Salient Features Of The Indian Contract Act
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Transcript of Salient Features Of The Indian Contract Act
SALIENT FEATURES OF THE INDIAN CONTRACT
ACT, 1872
VIJAY PAL DALMIYAVAISH ASSOCIATES
ADVOCATES
INDIAN CONTRACT ACT, 1872
In India, all contracts are covered/governed by the Indian Contract Act, 1872, unless stipulated otherwise by parties
What is a contract??
As per Contract Act, an agreement enforceable by law is a contract. [section 2(h)]
An agreement is a promise or set of promises: Between two or more persons To do or refrain from doing a particular thing For consideration
Contract may be oral or writtenNOTE: Special Contracts need to be in writing
ESSENTIALS OF A VALID CONTRACT
Offer/Proposal Acceptance Intention to create Legal relationship Consideration Consensus ad idem Free & genuine Consent
ESSENTIALS OF A VALID CONTRACT
Legal Capacity to contract Lawful Consideration/Object Agreement should not be void or voidable Discharge of the Contract
OFFER/PROPOSAL
Can be oral, written or through conduct Offer and Invitation to offer/treat Must be communicated to the offeree Counter Offer Offer to the whole world
OFFER/PROPOSAL
Offer gets terminated by:RejectionLapse of timeSpecified EventDeathRetraction/Withdrawal of Offer
ACCEPTANCE
Can be oral, written or through conduct Must be communicated to the offeror Must be absolute and unqualified Must be expressed in some usual and
reasonable manner, unless the proposal prescribes the manner in which it is to be accepted.
Acceptance by performing conditions of an offer Carlill vs. Carbolic Smoke Ball Co.
LEGAL RELATIONSHIP
Intention to enter into a legal relationship Social engagement are not binding, for
example;An agreement to have lunch at a friend’s
place.
CONSIDERATION
An act, abstinence or promise Must be at the desire of the promisor May be from the promisee or any other person Can be past, present or future Must be something of value (in the eyes of law) It may be adequate or not
CONSIDERATION
Examples:MoneyPropertyActionable ClaimAnything of Value
Performance of a legal duty is no consideration
FREE CONSENT
Consent is said to be free when it is not caused by:CoercionUndue InfluenceFraudMisrepresentationMistake
CONSENSUS AD IDEM
Both the parties to a contract must agree to same thing at the same time.
The contract may become void if it turns out that the parties were of a different understanding.
COMPETENCY TO CONTRACT
Every person is competent to contract who is of: Age of majority Sound mind Someone not disqualified under Indian laws
Examples: Alien enemy Foreign sovereigns and ambassadors
Both individual and companies having legal competency have the capacity to contract.
LAWFUL CONSIDERATION/OBJECT
The consideration or object of an agreement is lawful, unless - It is forbidden by law; or is of such nature that, if permitted it would defeat the provision of
any law or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful.
Every agreement of which the object or consideration is unlawful is void.
VOID AGREEMENT
Agreement to do an impossible act Agreement without consideration; except for gifts, debt
etc. If, consideration and object is unlawful When both the parties to an agreement are under a
mistake as to a matter of fact essential to the agreement Agreement in restraint of marriage Agreement in restraint of trade Agreement in restraint of legal proceedings
VOID AGREEMENT
Uncertain Agreement Wagering Agreement, except for Horse-racing Agreement contingent on impossible event When a party to a contract with reciprocal promises is
prevented from performing his obligation, the party prevented can void the contract
In a contract where time is of the essence and a party fails to adhere to the timing schedule, the other party can void the contract.
VOIDABLE AGREEMENT
An agreement is voidable at the option of the party giving consent;When consent is caused by CoercionWhen consent is caused by Undue InfluenceWhen consent is caused by FraudWhen consent is caused by Misrepresentation
Quasi Contracts
Claim for necessaries supplied to a person incompetent to contract
Reimbursement of money paid due by another Obligation of person enjoying benefit of non-
gratuitous act Enjoyment of benefit by the defendant is
necessary: Finder of Lost goods
DISCHARGE OF THE CONTRACT
Performance of contract Breach of Contract
PERFORMANCE OF CONTRACT
The final step in contract formation is its performance. Certainty and possibility of performance Every such offer must fulfill the following conditions:-
it must be unconditional it must be made at a proper time and place under such circumstances that the person to whom it is made
may have a reasonable opportunity for inspection An offer to one of several joint promisees has the same legal
consequences as an offer to all of them
BREACH OF THE CONTRACT
Anticipatory breach Actual Breach Liability of loss only due to CAUSATION Remoteness of damages Mitigation of loss
BREACH OF THE CONTRACT
Remedies Injunction
Temporary (interim) Permanent
Damages Nominal Compensatory Punitive/Exemplary
Account of Profits Specific performance (where subject matter is unique and money will
not adequately compensate.) Declaration Rectification Recission/Substitution/Novation
Thank you.
Vijay Pal Dalmia, AdvocateHead Intellectual Property & Information Technology Laws Division
Vaish Associates, AdvocatesFlat No 903, Indra Prakash Building,
21, Barakhamba Road,New Delhi 110001 (India)
Phone: +91 11 42492532 (Direct)Phone: +91 11 42492525 Ext 532
Mobile :- 9810081079Fax: +91 11 23320484
email:- [email protected]