Achieves justice?
ToTo limitlimit powerpower ofof thethe GovernmentGovernment andand otherotherauthoritiesauthorities Enforces accountability?Enforces accountability?
To examine To examine reasonreason in all activities in all activities
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Typology of LawTypology of Law
LegalLegal remediesremedies == Constitutional,Constitutional, Civil,Civil,Criminal,Criminal, ContractualContractual andand TortiousTortious
LegalLegal systemssystems andand JudicialJudicial approachesapproaches ==CommonCommon LawLaw andand CivilCivil LawLaw
PrinciplesPrinciples ofof interpretationinterpretation == Statutory,Statutory,ConstitutionalConstitutional andand EvidentiaryEvidentiary
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1:1: AnalyzingAnalyzingWhatWhatisLaw ?isLaw ?
Natural Law view.Natural Law view.
Positivist view.Positivist view.
Historical view.Historical view. Legal Realism view.Legal Realism view.
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NaturalLawNaturalLaw
Assumes that law, rights and ethics are basedAssumes that law, rights and ethics are basedon universal moral principals inherent in natureon universal moral principals inherent in naturediscoverable through the human reason.discoverable through the human reason.
The oldest view of jurisprudence dating back toThe oldest view of jurisprudence dating back toAristotle .Aristotle . (system of laws existing in particular(system of laws existing in particularplace. the system of laws that exists in aplace. the system of laws that exists in aparticular place or that affects a particular areaparticular place or that affects a particular areaof activity)of activity)
JeffersonsJeffersons DeclarationDeclaration assumes the Laws ofassumes the Laws ofNature.Nature.
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NaturalLawNaturalLaw
Rev. MartinLutherKing, Jr.Rev. MartinLutherKing, Jr.Letter from the Birmingham JailLetter from the Birmingham Jail, April 16,, April 16,1963. [T]here are two types of laws: just1963. [T]here are two types of laws: justand unjust laws. . . . A just law is a manand unjust laws. . . . A just law is a man--made code that squares with the moralmade code that squares with the morallaw . . . . An unjust law is a code that islaw . . . . An unjust law is a code that isout of harmony with the moral law. . . .out of harmony with the moral law. . . .
An unjust law is a human law that is notAn unjust law is a human law that is notrooted in eternal and natural law.rooted in eternal and natural law.
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Legal PositivismLegal Positivism
Law is the supreme will of the State thatLaw is the supreme will of the State thatapplies only to the citizens of that nationapplies only to the citizens of that nationat that time.at that time.
Law, and therefore rights and ethics, areLaw, and therefore rights and ethics, arenot universal. The morality of a law, ornot universal. The morality of a law, orwhether the law is bad or good, iswhether the law is bad or good, is
irrelevant.irrelevant.
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Legal RealismLegal Realism
Jurisprudence that holds law is not simplyJurisprudence that holds law is not simplya result of the written law, but a producta result of the written law, but a productof the views of judicial decision makers,of the views of judicial decision makers,as well as socialas well as social, economic, economic, and, andcontextual influences.contextual influences.
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2:2: The CommonLaw TraditionThe CommonLaw Tradition
American law is based largely onAmerican law is based largely on EnglishEnglishCommon LawCommon Law which was based largely onwhich was based largely ontraditions, social customs, rules, and casestraditions, social customs, rules, and casesdeveloped over hundreds of years.developed over hundreds of years.
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The CommonLaw TraditionThe CommonLaw Tradition[2][2]
At common law, there were two separateAt common law, there were two separatecourt systems with two different types ofcourt systems with two different types ofremedies:remedies:
COURTS OF LAW (monetary relief), andCOURTS OF LAW (monetary relief), and
COURTS OF EQUITY (nonCOURTS OF EQUITY (non--monetary relief)monetary relief)based on notions of justice and fair dealing.based on notions of justice and fair dealing.
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Courts ofLawCourts ofLaw
Also called kings courts where judgesAlso called kings courts where judgeswere appointed by the king.were appointed by the king.
Remedies limited to those provided at law,Remedies limited to those provided at law,i.e., land,i.e., land, chattel (something that youchattel (something that youown),own), money.money.
Judges resolved disputes by application ofJudges resolved disputes by application ofrules of law to the facts of the case beforerules of law to the facts of the case beforethe court.the court.
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Courts of EquityCourts of Equity
EquitableEquitable relief was sometimes availablerelief was sometimes availablein instances where a strict application ofin instances where a strict application ofthe law to the facts of the case compelledthe law to the facts of the case compelleda result that was legal but unjust.a result that was legal but unjust.
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Remedies TodayRemedies Today
Today federal and state courts of generalToday federal and state courts of generaljurisdiction have consolidated remedies atjurisdiction have consolidated remedies atlaw and remedies at equity.law and remedies at equity.
Generally, the same court can fashion aGenerally, the same court can fashion aremedy that includes both damages andremedy that includes both damages andequitable or injunctive relief.equitable or injunctive relief.
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Stare DecisisStare Decisis
Stare decisisStare decisis is a Latin phrase meaning tois a Latin phrase meaning tostand on decided cases.stand on decided cases. M
akes the law stable and predictable.M
akes the law stable and predictable. Increases judicial efficiency by relieving courtsIncreases judicial efficiency by relieving courts
of having to reinvent legal principles for eachof having to reinvent legal principles for eachcase brought before them.case brought before them.
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Stare DecisisStare Decisis and Precedentand Precedent
Stare decisisStare decisis is judge made law based onis judge made law based onprecedent.precedent.
Precedents are judicial decisions that give risePrecedents are judicial decisions that give rise
to legal principles that can be applied in futureto legal principles that can be applied in futurecases based upon similar facts.cases based upon similar facts.
Precedents and other forms of positive law, suchPrecedents and other forms of positive law, suchas statutes, constitutions, and regulations, areas statutes, constitutions, and regulations, arereferred to as binding authority and must bereferred to as binding authority and must befollowed.followed.
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Cases of First ImpressionCases of First Impression
In cases of first impression where thereIn cases of first impression where thereis no precedent, the court may refer tois no precedent, the court may refer topositive law, public policy, and widely heldpositive law, public policy, and widely heldsocial values in order to craft the best newsocial values in order to craft the best newprecedent.precedent.
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Legal ReasoningLegal Reasoning
Method used by judges to reach aMethod used by judges to reach adecision.decision.
Many courts and attorneys frame decisions
Many courts and attorneys frame decisionsand briefs using theand briefs using the IRACIRAC format: Issue,format: Issue,
Rule, Application (Analysis), andRule, Application (Analysis), andConclusionConclusion..
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Types ofLegal ReasoningTypes ofLegal Reasoning
Deductive Reasoning: Makes use ofDeductive Reasoning: Makes use ofsyllogism, a type of logical relationshipsyllogism, a type of logical relationshipinvolving a major premise and a minorinvolving a major premise and a minor
premise.premise. Linear Reasoning: Proceeds from pointLinear Reasoning: Proceeds from point
to point, with the final point being theto point, with the final point being theconclusion.conclusion.
Reasoning by Analogy: Analysis thatReasoning by Analogy: Analysis thatcompares facts of present case withcompares facts of present case withfacts of similar previouslyfacts of similar previously--decideddecidedcases.cases.
