hmm- busi law edit ver 2

8/3/2019 Hmm- Busi Law Edit Ver 2

1/197

BUSINESS LAWBUSINESS LAW


2/197

AN INTRODUCTION TOAN INTRODUCTION TO

LAW, LEGAL SYSTEMSLAW, LEGAL SYSTEMS

AND GLOBALIZATIONAND GLOBALIZATION


3/197

OBJECTIVESOBJECTIVES

ToTo understandunderstand thethe essentialessential featuresfeatures ofof aalegallegal system,system, includingincluding ourour ConstitutionConstitution

ToTo appreciateappreciate GlobalizationGlobalization asas relevantrelevant totoLawLaw andand LegalLegal InstitutionsInstitutions

ToTo studystudy thethe differentdifferent formsforms andand principlesprinciplesofof CivilCivil andand TortiousTortious liabilitiesliabilities


4/197

LAWLAW

LawLaw is a system of rules, usually enforcedis a system of rules, usually enforcedthrough a set of institutions.through a set of institutions.

It shapes politics, economics and societyIt shapes politics, economics and societyin numerous ways and serves as thein numerous ways and serves as theforemost social mediator in relationsforemost social mediator in relationsbetween people.between people.

Law governs a wide variety of socialLaw governs a wide variety of socialactivities.activities.


5/197

Law :The term `law refers to rules of conduct enforced by the

State to maintain peace and order in the society

Austin has defined law in the following words : `A law is

rule of conduct imposed and enforced by theSovereign.

Salmand defined law as `the body of principles

recognized and applied by the State in theadministration of justice.

Holland defined law as ``rule of external human actionsenforced by Sovereign Political Authority.

Definition of Law :


6/197

MEANING OF BUSINESS LAW

B

usiness law is a branch of General Law. It relates to industry, trade andcommerce. It includes law relating to contracts, sale of goods, partnerships,negotiable instruments, companies, cooperative societies etc. Further,consumers are a special constituent of any business. Consumers Protection Actnot only recognizes the importance of safeguarding the rights and interests of theConsumers but also puts every business on alert and answerable to the consumer

3. SOURCES OF BUSINESS LAW

1. English Mercantile Law

2. Statutes of Indian Legislature

3. Judicial Decisions

4. Customs and Usage


7/197

What is the Role of Law?What is the Role of Law?

ToTo establishestablish andand enforceenforce normsnorms oror societalsocietalmoralsmoralsAchieves justice?Achieves justice?

ToTo limitlimit powerpower ofof thethe GovernmentGovernment andand otherotherauthoritiesauthorities Enforces accountability?Enforces accountability?

To examine To examine reasonreason in all activities in all activities


8/197

Typology of LawTypology of Law

LegalLegal remediesremedies == Constitutional,Constitutional, Civil,Civil,Criminal,Criminal, ContractualContractual andand TortiousTortious

LegalLegal systemssystems andand JudicialJudicial approachesapproaches ==CommonCommon LawLaw andand CivilCivil LawLaw

PrinciplesPrinciples ofof interpretationinterpretation == Statutory,Statutory,ConstitutionalConstitutional andand EvidentiaryEvidentiary


9/197

1:1: AnalyzingAnalyzingWhatWhatisLaw ?isLaw ?

Natural Law view.Natural Law view.

Positivist view.Positivist view.

Historical view.Historical view. Legal Realism view.Legal Realism view.


10/197

NaturalLawNaturalLaw

Assumes that law, rights and ethics are basedAssumes that law, rights and ethics are basedon universal moral principals inherent in natureon universal moral principals inherent in naturediscoverable through the human reason.discoverable through the human reason.

The oldest view of jurisprudence dating back toThe oldest view of jurisprudence dating back toAristotle .Aristotle . (system of laws existing in particular(system of laws existing in particularplace. the system of laws that exists in aplace. the system of laws that exists in aparticular place or that affects a particular areaparticular place or that affects a particular areaof activity)of activity)

JeffersonsJeffersons DeclarationDeclaration assumes the Laws ofassumes the Laws ofNature.Nature.


11/197

NaturalLawNaturalLaw

Rev. MartinLutherKing, Jr.Rev. MartinLutherKing, Jr.Letter from the Birmingham JailLetter from the Birmingham Jail, April 16,, April 16,1963. [T]here are two types of laws: just1963. [T]here are two types of laws: justand unjust laws. . . . A just law is a manand unjust laws. . . . A just law is a man--made code that squares with the moralmade code that squares with the morallaw . . . . An unjust law is a code that islaw . . . . An unjust law is a code that isout of harmony with the moral law. . . .out of harmony with the moral law. . . .

An unjust law is a human law that is notAn unjust law is a human law that is notrooted in eternal and natural law.rooted in eternal and natural law.


12/197

Legal PositivismLegal Positivism

Law is the supreme will of the State thatLaw is the supreme will of the State thatapplies only to the citizens of that nationapplies only to the citizens of that nationat that time.at that time.

Law, and therefore rights and ethics, areLaw, and therefore rights and ethics, arenot universal. The morality of a law, ornot universal. The morality of a law, orwhether the law is bad or good, iswhether the law is bad or good, is

irrelevant.irrelevant.


13/197

Legal RealismLegal Realism

Jurisprudence that holds law is not simplyJurisprudence that holds law is not simplya result of the written law, but a producta result of the written law, but a productof the views of judicial decision makers,of the views of judicial decision makers,as well as socialas well as social, economic, economic, and, andcontextual influences.contextual influences.


14/197

2:2: The CommonLaw TraditionThe CommonLaw Tradition

American law is based largely onAmerican law is based largely on EnglishEnglishCommon LawCommon Law which was based largely onwhich was based largely ontraditions, social customs, rules, and casestraditions, social customs, rules, and casesdeveloped over hundreds of years.developed over hundreds of years.


15/197

The CommonLaw TraditionThe CommonLaw Tradition[2][2]

At common law, there were two separateAt common law, there were two separatecourt systems with two different types ofcourt systems with two different types ofremedies:remedies:

COURTS OF LAW (monetary relief), andCOURTS OF LAW (monetary relief), and

COURTS OF EQUITY (nonCOURTS OF EQUITY (non--monetary relief)monetary relief)based on notions of justice and fair dealing.based on notions of justice and fair dealing.


16/197

Courts ofLawCourts ofLaw

Also called kings courts where judgesAlso called kings courts where judgeswere appointed by the king.were appointed by the king.

Remedies limited to those provided at law,Remedies limited to those provided at law,i.e., land,i.e., land, chattel (something that youchattel (something that youown),own), money.money.

Judges resolved disputes by application ofJudges resolved disputes by application ofrules of law to the facts of the case beforerules of law to the facts of the case beforethe court.the court.


17/197

Courts of EquityCourts of Equity

EquitableEquitable relief was sometimes availablerelief was sometimes availablein instances where a strict application ofin instances where a strict application ofthe law to the facts of the case compelledthe law to the facts of the case compelleda result that was legal but unjust.a result that was legal but unjust.


18/197

Remedies TodayRemedies Today

Today federal and state courts of generalToday federal and state courts of generaljurisdiction have consolidated remedies atjurisdiction have consolidated remedies atlaw and remedies at equity.law and remedies at equity.

Generally, the same court can fashion aGenerally, the same court can fashion aremedy that includes both damages andremedy that includes both damages andequitable or injunctive relief.equitable or injunctive relief.


19/197

Stare DecisisStare Decisis

Stare decisisStare decisis is a Latin phrase meaning tois a Latin phrase meaning tostand on decided cases.stand on decided cases. M

akes the law stable and predictable.M

akes the law stable and predictable. Increases judicial efficiency by relieving courtsIncreases judicial efficiency by relieving courts

of having to reinvent legal principles for eachof having to reinvent legal principles for eachcase brought before them.case brought before them.


