Contract Act_1872 Modified

8/8/2019 Contract Act_1872 Modified

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Contract Act, 1872Contract Act, 1872

Dr. M. Tariq MasoodDr. M. Tariq Masood

Additional Commissioner (inland Revenue)Additional Commissioner (inland Revenue)


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Important DefinitionsImportant Definitions

(1)(1) ProposalProposal 22

(2)(2) AcceptanceAcceptance 2 &72 &7--88

(3)(3) PromisePromise 2 & 92 & 9(4)(4) Promise/PromisorPromise/Promisor 22

(5)(5) ConsiderationConsideration 2,232,23--35, & 5735, & 57--5858

(6)(6) AgreementAgreement 22

(7)(7) ContractContract 22


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Components of ContractComponents of Contract

ThereThere areare threethree componentscomponents ofof aacontractcontract::

ProposalProposal AcceptanceAcceptance

ConsiderationConsideration


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ProposalProposal (Cont)(Cont)

WhenWhen oneone personperson signifiessignifies toto anotheranotherhishis willingnesswillingness

toto dodo oror toto abstainabstain fromfrom doingdoing anything,anything,

withwith aa viewview toto obtainingobtaining thethe assentassentofof thatthat otherother toto suchsuch actact ororabstinenceabstinence


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- Proposal must contain the terms on which theproposer is willing to act, but beyond theexpression of willingness their must besomething in the nature of a request. If M says

to N.I am willing to sell you my horse if you willbuy it. This would not constitute a proposal. Asthere are no terms on which M is willing to sell.

- Proposer cannot dictate terms under which theoffer may be refused. e.g., a person cannot saythat if within a certaintime acceptance is not communicated the offerwould be considered as accepted.


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TheThe offeroffer mustmust bebe intendedintended toto create,create, andand bebecapablecapable ofof creatingcreating legallegal relationsrelations ee..gg.. ananinvitationinvitation toto dinnerdinner doesdoes notnot constituteconstitute anan offeroffer..

KalaiKalai HaldarHaldar VV.. Sheikh,Sheikh,2323WW

..RR..217217,A,A invitedinvited BB totodinnerdinner.. OnOn BB failingfailing toto attendattend AA suedsued BB forfor thethepriceprice ofof unun--consumedconsumed foodfood.. ItIt waswas heldheld thatthat AsAssuitsuit mustmust bebe dismisseddismissed..

ItIt isis necessarynecessary thatthat thethe agreementagreement mustmust havehave anan

expressexpress oror tacittacit referencereference toto thethe legallegal relationrelationbetweenbetween thethe partiesparties.. IfIf twotwo personspersons agreeagree toto helphelpreciprocallyreciprocally inin thethe fieldfield ofof science/science/ artart etcetc itit willwillnotnot bebe contractcontract..


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ProposalProposal

ItIt isis necessarynecessary thatthat toto amountamount toto aa contractcontract theretheremustmust bebe aa promisepromise toto dodo oror toto abstainabstain fromfrom doingdoingsomethingsomething asas aa legallegal dutyduty.. AA meremere statementstatement ofof

intentionintention doesdoes notnot constituteconstitute aa bindingbinding promisepromiseeveneven thoughthough thethe personperson toto whomwhom itit isis mademade actsactsuponupon itit.. TheThe wordswords usedused mustmust applyapply toto definitedefinitepersonspersons toto createcreate legallegal relationsrelations.. InvitationsInvitations forfortenderstenders andand advertisementsadvertisements byby anan auctioneerauctioneer forfor

anan intendedintended salesale areare meremere declarationsdeclarations tototransacttransact businessbusiness andand notnot offersoffers inin themselvesthemselves..


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PROPOSAL/OFFER.PROPOSAL/OFFER.

ProposalProposal isis synonymoussynonymous withwith offeroffer.. AA proposalproposal oror anan offeroffer must,must, inin orderorder toto

givegive riserise toto aa contract,contract, bebe intendedintended totocreatecreate andand capablecapable ofof creatingcreating legallegalrelationsrelations..

Social or moral relations not intended toSocial or moral relations not intended tohave a money value will not give rise tohave a money value will not give rise to

legal obligationslegal obligations..