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4:4: Classifications ofLawClassifications ofLaw
Every type of law will be either:Every type of law will be either:
Civil or Criminal, and eitherCivil or Criminal, and either
Substantive or Procedural, and eitherSubstantive or Procedural, and either Public or Private.Public or Private.
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Civil vs. CriminalCivil vs. Criminal
Civil law defines the rights betweenCivil law defines the rights betweenindividuals or individuals andindividuals or individuals andgovernments.governments.
Criminal law defines an individualsCriminal law defines an individualsobligations to society as a whole.obligations to society as a whole.
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Substantive vs. ProceduralSubstantive vs. Procedural
Substantive law defines or creates theSubstantive law defines or creates therights and obligations of persons andrights and obligations of persons and
governments.governments. Procedural law provides the steps oneProcedural law provides the steps one
must follow in order to avail oneself ofmust follow in order to avail oneself of
ones legal rights or enforce anothersones legal rights or enforce anotherslegal obligations.legal obligations.
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7: Businesspersons7: Businesspersons
andthe Lawandthe Law Laws regulate all areas of business.Laws regulate all areas of business.
Factors business owners must consider:Factors business owners must consider: Is contract enforceable?Is contract enforceable?
Contract for goods vs. services?Contract for goods vs. services?
What happens if someone breaches theWhat happens if someone breaches the
contract?contract? Dispute Resolution?Dispute Resolution?
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Contract lawContract law regulates everything fromregulates everything frombuying a bus ticket to trading on derivativesbuying a bus ticket to trading on derivativesmarkets.markets.
P
roperty lawP
roperty law defines rights and obligationsdefines rights and obligationsrelated to the transfer and title of personalrelated to the transfer and title of personaland real property.and real property.
criminal lawcriminal law offers means by which theoffers means by which the
state can prosecute the perpetratorstate can prosecute the perpetrator
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Major Legal SystemsMajor Legal Systems
CommonCommon LawLaw derivedderived fromfrom casecasecircumstancescircumstances;; JudgesJudges rolerole isis dominantdominant AdversarialAdversarial systemsystem
CivilCivil oror ContinentalContinental statutorystatutory basesbases;; JudgesJudgesdiscretiondiscretion isis minimizedminimized InquisitorialInquisitorial systemsystem
ReligiousReligious oror customarycustomary basedbased onon traditionaltraditionaltextstexts andand practicespractices
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Civil LawsCivil Laws
PrivatePrivate LawLaw == regulateregulate rightsrights andand dutiesdutiesbetweenbetween individualsindividuals ContractsContracts andand CivilCivil actionsactions
EquitableEquitable basesbases ofof interpretationinterpretation EquityEquity andand equalityequality balancebalance ofof interestsinterests
ProbabilitiesProbabilities andand preponderancepreponderance
CompensatoryCompensatory remediesremedies
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Criminal LawsCriminal Laws
RelatesRelates toto onlyonly specificspecific offencesoffences andand resultsresults inindeterrentdeterrent punishmentspunishments nono victimvictim perspective?perspective? NotNot retrospectiveretrospective;; rightright toto silencesilence
StrictStrict interpretationinterpretation andand fairfair trialtrial principlesprinciples proceduralprocedural guaranteesguarantees BeyondBeyond allall reasonablereasonable doubtdoubt
ProsecutionProsecution byby thethe StateState onon thethe rationalerationale ofofpublicpublic welfarewelfare andand deterrencedeterrence
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Economic CrimesEconomic Crimes
Features of Economic Crimes:Features of Economic Crimes: CauseCause economiceconomic lossloss toto societysociety;; not not justjust toto
victimsvictims
MultipleMultiple negativenegative effectseffects SpecificSpecific modusmodus operandioperandi
FraudulentFraudulent intentintent
EvidentiaryEvidentiary difficultiesdifficulties expertexpert testimonytestimony
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Quest for the TruthQuest for the Truth
ObjectObject ofof CriminalCriminal JusticeJustice == accurateaccurate truthtruth substantialsubstantial andand scientificscientific
DNADNA ProfilingProfiling;; NarcoNarco--analysisanalysis;; MedicoMedico--legallegal;;ForensicForensic methodsmethods andand resourcesresources
FingerprintingFingerprinting;; graphologygraphology;; phoneticsphonetics
DocumentaryDocumentary andand CyberCyber evidenceevidence
RelianceReliance onon ExpertExpert evidenceevidence
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Structure of the CourtsStructure of the Courts
CivilCivil sideside == CivilCivil JudgeJudge DistrictDistrict CourtCourt HighHighCourtCourt SupremeSupreme CourtCourt
CriminalCriminal sideside == MagistrateMagistrate SessionsSessions CourtCourt(District)(District) HighHigh CourtCourt SupremeSupreme CourtCourt AidedAided byby PolicePolice andand ProsecutionProsecution
Jurisdiction/PowersJurisdiction/Powers == determinationdetermination ofof factsfacts appreciationappreciation ofof evidenceevidence materialmaterial questionsquestions ofoffactsfacts andand lawlaw decisivedecisive onon factsfacts;; appealsappeals onon lawlaw
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Exercise of Judicial PowersExercise of Judicial Powers
Regular Appeals and Review in superior CourtsRegular Appeals and Review in superior Courts
Special Appeals in the Supreme CourtSpecial Appeals in the Supreme Court
WritWrit powerspowers ofof HighHigh CourtsCourts andand thethe SupremeSupremeCourtCourt (of(of emergentemergent nature)nature)
ReviewReview andand CurativeCurative powerspowers ofof SupremeSupreme CourtCourt
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The Constitution of IndiaThe Constitution of India
PreamblePreamble Sovereign,Sovereign, Socialist,Socialist, Secular,Secular, DemocraticDemocraticRepublicRepublic
Justice, Liberty, Equality & FraternityJustice, Liberty, Equality & Fraternity
InherentInherent QualitiesQualities ofof thethe IndianIndian LegalLegal SystemSystem
LongestLongest in the Worldin the World 395 not out !395 not out !
12 Schedules and 22 Parts12 Schedules and 22 Parts
Government and its three branchesGovernment and its three branches
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Fundamental RightsFundamental Rights
EnforceableEnforceable onlyonly againstagainst StateState exceptexcept RightRightagainstagainst exploitationexploitation andand Right Right of of PersonalPersonalLibertyLiberty whichwhich areare enforceableenforceable againstagainst fellowfellow
citizenscitizens tootoo IsIs CompanyCompany aa StateState onlyonly publicpublic functionfunction
CertainCertain RightsRights areare onlyonly forfor CitizensCitizens RightRight toto
freedomfreedom ofof speechspeech && expressionexpression;; toto formformassociationsassociations;; toto movemove freelyfreely andand resideresideanywhereanywhere inin IndiaIndia;; occupationoccupation
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Fundamental Rights Fundamental Rights
Right to EqualityRight to Equality bedrock of all Rightsbedrock of all Rights
EqualityEquality beforebefore thethe LawLaw;; andand EqualEqualProtectionProtection ofof thethe LawsLaws
Classification based on intelligible differentiaClassification based on intelligible differentia
Must have a nexus with the ObjectiveMust have a nexus with the Objective
Eschews ArbitrarinessEschews Arbitrariness CasteCaste basedbased ReservationsReservations;; AIDSAIDS DrugsDrugs PolicyPolicy
Equality?Equality?
