law contracts

1. INDIAN CONTRACT ACT, 1872 CONTRACT OFFER ACCEPTANCE CONSIDERATION

2. The Contract Act is the law of those agreements which create obligation and there is a legal remedy for the breach thereof.

3. CONTRACTS All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Contract : Agreement + enforceable by law. i.e. legal obligations to do or abstaining from doing anything. ALL CONTRACTS ARE AGREEMENT BUT ALL AGREEMENTS ARE NOT CONTRACTS. A legally binding agreement- legally enforceable means that a court will say that an agreement is a contract

4. EXAMPLES: I promise to bring chocolates to the whole class. Is there a contract? I promise to give you a new bicycle if you agree not to eat Chinese food for one year. Is there a contract?

5. BILATERAL A promise for a promise UNILATERAL A promise for an actVALID A contract that has all the nec. Elements VOID No contract w/out legal obligation VOIDABLE A contract where a party has the option of voiding UNENFORCEABLE A contract which can not be enforced because of legal defenses EXPRESS Formed by words IMPLIED IN FACT Formed at least in part by the parties conduct QUASI CONTRACT Imposed by law to prevent unjust enrichment EXECUTED A fully performed contract EXECUTORY A contract not yet fully performed FORMAL Requires a special form for creation INFORMAL Requires no special form

6. ESSENTIAL ELEMENTS OF A VALID CONTRACT: (SEC. 10) Agreement - Offer & acceptance Legal consequences - rights & obligations Capacity of the contracting parties Consideration Legal object Free consent Certainty Possibility of performance Writing & registration Not expressly declared to be void.

7. OFFER AND ACCEPTANCE

8. OFFER Section 2(a) of Indian contract act defines offer as when one person signifies to another his willingness to do or to abstain from doing something with a view to obtaining the assent of other , such act or abstinence is said as proposal. Offerer/Proposer/Promisor - a person making offer. Offeree/proposee- person to whom offer is made Offerer accepting the offer is acceptor/promisee.

9. MODE OF OFFER Offer may be made in writing or verbal Offer may be express or implied Something that is said to indicate that an offer is being made Something that is done, that though not expressly communicated, automatically indicate the act of offer.

10. SPECIFIC AND GENERAL OFFER An offer may be made to a particular individual or to a group of people If the offer is made to a specific individual, only that person may accept the offer If an offer is made to a group of people, then anyone from the group may accept the offer. General offer can be accepted by any person having notice of the offer by doing what is required under the offer.

11. I want Reward

12. Carbolic smoke ball company advertised in the newspaper that whosever would take smoke balls ,manufactured by it ,according to the printed instructions would not contract influenza. The company offered a reward of $100 to anyone who contracted influenza after taking its smoke balls according to the printed instructions .It was added that $1000 was deposited with alliance bank to show the sincerity of the company. One Mrs. Carlill used the smoke balls according to the directions given but contracted influenza. It was held that the offer was general one ,and Mrs.carlill had accepted it by acting according to the advertisement and therefore the company could not get away from responsibility by saying that it was a mere puff. She was entitled to get reward.

13. LEGAL RULES REGARDING VALID OFFER An offer may be express or implied It should give rise to legal consequences and be capable of creating legal relations. Leading Case: Balfour v. Balfour. The term of the offer must be certain. Leading case : Taylor V. Portington For example: Offer by A to B to pay a certain sum of money on the latter marrying As daughter is no offer

14. An offer can be made subject to any terms and conditions. Offer must be communicated to the Offeree. Leading Case: Lalman Shukla V. Gauri Dutt It should be made with a intent to obtain the assent of the other party. An offer should not contain a term the non compliance of which would amount to acceptance. An invitation of offer is not an offer

15. LALMAN V. GAURIDUTT It was held that the reward for the missing child cannot be claimed by a person who traced the child without any knowledge of the announcement. There was no contract between the two in the first place because the proposal never came to the knowledge of the announcement. There was no contract between the two in the first place because the proposal never came to the knowledge of the person who found the child and thus he could never accept it. I want reward

16. LAPSES AND REVOCATION OF OFFER An offer lapses after stipulated or reasonable time An offer lapses by not being accepted in the mode prescribed An offer lapses by rejection An offer lapses by the death or the insanity of the offeror or the offeree before acceptance An offer lapses by revocation before acceptance An offer lapses by subsequent illegality or destruction of subject matter.

17. Transactions that are not Offer but Invitation to Offer !!

18. An "invitation to treat is where a party is merely inviting offers, which he is then free to accept or reject. Auctions An auctioneer's call for bids is an invitation to treat, a request for offers. The bids made by persons at the auction are offers, which the auctioneer can accept or reject as he chooses. Similarly, the bidder may retract his bid before it is accepted. Display of Goods The display of goods with a price ticket attached in a shop window or on a supermarket shelf is not an offer to sell but an invitation for customers to make an offer to buy. Fisher v Bell [1960]

19. Mere Statement of Price A statement of the minimum price at which a party may be willing to sell will not amount to an offer. Harvey v Facey [1893] Harvey sent a Telegram to Facey which stated: - "Will you sell us Bumper Hall Pen? Telegraph lowest cash price. Facey replied by telegram:- "Lowest price for Bumper Hall Pen 900. Harvey then replied:- "We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us your title deed in order that we may get early possession." Held: The Privy Council held that there was no contract concluded between the parties. Facey had not directly answered the first question as to whether they would sell and the lowest price stated was merely responding to a request for information not an offer. There was thus no evidence of an intention that the telegram sent by Facey was to be an offer.

