INDIAN CONTRACT ACT 1872

What is law

A set of rules . It may be defined as the rules of conduct and enforced by the state to control and regulate the conduct of people ,to protect and contractual rights with a view to securing justice ,peaceful living and social security Purpose of knowing law is ignorance of law is of no excuse

Mercantile law

It is a part of civil law which deals with rights and obligations of mercantile persons arising out mercantile transactions in respect of mercantile property (e.g.) contracts, partnership, companies, negotiable instruments ,insurance.

Sources of mercantile law

Sources of mercantile law

English law

Indian statute law

Judicial decisions

Customs and usages

Law of contract

Deals with (a)general principles of law governing all contracts. (b) special provisions relating to special contracts like bailment,pledge,indeminity, guarantee and agency (e.g.) when you purchase a newspaper you enter in to contract with newspaper agent

Meaning of contract

According to section 2(h) of Indian contract act 1872, an agreement enforceable by law is a contract It has 2 elements . (a)an agreement, and (b)Enforceability of an agreement.

Agreement & promise

According to section 2(e) of the Indian contract act 1872, Every promise and every set of promises forming consideration for each other is an agreement. According to section 2(b) of Indian contract act 1872, A proposal when accepted becomes a promise. Agreement=offer +acceptance(promise)

Enforceability of agreement

The parties to an agreement must be bound to perform their promises and in case of default by either of them must intend to sue (e.g.) in case of social or domestic agreements the usual presumptions is that the parties do not intend to create legal relations.
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Essentials of valid contract

1.Proper offer and acceptance(consensus ad idem)
offer to be valid must satisfy certain conditions like intend to create legal relations, certain and unambiguous communicated to the person. acceptance to be valid must satisfy certain conditions like it must be made in prescribed manner and it must communicated to the concerned person
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2.Intention to create legal relationship

In commercial and business agreements the usual presumption is the parties intended to create legal relationship and in domestic and social agreements the parties does not create legal relations because it is social agreements.

3.Free consent
According to section 14 consent is said to be free and it should not caused by coercion, undue influence, fraud, misrepresentation, mistake.

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4.Capacities of parties
The parties must be capable to enter in the contract like he must be of sound mind, he must be major and he is not disqualified from any law.

5.Lawful consideration
According to section 23 of the Indian contract act 1872, the consideration is considered lawful unless it is forbidden by law or is fraudulent or involves or implies injury to the person or property of another or is immoral or is opposed to public policy

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6.Lawful object
According to section 23 of Indian contract act, the object is considered lawful unless it is forbidden by law or is fraudulent or involves or implies injury to the person or property of another or is immoral or is opposed to public policy.

7.Agreement not declared void

As per the provisions of Indian contract act section 24 to 30 agreement in restraint of marriage, agreement in restraint of legal proceedings, agreement in restraint of trade . (e.g.) x promises y that if y stops his business x pay Rs.20000 for closing of business.
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8.Certainity of meaning(id certum est quod certum reddi potest)

According to section 29 of Indian contract act 1872 the meaning of agreement which is not certain and or capable of being made certain are void (e.g.) x agreed to sell 100 tones of oil to y ,the agreement is void.

9.Possiblity of performance
According to section 56, an agreement to do an impossible act is void (e.g.) x agreed to discover treasure by magic to y

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10.Legal formalities The agreements must comply with the necessary formalities like writing, registration, stamping. These are essential elements to make a contract to be a valid one.

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Classification of contracts
1.Contracts on the basis of creation
(a)Express contract made by words spoken or written (b) Implied contract made otherwise than by spoken or written. It is inferred from the conduct of a person or the circumstances of the particular case

(e.g.) x,a coolie picks a bag of y with being

asked to y

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2.Contracts on the basis of execution

(a)Executed contract- both the parties have to fulfill their respective obligations under the contract. (e.g.)X offers to y that he sells his car and y accepts the offer .X delivers the car and y makes the payment. (b) Executory contract both the parties to the contract have still to perform their respective obligations. (c) partly executed and partly executory contractone of the parties to the contract fulfill his obligations but the other party has still perform his obligations 16

3.Contracts on basis of enforceability

(a)valid contract must fulfill all the essential elements (b)void contract-a contract which was valid when entered into but which subsequently became void due impossibility of performance, change of law or some other reasons. (e.g.) x offers to marry y ,y accepts the offer but later on y dies . (c) void agreement- agreement not enforceable by law (void ab initio) (e.g.)enter in to an agreement with minor
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(d)voidable contract- which can be set aside or repudiated or avoided at the option of aggrieved party. (e)Illegal agreement- one of the object which is unlawful . Such agreement is void ab initio . (e.g.)enter into an agreement for unlawful object. (f)Unenforceable contract- contract which is valid but cannot be enforced because of some technical default
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Offer or proposal