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Fundamental Rights Fundamental Rights
Fundamental FreedomsFundamental Freedoms only to citizensonly to citizens
ReasonableReasonable restrictionsrestrictions publicpublic orderorderandand interestsinterests ofof generalgeneral publicpublic
TENTEN SportsSports andand CricketCricket onon DDDD
RestrictionsRestrictions onon thethe MediaMedia inin reportingreporting ononterrorterror strikesstrikes andand rescuerescue attemptsattempts
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Right to PropertyRight to Property
EarlierEarlier a Fundamental Righta Fundamental Right
NowNow a Constitutional Righta Constitutional Right
DeprivationDeprivation only by authority of lawonly by authority of law
Public interest and Just compensationPublic interest and Just compensation SingurSingur controversy; SEZscontroversy; SEZs
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Directive Principles of State PolicyDirective Principles of State Policy
NonNon enforceable by Courtsenforceable by Courts
Welfare of the PeopleWelfare of the People Right to WorkRight to Work
Distribution of Economic ResourcesDistribution of Economic Resources
Living wage for workersLiving wage for workers
ParticipationParticipation ofof WorkersWorkers inin managementmanagement ofofIndustriesIndustries
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FederalismFederalism Law making PowersLaw making Powers
Union,Union, StateState andand ConcurrentConcurrent ListsLists toto facilitatefacilitate smoothsmoothtradetrade andand commercecommerce
UnionUnion == Defence,Defence, Ports,Ports, Aircrafts,Aircrafts, Railways,Railways, IntellectualIntellectualProperty,Property, TradeTrade andand CommerceCommerce;; TotalTotal 9696 withwith residuaryresiduarypowerpower
StateState == LandLand Rights,Rights, Production,Production, supplysupply andand distributiondistribution
ofof goodsgoods;; TotalTotal 6666
ConcurrentConcurrent == Contracts,Contracts, Banking,Banking, EconomicEconomic andand SocialSocialPlanningPlanning;; TotalTotal 4747
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Government ContractsGovernment Contracts
On behalf of President or GovernorOn behalf of President or Governor
They are not personally liableThey are not personally liable
Is Government Company like any other?Is Government Company like any other? PPPs and other Public ContractsPPPs and other Public Contracts
Economic Policy of the StateEconomic Policy of the State
Nature of Judicial interventionsNature of Judicial interventions
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Globalization of LawGlobalization of LawTo appreciate the relevance ofTo appreciate the relevance of
International legal principles inInternational legal principles inthe Indian Legal Systemthe Indian Legal System
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Effect of International LawEffect of International Law
TransnationalTransnational DisputeDispute ResolutionResolution MechanismsMechanisms InstitutionalInstitutional modelsmodels:: WTOWTO;; ICJICJ;; CommercialCommercialArbitrationArbitration mechanismsmechanisms
ApplicationApplication ofof InternationalInternational PrinciplesPrinciples withinwithin thetheLegalLegal SystemSystem ofof aa NationNation EnforcementEnforcement ofof InternationalInternational CovenantsCovenants
FormationFormation andand ComplianceCompliance ofof TreatiesTreaties
AdoptionAdoption byby DomesticDomestic InstitutionsInstitutions CourtsCourts andandLegislaturesLegislatures
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WTOWTO Constitutional PrinciplesConstitutional Principles
Most Favoured Nation (MFN)Most Favoured Nation (MFN)
National TreatmentNational Treatment
One MemberOne Member One VoteOne Vote
Reverse Consensus RuleReverse Consensus Rule
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WTOWTO Principles Principles
Single UndertakingSingle Undertaking except in Plurilateral Formexcept in Plurilateral Form
Dispute SettlementDispute Settlement multimulti--tiered structuretiered structure
EnforcementEnforcement Sanctions and CountermeasuresSanctions and Countermeasures
Supreme respect for NegotiationsSupreme respect for Negotiations at all stagesat all stages
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Specific ChallengesSpecific Challenges
WTOWTO -- International Trade RegulationInternational Trade Regulation Captured by vested interests?Captured by vested interests?
DefensiveDefensive MechanismsMechanisms andand TradeTradeRemediesRemedies ObjectivityObjectivity inin thethe Rules?Rules?
DisputeDispute SettlementSettlementMechanismsMechanisms LevelLevel--playingplaying field?field?
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LAW OF TORTIOUSLAW OF TORTIOUS
LIABILITYLIABILITYTo understand the extent ofTo understand the extent of
legal duty to take care and thelegal duty to take care and thecorresponding enforceable remediescorresponding enforceable remedies
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What is a Tort?What is a Tort?
CivilCivil WrongWrong anan affrontaffront committedcommitted inin aa
privateprivate sphere,sphere, butbut againstagainst aa dutyduty owedowed totoaa societysociety
Different from Criminal Law; Contract LawDifferent from Criminal Law; Contract Law
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Typology of TortsTypology of Torts
NegligenceNegligence
DefamationDefamation Libel and SlanderLibel and Slander
TrespassTrespass toto personperson (assault,(assault, battery,battery,confinement)confinement) andand toto propertyproperty
NuisanceNuisance PublicPublic andand PrivatePrivate
AbuseAbuse ofof legallegal procedureprocedure harassmentharassmentAccidentsAccidents && EnvironmentalEnvironmental HazardsHazards
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Basic PrinciplesBasic Principles
Duty to take careDuty to take care reasonable standardreasonable standard
Breach of that dutyBreach of that duty
InjuryInjury andand DamageDamage causedcaused byby suchsuch breachbreach
DamagesDamages payablepayable asas CompensationCompensation
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Basic Principles Basic Principles
RemotenessRemoteness ofof DamageDamage andand Test Test of ofReasonableReasonable ForesightForesight
CompensationCompensation isis thethe objectiveobjective restitutiorestitutioinin integrumintegrum
ResRes ipsaipsa loquitorloquitor (facts(facts speakspeak forforthemselves)themselves) rulerule ofof evidenceevidence
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Injuria sine damnumInjuria sine damnum
AshbyAshby vv.. WhiteWhite ((17031703)) legallegal rightright
injured,injured, butbut nono damagedamage
NominalNominal damagesdamages awardedawarded
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Damnum sine injuriaDamnum sine injuria
Mayor ofBradford v. PicklesMayor ofBradford v. Pickles
Use of own landUse of own land
but, with bad motivebut, with bad motive City ofBradford was affected by such an actCity ofBradford was affected by such an act
N
o legal right was injuredN
o legal right was injured
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General DefencesGeneral Defences
11.. VolentiVolenti nonnon fitfit injuriainjuria ifif volunteeredvolunteeredbyby thethe plaintiffplaintiff withwith knowledgeknowledge ++ consentconsent ConsentConsent couldcould bebe expressexpress oror impliedimplied
MedicalMedical NegligenceNegligence PriorPrior InformedInformed ConsentConsent
22.. InevitableInevitable accidentaccident
UncertainUncertain andand unforeseenunforeseen
DespiteDespite reasonablereasonable carecare byby thethe defendantdefendant
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General Defences General Defences
3. Act of God (vis major)3. Act of God (vis major)
Involvement ofNatural forcesInvolvement ofNatural forces
Unforeseen extraordinary impactUnforeseen extraordinary impact
4. Right of Private Defense4. Right of Private Defense
To protect person or own propertyTo protect person or own property
Necessary and Reasonable force standardNecessary and Reasonable force standard
Proportionality expectedProportionality expected electric fencingelectric fencing
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General Defences General Defences
5. Statutory Authority5. Statutory Authority
Activity causing injury should be authorizedActivity causing injury should be authorized DoesDoes notnot applyapply toto suchsuch authorizedauthorized activitiesactivities
undertakenundertaken inin aa negligentnegligent mannermanner
66.. ContributoryContributory NegligenceNegligence whenwhen thetheplaintiffplaintiff isis alsoalso partlypartly liableliable
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Kinds of LiabilitiesKinds of Liabilities
1. Vicarious Liability1. Vicarious Liability
2. Strict Liability2. Strict Liability
3. Absolute Liability3. Absolute Liability
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Vicarious LiabilityVicarious Liability
ResponsibilityResponsibility andand liabilityliability imposedimposed forforactionsactions undertakenundertaken byby certaincertain othersothers PrincipalPrincipal isis liableliable forfor AgentsAgents actsacts
PartnersPartners areare liableliable forfor eacheach othersothers actsacts
MasterMaster isis liableliable forfor thethe servantsservants actsacts whatwhataboutabout GovernmentGovernment servants?servants?
