Indian Contract Act 1872Cases and Concepts

Submitted By:Mayank Goel G022

Objective of the Contract Act

The objective of the Contract Act is to ensure that the rights and obligations arising out of a contract are honoured and that legal remedies are made available to an aggrieved party against the party failing to honour his part of agreement. The Indian Contract Act makes it obligatory that this is done and compels the defaulters to honour their commitments.

Basic Principles of Contract

(Sections 1 to 75)

Indemnity and Guarantee

(Sections 124 to 147)

Bailment (Sections 148 to 181)

Agency (Sections 182 to 238)

Present Contract Act*

It extends to the whole of India

except the State of Jammu and

Kashmir

It came into force on the first day of

September, 1872.

Extent and Commencement

*The sale of Goods was repealed from this Indian Contract Act in 1930. Contracts relating to partnership were repealed in 1932.

The Indian Contract Act, 1872 codifies the legal principles that govern such ‘contracts’.

The Act basically identifies the ingredients of a legally enforceable valid contract in addition to dealing with certain

special type of contractual relationships like indemnity, guarantee, bailment, pledge, quasi contracts, contingent

contracts etc.

Sec 2(h) “An agreement enforceable by law is a contract”

Agreement

• Plurality of Party• Proposal/Offer• Acceptance• Communication• Consensus-Ad-Idem

Legal Obligation

• Intention to create Legal Relation

• Consideration• Capacity of Parties• Free Consent• Lawful Object• Certainty• Not Expressly

Declared Void

CONTRACT

Offer and acceptance• OFFER• An offer is the starting point in the making of an agreement.• An offer is also called ‘proposal’• Sec 2(a) – “ A person is said to have made the proposal when he

signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that offer to such act or abstinence.”

05/02/2023 4

OFFER• An offer involves the following essential elements;

• It must be made by one person to another person• Offeror – The person making the proposal is called the ‘offeror’ or ‘proposer’.• Offeree – The person to whom the proposal is made is called the ‘offeree’ or the

‘proposee’.

• It must be an expression of readiness or willingness to do (i.e., a positive act) or to abstain from doing something (i.e., a negative act)

• It must be made with a view to obtain the consent of that other person to proposed Act or abstinence

05/02/2023 5

Types of offer• General offer – When the offer is made to the world at

large• Specific offer – When the offer is made to a definite

person• Implied offer – An offer may be implied from the

conduct of the parties or the circumstances of the case.

05/02/2023 6santhi narayanan

Cases • General offer

• Carlil vs Carbolic Smoke ball Co (1893) 1 QB 258• the defendant a sole proprietary concern manufacturing a medicine which was

a carbolic ball whose smoke could be inhaled through the nose to cure influenza, cold and other connected ailments issued an advertisement for sale of this medicine. The advertisement also included a reward of $100 to any person who contracted influenza, after using the medicine (which was described as ‘carbolic smoke ball’). Mrs. Carlill bought these smoke balls and used them as directed but contracted influenza.

• It was held that Mrs Carlill was entitled to a reward of $100 as anyone performing the conditions of the offer can be considered to have accepted the offer.

• Harbhajan lal vs Harcharan lal (AIR All 539)05/02/2023 7santhi narayanan

Legal rules as to offerCertain and

unambiguous terms

Intention to create legal relationship

Different from an invitation to offer

Proper communication

No term of non-compliance of

which amount to acceptance

Communication of special terms

Different from a mere declaration

of an intention

05/02/2023 8

Contd-• Intention to create legal relationship

• An offer must be such that when it is accepted it will create a legal relationship• Balfour vs Balfour [(1919) 2 K.B. 571]• A husband promised to pay maintenance allowance every month to his wife, so long as

they remain separate. When he failed to perform this promise, she brought an action to enforce it. As it is an agreement of domestic nature, it was held that it does not contemplate to create any legal obligation

• Certain and unambiguous terms• If the terms of the offer are vague or indefinite, its acceptance cannot create any

contractual relationship.• G. Scammell and Nephew Ltd. v HC & JG Ouston [1941] 1 AC 251

05/02/2023 9

Contd - • Different from a mere declaration of intention

• Mere declaration of intention indicates that an offer will be made or invited in the future

• A declaration of intention by a person does not give right of action to another.

05/02/2023 10

• Case: Harrison vs Nickerson LR 8 QB 286 • An auctioneer advertised in a newspaper that a sale of office furniture would

be held. A broker came from a distant place to attend that auction, but all the furniture was withdrawn. The broker thereupon sued the auctioneer for his loss of time and expenses.

• Held - A declaration of intention to do a thing did not create a binding contract with those who acted upon it, so that the broker could not recover.

Contd -• Different from an invitation to offer

• In an invitation to offer the person making an invitation invites others to make an offer to him• It is prelude to an offer inviting negotiations or preliminary discussions

• Case: Pharmaceutical Society of Great Britian vs Boots cash chemists Ltd (1953) 1 QB 401• The Court held that the display of a product in a store with a price attached is not sufficient

to be considered an offer, but rather is an invitation to treat.• Harvey vs faceey

• Counter Offer• Case: Hyde v. Wrench, [1840] 3 Bea 334; 49 ER 132.• Wrench (D) offered to sell his estate to Hyde for 1200 pounds and Hyde (P) declined. Wrench then made a final

offer to sell the farm for 1000 pounds. Hyde in turn offered to purchase the property for 950 pounds and Wrench replied that he would consider the offer and give an answer within approximately two weeks. Wrench ultimately rejected the offer and the plaintiff immediately replied that he accepted Wrench’s earlier offer to sell the real estate for 1000 pounds.

• Held that a counteroffer negates the original offer.05/02/2023 11

Contd-• Offer must be communicated

• An offer must be communicated to the person to whom it is made. • An offer is complete only when it is communicated to the offeree• Acceptance is not possible unless offer is brought to the knowledge of the offeree.

i.e., One can accept the offer only when he knows about it.• Acceptance in ignorance of offer confers no right. i.e., An offer accepted without

its knowledge does not confer any legal rights on the acceptor.

05/02/2023

12

Case: Lalman Shukla vs Gauri Dutt (1913) 11 ALJ 489• Gauridutt sent his servant lalman to find his lost nephew. when the servant had left,

Gauridutt announced reward to anyone, who will trace the boy. Lalman found the boy and brought him home .when lalman came to know he claimed for reward.

