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1. Proprietorship
2. Partnership ± Make a partnership deed
- Optional to register with the Registrar of
Firms¶ Office which exist in each state
3. Company ± To register with the Registrar of
Companies which exist in each state (ROC)
governed by the Companies Act, 1956
 Ö 


 

    

a. If sell goods which are subject to VAT, get

registered with the state VAT governed by
the state VAT Act
b. If sell Services, get registered with the
Central Service Tax governed by the Service
Tax Act
c. If manufacturer of Goods, apply for
registration under The Central Excise Act,
1960

 
  
 

d. Income Tax Act, 1961 applicable if in case of - proprietor, the

income of the proprietor exceeds the exemption limit of income
liable for tax
- In case of partnership once the firm starts earning income
- In case of Company once the Co. starts earning income
- to register with Income Tax apply for PAN No.
e. Apply for TAN No. if liable to deduct tax at source (TDS) under
sections 192 to 206 of Income Tax Act, 1961
- TDS applicable, if employees earn more than the exemption
limit of income liable for tax
- If make payment to contractors exceeding Rs. 30,000 /
aggregate of payments Rs. 75,000 in a financial year (F.Y.)
- If make payment of rent exceeding Rs. 1,80,000 in a F.Y.
- If make payment of fees for professional & technical services
exceeding Rs.30,000 in a F.Y., etc.

 

   


 

¬ The Industries (Development and Regulations) Act,

1951; Factories Act, 1948; The Minimum Wages
Act, 1948; The Banking Regulation Act, 1949; The
Employees¶ Provident Funds & Miscellaneous
Provisions Act,1952; The Insurance Regulatory &
Development Authority Act, 1999; The Foreign
Exchange Management Act, 1999; The Shops &
Establishments Act; The Securities & Exchange
Board of India Act, 1992; The Export-Import Bank of
India Act, 1981;
 
   

Essentials of a Valid Contract u/s 2(h), 3 to 18, 29 and 56

¬ u/s 2(h): An agreement enforceable by law is a contract
¬ u/s 10: 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.
1. Offer and Acceptance
- Lawful offer & lawful acceptance resulting into an agreement
- Lawful means the offer & acceptance must satisfy the
requirements of the Contract Act
   

  !! ! 


- Intention among the parties that the agreement

must be attached by legal consequences & create
legal obligations
- Agreements of social nature do not create legal
relations
- Case of Balfour vs. Balfour
- In commercial agreements an intention to create
legal relations is presumed unless parties to the
agreement expressly resolve that the intention is not
to create legal obligations
 K  !

  

- Presence of consideration
- Consideration is the price paid by one party for the promise of
the other
- Each of the parties to it gives something and gets something
- Consideration may be an act (doing something) or forbearance
(not doing something)
- u/s 23 Consideration is lawful if
a. it is not forbidden by law
b. does not defeat the provisions of any law
c. is not fraudulent
d. does not involve/imply injury to the person/property of another
e. is not immoral
f. is not opposed to public policy
 ´ " #
$ 

- The parties to an agreement must be

competent to contract otherwise it cannot be
enforced by a court of law
- u/s 11 Every person is competent to contract
who is: a. of the age of majority
b. of sound mind
c. not disqualified from contracting by
any law to which he is subject.
 È % 


- U/S 13 Consent means that the parties must have agreed
upon the same thing in the same sense
- u/s 14 There is absence of µfree consent¶ if the agreement is
induced by
i) Coercion (u/s 15)
ii) Undue Influence (u/s 16)
iii) Fraud (u/s 17)
iv) Misrepresentation (u/s 18)
a statement of fact made innocently/ believing it to be true to
induce the other party to enter into contract
For e.g. A wants to sell land to B. A says that land is fertile
believing it to be true but without verifying it. B purchases the
land and the land turns out to be non-fertile
i) Mistake
   !&'(

- u/s 23 Object is lawful if

a. it is not forbidden by law
b. does not defeat the provisions of any law
c. is not fraudulent
d. does not involve/imply injury to the
person/property of another
e. is not immoral
f. is not opposed to public policy
- If a landlord knowingly lets a house to carry out
illegal activities, the object is unlawful
  )  *
 