20/197

Stare DecisisStare Decisis and Precedentand Precedent

Stare decisisStare decisis is judge made law based onis judge made law based onprecedent.precedent.

Precedents are judicial decisions that give risePrecedents are judicial decisions that give rise

to legal principles that can be applied in futureto legal principles that can be applied in futurecases based upon similar facts.cases based upon similar facts.

Precedents and other forms of positive law, suchPrecedents and other forms of positive law, suchas statutes, constitutions, and regulations, areas statutes, constitutions, and regulations, arereferred to as binding authority and must bereferred to as binding authority and must befollowed.followed.


21/197

Cases of First ImpressionCases of First Impression

In cases of first impression where thereIn cases of first impression where thereis no precedent, the court may refer tois no precedent, the court may refer topositive law, public policy, and widely heldpositive law, public policy, and widely heldsocial values in order to craft the best newsocial values in order to craft the best newprecedent.precedent.


22/197

Legal ReasoningLegal Reasoning

Method used by judges to reach aMethod used by judges to reach adecision.decision.

Many courts and attorneys frame decisions

Many courts and attorneys frame decisionsand briefs using theand briefs using the IRACIRAC format: Issue,format: Issue,

Rule, Application (Analysis), andRule, Application (Analysis), andConclusionConclusion..


23/197

Types ofLegal ReasoningTypes ofLegal Reasoning

Deductive Reasoning: Makes use ofDeductive Reasoning: Makes use ofsyllogism, a type of logical relationshipsyllogism, a type of logical relationshipinvolving a major premise and a minorinvolving a major premise and a minor

premise.premise. Linear Reasoning: Proceeds from pointLinear Reasoning: Proceeds from point

to point, with the final point being theto point, with the final point being theconclusion.conclusion.

Reasoning by Analogy: Analysis thatReasoning by Analogy: Analysis thatcompares facts of present case withcompares facts of present case withfacts of similar previouslyfacts of similar previously--decideddecidedcases.cases.


24/197

4:4: Classifications ofLawClassifications ofLaw

Every type of law will be either:Every type of law will be either:

Civil or Criminal, and eitherCivil or Criminal, and either

Substantive or Procedural, and eitherSubstantive or Procedural, and either Public or Private.Public or Private.


25/197

Civil vs. CriminalCivil vs. Criminal

Civil law defines the rights betweenCivil law defines the rights betweenindividuals or individuals andindividuals or individuals andgovernments.governments.

Criminal law defines an individualsCriminal law defines an individualsobligations to society as a whole.obligations to society as a whole.


26/197

Substantive vs. ProceduralSubstantive vs. Procedural

Substantive law defines or creates theSubstantive law defines or creates therights and obligations of persons andrights and obligations of persons and

governments.governments. Procedural law provides the steps oneProcedural law provides the steps one

must follow in order to avail oneself ofmust follow in order to avail oneself of

ones legal rights or enforce anothersones legal rights or enforce anotherslegal obligations.legal obligations.


27/197

7: Businesspersons7: Businesspersons

andthe Lawandthe Law Laws regulate all areas of business.Laws regulate all areas of business.

Factors business owners must consider:Factors business owners must consider: Is contract enforceable?Is contract enforceable?

Contract for goods vs. services?Contract for goods vs. services?

What happens if someone breaches theWhat happens if someone breaches the

contract?contract? Dispute Resolution?Dispute Resolution?


28/197

Contract lawContract law regulates everything fromregulates everything frombuying a bus ticket to trading on derivativesbuying a bus ticket to trading on derivativesmarkets.markets.

P

roperty lawP

roperty law defines rights and obligationsdefines rights and obligationsrelated to the transfer and title of personalrelated to the transfer and title of personaland real property.and real property.

criminal lawcriminal law offers means by which theoffers means by which the

state can prosecute the perpetratorstate can prosecute the perpetrator


29/197

Major Legal SystemsMajor Legal Systems

CommonCommon LawLaw derivedderived fromfrom casecasecircumstancescircumstances;; JudgesJudges rolerole isis dominantdominant AdversarialAdversarial systemsystem

CivilCivil oror ContinentalContinental statutorystatutory basesbases;; JudgesJudgesdiscretiondiscretion isis minimizedminimized InquisitorialInquisitorial systemsystem

ReligiousReligious oror customarycustomary basedbased onon traditionaltraditionaltextstexts andand practicespractices


30/197

Civil LawsCivil Laws

PrivatePrivate LawLaw == regulateregulate rightsrights andand dutiesdutiesbetweenbetween individualsindividuals ContractsContracts andand CivilCivil actionsactions

EquitableEquitable basesbases ofof interpretationinterpretation EquityEquity andand equalityequality balancebalance ofof interestsinterests

ProbabilitiesProbabilities andand preponderancepreponderance

CompensatoryCompensatory remediesremedies


31/197

Criminal LawsCriminal Laws

RelatesRelates toto onlyonly specificspecific offencesoffences andand resultsresults inindeterrentdeterrent punishmentspunishments nono victimvictim perspective?perspective? NotNot retrospectiveretrospective;; rightright toto silencesilence

StrictStrict interpretationinterpretation andand fairfair trialtrial principlesprinciples proceduralprocedural guaranteesguarantees BeyondBeyond allall reasonablereasonable doubtdoubt

ProsecutionProsecution byby thethe StateState onon thethe rationalerationale ofofpublicpublic welfarewelfare andand deterrencedeterrence


32/197

Economic CrimesEconomic Crimes

Features of Economic Crimes:Features of Economic Crimes: CauseCause economiceconomic lossloss toto societysociety;; not not justjust toto

victimsvictims

MultipleMultiple negativenegative effectseffects SpecificSpecific modusmodus operandioperandi

FraudulentFraudulent intentintent

EvidentiaryEvidentiary difficultiesdifficulties expertexpert testimonytestimony


33/197

Quest for the TruthQuest for the Truth

ObjectObject ofof CriminalCriminal JusticeJustice == accurateaccurate truthtruth substantialsubstantial andand scientificscientific

DNADNA ProfilingProfiling;; NarcoNarco--analysisanalysis;; MedicoMedico--legallegal;;ForensicForensic methodsmethods andand resourcesresources

FingerprintingFingerprinting;; graphologygraphology;; phoneticsphonetics

DocumentaryDocumentary andand CyberCyber evidenceevidence

RelianceReliance onon ExpertExpert evidenceevidence


34/197

Structure of the CourtsStructure of the Courts

CivilCivil sideside == CivilCivil JudgeJudge DistrictDistrict CourtCourt HighHighCourtCourt SupremeSupreme CourtCourt

CriminalCriminal sideside == MagistrateMagistrate SessionsSessions CourtCourt(District)(District) HighHigh CourtCourt SupremeSupreme CourtCourt AidedAided byby PolicePolice andand ProsecutionProsecution

Jurisdiction/PowersJurisdiction/Powers == determinationdetermination ofof factsfacts appreciationappreciation ofof evidenceevidence materialmaterial questionsquestions ofoffactsfacts andand lawlaw decisivedecisive onon factsfacts;; appealsappeals onon lawlaw


35/197

Exercise of Judicial PowersExercise of Judicial Powers

Regular Appeals and Review in superior CourtsRegular Appeals and Review in superior Courts

Special Appeals in the Supreme CourtSpecial Appeals in the Supreme Court

WritWrit powerspowers ofof HighHigh CourtsCourts andand thethe SupremeSupremeCourtCourt (of(of emergentemergent nature)nature)

ReviewReview andand CurativeCurative powerspowers ofof SupremeSupreme CourtCourt


36/197


37/197

The Constitution of IndiaThe Constitution of India

PreamblePreamble Sovereign,Sovereign, Socialist,Socialist, Secular,Secular, DemocraticDemocraticRepublicRepublic

Justice, Liberty, Equality & FraternityJustice, Liberty, Equality & Fraternity

InherentInherent QualitiesQualities ofof thethe IndianIndian LegalLegal SystemSystem

LongestLongest in the Worldin the World 395 not out !395 not out !