• Lalman’s plea was cancelled on the grounds that he can not accept the offer unless he is not aware of it.

Contd -• No term of non-compliance of which amounts to acceptance

• The offer must not contain a term, the non-compliance of which amount to acceptance

• Ex: A offers by post to sell his horse to B for Rs 2000. He writes, “ If you do not reply, I shall assume you have accepted the offer.” There would be no contract even if B does not reply

05/02/2023

13

• While making the offer, the offeror cannot say that if the offer is not accepted before a certain date, it will be presumed to have been accepted

• Communication of special terms or standard terms of contract • Special terms of the offer must also be communicated along with the offer.• If the special terms of the offer are not communicated, the offeree will not

be bound by those terms.

Acceptance• Acceptance means giving consent to the offer.• It is an expression by the offeree of his willingness to be bound by the

terms of the offer.• Sec 2(b) – “ A proposal is said to be accepted when the person to whom

the proposal is made signifies his assent thereto. A proposal when accepted becomes a promise.”

• Acceptance is the consent given to offer.

05/02/2023 14

Who can accept??

• In case of a specific offer – • To be accepted by that definite person or that particular

group of persons to whom it has been made and non else.

• In case of general offer –• An offer made to the world at large or public in general

can be accepted by any person having the knowledge of the offer by fulfilling the terms of the offer.

05/02/2023 15

Contd -• How to make acceptance –

• Express acceptance –• An express acceptance is one in which is made by

words spoken or written• Implied acceptance –

• An implied acceptance is one which is made otherwise than in words.

• It is inferred from the conduct of the parties or the circumstances of a particular case

05/02/2023 16

Legal rules of valid acceptance• Absolute and unqualified• Manner• Communication• By whom• To whom• Before the lapse of the offer

05/02/2023 17

Communication of offer and acceptance• Must be complete so as to bind the concerned parties

because as soon as the communication is complete the parties loose the right of withdrawal or revocation.

• (a) Communication of offer – It is complete when it comes of the knowledge of the person to whom it is made.

05/02/2023 18

Contd -• Communication of acceptance –

• As against the proposer – • When it is put in a course of transmission to him, so

as to be out of the power of the acceptor.• As against the acceptor

• When it comes to the knowledge of the proposer.

05/02/2023 19

Revocation of offer and acceptance • Taking back, withdrawal (sec 5)• Time for revocation of proposal – A proposal may be

revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

05/02/2023 20

Contd -• Time for revocation of acceptance – An acceptance

may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

05/02/2023 21

Consensus-Ad-Idem

Meeting Of The Minds between the parties where all understand and have accepted the contractual commitments made by each other, respectively.

SAME THING IN THE SAME SENSE

Example: If ‘A’ who owns 2 cars x and y wishes to sell car ‘x’ for Rs. 30,000. ‘B’, an acquaintance of ‘A’ does not know that ‘A’ owns car ‘x’ also. He thinks that ‘A’ owns only car ‘y’ and is offering to sell the same for the stated price. He gives his acceptance to buy the same. There is no contract because the contracting parties have not agreed on the same thing at the same time, ‘A’ offering to sell his car ‘x’ and ‘B’ agreeing to buy car ‘y’. There is no consensus-ad-idem.

The life blood of every contract !

CONSIDERATION

CONSIDERATION ….Definition • Section 2 (d) Indian contract act… “ When at the desire of the promisor, the promisee or any other person has

done or abstain from doing, or does or abstain from doing, or promises to do or abstain from doing, something, such act or abstinence or promise is called consideration”

Consideration May be : • An act - means doing of something.• An abstinence – promising not to do something .• A promise – the promise of each party is the consideration for each other

ESSENTIALS OF VALID CONSIDERATION• Must move at the desire of the promisor – X’s house catches fire, and Y

helps in extinguishing it without being requested to do so by X. Y cannot demand any payment for his voluntary service.

• It must move from promisee or any other person – For making a valid contract consideration must be there, it is immaterial who furnishes it.

• It must be something to which the law attaches a value.

A stranger to consideration can sue, provided he is a party to contract…

• X pays Rs. 50000 to Y directing him to build a house for Z. Y agrees to do so. Hence, Z is a party to a contract but stranger to consideration & he can enforce the contract.

“ No consideration, No contract” – Exceptions to the rule • Natural love & affection . [Sec 25(2)] – is valid if it satisfies the following conditions • It is in writing• It is registered under law• It is between parties standing in a near relation to each other. X promises his son to give Rs. 1000 in writing & get it registered.

CHAPPELL & CO. LTD. V. NESTLE CO. LTD.

FACTS:

C were owners of copyright of a tune called ‘Rocking Shoes’ and N were manufacturers of chocolate who were selling to the public these records in return for 1 shilling and three wrappers of chocolate bars manufactured by N. Under the statutory provision then in force, N were required to pay certain percentage of ‘ordinary retail selling’ price to C. C contended that N couldn’t rely on statute for it contemplated price consisting of money alone, whereas in this case consideration for records included three chocolate wrappers also.

ISSUE:

Whether chocolate wrappers formed a part of consideration?

Answer??

Meaning & Definition…• According to section 11 of the contract act:“ Every person is competent to contract who is of the age of majority

according to the law to which he is subject, & who is of sound mind, and is not disqualified from contracting by any law to which he is subject.”

CAPACITY TO CONTRACT

Persons disqualified from entering into the contract…• Minors, who are not of the age of majority.• Persons of unsound mind, and • Persons disqualified to contract by any law ( Insolvents )

MINOR

• Who is a minor – Acc. To sec 3 of Indian majority act, 1875, a minor is a person who has not attained the age of 18 years.

• First rule- Law protects minors against their own inexperience & against the possible improper designs of those more experienced

• Second rule-The law should not cause unnecessary hardship to persons who deal with minors

Minor’s Agreements

1. Agreement is void ab initio: Case Mohori vs. Dharmodas Ghose – Dharmodas , a minor executed a mortgage for Rs. 20000

declaring himself major & received Rs. 8000 from Mohori , a mortgagee. The minor wanted to set aside the mortgage. The mortgagee wanted the refund of Rs 8000. It was held that the agreement with the minor was absolutely void & question of refunding money does not arise.