- A contract may be oral/in writing

- But, where under any other act, it is laid down
that for the agreement to be valid, it must be
in writing or/and registered it must be done so
- u/s 25 Agreement without consideration/
promise to compensate for something done
or promise to pay a debt barred by limitation
law, must be in writing and registered
    #
- The terms of the agreement must not be vague/uncertain
- It must be possible to ascertain the meaning of the agreement
- A agrees to sell B a hundred tons of oil, this is uncertain since
the type of oil is not specified
9. Possibility of performance
- Agreement must be capable of performance
- The act must not be impossible in itself, physically/legally
- A agrees with B to discover treasure by magic
10. Not expressly declared Void
- u/s 24-30
 Ö
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 Voidable Contract u/s 2(i)
- An agreement which is enforceable by law at the
option of one or more of the parties thereto, but
not at the option of the other or others, is a
voidable contract
- A contract becomes voidable
i) * When the consent of one of the parties to the
contract is obtained by coercion, undue influence,
misrepresentation or fraud
* u/s 19 & 19A Such contract is voidable at the option of the
aggrieved party if
a. The option is exercised within a reasonable time and
b. Before the rights of third parties intervene
 Ö
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  ,
  -

ii) u/s 53 When a contract contains reciprocal

promises and one party to the contract prevents
the other from performing his promise
* A contracts with B to whitewash B¶s house. A is
ready & willing to execute the work but B
prevents
iii) u/s 55 When a party to the contract promises to
do a certain thing within a specified time, but
fails to do it, and the intention of the parties was
that, time should be of the essence of the
contract
 

. 

 




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- u/s 64
i) When a person at whose option a contract
is voidable rescinds it, the other party need
not perform any promise therein contained
in which he is a promisor
ii) If the party rescinding a voidable contract
has received any benefit from another party
to such contract, he must restore such
benefit to the person from whom it was
received
 Ö

 
- Void means not binding in law
- u/s 2(j) A contract which ceases to be enforceable by law
becomes void when it ceases to be enforceable
- A void contract is valid and binding on the parties, when
originally entered, but after its formation it becomes invalid
because of:
a) Supervening impossibility (u/s 56)
* Performance is impossible after the formation of the contract
* A & B contract to marry, but before marriage, A goes mad
b) Subsequent illegality (u/s 56)
A agrees to sell B 100 bags of wheat at Rs. 1,650 per bag.
Before delivery, Govt. bans private trading in wheat




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  '
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,
  -
c) Repudiation of a voidable contract
If the party at whose option the contract is
voidable exercises the option, the contract
becomes void
d) u/s 32 In the case of a contract contingent
on the happening of an uncertain future
event, if that event becomes impossible
A contracts to give Rs. 1,000 as loan to B, if
B marries C. C dies without being married to
B
 Ö
 

- u/s 2(g) An agreement not enforceable by law is

said to be void
- It is void ab-initio i.e. such an agreement is no
agreement from the beginning
- There is absence of one or more essential
elements of a valid contract except that of free
consent
- Distinction between Void Agreement & Void
Contract
i) Void agreement is void ab-initio while a void
contract is valid when entered into
 Ö
 

1. u/s 11 Agreements by a minor or a person of

unsound mind
2. u/s 20 Agreements made under a bilateral mistake
of fact material to the agreement
3. u/s 23 Agreements of which the consideration/
object is unlawful
4. u/s 24 Agreements of which the consideration/
object is unlawful in part and the illegal part cannot
be separated from the legal part
5. u/s 25 agreements made without consideration
 Ë" 

!#! Ö
 

1. Agreement in restraint of Marriage u/s 26
Eg. A agrees with B that she will not marry C
2. Agreement in restraint of Trade u/s 27
Eg. A agrees to close his business
Exceptions:
i) Sale of Goodwill
The seller of goodwill of a business can be restrained from
carrying on a similar business within specified local limits
provided the restraint is reasonable in point of time and space
e.g. A sells the goodwill of his business to B & promises not to
carry on similar business anywhere in the world. Restraint is
unreasonable and so the agreement is void
 Ë" 


