- REVISION OF BUSINESS LAW SERIES 1(2019)
SHORT QUESTIONS
LAW OF CONTRACT
- DR. SHASHI AGGARWAL
- MEANING OF CONTRACT
- A CONTRACT IS AN AGREEMENT TO DO OR NOT TO DO AN
ACT. IT IS LEGALLY BINDING AGREEMENT
- SALMOND SAYS ,” CONTRACT IS AN AGREEMENT CREATING
AND DEFINING OBLIGATIONS BETWEEN THE PARTIES.
- FREDREICK POLLOCK SAYS,” EVERY AGREEMENT AND
PROMISE ENFORCEABLE AT LAW IS A CONTRACT
- TWO ELEMENTS :
- AN AGREEMENT : SEC 2(e) EVERY PROMISE OR EVERY SET
OF PROMISES FORMING THE CONSIDERATION FOR EACH OTHER. AGREEMENT INVOLVES
OFFER AND ACCEPTANCE OF THE SAME BY THE OTHER PARTY.
- AN ENFORCEABILITY OF LAW :MUST GIVE RISE TO LEGAL
OBLIGATION.
- DIFFERENCE BETWEEN ILLEGAL AND VOID AGREEMENTS
- VOID AGREEMENT
- ARE BROADER IN SCOPE
- PARTIES TO A VOID AGREEMENT MAY NOT BE PUNISHED
- TRANSACTIONS COLLATERAL TO VOID AGREEMENTS ARE
ENFORCEABLE LAW
- ILLEGAL AGREEMENT
1.
WHICH IS EITHER PROHIBITED
BY LAW OR OTHERWISE AGAINST THE POLICY
2.
VOID AND PARTIES TO AN
ILLEGAL AGREEMENT MAY BE LIABLE FOR PUNISHMENT
3.
TRANSACTIONS COLLATERAL MAY
BE TAINTED WITH ILLEGALITY
- MEANING OF VOIDABLE CONTRACT
- ACCORDING TO SEC 2(I) AN AGREEMENT WHICH IS
ENFORCEABLE BY LAW AT THE OPTION OF ONE OR MORE PARTIES BUT NOT AT THE
OPTION OF THE OTHER OR OTHER’S A VOIDABLE CONTRACT. MISSING OF THE FREE
CONSENT.
- CONTRACT IS VALID UNTIL AT THE OPTION TO AVOID IS
EXERCISED BY THE PERSON TO WHOSE CONSENT TO THE AGREEMENT WAS NOT FREE.
THE OTHER PARTY WHO INDUCED THE ONE TO ENTER CAN NOT TAKE BENEFIT OF HIS
OWN FRAUD.
- EXAMPLE:- A PERSON OF WEAK INTELLIGENCE MAKE A
GIFT OF HIS ENTIRE PROPERTY TO B WHO WAS IN DOMINANT POSITION. IT IS
VOIDABLE AT THE OPTION OF A
- DIFFERENCE BETWEEN OFFER AND INVITATION TO OFFER
- SECTION 2(a) DEFINES OFFER WHEN ONE PARTY
SIGNIFIES TO ANOTHER HIS WILLINGNESS TO DO OR ABSTAIN FROM DOING ANYTHING
WITH A VIEW TO OBTAINING THE ASSENT OF THAT OTHER TO SUCH ACT OR
ABSTINENCE
- DIFFERENT FROM
- A MERE STATEMENT OF INTENTION LIKE ANNOUNCEMENT OF
AUCTION SALE
- AN INVITATION TO OFFER: AN ADD IN THE
NEWSPAPER,DISPLAY OF THE GOODS
- A MERE COMMUNICATION OF INFORMATION
- A CATALOGUE OF GOODS WITH PRICE
- A CASUAL INQUIRY
- ADVERTISEMENT BY TENDERS
- MEANING OF COUNTER OFFER,CROSS OFFER
- COUNTER OFFER
- WHEN AN OFFER IS ACCEPTED WITH SOME MODIFICATION
IN TERMS OF THE OFFER OR WITH SOME OTHER CONDITIONS NOT FORMING PART OF
THE OFFER SUCH QUALIFIED ACCEPTANCE AMOUNT TO A COUNTER OFFER.
