Contract Aact

8/7/2019 Contract Aact

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THE CONTRACT ACT 1872

KUSHAGRA

KUSHAGRA KULSHRESHTHA


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Sec 11. Every person is competent to contract whois of the age of majority according to the law to

which he is subject, and who is of sound mind, and is

not disqualified from contracting by any law to which

he is subject.



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Minor Contracts:-

1. Contract with minor is void

2. Minor can not be asked to rectify contract

3. Can not ask to return any benefit4. No Estoppel (Bhimappa meti vs Balangowda)

5. Can not be a partner(but for benefit)

6. Minor estate is liable who supplied for necessaries for life

7. Parents/Guardians are not liable.8. Can not declare insolvent

9. But can act as an agent.Mohiribibe vs. Dharmodas Ghosh(1903) Void ab-initio



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Sec 12.Mental Incompetence:-

A person is said to be of sound mind for the purpose

of making a contract if, at the time when he makes it,

he is capable of understanding it and of forming a

rational judgment as to its effect upon his interests.

Further states:-

A person who is usually of unsound mind, but

occasionally of sound mind, may make a contract

when he is of sound mind.



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A person who is usually of sound mind, butoccasionally of unsound mind, may not make acontract when he is of unsound mind.

Types:- Idiocy:-God given, permanent

Lunacy:-Disease of brain

Drunkenness:-Temporary

Hypnotism:- Induces sleep Mental decay :-Old age.

Indersingh vs Parmeshawardhari Singh



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Incompetence through Status(DisqualifiedPerson)

1. Alien Enemies:- (peace time only)

2. Foreign Sovereigns & Ambassadors:-

3. Convict:-During imprisonment(can do if on bail,limitation act apply acc.)

4. Married women:-

5. Insolvent:-

6. Joint stock company:-



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Free ConsentSame thing in same sense

"Coercion" defined

15. "Coercion" is the committing, or

threatening to commit, any act forbidden bythe Penal Code or the unlawful detaining or

threatening to detain, any property, to the

prejudice of any person whatever, with the

intention of causing any person to enter into

an agreement.



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"Undue influence" defined

16.(1) A contract is said to be induced by "undueinfluence" where the relations subsisting between the

parties are such that one of the parties is in a positionto dominate the will of the other and uses that positionto obtain an unfair advantage over the other.

(2) In particular and without prejudice to the generalityof the foregoing principle, a person is deemed to be ina position to dominate the will of another- (a) wherehe holds a real or apparent authority over the other orwhere he stands in a fiduciary relation to the other; or



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(b) where he makes a contract with a person whosemental capacity is temporarily or permanently affectedby reason of age, illness, or mental or bodily distress.

(3) Where a person who is in a position to dominatethe will of another, enters into a contract with him, andthe transaction appears, on the face of it or on theevidence adduced, to be unconscionable, the burdenof proving that such contract was not induced by

undue influence shall lie upon the person in a positionto dominate the will of the other.



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"Fraud" defined

17. "Fraud" means and includes any of thefollowing acts committed by a party to acontract, or with his connivance, or by hisagent, with intent to deceive another partythereto or his agent, or to induce him to enterinto the contract:- (1) the suggestion, as a fact,of that which is not true, by one who does notbelieve it to be true;



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(2) the active concealment of a fact by one

having knowledge or belief of the fact; (3) a

promise made without any intention of

performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law

specially declares to be fraudulent



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"Misrepresentation" defined

18. Misrepresentation" means and includes

(1) the positive assertion, in a manner notwarranted by the information of the person

making it, of that which is not true, though he

believes it to be true;



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(2) any breach of duty which, without an intent to

deceive, gains an advantage to the 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;

(3) causing, however innocently, a party to an

agreement to make a mistake as to the substanceof the thing which is the subject of the

agreement.



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Consideration Sec 2(d)

(quid-pro-quo)

When, at the desire of the promisor, the

promisee or any other person has

done or abstained from doing, or does orabstains from doing, or promises to

do or to abstain from doing, something, such

act or abstinence or promise is

called a consideration for the promise:



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Rules for consideration

It must be atthe desire of

promisor

Stranger cannot maintain

a suit

Need not tobe adequate

Must move frompromisee or any

other person

Notillusionary

Past/present/future

Must be legal



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Exceptions

1. Agreement made in natural love and

affection

(a) In writing(b)Under law

(c) Love and affection

(d) Must be b/w parties standing in near relationto each other.



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2. Promise to compensate

a. Wholly or in part

b. Has already done something in past 3. Time barred Debts:- Must be in writing(3

yrs)

4. Gift:-

5. Agency:-

6.Bailment:-



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Stranger to Contract can not sue:-

Exceptions:-

In case of family settlement.

Beneficiary in trust etc.

Stranger to consideration can sue:-

Privity to Contract:-



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Legality of Object:-

If it is forbidden by law:-

William V Bayley (loan for minor marriage)

For dropping the robbery prosecution

If it is of such a nature, ifpermitted defeat the

provision of law:-

If it is fraudulent:- ABC divide the money got by fraud.



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Involves the injury to person or property:-

Libel(Clay V Yates)

Immoral or opposed to p

ublic policy:-((Prostitution)



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Agreement declared void:-

Agreement against public policy

For dropping prosecution

Contract in nature of champerty(The distinguishing feature of champerty isthe support of litigation by a stranger in return for a share of the proceeds.)

Agreement in sell of public office In restraint of parental rights

In restraint of Marriage

In restraint of legal proceedings

In restraint of course of justice

For creating Monopoly

In restraint of Trade



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QUASI CONTRACT


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