undefined | unit 2 indian contract act 1872 part ii

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UNIT-2

THE INDIAN CONTRACT ACT, 1872 PART II

Q1.What are the essentials of consent?

A 1)

Parties must be agreeing on an equivalent thing: “same thing” the entire material of the agreement whether it consist wholly or partially of an act or promise to try to or abstain from doing something. If the parties have various things in mind or the parties though agree upon a thing but do so in several sense, it's not said to be a true consent and agreement.

Parties must agree within the same sense: if one among the parties to a clear contract, by his own fault enters into it during a sense different from that during which it had been understood by the opposite party he could also be precluded from fixing that there was no agreement within the same sense.

Parties expressions must be in agreement: the aim of the good majority of contract is to effect and exchange of promises, or of certain performance. To attend this purpose, there must be mutual expressions of assent to the exchange.

Q2. Name the elements that impair the free consent.

A 2)

Coercion

Undue Influence

Fraud

Misrepresentation

Mistake

Elements Vitiating Free Consent

1. Coercion (Section 15)

Coercion means using force to compel an individual to enter into a contract. So force or threats are wont to obtain the consent of the party under coercion, i.e it's not free consent. Section 15 of the Act describes coercion as committing or threatening to commit any act forbidden by the law within the IPC unlawfully detaining or threatening to detain any property with the intention of causing a person to enter into a contract

Example: A threatens to harm B if he doesn't sell his house to A for five lakh rupees. Here albeit B sells the house to A, it'll not be a legitimate contract since B’s consent was obtained by coercion.

Now the effect of coercion is that it makes the contract voidable. This suggests the contract is voidable at the choice of the party whose consent wasn't free. Therefore the aggravated party will decide whether to perform the contract or to void the contract. So within the above example, if B still wishes, the contract can plow ahead.

Also, if any monies are paid or goods delivered under coercion must be repaid or returned once the contract is void and therefore the burden of proof proving coercion are going to be on the party who wants to avoid the contract therefore the aggravated party will need to prove the coercion, i.e. prove that his consent wasn't freely given.

2 Undue Influences (Section 16)

Section 16 of the Act contains the definition of undue influence. It states that when the relations between the 2 parties are such one party is during a position to dominate the opposite party, and uses such influence to get an unfair advantage of the opposite party it'll be undue influence.

The section also further describes how the person can abuse his authority within the following two ways: When an individual holds real or maybe apparent authority over the opposite person or if he's during a fiduciary relationship with the opposite person. He makes a contract with an individual whose brain is suffering from age, illness or distress. The unsoundness of mind are often temporary or permanent

Example: A sold his gold awaits only Rs 500/- to his teacher B after his teacher promised him good grades. Here the consent of A (adult) isn't freely given, he was under the influence of his teacher.

Now undue influence to be evident the dominant party must have the target to require advantage of the opposite party. If influence is wielded to profit the opposite party it'll not be undue influence. But if consent isn't free thanks to undue influence, the contract becomes voidable at the choice of the aggravated party and therefore the burden of proof is going to be on the dominant party to prove the absence of influence.

3. Fraud (Section 17)

Factors Impairing Free Consent: Fraud

Fraud means deceit by one among the parties, i.e. when one among the parties deliberately makes false statements. Therefore the misrepresentation is completed with full knowledge that it's not true, or recklessly on faith for the trueness, this is often said to be fraudulent. It absolutely impairs free consent.

So consistent with Section 17, a fraud is when a celebration convinces another to enter into an agreement by making statements that are suggesting a incontrovertible fact that isn't true, and he doesn't believe it to be true the active concealment of facts a promise made with none intention of performing it the other such act fitted to deceive.

Example: A bought a horse from B. B claims the horse are often used on the farm. Seems the horse is lame and A cannot use him on his farm. Here B knowingly deceived A and this may amount to fraud.

One factor to think about is that the aggravated party should suffer from some actual loss thanks to the fraud. There’s no fraud without damages. Also, the falsehood must be a fact, not an opinion. Within the above example if B had said his horse is best than C’s this is able to be an opinion, not a fact. And it might not amount to fraud.

