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WHAT IS
LAW
-HARMAN MANGAT
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LAW denotes rules and principles established by authority whether in the form of legislation or self imposed customs applicable to people.
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DEFINITIONS
ACC TO AUSTIN Law is a rule of conduct imposed and enforced by the sovereign ACC To SALMOND Law is the body of principles recognized and applied by the state in the administration of justice
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BRANCHES OF LAW
PUBLIC LAWS CRIMINAL LAW ADMINISTRATIVE LAW CONSTITUTIONAL LAW LABOUR LAWS MUNICIPAL LAW INTERNATIONAL LAW --PRIVATE LAWS/CIVIL LAWS BUSINESS OR MERCHANTILE LAW LAW OF PROPERTY LAW OF SUCCESSION FAMILY LAWS
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What is a contract
Acc to Salmond
An agreement between two or more persons which is intended to be enforceable at law and is constituted by the acceptance by the one party of the offer made to him by the other party to do or to abstain from doing some act.
Section 2(h) of Indian Contract act Defines contract as an agreement enforceable by law
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2 essential elements of contract -an agreement -its enforceability at law Agreement U/S 2(e) every promise forming the consideration of each other There should be 2 parties involved in agreement Agreements are of 2 types 1.un-enforceable 2.Enforceable agreements.
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1.unenforceable agreements-in which an aggrieved party cannot go to a court and that is left at the mercy of parties only. They never become contracts because they are merely social or domestic arrangements 2.enforceable-here, aggrieved parties have the right to approach a law court to get the agreement enforced and the other party is held liable either to perform the agreement or face the consequences. All these agreements which are enforceable at law are called contracts
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All contracts are agreements but all agreements are not contracts. 2.Enforceable at law-an agreement to become a contract must give rise to a legal obligation Eg. going at a dinner to friends place. Thus, Contract = agreement + enforceability at law.
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Husband and Wife--Contract--Temporary Separation--Allowance for Maintenance of Wife--Domestic Arrangement--No resulting Contract.
Intention to create legal relationship (Balfour Vs Balfour) Involving promises enforceable by a court(More than just a moral obligation) Lawful Consideration the cost of each others promise,it must be real and lawful.consideration may take the form of money,goods,promise to marry etc.
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Parties are competent to contract or capacity to contract (eg. minors unsound mind persons) Lawful object and Terms must be legal and reasonable eg. if 1 hires a house for gambling purpose so ,the object of the contract is to run a gambling house
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Possibility of performance-if act is impossible in itself.. eg. discovering treasure by magic Free consent-Have agreed to same thing in the same sense eg. Selling of a maruti but other thinking he getting a santro
contract not declared void-not declared void by any law in the country
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Classification of Contracts
Valid Contract Void Contract Voidable Contract Illegal Contract Express and Implied Contract Quasi Contract Executed and Executory contracts Unilateral and Bilateral Contracts
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Valid Contract-agreement enforceable at law is valid contract Void Contract-not enforceable Voidable Contract-an agreement which is enforceable by law at the option of one or more of the parties but not at the option of the other or others is a voidable contract.
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Express and Implied Contract-express contract is one which is entered into by words which may be either spoken or written. Implied-where the proposal and acceptance is made otherwise than in words. Quasi Contract-in which there is no intention on either side to make a contract but the law imposes a contract. eg founder of the lost goods is under an obligation to find out he true owner and return the goods
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Executed contract-where both the parties have their obligations or carried out the terms of contract Executory contracts-yet to performed either wholly or partially Unilateral contract-where one party has discharged his obligation either before or at time of entering into contract Bilateral Contracts-where a promise on one side is exchanged for a promise on the part of other party
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What is an offer
Section-2(a)
When one person 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,he is said to make an offer
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Offer can be made to particular person or whole world (Carlill Vs Carbolic smoke ball Co) The case concerned a flu remedy. The manufacturer advertised that buyers who found it did not work would be rewarded 100, a considerable amount of money at the time. The company was found to have been bound by its advertisement, because a contract was formed. The essential elements were all there, held the court of appeal, including an offer, acceptance, and consideration. Must be communicated to other party (Lalman Shukla vs gauri Dutt)the kid gets lost and servant found the kid but no reward was given to him as held by the court that it was the duty of the servant to find the child Offer can lapse by passing of time or revoked before acceptance
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Rejection destroys offer Offer may not lapse on death of offeror An Invitation to offer is not an offer eg. display of goods in a shop with price tags attached is an invitation to offer. An offer may be Conditional. eg-while joining a new job some part of salary might be deducted Counter offer-rejection of the original offer and making a new offer.