12 Schedules and 22 Parts12 Schedules and 22 Parts

Government and its three branchesGovernment and its three branches


38/197

Fundamental RightsFundamental Rights

EnforceableEnforceable onlyonly againstagainst StateState exceptexcept RightRightagainstagainst exploitationexploitation andand Right Right of of PersonalPersonalLibertyLiberty whichwhich areare enforceableenforceable againstagainst fellowfellow

citizenscitizens tootoo IsIs CompanyCompany aa StateState onlyonly publicpublic functionfunction

CertainCertain RightsRights areare onlyonly forfor CitizensCitizens RightRight toto

freedomfreedom ofof speechspeech && expressionexpression;; toto formformassociationsassociations;; toto movemove freelyfreely andand resideresideanywhereanywhere inin IndiaIndia;; occupationoccupation


39/197

Fundamental Rights Fundamental Rights

Right to EqualityRight to Equality bedrock of all Rightsbedrock of all Rights

EqualityEquality beforebefore thethe LawLaw;; andand EqualEqualProtectionProtection ofof thethe LawsLaws

Classification based on intelligible differentiaClassification based on intelligible differentia

Must have a nexus with the ObjectiveMust have a nexus with the Objective

Eschews ArbitrarinessEschews Arbitrariness CasteCaste basedbased ReservationsReservations;; AIDSAIDS DrugsDrugs PolicyPolicy

Equality?Equality?


40/197

Fundamental Rights Fundamental Rights

Fundamental FreedomsFundamental Freedoms only to citizensonly to citizens

ReasonableReasonable restrictionsrestrictions publicpublic orderorderandand interestsinterests ofof generalgeneral publicpublic

TENTEN SportsSports andand CricketCricket onon DDDD

RestrictionsRestrictions onon thethe MediaMedia inin reportingreporting ononterrorterror strikesstrikes andand rescuerescue attemptsattempts


41/197

Right to PropertyRight to Property

EarlierEarlier a Fundamental Righta Fundamental Right

NowNow a Constitutional Righta Constitutional Right

DeprivationDeprivation only by authority of lawonly by authority of law

Public interest and Just compensationPublic interest and Just compensation SingurSingur controversy; SEZscontroversy; SEZs


42/197

Directive Principles of State PolicyDirective Principles of State Policy

NonNon enforceable by Courtsenforceable by Courts

Welfare of the PeopleWelfare of the People Right to WorkRight to Work

Distribution of Economic ResourcesDistribution of Economic Resources

Living wage for workersLiving wage for workers

ParticipationParticipation ofof WorkersWorkers inin managementmanagement ofofIndustriesIndustries


43/197

FederalismFederalism Law making PowersLaw making Powers

Union,Union, StateState andand ConcurrentConcurrent ListsLists toto facilitatefacilitate smoothsmoothtradetrade andand commercecommerce

UnionUnion == Defence,Defence, Ports,Ports, Aircrafts,Aircrafts, Railways,Railways, IntellectualIntellectualProperty,Property, TradeTrade andand CommerceCommerce;; TotalTotal 9696 withwith residuaryresiduarypowerpower

StateState == LandLand Rights,Rights, Production,Production, supplysupply andand distributiondistribution

ofof goodsgoods;; TotalTotal 6666

ConcurrentConcurrent == Contracts,Contracts, Banking,Banking, EconomicEconomic andand SocialSocialPlanningPlanning;; TotalTotal 4747


44/197

Government ContractsGovernment Contracts

On behalf of President or GovernorOn behalf of President or Governor

They are not personally liableThey are not personally liable

Is Government Company like any other?Is Government Company like any other? PPPs and other Public ContractsPPPs and other Public Contracts

Economic Policy of the StateEconomic Policy of the State

Nature of Judicial interventionsNature of Judicial interventions


45/197

Globalization of LawGlobalization of LawTo appreciate the relevance ofTo appreciate the relevance of

International legal principles inInternational legal principles inthe Indian Legal Systemthe Indian Legal System


46/197

Effect of International LawEffect of International Law

TransnationalTransnational DisputeDispute ResolutionResolution MechanismsMechanisms InstitutionalInstitutional modelsmodels:: WTOWTO;; ICJICJ;; CommercialCommercialArbitrationArbitration mechanismsmechanisms

ApplicationApplication ofof InternationalInternational PrinciplesPrinciples withinwithin thetheLegalLegal SystemSystem ofof aa NationNation EnforcementEnforcement ofof InternationalInternational CovenantsCovenants

FormationFormation andand ComplianceCompliance ofof TreatiesTreaties

AdoptionAdoption byby DomesticDomestic InstitutionsInstitutions CourtsCourts andandLegislaturesLegislatures


47/197

WTOWTO Constitutional PrinciplesConstitutional Principles

Most Favoured Nation (MFN)Most Favoured Nation (MFN)

National TreatmentNational Treatment

One MemberOne Member One VoteOne Vote

Reverse Consensus RuleReverse Consensus Rule


48/197

WTOWTO Principles Principles

Single UndertakingSingle Undertaking except in Plurilateral Formexcept in Plurilateral Form

Dispute SettlementDispute Settlement multimulti--tiered structuretiered structure

EnforcementEnforcement Sanctions and CountermeasuresSanctions and Countermeasures

Supreme respect for NegotiationsSupreme respect for Negotiations at all stagesat all stages


49/197

Specific ChallengesSpecific Challenges

WTOWTO -- International Trade RegulationInternational Trade Regulation Captured by vested interests?Captured by vested interests?

DefensiveDefensive MechanismsMechanisms andand TradeTradeRemediesRemedies ObjectivityObjectivity inin thethe Rules?Rules?

DisputeDispute SettlementSettlementMechanismsMechanisms LevelLevel--playingplaying field?field?


50/197

LAW OF TORTIOUSLAW OF TORTIOUS

LIABILITYLIABILITYTo understand the extent ofTo understand the extent of

legal duty to take care and thelegal duty to take care and thecorresponding enforceable remediescorresponding enforceable remedies


51/197

What is a Tort?What is a Tort?

