Indian Contract Act, 1872

Modes of Performance

1) Actual

2) Attempted/Tender

Actual Performance

When both parties perform their oblgations in the prescribed manner.

Attempted/Tender Performance

A form of performance where one party fulfills their obligations by offering to perform, even if the other party does not accept or cooperate.

Essential Elements of a Valid Attempted Performance (How to tell it is a tender performance) (5)

1) Unconditional

2) Whole quantity/obligation

3) Made to the proper person

4) Made at the proper time and place

5)Promisee must be given reasonable opportunity to inspect the goods.

Who must perform a contract? (5)

1. Promisor himself (Section 40)

2. Authorized Agent

3. Legal Representatives

4. Third Persons (Section 41)

5. Joint Promisors (Section 42,43,44)

Who can demand performance? (3)

1. Promisor himself

2. Third Persons

3. Legal Representatives

How to decide the time and place of the performance? (4)

1) No time given

2) Date given but no time given

3) Date and time given but no place given

4) Dependent on Promisee

Important aspects of time as the essence (3)

1) Must be stated clearly

2) Indication of time is not included

3) In non-commercial cases it is presumed that time is not the essence.

Consequences of breach of time as the essence contract (4)

1) Contract becomes voidable at the choice of the promisee

2) If promisee accepts delayed perfomance, he must pay whole.

3) However damages can be claimed if stated prior.

4) Contracts of gold, shares, silver, etc are always of time as the essence.

What are the types of reciprocal promises?

1) Mutual and concurrent

2) Mutual and Independent

3) Condtional and Independent

What are the rules of reciprocal promises? (5M Direct)

1.Simultaneous Performance (Section 51)

2) Order of Performance (Section 52)

3) Effect of one party preventing other party from performing their promise. (Section 53) (O’ Neil vs. Armstrong)

4) Effect of default of promise to perform first (Section 54)

5) Legal and Other Illegal Things (Section 57)

Rules of appropriation of payments

1) Debtor expressly intimates (Section 59)

2) Debtor is silent (Section 60)

3) Debtor is silent and creditor fails to appropriate (Section 61)

4) Current A/c (Clayton’s Case)

Differentiation of Assignment and Succession (2M)

No Performance of Contract (6)

1)Performance is impossible due to uncotrollable circumstances

2) When contract is novated (Section 62)

3) When promisee cancels whole or partial or extends time limit

4) When person at whose option it is voidable, rescinds it

5) When promisee neglects or refuses to provide reasonable faclilties to promisor

6 When it is illegal

Types of Discharge of Contract

By:

1) Performance

2)Agreement

3)Impossibility of performance

4) Lapse of TIme

5)Operation of Law

6) Breach of Contract

By Performance

1)Actual

2) Attempted

By Agreement (Section 62 & 63) (6)

1) Novation=substitution

2) Rescission=cancellation

3) Alteration(T&C)

4) Remission(Discount)

5) Waiver(mutual abandonment)

6) Merger (rent →own)

Type of Impossibility of Performance

1) At the time of performance= Pre-contractual/initial

a) Known to all(Bringing back dead)

b)Unknown (Mistake Sec 20,21,22)

c) Known to one (Fraud Sec 17)

2) During Performance= Supervening impossibility

Types of Supervening Impossibilities (5)

1) Accidental destruction

2) Death or Incapacity

3) Outbreak of War

4) Non- existence of particular state of things

5) Change of Law

What are not excuses for impossibility of performance? (5)

1) Difficulty

2) Commercial

3) Failure of one of the objects

4) Failure of 3rd person

5) Strikes, lockouts,

6) Reckless promises

By Lapse of Time

Limitations Act 1963

By Operation of Law

1) Death

2) Insolvency

3) Unathourized alteration of terms

4) Rights and Liabilities vested in the same person

Types of Breach of Contract

1) Actual

2)Anticipatory

a) Express

b) Implied

Section 37

Performance of Contract

Section 40

Promisor himself

Section 41

Third Persons

Section 42,43,44

Joint Promisors

Section 46-50

Time and Place of Performance

Section 51-58

Reciprocal Promises

Section 51

Simultaneous Performance

Section 52

Order of Performance

Section 53

Effects of one party preventing the party from performing.