ContractContract ofof ServiceService && ContractContract forfor ServiceService
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Strict LiabilityStrict Liability
RylandsRylands v. Fletcher (1868)v. Fletcher (1868)
NegligentNegligent work,work, eveneven ofof IndependentIndependent ContractorsContractors
Source of damage from own landSource of damage from own land
StrictStrict ResponsibilityResponsibility attributedattributed toto anyany damagedamagecausedcaused byby actionsactions onon ownown propertyproperty
GeneralGeneral DefencesDefences cancan bebe claimedclaimed toto overcomeovercomeliabilityliability
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DiscussionDiscussion
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Nature of ContractSynopsis :
1. Introduction2. Meaning of Business Law3. Sources of Business Law4. Business Law in India5. Contract Act, 18726. Meaning of Contract7. Essential elements of a valid Contract8. Classification of Contracts
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4. BUSINESS LAW IN INDIA
1. Contract Act, 18722. Negotiable Instruments Act, 18813. Sale of Goods Act, 19304. Partnership Act, 19325. Companies Act, 1956
6. Securities Contracts (Regulation) Act, 19567. MRTP Act, 19698. Foreign Exchange Management Act, 19999. Patent Act, 1970; Copy Right Act, 1957; Trade and
Merchandise and Marks Act, 195810. Sick Industrial Companies (Special Provision) Act, 1985
11. ConsumerProtection Act, 198612. Environment (Protection) Act, 198613. Essential Commodities Act, 195514. Information Technology Act, 200015. Competition Act, 2002
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5. CONTRACT ACT, 1872
1. Applicability : The Contract Act, 1872 is the most important constituentsof Indian Mercantile Law. It affects every person since every one of us
enters into a contract virtually every day.2. Coverage of the ActThe act deals with the basic principles of the law of contracts. It deals withgeneral principles of Contracts and special contracts as given below in thefollowing chart.
Chart - 1
Indian Contract Act
Special types ofcontractsSec. 124 - 238
General Rules
relating toContractsSec.1 - 75
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1. GeneralP
rinciples of Contracts (Sec.1-75) :General principles of contracts include rules and laws relatingto communication, acceptance and revocation of proposal(Sec.2-9) voidable contracts (Sec.10-19 A and 22-23), voidagreements (Sec.11,2230, 32, 36. 56, 57 and 64-67),contingent contracts (sec.31-36), performance of contracts
(Sec.37-67) certain relations resembling those created bycontracts (Sec.68-73) and consequences of breach of contract(Sec.73-75).
2. Special Types of Contracts :Sec.124 to 238 deal with special types of contracts. These are
contracts of Indemnity and Guarantee (Sec.124 to 147)Bailment and pledge (Sec.148 181) and Agency Contracts(Sec.182 238).
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6. MEANING OF CONTRACT
1. Contract Definitions :Let us go through some definitions relating to contract.Salmond :A contract is an agreement, creating and defining theobligation between parties.
Sir William Anson : A contract is an agreement enforceable atlaw made between two or more persons by which rights
are acquired by one or more to acts or forbearances on thepart of others.
Sir Fredrick Pollock : Every agreement and promise enforceableat law is a contract.
Contract Act : Section 2(h) of the Act states that an agreementenforceable by law is a contract. Therefore, a contractessentially consists of two elements : (i) an agreement,
and (ii) its enforceability by law.
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6.2 Essential Requirements of Contract
1. Two parties
2. An agreement :
Consensus-ad-idem
3. Legal obligation
6.3 Agreements which are not contracts :
1. Agreements relating to social matters
2. Domestic agreements between husband and wife
Balfour Vs. Balfour (1919)In this case, on leaving England for Ceylon, the husband
agreed to pay 30 pounds to his wife every month till sheremained in England. As he failed to send the promised
amount regularly, the wife sued him for recovery of theamount. But her suit was dismissed on the ground that itwas an informal arrangement and there was nointention to create legal relationship
Agreement = Offer + Acceptance
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6.4 All contracts are agreements but all agreements are notcontracts
6.5 All obligations do not constitute contracts Torts or civil wrongs Quasi contracts Judgements of Courts Status of obligations like relationships of husband and
wife
7. ESSENTIAL ELEMENTS OF A VALID CONTRACT
According to Section 10 all agreements are contracts if they
are made by the free consent of the parties competent to contract, for alawful consideration and with a lawful object, and are not herebyexpressly declared to be void. Thus, an agreement becomes a validcontract if it has the following elements.
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1. Offer and acceptance
2. Intention to create legal relationship :
3. Lawful Consideration
4. Competence of parties to Contract
5. Free consent
6. Lawful object
7. Agreement not declared as void
8. Certainty and possibility of performance :
9. Legal formalities
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CLASSIFICATION OF CONTRACTS
Chart 2
Classification of Contracts
Validity andEnforceability
Mode ofCreation
Extent ofExecution Obligation
to perform
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Classification of contracts on the basis of validity and Enforceability :1. Valid contracts
2. Voidable contracts
3. Void Contract
Classification of contracts on the basis ofM
ode of Creation :1. Express Contracts
2. Implied contracts
3. Quasi Contracts
Classification on the basis of extent of execution :
1. Executed Contracts
2. Executory Contract
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Classification on the basis of
the obligation to perform :
1. Unilateral Contracts
2. Bilateral Contract
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CONTRACTCONTRACT
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CONTRACT - Accordingto sec.2(h),a
contractisdefinedasanagreementenforceable before the law.
AGREEMENT - Accordingto sec.2(e),everypromise orset ofpromises forming
consideration foreach other.
PROMISE - Accordingto sec.2(b),whenapersonmade aproposalto
anotherto whomproposalismade,if
proposalisassentedthere to.