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Communication of OfferCommunication of Offer

ThereThere isis nono offeroffer tilltill itit isis communicatedcommunicated toto thetheoffereeofferee..

IllustrationIllustration:: AA offersoffers aa promisepromise forfor anan actact toto bebedone,done, andand BB doesdoes thatthat actact notnot knowingknowing thethe offer,offer,

therethere willwill bebe nono contractcontract.. IfIf AA doesdoes somesome workworkwithoutwithout thethe knowledgeknowledge oror requestrequest ofof B,B, AA cannotcannotenforceenforce paymentpayment forfor thethe workwork donedone..

StandingStanding oror openopen offersoffers:: AdvertisementAdvertisement invitinginvitingtenderstenders isis notnot anan offeroffer inin itself,itself, itit isis aa meremere

invitationinvitation.. TheThe personperson whowho sendssends aa tendertender forfor thethesupplysupply ofof thethe goodsgoods thatthat isis deemeddeemed toto havehave mademadeanan offer,offer, whichwhich thethe partyparty invitinginviting thethe tendertender maymayoror maymay notnot acceptaccept..


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-- When the person to whom the proposal is made signifiesWhen the person to whom the proposal is made signifies

his assent thereto, the proposal is said tohis assent thereto, the proposal is said to bebe

accepted.accepted.

-- The person making the proposal is called the promisorThe person making the proposal is called the promisorand the person to whom it is made isand the person to whom it is made is called thecalled the

promisee.[S.2(b) (c)].promisee.[S.2(b) (c)].

-- Promise, agreement and contract:Promise, agreement and contract: Offer orproposal in itself wasOffer orproposal in itself was

not a promise, but it would become a promise, only when it wasnot a promise, but it would become a promise, only when it wasaccepted.accepted.

-- Proposal or acceptance of any promise need not be in writing , asProposal or acceptance of any promise need not be in writing , as

laid down in S.9 of the Contract Act,1872, 1994 MLD 2276.laid down in S.9 of the Contract Act,1872, 1994 MLD 2276.

AcceptanceAcceptance


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Acceptance mustAcceptance must::

(1)(1) be absolute and unqualified;be absolute and unqualified;

(2)(2) be expressed in some usual and reasonablebe expressed in some usual and reasonable

manner, unless the proposal prescribes themanner, unless the proposal prescribes the

manner in which it is to be accepted.manner in which it is to be accepted.

-- If the proposal prescribes a manner in which it is toIf the proposal prescribes a manner in which it is to

be accepted, and the acceptance is not made in suchbe accepted, and the acceptance is not made in such

manner, the proposermay insist that his proposal shallmanner, the proposermay insist that his proposal shallbe accepted in prescribed manner and not otherwise;be accepted in prescribed manner and not otherwise;

but ifhe fails to do so, he accepts the acceptance.but ifhe fails to do so, he accepts the acceptance.



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ILLUSTRATIONILLUSTRATION

AA ee--mailed tomailed to BB: Will you sell us: Will you sell usComputers? Email me the lowest price .Computers? Email me the lowest price .

BB mailedmailed Lowest Price $900.Lowest Price $900.

AA mailed again We agree to buy Computersmailed again We agree to buy Computersfor $900.for $900.

It was held that there was no contract,It was held that there was no contract,becausebecause BBnever made a proposal, i.e.never made a proposal, i.e.expressed his willingness to sell Computersexpressed his willingness to sell Computers[1893 A C 552][1893 A C 552]..


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-- Ignorance of offeree of terms of offer:: ManyMany contractscontracts setset

outout inin printedprinted documents,documents, ticketstickets issuedissued byby AirlineAirline /railway/railway containcontain

numerousnumerous ter msterms.. ButBut theythey areare deemeddeemed toto bebe communicatedcommunicated toto thethe

purchaser,purchaser, andand hehe isis boundbound byby themthem whetherwhether or or notnot hehe hashas readread themthem

providedprovided theythey areare legiblelegible..

