India Contact Act 1872

Indian Contact Act 1872A Brief history of the Act.The Act was came into force with effect from Sept. 1,1872.It is applicable in whole of India, except J&KTHE Act is divided into following parts: General principles of Contract: Sec. 1-75 Contracts relating to sale of goods: Sec. 76-124 (later these sections were replaced by Sale of Goods Act 1930,) Special kinds of Contracts: Sec. 125-238 Contract relating to Partnership: 239-266 (replaced by Partnership Act. 1932)Definition of Contract Contract is an agreement creating and defining obligations between the parties. ..Salmond Every agreement and promise enforceable at law is a Contract... Sir Fredrick Pollock A legally binding agreement made between two or more persons by which rights are acquired by one or more to acts or forbearances on the part of other or others. .. Sir William AnsonAccording to Sec. 2(h) of Contract Act 1872- an agreement enforceable by law is a contract. this definition is based on the definition of Pollock.AgreementAgreement- u/s 2(e), every promise or every set of promises, forming consideration for each otherPromise- u/s 2(b) a proposal when accepted becomes a promise.

Thus, an Agreement = Offer + AcceptanceEssential elements of a valid ContractAccording Sec. 10, all agreements are contracts if they are made by free consent of parties competent to contract, for a lawful consideration and with a lawful object and are not expressly declared to be void.Thus, there must be following essential elements for a valid contract:Offer and Acceptance: there must be two parties to an agreement, one making the offer and another accepting it.

2. Intention to create Legal Relationship: when two parties enter into an agreement, their intention must be to create a legal relationship. Thus, agreements of social and domestic in nature do not contemplate legal relationship. ( Balfour Vs. Balfour- 1919, 2KB, 571) eg. X promises to pay Rs. 3000, per month as Household expenses, later, both of them separated and the husband failed to pay the amount, wife sued for the allowance, the court held that the agreement was outside the realm of contract.Balfour vs. Balfour Intention to Create Legal Relationship (1919)

Facts:A husband promised to pay his wife a house hold allowance of 30 every month. Later the parties separated and the husband failed to pay the promised amount. The wife sued for the promised allowanceHeld:The wife will not succeed as agreements such as this did not create any legal obligations vis a vis legal relations.

Essential elements of a valid contract 3. Lawful Consideration: every contract must backed by lawful consideration. An agreement is enforceable when both the parties get something from each otherCapacity to be a party to the contract: a). is of age of majority, b). Is of sound mind, c). Is not expressly disqualified by lawFree Consent: According to Sec. 14, two or more person are said to consent when they agree upon same thing in same sense. further, consent is said to be free when it is not caused by-1. COERCION, or 2. UNDUE INFLUENCE or 3. FRAUD or 4. MIS-REPRESENTATION or 5. MISTAKE

ContinuesLawful Object: u/s 23: the object of the agreement must be lawful. Certainty of meaning: u/s 29: agreements; the meaning of which is not certain or capable of being made certain are void. The terms of the contract must be certain and clear.Possibility of performance : e.g. Mr. X promises to Ms. Y to discover a Treasure by magic. Such performance can not be enforceable.Not Declared to be Void or Illegal: (Sec 24-30)10. Legal formalities. Legal formalities requiring in an agreement must be fulfilled to make the agreement enforceable.

Kinds of Contracts On the basis of Enforceability1. Valid Contract: an agreement that is enforceable at law2. Voidable Contract: u/s 2(i). An agreement that is enforceable by law at the option of one or more parties but not at the options of other or others is a voidable contract.3. Void Contract u/s 2(j): a contract which is ceases to be enforceable by law is a void contract.4. Unenforceable Contract: a contract which is otherwise valid but can not be enforced because of some technical defects, is an unenforceable contract. 5. Illegal or Unlawful Contract: a contract which is either prohibited by law or otherwise against the policy of law is an illegal contract .

On the basis of Mode of Creation

1. Express Contract: a contract one enters into by words may be either spoken or written 2. Implied Contract: where the proposal and acceptance is made otherwise than words.3. Constructive or Quasi Contract: it is a contract where there is no intention on either side to make a contract, but the law imposes a contract. In such a contract rights and obligations arise not by any agreement between the parties, but by operation of law. On the Basis of Extent of ExecutionExecuted Contract : where both the parties have performed their obligations or carried out the terms of the contract.Executory Contract : where the contract is yet to be performed either wholly or partially.