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ACCEPTANCE
SECTION-2(d) When the person to whom the proposal is made signifies his assent, it is acceptance of the proposal.An accepted proposal is called a promise or an agreement.
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Acceptance is like lighting a fuse it cannot be undone Acceptance of an offer must be absolute and unconditional Acceptance must be made within reasonable time(A applies for allotment in june but get shares in nov .) Acceptance must be identical with offer and acc to mode prescribed (sec 7(2))eg.a wanted to sell the house and wanted to receive the reply in writing at his address instead of giving in writing to buy the house, b send a person to a to let him know that b wants to purchase the house.a was bound to b. Can be accepted only by person to whom offer was made the offeror
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Acceptance must be communicated no particular form required Acceptance may be implied or expressed Time of acceptance = time of formation of contract Acceptance must be given before the offer lapses and it cannot be implied by silence
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COMMUNICATION OF OFFER,ACCEPTANCE
COMMUNICATION OF AN OFFER (SECTION4) Communication of proposal is complete as soon as it comes to the knowledge of the offeree. [EG. 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]
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REVOCATION OF OFFER & ACCEPTANCE By NOTICE (section-5&6) LAPSE OF TIME [a offered to sell a product to b on
Thursday and agreed to give him 3 days time to accept ,b accepted the offer on Monday ,but by that time a had sold the product. it was held that the offer was lapsed] NON FULFILLMENT OF CONDITION PRECEDENT [x may offer to sell certain goods to y on condition that y pays a certain amount before a certain date. the proposal is revoked if y fails to pay the requested amount within given time] BY DEATH OR INSANITY
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BY COUNTER OFFER [a offers to sell his house to b for rs 1000.b replies offering to pay rs. 950. a refuses subsequently b writes accepting the original offer has lapsed] BY NON ACCEPTANCE OF THE OFFER ACC TO PRESCRIBED MODE BY SUBSEQUENT ILLEGALITY Intention to create legal relations and the underlying presumptions of law for commercial and social relationships
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A contract naturally demands that parties intend that the agreement be enforceable Commercial agreements are presumed to be legally binding Social and domestic agreements are presumed not to be binding but that presumption can be rebutted by circumstances
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CONSIDERATION-MEANING
SECTION-2(d) Defines consideration as A)When at the desire of the promisor, B)The promisee or any other person C)Has done or abstained from doing ,or does or abstains from doing,or promises to do or abstain from doing, D)Something, such act or abstinence or promise is called a consideration for promise.