Proposal is an expression of will or intention to do or not to do something Section 2(a) of the contract act defines the proposal as when one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that other, to such act or abstinence, he is said to make a proposal
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Kinds of an offer

Expressed or implied. Positive or negative. Statement or question

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Essentials of valid offer

1.Offer must be capable creating legal relations.
an offer to perform social, religious or moral acts with out creating legal relations will not be a valid offer.

2.Terms of offer must be certain

the terms and conditions of offer must be certain and unambiguous

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3.Offer may be specific or general when an offer is made to general public at large is called general offer (e.g) A made an offer to general public that if anyone find his missing dog he will give Rs.100 when an offer is made to specific individuals is called specific offer (e.g) A made an offer to B that if B find As missing dog he will give Rs.100.
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4. Offer must be communicated to the offeree

The offer must be communicated to the offeree by the offeror by choosing available means such as a word of mouth, mail, telegram ,messenger, a written document, or even signs and gestures.

5.Invitation to offer is not an offer

There is no intention on the part of the person sending out the invitation to obtain the consent of other person to such an invitation. His aim is to circulate the information. (e.g.)A price list of goods for sale Railway time table Prospectus issued by the company
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6.Offer must be made to obtaining the assent

Mere enquiry is not an offer , the offerer must get the assent from the acceptor.

7.An offer should contain a term the non compliance of which would amounts to acceptance
An offer must not contain any condition if acceptor does not communicate his acceptance with in the specified time, he is deemed to have accepted the offer (e.g.)A writes to B , I shall sell my car for Rs.100000 if you dont reply with in a week .I shall assume that you have accepted the offer
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8.Offer may be conditional

The offeror is free to lay down the terms & conditions in his offer if other party accepts the conditions.

9.General offer is different from tender

A person invites tender for the purchase or sale of goods does not make an offer .The person who submits the tender is said to make an offer.

10.Cross offers
identical offers made by the persons are known as cross offers, they do not make a contract.
(e.g.)A offers to sell his scooter for Rs 15000 on the same day B writes to A offering to buy his scooter for Rs.15000
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Acceptance

A contract is formed when offer is accepted by the acceptor. Section 2(b) of the Indian contract act defines acceptance as when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. E.g.- A offers to sell his house to B for Rs.1000000,B accepts the offer to purchase the house. As offer is said to be accepted and it becomes agreement between A and B
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Essentials of valid acceptance

1.Acceptance must be absolute and unconditional Must correspond with all the terms of the offer. Even the slightest deviations from the terms of the offer makes the acceptance invalid. offer must be accepted in Toto. E.g.- A offers to sell his ring for Rs 5500 to B. But B accepts to buy for Rs.5000.This acceptance is not valid

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2.Acceptance must be communicated communication need not be in writing or by word of mouth. When the parties are face to face communication could be oral. When they are distant place communication could be made by post , by telegram, by a message on phone or in any other reasonable manner. 3.Acceptance must be in the mode prescribed The acceptance must be made by the acceptor in the mode prescribed ,if the acceptor made the acceptance in any other mode the offerer if time permits can ask the acceptor in prescribed mode

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4.Acceptance must be given within a reasonable time The offer must be accepted within the prescribed time if no time is prescribed for acceptance the offer must be accepted with in reasonable time 5.Acceptance must be given only by the offeree If the acceptance accepted by any another person, there is no valid acceptance. 6.Acceptance must be after an offer acceptance must succeed the offer. In other words acceptance should follow the offer and not precede it I
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7.Acceptance must be given before the offer lapses or its revocation Acceptance after the lapse of the offer cannot give rise to a contract. 8.A proposal once rejected cannot be accepted unless it is renewed offer once rejected cannot be accepted again unless a fresh offer is made These are the essentials to make acceptance to be a valid one