CivilCivil WrongWrong anan affrontaffront committedcommitted inin aa

privateprivate sphere,sphere, butbut againstagainst aa dutyduty owedowed totoaa societysociety

Different from Criminal Law; Contract LawDifferent from Criminal Law; Contract Law


52/197

Typology of TortsTypology of Torts

NegligenceNegligence

DefamationDefamation Libel and SlanderLibel and Slander

TrespassTrespass toto personperson (assault,(assault, battery,battery,confinement)confinement) andand toto propertyproperty

NuisanceNuisance PublicPublic andand PrivatePrivate

AbuseAbuse ofof legallegal procedureprocedure harassmentharassmentAccidentsAccidents && EnvironmentalEnvironmental HazardsHazards


53/197

Basic PrinciplesBasic Principles

Duty to take careDuty to take care reasonable standardreasonable standard

Breach of that dutyBreach of that duty

InjuryInjury andand DamageDamage causedcaused byby suchsuch breachbreach

DamagesDamages payablepayable asas CompensationCompensation


54/197

Basic Principles Basic Principles

RemotenessRemoteness ofof DamageDamage andand Test Test of ofReasonableReasonable ForesightForesight

CompensationCompensation isis thethe objectiveobjective restitutiorestitutioinin integrumintegrum

ResRes ipsaipsa loquitorloquitor (facts(facts speakspeak forforthemselves)themselves) rulerule ofof evidenceevidence


55/197

Injuria sine damnumInjuria sine damnum

AshbyAshby vv.. WhiteWhite ((17031703)) legallegal rightright

injured,injured, butbut nono damagedamage

NominalNominal damagesdamages awardedawarded


56/197

Damnum sine injuriaDamnum sine injuria

Mayor ofBradford v. PicklesMayor ofBradford v. Pickles

Use of own landUse of own land

but, with bad motivebut, with bad motive City ofBradford was affected by such an actCity ofBradford was affected by such an act

N

o legal right was injuredN

o legal right was injured


57/197

General DefencesGeneral Defences

11.. VolentiVolenti nonnon fitfit injuriainjuria ifif volunteeredvolunteeredbyby thethe plaintiffplaintiff withwith knowledgeknowledge ++ consentconsent ConsentConsent couldcould bebe expressexpress oror impliedimplied

MedicalMedical NegligenceNegligence PriorPrior InformedInformed ConsentConsent

22.. InevitableInevitable accidentaccident

UncertainUncertain andand unforeseenunforeseen

DespiteDespite reasonablereasonable carecare byby thethe defendantdefendant


58/197

General Defences General Defences

3. Act of God (vis major)3. Act of God (vis major)

Involvement ofNatural forcesInvolvement ofNatural forces

Unforeseen extraordinary impactUnforeseen extraordinary impact

4. Right of Private Defense4. Right of Private Defense

To protect person or own propertyTo protect person or own property

Necessary and Reasonable force standardNecessary and Reasonable force standard

Proportionality expectedProportionality expected electric fencingelectric fencing


59/197

General Defences General Defences

5. Statutory Authority5. Statutory Authority

Activity causing injury should be authorizedActivity causing injury should be authorized DoesDoes notnot applyapply toto suchsuch authorizedauthorized activitiesactivities

undertakenundertaken inin aa negligentnegligent mannermanner

66.. ContributoryContributory NegligenceNegligence whenwhen thetheplaintiffplaintiff isis alsoalso partlypartly liableliable


60/197

Kinds of LiabilitiesKinds of Liabilities

1. Vicarious Liability1. Vicarious Liability

2. Strict Liability2. Strict Liability

3. Absolute Liability3. Absolute Liability


61/197

Vicarious LiabilityVicarious Liability

ResponsibilityResponsibility andand liabilityliability imposedimposed forforactionsactions undertakenundertaken byby certaincertain othersothers PrincipalPrincipal isis liableliable forfor AgentsAgents actsacts

PartnersPartners areare liableliable forfor eacheach othersothers actsacts

MasterMaster isis liableliable forfor thethe servantsservants actsacts whatwhataboutabout GovernmentGovernment servants?servants?

ContractContract ofof ServiceService && ContractContract forfor ServiceService


62/197

Strict LiabilityStrict Liability

RylandsRylands v. Fletcher (1868)v. Fletcher (1868)

NegligentNegligent work,work, eveneven ofof IndependentIndependent ContractorsContractors

Source of damage from own landSource of damage from own land

StrictStrict ResponsibilityResponsibility attributedattributed toto anyany damagedamagecausedcaused byby actionsactions onon ownown propertyproperty

GeneralGeneral DefencesDefences cancan bebe claimedclaimed toto overcomeovercomeliabilityliability


63/197


64/197

DiscussionDiscussion


65/197


66/197

Nature of ContractSynopsis :

1. Introduction2. Meaning of Business Law3. Sources of Business Law4. Business Law in India5. Contract Act, 18726. Meaning of Contract7. Essential elements of a valid Contract8. Classification of Contracts


67/197

4. BUSINESS LAW IN INDIA

1. Contract Act, 18722. Negotiable Instruments Act, 18813. Sale of Goods Act, 19304. Partnership Act, 19325. Companies Act, 1956

6. Securities Contracts (Regulation) Act, 19567. MRTP Act, 19698. Foreign Exchange Management Act, 19999. Patent Act, 1970; Copy Right Act, 1957; Trade and

Merchandise and Marks Act, 195810. Sick Industrial Companies (Special Provision) Act, 1985

11. ConsumerProtection Act, 198612. Environment (Protection) Act, 198613. Essential Commodities Act, 195514. Information Technology Act, 200015. Competition Act, 2002


68/197

5. CONTRACT ACT, 1872

1. Applicability : The Contract Act, 1872 is the most important constituentsof Indian Mercantile Law. It affects every person since every one of us

enters into a contract virtually every day.2. Coverage of the ActThe act deals with the basic principles of the law of contracts. It deals withgeneral principles of Contracts and special contracts as given below in thefollowing chart.

Chart - 1

Indian Contract Act

Special types ofcontractsSec. 124 - 238

General Rules

relating toContractsSec.1 - 75


69/197

1. GeneralP

rinciples of Contracts (Sec.1-75) :General principles of contracts include rules and laws relatingto communication, acceptance and revocation of proposal(Sec.2-9) voidable contracts (Sec.10-19 A and 22-23), voidagreements (Sec.11,2230, 32, 36. 56, 57 and 64-67),contingent contracts (sec.31-36), performance of contracts

(Sec.37-67) certain relations resembling those created bycontracts (Sec.68-73) and consequences of breach of contract(Sec.73-75).

2. Special Types of Contracts :Sec.124 to 238 deal with special types of contracts. These are

contracts of Indemnity and Guarantee (Sec.124 to 147)Bailment and pledge (Sec.148 181) and Agency Contracts(Sec.182 238).


70/197

6. MEANING OF CONTRACT

1. Contract Definitions :Let us go through some definitions relating to contract.Salmond :A contract is an agreement, creating and defining theobligation between parties.

Sir William Anson : A contract is an agreement enforceable atlaw made between two or more persons by which rights

are acquired by one or more to acts or forbearances on thepart of others.

Sir Fredrick Pollock : Every agreement and promise enforceableat law is a contract.

Contract Act : Section 2(h) of the Act states that an agreementenforceable by law is a contract. Therefore, a contractessentially consists of two elements : (i) an agreement,

and (ii) its enforceability by law.


71/197

6.2 Essential Requirements of Contract

1. Two parties

2. An agreement :

Consensus-ad-idem

3. Legal obligation

6.3 Agreements which are not contracts :

1. Agreements relating to social matters

2. Domestic agreements between husband and wife

Balfour Vs. Balfour (1919)In this case, on leaving England for Ceylon, the husband

agreed to pay 30 pounds to his wife every month till sheremained in England. As he failed to send the promised

amount regularly, the wife sued him for recovery of theamount. But her suit was dismissed on the ground that itwas an informal arrangement and there was nointention to create legal relationship

Agreement = Offer + Acceptance


72/197

6.4 All contracts are agreements but all agreements are notcontracts

6.5 All obligations do not constitute contracts Torts or civil wrongs Quasi contracts Judgements of Courts Status of obligations like relationships of husband and

wife

7. ESSENTIAL ELEMENTS OF A VALID CONTRACT

According to Section 10 all agreements are contracts if they

are made by the free consent of the parties competent to contract, for alawful consideration and with a lawful object, and are not herebyexpressly declared to be void. Thus, an agreement becomes a validcontract if it has the following elements.