Valid offer- meaning and definitionAn offer is the starting point in the making of an agreement.According to Indian Contract Act 1872 u/s 2 (a)- an individual is said to have made the proposal when he signifies to another person his willingness to do or to abstain from doing anything with a view to obtaining the assent of that offer to such act or abstinence, he is said to make a proposal

Thus an offer involves the following:Made by one person to another.Must be an expression of readiness or willingness to do or to abstain from doing something.Must be made with a view to obtain the consent of that other person to proposed act or abstinence.Meaning continues..In an offer, there must be- Offerer ( promisor): person making the proposal Offeree ( promisee): the person to whom the proposal is made . Classification of Offer:On the basis of creation, an offer can be-Express offer: Implied offer On the basis of To whom an offer is made, it can be-General Offer: when the offer is made to the world at largeSpecific Offer: when the offer is made to a specific person Cross offer Standing offerLegal rules for a valid offer An offer may be express or implied.An offer must contemplate to create legal relationshipTerms of the offer must be definite, unambiguous and clear.An offer must be Different from a mere declaration of intention to give an offerAn offer must be Different from an invitation to offerProper communicationNo term, the non compliance of which may be assumed to acceptanceCommunication of special terms or standard form of contractAcceptance Meaning of acceptance: giving consent to offer According to Indian Contract Act 1872: a proposal is said to be accepted when the person to whom the proposal is made signifies his assent thereto. A proposal when accepted becomes a promise.

Acceptance Who can accept: In case of specific offer: the person whom it is madeIn case of general offer: any oneHow to make acceptance:Express acceptanceImplied acceptanceLegal rules for valid acceptanceAbsolute and unqualified, i.e. it must conform with the offerManner in which acceptance is to be given- i.e. it must be according to the mode prescribed.CommunicationBy whomTo whomTime LimitBefore lapse of offerCommunication and revocationCommunication of offerCommunication of acceptanceMode of Revocation of an Offer: A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards. A proposal is revoked -(1) by the communication of notice of revocation by the proposer to the other party;(2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;(3) by the failure of the acceptor to fulfill a condition precedent to acceptance; or(4) by the death or insanity of the proposer, if the fact of the death or insanity comes to the knowledge of the acceptor before acceptance.(5) By counter offer(6) by subsequent illegalityCapacity u/s 11, of Indian Contract Act 1872: every person is competent to contract who is of the age of majority, according to the law to which he is subject, and who is of sound mind and is not disqualifies from contracting by any law to which he is subject.It means, the person should not be-A minorOf unsound mindDisqualified by any law

Position of minorAn agreement with or by minor subject to certain exceptions, is absolutely void. Mohiri Bibi v. Dharmodas Ghose (190, 30 Ca. 539).A minor can be a Promisee or beneficiary.An agreement with minor, being absolutely void, can not be ratified by him on his becoming a major.A minor can not be asked to return any benefit enjoyed by himA minor can always plead infancy or minority.A minor can be an agent.A minors estate is liable for necessaries supplied to him.A minor can not become a partner but he may be admitted for benefits in the partnership.No liability of guardian for the acts of minor.A minor can not become a member of a companyJoint contract by a minor and an adultSurety for a minor: if an adult gives guarantee for a minor, the surety will be held responsible to the third party

Unsound person According to sec(12) a person generally sound , occasionally unsound can enter into a contract when he of sound mind A person generally unsound occasionally sound can enter onto contract when he is sound mind .19Persons of unsound mind1)Lunatic ,2)Idiots ,3)Drunken or intoxicated persons .

20Persons disqualified by law to enter into ContractsAlien enemyForeign sovereign or stateConvict Insolvent

Consideration Consideration means something in return According to Indian Companies Act 1872 u/s 2(d)when, at the desire of the Promisor, the Promisee or any other person has done or abstained from doing, or does or abstain from doing, or promises to do or abstain from doing something, such act or abstinence or promise is called a consideration for the promise. Eg. Ram promises Rahim to gurantee payment of price of the goods which Rahim sells to Gurmeet on credit. Here, sales by Rahim to Gurmeet is the consideration for the promise of Ram. Essentials of valid Consideration