4. Misrepresentation (Section 18)

Misrepresentation is additionally when a celebration makes a representation that's false, inaccurate, incorrect, etc. The difference here is that the misrepresentation is innocent.

i.e. not intentional. The party making the statement believes it to be true. Misrepresentation are often of three types an individual makes a positive assertion believing it to be true any breach of duty gives the person committing it a plus by misleading another. But the breach of duty is with none intent to deceive.

When one party causes the opposite party to form an error on the topic matter of the contract but this is often done innocently and not intentionally.

5 Mistake: an error is described as a component, which when occurs during a contract makes it void.

There are two sorts of mistakes, which occurs during a contract

Unilateral Mistake: A mistake is claimed to be unilateral when one party is mistaken within the agreement.

Bilateral Mistake: A mistake is claimed to be mutual when both parties misunderstood one another. Thus it shows that there's a breach within the principle of consensus-ad-idem within the contracts and therefore the contract is to be considered as void.

Example: “A” made an offer to “B” to sell his scooter. “A” intended to sell his 3G scooter but “B” believed that “A” would sell his 4G scooter. Thus there was no proper communication and therefore the fact was mistaken. It might amount to an effective agreement.

Common mistake: Section 20 of the Indian Contract Act, 1872 lays down the supply for common mistakes. A contract arising out of common mistake is taken into account to be void. This sort of mistake is possessed by both the parties but this error isn't the results of mutual mistake, it arises individually.

Q3.Which are the void agreements as per the provisions of Indian contrary act?

A 3)

Any agreement with a bilateral mistake is void

Agreements which have unlawful consideration and objects are void

Agreements made inconsiderately is void

Agreement in check of marriage of any major person is void

Agreement in check of trade is void

Void Agreement: Void Contract means a contract doesn't exist in any respect. The law can't enforce any legal obligation to either party especially the disappointed party because they are not entitled to any protective laws as far as contracts are concerned.

An agreement to carry out an illegal act is an example of a void contract or void agreement.

Example: Contract between drug dealers and buyers could also be a void contract simply because the terms of the contract are illegal. In such a case, neither party can move to court to enforce the contract.

As per Section 2(g) of The Indian Contract Act, 1872 “An agreement not enforceable by law is claimed to be void”, and as per Section 2(j) of The Act “A Contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”

Thus Void Contracts are often of following two types:-

Void ab initio: - void-ab-initio i.e. unenforceable from the very beginning

Void due to the impossibility of its performance: A contract can also be void due to the impossibility of its performance. E g: If a contract is formed between two parties A & B but during the performance of the contract the thing of the contract becomes impossible to achieve (due to action by someone or something apart from the contracting parties), then the contract cannot be enforced within the court of law and is thus void.

Q4. Mention the rules on enforcement of contingent contracts.

Ans:

Rule # 1 – Contracts contingent the happening of an event

Rule # 2 – Contracts contingent an event not happening

Rule # 3 – Contracts contingent the conduct of a living one that does something to form the event or conduct as impossible of happening

Rule # 4 – Contracts contingent an occasion happening within a selected Time

Rule # 5 – Contracts contingent an incident not happening within a selected Time

Rule # 6 – Contracts contingent an Impossible Event

Rule # 1 – Contracts contingent the happening of an event

A contingent contract could be supported the happening of an uncertain future event. In such cases, the promisor is liable to do or not do something if the event happens. However, the contract can't be enforced by law unless the event takes place. If the happening of the event becomes impossible, then the contingent contract is void. This rule is laid out in Section 32 of the Indian Contract Act, 1872.

Example: Peter promises to pay John Rs 50,000 if he can marry Julia, the prettiest girl within the neighborhood. This is often a contingent contract. Unfortunately, Julia dies during a car accident. Since the happening of the event is not any longer possible, the contract is void.

Rule # 2 – Contracts contingent an event not happening

A contingent contract could be based on the non-happening of an uncertain future event. In such cases, the promisor is susceptible to do or not do something if the event doesn't happen. However, the contract can't be enforced by law unless happening of the event becomes impossible. If the event takes place, then the contingent contract is void. This rule is laid out in Section 33 of the Indian Contract Act, 1872.

Example: Peter promises to pay John Rs 50,000 if the ship named Titanic which leaves on a dangerous mission doesn't return. This is often a contingent contract. This contract is enforceable by law if the ship sinks making its return impossible. On the opposite hand, if the ship returns, then the contract is void.