-- AcceptanceAcceptance ofof aa proposalproposal isis thethe acceptanceacceptance ofof allall itsits termsterms::

-- AcceptanceAcceptance ofof thethe proposalproposal needneed notnot alwaysalways bebe expressedexpressed inin

wordswords:: SectionSection 88 ofof thethe ContractContract ActAct aa proposalproposal maymay bebe

acceptedaccepted inin ::

((11)) ByBy communicatingcommunicating thethe acceptance,acceptance,

((22)) ByBy acceptanceacceptance ofof anyany considerationconsideration forfor aa reciprocalreciprocal

promisepromise;;andand

((33)) PerformancePerformance ofof thethe conditioncondition ofof aa proposal,proposal,



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Firstly, wherewhere thethe proposalproposal isis inin thethe naturenature ofof anan offeroffermademade toto thethe worldworld atat

largelarge.. ItIt isis impossibleimpossible forfor thethe offereeofferee toto expressexpress hishis acceptanceacceptance otherwiseotherwise

thanthan byby performanceperformance of of thethe contractcontract..

Secondly,, thethe proposalproposal itselfitselfmightmight indicateindicate thatthat performanceperformance isis aa modemode ofofacceptanceacceptance

-- PersonPerson toto whomwhom proposalproposal isis mademade maymay bebe definitedefinite oror notnot:: butbut nono contractcontract

cancan arisearise untiluntil itit hashas beenbeen acceptedaccepted byby anan ascertainedascertained personperson..

-- EffectEffect ofof actact donedone inin ignoranceignorance ofof proposalproposal:: IfIf thethe actact requiredrequired isis donedone

inin ignoranceignorance ofof thethe proposal,proposal, itit isis nono acceptanceacceptance ofof thethe proposalproposal andand hencehence

therethere willwill bebe nono contract,contract, forfor toto anan unun--communicatedcommunicated offeroffer therethere cancan bebe nono

consentconsent or or assentassent..



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PromisePromise WhenWhen thethe personperson toto whomwhom thethe proposalproposal isis mademade signifiessignifies

hishis assentassent thereto,thereto, thethe proposalproposal isis saidsaid toto bebe acceptedaccepted.. AAproposal,proposal, whenwhen accepted,accepted, becomesbecomes aa promisespromises

TheThe personperson makingmaking thethe proposalproposal isis calledcalled thethe "promisor,""promisor,"andand thethe personperson acceptingaccepting thethe proposalproposal isis calledcalled thethe

"promisee""promisee".. AA meremere statementstatement ofof factfact isis notnot aa proposalproposal unlessunless itit isis mademade

withwith thethe viewview ofof obtainingobtaining thethe assentassent ofof thethe otherother partypartyaddressedaddressed.. II amam readyready toto marrymarry youyou oror II shallshall sellsell thisthisbookbook toto youyou forfor RsRs..33 areare proposalsproposals && notnot statementsstatements whenwhen

mademade withwith intentintent toto seekseek acceptanceacceptance ofof thethe otherother personperson.."" IIcancan diedie forfor thethe countrycountry II amam readyready toto serveserve youyou..


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TypesTypes

11)) ExpressExpress ((99)) WhenWhen promisepromise isis mademade inin wordswords..

22)) ImpliedImplied ((99)) WhereWhere suchsuch proposalproposal oror acceptanceacceptance isis mademadeotherwiseotherwise thanthan inin wordswords..

33)) ReciprocalReciprocal PromisesPromises ((22)) whichwhich formform considerationconsideration oror partpart ofofconsiderationconsideration ofof eacheach otherother ..EachEach partyparty givesgives aa promisepromise ininreturnreturn ofof aa promisepromise.. BothBoth partiesparties havehave yetyet toto performperform theirtheirrespectiverespective partsparts..

IllustrationIllustration:: AA offersoffers RsRs..5050,,000000 forfor findingfinding hishis lostlost dogdog andandrestoringrestoring itit toto himhim..

BB,, inin pursuancepursuance ofof thethe offeroffer ,, findsfinds thethe dogdog andand writeswrites toto AA thatthathehe isis arrangingarranging toto returnreturn itit..TheThe considerationconsideration forfor promisepromise ofofAA isis partlypartly executedexecuted andand partlypartlyexecutoryexecutory.. TheThe promisepromise toto paypay andand thethe promisepromise toto restorerestore arearenonethelessnonetheless reciprocalreciprocal promisespromises forfor partpart ofof thethe considerationconsiderationbeingbeing executoryexecutory..


