CONTRACT
- "IGNORANTIA JURIS NON EXCUSAT”
- Means " Ignorance of law is no excuse"
- Every person presume to know the law of the which he is a subject.
- BUSINESS LAW (BL)
- Business law is also known as Mercantile law, Commercial Law or Corporate Law.
- LAW: "Rule made by authority for the proper regulation of a community or society or for correct conduct in life"
- Law is the body of principles recognize and applied by the state in administration of justice.
--- Content provided by FirstRanker.com ---
--- Content provided by FirstRanker.com ---
- CONTRACT: Section 2(h) of ICA" An agreement enforceable by law is known as contract”
- Definition of an AGREEMENT Sec.2(e) of ICA “Every promise and every set of promises, forming the consideration for each other.”
- Sec.2(b) of ICA defines PROMISE as “ When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise"
- On analyzing the definitions of agreement and contract, the following definitions of an agreement are:
- Plurality of persons : There must be two or more persons to make a contract because one person can not enter into an agreement with himself.
- Consensus-ad-idem : Both the parties to an agreement must agree about the subject matter of the agreement in the same sense and at the same time.
- Legal Obligation Or Enforceability : An agreement is said to be enforceable if it is recognize by the courts.
--- Content provided by FirstRanker.com ---
DIFFERENCE BETWEEN AGREEMENT AND CONTRACTS
- Sec. 10 of ICA “ All agreements are contracts if they are made by the free consent of the parties competent to contract, for a lawful consideration and with lawful object not hereby expressly declared to void “
ESSENTIALS OF A VALID CONTRACT
- Following are the essentials of a valid or complete contract:
- Plurality of persons.
- Consensus-ad-idem.
- Valid offer and acceptance.
- Capacity of parties.
- Free Consent.
- Lawful Consideration.
- Lawful Object.
- Agreement Not Expressly Declared Void.
- Legal formalities.
- Certainty.
- Possibility of performance.
- Intention to create Legal Relationship.
--- Content provided by FirstRanker.com ---
--- Content provided by FirstRanker.com ---
--- Content provided by FirstRanker.com ---
EXPLANATION
- Explanation of above essentials:
- 1. Plurality of persons : There must be two or more persons to contract because one person cannot enter into a contract with himself.
- 2. Consensus-ad-idem : Both the parties to a contract must agree about the subject matter of a contract in the same sense and at the same time, meeting of minds.
- 3.Valid Offer and Acceptance : There should be atleast two parties 'offerer" and "offeree". An offer to be valid must fulfil certain conditions such as it must tend to create legal relations , its terms should be certain and unambiguous , it must be communicated to the offeree e.t.c.
- An acceptance must fulfil certain conditions such as it must be absolute and unqualified, in a prescribed manner, communicated by an authorized person before the offer lapses.
--- Content provided by FirstRanker.com ---
- 4. Capacity of Parties : Sec.11 of ICA “Every person is competent to contract who is of the age of Majority and who is of sound mind and must not be declared Disqualified from contracting by any law to which he is subject."
- 5. Free consent : Consent means that the parties must have agreed upon the same thing in the same sense.
- There is absence of “free consent", if the agreement is induced by
- a. Coercion.
- b. Undue Influence
- c. Misrepresentation.
- d. Fraud. or
- e. Mistake.
--- Content provided by FirstRanker.com ---
- If the agreement is vitiated by any of the first four factors, the contract is voidable and can not be enforced by the party guilty of coercion or undue influence etc.
--- Content provided by FirstRanker.com ---
- 6.Lawful Consideration: Consideration is “ something in return".
- No consideration, no contract".
- A promise to do something or to give something for no return is not enforceable by law.
- With certain exceptions.
- The consideration is lawful if it is Forbidden by law, or is of such a nature that it would defeat the provisions of any law, or is Fraudulent or Involves or implies injury to the person or property of another, or Oppose to Public Policy.