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OFFER -Accordingto Sec.2(a),whena
personmade aproposal,whenhe signifiesto anotherhiswillingnessto do orto abstain
fromdoingsomething.
AGREEMENT = OFFER + ACCEPTANCE
CONSENSUS - AD IDEM-Accordingto Sec.13,meeting ofminds oridentity ofminds orreceivingthe same thing
insame sense atsame time.
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Agreement Legal Obligation
Contract
All agreements are contracbut all
contracts are not
agreements.CONTRACT = AGREEMENT +
ENFORCIBILITY BEFORE LAW
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TYPES OF CONTRACTSTYPES OF CONTRACTS
VALID CONTRACTS
Absolute contract
Contingent contract(Sec. 31-36)
Express contractImplied/Quasi contract(Sec.68- 72)
Valid contract - If all the condition are
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fulfilled it is called as a valid contract.
Contingent contract - In a contractto do or not to do something, if an event
is collateral, does or doesn't happen.
Express contract - When contractsare either in writing or in oral.
Implied contract - When contracts
are neither in writing nor in oral.
Absolute contract - A contract which
is not dependent on fulfillment of any
condition.
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INVALID CONTRACTS
Void contract
Is void(Void - ab - initio)Becomes void
Voidable contract
Illegal contract
Unenforceable contract
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Invalid contract - In a contact if
any one condition is not fulfilled.
Is void (Void-ab-initio) - An
agreement which is not valid from
the beginning.
Becomes void - An agreement
which is valid in the beginning but
due to some superveningimpossibility the contract becomes
void.
V id bl t t A t t
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Illegal contract - An agreement
forbidden by law.
Unenforceable contract - It is
valid but due to some technical
defect the contract becomes void. Incase defects are removed the
contract is enforceable.(lack of
registration, lack of signature etc.,)
Voidable contract - A contract
which is valid unless until avoided
by either the party.
OTHER TYPES
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OTHER TYPES
OF CONTRACTS
Executed contract
Executory contract
Unilateral contractBilateral contract
Executed contract -In a contract where both
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the parties have performed their obligation,
there is remaining nothing to perform.
Executory contract -In a contract where both
the parties are yet to perform their obligation.
Unilateral contract - In a contract one partyhas performed his obligation and other
person is yet to perform his obligation.
Bilateral contract - In a contract where boththe parties have performed their obligation.
Bilateral & Executory are same and inter -
changeable.
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OFFEROFFERAccording to Sec.2(a),
when a person made aproposal, when he
signifies to another his
willingness to do or toabstain from doingsomething.
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TYPES OF OFFER
Express offer
Implied offer
Specific offer
General offer
Cross offer
Counter offer
Standing offer
ff
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Express offer - When offer is givento another person either in writing or in
oral.
Implied offer - When offer is given
to another person neither in writing norin oral.
Specific offer - When offer is given
to a specific person.
General offer - When offer is givento entire world at a large.(Carlill Vs.
Carbolic smoke ball Co.,
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Cross offer - When both the
persons are making identical offers toeachother in ignorance of others offer.
Counter offer - When both the
persons are making offers to eachotherwhich are not identical in ignorance of
others offer.
Standing offer - An offer whichremains continuously enforceable for a
certain period of time.
LEGAL RULES FOR OFFER
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LEGAL RULES FOR OFFER
Offer must be given with an intentionto create a legal relationship.(BalfourVs. Balfour)
Offer must be definite.(Taylor Vs.Portington)
There is a clear cut differencebetween offer, invitation to offer,invitation to sale. (Harris Vs.Nickerson)
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Offer must be communicated. (Fitch
Vs. Snedkar)
Mere statement of price of price is not
an offer.(Harvey Vs. Facey)
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ACCEPTANCEACCEPTANCEACCEPTANCEACCEPTANCE
ACCEPTANCE
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ACCEPTANCE
According to sec.2(b), when a
person made a proposal toanother to whom proposal ismade, if proposal is assented
there to, it is calledacceptance.
LEGAL RULES FOR
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ACCEPTANCE
Acceptance must be given as per the
mode prescribed by the offerer.
Acceptance must be given before thelapse of time or within reasonable time.
Acceptance must be unconditional.
Acceptance may be given by anyperson in case of general offer.
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Acceptance may be given by any
specific person in case of specific offer.
Acceptance must be communicated.
(Bordgon Vs. Metropolitan Rly. Co.)
Mental acceptance is no acceptance
or acceptance must not be derived from
silence.
Acceptance must not be precedent to
offer.
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According to sec 2(d) consideration isdefined as when at the desire of the
promisor , or promisee or any other
person has done or abstained from doing
or does or abstains from doing ,or promises to do or to abstain from doing ,
something , such an act or absinence or
promise is called a consideration for the
promise .
CONSIDERATION
When a party to an agreement promises
to do something he must get
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to do something he must get
something in return .This something
is defined as consideration.LEGAL RULES AS TO
CONSIDERATION
1) It must move at the desire of the promisor.
[Durga Prasad v. Baldeo ]
2) It may move by the promisee .
[Chinnaya v. Ramayya ]
3) It must be past ,present or future .4) It need not be adequate .
5) It must be real .
6) It must not be illegal , immoral or opposed to
public policy .
STRANGER TO CONTRACT
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STRANGER TO CONTRACT
It is general rule of contract that only parties
to contract can sue & be sued on thatcontract . This rule is known as Doctrine of privity i.e relationship between the partiesto contract .
Exceptions1)A trust or a charge .
2)Marriage settlement , partition or otherfamily arrangements .
3)Estoppel4)Assignment of contract .
5)Contract with agent .
6)Convenants running with land .
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No consideration no
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No consideration no
contract [Abdul Aziz v. Masum Ali]
[Kedarnath v. Gauri Mohamed ]
CAPACITYCAPACITY
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CAPACITYCAPACITY
TOTO
CONTRCTCONTRCT
Capacity to contract
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Capacity to contract
Following are the condition for a personto enter into contract
He must be major
He must be sound mind
He must not be disqualified by any
other law.
Disqualified persons to
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Disqualified persons to
enter into a contracta) Minor
b) unsound person
c)othersi.e alien enemy,
insolvent,
convict,company/corporationagainst MOA / AOA .
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MinorMinor According to Indian majority act sec(3)
minor is defined as any person underthe age of 18 years . In the following
cases a person is said to be minor ifhe does not complete the age of 21years
a) any person under the guardian &
wards act ,1890b)any person which comes undersuperintendence of law/legalrepresentative
Rules governing minors
t
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agreement
Rule 1 : judges are counsellors , jury is the servant ,
law is the guardian .
Rule 2:in case minor entered into acontract which is unlawful , illegal ,
immoral he is also prosecutable &
punishable under the relevant law.
Legal rules
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Legal rules
An agreement with minor is voidab initio
[Mohiri Bibi v. Dharmadas Ghase] Minor can be promisee
[Shrafat Ali v. Noor Mohd]
Minor cannot ratify his agreementon attaining the age of majority
[Indra Ramaswamy v. AnthiappaChettier]
Minor as a shareholder ,
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Minor as a partner,
Minor as a agent , Minor as a member of trade union ,
No estoppel against minor ,
He can plead his minority ,
He can enter into contract for hisnecessary
[Robert v. Gray ]
On behalf of minor his parents ,guardian or any other person canenter into void contract to acquiremovable property.
