Prof Farheen Ansari B.com, CS, LLB, PGDIPR Q2. TYPES OF CONTRACT & AGREEMENT Ire GES all essentials of valid contract must be present ' Agreement which has null/no effect in the eyes of law, not ! eens | enforceable ; SR een emp | when there are 2 parties, out of which 1 party breaches | [Section 2(i)] | the contract then the contract becomes voidable : 1 slab: 30% payment 2 slab: 30% payment 3 slab: 40% payment " Ex. Here, Ram told the constructor to construct his house, and he will pay him in slab wise. It was agreed that first Ram will have to pay to start the work of each slab. After completing the 2~ slab, when the constructor asked for 3 slab amount, Ram didn't pay, meaning he breached the contract. Will the constructor construct the 3° slab as per the contract? No, because the contract has become Voidable on the part of constructor. Reo Agreement which is against public policy, morally or | ‘is criminal Agreement to Kidnap Agreement to murder dealing in drugs > Thus, Illegal Agreements are not only unenforceable, but also punishable by law.Prof Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 ee Ea Ce Co when the agreement is entered without any word, | but by conduct or act of parties Ex. Ordering a coffee Ex. picking a newspaper ina restaurant from vendor's stall PETE a! this is not real contract but alike/resemble like a contract. } Here the parties don't intend to enter into contract, but by | @ parcel gly neighbor. shall be the duty ofthe neighbor to ‘etum the good to the true owner, and i it doesn't then true owner can take action, a there has been ‘Quasi contract between the true owner and | neighbor. | when parties are yet to perform | | performed their respective |_| obligation under the contract ; | obligations under contract ff }Prof Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 | When contract is entered by two or more parties * using electronic means, such as ema is known ‘commerce contracts. | There EDI contracts or Cyber contract or Mouse | click contracts Oniine contractProf Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 NTIAI F VALID PROPOSAL. F PROPOSAL: > Section 2(a) of the act defines proposal as; | » When one person signifies to another, | > his willingness to do or abstain from doing anything, ' { t » with a view to obtaining the assent of that other to such act or abstinence, > Proposal is same as “Offer” under English law of contract. > Itis the first step in formation of contract. > The person making the proposal is called “offeror” 2 Ex. When A offers to sell his watch to B for Rs.1000/- Offeror Offeree ID PROP: 1 tt be in the form of * Anoffer cannot be dictating or demanding. * An offer must always be in the form of request. 2. It must create legal relations (not social relation): "An offer must intend to create legal relations between the parties. "An offer creating a social relation cannot create valid contract. "Case law: Kalai Halder v/s Sheikh [Invitation for dinner]Prof Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 in eee essed “NO act or conduct of parties Oral Writing "Offer can be Expressed or Implied. "Expressed means either in Oral or Written form. = Implied means “by an act or conduct of parties” 6. Offer must be communicated: @. @ = When there is no communication, there is no offer. * Communication is an important link between the proposal and acceptor. "For valid offer, it must be communicated. 7. Offer may be conditional * An offeror may put a condition while making an offer. + However, if the offer is conditional, then the conditions must be clearly communicated. 8. Offer must be ready to be accepted + The person making the offer is bound by that offer, once it is Mil = =9° accepted by the other party. + The offeror cannot reverse his offer, once accepted. t iProf Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 FFER/ STANDII > These are not offer but an invitation to make offer. A mere statement of price is not an offer. > Ex. Window displays, Tenders, Auction sales are all invitation to offer. v/s Facie [189: The plaintiffs through telegram asked 2 questions from defendant; i) will you sell us Bumper Hall pen? And ii) Telegraph lowest cash price The defendants replied through telegram, “lowest price for Bumper Hall pen is 900 euro. The plaintiff sent another telegram stating “we agree to buy the Bumper Hall pen at 900 euro”. However the defendant refused to selll. Are the defendants liable? Privy council held that the defendant are not liable to sell because out of 2 question they answered only one and neither have they indicated their willingness to sell. Thus no offer was made. Mere statement of price is not an offer. VILCOUNTER OFFER: > A rejection to the original offer is counter offer. It is a new offer. > Ex. A offers to sell the painting at Rs.2000/- to B. B says he will buy at Rs.1200/-. Here is has rejected A's offer and made his counter offer.Prof Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 DEFINE ACCEPTANCE AND. OF VALID ACCEPTANCE ILMEANING: > Section 2(b) defines acceptance, Vv ry pr |» When the person to whom the proposal is made, > signifies his assent thereto, |» The proposal is said to be accepted. | » Aproposal when accepted becomes a “promise”. a > The person making the proposal is called “Promisor” and the person accepting is called “promise” Sir William Anson, “Acceptance is to offer what a lighted match is to a train of gun powder”Prof Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 HLESSENTIAL F VALID ACCEPTANCE: I incon’ ! "= Acceptance with conditions is no acceptance at all. + Acceptance cannot be conditional. * For valid Acceptance, it must be absolute and unconditional. * Acceptance may be made with orally or in writing or even by implied ways. * The promisor may prescribe a particular mode of acceptance. * But, if the particular mode of acceptance is not specified, then acceptance can be done is usual and reasonable mode D A nce mi mmunicated * Acceptance, made by the acceptor is required to be communicated to the proposer. + Ifthere is no communication to the acceptance, there is no acceptance at all. railway Co. viz, Metropolitian railway for his acceptance. The manager wrote the word i { ' 1 | Ba supplier, sent a draft agreement relating fo the supply of coal to the manager of 1 1 | “Approved” on the same and put the draft agreement in the drawer of the table. ; t t t 1 t By an over sight the draft agreement remained in drawer. Will it amount to communication? Held, that there was no contract as the manager | had not communicated his acceptance to the supplier,Prof Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 4, Silence does not amount to acceptance + An acceptance to an offer cannot be implied. + Hence, remaining silent does not amount to acceptance. + Mental acceptance is no acceptance at all. Case Law: Felthouse vs. Bindley (1862) 2 i t ' ! F (Uncle) ordered to buy his nephew's horse for £30 saying “If | hear no more | about it I shall consider the horse mine at £30.” The nephew did not reply to F at t ' ' all, Will that amount to nephew's acceptance? No, as mere silence does not amount 8 to acceptance Acceptan r of all terms of offer ie @ + For valid acceptance of proposal, all the terms of the offer must be acceptance. One cannot ignore some terms and accept few terms of the offe! A nce mi within specified fir Acceptance can be made till the time the offer is subsisting and valid. Once the offer expires, acceptance is of no use. a7 & zi ing the offer must int + Acceptance shall be made only when the person is aware of the offer. + Ifthe acceptor was ignorant of the offer itself, then there cannot be acceptance. "| [Case Law: Lalman Shukla v/s Gauri Dutt],Prof Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 Q5. EXPLAIN COMMUNICATION, ACCEPTANCE AND REVOCATION OF OFFER AND. ACCEPTANCES [SECTION 3-6] 7 -EPTANCE AND REVOCATION OF PROPOSAL AND ACCEPTANCES. Shall be deemed to be made by any | act_or omission of part proposing, | * communication of proposals ‘ ' * acceptances of proposals | accepting or revoking which intends 1 1 ' fo communicate such proposal, * revocation of proposals and acceptances acceptance or revocation 1 When communication of Acceptance Is complete When communication } of Proposal is complete When it comes to the knowledge of the. person to whom it is ! fo him, so as to be out | of power of the icceptor ‘A proposes to sell his house to B for Rs.20 lacs iy 2 By sending a letter to B B accepts the offer by sending a letter by post A B Nice deal! | will buy it. Ex. Q. When is the communication of proposal of A complete? > When Breceives the letter Q. When is the communication of acceptance of 8 complete? > On the part of A- when the letter is posted by B > On the part of B- when the letter is received by AProf Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 As against the person As against the person to _ who makes it whom itis made When it is put in the | When comes to the course of transmission knowledge of the to him, so as to be out ‘of power of the person | who makes it | Person against whom it | ismade Ex. = . { I don’t want to buy, let {me send him a ~~ Awants to revoke his offer of selling house S Glageani to revoke inf —__., He sends a telegram to B A B Q. When is the revocation of proposal of A complete? > When B receives the telegram Q. When is the revocation of acceptance of B complete? > On the part of A- when the telegram is sent by B > On the part of B- when the telegram is received by A as ION 5: WHEN REVOCATION OF PROPOSAL & ACCEP! MADE’ | A Proposal may be revoked at any time ‘An Acceptance may be revoked any time before the communication of acceptance before the communication of acceptance is completed, not afterwards is complete, not afterwards: is received by A, now B cannot revokeProf Farheen Ansari B.com, CS, LLB, PGDIPR FYBAF- Indian Contract Act 1872 4 ON 6: HOW REVOCATI A proposal is revoked- By communication of notice of revocation By lapse of time yy By failure of acceptor to fulfill a condition CS By death/insanity of proposer By Counter-offer Oe) a” By subsequent illegality