73/197

1. Offer and acceptance

2. Intention to create legal relationship :

3. Lawful Consideration

4. Competence of parties to Contract

5. Free consent

6. Lawful object

7. Agreement not declared as void

8. Certainty and possibility of performance :

9. Legal formalities


74/197

CLASSIFICATION OF CONTRACTS

Chart 2

Classification of Contracts

Validity andEnforceability

Mode ofCreation

Extent ofExecution Obligation

to perform


75/197

Classification of contracts on the basis of validity and Enforceability :1. Valid contracts

2. Voidable contracts

3. Void Contract

Classification of contracts on the basis ofM

ode of Creation :1. Express Contracts

2. Implied contracts

3. Quasi Contracts

Classification on the basis of extent of execution :

1. Executed Contracts

2. Executory Contract


76/197

Classification on the basis of

the obligation to perform :

1. Unilateral Contracts

2. Bilateral Contract


77/197


78/197

CONTRACTCONTRACT


79/197

CONTRACT - Accordingto sec.2(h),a

contractisdefinedasanagreementenforceable before the law.

AGREEMENT - Accordingto sec.2(e),everypromise orset ofpromises forming

consideration foreach other.

PROMISE - Accordingto sec.2(b),whenapersonmade aproposalto

anotherto whomproposalismade,if

proposalisassentedthere to.


80/197

OFFER -Accordingto Sec.2(a),whena

personmade aproposal,whenhe signifiesto anotherhiswillingnessto do orto abstain

fromdoingsomething.

AGREEMENT = OFFER + ACCEPTANCE

CONSENSUS - AD IDEM-Accordingto Sec.13,meeting ofminds oridentity ofminds orreceivingthe same thing

insame sense atsame time.


81/197

Agreement Legal Obligation

Contract

All agreements are contracbut all

contracts are not

agreements.CONTRACT = AGREEMENT +

ENFORCIBILITY BEFORE LAW


82/197


83/197

TYPES OF CONTRACTSTYPES OF CONTRACTS

VALID CONTRACTS

Absolute contract

Contingent contract(Sec. 31-36)

Express contractImplied/Quasi contract(Sec.68- 72)

Valid contract - If all the condition are


84/197

fulfilled it is called as a valid contract.

Contingent contract - In a contractto do or not to do something, if an event

is collateral, does or doesn't happen.

Express contract - When contractsare either in writing or in oral.

Implied contract - When contracts

are neither in writing nor in oral.

Absolute contract - A contract which

is not dependent on fulfillment of any

condition.


85/197

INVALID CONTRACTS

Void contract

Is void(Void - ab - initio)Becomes void

Voidable contract

Illegal contract

Unenforceable contract


86/197

Invalid contract - In a contact if

any one condition is not fulfilled.

Is void (Void-ab-initio) - An

agreement which is not valid from

the beginning.

Becomes void - An agreement

which is valid in the beginning but

due to some superveningimpossibility the contract becomes

void.

V id bl t t A t t


87/197

Illegal contract - An agreement

forbidden by law.

Unenforceable contract - It is

valid but due to some technical

defect the contract becomes void. Incase defects are removed the

contract is enforceable.(lack of

registration, lack of signature etc.,)

Voidable contract - A contract

which is valid unless until avoided

by either the party.

OTHER TYPES


88/197

OTHER TYPES

OF CONTRACTS

Executed contract

Executory contract

Unilateral contractBilateral contract

Executed contract -In a contract where both


89/197

the parties have performed their obligation,

there is remaining nothing to perform.

Executory contract -In a contract where both

the parties are yet to perform their obligation.

Unilateral contract - In a contract one partyhas performed his obligation and other

person is yet to perform his obligation.

Bilateral contract - In a contract where boththe parties have performed their obligation.

Bilateral & Executory are same and inter -

changeable.


90/197


91/197

OFFEROFFERAccording to Sec.2(a),

when a person made aproposal, when he

signifies to another his

willingness to do or toabstain from doingsomething.


92/197

TYPES OF OFFER

Express offer

Implied offer

Specific offer

General offer

Cross offer

Counter offer

Standing offer

ff


93/197

Express offer - When offer is givento another person either in writing or in

oral.

Implied offer - When offer is given

to another person neither in writing norin oral.

Specific offer - When offer is given

to a specific person.

General offer - When offer is givento entire world at a large.(Carlill Vs.

Carbolic smoke ball Co.,


94/197

Cross offer - When both the

persons are making identical offers toeachother in ignorance of others offer.

Counter offer - When both the

persons are making offers to eachotherwhich are not identical in ignorance of

others offer.

Standing offer - An offer whichremains continuously enforceable for a

certain period of time.

LEGAL RULES FOR OFFER


95/197

LEGAL RULES FOR OFFER

Offer must be given with an intentionto create a legal relationship.(BalfourVs. Balfour)

Offer must be definite.(Taylor Vs.Portington)

There is a clear cut differencebetween offer, invitation to offer,invitation to sale. (Harris Vs.Nickerson)


96/197

Offer must be communicated. (Fitch

Vs. Snedkar)

Mere statement of price of price is not

an offer.(Harvey Vs. Facey)


97/197

ACCEPTANCEACCEPTANCEACCEPTANCEACCEPTANCE

ACCEPTANCE


98/197

ACCEPTANCE

According to sec.2(b), when a

person made a proposal toanother to whom proposal ismade, if proposal is assented

there to, it is calledacceptance.

LEGAL RULES FOR


99/197

ACCEPTANCE

Acceptance must be given as per the

mode prescribed by the offerer.

Acceptance must be given before thelapse of time or within reasonable time.

Acceptance must be unconditional.

Acceptance may be given by anyperson in case of general offer.


100/197

Acceptance may be given by any

specific person in case of specific offer.

Acceptance must be communicated.

(Bordgon Vs. Metropolitan Rly. Co.)

Mental acceptance is no acceptance

or acceptance must not be derived from

silence.

Acceptance must not be precedent to

offer.


101/197


102/197

According to sec 2(d) consideration isdefined as when at the desire of the

promisor , or promisee or 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 an act or absinence or

promise is called a consideration for the

promise .

CONSIDERATION

When a party to an agreement promises

to do something he must get


103/197

to do something he must get

something in return .This something

is defined as consideration.LEGAL RULES AS TO

CONSIDERATION

1) It must move at the desire of the promisor.

[Durga Prasad v. Baldeo ]

2) It may move by the promisee .

[Chinnaya v. Ramayya ]

3) It must be past ,present or future .4) It need not be adequate .

5) It must be real .

6) It must not be illegal , immoral or opposed to

public policy .

STRANGER TO CONTRACT


104/197

STRANGER TO CONTRACT

It is general rule of contract that only parties

to contract can sue & be sued on thatcontract . This rule is known as Doctrine of privity i.e relationship between the partiesto contract .

Exceptions1)A trust or a charge .

2)Marriage settlement , partition or otherfamily arrangements .

3)Estoppel4)Assignment of contract .

5)Contract with agent .

6)Convenants running with land .


105/197

No consideration no


106/197

No consideration no

contract [Abdul Aziz v. Masum Ali]

[Kedarnath v. Gauri Mohamed ]

CAPACITYCAPACITY


107/197

CAPACITYCAPACITY

TOTO

CONTRCTCONTRCT

Capacity to contract


108/197

Capacity to contract

Following are the condition for a personto enter into contract

He must be major

He must be sound mind

He must not be disqualified by any

other law.

Disqualified persons to


109/197

Disqualified persons to

enter into a contracta) Minor

b) unsound person

c)othersi.e alien enemy,

insolvent,

convict,company/corporationagainst MOA / AOA .