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TypesTypes44)) AlternativeAlternative (S(S..5858))..WhenWhen oneone offersoffers thethe choicechoice ofof twotwo

thingsthings..

IllustrationIllustration:: AA andand BB agreeagree thatthat AA shallshall paypay BB RsRs..11,,000000,, forforwhichwhich BB shallshall afterwardsafterwards deliverdeliver toto AA eithereither ricerice oror wheatwheat..(S(S..5858)).. ButBut therethere areare nono circumstancescircumstances toto indicateindicate whichwhich ofofthethe alternativesalternatives waswas intendedintended toto bebe enforced,enforced, thethe wholewholecontractcontract willwill bebe voidvoid forfor uncertainty,uncertainty, ee..gg..,, AA agreesagrees toto sellsell totoBB hishis whitewhite horsehorse forfor RsRs..5050,,000000 oror RsRs..100100,,000000,, therethere beingbeingnothingnothing toto showshow whichwhich oo thethe twotwo pricesprices waswas intendedintended.. (S(S..2929))..MuhammadMuhammad ShafiShafi VV.. IshaqueIshaque 19941994 CLCCLC 12001200..

-- AlternativeAlternative promisespromises,, oneone branchbranch beingbeing illegalillegal:: InIn thethe casecaseofof anan alternativealternative promisepromise ,, oneone branchbranch ofof whichwhich isis legallegal andandthethe otherother illegalillegal thethe legallegal branchbranch alonealone cancan bebe

enforcedenforced..(S(S..5858))IllustrationIllustration :: AA andand BB agreeagree thatthat AA shallshall paypay BB RsRs..11,,000000 forforwhichwhich BB shallshall afterwardsafterwards deliverdeliver toto AA eithereither ricerice oror smuggledsmuggledopiumopium.. ThisThis isis aa validvalid contractcontract toto deliverdeliver ricerice andand aa voidvoidagreementagreement asas toto thethe opiumopium..


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Consideration Consideration

When,When, atat thethe desiredesire ofof thethe promisor,promisor, thethepromiseepromisee oror anyany otherother personperson hashas donedone ororabstainedabstained fromfrom doingdoing oror doesdoes oror abstainsabstains fromfromdoing,doing, oror promisespromises toto dodo oror toto abstainabstain fromfrom

doing,doing, something,something, suchsuch actact oror abstinenceabstinence ororpromisepromise isis calledcalled aa considerationconsideration forfor thethe promisepromise..

AA agreesagrees toto sellsell hishis househouse toto BB forfor RsRs..1010(M)(M) ..HereHere BsBs promisepromise toto paypay thethe sumsum ofof RsRs..1010(M)(M) isisthethe considerationconsideration forfor AsAs promisepromise toto sellsell thethe

house,house, andand AsAs promisepromise toto sellsell thethe househouse isis thetheconsiderationconsideration forfor BsBs promisepromise toto paypay thetheRsRs..1010(M)(M).. TheseThese areare lawfullawful considerationsconsiderations


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ConsiderationConsideration 2(d)2(d)

When,When, atat thethe desiredesire

ofof thethe promisor,promisor, thethepromiseepromisee oror anyanyotherother personspersons

i)i) HasHas done,done, ororabstainedabstained formformdoingdoing ,or,or

ii)ii) DoesDoes oror abstainsabstainsfromfrom doing,doing, oror

iii)iii) PromisesPromises toto dodo toto

abstainabstain fromfromdoingdoing--

Something,Something, suchsuch

act,act, abstinenceabstinence ororpromisepromise isis calledcalledaa considerationconsiderationforfor thethepromisepromise..[[22(d)](d)]


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ADEQUACY OF CONSIDERATIONADEQUACY OF CONSIDERATION

AA promisespromises toto maintainmaintain BsBs childchild andand BB promisespromises toto paypay AA RsRs..11,,000000

yearlyyearly forfor thethe purposepurpose.. HereHere thethe promisepromise of of eacheach partyparty isis thethe

considerationconsideration forfor thethe promisepromise ofof thethe otherotherpartyparty..(S(S..2323))..