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Revoking a proposal
Revocation means cancellation .Revocation of an offer means its withdrawal by the offeror. Section 5 lays down, a proposal may be revoked at any time before the communication of its acceptance as against the proposer E.g.- A proposes to B that he will sell his car. A can revoke his offer before B posts his letter of acceptance
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Methods
1.Revocation by communication of notice An offer may be revoked by the offeror by giving notice of revocation to the other party before it is accepted. 2.Revocation by lapse of time If time is prescribed for acceptance ,the offer gets revoked by non acceptance within that time. 3.Revocation by non-fulfillment of conditions An offer is revoked when the acceptor fails to fulfill a conditions to the acceptance of the offer
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4.Revocation by death or insanity of the offeror An offer is revoked by the death or insanity of the offeror, in fact of his death or insanity comes to the knowledge of the acceptor before acceptance. 5.Revocation by counter offer An offer is revoked if counter offer is made to it. 6.Revocation by failure to accept in the mode prescribed. The acceptance must be made by the acceptor in the mode prescribed ,if the acceptor made the acceptance in any other mode the offerer if time permits can ask the acceptor in prescribed mode

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Consideration

Something in return(Quid pro quo) The price for which the promise of the other is bought. E.g.- A agrees to sell his house to B for Rs.1000000 . B accepts to buy his house for Rs.1000000. here for A Rs 1000000 is consideration and for B house is consideration.

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Legal rules as to consideration

1.Consideration must move at the desire of the promisor consideration must have been given at the desire of the promisor ,here the promisee cannot force the promisor to give consideration for the acts done. E.g-A sees Bs house on fire and helps to extinguish it .Here B cannot claim any amount because A never asked help from B

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2.Consideration may move from promisee to any other person consideration may be given by the promisee or any other person on his behalf, so the stranger to consideration can sue on the agreement e.g.-A gifted property to her daughter B with instruction that B should pay her uncle C, a certain amount annually .B refused. But B was liable to pay C 3.Consideration may be past, present and future under Indian law consideration may be past , present, future But under English law consideration may be present and future
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4.Consideration need not be adequate consideration need not be adequate but it should have some values in the eyes of law E.g.-A agrees to sell a horse worth Rs.1000 for Rs.10 5.Consideration must be real consideration must be real and possible, it must not be legal, impossible, or illusory E.g.- a promise to create treasure by magic 6.Considerationmust be lawful It must not be illegal, immoral, opposed to public policy
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Exceptions(no consideration)
1.Promise made on account of natural love and affection
An agreement made without consideration is valid if it is writing and registered and is made on account of natural love and affection.

2.Compensation for past voluntary services

A promise to pay a past voluntary service is binding.(e.g.) A finds B purse and B promises to pay Rs 500 to A.

3.Contract of agency
According to section 185 of the contract act, no consideration is necessary to create contract of agency
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4.Written promise to pay a time barred debt

A promise by a debtor to pay a time barred debt is also enforceable. But the promise must be in writing (e.g.) A owes B Rs.1000 but the debt is barred by the limitation act. A signs a written promise to pay Rs.500 on account of debt. The promise will be valid and binding without any fresh consideration.

5.completed gifts
Gift does not require any consideration . Absence of consideration shall not affect the validity of any gift actually made. 6.Contract under seal In English law a contract under seal is valid and enforceable even without consideration
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Post consideration is no consideration

1.Past consideration
Where the promisor has received consideration before the date of promise the

2.Present consideration(executed)
Where the promisor receives consideration along with promise 3.Future consideration(Executory) Where the promisor has to receive consideration in future for his promise
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Capacities of parties
capacity to contract means competence of the parties to enter into a valid contract. According to section 10 an agreement becomes contract if it is entered into between the parties who are competent to contract According to section 11 Every person is competent to contract who is of age of majority and who is of sound mind and is not disqualified from any law to which he is subject
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Reasons for incapacity

A)Incapacity arising from status 1.Foreign sovereigns and ambassadors Indian law- full capacity to enter into contracts but they cannot be sued in our courts with out the permission from our central government. English law full capacity to enter but suit can be instituted if they submit themselves to the jurisdiction of England
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2.Alien enemy- alien means citizen of foreign country and alien enemy cannot have the capacity to enter in to contract. 3.convicts-A convict while undergoing imprisonment cannot have a capacity to enter a contract but after completed his sentence he can enter. 4.Professional persons-In England Barristers suffer from professional incapacity, they cannot sue for their fees .But in India no person can suffer from professional incapacity 5.Corporation- can enter into contracts but cannot make contracts of marriage.