2.No Ratification – minor cannot ratify the agreement on attaining the age of majority which he has entered into in the age of minority.

3.Minor’s Liability for necessaries – Minor is liable to pay a reasonable price for the necessaries supplied to him…. His property is liable but he is not personally liable.

Clare was of age 17, a minor in her state, when she bought a week’s worth of groceries at the local supermarket. Later she discovered she spent too much money and was going to be over her weekly budget. So she took the groceries back and asked for her money back. If she sues, will she get her money back?

No, Clare purchased necessaries so she cannot disaffirm.

While still a minor, Beach bought a stereo system on credit from McReam’s Electonic Cloud for $500. Beach paid $100 down and promised to pay $50 a month on the unpaid balance until the debt was paid. After making four payments, two of which were made after he reached the age of majority. Beach decided to disaffirm the contract and return the equipment.

The two payments made after he reached majority would be considered a ratification of the contract. Therefore Beach cannot disaffirm.

Cases!

Chapple v Cooper (1844)

• A minor whose husband had recently died contracted with undertakers for his funeral. She later refused to pay the cost of the funeral, claiming her incapacity to contract. The court held her liable to pay the bill.

• The funeral was for her private benefit and was a necessary as she had an obvious obligation to bury her dead husband.

33

‘Necessary’ does not mean ‘Necessity’

Persons of UNSOUND MIND…• Acc to sec 12:“ 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 & of forming a rational judgment as to its effect upon his interest.”

Persons disqualified from contracting

• Alien enemy • Foreign sovereign (prior sanction of central govt) • Corporations – contract is ultra vires if not in MOA) • Insolvents- all property in hand of Official assignee. He can enter into contract when court passes an order of

discharge• Convicts – persons who are sentenced to imprisonment cannot enter into contract during that period).

According to Section 13 two or more persons are said to consent when they agree upon the same thing in the same sense. This means that there should be perfect identity of mind (consensus ad idem) regarding the subject matter of the contract.

• To make a contract valid not only consent is necessary but the consent should also be free.• Section 13 says the consent is said to be free when it is not caused by any of the following :

(a) Coercion - sec 15

(b) Undue influence - sec 16

(c) Fraud

(d) Misrepresentation - sec 17,18

(e) Mistake –sec 20,21

Meaning of Free Consent

Free Consent

Flaw in consent

Coercion(sec15)

Undue influence(sec 16)

Misrepresentation

(sec 17,18)

Faudulent or wilful

(sec 17)

Innocent orUnintentional

(sec 18)

Mistake(sec 20,21)

Mistake of fact(sec 20)

Mistake of law(sec 21)

Types of Not free Consent

1.CoercionCoercion is committing or threatening to commit any act forbidden by the Indian Penal Code, or

the unlawful detaining or threatening to detain any property to the prejudice of any person, whatsoever with the intention of causing any person to enter into an agreement .

Effects of CoercionWhen the consent of a party to an agreement is obtained by coercion, the contract becomes

voidable at the option of the party ,whose consent is so obtained The burden of proving that the consent was obtained through coercion shall be upon the party

who wants to set aside the contract on the plea of contract.

Examples of Effects of Coercion

A executes a transfer bond for the house under fear of assault .It will be a contract voidable at the option of A since his consent was obtained by coercion..

A railway company refuses to deliver certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.

2. UNDUE INFLUENCEUndue influence is the improper use of any power possessed over the mind of the contracting party.

According to section 16 a contract is said to be affected by undue influence when:The relations subsisting between the parties are such that one of the parties is in a position to

dominate the will of other uses that position to obtain an unfair advantage over the other.

Examples of parties that can be affected by undue influenceDoctor and patientLawyer and clientGuardian and wardTrustee and beneficiaryTeacher and student

Decided case on undue influence In Karnal Distillery Co. ltd V. Ladli prasad .1958 Punj 190,confirmed by the supreme court in 1963

S.C 1279,the elder brother was shown to have exercised undue influence over his younger brother in respect of a compromise arrangement, the transaction was held to be voidable at the instance of the younger brother.

Coercion

The consent of the aggrieved party is taken by committing or threatening to commit an act forbidden by Indian penal code.

Undue Influence

The consent of the aggrieved party is obtained by dominating the party by taking an unfair advantage of his position.

Physical force is exercised Moral force is used in undue influence

Relationship between the promisor and the promisee is not necessary

Some sort of relationship must exist between the two parties to the contract

Difference between coercion and undue influence

3.FraudMisrepresentation of facts may be intentional or innocent. Intentional misrepresentation has been

termed as Fraud and innocent misrepresentation has been termed simply as ‘misrepresentation’ in the contract act.

Definition under law section 17 According to section 17 fraud means and includes any of the following acts Committed by a party to a contract or by any one with his connivance or by his agent with intent to deceive another party thereto or

his agent or to induce him to enter into contract: (a) A suggestion as to fact of that which is not true by one who does not believe it to be true (b) An active concealment of a fact by one having knowledge or belief of the fact. (c) Any other act fitted to deceive (d) A promise made without any intention of performing it

Essential of fraud There must be a representation and it must be false. (Peek vs Gurney(1873) L.R 6 H .L 377) The representation must relate to material fact (Bisset vs Wilkinson (1972) A.C 177) The representation must have been made before the conclusion of the contract with the intention of inducing the other party to act upon

it. The other party must have been induced to act upon the representation The other party must have relied upon the representation and must have been deceived. (Horsefull vs thomas , (1862) 1 H & C 90)

Mayank was induced to buy shares in a company on account of a false statement made by a stranger. It was held that he could not get out of the bargains because false statement was not made by the company or its agent.

Kapil says to Deepika his coat is made of pure wool ,though he knows that it is untrue .Deepika purchases the coat believing Kapil’s statement to be true ,It is a fraud by Kapil and therefore contract is voidable at deepika’s option.