Section 54

Effect of default of promise to be performed first

Section 57

Legal and other illegal things

Section 59

Debtor expressly intimates

Section 60

Debtor is silent

Section 61

Debtor is silent and creditor also fails to appropriate

Section 62 & 63

Discharge by Agreement

Hadley vs. Baxendale

Time as the Essence

Section 39

Anticipatory Breach of Contract (Frost vs. Knight)

Consequences of Anticipatory Breach

Modes of Breach

Section 73

Measures of Damages

Types of Damages (6-7 M)

1) Natural/Ordinary- Decided Price< M.P (DIfferential price)

2) Special Damages- Time as the essence

3) Nominal Damages- Breach but no damage (1 rupee comp.)

4) Loss of Reputation- Smaller the amount greater the damage awarded.

5) Detoriation caused by delay- Opportunity Loss (Wilson vs. Lancashire & Yorkshire Railway)

6) Pre-Fixed Damages (Section 74)

Term: Quantum Meruit

As much as earned

When can aggrieved party not rescind the contract?

1) When aggrieved party ratifies contract

2) When third party acquired rights in good faith

3) When partial contract is to be rescinded but cannot be seperated from the rest.

Section 74

Pre-fixed Damages

Section 2 (a)

Offer

Section 2 (b)

Acceptance

Section 2 (c)

Promise

Section 2 (d)

Consideration

Section 2 (h)

Contract

Section 10

Essentials of a Contract

What are the Essentials of a Contract

Section 10 includes:

1. Offer & Acceptance [Section 2 (a) and 2 (b)]

2. Intention to Create Legal Relation (B vs. B)

3. Consideration [Section 2 (d)]

4. Lawful Object [Section 23]

5. Possibility of Performance [Section 56]

6. Capacity of Parties

7. Free Consent [Section 15 to 22]

8. Legal Formalities

9. Agreement NOT declared void

10. Certainty of Meaning [Section 29]

Classification of Contracts based on Validity

1. Valid Contract [Section 10]

2. Void Contract [Section 2 (j)]

3. Void Agreement [Section 2 (g)]

4. Illegal Agreement

5. Voidable Contract [Section 2 (i)]

Classification of Contracts Based on Formation

1. Express

2. Implied

3. Quasi

4. E-Contracts

Classification of Contracts Based on Performance

1. Executed

2. Executory
   a. Unilateral
   b. Biilateral

Types of Offers (7)

1. Express offer

2. Implied Offer

3. General Offer (Carlil vs. Carbolic Smoke Ball Company)

4. Specific Offer

5. Standing Open Offer

6. Cross Offer (Tim vs. Hoffman)

7. Counter Offer

Essential Elements for a Valid Offer (9)

1. Clear & Definite

2. Legal Relation (B vs. B)

3. Made for obtaining Assent

4. It Must be Communicated (Lalman Shukla vs. Gauri Dutt)

5. May be Expressed or Implied.

6. May be Conditional

7. Non- Compliance is NOT equal to assent.

8. Invitation to Offer is NOT an Offer. (Pharma Society of Britain vs. Boots Cash Chemist)

9. Statement of Price is NOT an Offer. (Harvey s. Facey)

Essential Elements of Valid Acceptance (9)

1. Absolute & Unconditional (Neal vs. Merret) (Hyde vs. Wrench)

2. Must be communicated to the offeror.

3. Must be given in the mode prescribed.

4. Must be within prescribed time limit.

5. Must not precede an offer.

6. Must be given to the person by whom the offer is made.

7. Must be given before the offer is withdrawn.

8. It must not be assumed through silence.

9. Can be expressed or implied

Section 4

Communication of Offer and Acceptance.

Section 5

Revocation of Offer and Acceptance

Offer comes to an end when..