- A OFFERS TO SELL HIS BY CYCLE FOR 1000 TO B BUT
REPLIES OFFERING TO PAY 900.
- CROSS OFFER
·
WHEN TWO PARTIES MAKE
IDENTICAL OFFERS TO EACH OTHER IN
IGNORANCE OF OTHER’S OFFER SUCH OFFERS ARE KNOWN AS CROSS OFFER.
- COMPETENCY OF THE PA RITES
- SECTION 11 OF THE CONTRACT ACT DEALS WITH THE
COMPETENCY OF PARTIES AND PROVIDES THAT EVERY PERSON IS COMPETENT TO ENTER
INTO CONTRACT WHO IS THE AGE OF MAJORITY ACCORDING TO THE LAW TO WHICH HE
IS SUBJECT AND WHO IS OF SOUND MIND AND IS NOT DISQUALIFIED FROM
CONTRACTING BY ANY LAW TO WHICH HE IS SUBJECT.
- FOLLOWING PERSONS ARE THE INCOMPETENT TO ENTER
INTO CONTRACT:-
- MINOR
- PERSON OF UNSOUND MIND
- PERSON DISQUALIFIED BY ANY LAW TO WHICH THEY ARE
SUBJECT.
- DIFFERENCE BETWEEN
- VOID CONTRACT
- IT WAS VALID BUT SUBSEQUENTLY IT BECOMES VOID
- AN AGREEMENT WHICH BECOMES ILLEGAL IN THE COURSE
OF PERFORMANCE IS A CASE OF VOID CONTRACT.
- VOID AGREEMENT
- NOT ENFORCEABLE AT LAW
- NO CONTRACT COMES INTO EXISTENCE
- AN AGREEMENT WITH MINOR IS VOID
- FROM THE VERY BEGINNING IT HAS NO LEGAL EFFECT
- IT IS VOID AB INITIO AND DEFECTS ARE INCURABLE
- VOIDABLE CONTRACT
- ONE OF THE PARTIES MAY AFFIRM OR REJECT
- IT IS VALID AND ENFORCEABLE TILL IT IS CANCELLED
AND IT IS CURABLE
- THIRD PARTY CAN ACQUIRE A VALID TITLE
- ELIGIBLE FOR COMPENSATION IN CASE OF NON
PERFORMANCE
- FREE CONSENT
- FREE CONSENT OF ALL THE PARTIES TO A CONTRACT IS
ONE OF THE ESSENTIAL ELEMENTS OF CONTRACT AS PER SECTION 10
- THE PARTIES TO CONTRACT SHOULD HAVE IDENTITY OF
MIND
- TWO OR MORE PERSON ARE SAID TO CONSENT WHEN THEY
AGREE UPON THE SAME THING IN THE SAME SENSE ( SECTION 13)
- NOT ONLY THE PARTIES TO CONTRACT SHOULD HAVE
IDENTITY OF MIND BUT THE CONSENT OF THE PARTIES MUST BE REAL AND FREE
- FREE CONSENT IS THE CONSENT WHICH IS HAS BEEN
OBTAINED BY THE FREE WILL OF THE PARTIES OUT OF THEIR OWN 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
- FREE CONSENT
- WHEN CONSENT TO AGREEMENT IS CAUSED BY
COERCION,UNDUE INFLUENCE,MISREPRESENTATION OR FRAUD,THE CONTRACT IS
VOIDABLE AT THE OPTION OF THE PARTY WHOSE CONSENT IS NOT FREE
- WHEN CONSENT IS CAUSED BY MISTAKE,THE AGREEMENT IS
VOID
- DIFFERENCE BETWEEN COERCION AND UNDUE INFLUENCE
- COERCION IS THREAT OR FORCE USED BY ONE PARTY
AGAINST ANOTHER FOR COMPELLING HIM TO ENTER INTO AGREEMENT
- SECTION 16 OF THE INDIAN CONTRACT ACT DEFINES
COERCION AS THE
- AS THE COMMITTING OR THREATENING TO COMMIT ANY ACT
AS FORBIDDEN BY THE INDIAN PENAL CODE
- OR UNLAWFUL DETAINING OR THREATENING TO COMMIT ANY
ACT FORBIDDEN BY THE INDIAN PENAL CODE OR
- AN UNLAWFUL DETAINING TO DETAIN,ANY PROPERTY TO
THE PREJUDICE OF ANY PERSON WITH THE INTENTION OF INDUCING ANY PERSON TO
ENTER INTO AN AGREEMENT.