Examples of Fraud

Mere silence without any legal Duty to speak will not amountto fraud except where :(a) The circumstances of the case are such that with regard to them ,it is the duty of thePerson keeping silence to speak (b)Silence in itself will be equivalent to speech

Hands vs Simpson, fawcett & co ltd (1928) 44T LR 295 Hands a commercial traveller, obtained an

employment with Simpson. S regarded driving as an essential part of H’s duties but he did not specifically ask H if he is qualified to drive a car. H kept quiet about his disqualification to drive a car. S contended that H’s silence is misrepresentation. But it was held that H was under no duty to volunteer the information and there was no misrepresentation.

4.Misrepresentation Misrepresentation - SECTION 18 means and includes :

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

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;

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.

Difference between fraud and misrepresentation

Misrepresentation FraudThere is no intention to deceive or to gain any undue advantage

In fraud the false statement is made deliberately with a clear intention of deceiving the other party

It makes the other contract only voidable at the option of the party whose consent has been so caused

In fraud the injured party besides avoiding the contract may also claim the damages.

The prospectus of a company did not refer to the existence of a document disclosing liabilities. This gave the impression that the company was prosperous. If the existence of the document had been disclosed the impression would have been quite different. Held, non disclosure amounted to fraud and anyone who purchased shares on the faith of this prospectus could avoid the contract.

There must be false representationPeek vs Gurney(1873) L.R 6 H .L 377

The representation must relate to material fact Bisset vs Wilkinson (1972) A.C 177

The vendor of a piece of land told a prospective purchaser that, in his opinion the land would carry 2000 sheep. In fact the land could carry only a number less than this. Held there was no misrepresentation as the statement was one of opinion which was honestly held.

5.MistakeTwo types : Mistake of law Mistake of fact

Mistake of Fact Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. Explanation.- An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement is not to be deemed

a mistake as to a matter of fact.

Examples (a) A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Bombay. It turns out that, before the day of the bargain, the ship conveying the cargo had been cast away and the goods lost. Neither party was aware of the facts. The agreement is void.

(b) A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement is void.

(c) A, being entitled to an estate for the life of B, agrees to sell it to C. B was dead at the time of the agreement, but both parties were ignorant of the fact. The agreement is void.

Mistake of Law

A contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in [India] has the same effect as a mistake of fact.

ExampleA and B make a contract grounded on the erroneous belief that a particular debt is barred by the Indian Law of Limitation: the contract is not voidable.

Types of Mistake of Facts Bilateral - Section 20 states that were both the parties to an agreement are under a mistake as to a matter of fact, essential to

the agreement shall be void. The mistake shall be termed as bilateral mistake of fact only when both of the following conditions are satisfied

(a) it should be committed by both the parties (b) it should relate to a matter of fact essential to the agreement. Unilateral

(c) A, being entitled to an estate for the life of B, agrees to sell it to C. B was dead at the time of the agreement, but both parties were ignorant of the fact. The agreement is void.

The object of an agreement must be valid. Object has nothing to do with consideration. It means the purpose or design of the contract. Thus, when one hires a house for use as a gambling house, the object of the contract is to run a gambling house.

The Object is said to be unlawful if-

(a) it is forbidden by law;(b) it is of such nature that if permitted it would defeat the provision of any law;(c) it is fraudulent;(d) it involves an injury to the person or property of any other;(e) the court regards it as immoral or opposed to public policy.

Lawful Object

Enforceabilty Method of Formation

Extent of performance

Obligation to perform

Valid

Voidable

unenforceable

Illegal

Void

Executed

Executory

Express

Formal

Simple

Implied StandardForm

ContingentQuasi

Bilateral

Unilateral

Types Of Contracts

On Record Under Seal

BY ENFORCEABILITY

Valid Contract: A valid contract is an agreement duly enforceable by law with all the essential elements of the contract which are:•Agreement•Consideration•Contractual Capacity•Legality

Valid

Void

VoidableUnenforceable

Illegal

BY ENFORCEABILITYVoid Contract: A contract becomes void when it ceases to be legally valid or enforced by law.A valid contract becomes void on account of:•Subsequent illegality•Party/parties in contract lack the capacity to enter in a contract because he is a minor or mentally incapacitated•Mistake of identity or subject matter•No meeting of minds

Voidable Contract: A contract which ceases to be enforceable by law at the option of one of the parties, i.e. the aggrieved party.A contract becomes voidable in which consent of one of the parties is obtained by:•Coercion•Undue Influence•Misrepresentation or Fraud

Court Case: Shogun Finance Ltd. Vs Hudson

BY ENFORCEABILITY

Unenforceable Contract: A contract which is valid but not capable of being enforced by the courts. A contract is unenforceable when it is:•Incapable of proof due to lapse of time•Unsigned

Illegal Contract: A contract is illegal when either the consideration or the object is illegal or fraudulent.

Court Case: Anderson Vs. Daniel

Method of Formation

FormalRecord

Under Seal

Simple

Express

Implied

Quasi

Standard Form

Contingent

BY METHOD OF FORMATIONFormal Contract: Contracts wherein consideration is not essential. •Contracts of Record: Contracts declared and Adjudicated by a court having jurisdiction or which is entered of record in obedience to the judgments of a court. •Contracts Under Seal: Contracts created by a sealed document. It must be a document in print or in writing and must be signed, sealed and delivered to the concerned party.

BY METHOD OF FORMATIONSimple Contract: Contracts which are not formal. They may be in writing, or made orally, or they may be implied from the conduct of the parties. All simple contract must be supported by consideration.

• Express Contract: Contract where the terms of contract are expressly agreed upon (whether by words spoken or written) at the time of formation of the contract

• Implied Contract: Contracts which come into existence by the acts or conducts of the parties.

• Quasi Contract: Contract which is created by the law. It is an obligation which law creates in absence of an agreement based upon the principle of equity, which means that no person should be allowed to unjustly enrich himself at the cost to another.

• Standard Form Contract: Contract between two parties, where the terms and conditions of the contract are set by one of the parties, and the other party has little or no ability to negotiate more favorable terms and is thus placed in a "take it or leave it" position.

• Contingent Contract: Contract to do or not to do something contingent to the happening or not happening of some event.

BY EXTENT OF PERFORMANCE

Executed Contract: Contract in which both the parties to the contract have completely performed their share of obligation and nothing remains to be done by either of the parties.Promises are made and completed immediately.

Executory Contract: Contract where both or any one of the parties is yet to perform its obligation. Promises are not fully performed immediately.