A valid consideration should have following essentials: According to Sec. 2(d)-Moves at the desire of the Promisor (Durga Prasad Vs. Baldeorao, 1880, All. 221)Moves from any other person (Chinayya Vs. Ramayya, 1881, 4, Madrass.137)It may be an act, abstinence or forbearance or a return promise. (Devi Radha Rani Vs. Ram Dass, A.I.R. 1941, Patna.282)It need not to be adequate.It can be of past, present or futureOf some valueReal and not illusorySomething other than the Pomisors existing obligationLawful Exceptions of consideration(or contracts without consideration)1.Promise made out of natural love. u/s 25(1)- u/s 25(1)- an agreement made without consideration is enforceable if, is i)- expressed in writing, ii)- registered under Law for the time being in force for the registration of documents and iii)- made on Account of natural Love and Affections, iv)- between parties standing in a near relation to each other. 2. Promise made to compensate for past voluntary services u/s 25(2)3. Written promise to pay time-barred debt u/s 25(3)4. Completed gifts u/s 25- a completed gift, that is gift actually given is a valid contract with out any consideration.

ConsentConsent- stands for an act of assenting to an offer.According to Indian Contract Act 1872 Sec.13- two or more persons are said to consent when they agree upon the same thing in the same sense.Thus, consent involves identity of minds in respect of the subject matter of the contract. In English Law, this is called consensus-ad-idemFree Consent :u/s 14, Consent is said to be free when it is not caused by-Coercion, or Undue influence, or Fraud, or Misrepresentation, or Mistake.Effect of absence of Free Consent (u/s 19)When the consent is not free, the contract is usually voidable at the option of the party whose consent was not so caused.Coercion u/s- 15

It means compelling a person to enter into a contract under a pressure or a threat.According to Sec. 15 a contract is said to be caused by Coercion when it is obtained by- a) committing any act which is forbidden by the IPC or b) threatening to commit any act which is forbidden by the IPC or c) unlawful detaining of any property or d) threatening to detain any property.

Against Whom/by Whom Coercion may be Exercised- Coercion may proceed from any person and may be directed against any person even a stranger. Effects of CoercionAt the option of the aggrieved party to avoid the contractObligation of aggrieved party to restore benefitObligation of other party to repay or returnThreat to Commit SuicideWhen consent is received by threatening to commit suicide, it is also considered coercion (Amiraju Vs. Seshmma (1917) 41 Mad. 33.)Duress: under English law threat to the person(body) with the object of compelling to enter into the agreement.1.Chikkim Ammiraju vs. Seshamma:In this case a person threatened his wife and son that he would suicide if she doesnt transfer her property in his brothers favour. The wife and son executed the release of the deed under the threat . Held the threat of suicide amounted to coercion within Sec 15 and the release deed was therefore voidable.This also is a very important case to prove that threat to commit suicide amounts to coercion Important cases:

292. Ranganayakamma vs. Alwar Setty:

A young widowed girl of 13 years was forced to adopt a boy by her relatives who prevented the removal of his body for cremation until she consented. Held the consent was not free but was induces by coercion.Consequently the adoption was set aside. 303.Muthia vs. Muthu Karuppa:An agent refused to hand over the account books of a business to the new agent unless the principal released him from all liabilities.the principal had to give a release deed.held the deed was given under coercion and was voidable at the option of the principal.

31Undue InfluencesMeaning of Undue influences: - Dominating the will of other person to obtain an unfair advantage over the other.Sec. 16(1) A contract is said to be induced by undue influence-a). Where the relationship subsisting between the parties are such that one of them is in a position to dominate the will of other andb). The dominant party uses that position to obtain an unfair advantage over the otherPresumption of domination1 where there is real or Master and servant, Parent and child, Income apparent authority Tax officer and Assessee.2.Where there is fiduciary Trustee and beneficiary, Religious Guru and Relationship the disciples, Solicitors and client3. Where physical capacity is Medical attendant and patientAffected by age or illness.