 

 

 ,
  -
ii) Partner¶s agreements
Partners can be restrained if there is an agreement:
a. Among the partners that a partner shall not carry on any
business while he is a partner
b. By a partner with his other partners that on retiring from the
partnership he will not carry on any business similar to that of
the firm within a specified period/within specified local limits, if
the restrictions imposed are reasonable
c. Among the partners upon/in anticipation of the dissolution of
the firm that some/ all of them will not carry on a business
similar to that of the firm within a specified period/within
specified local limits, if the restrictions imposed are reasonable
d. Between any partner and the buyer of the firm¶s goodwill that
such partner will not carry on any business similar to that of
the firm within a specified period/within specified local limits, if
the restrictions imposed are reasonable
 Ë" 


 

 

 ,
  -
iii) Trade Combinations
* An agreement, to regulate the business is
valid
* Agreements in the nature of a business
combination between traders/manufacturers
e.g. not to sell their goods below a certain
price (Fraser & Co. Vs Bombay Ice Co.)
* But, if an agreement attempts to create a
monopoly, it is void
 Ë" 


 

 

 ,
  -
iv) Negative stipulations in service agreements
* An agreement of service by which a
person binds himself during the term of the
agreement, not to take service with anyone
else, is valid
* But, an agreement of service which
restricts occupation for some period, after
the termination of service, is void
(Brahamputra Tea Co. Vs Scarth)
 Ë" 

!#! Ö
 

,
  -
3. Agreements in restraint of Legal Proceedings u/s 28
Following agreements are void
i) An agreement by which a party is restricted from taking legal
proceedings, in respect of any rights arising from a contract
Exceptions
(a) Does not affect the law relating to arbitration
(b) Does not affect an agreement whereby parties agree not to file
an appeal in a higher court
(c) Does not prevent the parties to a contract from selecting one of
the two courts which are equally competent to try the suit
  
 
 
!
$

,
  -
ii) An agreement which limits the time within which one may enforce
his contract rights, without regard to the time allowed by the
Limitation Act
E.g. A & B contract that either party can sue for breach within a
year of breach. The clause is void because the time allowed by
the Limitation Act is three years
iii) An agreement which provides for forfeiture of any rights arising
from a contract, if suit is not brought within a specified period,
without regard to the time allowed by the Limitation Act.
E.g. Insurance companies cannot insist that suits for claims be
brought within a period of time shorter than the period provided
under the Limitation Act, otherwise all benefits under the policy
shall be forfeited
 Ë" 

!#! Ö
 

,
  -
4. Uncertain Agreements u/s 29
An agreement to enter into an agreement in future
is void for uncertainty unless all the terms of the
proposed agreement are agreed clearly
5. Wagering Agreements u/s 30
Wager means a bet, something stated to be
lost/won on the result of a doubtful issue
Exception
Prize amounting to >= Rs.500 to be awarded to
the winner of any horse race
 "!

   +

a. Commercial transactions
* Agreements for sale & purchase of any commodity/share
market transactions, with a genuine intention to give & take
delivery of goods/shares are not wagering agreements
* If parties only want to gamble on the rise/fall of the market by
paying/receiving the difference in prices only, the transaction is
a wager
b. Lotteries
* It is a wager
* Sometimes lottery is authorised by Govt. e.g Maharashtra &
Gujarat, then the effect is that persons running the lottery are
not guilty of criminal offence but such agreements are void
because they are wager
"!

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,
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c. Crossword Puzzles
* When prizes depend upon a chance, it is a lottery and so a wager
* if prizes depend upon skill & intelligence, it is not a wager, but, if
such prizes exceed Rs. 1,000 they are wagers as per the provisions
of the Prize Competition Act, 1955
d. Insurance Contracts
Valid contracts because:
i) They are entered to protect the interest of the holder of the policy but
in wagering there is no interest to protect but only a means to make
some easy money
ii) Insurance contracts are based on scientific calculation of risks
whereas wagering agreements are a gamble without any scientific
calculation of risks
iii) Insurance contracts are beneficial to the public whereas wagering
agreements do not serve any useful purpose
 Ë" 

!#! Ö
 

,
  -
6. Agreements contingent on impossible
events u/s 36
Contingent agreements to do/ not to do, if
an impossible event happens are void
e.g. A agrees to pay B Rs. 1,000 as a loan if
B marries A¶s daughter C. But, C was dead
at the time of agreement.
7. Agreements to do Impossible Acts u/s 56
 &'! 