110/197

MinorMinor According to Indian majority act sec(3)

minor is defined as any person underthe age of 18 years . In the following

cases a person is said to be minor ifhe does not complete the age of 21years

a) any person under the guardian &

wards act ,1890b)any person which comes undersuperintendence of law/legalrepresentative

Rules governing minors

t


111/197

agreement

Rule 1 : judges are counsellors , jury is the servant ,

law is the guardian .

Rule 2:in case minor entered into acontract which is unlawful , illegal ,

immoral he is also prosecutable &

punishable under the relevant law.

Legal rules


112/197

Legal rules

An agreement with minor is voidab initio

[Mohiri Bibi v. Dharmadas Ghase] Minor can be promisee

[Shrafat Ali v. Noor Mohd]

Minor cannot ratify his agreementon attaining the age of majority

[Indra Ramaswamy v. AnthiappaChettier]

Minor as a shareholder ,


113/197

Minor as a partner,

Minor as a agent , Minor as a member of trade union ,

No estoppel against minor ,

He can plead his minority ,

He can enter into contract for hisnecessary

[Robert v. Gray ]

On behalf of minor his parents ,guardian or any other person canenter into void contract to acquiremovable property.


114/197

Persons of


115/197

Persons of

unsound mind1)Lunatic ,

2)Idiots ,

3)Drunken or intoxicated persons .


116/197

FREEFREE

CONSENTCONSENT

FREEFREE

CONSENTCONSENT

FREE CONSENT


117/197

According to Sec 10 of the IndianContract Act one of the essentials of avalid contract is Free Consent

Sec 13 defines consent as Two or

more persons are said to consent whenthey agree upon the same thing in thesame sense.According to Sec 14,consent is said to be free when it is notcaused by:

1.Coercion

2.Undue influence

3.Fraud

4.Misrepresentation

FREE CONSENT

COERCION


118/197

According to Sec 15 coercion meansCommitting or threaten to commit any actforbidden by Indian Penal Code 1860 orunlawful detaining or threating to detainingany other persons property with a view toenter into an agreement. It is immaterialwhether the IPC is or is not in force wherethe coercion is employed

The threat amounting to coercion neednot necessarily be from a party to contract ,it may also proceed from a stranger to thecontract.

COERCION

Consent is said to be caused by coercion when


119/197

obtained by:

1.The committing or threatening to commit any act

forbidden by the Indian Penal Code

2.The unlawful detaining or threatening to detain any

property

It is not important whether the IPC is or not in forcewhere the coercion is taking place.

For example A and B , both Indians are on a voyage

trip to America when the ship is on the Atlantic

ocean B threatens a that if doesnt transfer hisproperty to Bs name then he will push him into the

water.now though the IPC is not in force on the

Atlantic ocean it is still considered a coercion.

Important cases:


120/197

1.Chikkim Ammiraju vs. Seshamma:

In this case a person threatened his wife and sonthat he would suicide if she doesnt transfer herproperty in his brothers favour. The wife andson executed the release of the deed under the

threat . Held the threat of suicide amounted tocoercion within Sec 15 and the release deed wastherefore voidable.

This also is a very important case

to prove that threat to commitsuicide amounts to coercion

p

2. Ranganayakamma vs. Alwar Setty:


121/197

g y y

A young widowed girl of 13 years wasforced to adopt a boy by her relatives who

prevented the removal of his body for

cremation until she consented. Held theconsent was not free but was induces by

coercion.Consequently the adoption was

set aside.

3.Muthia vs. Muthu Karuppa:A f d h d h


122/197

An agent refused to hand over the

account books of a business to thenew agent unless the principal

released him from all liabilities.the

principal had to give a releasedeed.held the deed was

given under coercion

and was voidable

at the option of the

principal.

4. Bansraj vs. Secretary of State:


123/197

The government gave a threat of

attachment against the property ofP for the recovery of the fine due

from his son. P paid the fine. Heldcontract was

induced by

coercion

UNDUE INFLUENCE


124/197

Sometimes a party is compelled to enter into acontract against his will as a result of unfair

persuasion by the other party.

Section 16 defines undue influence as follows

A contract is said to be induced by undue

influencewhere the relations subsisting

between the parties are such that one of the

parties is in a position to dominate the will ofthe other and uses that position to obtain an

unfair advantage over the other

Essentials of undue


125/197

Essentials of undue

influence1. There are two persons

2. The relations are satisfying between them

3. One must dominate the other

4. There must be unfair advantage

5. It involves the moral pressure

There is an undue influence between the


126/197

There 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

Among the following relations there is no undue

influence


127/197

influence

1.wife and husband

2.landlord and tenant

3.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%

FRAUD


128/197

According to Sec 17 fraud means and includes any ofthose acts committed by a party to contract or with his

connivance or by his agent with an intent to deceive orinduce a person to enter a contract:

1. The suggestion that a fact is true when it is nottrue and the person making it does not believe initto be true

2. The active concealment of a fact by a personhaving knowledge or belief of the fact

3. A promise made without any intention ofperforming it

4. Any other act fitted to deceive

5. Any such act or omission as the law speciallydeclares to be fraudulent

The essentials of fraud are:1 There m st be a representation or


129/197

1. There must be a representation or

assertion and it must be false2.The representation must relate to a fact

3.The representation must have been

made with the intention of inducing theother party to act upon it

4.the representation must have been

made with a knowledge of its falsity5.the other party must have subsequently

suffered some loss

MISREPRESENTATION


130/197

According to Sec 18 there is misrepresentation:1. When a person positively asserts a fact is true

when his information does not warrant it to beso, though he believes it to be true

2. When there is any Breach of duty by a personwhich brings an advantage to the personcommitting it by misleading another to hisprejudice

3. When a party causes however innocently theother party to the agreement to make a mistakeas to the substance of the thing which s thesubject of the agreement


131/197

MISTAKE


132/197

Mistake of fact

Of the

countryOf the foreign

country Bilateral mistake Unilateral mistake

Mistake as to subject matter Mistake as to

possibilityAs to

person

As to

nature

Physical impossibility Legal impossibility

existence identity quality quantity title price

Mistake of law

UNLAWFULUNLAWFULUNLAWFULUNLAWFUL


133/197

UNLAWFULUNLAWFUL


&&

VOID AGREEMENTSVOID AGREEMENTS

UNLAWFULUNLAWFUL


&&

VOID AGREEMENTSVOID AGREEMENTS

Unlawful agreements


134/197

illegal immoralAgreement opposing

public policy wagerAn agreement which

interferes with

administration of

governmentAn agreement

interfering with the

administration of justice

An agreement interfering

with administration of

personal liberties

Restraint of Restraint of Restraint of

Restraint of Restraint of


135/197


136/197


137/197

If it is immoral

Case: S.Yellappa vs. Y.Sabu

Cohabitation agreements are immoral

Sumitradevi vs. Sulekha Kundu

An agreement between a husband and wife to

separate in future is immoral and void

An agreement opposed to public policy


138/197

If it is fraudulent

If it is creating damage to person or property

Case: Ramswaroop vs. Bansimandir

B borrowed Rs. 100 from L and executed abond promising to work for L without payfor a period of two years.In case of default

B was to pay interest at a very exorbitantrate and the principal sum of once. Heldthe contract was void as it involved injuryto the person of B.


139/197


140/197

Essential Elements of

W i


141/197

Wagering

There are two persons.

There must be an uncertain future event.

No control over the event by both theparties.

There must be a reciprocal promise.

Others are not interested in the contract.

E l


142/197

Example:

In a wrestling bout,

A tells B that wrestler

no.1 will win. B

challenges the

statement of A. They

bet with each other

over the result of the

bout. This is a

wagering agreement.