Essentials of undue influenceThere are two personsThe relations are satisfying between themOne must dominate the otherThere must be unfair advantageIt involves the moral pressure33There 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

34Among the following relations there is no undue influence1.wife and husband2.landlord and tenant3.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%

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Fraud

Meaning- a false representation of facts made willfully with a view to deceive the other party. u/s 17 Fraud includes-The suggestion, as to a fact, of that which is not true.The active concealment of factA promise made without intention of performing itAny such act which law specially declares to be fraudulentAny such act fitted to deceive

The essentials of fraud are: 1. There must be a representation or assertion and it must be false

2.The representation must relate to a fact

3.The representation must have been made with the intention of inducing the other party to act upon it

4.the representation must have been made with a knowledge of its falsity

5.the other party must have subsequently suffered some loss37Effects of Frauda) the party whose consent was caused by fraud, can rescind the contract, but he can not do so in case- 1. where silence amounts to fraud. 2. the party gave consent in ignorance of fraud 3. party after becoming aware of fraud, takes a benefit of the contract 4. where the parties can not restore their original position. Misrepresentation (sec. 18)Meaning- A false representation of fact made innocently or non disclosure of a material fact without any intention to deceive the other party.Examples(1) X entered into contract with C for the sale of hops. X told Y that no sulphur had beenused in their growth. Y agreed to buy only if no sulphur had been used for theirgrowth. As a matter of fact, sulphur had been used in 5 out of 300 acres which factwas evidently forgotten by X when he represented that no sulphur was used.Held : That the representation that no sulphur had been used was in the nature ofa primary stipulation and in a sense a condition, without which the contract wouldnot have been proceeded with and, therefore, the contract could be avoided, thoughthe representation was not fraudulent [Bonnerman v. White (1861) 142 E.R. 658.] Essential Elements of Misrepresentation

By a party to the contractFalse representationRepresentation as to factMade without any intention to deceive other partyActually acted and induced the other party for the contract Effects of misrepresentation. Right to rescind the contract. Right to insist upon performanceMISREPRESENTATION AND FRAUD DISTINGUISHED . The following are the points of difference between the two:1. In case of fraud, the party making a false or untrue representation makes it with the intention to deceive the other party to enter into a contract. Misrepresentation on the other hand, is innocent, i.e., without any intention to deceive or to gain an advantage.

2. Both misrepresentation and fraud make a contract voidable at the option of the party wronged. But in case of fraud, the party defrauded, gets the additional remedy of suing for damages caused by such fraud. In case of misrepresentation, except in certain cases, the only remedies are rescission and restitution.

3. Although in both the cases, the contract can be avoided; in case of misrepresentation the contract cannot be avoided if the party whose consent was so caused had the means of discoveringthe truth with ordinary diligenceMistake (sec. 20)Meaning- A mistake is said to have occurred where the parties intending to do one thing by error do something else. Mistake is an erroneous belief concerning something.Types of Mistake:Mistake of Law- a) of Indian law b) of foreign lawMistake of Fact- a) Bilateral Mistake 1. as to subject matter 2. as to possibility of performance b) Unilateral 1. Identity of person 2. Nature of Contract

MISTAKEMistake of factOf the countryOf the foreign countryBilateral mistakeUnilateral mistakeMistake as to subject matterMistake as to possibilityAs to personAs to naturePhysical impossibilityLegal impossibilityexistenceidentityqualityquantitytitlepriceMistake of law43Effects of MistakeIn case of bilateral mistake to facts- the agreement is voidIn case of Unilateral mistake- as to identity of person- agreement is void as to the nature of contract- agreement is void as to other matter- agreement is not void.obligation of aggrieved party- u/s 64 must restore any benefit received by him under the contractObligation of other party- u/s 72 the person whom money has been paid or anything delivered by mistake must repay or return. fiduciary relationship (n.)Meaning: where one person places complete confidence in another in regard to a particular transaction or one's general affairs or business. The relationship is not necessarily formally or legally established as in a declaration of trust, but can be one of moral or personal responsibility, due to the superior knowledge and training of the fiduciary as compared to the one whose affairs the fiduciary is handling.Carlill Vs. Carbolic smoke ball Co. (1893) In this case Carbolic smoke ball co. offered by advertisement a reward of 100 to any one who should contract influenza after having used the smoke ball three times daily for two weeks according to the printed directions. It also added that 100 were deposited in bank showing its sincerity in promise. Ms. Carlill used the balls as per the direction but she had contracted the influenza. It was held that she could recover the reward because then ad. Was not mere invitation to offer but an offer at large.

Rose & Frank Co. VS Crompton Bros. Ltd. Intention to Create Legal RelationshipFacts:There was an agreement between these two companies by means of which rose and frank co. was appointed as the agent of Crompton Bros. Ltd. One clause in the agreement stated that the agreement is not entered into as legal and formal and shall not be subject to legal jurisdiction in the law courts.Held:There was no binding and legally enforceable contract between the 2 companies as there was no intention to create legal relationship.