Rule # 3 – Contracts contingent the conduct of a living one that does something to form the event or conduct as impossible of happening

Section 34 of the Indian Contract Act, 1872 states that if a contract may be a contingent upon how an individual will act at a future time, then the event is taken into account impossible when the person does anything which makes it impossible for the event to happen.

Example: Peter promises to pay John Rs 5,000 if he marries Julia. However, Julia marries Oliver. Julia’s act thus renders the event of John marrying her impossible. (A divorce remains possible though but the happening of the event is taken into account impossible.)

Rule # 4 – Contracts contingent an occasion happening within a selected Time

There are often a contingent contract wherein a party promises to do or not do something if a future uncertain event happens within a fixed time. Such a contract is void if the event doesn't happen and therefore the time lapses. It's also void if before the time fixed, the happening of the event becomes impossible. This rule is laid out in Section 35 of the Indian Contract Act, 1872.

Example: Peter promises to pay John Rs 5,000 if the ship named Titanic which leaves on a dangerous mission returns before June 01, 2019. This contract is enforceable by law if the ship returns within the fixed time. On the opposite hand, if the ship sinks, then the contract is void.

Rule # 5 – Contracts contingent an incident not happening within a selected Time

Contingent contracts could be based on the non-happening of an uncertain future event within a hard and fast time. In such cases, the promisor is liable to do or not do something if the event doesn't happen within the said time. The contract are often enforced by law if the fixed time has expired and therefore the event has not happened before the expiry of the time. Also, if it becomes certain that the event won't happen before the time has expired, then it are often enforced by law. This rule is laid out in Section 35 of the Indian Contract Act, 1872.

Example: Peter promises to pay John Rs 5,000 if the ship named Titanic which leaves on a dangerous mission doesn't return before June 01, 2019. This contract is enforceable by law if the ship doesn't return within the fixed time. Also, if the ship sinks or is burnt, the contract is enforced by law since the return isn't possible.

Rule # 6 – Contracts contingent an Impossible Event

If a contingent contract is predicated on the happening or non-happening of an impossible event, then such a contract is void. This is often no matter the very fact if the parties to the contract are conscious of the impossibility or not. This rule is laid out in Section 36 of the Indian Contract Act, 1872.

Example: Peter promises to pay John Rs 50,000 if the sun rises within the west subsequent morning. This contract is void since the happening of the event is impossible.

Q5. State the difference between void and voidable agreement.

A 5)

A void contract is taken into account to be a legal contract that's invalid, even from the start of signing the contract. On the other hand, a voidable contract is additionally a legal contract which is claimed invalid by one of the two parties, surely legal reasons.

While a void contract becomes invalid at the time of its creation, a voidable contract only becomes invalid if it's cancelled by one of the two parties who are engaged within the contract.

In the case of a void contract, no performance is possible, whereas it's possible during a voidable contract. While a void contract isn't valid at face value, a voidable contract is valid, but is usually declared invalid at any time.

While a void contract is non-existent and cannot be upheld by any law, a voidable contract is an existing contract, and is binding to a minimum of 1 party involved within the contract.

Q6) Explain the nature of e-contract.

A )

The parties don’t, in most cases, meet physically.

There are not any physical boundaries.

No handwritten signature and in most times, no hand writing is required.

Since there's no utmost security, risk factor is extremely high.

Jurisdictional issues are a serious setback on e-contracts just in case of breach.

There's no single authority to watch the entire process especially in shrink wrap contracts.

Digital Signatures are used and electronic records are used as evidences in court n when need arises.

The three main methods of contracting electronically are e-mail, World Wide Web (www), and Cyber contracts (Click to agree/online contract).

The topic matter includes:

(A). Physical goods, where goods are ordered onlineand paid over internet and physical delivery is formed.

(B). Digitized products like software which may even be ordered for.

(C). Services like electronic banking, sale of shares, financial advice etc.

Q7) Explain quasi contract in detail.

A 7)

The word ‘Quasi’ means pseudo. Hence, a contract may be a pseudo-contract. Once we mention a valid contact we expect it to possess certain elements like offer and acceptance, consideration, the capacity to contract, and discretion. But there are other sorts of contracts also.

There are cases where the law implies a promise and imposes obligations on one party while conferring rights to the opposite even when the essential elements of a contract aren't present. These promises aren't legal contracts, but the Court recognizes them as relations resembling a contract and enforces them like a contract.