143/197

CONTINGENTCONTINGENT

CONTRACTSCONTRACTS

Contingent Contract(sec 31)


144/197

Contingent Contract(sec 31)

A contingent contract is a contract to do or

not to do something, if some event,

collateral to such contract, does or does nothappen. It is also called a conditional

contract.

Essential Elements of a


145/197

Contingent Contract: There are two persons.

There must be an uncertain future event.

Some control over the event but notabsolute control.

There is no reciprocal promise between thepersons.

Others may be interested in the contract.

It is a valid contract.

Example:


146/197

Example:

A contracts to pay B

Rs.10,000 if Bs

house is burnt. This is

a contingent contract.

Rules Regarding Contingent


147/197

g g g

Contracts Contingent contracts dependent on happening of anuncertain future event cannot be enforced until theevent has happened.( Sec 32)

Where a contingent contracts is to be performed if

a particular event does not happen, its performancecan be enforced when the happening of that eventbecomes impossible.( Sec 33)

If a contract is contingent upon how a person will

act at an unspecified time, the event shall beconsidered to become impossible when such persondoes anything which renders it impossible that heshould so act within any definite time, or otherwisethan under further contingencies.( Sec 34)

Contingent contracts to do or not to do


148/197

anything, if a specified uncertain event does

not happen within a fixed time, may beenforced if the event does not happen or its

happening becomes impossible before the

expiry of that time.( Sec 35 )

Contingent agreements to do or not to do

anything, if an impossible event happens,

are void, whether or not the fact is known to

the parties. (Sec 36)

Differences Between aWagering

Agreement and a Contingent


149/197

g g

Agreement: Wager agreement

There is a reciprocal

promise.

It is a void contract.

Others are not

interested in the

contract. It is contingent in

nature.

Contingent agreement

There is no reciprocal

promise. It is a valid contract.

Others are interested in

the contract.

It may not be wagering

in nature.


150/197

DISCHARGE OFDISCHARGE OFA CONTRACTA CONTRACT

DISCHARGE OF A


151/197

CONTRACTDISCHARGE BY PERFORMANCE

DISCHARGE BY AGREEMENT OR

CONSENTDISCHARGE BY IMPOSSIBILITY OF

PERFORMANCE

DISCHARGE BY LAPSE OF TIME

DISCHARGE BY OPERATION OF LAW

DISHARGE BY BREACH OF CONTRACT


152/197

DISCHARGEB

Y PERFORMANCEACTUAL PERFORMANCE

When both parties perform their promises &

there is nothing remaining to perform

ATTEMPTED PERFORMANCEWhen the promisor offers to perform his

obligation ,but promisee refuses to accept theperformance. It is also known as tender

DISCHARGE BY

AGREEMENT OR CONSENT


153/197

AGREEMENT OR CONSENT

NOVATION (Sec 62): New contract substituted forold contract with the same or different parties

RESCISSION (Sec 62) : When some or all terms of acontract are cancelled

ALTERATION (Sec 62):When one or more terms of

a contract is/are altered by the mutual consent ofthe parties to the contract

REMISSION (Sec 63) :Acceptance of a lesserfulfilment of the promise made.

WAIVER:Mutual abandonment of the right by theparties to contract

MERGER :When an inferior right accruing to aparty to contract merges into a superior rightaccruing to the same party

DISCHARGE BY

IMPOSSIBILITY OF


154/197

IMPOSSIBILITY OF

PERFORMANCE

KNOWN TO PARTIES

UNKNOWN TO PARTIES SUBSEQUENT IMPOSSIBILITY

SUPERVENNING IMPOSSIBILITY (Sec 56)

Destruction of subject matter

Non-existance of state of things

Death or incapacity of personal services

Change of law

Outbreak of war

DISCHARGE BY

LAPSE OF TIME


155/197

LAPSE OF TIME

THE LIMITATION ACT 1963,CLEARLY STATES THAT A

CONTRACT SHOULD BE

PERFORMEDWITHIN A SPECIFIEDTIME CALLED PERIODOF

LIMITATION

IF IT IS NOT PERFORME

D

AND

IFTHE PROMISEE TAKES NO ACTIONWITHIN THE LIMITATION TIME,

THEN HE IS DEPRIVED OF HISREMEDY AT LAW

DISCHARGE BY


156/197

OPERATION OF LAW

DEATH

MERGER

INSOLVENCY

UNAUTHORISEDALTERATION OF THE

TERMS OF AWRITTEN AGREEMENT

RIGHTS & LIABILITIES VESTING IN THE

SAME PERSON

DISCHARGE BY


157/197

BREACH OF CONTRACTACTUAL BREACH:

At the time of performance

During the performance

ANTICIPATORY BREACH

By the act of promisor

(implied repudation)

By renunciation of obligation

(express repudation)


158/197

REMEDIESREMEDIESFORFOR

BREACH OFBREACH OF

CONTRACTCONTRACT

REMEDIES OF INJURED


159/197

PARTY A remedy is a means given by law for the

enforcement of a right

Following are the remedies

[1] Rescission of damages.

[2] Suit upon quantum meruit.

[3] Suit for specific performance.

[4] Suit for injunction.

RESCISSION


160/197

When a contract is broken by one party,the other

party may sue to treat the contract as rescindedand refuse further performance.In such a case,he isabsolved of all his obligations under the contract.

The court may give rescission due to

1)contract is voidable.2)contract is unlawful

The court may refuse to rescind if

1)Plaintiff has ratified the contract.2)Parties cannotbe restored to the original position.3)The thirdparty has acquired for value.4)When only a part issought to be rescinded.(sec 27 of specific relief act1937)

DAMAGES


161/197

DAMAGES

Damages are a monetary compensation

allowed to the injured party by the court for the

loss or injury suffered by him by the breech of

the contract.The objective of awarding damagesfor the breech of contract is to put the injured

party in the same position as if he had not been

injured.This is called the doctrine of

restitution.The fundamental basis is awarding

damages for the pecuniary loss.

QUANTUM


162/197

MERUITThe phrase quantum meruit literally means as

much as earned.A right to sue on a quantum

meruit arises when a contract, partly performedby one party,has been discharged by breach of

contract by the other party.This right is

performed not on original contract but on implied

promise by other party for what has been done.

SPECIFIC


163/197

PERFORMANCE In certain cases of breach of contract damages arenot an adequate remedy.The court may,in suchcases,direct the party in breach to carry out his

promise according to terms of the contract.This isa direction by the court for specific performanceof the contract at the suit of the party not in breach

Cases for specific performance to be enforced

1)when the act agreed to be done is such thatcompensation is not adequate relief.2)when thereis no standard for ascertaining the actual damage

3)when it is probable that compensation cannot

be a reed to be done.


164/197

QUASIQUASI


165/197

QUASIQUASI

CONTRACTSCONTRACTS

TYPES OF QUASI

CONTRACTS


166/197

CONTRACTS

Supply of necessaries (Sec 68)

Payment by a interested person (Sec 69)

Obligation to pay for non gratuitous acts

(Sec 70 )

Responsibility of finder of goods (Sec 71 )

Mistake or Coercion (Sec 72 )

SUPPLY OF


167/197

NECESSARIESAccording to sec 68 a minor is liable to pay out

of his property for necessaries supplied to him or

to anyone whom he is legally bound to

support.The significance of this is that it does not

arise out of a contract as much so as it arises out of

a contract.the minor is not personally liable and

necessaries include food,clothing as well as

education,They also include watch bicycle etc.