46Case examples..Willkie vs. London passenger transport board Implied AgreementWhen a transport company runs a bus there is an implied offer by the transport company to carry passengers for certain fare. The acceptance of the offer is complete as soon as a passenger boards a bus that is, implied acceptance.

Durga Prasad vs Baled (1880) Consideration must be given at the desire of the promisor.

Facts :The plaintiff, Baldeo, at the desire and request of the elector of the town expanded money in the construction of a market in the town. Subsequently the defendants, Durga Prasad & Ors. Occupied the shops in the market. Since the plaintff had spent money for the construction of the market, the defendants in consideration thereof, promised to pay to plaintiff, a commission on the articles sold throuGH their (defendants) shops in that market. Defendants however, failed to pay the promised commission, the plaintiff brought an action to recover the promised commission.Held:The plaintiff will not succeed since the agreement was void for the want of consideration.It was observed in this case that the consideration of the promisor to pay the commission was the construction of market by the plaintiff. But the expenses incurred by the plaintiff in construction of the market was not there in the desire of the defendants (promisors) but at the instance/ request of the 3rd party ie, contractor of the town.It was therefore, held that since the consideration for the construction of market did not move at the desire of the defendants., that is, the promisor ( D & Ors.). It did not constitute a valid / good consideration. Hence the defendants were not liable in respect of the promise made by them, following the first legal rule.