--- Content provided by FirstRanker.com ---
- 7. Agreement Not Expressly Declared Void : The ICA has declared some agreements specifically void under sections 24 to 30 and 56. Agreements like “ in restraints of marriage" “ in restraint of trade" "in restraint of legal proceedings" involving uncertainty; wagering and impossible are void.
- 8. Legal Formalities: A contract must be oral or in writing. And in some cases it must be in writing and registered.
- Eg To make gift for natural love and affection.
- Exceptions: Implied contracts, Quasi contracts.
- 9. Certainty: The contract must be certain or at least capable of being made certain. Eg. Quality or quantity of subject matter.
- 10. Possibility of Performance : The agreement must be capable of being performed. This is based on Latin maxim “ lex non cogit ad impossiblia” – which means law does not compel to do what is impossible.
- Impossibility can be
- Pre contractual impossibility : Agreement is void ab initio
- Post contractual impossibility: Contract becomes void as "Doctrine of Supervening Impossibility" or “ Doctrine of Frustration"
--- Content provided by FirstRanker.com ---
- 11.Intention to Create Legal relationship: The intention of both the parties entering into an agreement must be to create a legal relationship among them. Agreements of social or domestic nature do not create legal relations.
- Eg. If 'D' agrees to go to cinema with 'B', this is not a contract enforceable by law. Social obligations are not enforceable by law.
- The elements mentioned above must all be present.
- If any one of them is absent, the agreement does not become a contract.(With certain exceptions). From this it follows that Every contract is an agreement but all agreements are not contracts.”
--- Content provided by FirstRanker.com ---
OFFER OR PROPOSAL
- Sec.2(a) of ICA defines OFFER as “when one person signifies to another his willingness to do or to 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 (proposal)".
- For a lawful offer, the following conditions (Nature/Features) must be fulfilled .
- There shall be atleast two persons (Offeror and Offeree) competent to contract.
- The person (expressing willingness) has the intention to get the assent of that other person to such an act or abstinence.
- One person expresses (signifies) his willingness to another 'a" to do or 'b" to abstain from doing anything.
- Offeror or promisor is the person making the proposal to another.
- Offeree or Promisee is the person to whom offer or proposal is made.
--- Content provided by FirstRanker.com ---
--- Content provided by FirstRanker.com ---
LEGAL RULES REGARDING A VALID OFFER
- An offer must be " Expressed or Implied".
- An offer must contemplate to give rise to ‘legal consequence' and be capable of creating legal relationship.
- The terms of the offer must be certain and not vague or loose.
- "An invitation to an offer is not an offer".
- An offer may be 'Specific or General'.
- An offer must be communicated to the offeree.
- An offer should not contain a term the non compliance of which would amounts to acceptance.
- An offer can be made subject to any terms and conditions.
- Two identical cross offers do not make a contract.
--- Content provided by FirstRanker.com ---
- Explanation.........
- An offer may be Expressed or Implied: That offer can be expressed in words etc. At the same time offer can be implied e.g. runs buses in different routes at the scheduled time.
- The offer must disclose the intention to create legal relations: To constitute an offer, the offerer must intend to create legal obligation. Invitation to negotiation, Social invitation, Invitation to offer, offer made in Excitement are the examples of a lack of contractual intention on the part of offerer.
- The terms of an offer must be certain, not loose or vague: observes “ Unless all the material terms of the contract are agreed, there is no binding obligation".
- E.g. 'X' purchased horse from 'Y' and promise to by another if first horse is lucky. 'X' refuse to purchase second horse 'Y' cannot enforce (Taylor Vs Porting ton)
- An invitation to an offer is not an offer : An offer is different from “ Invitation to Receive offer" or “ Invitation to Treat"(judicial expression) because its objective is mere " Circulation of Information".
- E.g. (a) An advertisement for sale of goods by Auction is not an offer (Harris Vs Nickerson ).
- (b) Quotations, Catalogues of prices and Display of goods.
--- Content provided by FirstRanker.com ---
--- Content provided by FirstRanker.com ---
- Grainer and son Vs Gough.
- Case:" The transmission of price list does not amount to an offer to supply an unlimited quantity or quality specified".