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Persons of
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Persons of
unsound mind1)Lunatic ,
2)Idiots ,
3)Drunken or intoxicated persons .
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FREEFREE
CONSENTCONSENT
FREEFREE
CONSENTCONSENT
FREE CONSENT
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According to Sec 10 of the IndianContract Act one of the essentials of avalid contract is Free Consent
Sec 13 defines consent as Two or
more persons are said to consent whenthey agree upon the same thing in thesame sense.According to Sec 14,consent is said to be free when it is notcaused by:
1.Coercion
2.Undue influence
3.Fraud
4.Misrepresentation
FREE CONSENT
COERCION
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According to Sec 15 coercion meansCommitting or threaten to commit any actforbidden by Indian Penal Code 1860 orunlawful detaining or threating to detainingany other persons property with a view toenter into an agreement. It is immaterialwhether the IPC is or is not in force wherethe coercion is employed
The threat amounting to coercion neednot necessarily be from a party to contract ,it may also proceed from a stranger to thecontract.
COERCION
Consent is said to be caused by coercion when
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obtained by:
1.The committing or threatening to commit any act
forbidden by the Indian Penal Code
2.The unlawful detaining or threatening to detain any
property
It is not important whether the IPC is or not in forcewhere the coercion is taking place.
For example A and B , both Indians are on a voyage
trip to America when the ship is on the Atlantic
ocean B threatens a that if doesnt transfer hisproperty to Bs name then he will push him into the
water.now though the IPC is not in force on the
Atlantic ocean it is still considered a coercion.
Important cases:
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1.Chikkim Ammiraju vs. Seshamma:
In this case a person threatened his wife and sonthat he would suicide if she doesnt transfer herproperty in his brothers favour. The wife andson executed the release of the deed under the
threat . Held the threat of suicide amounted tocoercion within Sec 15 and the release deed wastherefore voidable.
This also is a very important case
to prove that threat to commitsuicide amounts to coercion
p
2. Ranganayakamma vs. Alwar Setty:
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g y y
A young widowed girl of 13 years wasforced to adopt a boy by her relatives who
prevented the removal of his body for
cremation until she consented. Held theconsent was not free but was induces by
coercion.Consequently the adoption was
set aside.
3.Muthia vs. Muthu Karuppa:A f d h d h
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An agent refused to hand over the
account books of a business to thenew agent unless the principal
released him from all liabilities.the
principal had to give a releasedeed.held the deed was
given under coercion
and was voidable
at the option of the
principal.
4. Bansraj vs. Secretary of State:
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The government gave a threat of
attachment against the property ofP for the recovery of the fine due
from his son. P paid the fine. Heldcontract was
induced by
coercion
UNDUE INFLUENCE
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Sometimes a party is compelled to enter into acontract against his will as a result of unfair
persuasion by the other party.
Section 16 defines undue influence as follows
A contract is said to be induced by undue
influencewhere the relations subsisting
between the parties are such that one of the
parties is in a position to dominate the will ofthe other and uses that position to obtain an
unfair advantage over the other
Essentials of undue
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Essentials of undue
influence1. There are two persons
2. The relations are satisfying between them
3. One must dominate the other
4. There must be unfair advantage
5. It involves the moral pressure
There is an undue influence between the
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There is an undue influence between the
following persons:
-Principal and agent
-Superior and and subordinate
- Doctor and patient
- Father and son- Teacher and student
- Promoter and company
- Master servant
- Spiritual advisor and devotee
Among the following relations there is no undue
influence
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influence
1.wife and husband
2.landlord and tenant
3.debtor and creditor
CASE: Raniannapurna vs. SwaminathanA poor Hindu widow was persuaded by a money
lender to agree to pay 100% rate of interest on
money lent by him. She needed the money to
establish her right to maintenance.it was a clear case
of undue influence and the court reduced the rate of
interest to 24%
FRAUD
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According to Sec 17 fraud means and includes any ofthose acts committed by a party to contract or with his
connivance or by his agent with an intent to deceive orinduce a person to enter a contract:
1. The suggestion that a fact is true when it is nottrue and the person making it does not believe initto be true
2. The active concealment of a fact by a personhaving knowledge or belief of the fact
3. A promise made without any intention ofperforming it
4. Any other act fitted to deceive
5. Any such act or omission as the law speciallydeclares to be fraudulent
The essentials of fraud are:1 There m st be a representation or
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1. There must be a representation or
assertion and it must be false2.The representation must relate to a fact
3.The representation must have been
made with the intention of inducing theother party to act upon it
4.the representation must have been
made with a knowledge of its falsity5.the other party must have subsequently
suffered some loss
MISREPRESENTATION
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According to Sec 18 there is misrepresentation:1. When a person positively asserts a fact is true
when his information does not warrant it to beso, though he believes it to be true
2. When there is any Breach of duty by a personwhich brings an advantage to the personcommitting it by misleading another to hisprejudice
3. When a party causes however innocently theother party to the agreement to make a mistakeas to the substance of the thing which s thesubject of the agreement
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MISTAKE
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Mistake of fact
Of the
countryOf the foreign
country Bilateral mistake Unilateral mistake
Mistake as to subject matter Mistake as to
possibilityAs to
person
As to
nature
Physical impossibility Legal impossibility
existence identity quality quantity title price
Mistake of law
UNLAWFULUNLAWFULUNLAWFULUNLAWFUL
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UNLAWFULUNLAWFUL
OBJECTIVESOBJECTIVES
&&
VOID AGREEMENTSVOID AGREEMENTS
UNLAWFULUNLAWFUL
OBJECTIVESOBJECTIVES
&&
VOID AGREEMENTSVOID AGREEMENTS
Unlawful agreements
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illegal immoralAgreement opposing
public policy wagerAn agreement which
interferes with
administration of
governmentAn agreement
interfering with the
administration of justice
An agreement interfering
with administration of
personal liberties
Restraint of Restraint of Restraint of
Restraint of Restraint of
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If it is immoral
Case: S.Yellappa vs. Y.Sabu
Cohabitation agreements are immoral
Sumitradevi vs. Sulekha Kundu
An agreement between a husband and wife to
separate in future is immoral and void
An agreement opposed to public policy
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If it is fraudulent
If it is creating damage to person or property
Case: Ramswaroop vs. Bansimandir
B borrowed Rs. 100 from L and executed abond promising to work for L without payfor a period of two years.In case of default
B was to pay interest at a very exorbitantrate and the principal sum of once. Heldthe contract was void as it involved injuryto the person of B.
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Essential Elements of
W i
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Wagering
There are two persons.
There must be an uncertain future event.
No control over the event by both theparties.
There must be a reciprocal promise.
Others are not interested in the contract.
E l
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Example:
In a wrestling bout,
A tells B that wrestler
no.1 will win. B
challenges the
statement of A. They
bet with each other
over the result of the
bout. This is a
wagering agreement.
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CONTINGENTCONTINGENT
CONTRACTSCONTRACTS
Contingent Contract(sec 31)
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Contingent Contract(sec 31)
A contingent contract is a contract to do or
not to do something, if some event,
collateral to such contract, does or does nothappen. It is also called a conditional
contract.
Essential Elements of a
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Contingent Contract: There are two persons.