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It may be past, present, or, future [paying a retired person for his learning's is a past consideration ,when the consideration is given simultaneously with the promise is called present eg. buying and selling, mutual promise to marry is a future consideration] It need not be adequate but must be real and lawful
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It must not be something which the promisor is already bound to do [eg. A promising a police officer to pay money to investigate in a crime ,the agreement was invalid as the police officer is already under the duty to do so by law] Anything valuable to promisor can be consideration
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Every agreement to be enforceable at law must be supported by valid consideration. an agreement without consideration is void and is unenforceable except in certain cases
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Natural love and affection (section-25(1))an agreement though made without consideration will be valid if it is in writing and registered and is made on account of natural love and affection between parties standing in a near relation to each other. An agreement without consideration will be valid provided(1)it is expressed in writing (2)on account of natural love and affection (3)between parties standing in a near relation to each other
Compensation for services rendered sec- 25(2) A finds Bs purse and gives it to him.b promises to give A rs 100.this is a contract
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Complemented gifts sec-25 exp-1-transfer of property cannot subsequently demand the property back on the ground that there was no consideration. Agency sec-185.It is given in section 185 which says that no consideration is needed to create an agency. Guarantee sec-127-a contract of guarantee is made without consideration
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Privity of contract
Only those who made the contract can derive benefits under it Where a contract is made for the benefit of a third party that person cannot enforce contract If a third party gets a benefit under a contract, it does not have the right to go against the parties to the contract beyond its entitlement to a benefit. An example of this occurs when a manufacturer sells a product to a distributor and the distributor sells the product to a retailer. The retailer then sells the product to a consumer. There is no privity of contract between the manufacturer and the consumer
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Drunks
contracts are prima facie valid can repudiate if they were incapable and other party knew that.
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Bankrupts
not limited per se
legislation prevents bankrupt from entering certain contracts without disclosing bankruptcy
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Mohiri bibi Vs Dharamdas ghose(1903) Agreement Void ab initio No ratification Can be a promisee or a beneficiary No estoppel against a minor Minor as a partner & agent Liability under torts and contract No specific performance & no insolvency
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Cannot bind parent or guardian Joint contract by a minor and adult Minor as a shareholder Liability for necessities
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VOIDABLE
VOID
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Undue influence
misrepre sentation
mistake
Fraudulent(sec17)
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DEFINITIONS
COERCION(SEC-15) committing or threatening to commit any act forbidden by IPC OR unlawfully detaining or threatening to detain,any property to the prejudice of any person with the intention of inducing any person to enter into an agreement. UNDUE INFLUENCE(SEC-16) A contract is said to be induced by undue influence where the relations subsisting between the parties are such that one of the parties is in the position to dominate the will of the other and uses the position to obtain an unfair advantage over the other
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COERCION(SEC-15)
When the person is compelled to enter into a contract by the use of force by the other party under a thrtcoercion is said to be employed. Eg.a threatens to shoot B if he does not release him from Debt which A owes to B.B releases A under the threat. Other eg.s ranganayakamma v Alwar Setty(girl was forced to adopt a kid after her husbands death) Effect-the contract is voidable at the option of party Threat to commit suicide also amount to coercion Duress-nea equivalent term of coercion ,is used in english law
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A person is deemed to be in a position to dominate the will of another A) where he holds a real or apparent authority over the other e.g master servant ,public officer& accused b) Where he stands fiduciary relationship to the other e.g father son ,guardian ward c) Where he is mentally or physically ill either temporarily or permanently due to age,illness, mentally or bodily distress
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Obtaining the consent-consent obtained by committing or threatening to commit an offense Physical force is used May be even used by stranger to the contract
Coercion
undue influence
Here, consent is obtained by dominating the will of other person Mental force is used Can only be used by party to contract
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Any other act fitted to deceive Any such act or omission as law specifically declares to be fraudulent
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Means false representation made innocently with an honest belief as to its truth by a party without any intention to deceive Thus false statement is made willfully or innocently
MISREPRESENTATION (SECTION-18)
Fraudulent misrepresentation
innocent misrepresentation
Misrepresentation
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It is innocent The suggestion is believed to be true The aggreived party can rescind the contract or sue for restitution but cannot suit for damages I truth is discovered the contract will not be avoided