- An offer may be Specific or General : General offer is made to the world at large or public in general. While Specific offer is made to some specific individual or individuals. It follows that an offer need not be made to an ascertained person, but it must be accepted by a definite person.
- Case: "Carlill Vs Carbolic Smoke Ball Co."
- Reward of 100 pound to any person who contracts 'influenza' after consuming smoke balls.(Gen. Offer.)
- 6. An offer must be communicated to the offeree : Until the offer is known to the offeree there is no contract. Communication means bringing it to the knowledge of the offeree.
- “ Doing anything in ignorance of an offer can never be treated as acceptance, for there was never a consequences of wills. This applies to both general and specific offer".
- Case : Lalman shukla Vs Gauridatt.
- Servant found the absconded nephew of defendant without the knowledge of the reward. Plaintiff cannot claim the reward.
--- Content provided by FirstRanker.com ---
--- Content provided by FirstRanker.com ---
- Communication of "Special Terms"
- In case of the contract as contained in Credit cards, Ticket, Standard form Documents the more adopted rules by the courts are:
- If the acceptor or promisee had no knowledge of special terms at the time of contract they are not binding upon courts.
- Case.1.: Henderson Vs Stevenson. ( Steamer ticket “ Dublin to Haven". No reference for “special conditions” (PTO).Plaintiff lost luggage and won the claim for the damages.)
- Case.2. Parker Vs South East Railway Company.
- Deposited luggage at clock room. Special terms reference given on ticket (see back). Defendant not responsible for damages. (Special charge responsible for luggage exceeding 10 pounds, unless extra charge is paid). Exemption to above rule :
- "The Doctrine of Fundamental Breach and Strict Construction" Doctrine protects the unreasonable consequences if wide and general exemption of clauses.
- Case.3. M. Siddaligappa Vs T. Nataraj.
- Dry cleaner's terms that he will pay only eight times the amount of charges, for any damage to or loss of the garment, held unreasonable.
- “ Terms and conditions must be reasonable, so that they should not cheat any body.
--- Content provided by FirstRanker.com ---
--- Content provided by FirstRanker.com ---
- An offer should not contain a term the non compliance of which would amounts to acceptance.
- Thus, an offeror can not say that if acceptance cannot be communicated up to a certain date, the offer would be presumed to have been accepted. If the offeror does not reply, there is no contract, because no obligation to reply can be imposed on him, on the ground of justice.
- An Offer can be made subject to any terms and conditions : An offeror may attach any terms and conditions to the offer he make. He may prescribe the mode of acceptance. – "By Registered Post Or By Telegram" Etc.
- Two Identical Cross Offers do not make a contract.
- When two parties make identical offers to each other in ignorance of others offer, the offers are "Cross Offers" which do not make a contract.
--- Content provided by FirstRanker.com ---
ACCEPTANCE
- Sec.2(b) of ICA " A Proposal when accepted becomes a Promise"
- Acceptance defined as
- “ When the person to whom proposal is made signifies his assent thereto, the proposal is said to be accepted".
- Acceptance is the manifestation of offeree of assent to the terms of the offer.
--- Content provided by FirstRanker.com ---
Legal rules Regarding Valid Acceptance : (Essentials of Valid Acceptance )
- Only a valid acceptance to a valid offer can establish legal relationship between offeror and acceptor (offeree).
- Following are the essentials and legal rules of a valid acceptance:
- Acceptance must be given only by the person to whom offer is made: Jones, A sold B his business without telling c, a customer. C sent an order for goods to A. B received the order and executed it. C refused to pay the price. Held no contract between C and B because C never made any offer to B).
- Acceptance must be "Absolute and Unqualified".
- Sec.7(2) “ Even a slightest deviation from the terms of the offer makes acceptance invalid.”
--- Content provided by FirstRanker.com ---
- Acceptance must be Expressed in some usual and Reasonable manner unless the proposal prescribes the manner in which it is Expressed or Implied (Tacit) Acceptance.