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B)Incapacity arising from mental deficiency The contracts entered with minor cannot be enforceable under Indian law and the contract is void .But contracts for necessaries supplied to the minor are enforceable against him .Under English law the contracts are void,valid,voidable C) Incapacity arising from unsoundness mind The contracts entered with unsound mind cannot be enforceable and it is void .But for contracts for necessaries can be enforced against them

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Minor law
Minor- A person who is not attaining the age of majority that is not completing the age of 18 and incase of the persons managed by their guardians his majority age will be 21. Minor under Indian law 1.Absolutely void-According section 11,a minor is not competent to contract. Hence an agreement is void ab intio. 2.No ratification is possible-ratification means subsequent approval of an act already done. A contract by a minor is absolutely void ,he cannot ratify the contracts entered in to by him during his minority
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3. No estoppels against a minor-A minor is not bound by his misrepresentation, if a minor fraudulently representing himself as a major he cannot be prevented from pleading his minority as defense and he compensate the other party 4.No restitution for fraud-If minor obtains the property or goods by fraud on credit, the court will order to return the property to the trader. If the property cannot be traced or destroyed he need not pay back any money he has received. 5.Enforceablity of contracts by minor-A minor cannot be a promisor but he can be a promisee or beneficiary. so contracts which are beneficial to minor can be enforced by him.
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6.Minor and insolvency- A minor cannot be declared as insolvent because even for necessities of life he is not personally liable. 7.Minor and partnership- A minor cannot be admitted as partner but if all partners agree ,he can be admitted as partnership for the benefits. 8.Minor and agency- A minor can be appointed as agent and he has to represent his dealings with principal to other parties. 9.Minor and negotiable instruments- A minor can draw ,deliver, and endorse without himself being liable. 10.Minor as a member of a company- A minor cannot become a member and with name of lawful
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11.Position of minor parents-The parents of minor is not liable but if they act as their agents they are held liable. 12.Minors liability for necessities-A minor is liable for necessities supplied to him and it should reimbursed by the supplier if the minor have some property and if they minor does not have any property the seller has lose their price. 13.Minor and guardian-A contract entered into by a guardian on behalf of minor is binding on the minor provided the contract is beneficial to the minor. The guardian cannot sell any immovable property with out permission of the court.
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14.Minor liability for tort-Minors are liable for causing any injury or damage for property that does not belongs to them. 15.No specific performance An agreement with minor is void and the court will never direct specific performance of such an agreement by him

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Consent

Two or more parties are said to be consent when they agree upon the same thing ,in the same sense. When the parties agree upon the same thing ,in the same sense , they are said to consensus ad idem

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Free Consent

Free consent is the consent which has been obtained by the free will of the parties out of their accord. According to section 14, consent is said to be free when it is not caused by coercion or undue influence or fraud or misrepresentation or mistake.

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Definition of Mistake

Erroneous (wrong) belief concerning something. consent is not free when it is caused by mistake. If the consent is not free the contract is invalid. Thus mistake affects the validity of contract.

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Types of mistake

Mistake of law

Mistake of fact

Indian law

Foreign law

Bilateral

unilateral

As to subject matter

As to possibility of performance

Identity of person
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Nature of contract

Mistake of law
Mistake of Indian law
The contract is not voidable because every one is supposed to know the law of his country. But if one of the parties makes a mistake of law through the inducement of the other party the contract may be avoided.

Mistake of foreign law

The contract will be void if a mistake is made by one of the parties to the contract in regard to foreign law.
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Mistake of fact
Mistake of fact can be either bilateral mistake or unilateral mistake.
a)Bilateral mistake-Where the both the parties to the agreement are under a mistake. (e.g.) A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bargain ,though neither party was aware of the fact. The agreement is void. b) Unilateral mistake-A mistake of fact in the mind of the one party to the contract is called unilateral mistake. (e.g.) A buys an article that it worth Rs1000 when it is worth only Rs.500 .A cannot subsequently avoid the contract.
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Coercion
Coercion is threat or force by one party against the other for making him enter into an agreement. Section 15 of the contract act defines coercion as the committing or threatening to commit any act forbidden by the penal code ,or the unlawful detaining or threatening to detain any property, to the prejudice of any person whatever ,with the intention of causing any person to enter into an agreement

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Any of the following acts amount to coercion

1.Committing an act forbidden by the Indian penal code 2.Threatening to commit an act forbidden by the Indian penal code 3.Unlawful detain of any property 4.Threatening to detain the property of any person wrongfully. E.g.- A threatens to shoot B if he does not lend him Rs.3000 and B lends the amount. Threat amounts to coercion

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Consequences of coercion
When an agreement is made under coercion ,the consent is not free .Hence it is voidable at the option of the party whose consent was not free. According section 72 of the contract act, a person to whom anything has been delivered or money paid under coercion must return or repay it.
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Undue influence
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Improper use of any power possessed over the mind of the other contracting party. Section 16 of Indian contract act as an influence exercised by one party on the other where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other

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Essentials of undue influence

1.One of the parties must be in a position to dominate the will of the other. 2.One the parties must use his dominant position to obtain that unfair advantage. 3.The dominant party should obtain an unfair advantage over the other.