Mohiri Bibi v. Dharmodar Ghosh (190, 30 Ca. 539).Dharmodas Ghose, a minor, entered into a contract for borrowing a sum of Rs. 20,000 out of which the lender paid the minor a sum of Rs. 8,000. The minor executed mortgage of property in favour of the lender. Subsequently, the minor sued for setting aside the mortgage. The Privy Council had to ascertain the validity of the mortgage.Under Section 7 of the Transfer of Property Act, every person competent to contract is competent to mortgage. The Privy Council decided that Sections 10 and 11 of the Indian Contract Act make the minors contract void. The mortgagee prayed for refund of Rs. 8,000 by the minor. The Privy Council further held that as a minors contract is void, any money advanced to a minor cannot be recovered.Examples of consideration1. Abdul Aziz v. Mazum Ali (1914) 36 All. 268.In this case a person verbally promised the secretary of the Mosque Committee tosubscribe Rs. 500 for rebuilding of a mosque. Later, he declined to pay the said amount.Held : There was no consideration and hence the agreement was void.2. Kedarnath v. Gori Mohamed (1886) 14 Cal. 64.In this case the defendant had agreed to subscribe Rs. 100 towards the construction ofa Town Hall at Howrah. The Secretary, on the faith of the promise, called for plans andentrusted the work to contractors and undertook liability to pay them.Held : The agreement was enforceable being one supported by consideration in the formof a detriment to the secretary who had undertaken a liability to the contractors on thefaith of the promise made by the defendant. According to sec. 23 & 24, If the object of an agreement is unlawful, the agreement is unenforceable.For a contract to be valid only if the object and the consideration should be legal.The word object means Purpose or Consideration. The consideration and the object of an agreement are unlawful in the following cases: 1. If it is forbidden by law: Examples: (1) A loan granted to the guardian of a minor to enable him to celebrate the minors marriage in contravention of the Child Marriage Restraint Act is illegal and cannot be recovered [Srinivas v. Raja Ram Mohan (1951) 2 M.L.J. 264].(3) A promises to drop a prosecution which he has instituted against B for robbery, and B promises to restore the value of the things taken. The agreement is void, as its object is unlawful [Illustration (h) to Section 23].Legality of Object u/s 23, 24512. If it is of such a nature that if permitted, it would defeat the provisions of any lawIf the object or the consideration of an agreement is of such a nature that, though not directly forbidden by law, it would defeat the provisions of the law, the agreement is void.(2) A let a flat to B at a rent of Rs. 1200 a year. With a view to reduce the municipal tax A made two agreements with B. One, by which the rent was stated to be 450 only and the other, by which B agreed to pay Rs. 750 for services in connection with the flat.Held : A could not recover Rs.750 since the agreement was made to defraud the municipal authority and thus void [Alexander v. Rayson (1936) 1 K.B. 169].3. If it is fraudulentAn agreement with a view to defraud other is void.Example. (1) A, B and C enter into an agreement for the division among them of gains acquired or to be acquired, by them by fraud. The agreement is void as its object is unlawful.4. If it involves or implies injury to the person or property of anotherIf the object of an agreement is to injure the person or property of another it is void. Examples(1) A borrowed Rs. 100 from B. He (A) executed a bond promising to work for B without pay for 2 years and in case of default agreed to pay interest at a very exhorbitant rate and the principal amount at once. Held : The contract was void [Ram Saroop v. Bansi 42 Cal. 742].5. If the Court Regards it as Immoral or Opposed to Public PolicyAn agreement whose object or consideration is immoral or is opposed to the public policy, is void. Examples(1) A let a cab on hire to B, a prostitute, knowing that it would be used for immoral purposes. The agreement is void [Pearce v. Brooks (1886) L.R. 1 Ex. 213].(2) A, who is Bs mukhtar, promises to exercise his influence, as such, with B in favour of C and C promises to pay 1,000 rupees to A. The agreement is void, because it is immoral.53AGREEMENTS AGAINST PUBLIC POLICYAccording to F. Pollock, Agreements may offend against the public policy, or tend to the prejudice of the state in time of war (trading with the enemies, etc.), by tending to the perversion or abuse of municipal justice, (stifling prosecution, champerty, maintenance) or in private life by attempting to impose inconvenient and unreasonable restrictions on the free choice of individuals in marriage or their liberty to exercise any lawful trading or calling.Sections 26 to 28 are dealt with in the following agreements as against public policy: 1. Trading with enemy2. Agreements for stifling prosecution3. Contracts in the nature champerty and maintenance4. Agreements for the sale of public offices and titles5. Agreements in restraint of parental rightsContinues..6. Agreement in restraint of marriage7. Agreements in restraint of legal proceedings: 8. Marriage brokerage or brocage contracts: A marriage brokerage contract is one in which, in consideration of marriage, one or the other of the parties to it, or their parents or third parties receive a certain sum of money. Accordingly, dowry is a marriage brokerage and hence unlawful and void.Example. (Venkatakrishna v. Venkatachalam 32, Mad. 185) a sum of money was agreed to be paid to the father in consideration of his giving his daughter in marriage.Held : Such a promise amounted to a marriage brokerage contract and was void.9. Contracts interfering with course of Justice10. Contracts tending to create monopolies11. Agreements in restraint of trade55 WAGERING AGREEMENTSA wagering agreement, says Sir William Anson, is a promise to give money or moneys worth upon the determination or ascertainment of an uncertain event. Cockburn C.J. defined it as A contract by A to pay money to B on the happening of a given event in consideration of Bs promise to pay money to A on the event not happening. Thus, a wagering agreement is an agreement under which money or moneys worth is payable, by one person to another on the happening or non-happening of a future, uncertain event.Effects of Wagering AgreementsAn agreement by way of wager is void. Section 30 provides Agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager or entrusted to any person to abide by the result of any game or other uncertain event on which any wager is made. Thus, in India all agreements by way of wager are void.

Lotteries

Lottery is an arrangement for the distribution by chance among persons purchasing tickets. The dominant motive of the participants need not be gambling. Where a wagering transaction amounts to a lottery, it is illegal as per Sec. 294-A of the Indian Penal Code. In Sir Dorabji Tata v. Edward F Lance (1918) I.L.R. 42 Bom. 676, where the Government of India had sanctioned a lottery, the Court held that the permission granted by the Government will not have the effect of overriding Sec. 30 of the Indian Contract Act and making such a lottery legal. Its only effect was that the persons responsible for running the lottery would not be punishable under the Indian Penal Code.CONTINGENT CONTRACT [Sections 3136]Contingent Contract Defined (Section 31)A contingent contract, is a contract to do or not to do something, if some event, collateral to such contract does or does not happen.Example A contracts to pay B Rs. 10,000 if Bs house is burnt. This is a contingent contract.]