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u/s 65 the person is bound to restore the advantage received/make
compensation for it, to the person from whom he received it when
a) An agreement is discovered to be void
* But, if the agreement is known to be void when entered into, no
such obligation arises
if A pays Rs. 10,000 to B to murder C, the money cannot be
recovered
* Nothing can be recovered in the case of expressly declared void
agreements except for:
i) u/s 20 In the case of an agreement caused by bilateral mistake of
essential fact
restoration is allowed since agreement is not known to be void but is
discovered to be void
ii) In the case of an agreement with a minor who commits fraud by
misrepresenting his age
restoration is allowed
 $ 


 

¬ It means fulfilling of their respective legal obligations

created under the contract by both the promisor and
the promisee
¬ Who can demand Performance

- Only the promisee can demand performance

- A third party cannot demand performance of the
contract even if it was made for his benefit
- In case of death of the promisee, his legal
representatives can enforce performance
- E.g. A promises B to pay C a sum of Rs. 1,000. B
can demand performance and not C
 |#

 

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1. By the promisor himself u/s 40

Contract involving personal skill, taste or credit, e.g. a contract
to paint a picture, the promisor must himself perform
2. By the promisor/ his agent u/s 40(2)
In the case of impersonal contract, the promisor/his agent may
perform
3. By the legal representatives u/s 37(2)
In the case of death of the promisor before performance, the
liability of performance falls on his legal representatives but
their liability is limited to the estate of the deceased which has
come to their hands
4. By a third person u/s 41
If a promisee accepts performance of the promise from a third
person, promisee cannot then enforce it against the promisor
 $ 

/
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¬ Who can demand Performance u/s 45
When a promise is made to several persons jointly, the right to
claim performance rests with all the promisees jointly & a single
promisee cannot demand performance
¬ By whom Joint Pomises must be performed u/s 42 to 44
Rules
1. All promisors must jointly fulfill the promise
2. - Any one or more of joint promisors may be compelled to
perform u/s 43 because the liability of the joint promisors is
joint and several.
- but the liability in case of Co-heirs is joint and not several
because they are not joint promisors
E.g. A, B and C jointly promise to pay D Rs. 3000. D may
compel either A/B/C/All/Any two to pay
 |#
/
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´
´´,
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3. Right of contribution inter-se between joint promisors
If one of several joint promisors are made to perform, he may
require equal contribution from the other joint promisors
4. Sharing of loss by default in contribution
If any joint promisor makes default in making contribution, the
remaining joint promisors must bear the loss arising from such
default in equal shares
5. Effect of release of one joint promisor u/s 44
If one of the joint promisors is released from his liability by the
promisee, his liability to the promisee ceases but does not
discharge the other joint promisors from their liability, neither
does it free the joint promisors so released from his liability to
contribute to the other joint promisors
 

 

 

¬ Means transfer of contractual rights & liabilities to a third party
¬ Rule
1. Contracts involving personal skill, taste or credit cannot be
assigned
2. The obligations under a contract cannot be assigned except
with the consent of the promisee
3. Assignment of a claim to any debt/ beneficial interest in
movable property to be complete & effectual must be made by
an instrument in writing
4. Assignment by operation of law takes place in case of death
upon his heirs and in case of insolvency upon the Official
Assignee/Receiver
 &  
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¬ Promises which form the consideration for each other are reciprocal
promises
¬ There is an obligation on each party to perform his own promise & to
accept performance of other¶s promise
¬ Three types of reciprocal promises & rules for order of performance:
1. Mutual & Independent
- Where each party must perform his promise independently without
waiting for the performance of the other
- Promises must be performed in the order expressly fixed by the
contract & where it is not fixed, they must be performed in the order of
the nature of the transaction u/s 52
- E.g. A promises to deliver goods to B on 10th April & B promises to
pay the price in advance on 1st April and on default to pay interest @
15% p.a. from 1st April till the date of payment. So, B need to perform
first but even if B does not perform, A must perform & then claim for
price & damages
#"