- IT IS IMMATERIAL WHETHER THE INDIAN PENAL
CODE IS NOT FORCE IN THE PLACE
WHERE THE COERCION IS EMPLOYED.
- UNDUE INFLUENCE
- IS MORAL COERCION AS OPPOSED TO PHYSICAL COERCION
(15)
- DOMINATION OF WEAK MIND BY A STRONG MIND TO AN
EXTENT WHICH CAUSES THE BEHAVIOR OF WEAKER PERSON TO ASSUME AN UNNATURAL
CHARACTER
- SECTION 16 OF THE INDIAN CONTRACT ACT :
- A CONTRACT IS SAID TO BE INDUCED BY UNDUE
INFLUENCE
- WHERE THE RELATION SUBSISTING BETWEEN THE PARTIES
ARE SUCH THAT ONE OF THE PARTIES IS IN A POSITION TO DOMINATE THE WILL OF
OTHER AND USES THE POSITION TO OBTAIN AN UNFAIR ADVANTAGE OVER THE OTHER.
- DIFFERENCE BETWEEN UNDUE INFLUENCE AND COERCION
- COERCION
- USE OF PHYSICAL FORCE
- NEED NOT PROCEED FROM THE PROMISEE NOR NEED IT BE
DIRECTED AGAINST THE PROMISOR.
- MAY PROCEED FROM A STRANGER TO CONTRACT AND MAY BE
DIRECTED AGAINST STRANGER
- VOIDABLE CONTRACT
- INVOLVES CRIMINAL ACT
- UNDUE INFLUENCE
- USE OF MORAL PRESSURE
- MUST BE SOME RELATION BETWEEN THE PARTIES WHICH
PLACES ONE PARTY IN A POSITION TO DOMINATE THE WILL OF OTHER
- EITHER VOIDABLE OR THE COURT MAY SET ASIDE OR
ENFORCE IT MODIFIED FORM
- NO CRIMINAL ACT
- UNCERTAIN AGREEMENT
- SECTION 29 PROVIDES THAT AN AGREEMENT THE MEANING
OF WHICH IS NOT CERTAIN OR CAPABLE OF BEING MADE CERTAIN IS VOID
- IF THERE IS AMBIGUITY IN THE WORDING OF THE
CONTRACT,NOT POSSIBLE TO READ THE EXACT INTENTION OF THE PARTIES TO
CONTRACT
- AN AGREEMENT TO SELL AT A CONCESSIONAL RATE IS
VOID FOR UNCERTAINTY
- AGREEMENT IN WHICH PRICE IS TO BE BASED ON LUCK OR
AN UNCERTAIN EVENT ARE VOID FOR UNCERTAINTY
- AGREEMENT OT AGREE IS FUTURE
- GUTHING V LYNN:
- THE BUYER OF A HORSE AGREED TO PAY FIVE POUND MORE
IF THE HORSE PROVED TO BE LUCKY.
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