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Effects of undue influence

Consent given under undue influence is not free consent .Hence the party who is subject to undue influence can avoid the contract.

(e.g) A advanced money to his minor son .After becoming major ,the son was induced by the father to execute a bond for a greater amount .A employed undue influence

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Pardanashin woman is one who observes complete seclusion because of the custom of the community to which she belongs. The court when called upon to deal with a deed executed by pardanashin woman must satisfy upon evidence 1.the deed executed actually by her with full understanding of what she was about to do. 2.she had full knowledge about the contract. 3.She had independent and interest in the matter
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Contracts with pardanashin woman

Misrepresentation

Representations may be of 2 types (i)innocent representation (ii)intention representation Innocent representation will be called as Misrepresentation and party doesnot have any intention to deceive any party and intention representation will be called as Fraud
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Essentials of Misrepresentation
1.

2.
3. 4. 5.

By the party to a contract False representation Representation of fact. Objective. Actually acted

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Consequences of misrepresentation
A contract caused by misrepresentation is voidable .Misrepresentation does not entitle the aggrieved party to claim damages .The aggrieved party has the following remedies : (a) he can avoid contract (b) he can insist that the contract be performed. e.g.- A, innocently in good faith informs B that As estate is free from encumbrance. B thereupon buys the estate. The estate is subject to mortgage. B may either avoid the contract or may insist on its being carried and the mortgage debt redeemed
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Fraud
Representation made with an intention to deceive or cheat the other party Essential elements of fraud 1.By the party to a contract. 2.False representation 3.Representation as to fact.(opinion,statements,intention) 4.Actually deceived. 5.Suffered loss.

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Consequences of fraud
1.He may rescind the contract. 2.He may insist on the performance of the contract. 3.He can also file a suit to claim damages. e.g-A, fraudulently informs B that As estate is free from encumbrance. B thereupon buys the estate. The estate is subject to mortgage. B may either avoid the contract or may insist on its being carried and the mortgage debt redeemed
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Legality of object and consideration

Circumstances under which the object or consideration is deemed to be Unlawful:
a)If it is forbidden by law If the object or the consideration of an agreement in doing of an act which is forbidden by law ,the agreement is void. (e.g)X, a Hindu already married and his wife alive entered into marriage agreement with Y an unmarried girl.
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b)If it defeats the provision of any law

If the object or consideration of an agreement defeat the provisions of any law, the agreement is void

c)If it is fraudulent
If the object of an agreement is to defraud others ,the agreement is void (e.g)A,B and C enters into an agreement of the division among them of gains acquired or be acquired ,by them by fraud, the agreement is void.

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d)If it involves or implies injury to a person or property of another

If the object of an agreement is to injure a person or the property of another the agreement is void (e.g) X promised to pay Rs 10000 to Y when he agreed to publish a libel of Z the agreement is void because it involves injury to Z.

e) It the court regards it as immoral or opposed to public policy

If the object or consideration is immoral or is opposed to public policy the agreement is void (e.g)X gave Rs.100000 to Y a married woman to obtain a divorce from her husband.X agreed to marry her as soon as she obtained a divorce .It was held that X could not recover back the amount.
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ILLEGAL AGREEMENTS
Agreements which are (a) void ab intio i.e void at the beginning (b) punishable by the criminal law of the country. Effects of Illegal agreements (1)The collateral transactions to an agreements also become illegal and hence cannot be enforced. (2) No action can be taken for the recovery of money paid or property transferred under an illegal agreement. (e.g) X promises to pay Y Rs.1000 if Y beats Z.Y beats Z and claims Rs1000 but refuses to pay .Y cannot recover from X because the agreement between X and Y is illegal.