There must be an uncertain future event.
Some control over the event but notabsolute control.
There is no reciprocal promise between thepersons.
Others may be interested in the contract.
It is a valid contract.
Example:
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Example:
A contracts to pay B
Rs.10,000 if Bs
house is burnt. This is
a contingent contract.
Rules Regarding Contingent
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g g g
Contracts Contingent contracts dependent on happening of anuncertain future event cannot be enforced until theevent has happened.( Sec 32)
Where a contingent contracts is to be performed if
a particular event does not happen, its performancecan be enforced when the happening of that eventbecomes impossible.( Sec 33)
If a contract is contingent upon how a person will
act at an unspecified time, the event shall beconsidered to become impossible when such persondoes anything which renders it impossible that heshould so act within any definite time, or otherwisethan under further contingencies.( Sec 34)
Contingent contracts to do or not to do
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anything, if a specified uncertain event does
not happen within a fixed time, may beenforced if the event does not happen or its
happening becomes impossible before the
expiry of that time.( Sec 35 )
Contingent agreements to do or not to do
anything, if an impossible event happens,
are void, whether or not the fact is known to
the parties. (Sec 36)
Differences Between aWagering
Agreement and a Contingent
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g g
Agreement: Wager agreement
There is a reciprocal
promise.
It is a void contract.
Others are not
interested in the
contract. It is contingent in
nature.
Contingent agreement
There is no reciprocal
promise. It is a valid contract.
Others are interested in
the contract.
It may not be wagering
in nature.
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DISCHARGE OFDISCHARGE OFA CONTRACTA CONTRACT
DISCHARGE OF A
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CONTRACTDISCHARGE BY PERFORMANCE
DISCHARGE BY AGREEMENT OR
CONSENTDISCHARGE BY IMPOSSIBILITY OF
PERFORMANCE
DISCHARGE BY LAPSE OF TIME
DISCHARGE BY OPERATION OF LAW
DISHARGE BY BREACH OF CONTRACT
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DISCHARGEB
Y PERFORMANCEACTUAL PERFORMANCE
When both parties perform their promises &
there is nothing remaining to perform
ATTEMPTED PERFORMANCEWhen the promisor offers to perform his
obligation ,but promisee refuses to accept theperformance. It is also known as tender
DISCHARGE BY
AGREEMENT OR CONSENT
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AGREEMENT OR CONSENT
NOVATION (Sec 62): New contract substituted forold contract with the same or different parties
RESCISSION (Sec 62) : When some or all terms of acontract are cancelled
ALTERATION (Sec 62):When one or more terms of
a contract is/are altered by the mutual consent ofthe parties to the contract
REMISSION (Sec 63) :Acceptance of a lesserfulfilment of the promise made.
WAIVER:Mutual abandonment of the right by theparties to contract
MERGER :When an inferior right accruing to aparty to contract merges into a superior rightaccruing to the same party
DISCHARGE BY
IMPOSSIBILITY OF
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IMPOSSIBILITY OF
PERFORMANCE
KNOWN TO PARTIES
UNKNOWN TO PARTIES SUBSEQUENT IMPOSSIBILITY
SUPERVENNING IMPOSSIBILITY (Sec 56)
Destruction of subject matter
Non-existance of state of things
Death or incapacity of personal services
Change of law
Outbreak of war
DISCHARGE BY
LAPSE OF TIME
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LAPSE OF TIME
THE LIMITATION ACT 1963,CLEARLY STATES THAT A
CONTRACT SHOULD BE
PERFORMEDWITHIN A SPECIFIEDTIME CALLED PERIODOF
LIMITATION
IF IT IS NOT PERFORME
D
AND
IFTHE PROMISEE TAKES NO ACTIONWITHIN THE LIMITATION TIME,
THEN HE IS DEPRIVED OF HISREMEDY AT LAW
DISCHARGE BY
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OPERATION OF LAW
DEATH
MERGER
INSOLVENCY
UNAUTHORISEDALTERATION OF THE
TERMS OF AWRITTEN AGREEMENT
RIGHTS & LIABILITIES VESTING IN THE
SAME PERSON
DISCHARGE BY
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BREACH OF CONTRACTACTUAL BREACH:
At the time of performance
During the performance
ANTICIPATORY BREACH
By the act of promisor
(implied repudation)
By renunciation of obligation
(express repudation)
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REMEDIESREMEDIESFORFOR
BREACH OFBREACH OF
CONTRACTCONTRACT
REMEDIES OF INJURED
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PARTY A remedy is a means given by law for the
enforcement of a right
Following are the remedies
[1] Rescission of damages.
[2] Suit upon quantum meruit.
[3] Suit for specific performance.
[4] Suit for injunction.
RESCISSION
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When a contract is broken by one party,the other
party may sue to treat the contract as rescindedand refuse further performance.In such a case,he isabsolved of all his obligations under the contract.
The court may give rescission due to
1)contract is voidable.2)contract is unlawful
The court may refuse to rescind if
1)Plaintiff has ratified the contract.2)Parties cannotbe restored to the original position.3)The thirdparty has acquired for value.4)When only a part issought to be rescinded.(sec 27 of specific relief act1937)
DAMAGES
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DAMAGES
Damages are a monetary compensation
allowed to the injured party by the court for the
loss or injury suffered by him by the breech of
the contract.The objective of awarding damagesfor the breech of contract is to put the injured
party in the same position as if he had not been
injured.This is called the doctrine of
restitution.The fundamental basis is awarding
damages for the pecuniary loss.
QUANTUM
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MERUITThe phrase quantum meruit literally means as
much as earned.A right to sue on a quantum
meruit arises when a contract, partly performedby one party,has been discharged by breach of
contract by the other party.This right is
performed not on original contract but on implied
promise by other party for what has been done.
SPECIFIC
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PERFORMANCE In certain cases of breach of contract damages arenot an adequate remedy.The court may,in suchcases,direct the party in breach to carry out his
promise according to terms of the contract.This isa direction by the court for specific performanceof the contract at the suit of the party not in breach
Cases for specific performance to be enforced
1)when the act agreed to be done is such thatcompensation is not adequate relief.2)when thereis no standard for ascertaining the actual damage
3)when it is probable that compensation cannot
be a reed to be done.
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QUASIQUASI
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QUASIQUASI
CONTRACTSCONTRACTS
TYPES OF QUASI
CONTRACTS
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CONTRACTS
Supply of necessaries (Sec 68)
Payment by a interested person (Sec 69)
Obligation to pay for non gratuitous acts
(Sec 70 )
Responsibility of finder of goods (Sec 71 )
Mistake or Coercion (Sec 72 )
SUPPLY OF
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NECESSARIESAccording to sec 68 a minor is liable to pay out
of his property for necessaries supplied to him or
to anyone whom he is legally bound to
support.The significance of this is that it does not
arise out of a contract as much so as it arises out of
a contract.the minor is not personally liable and
necessaries include food,clothing as well as
education,They also include watch bicycle etc.
OBLIGATION TO PAY FOR
NON GRATUITOUS ACTS
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NON GRATUITOUS ACTSAccording to Sec 70 when a person lawfully does or
delivers anything for the other ,not intending to doso gratuitously,and the person derives any benefitfrom it,he is liable to compensate,or restore the
thing so done or delivered.