- Sec.7 (2) says in case of deviated acceptance, "The proposer may within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner and not other wise. If he fails to do so , he accepts the deviated offer."
- Mental acceptance is ineffective. Acceptance must be communicated to the offeror, otherwise it has no effect.
- “ This rule is based on " Consensus Ad Idem" (meeting of minds). The offeror cannot impose a condition that offeree's silence will be regarded as equivalent to acceptance.
- Case:1. Felthouse Vs Bindley ( F offered to buy horse from his Nephew not replied but told B his auctioneer not to auction horse. B auctioned horse by mistake. F filed case. Held, no contract because there was no communication of acceptance by nephew to F)
- Case:2. BrogdenVs Metropolitan Railway (Letter of acceptance remained kept in drawer).
--- Content provided by FirstRanker.com ---
- An Acceptance must be communicated by the acceptor:
- Case: Powel Vs Lee (“Post of Head Master"- informed about selection- Post canceled- No contract)
- Acceptance must be given within a Reasonable time and Before the offer Lapses or Revoked :
- Case: Shree Jayamahal co-op. Housing society Vs Zenith Chemical Works Limited. (Applied for shares- no allotment till five months – refuse to accept- No contract.)
- Acceptance must succeed the offer : E.g. Allotment of shares prior to application of shares.
- Rejected offer can accepted only, if Renewed.
--- Content provided by FirstRanker.com ---
Privity of contract:
The basic principle underlying law of contracts is that a stranger to a contract cannot maintain a suit for remedy. The law entitles only those who are parties to contract to file suits for exercising their rights. This is known as 'privity' of contract.
CONSIDERATION
"EX NUDO PACTO NON ORITUS ACTIO"
--- Content provided by FirstRanker.com ---
[ From a Nude or Bare Promise, No Right of Action can arise]
Consideration is the one of the essential element of a valid contract (sec.10).
Pollock "Consideration is the price for which the promise of the other is bought"
Sec.2 (d) of ICA defines “ When at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or promises to do or to abstain from doing, something, such act or abstinence or promise is called a Consideration for the promise".
Types of Consideration :
--- Content provided by FirstRanker.com ---
Present Consideration :
Past Consideration :
Future Consideration:
ESSENTIALS OF A VALID CONSIDERATION OR LEGAL RULES OF A VALID CONSIDERATION:
Consideration Must Move at the Desire of the Promisor: The act or abstinence must have been done at the desire of the promisor, not at the desire of any third party.
Case : Durga Prasad Vs Baldeo. (Construction of the shops in the market at the desire of the collector by D- Shopkeepers promised to pay commission to D on sold articles-D sued them for not paying-Held Cannot collect commission from shopkeepers because shops are not built at their desire)
--- Content provided by FirstRanker.com ---
Consideration may move from the Promisee or any other person: Sec.2(d). “ Consideration need not move from the promisee alone but may proceed from a third person".
“ A Stranger to Consideration Can sue on a contract provided he is a Party to the Contract"-Called DOCTRINE OF CONSTRUCTIVE CONSIDERATION
Chinnaiah Vs Ramayya".
'A' an old lady gifted her property to her daughter 'B' and 'B' should pay annuity to A's brother 'C' – Held that 'C' can sue.
A Stranger to Contract Cannot Sue : As per Doctrine of Privity of Contract"- Privity is essential for enforcing contract ( he must be a party to the contract, stranger cannot sue".
--- Content provided by FirstRanker.com ---
Case: Dunlop Pneumatic Tyre Co. Vs Selfridge & Co.(1915)
A dealer purchase tyre from the Dunlop Co. and sold to a retailer (selfridge & Co). Retailer sold below the fixed price.Dunlop co cannot file a case against Sefridges & Co because there is no privity of contract between Dunlop and selfridge.
Case Iswaram Pillai Vs Sonnivaveru.
'A' mortgage his property to 'B' in consideration of B's promise to pay A's debt to 'C'. 'C' cannot file a case because he is not a party to the contract.