Essential Elements of a Contingent Contract:There are two persons.There must be an uncertain future event.Some control over the event but not absolute control.There is no reciprocal promise between the persons.Others may be interested in the contract.It is a valid contract.59

QUASI CONTRACT ( Certain Relations resembling those created by contracts) [Sections 6872]

Quasi Contracts are so called because the obligations associated with such transactions could neither be referred as tortious nor contractual, but are still recognised as enforceable, like contracts, in Courts.(1) Claim for necessaries supplied to a person incapable of contracting or on his account(2) Reimbursement of person paying money due by another in payment of which he is interested In order that the Section may apply, it is necessary to prove that:(a) the person making the payment is interested in the payment of money, i.e., thepayment was made bonafide, for the protection of his own interest.(b) the payment should not be a voluntary payment. It should be such that there issome legal or other coercive process compelling the payment.(c) the payment must be to another person.(d) the payment must be one which the other party was bound by law to pay.QUASI CONTRACTS(3) Obligation of a person enjoying benefits of non-gratuitous act: Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore the thing so done or delivered [Section 70].(4) Responsibility of finder of goods(5) Liability of person to whom money is paid, or thing delivered by mistake or under coercion (Section 72) Quantum Meruit61Performance of ContractBy performance it means that the parties have done whatever they had agreed to do or have fulfilled their obligations arising out of the contract. Thus performance may be a) actual b) attempted. i. Actual Performance: when the promisor performs the obligations . ii. Attempted: It may happen that the promisor offers performance of his obligation under the contract at the proper time and place but the promisee refuses to accept the performance. This is called as Tender or attempted performance A tender or offer of performance to be valid must satisfy the following conditions:1. It must be unconditional2. It must be made at proper time and place, and under such circumstances that the person to whom it is made may have a reasonable opportunity of ascertaining that the person offering to perform is able and willing there and then to do the whole of what he is bound by his promise to do.3. Since the tender is an offer to deliver anything to the promisee, the promisee must have a reasonable opportunity to see that the thing offered is the thing contracted for.Who must perform the promise?

The Promisor 2. The agent of the PromisorThe legal representative Third party Joint PromisorsWho can demand the performance?The promisee The legal representative of Promisee3. Joint Promisee.

TIME, PLACE AND MANNER OF PERFORMANCE (Sections 46 to 50 and 55)1. Where the time for performance has been specified and the promisor has undertaken to perform it without application by the promisee, the promisor must perform on the day fixed during the usual business hours and at the place at which the promise ought to be performed.2. But, where the time of performance is not specified, and the promisor agreed to perform without a demand from the promisee, the performance must be made within a reasonable time. What a reasonable time is, in each particular case, a question of fact.3. Where a promise is to be performed on a certain day, and the promisor has not undertaken to perform it without application by the promisee, the promisee must apply for performance at a proper place and within the usual business hours. What is a proper time and place is, in each particular case, a question of fact.4. When a promise is to be performed without application by the promisee and no place is fixed for its performance, the promisor must apply to the promisee to appoint a reasonable place for the performance of the promise, and perform it at such place5. The performance of any promise may be made in any manner, or at any time which the promisee prescribes or sanctions.

Reciprocal Promise

Reciprocal promise means a promise in return for a promise. Thus, where a contract consists of promise by one party (to do or not to do something in future) in consideration of a similar promise by other party, it will be called a case of reciprocal promises. Reciprocal promises maybe divided into three groups:1. Mutual and Dependent: In such a case the performance of one party depends upon the prior performance of the other party.2. Mutual and Independent: In such cases, each party must perform his promise without waiting for the performance or readiness to perform on the part of the other.3. Mutual and Concurrent: In such cases the promises have to be simultaneously performed. According to Section 51, when a contract consists of reciprocal promises to be simultaneously performed, no promisor need perform his promise unless the promisee is ready and willing to perform his reciprocal promise.Discharge of the contractBy performanceBy death By tenderBy breach of contractBy impossibility Impossibility existing at the time of contract Impossibility arising subsequentlyBy non existence of the state of thing Discharge by operation of law.By agreement

By agreement-

Novation : Novation means substitution of a new contract for the original one. The new contract may be substituted either between the same parties or between different parties.Rescission : Rescission means cancellation of all or some of the terms of the contract. Where parties mutually decide to cancel the terms of the contract, the obligations of the parties there under terminate.Alteration: If the parties mutually agree to change certain terms of the contract, it has the effect of terminating the original contract. There is, however, no change in the parties. Remission : Remission is the acceptance of a lesser sum than what was contracted for or a lesser fulfilment of the promise made. Waiver: Waiver means relinquishment or abandonment of a right. Where a party waives his rights under the contract, the other party is released of his obligations. Merger: A contract is said to have been discharged by way of merger where an inferior right possessed by a person coincides with a superior right of the same person.