AccordingAccording toto thethe casecase ofof GhafooranGhafooran VV.. MuhammadMuhammad Yaqoob,Yaqoob,19851985 CLCCLC

22632263,, meremere inadequacyinadequacy ofof considerationconsideration ,, held,held, nono groundground forfor refusingrefusingspecificspecific performanceperformance of of contractcontract inin respectrespect of of immovableimmovable propertiesproperties

unlessunless inadequacyinadequacy waswas shownshown toto bebe suchsuch whichwhich wouldwould shockshock

conscienceconscience ofof CourtCourt whilewhile decreeingdecreeing suitsuit for for specificspecific performanceperformance oror

therethere werewere fraudfraud orormisrepresentationmisrepresentation onon partpart ofofplaintiffplaintiff whichwhich inducedinduced

defendantdefendant toto enter enter intointo aa contractcontract forfor salesale or or therethere waswas certaincertain

circumstancescircumstances underunder whichwhich plaintiffplaintiff tooktook improperimproper advantageadvantage ofof hishis

positionposition oror difficultiesdifficulties ofof defendantdefendant makingmaking himhim victimvictim ofofhishis impositionimposition..

TheThe lawlaw for for veryvery soundsound reasonsreasons insistsinsists onon thethe existenceexistence ofof

considerationconsideration..


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Lawful ConsiderationLawful Consideration

AA agreesagrees toto sellsell hishis househouse toto BB forforRsRs..1010(M)(M) .. HereHere BsBs promisepromise toto paypay thethesumsum ofof RsRs..1010(M)(M) isis thethe considerationconsideration forfor

AsAs promisepromise toto sellsell thethe house,house, andand AsAspromisepromise toto sellsell thethe househouse isis thetheconsiderationconsideration forfor BsBs promisepromise toto paypay thetheRsRs..1010(M)(M).. TheseThese areare lawfullawful considerationsconsiderations..


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OtherRequirementsOtherRequirements-- Act or forbearance must be at the desire of the promisor:

If it is done at the instance of a third party, or without the desire o thepromisor, it is not consideration.

- Act done at request of third person is no consideration: Thus, it is clear that an act done at the request of a third person ( and not thepromisor) is no consideration at all. The criterion is this: Is this act doneat the desire of the promisor ( or any otherperson on promisors behalf?if so ,it will bind the promisor and not otherwise . It is enough if thepromisee gives consideration at the desire of the promisor; it is notnecessary that the promisorhimself should benefit by the consideration;the promise would be valid even if the benefit accrued to a third party.

- Promisee or any other persons : Consideration must move fromthe promisee or from his agent or if the consideration moves from a thirdparty it must move on the procurement of the promisee. So no strangerto the contract is allowed to claim any benefit under the contract.


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Third party interestThird party interest

AA (Insurance(Insurance CoCo..)) insuresinsures thethe lifelife ofof XX..XX diesdies.. YY,, hishis wife,wife,cannotcannot suesue forfor thethe moneymoney duedue onon thethe policy,policy, asas sheshe isis aastrangerstranger toto thethe contractcontract..5555 CalCal..13151315.. SheShe couldcould havehave suedsued ififthethe policypolicy hadhad beenbeen assignedassigned toto her,her, oror sheshe werewere aa nomineenomineeunderunder thethe newnew insuranceinsurance Act,Act, SectionSection3939,, oror aa trusttrust hadhad beenbeendeclareddeclared inin herher favourfavour underunder SectionSection 55,, TrustsTrusts ActAct..

ContractContract enforceableenforceable byby aa beneficiarybeneficiary thoughthough notnot aa partypartytoto thethe contractcontract:: The Pakistani law is the same as English lawbut with this modification that in Pakistan an exception is made inthe case of a beneficiary. In Pakistan a person not a party to the

agreement can sue on the agreement if such person is abeneficiary (called cesti que trust) and the contract is for hisbenefit. In other words, where a contract between A and B isintended to secure benefit to C as a cestui que trust, C may sue inhis own right to enforce the trust. And this seems to be theprinciple underlying the decision of the judicial Committee in the

case of Khawaja Muhammad V. Husani Begum.