Extent of Performance

Executed Contract

Executory Contract

BY OBLIGATION TO PERFORM

Unilateral Contract: Contract in which any one party to the contract has to still perform its share of obligation.

Bilateral Contract: Contract in which both the parties to the contract have to still perform their share of obligation.

Obligation to Perform

Unilateral Bilateral

Discharge Of Contract

DISCHARGE OF CONTRACTWhen an agreement, which was binding on the parties to it, ceases to bind them, the contact is said to be discharged. A contract may be discharged in the following ways:1. By Performance of the contract ;2. By breach of the contract ;3. By Agreement/Novation ;4. By impossibility of performance ;

Breach is said to

occur when

When a party does not fulfill his contractual obligation

By his own act makes it impossible to discharge

his obligation

Types of Breach : Actual breach of contract OR Anticipatory/Constructive Breach

Breach Of Contract

Actual Breach and Its Consequences : An actual breach of contract on the due date or during performance enables the other i.e. the aggrieved party to obtain a right of action against the other party

In Case of Anticipatory Breach where the promisor declares his intention of not performing the contract even before the time stipulated for performance, In such a case, the other party may end the contract or may opt to wait till the due date….....

Remedies for Breach of a Contract : Novation

Rescission

Suit for Injunction

Suit for Specific Performances

Suit for Quantum Merit

Novation : Two parties agree to resolve their differences and amend the contract into a new one

Rescission: When one party breaches the contract , it absolves the other party of his obligations and entitles him to charge damages as compensation

Suit for damages : Damages are monetary compensation allowed for loss suffered by the aggrieved party. This is contingent on compensation and not punishment

Suit for specific performances: This is with regard to immovable property. It implies seeking a court order asking for the promise specified in the contract to be carried out. In such cases actual damages are indeterminate and monetary compensation is inadequate

Quantum Merit : When the actions of a certain party prevent the other party from fulfilling his obligations, he is entitled to be compensated for the losses suffered in the course of his actions

o Case: De Bernardy Vs. Harding, (1853)

o the defendant, who was to erect and le seats to view the funeral of the Duke of

Wellington, appointed the plaintiff as his agent to advertise and sell tickets for

the seats. The plaintiff was to be paid commission on the tickets sold by him.

The plaintiff incurred some expense in advertising for the tickets but before

any tickets were actually sold by him his authority to sell tickets was wrongfully

revoked by the defendant.

o It was held that the plaintiff was entitled to recover the expenses already

incurred by him under an action for quantum meruit.

Damages are essentially compensation for breach of contracts or for the nonperformance of the same. The 5 types of Damages are :

Ordinary Special Exemplary Liquidated Nominal

Ordinary damages : Compensation suffered for loss in the normal course of events, based on the premise of opportunity cost

Special Damages : Damages contingent on special circumstances which go beyond the purview of ordinary losses.Eg- Hadley vs Baxendale

Exemplary Damages : Damages awarded to compensate for humiliation or loss of reputation suffered. Eg- Breach of promise to marry or wrongful dishonour of a cheque

Eg- Western vs Olathe State Bank( cheque dishonored)

Liquidated Damages : Damages specified in the drawing of the contract itself , i.e. the contract contains a quantitative specification of who is to pay whom how much in the instance of a breach. Specification may be one or many depending on the contract drawn up between the parties. Indian law does not differentiate between penalties and liquidated damages

Nominal Damages : Damages awarded as a token. Costs incurred are often insignificant and the difference between nominal and ordinary damages lies in the availability of evidence of loss.

Eg- Union of India vs Tribhuwan Dasji Patel

Sec 57 (2) 0f the MCA 1950 provides for the doctrine of frustration:

“A contract to do an act which, after the contract is made, becomes impossible or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.”

The section envisages 2 main instances of frustration, namely:

(a) Impossibility of performance; and(b) Unlawful to perform

Doctrine Of Frustration

IMPOSSIBILITY

impossibility existing at the time of agreement impossibility arising subsequent to the / pre-contractual impossibility formation of contract / Supervening impossibility A. Known to the parties Post- contractual impossibility

B. Unknown to the parties A. Destruction of subject matter of the contract.B. Non-existence or non-occurrence of a particular state of

things .C. Death or incapacity of personal skill.D. Change of law/ war, etc

If an agreement contains an undertaking to perform an impossibility, it is void ab initioRule1. lex non cognit ad impossibilia i.e. the law does not recognise what is impossible2. impossibilium nulla obligato i.e. what is impossible does not create an obligation.

INSTANCES OF FRUSTRATIONInstance Case1. Outbreak of War HA Berney v Tronoh Mines2. Destruction of the Subject matter Taylor v Caldwell

Appleby v Myers3. Non-occurrence of a particular event *Krell v Henry

*Chandler v Webster4. Death or incapacity for personal

service*Nga Sheau Sheau v United Merchant Finance Bhd*Condor v Barron Knight Ltd [1966] 1 WLR 87

5. Statutory Prohibition Metropolitan Water Board v Dick, Kerr & Co Ltd [1918] AC 119

6. Inability of Promisor to Obtain License

*Yong Ung Kai v Enting*Ho Weng Leong v Ng Kee Chin

7. Grant of an injunction *Standard Chartered Bank v Kuala Lumpur Sdn Bhd

8. Seizure of compulsory acquisition by the government

Public Finance Bhd v Ehwan bin SaringRe Shipton

INSTANCES OF NO FRUSTRATION

Instances Case1. Event causing carriage of

goods by sea more expensiveTsakiroglu &Co. Ltd v Noblee Thorl GmbH [1962] AC 93

2. Financial crisis Sentul Raya Sdn Bhd v Hariram a/l Jayaram [2008] 4 MLJ 852

3. Shortage of labour and materials in building contracts

Davis Contractor Ltd v Fareham UDC [1959] AC 696,

4. Occurrence of bad weather *Kwan Sun Ming v Chak Chee Hing, [1965] 1 MLJ 236*Khoo Than Sui v Chan Chiau Hee [1976] 1 MLJ 25

5. Compulsory acquisition by the government of small part of the land

Wong Siew Choong Sdn Bhd v Anvest Corp Sdn Bhd [1999] 3 MLJ 577

6. Difficulty in interpreting the terms of the contract

Pacific Forest Industries Sdn Bhd v Lin Wen-Chih, [2009] 6 MLJ 293

• Case: Taylor v Caldwell (1863)

• In this case plaintiff ( P) Taylor entered into a contract with defendant (D)

Caldwell, where the P would pay D 100 pounds/day to use D’s music hall for a

concert. The agreement was made but before the first performance, the music

hall was destroyed, neither of the party was at fault in the fire.