These promises/ relations are Quasi contracts. These obligations also can arise due to different social relationships which we'll check out during this article.

The core principles behind a contract are justice, equity and good conscience. It's based on the maxim: “No man must grow rich out of another persons’ loss.”

Example of a Quasi contract: Peter and Oliver enter a contract under which Peter agrees to deliver a basket of fruits at Oliver’s residence and Oliver promises to pay Rs 1,500 after consuming all the fruits. However, Peter erroneously delivers a basket of fruits at John’s residence rather than Oliver’s. When John gets home he assumes that the fruit basket may be a birthday present and consumes them.

Although there's no contract between Peter and John, the Court treats this as a Quasi-contract and orders John to either return the basket of fruits or pay Peter.

FEATURES OF A QUASI CONTRACT

1. it's usually a right to money and is usually (not always) to a liquated sum of cash

2. the right isn't an outcome of an agreement but is imposed by law.

3. the right isn't available against everyone within the world but only against a selected person(s). Hence it resembles a contractual right.

Q8.WHAT IS E CONTRACT?

A 8)

E-contract is any quite contract formed within the course of e-commerce by the interaction of two or more individuals using electronic means, like e-mail, the interaction of a private with an electronic agent, like a computer virus, or the interaction of a minimum of two electronic agents that are programmed to recognize the existence of a contract.

E-contract may be a contract modelled, specified, executed and deployed by software

The two main parties to an e-contract are- The Originator and therefore the Addressee.

• Originator consistent with the IT Act, 2008 is a one that sends, generates, stores or transmits any electronic mail to be sent, generated, stored or transmitted to the other person and doesn't include an Intermediary.

• An Addressee consistent with the IT Act, 2008 is a one that is meant by the originator to receive the electronic record but doesn't include any Intermediary

NATURE OF E-CONTRACT

1. The parties don’t, in most cases, meet physically.

2. There are not any physical boundaries.

3. No handwritten signature and in most times, no hand writing is required.

4. Since there's no utmost security, risk factor is extremely high.

5. Jurisdictional issues are a serious setback on e-contracts just in case of breach.

6. There's no single authority to watch the entire process especially in shrink wrap contracts.

7. Digital Signatures are used and electronic records are used as evidences in court n when need arises.

8. The three main methods of contracting electronically are e-mail, World Wide Web (www), and Cyber contracts (Click to agree/online contract).

9. The topic matter includes:

(A). Physical goods, where goods are ordered online and paid over internet and physical delivery is formed.

(B). Digitized products like software which may even be ordered for.

(C). Services like electronic banking, sale of shares, financial advice etc.

Q9) List out the instruments to which the IT act doesn’t apply.

A 9)

Negotiable Instruments;

Powers of Attorney;

Trust deeds;

Wills;

Contracts purchasable or Transfer of Immovable Property

Q 10)Enlist the modes of discharge of contract.

A 10)

Discharge by performance.

Discharge of Contract by Substituted Agreement.

Discharge by lapse of your time.

Discharge by operation of law.

Discharge by Impossibility of Performance.

Discharge by Accord and Satisfaction.

Discharge by breach.

Discharge by performance

Where both the parties have either carried out or tendered (attempted) to carry out their obligations under the contract, is mentioned as discharge of the contract by performance. Because performance by one party constitutes the occurrence of a constructive condition, the other party’s duty to perform is additionally triggered, and thus the one that has performed has the proper to receive the other party’s performance. The overwhelming majority of contracts are discharged during this manner.

Discharge of Contract by Substituted Agreement

A contract emanates from an agreement between the parties. It thus follows that, the contract must even be discharged by agreement. Therefore, what's required, inevitably, is mutuality. Discharge by substituted agreement arises when a contract is abandoned, or the terms within it are altered, and both the parties are in conformity over it.

For example, A and B enter into some agreement, and A wants to change his mind and to not perform his terms of the contract. If he does this unilaterally then he are getting to be in breach of contract to B. However, if he approaches B and states that he would adore to be released from his liabilities under the contract then the latter might agree. Therein case the contract is claimed to be discharged by (bilateral) agreement. In effect B has promised to not sue A if he doesn't perform his a neighbourhood of the contract and thus the consideration for his promise could also be a‘s promise to not sue B. Discharge by agreement may arise within the subsequent ways.