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PAST CONSIDERATIONPAST CONSIDERATION

TheThe wordswords hashas donedone oror abstainedabstained fromfrom doingdoingdeclaredeclare thethe lawlaw toto bebe thatthat anan actact donedone byby AA atat BBss requestrequest withoutwithout anyany contemporaneouscontemporaneous promisepromisefromfrom BB maymay bebe aa considerationconsideration forfor aa subsequentsubsequent

promisepromise formform BB toto AA..DoesDoes oror abstainsabstains fromfrom doingdoingForbearanceForbearancetoto suesue:: considerationconsideration maymay consistconsist eithereither ofof somesomeactact whichwhich thethe promiseepromisee doesdoes atat thethe desiredesire ofof thethepromisorpromisor oror ofof somesome omissionomission oror forbearanceforbearance onon

thethe partpart ofof thethe promiseepromisee;; thus,thus, ifif aa promiseepromiseerefrainsrefrains fromfrom bringingbringing aa suitsuit which,which, butbut forfor thethepromise,promise, hehe maymay havehave broughtbrought therethere isis goodgoodconsiderationconsideration forfor thethe promisepromise..


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Contract Vs. AgreementContract Vs. Agreement

EveryEvery promisepromise andand everyevery setset ofof promises,promises,formingforming thethe considerationconsideration forfor eacheach other,other,isis anan agreementagreement..

AllAll agreementsagreements areare contractscontracts ifif theythey arearemademade byby thethe freefree consentconsent ofof partiespartiescompetentcompetent toto contract,contract, forfor aa lawfullawfulconsiderationconsideration andand withwith aa lawfullawful object,object,andand areare notnot herebyhereby expresslyexpressly declareddeclared totobebe voidvoid

AnAn agreementagreement enforceableenforceable byby lawlaw isis aacontractcontract


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Contract Vs. AgreementContract Vs. Agreement

AnAn agreementagreement isis aa widerwider termterm thanthancontractcontract.. ContractContract resultsresults fromfrom aacombinationcombination ofof twotwo ideasideas agreementagreement andandobligationobligation.. ThereThere maymay bebe agreementsagreements

whichwhich dodo notnot createcreate anyany legallegal obligation,obligation,asas inin thethe conveyanceconveyance ofof gifts,gifts, oror maymay onlyonlycreatecreate itit independentlyindependently.. AnAn agreementagreementbecomesbecomes aa contractcontract whenwhen therethere arearecompetentcompetent parties,parties, consideration,consideration, freefree

consentconsent andand legallegal objectobject.. AllAll contractscontracts areareagreementsagreements butbut allall agreementsagreements areare notnotcontracts,contracts, anan agreement,agreement, inin orderorder toto bebe aacontract,contract, mustmust bebe enforceableenforceable byby lawlaw..


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Types of agreementsTypes of agreements

(a)(a) ValidValid:: AA validvalid agreementagreement isis oneone whichwhich isis enforceableenforceableatat lawlaw..

(b)(b) VoidVoid:: AA voidvoid agreementagreement isis oneone whichwhich isis notnot enforceableenforceableatat lawlaw hashas nono legallegal existenceexistence atat allall agreementsagreements wherewhere bothboth

thethe partiesparties areare underunder aa mistakemistake asas toto aa mattermatter ofof factfactessentialessential toto thethe agreementagreement areare voidvoid (Section(Section 2020));;agreementsagreements ofof whichwhich thethe objectobject oror considerationconsideration isisunlawfulunlawful (Section(Section 2323),),agreementsagreements inin restraintrestraint ofof tradetrade (Section(Section 2727)) oror ofof marriagemarriage(Section(Section 2626)) oror ofof legallegal proceedingsproceedings (Section(Section 2828),),uncertainuncertain agreementsagreements (Section(Section 2929),), agreementsagreements byby wayway ofof

wager,wager, etcetc.. AsAs soonsoon asas itit isis shownshown toto bebe void,void, thethe wholewholetransactiontransaction fallsfalls toto bebe groundground..