• The Court held that subject to an implied condition the parties shall be excused

in case, the performance becomes impossible due to the perishing of thing

without fault of the contractors.

• Case: ROBINSON VS DAVISON

Singer unable to perform because of illness

Special Contracts

According to the instruction of the person delivering it

This is called Bailment

With the understanding thatGoods shall be either returned to Or disposed off

When a personDelivers some goods to another person For some purpose

Bailment and Pledge (Sections 148 to 181)

Sending T.V. to service centre for

repairing

Delivering old jewellary to

goldsmith for polishing

Handing over goods to

transporter for transportation

Hiring of taxi for tour purposes

Giving clothes for Dry Cleaning

EXAMPLES OF CONTRACT OF BAILMENT

• Duty to dispose faults: Bailor should disclose faults present in goods at the time of making delivery. Faults are of two types namely ; Known faults and Un-known faults. On the other hand bailments also are of two types namely Gratuitous bailment and Non-Gratuitous bailment. In case of gratuitous bailment, bailer is liable to compensate for bailee injuries arising out of known faults. In Gratuitous bailment, bailer is not answerable to un-known faults. In case of Non-Gratuitous bailment, bailer is answerable to both known faults and Un-known faults

• Duty to contribute for expenses: Bailor should Contribute for expenses incurred by bailee. In case of Gratuitous bailment, bailer need not contribute for ordinary expenses and extra ordinary expenses or to the contributed by bailer. In case of Non-Gratuitous bailment, bailor should contribute for both ordinary expenses and extra ordinary expenses

• Duty with regard to defective title: In case where bailor has delivered the goods with defective title, the bailee may come across suffering from the side of true owner due to bailers defective title. In such a case bailer with defective title should compensate bailee

• Duty to Indemnify: Principal of indemnity operates between bailor and bailee, where bailer becomes implied indemnifier and bailee becomes implied indemnity holder. So bailer has duty to indemnify bailee

• Duty to take the Goods back: After fulfillment of purpose bailee returns the goods to bailer. Then bailer should take them back. If bailer refuses to take the goods back, bailor has to compensate bailee

DUTIES OF BAILOR

RIGHTS OF A BAILOR• Rights of taking back the goods bailed: The bailor has right to take back the goods bailed as soon as

the purpose of bailment is completed. If the bailee defaults in so returning, the bailor has right to receive compensation

• Right in case of unauthorized use of goods: The bailor is entitled to terminate the contract of bailment if the bailee makes the unauthorized use of the goods bailed

• Right to goods bailed before stated period: The bailor may get back his goods before the time stated in the contract of bailment with the consent of the bailee

• Right to Dissolution of contract: The bailor may dissolve the contract if the conditions of bailment are disobeyed by the bailee

• Right to Gratuitous goods: The bailor has right it terminate the contract of gratuitous bailment at any time even before the specified time, subject to the limitation that where such a termination of bailment causes loss in excess of benefit, the bailor must compensate the bailee

• Right in share of Profit: The bailor has share in the increase or profit gained from the goods bailed if there is provision in the contract

DUTIES OF A BAILEE• To take care of goods bailed: The bailee is bound to take as much care of the goods entrusted to

him as a man of ordinary prudence• To avoid the inconsistent act: A contract of bailment is voidable at the option of the bailor, if the

bailee does any act with regard to the goods bailed, inconsistent with the conditions of the bailment• The authorize use of goods: If the bailee makes any unauthorized use of the goods bailed, he is

liable to make compensation to the bailor for any damage arising to the goods from or during such use of them

• Not to mix bailor’s goods: The bailee is bound to keep the goods of the bailor separate from his own where the mixture without the consent of the bailor is inseparable, the bailor is entitled to be compensated by the bailee for the loss of the goods

• To return the goods: It is the duty of the bailee to return, or deliver the goods bailed according to the bailor’s directions

• Responsibility in case of default: If the goods are not returned, delivered or tendered due to default of the bailee, he is responsible to the bailor for any loss of the goods from that time

• To return any profit from the goods: The bailee is bound to deliver to the bailor, or according to his directions, any increase or profit which may have accrued from the goods bailed

RIGHTS OF A BAILEE

• Right to recover damages: A bailee has right to recover damages from the bailor if he suffers any loss due to defects of the goods bailed

• Right to receive compensation: A bailee is entitled to receive compensation from the bailor for any loss resulting from the defect in the bailor’s title

• Right of Legal Action: A bailee may take necessary legal action against the person who wrongfully deprives him of the use of goods bailed or does them any injury

• Right to recover Bailment Expenses: Bailee is entitled to be reimbursed for all legitimate expenses incurred for any purpose of bailment

• Right of Lien: Where the bailee has rendered any service for the purpose of bailment, he has right to retain such goods bailed until he receives due remuneration for his services in absence of contract to the contrary

• Right of Indemnity: The bailee has right to receive the amount of indemnity from bailor for any loss which he may sustain by reason that the bailor was not entitled to make the bailment or to receive back the goods, or to give directions respecting them

RIGHTS OF FINDER OF GOODS• Right to receive compensation: The finder of goods has right to recover compensation for the trouble and

expenses incurred in preserving• Right of lien: He can exercise his right of lien and may retain the goods until he receive the expenses

incurred in preserving the property or for finding out the true owner• Right to Sue: He can file a suit against the owner for any reward that might have been offered to give him• Right of legal Action: The finder may take necessary legal action against third party who wrongfully deprives

him of the possession of the goods• Right of Selling: The finder has a right to sell the thing of another found by him under the circumstances

given below : a. The thing found is commonly the subject of sale. b. The owner cannot be found with reasonable diligence. c. The owner refuses to pay the lawful charges. d. The thing is in danger of perishing or losing the greater part of the value or e. When the lawful charges of the founder amount to two- third of the value of the thing found

