Contract Law New

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Contract Law Prof. Manoj Nair

Transcript of Contract Law New

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Contract Law

Prof. Manoj Nair

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Definition

A contract is an agreement that isenforceable at law

………Indian Contract Act

A contract is a promise or a set of 

 promises for the breach of which the law

gives a remedy, or the performance of whichthe law in some way recognizes as a duty

  …………US Restatement 

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Offer + Acceptance + Consideration

Contract

Offer 

 Acceptance

Consideration

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Offer

the indication by one person to another of his or her willingness to enter into a contract with that person oncertain terms

Essential Features of an offer  Offer must be clear and definite

Must be communicated to the offeree

Minimum requirement offer should include:

Delivery date

Price Terms of payment and

description of the item of offer/ type of service

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Invitation to treat

 Also known as invitation to offer  Invitation to treat is not an offer, but an indication of 

persons willingness to negotiate a contract.

Examples Display of goods for sale

 Auction

 Advertisements

Invitation to bid (ITB)

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An Offer Comes To An End

Revocation

Rejection( explicitly or by counter-offer)

Termination (lapse of Time)

Death

Condition bringing an offer to an end

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Acceptance

 All an offer needs is a “yes” to make a contract 

Essentials of acceptance

Must respond to the offer  Must be communicated

Should be made before the offer lapses

Must be absolute and unconditional

Silence ......................???????????

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CONSIDERATION

Consideration is the price for which the promise of the other is bought .Consideration could be anything

of value (such as an item or service)

Example A signs a contract to buy a car from B for Rs.50,000

  A’s consideration is the Rs. 50,000 and

 B’s consideration is the car 

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CONSDIERATION

The British courts have come to defineconsideration as

“rights, interest, profit or benefit accruing to one party, or 

some forbearance, detriment, loss or responsibility given

suffered or undertaken by the other”

Exceptions to the Rule

Love and Affection

…………. 

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Essentials Of A Valid Contract

Consensus ad idem- meeting of the minds

Free consent

Capacity to Contract

Lawful consideration

Legal and not against public policy

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FREE CONSENT 

Consent is said to be free and voluntary if it is notcaused by;-

Coercion

Undue influence Fraud

Misrepresentation

Mistake

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Lawful consideration and not against public

policy 

The consideration or object of contract is lawful unlessand unless and until it is;

Forbidden by law

Fraudulent

Implied or involved injury to person or property

Defeat any provisions of law Immoral

Opposed to public policy – examples

Agreement for restraint of Marriage

Agreement in restraint of parental rights Agreements which interfere with Administration of 

 justice

Agreements for restraint of trade/ personal freedom

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Types of Contracts

Executory and executed   A executory promise is a promise for future performance

If the contract has been executed, both parties have performed

Express and Implied

 An express contract can be written or oral

In an express contract the duties of the parties are clearly

elucidated

 An implied contract is implied by conduct

 After receiving treatment from a doctor, you will be asked tomake arrangements for payment

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Quasi Contracts The plaintiff is suing for quantum merit (the fair market

value of her services) The plaintiff performed valuable services

The defendant knowingly received these services

The plaintiff expected to get paid if the services were used bythe def.

The def. was unjustly enriched

Example

 A plumber accidentally installs a sprinkler system in the lawn of the wrong house. The owner of the house had learned the

previous day that his neighbour was getting new sprinklers.That morning, he sees the plumber begin installing them in hisown lawn. Pleased at the mistake, he says nothing, and thenrefuses to pay when the plumber hands him the bill, claimingthat he never agreed to pay for the sprinklers

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Writing requirements

Oral contracts in general are enforceable

For certain contracts, the contract must be in writing

……………………………………. 

………………………………….. 

……………………………………. 

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Performance of Contract

Performance in law means the act of doing thatwhich is required by a contract.

Each party to the contract is bound to perform

promises according to the stipulated terms

Most contractual obligations are discharged by

performance

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Breach of Contract

If performance fails in its essential purpose, it ismaterial breach

 A material breach relieves the non-breaching party from

the obligation to pay the breaching party By inserting a time is of the essence clause, late

performance becomes a breach

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Remedies for breach of contract

Rescission

Damages

Quantum merit- as much as earned in proportion to

the work done

Specific performance

Injunction

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Discharge of Contract

Discharge of contract means termination of thecontractual relationship between the parties thereto

By Performance

By agreement or consent By impossibility

By lapse of time

By operation of law

By breach of contract

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Discharge by Agreement or consent

Novation- substitution

Recession- cancellation

 Alteration- by mutual consent

Remission- acceptance of a lesser sum then what

was contracted for 

Waiver 

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Discharge Due to Impossibility 

Impossibility If performance is objectively impossible due to war or 

embargoes, the promisor is discharged without liability

If there is a subjective impossibility due to events that are

foreseeable, the obligation to perform is not discharged

If the promisor made a bad bid, he cannot claim he cannot

perform because he is not making any money

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Discharge by impossibility of performance

Destruction of subject matter of the contract

Death or disablement of parties

Subsequent illegality

Declaration of War 

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Doctrine of Privity of Contract

a contract is a contract between the parties onlyand no stranger to the contract can sue even if 

the contract is avowedly made for his benefit ….

English law

when, at the desire of the promisor, the promiseeor 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 act or abstinence or promise iscalled a consideration for the promise… Section 2(d) of 

the Indian Contract Act

Contracts (Rights of Third Parties) Act 1999