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Agreements opposed to public policy

a)Agreements of trading with enemyAll agreements made with an alien enemy are illegal on the ground of public policy b)Agreements for stifling prosecution An agreements for stifling prosecution is illegal on the ground of public policy (e.g) X knows that Y has commited a murder receives Rs 500000 for not exposing Y ,the agreements is illegal
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c) Agreements in the nature of maintenance and

champerty
When a person agrees to help another by money or otherwise in litigation in which he is not himself interested it is called maintenance . When a person agrees to help another in litigation in exchange for a promise to handover a portion of the fruits of the litigation is called champerty

d) Agreements for the sale/transfer of public offices and titles

The agreements for the sale or transfer of public offices or to obtain public titles like Padmashree are illegal on the ground of public policy (e.g) X promises to pay Y Rs 50000 if Y secures him an employment in govt service 73

e) Agreements in restraint of parental rights An agreement which prevent a parent to exercise his right of guardianship is void on the ground of public policy (e.g)G, the father of 2 sons agreed to transfer his guardianship to A and also agreed not to revoke the transfer during his lifetime. Subsequently ,he filed a suit for the recovery of boys. He got success f)Agreements in restraint of personal liberty An agreements in restraint of personal liberty of any person is void on ground of public policy.

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g)Agreement tending to create monopoly

An agreement creating monopoly is void on the ground of public policy (e.g) A local body granted a monopoly to X to sell vegetables in a particular locality h) Agreement interfering with court of justice i) Agreements in restraint of marriage-other than minor j) Agreement in restraint of trade-restraint from exercising his trade k) Agreement in restraint of legal proceedings

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Void agreements
A void agreements is one which is not enforceable by law. Such an agreement does not give rise to any legal consequences and is void ab initio
1.Agreements by incompetent parties. 2.Agreements made under a mutual mistake of fact. 3.Agreements the consideration or object of which is unlawful. 4.Agreements the consideration or object of which is unlawful or part. 5.Agreements made with out consideration. 6.Agreements in restraint of marriage, trade, legal proceedings. 7.Agreeements the meaning of which is uncertain. 8.Agreements by way of wager 9.Agreements contingent on impossible events. 10.Agreements to do impossible acts.
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Wagering agreements (betting )

An agreements between 2 parties by which one promises to pay money or moneys worth on the happening of some uncertain event in consideration of other partys promise to pay if the event does not happen. e.g- A and B enters in to agreements that A shall pay B Rs.100 if it rains on Monday and that B shall pay A the same amount if it does not rain, it is wagering agreements.

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Essentials of wagering agreements

1.Promise to pay money or moneys worth. 2.Uncertain events. 3.Each party must stand to win or lose. 4.No control over the events. 5.No other interest in the event.

Effects of wagering agreements

Wagering agreements have been expressely declared to be void in india.In the states of maharastra and gujrat they have been declared to be illegal.
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Performance of the contract

Performance of the contract means fulfillment of legal obligations created by a contract. when a contract is duly performed by both the parties, that contract comes to a happy ending and nothing more remains.
Section 37 of the contract act lays down that parties to a contract must either perform or offer to perform their respective promises ,unless such performance is dispensed with or excused under the provisions of law

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Who can demand performance?

It is only the promisee who can demand performance of the promisee under the contract. A third party generally cannot demand performance of the contract even if it was made for his benefit.

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Contracts which need not be performed

1.If the parties to a contract agree to substitute anew contract for it or to rescind or alter it ,the original contract need not be performed. 2.When its performance becomes impossible. 3.When the person at whose option it is voidable, rescinds it. 4.When the promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise. E.g- A contracts with B to repairs Bs house .B neglects or refuses to point out to A the places in which his house requires repairs. 5.When it is illegal.
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Tender
An offer to perform ones obligations under a contract is called tender Section 38 lays down that where the promisor ,has made offer of performance to the promisee and the offer has not been accepted ,the promisor is not responsible ,nor does he thereby loses his rights under the contract

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Kinds of an offer
1.Tender of goods
Tender of goods amounts actual performance .It discharges the contract if the offeror or promisor produces goods of the correct quality and quantity ,the rejection of his offer discharges him from further liablity. He can bring an action for non acceptance .

2.Tender of money
If the debtor makes a valid tender of money ,but the creditor refuses to accept it , the debtor discharged from making payment .Debtor is held liable for the payment of debt. He is ,however ,not liable for any interest on the debt from the date of valid tender
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Essentials of valid tender

1.It is must be unconditional A tender should be exactly in accordance with the terms of the contract. A tender becomes conditional if it is not in accordance with the terms of the contract. 2.It must be made at a proper time and place 3.Ready to perform 4.Tender by minor-not a valid tender 5.Made to the proper person 6.It must be in respect of the whole promise 7.Reasonable opportunity to inspect by the promisee 8.Exact amount should be tendered(for the tender of money)

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Reciprocal promises
Promises which form consideration or part of the consideration for each other are called reciprocal promises such promise are mutual promises When one party gives a promise in consideration of the others promise ,both the promises are called reciprocal promises. e.g-In contract of sale ,A promises to deliver the goods to B at a fixed price B promises to give security for the payment of the price .such promises are called reciprocal promises.