“A Stranger to contract cannot Sue,but a Stranger to Consideration can sue"
--- Content provided by FirstRanker.com ---
- Exceptions to "A Stanger to Contract Cannot Sue" [Exceptions To "Doctrine of Privity of Contract" ]
- There are special Clause in contract act called as "Cardinal Principles" That says that stranger to contract can sue.
- But there are certain exceptions to this law and in the following cases the "Third Party" [Stranger To contract] can sue:
- Marriage Settlements , Partition And other family arrangements:
- Assignment of the Contract: The Assignee can sue.
- Beneficiary of a Trust:
- Contract Entered through an Agent: A principal can sue.
- Estoppel or Acknowledgement: When the promisor by his conduct admits or acknowledges liability, or constitute himself as the agent to the third party' he shall be estopped from denying any liability.
- Charge Created with favour of certain person on Immovable Property The beneficiary can enforce the charge.
--- Content provided by FirstRanker.com ---
- The Consideration may be Past (Executed), Present or Future: The words used in Sec.2(d) are "has done or abstained from doing( Past), does or promises to abstain from doing (Present) or promises to do or abstain from doing (Future Consideration).
- Consideration must be something of Value in the Eyes of Law: Where consideration is Physically impossible (make a dead man alive), Legally Impossible, Uncertain Consideration (unclear or vague), Illusory or Deceptive consideration. (Promise to perform public duty or perform a duty already made with the promisor.)
--- Content provided by FirstRanker.com ---
- Consideration may be an act, abstinence or return promise. The consideration may be positive (to act) Negative (Abstinence).
- Consideration must be lawful: Not some illegal act like paying one to do crime.
- A Contract must be supported by Consideration: “ No consideration no contract".
- Consideration need not be adequate: But must have some value, however slight. Inadequate of consideration does not invalidate a contract. E.g. Ram involuntarily agreed to sell his bicycle for Rs. 50.( of Rs. 500) to Karan. it becomes a valid contract.
- There must be Mutuality: i.e. Each party must do or promise to do something. A gratuitous promise, as in the case of a subscription for charity, is not enforceable
--- Content provided by FirstRanker.com ---
EXCEPTION TO THE RULE “ NO CONSIDERATION NO CONTRACT".
Sec.25 of ICA, specifically states that “ Subject to certain exceptions, agreements without consideration are void"
- Exceptions to the Rule “No Consideration No contract" are as follows:
- Agreement made on Natural Love and Affection:
- Agreement to Compensate for Past Voluntary Services:
- Agreement to Pay a Time Barred Debt:
- Completed Gift:
- In case of Contract of Agency:
- Permission by the Promisee of performance of the promise:
- Contribution to Charity:
--- Content provided by FirstRanker.com ---
--- Content provided by FirstRanker.com ---
Explanation to above Exceptions:
(1) Agreement made on account of Natural Love and Affection { Sec.25(1) }: An agreement without consideration is valid provided:
It is made on account of love and affection.
It is between parties standing in near relation to each other.
--- Content provided by FirstRanker.com ---
It is expressed in writing. It is registered under the law for the time being in force.
All these above essentials must be present to enforce an agreement made without consideration.
Case: Rajlakhi Devi Vs Bhootnath. (Husband given property to wife due to some dispute - But not out of love and affection- Not enforceable.)
(2) Agreement to compensate for Past Voluntary Services:[Sec.25(2)] A promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, is enforceable, even though without consideration.
E.g. 'A' saves 'B' from an accident. "B" promises to 'A' Rs. 1000. The contract is valid.
--- Content provided by FirstRanker.com ---
(3) Agreement to Pay a "Time Barred Debt" {Sec.15(3)}- is enforceable by law. Provided following conditions should fulfill:
- There must be an Expressed promise to pay a Time Barred Debt .
- The debt must be such that, the creditor might have enforced payment but for the "Law of Limitation of Suits".
- Writing and signed.
- The promisor himself must be liable for the debt.