DUTIES OF THE FINDER OF GOODS• Finding out the real owner: It is the duty of the finder of the goods to make possible effort in order to

find out the real owner of the goods. He may retain such goods until he finds true owner by advertisement in case of costly thing

• Care to be taken by the finder: The finder is bound to take as much care of the goods lost as a man of ordinary prudence would under similar circumstances take of his own goods of the same bulk, quality and value as the goods lost

• Returning of goods: It is the duty of finder to return the lost goods to real owner when he receives reasonable compensation for his services he has rendered in respect of them

General Lien Particular Lien

• It is a right to detain/ retain any goods of the bailor for general balance of account outstanding

• It is not automatic• It can be exercised against

goods even without involvement of labour or skill

• Banker, factors, wharfingers, policy brokers are entitled to general lien

• It is a right exercisable only on such goods in respect of which charges are due

• It is automatic• It comes into play only

when some labour or skill is involved

• Bailee, finder of goods, pledgee, unpaid seller, agent, partner etc are entitled to particular lien

Vs

PLEDGE• Pledge is a bailment of goods as security for payment of a debt or

performance of a promise• Bailor of goods is called pawnor• Bailee of the goods is called pawnee

ESSENTIAL OF CONTRACT OF PLEDGE• There must be bailment for security for payment of debt/performance of a promise• Goods must be the subject matter of the contract of pledge• The goods pledged must be in existence• There must be a delivery of goods from pawnor to pawnee

RIGHTS OF A PAWNEE• Right of retainer : Pawnee has right to retain the goods pledged not only for payment of debt or

performance of a promise but also for recovery of debts and all expenses incurred for preservation of goods pledged. Where ‘M’ pledges stock of goods for certain loan from a bank, the bank has a right the stock not only for adjustment of the loan but also for payment of interest

• Right to retention to subsequent debts : Pawnee has a right to retain the goods pledged towards subsequent advances as well

• Right to seek reimbursement of extraordinary expenses : Pawnee has a right to seek reimbursement of extraordinary expenses incurred. However his right to retain the goods shall not exceed to such extraordinary expenses but is restricted to ordinary expenses

• Right to sue : In the event of pawnor failing to redeem the debt or perform the promise, the pawnee has a right to sue the goods which he has retained

RIGHTS OF A PAWNOR• Right to redeem : Pawnor has a basic right to redeem the goods pledged by performing

his promise• Right to sue : Pawnor has a right to sue, but within a period of 3 years in view of

provision of Limitation Act only in the event of pawnee refusing to return the goods even after payment of debt etc

• Right to take care of the goods : Pawnor has a right to demand a pawnee to take all reasonable care and preservation of the goods pledged

• Right to receive increase or profit from the goods : Pawnor is entitled to receive the increase or profit from the goods if there is any increase/ profit relating to it during the pledged period

-Purpose : As security

-Sale of goods : Pledge has a right of sale of pledge on default of pawnor

-Use of goods : No right

- Purpose : other purposes like repair, safe custody etc

- Sale of goods : no right

- Use of goods : Can use as per the terms of the contract

PLEDGE BAILMENT

Vs

Contract of Indemnity and Guarantee

(sec. 124 of Indian contract act)—A Contract by which one party promises to save the another from losses caused to him by the conduct of the promisor himself or by the conduct of any other person , it is called a contract of indemnity. It is an agreement between the indemnifier (who promises to make up the loss) and indemnity-holder or indemnified (whose loss is to be made).

Essential elements - Essentials of a valid contract – enforceable/valid/consideration1. There must be a loss- Contingency2. The loss must be caused either by the promisor or by any other person.3. Indemnifier is liable only for the loss.

Rights of indemnity holder-1. Claim for damages2. Claim for cost of suit3. Recovery of sums paid under conditions of compromise

(Sections 124 to 147)

Real case : GAJAN MORESHWAR v. MORESHWAR MADAN 1942 BOM 302.

FACTS: • G Moreshwar got a plot in Bombay for a long lease period. • He transferred the lease to M Madan• M Madan started construction over that plot and took supplies from Mohan Das.• When asked for payment by Mohan Das, Madan couldn’t pay.• Upon request of Madan, Gajan executed a mortgage deed in favor of Madan.• Interest rate was decided for Madan to pay back Gajan• Madan agreed to pay on a particular day, the principal interest. But when Madan dint pay anything, Gajan sued him for indemnity

HELD:Court dint accept Madan’s stance that Gajan had suffered no loss and thus couldn't claim. But court said that if indemnity holder has incurred a liability and the liability is absolute, he can turn to the indemnifier to take care of the liability and pay it off. Thus Gajan was indemnified by Madan against all liability under mortgage and deed of charge.

Contract of guarantee - contract to perform the promise, or to discharge the liabilities of a third person in case of his default. The person who gives the guarantee is called Surety, the person in respect of whose default the guarantee is given is called Principal Debtor, and the person to whom the guarantee is given is called Creditor.

3 contractsBetween Principal Debtor & CreditorBetween Principal Debtor & SuretyBetween Surety& Creditor

Essential elements -1. Existence of Creditor, Surety, and Principal Debtor2. Distinct promise of surety – Explicit or implied3. Liability must be legally enforceable4. Consideration - "Any thing done or any promise made for the benefit of the principal debtor may be sufficient

consideration to the surety for giving the guarantee.“5. It should be without mispresentation or concealment

Continuing Guarantee- As per section 129, a guarantee which extends to a series of transactions is called a continuing guarantee.

Revocation of Continuing Guarantee

1. When surety notifies creditor2. Death of surety

Rights of surety

Right against principal Debtor

1. Right of subrogation: Surety get the rights of the principal debtor

2. Right to Indemnity: Every contract has an implied promise by the principal debtor to indemnify the surety, surety is entitled to cover from principal debtor what paid under guarantee

Rights against creditor

1. Right of set off : If the creditor sues the surety, the surety may have the benefit of the set off, if any, that the principal debtor had against the creditor

2. Right to securities: A surety is entitled to the benefit of every security which the creditor has against the principal debtor

Real case : Kashiba v. Sripat (1894) I.L.R 19 Bom. 697

FACTS: Laxmibai entered into a bond to secure payment to plaintiff for Rs 1000 and the interest, but at the time of the bond she was a minor and her father joined in the bond as a surety and said under a contract that if she fail to pay, he will pay the above mentioned amount personally , if it was not paid, they should get it paid off from his income.