OBLIGATION TO PAY FOR

NON GRATUITOUS ACTS


168/197

NON GRATUITOUS ACTSAccording to Sec 70 when a person lawfully does or

delivers anything for the other ,not intending to doso gratuitously,and the person derives any benefitfrom it,he is liable to compensate,or restore the

thing so done or delivered.

Here three conditions must satisfy

[1] The thing must have been done lawfully

[2] The person intending to do it must not have doneit gratuitously

[3] The person must have derived benefit from theact

PAYMENT BY A INTERESTED

PERSON


169/197

PERSON

According to Sec 69 a person who is interested in

the payment of money which another is bound by

law to pay,and who therefore pays it, is entitled to

be reimbursed by the other.The essential elements center around

[1] The payment made should be bona fide of ones

interest

[2] The payment should not be a voluntary one

[3] The payment must be such that the other is

bound by law to pay

RESPONSIBILITY OF THE

FINDER OF GOODS


170/197

According to Sec 71 a person who finds goodsbelonging to another and takes them into his

custody is subject to the same responsibility as thebailee is bound to take as much care of the goods asa man of ordinary prudence would,In addition to

that he must make efforts to trace the owner.If hedoes not ,he will be guilty of wrong conversation,andtill the owner is found out the property will vest

with the finder,he can sell in case of

[1] goods are or perishable nature

[2] owner cannot be found out

[3] when owner refuses to pay for the lawful charges

[4] when the lawful charges amount to two thirds ofthing


171/197

INDEMNITYINDEMNITY

INDEMNITY (Sec 124)


172/197

INDEMNITY (Sec 124)

A CONTRACT BYWHICH ONE

PARTY PROMISES TO ANOTHERR TO

SAVE HIM FROM LOSS CAUSED TO

HIM BY THE COND

UCT OF THEPROMISOR HIMSELF , OR BY THE

CONDUCT OF ANY OTHER PERSON IS

CALLED A CONTRACT OF INDEMNITY

ESSENTIAL FEATURES

OF INDEMNITY


173/197

OF INDEMNITY There are two persons , the indemnifier

the indemnified or the indemnity holder

There must be loss either by thepromisors conduct or by any other

persons conduct It is a contingent contract by nature

It may be express or implied

Sec125 deals with the commencementof the indemnifiers liability. His liabilitycommences when the event causing theloss occurs or when the event saving theindemnified from the loss becomes

impossible


174/197

GUARANTEEGUARANTEE

GUARANTEE


175/197

(Sec 126)A CONTRACT OF GUARANTEE IS A CONTRACT TO

PERFORM THE PROMISE, ORDISCHARGE THELIABILITY,OF A THIRD PERSON IN CASE OF HIS

DEFAULT. THE PERSON

WHO GIVES THEGUARANTEE IS KNOWN AS THE SURETY, THE

PERSON IN RESPECT OFWHOM THE GUARANTEEIS GIVEN IS KNOWN AS THE PRINCIPAL DEBTOR,AND THE PERSON TOWHOM THE GUARANTEE IS

GIVEN IS CALLED THE CREDITOR. AGUARANTEE MAY BE EITHER ORAL ORWRITTEN.

ESSENTIAL FEATURES

OF GUARANTEE


176/197

OF GUARANTEE

Concurrence of three contracts

Primary liability is that of the principal debtor

In case the debtor is a minor , the suretysliability becomes primary

All the essentials of a valid contract

It may be in writing or oral

There need not be full disclosure of facts to thesurety before he gives the guarantee

TYPES OF GUARANTEE


177/197

SPECIFIC GUARANTEE :

When a guarantee extends to a single

transaction or debt it is known as a specific or

simple guarantee

CONTINUING GUARANTEE :

When a guarantee extends to a series of transactions

It is called continuing guarantee


178/197

BAILMENTBAILMENT

BAILMENT Sec 148


179/197

The word Bailment is derived from the Frenchword ballier which means to deliver .

Bailment means delivery of goods by one person

to another for some purpose ,upon a contract ,thatthey shall ,when the purpose is accomplished ,bereturned or otherwise disposed of according tothe instructions of the person delivering them.

The person delivering the goods is called thebailorand the person to whom they aredelivered is called the bailee.

Essentials of bailmentEssentials of bailment


180/197

There are two persons namely Bailor andBailee.

Bailor means the person delivering thegoods, Bailee means the person to whomthe goods are delivered.

Their must be delivery of goods .

The goods must be in deliverablecondition.

Only the goods are delivered but not the


181/197

y g

ownership of goods, their must bepurpose.

Bailey can use the goods.

Goods must be returned or disposed offafter the purpose is accomplished.

Duties and rights of

Bailor and Bailee


182/197

Bailor and Bailee

Duties of bailor.

To disclose known faults.

To bear extraordinary expenses ofbailment.

To indemnify bailee for loss in case of premature termination of gratuitous bailment.

To receive back the goods.

To indemnify the bailee.


183/197

Rights of bailee


184/197

g

Delivery of goods to one of several joint

bailor of goods. (Sec 165).

Delivery of goods to bailor without title.(Sec 166).

Right to apply to court to stop delivery.(Sec 167)

Right to action against trespassers. (Sec180)

Bailee s lien.


185/197

PLEDGE (SEC 172)


186/197

( )

The bailment of goods as security for

payment of a debt or performance of a

promise is called Pledge.

The bailor in this case is called the

pledger or pawnor and the bailee is

called the pledgee or pawnee

RIGHTS ANDDUTIES OF

PAWNOR AND PAWNEE


187/197

PAWNOR AND PAWNEE

Rights of Pawnee.

Right of retainer.

Right of retainer for subsequent advances.

Right to extraordinary expenses.

Right against true owner, when thePawnors title is defective.

Pawnees rights where pawnor makesdefault .

Rights of Pawnor


188/197

Right to get back goods.

Right to redeem debt.

Presentation and maintenance of the goods. Rights of an ordinary debtor.


189/197

AGENT


190/197

Sec 182 defines an agent as aperson employed to do any

act for another , or to

represent another indealings with third

personsthe person for

whom such act is done is scalled the principal

ESSENTIALS OFRELATIONSHIP OF


191/197

AGENCY

Agreement between principal & agent

Intention of agent to act on behalf of the

principal

Anyone can be an agent

Anyone can employ an agent

CREATION OF AGENCY


192/197

BY EXPRESS AGREEMENT

BY IMPLIED AGREEMENT

Agency by estoppelAgency by holding out

Agency by neccesity

AGENCY BY RATIFICATION

AGENCY BY OPERATION OF LAW

REQUISITES OF VALIDRATIFICATION

Agent must act as an agent for his principal


193/197

Agent must act as an agent for his principal

Principal must be in existance at the time of contract Ratification must be with full knowledge of facts

Ratification should be done within a reasonable timeof the performance of the act

The act to be ratified should be of lawful nature The ratification can be done only to the whole

transaction & not any part of it (Sec 199)

Ratification should be communicated with the partyto contract

Ratification should not cause any damages to a thirdparty

Ratification can only be of acts which principal hadthe right to do

SUB-AGENT &

SUBSTITUTED AGENT


194/197

A sub agent is aperson employed & acting

under the control of the agent in the

business of the agency (Sec 191)

A substituted agent is a person named by the

agent, on an express or implied authorityfrom the principal, to act for the principal

(Sec 194)


195/197

Termination of agency By act of parties

Agreement


196/197

Agreement

Revocation by the principal

Revocation by the agent

By operation of law

Performance of the contract

Expiry of time

Death of either party

Insanity of either party

Insolvency of either party

Destruction of the subject matter

Principal becoming an alien enemy

Dissolution of a company

Termination of sub-agents authority


197/197

hmm- busi law edit ver 2

Documents