1. Revoked

2. Lapse of Time

3. Non-fulfillment of Conditions by Offeree

4. Death of Insanity of Offeror

5. Counter Offer

6. Offer Stands Impossible

Essential Elements of a Valid Consideration (8)

1) Must move at the desire of the promise (Durga Prasad vs. Baldev Singh)

2) Consideration may move from the promisee or any other person. (Chinayya vs. Rammaya)

3) Can be of Past, Present, Future

4) May be an act of Abstinence, Sacrifice, Return Promise.

5) Consideration need not to be adequate.

6) Consideration must not be imaginary.

7) Must not be illegal, immoral or against public policy.

8) Promisor is not already bound to do.

Exceptions to Doctrine of Privity. (5)

1. Trust or Charge

2. Marriage Settlement

3. Assignment of Contract

4. Contracts entered through an Agent

5. Covenants running with the land.

Contracts Without Consideration (8)

1. Natural love and affection

2. Compensation for past voluntary services

3. Written to pay a time barred debt

4. Completed GIft

5. Creation of Agency

6. Charitable Subscription

7. Creation of Gratituous Bailment

8. Creation of Contract of Guarantee

Section 11

Capacity of Parties

Rules of Minor’s Agreements (11)

1. Agreements with minors are void ab initio (Mohiri Bibi vs. Dharmodas Ghosh)

2. Minor can be a beneficiary.

3. No ratification of reaching age of majority.

4. No specific performance of the agreements.

5. Minor cannot be adjudged insolvent.

6. Minor can always plead minority.

7. Minor is liable for necessaries

8. Minor cannot be partner.

9. Only parents can enter into contracts on minors behalf, for minor’s benefit.

10. Minor can only be shareholder through lawful guardian.

11. Liable to Torts

Section 12

Person of Unsound Mind

Examples of Unsound Mind

1. Lunatics

2. Idiot

3. Drunken

4. Hypnotism

Disqualified by Law

1. Alien Enemies

2. Convicts

3. Foreign Diplomats

4. Joint Stock Companies

5. Insolvents

Section 13

Free Consent

Section 15

Coercion

Features of Coercion

1. Voidable

2. Physical harm to parties related or involed

3. Threaten to harm (Chikam Amiraju vs Seshamma)

Section 16

Undue Influence

Section 17

Fraud

Essential Elements of Fraud (5)

1. False Representation

2. Related to an important fact of the contract.

3. Must be made before the conclusion of the contract with the intention to induce the other party into taking action upon it.

4. Made with knowledge to falsify

5. Other party must have suffered a loss and have been deceived.

Uberrmae Fidei

“Utmost Good Faith”. Some contracts which the law imposes a special duty to act upon with utmost good faith.

Section 18

Misrepresentation

Essential Elements of Misrepresentation (6)

1. False Representation

2. Related to an important fact of the contract.

3. Must be made before the conclusion of the contract with the intention to induce the other party into taking action upon it.

4. The repesentation must be false but the person who made it must believe it is true.

5. May not be directly made to the plaintiff.

6. Burden of Proof

Section 20, 21, 22

Mistake

Examples of Bilateral Mistake (6)

1. Existence of Subject Matter

2. Identity of Subject Matter

3. Quality of Subject Matter

4. Quantity of Subject Matter

5. Title of Subject Matter

6. Possibility of Performance

Term: Maintenance & Champerty

Person initiating litigation falsely and assistant for sourcing funds or witness.

Term: Litigation

Legal lawsuit

Term: Plaintiff

Aggreived

Term: Remedies

Solutions

Term: Consensus ad Idem

Meeting of Minds, Same subject matter, same time, same sense.

Term: Quid Pro Quo

Something in return

Term: Abstinence

Refrain

Term: Void ab Initio

Void from the start

Term: Assent

Approval

Term: Revocation

Withdraw/ Cancel

Term: Covenants

Legal clauses

Term: Bailment

Transfer of possesion without ownership (borrowed pen)

Term: Ratification

confirmation of previous act

Term: Torts

Ciil wrongs

Cases of Unlawful Object

1. Prohibited by law

2. If contract is permitted, it will cause destruction of provisions of law

3. Fraudulent purpose

4. Injury to person or property.

5. Object is immoral by law.

6. Agreements against Public