Here three conditions must satisfy
[1] The thing must have been done lawfully
[2] The person intending to do it must not have doneit gratuitously
[3] The person must have derived benefit from theact
PAYMENT BY A INTERESTED
PERSON
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PERSON
According to Sec 69 a person who is interested in
the payment of money which another is bound by
law to pay,and who therefore pays it, is entitled to
be reimbursed by the other.The essential elements center around
[1] The payment made should be bona fide of ones
interest
[2] The payment should not be a voluntary one
[3] The payment must be such that the other is
bound by law to pay
RESPONSIBILITY OF THE
FINDER OF GOODS
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According to Sec 71 a person who finds goodsbelonging to another and takes them into his
custody is subject to the same responsibility as thebailee is bound to take as much care of the goods asa man of ordinary prudence would,In addition to
that he must make efforts to trace the owner.If hedoes not ,he will be guilty of wrong conversation,andtill the owner is found out the property will vest
with the finder,he can sell in case of
[1] goods are or perishable nature
[2] owner cannot be found out
[3] when owner refuses to pay for the lawful charges
[4] when the lawful charges amount to two thirds ofthing
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INDEMNITYINDEMNITY
INDEMNITY (Sec 124)
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INDEMNITY (Sec 124)
A CONTRACT BYWHICH ONE
PARTY PROMISES TO ANOTHERR TO
SAVE HIM FROM LOSS CAUSED TO
HIM BY THE COND
UCT OF THEPROMISOR HIMSELF , OR BY THE
CONDUCT OF ANY OTHER PERSON IS
CALLED A CONTRACT OF INDEMNITY
ESSENTIAL FEATURES
OF INDEMNITY
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OF INDEMNITY There are two persons , the indemnifier
the indemnified or the indemnity holder
There must be loss either by thepromisors conduct or by any other
persons conduct It is a contingent contract by nature
It may be express or implied
Sec125 deals with the commencementof the indemnifiers liability. His liabilitycommences when the event causing theloss occurs or when the event saving theindemnified from the loss becomes
impossible
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GUARANTEEGUARANTEE
GUARANTEE
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(Sec 126)A CONTRACT OF GUARANTEE IS A CONTRACT TO
PERFORM THE PROMISE, ORDISCHARGE THELIABILITY,OF A THIRD PERSON IN CASE OF HIS
DEFAULT. THE PERSON
WHO GIVES THEGUARANTEE IS KNOWN AS THE SURETY, THE
PERSON IN RESPECT OFWHOM THE GUARANTEEIS GIVEN IS KNOWN AS THE PRINCIPAL DEBTOR,AND THE PERSON TOWHOM THE GUARANTEE IS
GIVEN IS CALLED THE CREDITOR. AGUARANTEE MAY BE EITHER ORAL ORWRITTEN.
ESSENTIAL FEATURES
OF GUARANTEE
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OF GUARANTEE
Concurrence of three contracts
Primary liability is that of the principal debtor
In case the debtor is a minor , the suretysliability becomes primary
All the essentials of a valid contract
It may be in writing or oral
There need not be full disclosure of facts to thesurety before he gives the guarantee
TYPES OF GUARANTEE
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SPECIFIC GUARANTEE :
When a guarantee extends to a single
transaction or debt it is known as a specific or
simple guarantee
CONTINUING GUARANTEE :
When a guarantee extends to a series of transactions
It is called continuing guarantee
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BAILMENTBAILMENT
BAILMENT Sec 148
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The word Bailment is derived from the Frenchword ballier which means to deliver .
Bailment means delivery of goods by one person
to another for some purpose ,upon a contract ,thatthey shall ,when the purpose is accomplished ,bereturned or otherwise disposed of according tothe instructions of the person delivering them.
The person delivering the goods is called thebailorand the person to whom they aredelivered is called the bailee.
Essentials of bailmentEssentials of bailment
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There are two persons namely Bailor andBailee.
Bailor means the person delivering thegoods, Bailee means the person to whomthe goods are delivered.
Their must be delivery of goods .
The goods must be in deliverablecondition.
Only the goods are delivered but not the
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y g
ownership of goods, their must bepurpose.
Bailey can use the goods.
Goods must be returned or disposed offafter the purpose is accomplished.
Duties and rights of
Bailor and Bailee
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Bailor and Bailee
Duties of bailor.
To disclose known faults.
To bear extraordinary expenses ofbailment.
To indemnify bailee for loss in case of premature termination of gratuitous bailment.
To receive back the goods.
To indemnify the bailee.
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Rights of bailee
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g
Delivery of goods to one of several joint
bailor of goods. (Sec 165).
Delivery of goods to bailor without title.(Sec 166).
Right to apply to court to stop delivery.(Sec 167)
Right to action against trespassers. (Sec180)
Bailee s lien.
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PLEDGE (SEC 172)
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( )
The bailment of goods as security for
payment of a debt or performance of a
promise is called Pledge.
The bailor in this case is called the
pledger or pawnor and the bailee is
called the pledgee or pawnee
RIGHTS ANDDUTIES OF
PAWNOR AND PAWNEE
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PAWNOR AND PAWNEE
Rights of Pawnee.
Right of retainer.
Right of retainer for subsequent advances.
Right to extraordinary expenses.
Right against true owner, when thePawnors title is defective.
Pawnees rights where pawnor makesdefault .
Rights of Pawnor
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Right to get back goods.
Right to redeem debt.
Presentation and maintenance of the goods. Rights of an ordinary debtor.
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AGENT
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Sec 182 defines an agent as aperson employed to do any
act for another , or to
represent another indealings with third
personsthe person for
whom such act is done is scalled the principal
ESSENTIALS OFRELATIONSHIP OF
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AGENCY
Agreement between principal & agent
Intention of agent to act on behalf of the
principal
Anyone can be an agent
Anyone can employ an agent
CREATION OF AGENCY
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BY EXPRESS AGREEMENT
BY IMPLIED AGREEMENT
Agency by estoppelAgency by holding out
Agency by neccesity
AGENCY BY RATIFICATION
AGENCY BY OPERATION OF LAW
REQUISITES OF VALIDRATIFICATION
Agent must act as an agent for his principal
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Agent must act as an agent for his principal
Principal must be in existance at the time of contract Ratification must be with full knowledge of facts
Ratification should be done within a reasonable timeof the performance of the act
The act to be ratified should be of lawful nature The ratification can be done only to the whole
transaction & not any part of it (Sec 199)
Ratification should be communicated with the partyto contract
Ratification should not cause any damages to a thirdparty
Ratification can only be of acts which principal hadthe right to do
SUB-AGENT &
SUBSTITUTED AGENT
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A sub agent is aperson employed & acting
under the control of the agent in the
business of the agency (Sec 191)
A substituted agent is a person named by the
agent, on an express or implied authorityfrom the principal, to act for the principal
(Sec 194)
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Termination of agency By act of parties
Agreement
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Agreement
Revocation by the principal
Revocation by the agent
By operation of law
Performance of the contract
Expiry of time
Death of either party
Insanity of either party
Insolvency of either party
Destruction of the subject matter
Principal becoming an alien enemy
Dissolution of a company
Termination of sub-agents authority
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