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,
  -
2. Mutual and Dependent
- Where the performance of the promise by one party depends
on the prior performance of the promise by the other party
- u/s 54 if the promisor who is required to perform his promise
first does not perform, such promisor cannot claim the
performance of the reciprocal promise
3. Mutual & Concurrent
- Where the two promises are to be performed simultaneously
- u/s 51 the promisor need not perform unless the promisee is
ready & willing to perform his reciprocal promise
- E.g. A & B contract that A shall deliver goods to B to be paid
for by B on delivery
4. Consequences where a party prevents performance (u/s 53)
the contract becomes voidable at the option of the party so
prevented
*$!
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*ÈÈ
¬ Where prescribed by the promisee at the
specified time & place
¬ Where not prescribed by the promisee then
the contract must be performed
a) Within a reasonable time on a working day
& within the usual hours of business
b) At proper place e.g. at godown/shop & not
at a public meeting/ fair
 Ë 
! 
" 

  
  
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¬ Rules u/s 55
1. Where ³time is of the essence of the contract´ the contract
becomes voidable at the option of the promisee
The promisee may rescind the contract & sue for the breach
2. Where ³time is not the essence of the contract´ the promisee
has to accept the delayed performance, and can claim
compensation for loss caused by the delay
But if the delay is beyond a reasonable time the contract will
become voidable by promisee
3. In case of a voidable contract if the promisee accepts the
delayed performance, he cannot later claim compensation for
loss due to delay
 ) 
 


 
 

i) If the parties expressly agree

ii) If the nature of transaction and the intention of
parties was such
Normally in commercial contracts the time of
delivery of goods is the essence of the contract
but not the time of payment of price
¬ Mode of performance
The promisor must perform as per the terms of the
contract/ instructions from the promisee
 ""
"  

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¬ When a debtor owes several debts to the same creditor & if the
creditor accepts the payment, he must follow the rules for
appropriation as follows, otherwise he must refuse to accept the
payment:
1. Debtor¶s express instructions must be followed
2. Debtor¶s implied intention must be followed
3. Appropriation by Creditor
If there is no express/implied directions by the debtor, creditor may
appropriate to any debt
4. Appropriation by Law
- Where debtor/creditor has not appropriated, order of time need to be
followed
- If debts are of equal standing, payment shall be applied
proportionately
5. When principal & interest both due
to be applied towards interest first
 
 

'" 


¬ If parties to a contract agree to Novation, Rescission

or Alteration
* Original contract disappears & is substituted by a
new contract
* Novation - Same contract, new parties
* Rescission ± Cancellation of old contract
* Alteration ± Same party, change of terms
¬ u/s 64 When a person at whose option a contract is
voidable rescinds it, the other party need not
perform his promise
 | 

  

¬ Breach of contract is a method of discharge

of a contract
¬ The contract stands terminated
¬ Breach brings an end to the obligations
created by a contract on the part of each of
the parties
¬ The aggrieved party can sue for damages
for breach of contract as per law
 ß

' 

 

(1) Anticipatory Breach

Breach occurring before the time fixed for
performance taking place in two ways:
(i) Expressly by words spoken/written
- Promisor communicates intention not to perform
before the due date of performance
- Such declaration must be absolute &
unconditional & not a probability to perform/not
(ii) Implied by the conduct of one of the parties
- The promisor promises to sell a particular horse to
promisee but before the due date of performance
sells it to another person
 Ë 
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¬ When there is an anticipatory breach of contract the promisee
need not perform
¬ The promisee has the option:

i) to treat the contract as cancelled & sue the other party for
damages immediately without waiting till the due date of
performance known as The Doctrine of Anticipatory Breach
¬ Exception to the doctrine:

- Does not apply to contracts for the payment of debt

- Suppose the payment of debt is 2 months & the promisor
conveys that he is not able to make the payment, the promisee
cannot sue immediately but need to wait for the due period
 &" 

"

,
  -
ii) Not to treat the contract as cancelled & wait for the due date of
performance and then sue
- In this case the contract shall be kept alive for the benefit of the
promisor & the promisee
- The guilty party may reconsider & perform & take the advantage
of any supervening imposibility which may discharge the contract
- A agrees to sell his house to B for Rs. 8,50,000 on 1st of March.
But on 10th February informs B that he will not sell his house.
There is an anticipatory breach. Later on the house is destroyed
by fire. If B would have exercised the option to cancel the
contract after 10th february but before the house is destroyed by
fire, B could claim damages but after the house is destroyed by
fire & the contract gets cancelled due to this supervening
impossibility, there can be no damages
  !| 

¬ When a party fails to perform his obligation

upon the date fixed for performance by the
contract
¬ Entitles the aggrieved party to cancel the
contract & sue for damages for breach of
contract
 

| 

 

1.The injured party may cancel the contract, not

perform his part of obligation & may sit
quiet/ sue the party for damages
2. Suit for Damages
Damages are monetary compensation
allowed to the injured party for the injury
suffered
 



 


¬ ßinds of damages
i) Ordinary damages are damages arising normally
from the breach
ii) Special damages are decided at the time of
contract by the parties
iii) Exemplary damages are awarded to punish the
guilty party for the breach & not by way of
compensation for the loss suffered by the
aggrieved party
- Exemplary damages have no place in the law of
contract & are not recoverable for a breach of
contract
 Ë" 
0Ë"! #1
'
!
a) Breach of a contract to marry
b) Dishonour of a cheque by a banker when there are
sufficient funds to the credit of the customer
The rule of ascertaining damages is µsmaller the
cheque, greater the damage¶ according to the status
of the party
c) When any person gives any bond for the
performance of any public duty
iv) Nominal damages
  !
   2

1

1. Damages are awarded as compensation for the loss suffered

by the aggrieved party & not for punishing the guilty party for
the breach
2. The aggrieved party can recover only the actual loss suffered
arising naturally in the usual course known as ordinary
damages
- Case of Hadley vs. Baxendale
3. In the case of contract for µsale & purchase¶ damages would
be assessed on the difference between the contract price & the
mkt. price at the date of breach
4. Special damages are not allowed until they are in the
knowledge of both the parties at the time of entering into the
contract
  !




5. Even if the parties fix up in advance the sum payable as
damages , the court will allow only reasonable compensation to
cover the actual loss, it should not exceed the amount
mentioned in the contract
6. It is the duty of the injured party to use all reasonable means of
avoiding the damage
7. The injured is entitled to get the costs of filing suit and order for
damages from the defaulter
8. Stipulation regarding payment of interest
A stipulation of increased interest from the date of default may
be a stipulation by way of penalty and so disallowed if the rate
is very high
 $# 
  

¬ Rules:
1. Unless specifically mentioned for the payment of interest ,
interest cannot be recovered as damages
2. If mentioned, only reasonable interest is allowed
3. Payment of compound interest on default is allowed only if it is
reasonable
¬ Earnest Money Deposit (EMD)
Money deposited as security for the due performance of a
contract
- Cancellation of EMD is allowed if the amount is reasonable
- Reasonable means, proportion of the EMD which bears to the
total sale price, the nature of the contract and other
circumstances
K    "
3  2   +
È*

¬ uantum Meruit means ³as much as is

earned´ / ³in proportion to the work done´
¬ A right to sue upon quantum meruit arises
where after part performance of the contract
by one party, there is a breach of contract,
or the contract is discovered void or
becomes void
 3  2  ,
  -