Question:Whether father was liable on this guarantee in view of Laxmibai herself not being liable because of her minority.

OUTCOME: Father was held liable and the court said that in cases like this, surety does not just work as a collateral but becomes the principal debtor and is required to pay full amount.

Contract of Agency(Sections 182 to 238)

Agent • a person employed to do

any act for another or to represent another in dealings with third persons

Principal• Is the person for whom

such act is done, or who is so represented

Agency• The contract which creates

relationship of ‘principal’ and ‘agent’.

Basis: Principal is bound by the acts of the agent and is liable to the third party.

Consideration: The relationship is not necessarily supported with consideration.

Capacity to employ an agent: The principal must major and be of sound mind.

Capacity to be an agent: The agent must also be major and of sound mind in order to enter into contract.

MO

DES

OF

CREA

TIO

N Agency by actual authority: A contract of agency can be express or implied spoken or written.

Agency by ratification: When a person does something on behalf of another without their knowledge, the act may be raified or disown by the

other person

Agency by necessity: Sometimes circumstances would compel and a relation of agency would fall in place. This is often out of necessity.

Agency by operation of law: in certain cases, it is the law which creates the relationship of agent and principal.

Agency by ostensible authority

By holding out: if a person holds himself as an agent of another and that person does not deny it, then it becomes agency relationship.

By Estoppel: if a person permits other to act on his behalf so that a reasonable person would believe it to be an agency, then he would be estopped from denying agent’s authority.

EXTENT OF AN AGENT’S AUTHORITY

• In normal circumstances:

An agent, having an authority to do an act, has authority to do every lawful thing which is necessary in order to do such act.

• In an Emergency:

An agent has authority, in an emergency

To do all such acts for the purpose of protecting his principal from loss

As would be done by a person of ordinary prudence, in his own case under similar circumstances.

DUTIES OF AN AGENT

• Duty in conducting principal’s business: The agent should conduct the business of the principal as per directions of

the principal or in the absence of any directions as per the custom prevalent in the business

• The agent is liable to the principal for any loss if he deviates from the above duty/ obligation where he did not act

according to instruction of the principal. It was held by the Supreme Court in a case that the agent had to

compensate the principal where the agent did not act according to the instructions of the principal

• Requirements as to skill and diligence: Agent must act always as a person with diligence and skill normally exercised

in the trade. He would otherwise be responsible to compensate the principal for any loss suffered by the principal

for want of his skill.

• Agents duty to account: The agent has to maintain and render proper accounts to principal whenever demanded.

He is bound to pay the principal all sums received.

• Duty to communicate: The agent must in order to obtain instruction, communicate and contact the principal as a

man of ordinary diligence.

RIGHTS OF AN AGENT

• Right of lien on principal’s property: An agent is entitled to retain the goods, properties and books for any remuneration,

commission etc due to him. The possession of such property should be however lawful.

• Right of indemnification for lawful acts: The principal is bound to indemnify the agent against all consequences of lawful acts

done in exercise of his authority.

• Right of indemnification against acts done in good faith: Where the agent acts in good faith on the instruction of principal,

agent is entitled for indemnification of any loss or damage from the principal. However the agent cannot claim any

reimbursement or indemnification for any loss etc arising out of acts done by him in violation of any penal laws of the country.

• Right of retention: The agent can retain, out of the sums received from the principal, such amounts towards reimbursement

of expenditure, remuneration and advances paid by him on account towards the business and render accounts only for the

balance.

• Right of remuneration: The agent in the normal course is entitled for remuneration as per the contract. In the absence of any

agreed amount of remuneration, he is entitled for usual remuneration which is customary in the business. However he is not

entitled for any remuneration for acts done through misconduct/negligence.

PERSONAL LIABILITY OF AN AGENT

When the contract expressly provides for the agent’s liability

where the agent works for a foreign principal

where according to usage in trade in certain kinds of business agents are personally liable.

where the agent signs the negotiable instrument without indicating that he is signing

it for the principal

where the agent acts for a principal who cannot be sued viz Ambassador of a country

where the agency is coupled with interest. The ‘interest’ of the agent to come under this

category should not be an ordinary ‘interest’ like towards remuneration etc., but should be a

special interest.

PRINCIPAL’S LIABILITY FOR THE AGENT’S ACT TO THIRD PARTIES

• When the agent acts within the scope of his authority

• Principal is bound by the notice given to the agent

• In case of any misrepresentation or fraud by the agent within his authority

• Principal is bound by the doctrine of estoppel

• In case the name of the principal is not unknown but the existence is known to the third party

Except in the case of specific restrictions.

Except in the case of frauds done by agent.

Except where the agent exceeds the authority.

Unless the agent refuses to disclose the identity.

TERMINATION OF AGENCY

AN AGENCY IS

TERMINATED BY

Revocation of authority by the

principal or renunciation by

the agent

Completion of the business

cycle

Insolvency of the principal

Death or insanity of principal or

agent

IRREVOCABLE AGENCY

The agency is irrevocable in where

The agent has interest in the subject matter of the agency. It doesn’t come to an end even in the case of death,

insanity or insolvency of the principal

The agent has incurred personal liability

Agent has partially exercised the authority

SUB- AGENTSub agency refers to case where an agent appoints another agent. The appointment of sub agent is not lawful, because the agent is a delegatee and a delegatee cannot further delegate.

The appointment of a sub agent would be valid if the terms of appointment originally contemplated it.

PRINCIPAL’S LIABILTY:

• When the sub-agent is properly appointed: The principal is bound by his acts and is therefore responsible to third parties as if he were an agent originally appointed by the principal.

• When appointed without authority: The principal is not bound by the acts of sub agent.

SUBSTITUTED AGENTSubstituted agents are not sub agents. They are agents of the principal. Where the principal appoints an agent and if that agent identifies another person to carry out the acts ordered by principal, than the second person is not to be treated as a sub agent but only as an agent of the original principal.

The agent while selecting substituted agent is expected to exercise same amount of diligence as an ordinary man of prudence. If he does, he will not be responsible for negligence of substituted agent.

“Ubi Jus Ibi Remedium”