20. Statement of Intention A mere statement indicating a persons intention to do something is not an offer. Harris v Nickerson (1873) he case established that an advertisement that goods will be put up for auction does not constitute an offer to any person that the goods will actually be put up, and that the advertiser is therefore free to withdraw the goods from the auction at any time prior to the auction.

21. ACCEPTANCE Section 2(b) states that A proposal when the person to whom the proposal is made signifies his assent thereto the proposal is said to be accepted.

22. LEGAL RULES REGARDING ACCEPTANCE Acceptance must be given only by the person to whom the offer is made Acceptance must be absolute and unqualified It should be communicated by the acceptor It should be given within reasonable time or time stipulated Acceptance must succeed the offer. Mental acceptance is not sufficient in law.

23. COMMUNICATION OF OFFER & ACCEPTANCE The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. E.g. - A proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter. The communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; as against the acceptor, when it comes to the, knowledge, of the proposer. B accepts A's proposal by a letter sent by post. The communication of the acceptance is complete, as against A when the letter is posted as against B, when the letter is received by A.

24. EXAMPLE A proposes by a letter sent by post to sell his car to B. The letter is posted on the 1st of the month. B accept the proposal by a letter sent by post on the 4th. The letter reaches A on 6th. A may revoke his offer at any time before B post his letter of acceptance i.e 4th but not afterwards. B may revoke his acceptance at any time before the letter of acceptance reaches A i.e. 6th but not afterwards.

25. CHECK YOUR MEMORY Harish says in conversation to suresh that he will give Rs.10000 to a person whosoever marries his daughter .Alok marries Harishs daughter and files a suit to recover Rs10000.will he succeed ? No ,Harish has expressed his wish only ,and has never made an offer with a view to obtaining the assent of the other party. Secondly there was no offer to Alok or Suresh It was neither general offer nor specific offer

26. Amar had two visitors in his office one evening, Bharat and Ram. Bharat ran an event mgmt service. Amar had hosted a party the previous evening to celebrate his sons birthday. Bharat had done the mgmt for the party. Bharat had come to Amars office that evening, to collect Rs20000 for having done the work. Ram was the son of an ex- colleague of Amar. Rams family had fallen into bad times. They had accumulated a lot of debts. Ram was studying in the final year of college. He was going around meeting people his father had known and soliciting money as donation, so as to be able to finish his education. Amar was a kind person. He told Ram that he would give him Rs5000. Ram pleaded and said that if Amar could give him Rs10000, he would not have to go any further to collect money. Amar agreed to give him Rs10000 While Amar was in the process of obtaining the money to give to Bharat and Ram, the phone rang. It was Amars stock broker. He informed Amar that on a particular purchase and sale order Amar had a loss of huge amount of money. He had to pay to the broker Rs9 lakh, within a week. Amar was very upset. In result he refused to pay the money agreed to Ram and Bharat.

27. QUESTIONS?? Was there an agreement between Amar and Bharat? Was there an agreement between Amar and Ram? should agreements be fulfilled?

28. CONSIDERATION The life blood of every contract !!

29. CONSIDERATION It is quid pro quo i.e. something in return. It is the price of promise. Section 2 (d) Indian contract act When at the desire of the promisor, the promisee or any other person has done or abstain from doing, or does or abstain from doing, or promises to do or abstain from doing, something, such act or abstinence or promise is called consideration X agrees to sell his TV set to Y for rs.8000. TV set is the consideration of Y and rs. 8000 is the consideration of X.

30. CONSIDERATION MAY BE : An act - means doing of something. An abstinence promising not to do something . A promise the promise of each party is the consideration for each other

31. ESSENTIALS OF VALID CONSIDERATION Must move at the desire of the promisor Xs house catches fire, and Y helps in extinguishing it without being requested to do so by X. Y cannot demand any payment for his voluntary service. CASE: DURGA PRASAD V. BALDEO D had built at his own shop, in a market at the request of the Collector of the District. The shopkeepers in the market promised to pay D a commission on all articles sold by them in the market. D sued the shopkeepers for non-receipt of commission. Judgment Held that the promise to pay commission did not amount to a contract for want of consideration, because D (the promisee) had constructed the market not at the desire of the shopkeepers (the promisors) but at the desire of the Collector of the District to please him.

32. It must move from promisee or any other person For making a valid contract consideration must be there, it is immaterial who furnishes it. CASE: CHINNAYYA V. RAMAYYA A father, by a gift deed, made over certain property to his daughter, with the direction that the daughter should pay an annuity to the fathers brother. On the same day, the daughter entered into an agreement with her uncle and agreed to pay the annuity. Later, the daughter declined to fulfill her promise on the ground that no consideration was paid by fathers brother to her. Decision of the Case: The Court held that the consideration was paid by the father on behalf of her uncle. So the uncle was entitled to recover the annuity.

33. A STRANGER TO CONSIDERATION CAN SUE, PROVIDED HE IS A PARTY TO CONTRACT X pays Rs. 50000 to Y directing him to build a house for Z. Y agrees to do so. Hence, Z is a party to a contract but stranger to consideration & he can enforce the contract. It need not be adequate Law only requires presence of consideration & not the adequacy of it. ( Selling a car for just Rs. 5000)

34. Must be real It must have some value in the eyes of law. It should not be: (1) Physically impossible making a dead person alive. (2) Legally impossible X file a suit against Y for non payment of debt. Y approaches Xs brother Z & he promises to withdraw the suit for a consideration of Rs. 500. It is legally impossible.

35. THANK YOU ANY QUESTIONS????