--- Content provided by FirstRanker.com ---
Case: Pestonji Vs Meher Bai. (Widow cannot execute her husbands promissory note. It must be an expressed promise, In writing and Signed.)
(4) Completed Gift {Sec.25}: If a person gives one's property to another according to the provision of "Transfer of Property Act" He cannot subsequently demand the property back on the ground that there was no consideration
(5) In case of contract of Agency: According to Section 185 of ICA, no consideration is required to create an Agency.
(6) Remission by the promise, of performance of the promise: (Sec.63) for compromising a due debt and agreeing to accept less than what is due, no consideration is necessary.
(7)Contribution to Charity : A promise to contribute to charity, though gratuitous, would be enforceable; if on the faith of the promised subscription, the promisee incurs any liability.
--- Content provided by FirstRanker.com ---
Case.1: Kedarnath Vs Gorie Mohammed (Town hall construction- Incurred liability. (Valid contract.)
Case.2: Abdul Azeez Vs Masum Ali. ( Funds for construction of Mosque- Liability not incurred –Cannot claim.
FREE CONSENT
Sec.13. of ICA defines CONSENT as “Two or more persons to have said to have consented when they agree upon the same thing in the same sense"
"Consensus Ad -Idem" is a condition essential for the formation of a valid contract.
Absence of consent may arise from a number of causes, namely-
--- Content provided by FirstRanker.com ---
- By reason of an error as to the identity of the person with whom the contract is entered into;
- By reason of an error as to the nature of the contract itself;
- By reason of an error as to the subject matter of the agreement.
FREE CONSENT Sec. 14 define Free Consent Consent is said to be Free when it is not caused by
Coercion (Sec.15)
--- Content provided by FirstRanker.com ---
Undue Influence (Sec. 16)
Fraud ( Sec.17)
Misrepresentation(Sec.18)
Mistake subject to the provision of Sec.20,21,22
In the absence of "Free Consent" the contract turns out to be either Voidable or Void depending upon the nature of the flaw in consent. If the contract is caused by "bilateral mistake" the agreement is void.
--- Content provided by FirstRanker.com ---
COERCION
Sec.15 defines Coercion as " Coercion is committing or threatening to commit, any act forbidden by Indian Penal Code, or the unlawful detaining or threatening to detain' any property, to the prejudice of any person to enter into an agreement.”
In short, it can be said coercion is there where consent is obtained by –
- Threatening to commit any act which is forbidden by the IPC.
- Threatening to detain any property.
- Committing any act which is forbidden by the IPC.
- Unlawful detaining any property.
--- Content provided by FirstRanker.com ---
Effect of Threat to Commit Suicide:
A " Suicide" and a “ Threat to Commit Suicide" is punishable but an " attempt to commit suicide" is punishable under IPC.
A Threat to commit suicide does not amount to coercion as considered by Madras high court in the case of “ Amiraju Vs Chikkam Sheshamma”.
In this case husband threatens to commit suicide if wife and son did not execute a release deed in favour of his brother in respect of certain property.
--- Content provided by FirstRanker.com ---
Effect of Threat to File a Suit:
To threaten a criminal or Civil prosecution does not constitute Coercion because it is not a act forbidden by law. But threat to file a suit on a false charge constitute coercion, for such an act is forbidden by the IPC.
As per Sec.64., if the aggrieved party opts to rescind the voidable contract, he must restore any benefits received from the other party.
DURESS : (jures) In English law coercion is called as Duress-means “ illegal imprisonment or either actual or threatened violence over the body of a person (body/ Physical) or another party or his wife or children with a view to obtain the consent of that party to the agreement.”
UNDUE INFLUENCE :(UI)
Sec.16(1) defines UI as “ A contract is said to be induced by "UI” where the relations subsisting between the parties are in a position to dominate the will of the will other and uses that position to obtain an unfair advantage over the other.
--- Content provided by FirstRanker.com ---
A person is Deemed to be in a position to dominate the other; (Presumption of UI)
(A) where he stands in a “Fiduciary Relation" (relationship of trust and confidence) to the other. E.g. Father and son, Solicitor and Client , Trustee and Beneficiary , Promoters and Company, And Guardian and Ward.