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Kinds of reciprocal promises

1.Mutual and independent promises
where each party must perform his promise independently without waiting for the performance of the other the promise are mutual and independent e.g- A agrees to pay B, the price of the goods on 15th and B promises to deliver the goods on 20th .The promise are mutual and independent. 2.Mutual and dependent promises Where the promise of performance of the promise by one party depends on the prior performance by the other party e.g- A agrees to build a house for B and B agrees to supply the necessary timber for the construction of the house. 3.Mutual and concurrent promises When the 2 promises are to be performed simultaneously.
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Rules regarding performance of reciprocal promises

1.Contracts which consist of reciprocal promises to be simultaneously performed. When a contract consists of reciprocal promises to be simultaneously performed the promisor need not perform unless the promisee is also ready and willing to perform his part . 2.Order in which reciprocal promises are to be performed Where the order in which reciprocal promises are to be performed is expressly fixed ,they shall be performed in that order. When the order is not fixed ,reciprocal promises shall be performed in that order which the nature of the transactions requires
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3.Consequences where a party prevents performance When one party prevents the other from performing his promise ,the contract becomes voidable . The party prevents the performance of the other party is entitled to compensation. 4.Effect of non performance in case of mutual and dependent reciprocal promises. The party who is failing to perform his duties is liable to pay compensation to the other party for non performance of contract. 5.Effect of promise to do legal and illegal things Where a contract consists of legal and illegal the legal part is contract and illegal part is void e.g-A and B agree that A shall sell B a house for Rs.10000 but that if B uses it as a gambling house he shall pay Rs.50000 for it. 6.Effect of alternative promise being illegal In case of an alternative promise one branch is legal and other branch is illegal e.g-A and B agree that A shall pay B Rs.1000 for which B shall afterwards deliver to A either rice or smuggled gold
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Devolution of joint liabilities

Devolution means passing over from one person to another When two or more persons made a promise ,they are known as promisors. unless a contrary intention appears from the contract ,all joint promisors must jointly fulfill the promise .If any of them dies ,his legal representatives must jointly with the surviving promisors fulfill the promise ,if all of them dies the legal representatives of all them must fulfill the promise jointly
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Rules regarding performance of joint promise

1.Any one of the joint promisors may be compelled to perform If there is no express agreement ,the promisee may compel any one or more of the promisors to perform the whole of the promise e.g- A,B,C jointly promise to pay Rs10000 to D.D may compel all or any or either A or B or C to pay him Rs10000. 2.A joint promisor compelled to perform may claim contribution When a joint promisor has been compelled to perform the whole of the promise ,he may compel the other joint promisors to contribute equally e.g-A,B,C made promise to pay to D ,Rs30000 and D compelled A to pay Rs30000 ,A can recover Rs 10000 from both B and C
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3.Sharing of loss in case of default If any one of the promisors makes a default in the contribution ,the remaining promisors has to bear the loss arising from such promisor. E.g-A,B,C made a promise to pay D,Rs.30000 ,A is not in a position to pay his contribution and A is being compelled by D in that case B can claim Rs.15000 from C
Devolution of joint rights When a person (say A)has made a promise to several persons (B,C,and D) these persons are known as joint promisees . If there is no agreement the right to claim performance rests with all of the promisees (B,C,and D) when one of the promisees dies his legal representative must claim perform for the promise and if all of the promisees dies legal representatives of all of them can claim performance 91 from the promisor

Discharge of the contract

A contract creates rights and obligations .When the rights and obligations created by the contract come to an end ,the contract is said to de discharged or dissolved or terminated. In simple words discharge of contract means termination of contract.
Methods of discharge of the contract 1.Discharge by performance 2.Discharge by agreement 3.Discharge by lapse of time 4.Discharge by operation of law 5.Discharge by breach 6.Discharge by impossibility of performance
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1.Discharge by performance It may be of 2 types (a) actual performance-When parties fulfill the legal obligations and the promises made under the contract ,the contract is said to be performed. (b)attempted performance-If the promisor offers to perform the contract and the promisee refuses to accept the performance the promisor is discharge 2.Discharge by agreement (a) Novation-substitution of new contract in the place of already existing contract in that case the old contract is discharged.
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b) alteration- change in one or more of the terms of the contract. Alteration made by the mutual consent of the parties will be perfectly valid. c)Rescission- It means cancellation Rescission may be of 2 types (1)total rescission-when all the terms are cancelled. (2) partial rescission-When some of the terms are cancelled d)Remission-acceptance of lesser perfomance than what is actually due under the contract e.g-A borrowed Rs500 from B.A agrees to repay Rs 250 to B