¬ Aggrieved party may file a suit upon quantum

meruit:
a. Where contract is discharged by the default of guilty
A engages B to build a three storied house. After a
part is constructed A prevents B from working
b. Where work has been done in pursuance of a
contract which is discovered void provided the
contract is divisible
A contracts with B to repair his house at a piece
rate. After part of repairs, the house is destroyed.
But if the payment is lumpsum then no quantum
meruit
 3  2  ,
  -

c. When a person enjoys benefit of non-gratuitous act

A, a trader leaves certain goods at B¶s house by
mistake. B treats the goods as his own. He is
bound to pay A for them.
d. A party who is guilty of breach of contract may sue
on a quantum meruit if
(a) The contract is divisible
(b) The other party must have enjoyed the benefit of
the part which has been performed
 3  2  ,
  -

A carrier fails to take the complete consignment to

the agreed destination, he may recover pro-rata
freight
4. Suit for Specific Performance
- means the actual carrying out of the contract
- granted only where just & equitable
- Usually granted in contracts connected with land,
buildings, rare articles & unique goods having
special value
- In such a case money is not an adequate relief
because there is no substitute
  
"$ 
,
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- not granted where

a. Monetary compensation is an adequate
relief
b. Where the court cannot supervise the actual
execution of the contract e.g. a building
construction contract
c. Where the contract is for personal service
e.g. a contract to marry
È   
(  


¬ Injunction is an order of a court restraining a

person from doing a particular act
¬ Order not to do what he promised not to do
¬ A agreed to sing at B¶s theatre and sing for
no one else. But A contracted to sing at
somebody else¶s (Lumley vs, Wagner)
 3 
4
 
 +



¬ Contracts where there is no offer, no

acceptance, no consent & no intention of the
parties to enter into a contract but from the
conduct & relationship of the parties, implies
a promise imposing obligation on the one
party & conferring a right in favour of the
other
¬ Such obligation imposed by law are uasi-
Contracts
¬ Based on the doctrine of unjust enrichment
1
 
5(
Ë 

¬ A person shall not be allowed to enrich

unjustly at the expense of others
¬ Duty & not a promise or agreement is the
basis of such contracts
3 
4
  !
'! 

0

1.Claim for necessaries supplied to an

incapable person or on his account u/s 68
- If a person incapable of entering into a
contract/ anyone whom he is legally bound to
support, is supplied by another person with
necessaries suited to his condition, the
person who has furnished such supplies is
entitled to be reimbursed from the property of
such incapable person
!


 
'#
"  
"

,
  -
- Only the estate is liable
- The things supplied must be necessaries
- Necessaries must be supplied only to
incompetent person/ one whom he is legally
bound to support
- Liable to pay a reasonable price
 '
 
"

"#
# '#

 "# 

  
 +


¬ Conditions:
i) The plaintiff should be interested in making the
payment to protect his own interest & the
payment should not be voluntary
ii) The payment must be such as the other party was
bound by law to pay
iii) The payment must not be such as the plaintiff
himself was bound to pay
A sub-tenant pays the arrears of rent due by the
tenant to the landlord to save the tenancy from
forfeiture
K &'! 

"

(
#
' 

4  

  +

¬ Where a person lawfully does anything for another
person, or delivers anything to him, not intending
to do so gratuitously and such other person enjoys
the benefit thereof, the latter is bound to make
compensation to the former
¬ Conditions:
a. The thing must have been done lawfully in good
faith
b. The thing must have been done by a person not
intending to act gratuitously
c. The person for whom the act is done must have
enjoyed the benefit of it
´ 
"

'! #
 




+

¬ Duties of finder of goods:
a. Must try to find the real owner & hand over
b. Must not appropriate the property to his own
use
c. Till the goods are in possession of the
finder, he must take due care as if they
were his own


 



0

a. Till the true owner is found he can retain the

goods
b. Entitled to receive from the owner all expenses
incurred for preserving the goods & finding the
true owner
c. Entitled to sell the goods if the owner is not found
/if he refuses to pay the lawful charges of the
finder when:
i) The goods are perishing or
ii) When the lawful charges of the finder amount to at
least 2/3rd of the value of goods found

"

'! #
 




,
  -
¬ The true owner is entitled to get the balance
of sale proceeds if there is surplus after
meeting the lawful charges
5. Liability of person to whom money is paid or
thing delivered by mistake/ under coercion
u/s 72
- person must repay/return it