(B) Where he holds a Real or Apparent Authority over the other e.g. Relationship between Master and Servant, Doctor and Patient , Solicitor and Client.
C. Where a Party Makes a contract with a person whose mental capacity is Temporarily, or Permanently affected by reason of Age, Illness, or Mental or Bodily Distress.
Presumption of UI is not there in the following cases in which it has to be proved.
--- Content provided by FirstRanker.com ---
- Husband and Wife.
- Mother and Daughter.
- Grand son and grand father.
- Land lord and Tenant.
- Creditor and Debtor.
--- Content provided by FirstRanker.com ---
When consent to an agreement is got with UI the agreement is a voidable contract at the option of the aggrieved party.
MISREPRESENTATION (SEC 18)
A Representation is a “statement or assertion made by one party to the other, before or at the time of contract, regarding some matter or circumstance essential to the formation of the contract, with an intension to induce other party to enter in to contract.
A Representation when wrongly made, either innocently or intentionally is termed as Misrepresentation.
Misrepresentation includes
- a. The positive assertion in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true.
- b. Any breach of duty which, without an intent to deceive, gains an advantage to person committing it; or any one claiming under him by misleading another to his prejudice or to the prejudice of any one claiming under him.
- C. Causing, however innocently a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.
--- Content provided by FirstRanker.com ---
Essentials of Misrepresentation:
- In this a representation should be made innocently with an honest belief as to its truth and without any desire to deceive the other party, either expressly or Impliedly.
- The representation must relate to facts material to the contract.
- The representation must be untrue; or must have become untrue.
- The representation must have induces or have become instrumental in inducing the other party to enter into the contract.
--- Content provided by FirstRanker.com ---
- FRAUD ( Sec.17)
- Definition: Fraud means and includes any of the following acts committed by a party to contract, with his connivance or of his agent with intent to deceive another party there to or his agent, induce him to enter into contract:
- The suggestion as to a fact, of that which is not true, by one who does not believe it to be true.
- The active concealment of a fact by one having knowledge or belief of fact.
- A promise without any intention of performing it.
- Any other act fitted to be deceive.
- Any such act or omission as the law specially declares to be fraudulent.
--- Content provided by FirstRanker.com ---
Mistake
Mistake may be defined as a erroneous belief on the part of the parties to the contract concerning something pertaining to the contract.
- Different kinds of Mistake
- i] Mistake of fact
- a) Bilateral
- b) unilateral
- ii] Mistake of Law
- a) mistake of law of land
- b) mistake of foreign law
--- Content provided by FirstRanker.com ---
--- Content provided by FirstRanker.com ---
Capacity of Parties.
- Sec.11.of ICA states that “ Every person is competent to contract who is of the age of majority according to the law to which he is a subject, and who is of sound mind, and not Disqualified from contracting by any law to which he is a subject.”
- Sec.11 states that following persons to be incompetent to enter into contract:
- (a) Persons Disqualified by any law to which they are subject,e.g. Alien Enemies, Foreign Sovereigns and Ambassadors, Insolvents and Convicts etc.
- (b) Minors.
- (c) Persons of Unsound Mind i.e.Idiots, Lunatics and Drunken Person.
--- Content provided by FirstRanker.com ---
- Persons Incapable to Enter into Contractual Status: Following categories of persons are generally included as Disqualified Persons :
- (a)Alien Enemy. (b) Corporations and Joint Stock Companies.
- (c) Convicts. (d) Insolvent.
- (e) Foreign Sovereigns and Ambassadors. Married Women.
- (g) Trade Unions:
--- Content provided by FirstRanker.com ---
- MINOR (INFANT)
- Sec.3. Of ICA," a Minor is one who has not completed his 18th year of age."
This download link is referred from the post: VTU MBA Lecture Notes - 1st Sem, 2nd Sem, 3rd Sem and 4th Sem || Visvesvaraya Technological University
--- Content provided by FirstRanker.com ---