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e) waiver- giving up or foregoing certain rights.When a party agrees to give up its rights the contract is discharged f)Accord and satisfaction- Accepting any other satisfaction than the performance originally agreed is known as accord and satisfaction. 3)Discharge by lapse of time Every contract must be performed with in the stipulated time or reasonable time .Lapse of time discharges the contract.

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4) Discharge by operation of law (a) death In contracts involving personal skill and ability death terminates the contract, in other cases the rights and liablities of the deceased person will pass on to his legal representatives. (b)Insolvency
The insolvency of promisor discharges the contract (c)Unauthorized material alteration Any change in terms of the contract which affects or alters the rights and liablities of parties is called material alteration .If this is done without the 96 consent of other party the contract gets discharged

d)merger-When inferior rights of a person under a contract merge with superior rights under a new contract ,the contracts with inferior rights will come to an end 5) Discharge by breachBreach means failure of a party to perform his obligations .It may be 2 types (a)actual-breach of contract takes place at the time when actually performing the contract. (b)anticipated-takes place before the actual performance by the parties. 6.Discharge by impossibility of performance An agreement which is impossible is void because law doesnot compel people to do impossible things e.g-A agrees to pay Rs1000 and B promises to bring for A stars from heaven .The agreement is void
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Remedies for breach of contract

Meaning of breach Failure of the party to perform his legal obligations. Meaning of remedy
A remedy is the means given by law for the enforcement of a right When a contract is broken ,the injured party has one or more of the following rights. 1.Recission of the contract. 2.suit for damages. 3.suit upon Quantum meruit 4.suit for specific performance of the contract. 98 5.suit for injunction

1.Recission When a contract broken by one party ,the other party may sue to treat the contract as rescinded and refuse further performance e.g- A promises B to supply 10 bags of cement on a certain day.B agrees to pay the price after the receipt of the goods.A does not supply the goods .B is discharged from the liablity to pay the price. 2.Damages Damages are a monetary compensation allowed to the injured party by the court for the loss or injury suffered by him by the breach of the contract.
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3.Quantum meruit
It means payment in proportion to the amount of work done. A right to sue on a quantum meruit arises where a contract partly performed by one party has become discharged by the breach of other party

4.Specific performance
If damages are not an adequate remedy, the court order specific performance of the contract .The defaulting party will be forced to perform the act promised under the contract.

5.Injunction
An injunction is the preventive relief .It is an order of a court restraining a person from doing a particular act

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Quasi contracts
A Quasi contracts is not a contract at all because one or the essential for the formation of a contract are absent. It is a obligation imposed by law upon a person for the benefit of another even in the absence of a contract . It is based on the principle of equity which means no person shall be allowed to unjustly enrich himself at the expense of another.

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Kinds of quasi contracts

1.Right to recover the price of necessaries supplied The person who has supplied the necessaries to a person who is incapable is entitled to claim their price from the property of such incapable person 2.Right to recover money paid for another person A person who is interested in the payment of money which another is bound by law to pay e.g- The goods belonging to A were wrongfully attached in order to realise arrears of government revenue due by G. A paid the amount to save the goods from sale. It was held that A was entitled to recover the amount from G
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3.Right to recover for Non-gratuitous act.

When a person does anything for anything person or delivers anything to him, not intending to do so gratuitously and such other enjoys the benefit thereof ,the latter is bound to make compensation e.g-A ,a tradesman leaves goods at Bs house by mistake. B treat the goods as his own. He is bound to pay A for them.

4.Responsibility of finder of goods

A person who finds goods belonging to another and takes them into his custody is subject to the same responsibility as a bailee e.g- X,a guest found a diamond ring at a birthday party of Y,X told Y and other guests about it .He has performed his duty to find the owner ,if he is not able to find the owner he retain the ring as bailee
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5.Mistake or coercion
A person to whom the money has been paid or anything delivered by mistake or under coercion must repay or return it to the person who paid it by mistake or under coercion e.g-A owes money to B . It is really due to C.B must refund to A

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