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Mistake of fact-a man and a woman made a separation deed under which the man agreed to pay a weekly allowance to the woman under a mistaken assumption that they wee lawfully married. it was held that the agreement was void as there was common mistake on a point of fact which was material to the existence of the agreement( Galloway v. Galloway)
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BILATERAL MISTAKES
Mistake as to subject matter I.e existence,identity,price,quantity,title,price, quality Mistake as to possibility of performance I.e physical impossibility,legal impossibility UNILATERAL MISTAKE As to nature of contract As to identity of persons
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Existence of Subject matter-there is an agreement between A and B for the purchase of a certain horse,but the horse is dead at the time of the contract.the agreement is void Mistake of identity of subject matter-eg. Of 2 cars maruti and santro Price-a seller,within the knowledge of B ,the buyer makes a mistake n writing a figure $1250,the agreement is void
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Mistake as to nature of contract-eg. A blind man signing a document read over to him wrongly will not bind him. this is because of the fact that the mind of the signer does not accompany the signature, but this rule will not apply to the peron who can read. (b) mistakes as to identity of persons-mistake as to the identity of a person may also avoid a contract, where A intends to contract only with B ,but enters into a contract with C believing him to be B,the contact is vitiated
Unilateral mistakes
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VOID AGREEMENTS
Agreement made by incompetent parties(sec-11) Agreement made under mutual mistake of fact(sec20) Agreements, the consideration and object is unlawful(sec-23-24) Agreements made without consideration(sec-25)
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Agreements in restraint of legal proceeding(sec-28) Agreements the meaning of which is uncertain(sec-29) Agreements by way of wager(sec-30) Agreements to do impossible act(sec-56)
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Every contract consists of reciprocal promises Sec-37 The parties to a contract must either perform or offer to perform their respective promises, unless such performance is dispensed with or excused under the provisions of this act or of any other law The parties to a contract however need perform their promises in case: 1. Such performance is dispensed with or( sec-63) 2. Excused under the provisions of this act,or any other law (sec-56)
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When the promisor is willing to perform the contract and he offers to perform the same, the promisee has a duty to accept the performance of the contract.if the offer of performance is not accepted by the promisee,the promisor cannot be blamed for non-performance of the contract Sec-67 ;-Effect of neglect of promisee to afford promisor reasonable facilities for perMformance Sec-38 ;- Effect of refusal to accept offer of performance
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DISCHARGE OF CONTRACT
By agreement (sec-62,63) By breach of contract (section-39) By impossibility of performance initial impossibility subsequent impossibility By operation of law By lapse of time
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DISCHARGE BY AGREEMENT
Novation Alteration Rescission Remission Waiver Accord and satisfaction
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Part performance
Overcomes legalism Puts good conscience ahead of legalism Allows person who has performed all or part of contract to defeat other partys defence that contact is unenforceable Requires three features; oral agreement acts done in reliance on that agreement existence of contract is the only explanation of the doing of the act
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AGENCY
SECTION-182 OF IC-ACT An agent is a person employed to do any act for another or to represent another in dealings with third person.The person for whom such act is done or who is so represented,is called the principal Agent is a connecting link between principal & third person The agent may be expressly or impliedly authorized to do an act on behalf of the principal The courts have to examine the relationship of agent and principal appears or not
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KINDS OF AGENTS
Auctioneers (open sale or auction) Factors (possession for sale or on credit) Broker (connecting link merely negotiate and no possession) Del credere agent (mercantile agent who on payment of extra commission, guarantees the performance of the contract by the third party
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DUTIES OF AGENTS
Duty not to delegate his duties (190) Duty to follow principals directions (211) Duty to show proper skill and care (212) Duty to render proper accounts (213) Duty to communicate with principal(214) Duty not to deal on his own accounts (215&216) Duty to pay sums received for principal (217218) Duty to protect and preserve the interest of principal
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Right to remuneration (219) Right to retain sums (217&218) Right of lien on principals property (221) Right to be indemnified for lawful acts (222-224) Right to compensation for damages due to principals neglect(225)
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Where agent acts for foreign principal Where agent acts for undisclosed principal When the agent acts for a disclosed principal who cannot be sued When the agents authority is coupled with interest Where the agent receives or pays money by mistake or fraud Where the agent signs the negotiable instrument in his own name Where the agent exceeds his authority or where the contract so provides Where acc to usage or trade agent is personally
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