Novation: The term novation implies the substitution of a fresh contract for the first one. This arrangement could even be either with the same parties or with different parties. For a novation to be valid and effective, the consent of all the parties, including the new one(s), if any, is vital. Moreover, subsequent or second agreement must be one capable of enforcement in law, the consideration that is that the exchange of promises to not enforce the first contract.

Rescission: This refers to cancellation of all or few the fabric terms of the contract. If the contracting parties mutually decide to do so, the respective contractual obligations of the parties stand terminated.

Alteration: This refers to a change in one or more of the terms of a contract with the consent of all the contracting parties. Alteration results in a replacement contract but parties thereto remain the same. Here the assumption is that both the parties are to understand a fresh but different enjoy the new agreement. Remission this means the acceptance (by the promisee) of a lesser sum than what was contracted for, or a lesser fulfilment of the promise made. As per Section 63, ‘every promisee may (a) remit or dispense with it, wholly or partially, or (b) extend the time of performance, or (c) accept the opposite satisfaction instead of performance’.

Waiver: The term waiver implies abandonment or relinquishment of a right. Where a party deliberately abandons its rights under the contract, the other party is released of its obligations, otherwise binding upon it.

Discharge by lapse of your time

A contract stands discharged if not enforced within a specified period called the ‘period of limitation‘. The Limitation Act, 1963 prescribes the duration of limitation for various contracts. as an example , period of limitation for exercising right to recover an immovable property is twelve years, and right to recover a debt is three years. Contractual rights become time barred after the expiry of this limitation period. Accordingly, if a debt isn't recovered within three years of its payment becoming due, the debt ceases to be payable and is discharged by lapse of your time.

Discharge by Impossibility of Performance

Sometimes after a contract has been established, something might occur, though not at the fault of either party, which can render the contract impossible to perform, or illegal, or radically different from that originally undertaken.

However, if whatever happens to prevent the contract from being performe has not been caused by either party couldn't are foreseen, and its effect is to destroy the thought of the contract then the courts will, generality, state that the contract has become impossible to perform. If that happens then the contract is discharged and neither party will have any liability there under Section 56 of the Indian Contract Act clearly provides that an agreement to undertake to an act impossible in itself is void

The performance of a contractual obligation may become subsequently impossible on sort of grounds.

They include the next

• Objective impossibility of performance

• Commercial impracticability

• Frustration of purpose

• Temporary impossibility

Discharge of operation of law

A contract stands discharged by operation of law within the subsequent circumstances.

Unauthorized material alteration of a document

A party can treat a contract discharged (i.e., from his side) if the other party alters a term (such as quantity or price) of the contract without seeking the consent of the previous.

Statutes of Limitations

A contract stands discharged if not enforced within a specified period called the ‘period of limitation’. The Limitation Act, 1963 prescribes the duration of limitation for various contracts. as an example , limitation period for exercising right to recover an immovable property is twelve years and right to recover a debt is three years. Contractual rights become time barred after the expiry of this limitation period. Accordingly, if a debt isn't recovered within three years of its payment becoming due, the debt ceases to be payable and is discharged by lapse of your time.

Insolvency

A discharge in bankruptcy will ordinarily bar enforcement of most of a debtor’s contracts.

Merger

A contract also stands discharged through a merger that happens when an inferior right accruing to party during a contract amalgamates into the superior right ensuing to an equivalent party. As an example, A hires a factory premises from B for a couple of manufacturing activity for a year, but 3 months before the expiry of lease purchases that very premises. Now since A has become the owner of the building, his rights associated with the lease (inferior rights) subsequently merge into the rights of ownership (superior rights). The previous rental contract ceases to exist.

Discharge by Accord and Satisfaction

To discharge a contract by accord and satisfaction; the parties must suits accept performance that's different from the performance originally promised. It's getting to be studied under the next sub-heads.

Accord

An accord is an executor contract to perform an act which can satisfy an existing duty. An accord suspends, but doesn't discharge, the primary contract.

Satisfaction

Satisfaction is that the performance of the accord, which discharges the primary contractual obligation.

Q 11) Mention the types of remedies.

A 11)

Suit for rescission

Suit for damages

Suit for quantum merit

Suit for performance

Suit for an i injunction

Suit for Rescission

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