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Types of agreementsTypes of agreements

(c(c )) VoidableVoidable:: AA voidablevoidable agreementagreement isis oneone whichwhich isis enforceableenforceableatat lawlaw atat thethe optionoption ofof oneone oror moremore ofof thethe partiesparties thereto,thereto, butbut notnotatat thethe optionoption ofof otherother oror othersothers.. ThusThus ,, anan agreementagreement inducedinduced bybycoercioncoercion ,, undueundue influence,influence, fraudfraud oror misrepresentationmisrepresentation isis voidablevoidable..StrictlyStrictly speaking,speaking, anan

agreementagreement isis voidvoid oror voidablevoidable ,, becausebecause ofof itsits substancesubstance owingowing toto flawsflaws ininthethe contract,contract, oror forfor wantwant ofof freefree consentconsent isis unenforceableunenforceable isis soso bybyprocedure,procedure, ee..gg..,, byby wantwant ofof stamp,stamp, byby barbar ofof limitation,limitation, etcetc.. ItIt isis validvalid butbutincapableincapable ofof proofproof.... ItIt isis goodgood inin substancesubstance thoughthough byby reasonreason ofof somesometechnicaltechnical defectdefect oneone oror bothboth ofof thethe partiesparties cancan notnot suesue uponupon itit..

(d)(d) UnenforceableUnenforceable:: AnAn unenforceableunenforceable contractcontract isis validvalid atat lawlaw butbut

incapableincapable of of proof proof..(e)(e) IllegalIllegal:: AnAn illegalillegal agreementagreement isis somethingsomething againstagainst thethe lawlaw itself,itself, allallillegalillegal contractscontracts areare voidvoid butbut allall thatthat areare voidvoid areare notnot necessarilynecessarily illegalillegal..


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VoidVoid

AnAn agreementagreement notnot enforceableenforceable byby lawlawisis saidsaid toto bebe voidvoid

AA contractcontract whichwhich ceasesceases toto bebeenforceableenforceable byby lawlaw becomesbecomes VoidVoidwhenwhen itit ceasesceases toto bebe enforceableenforceable


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VOIDABLE CONTRACTVOIDABLE CONTRACT

AnAn agreementagreement whichwhich isis enforceableenforceable byby lawlawatat thethe optionoption ofof oneone oror moremore ofof thethe partiespartiesthereto,thereto, butbut notnot atat thethe optionoption ofof thethe otherotheroror others,others, isis aa voidablevoidable contractcontract.. AA

contractcontract whichwhich ceasesceases toto bebe enforceableenforceablebyby lawlaw becomesbecomes voidvoid whenwhen itit ceasesceases toto bebeenforceableenforceable.. VoidableVoidable contractcontract isis aacontractcontract withwith aa flaw,flaw, ofof whichwhich oneone ofof thetheparties,parties, may,may, ifif hehe chooses,chooses, taketake

advantageadvantage.. ThusThus agreementagreement inducedinduced bybycoercion,coercion, undueundue influence,influence, fraudfraud orormisrepresentationmisrepresentation areare voidablevoidable..


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Executed ContractExecuted Contract

WhereWhere bothboth thethe partiesparties havehaveperformedperformed theirtheir obligation,obligation, itit isis ananexecutedexecuted contractcontract.. EvenEven whenwhen oneonepartyparty toto thethe contractcontract hashas performedperformedhishis shareshare ofof thethe obligation,obligation, thethecontractcontract isis executedexecuted thoughthough toto thethe

otherother partyparty isis stillstill underunder ananoutstandingoutstanding obligationobligation toto performperform hishispartpart ofof thethe promisepromise..


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Executory ContractExecutory Contract

:: HereHere neitherneither partyparty toto thethe contractcontract hashasperformedperformed hishis shareshare ofof thethe obligation,obligation, forforexample,example, bothboth thethe partiesparties havehave yetyet totoperformperform theirtheir promises,promises, thethe contractcontract isis

executoryexecutory.. InIn anan executedexecuted contractcontract oneonepartyparty hashas alreadyalready performedperformed hishis partpart ofof heheagreementagreement whilewhile thethe otherother partyparty hashas totoperformperform hishis parpar.. InIn anan executoryexecutory contractcontractbothboth thethe partiesparties havehave toto performperform theirtheir

mutualmutual promisespromises andand thethe factfact thatthat theytheyhavehave toto performperform theirtheir partsparts ofof thethe contractcontractdoesdoes notnot affectaffect thethe validityvalidity ofof thethe contractcontract..


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Express ContractExpress Contract

WhenWhen thethe termsterms ofof aa contractcontract arearereducedreduced inin writingwriting oror areare agreedagreeduponupon byby spokenspoken wordswords atat thethe timetime ofofitsits formation,formation, thethe contractcontract isis expressexpress..


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Implied ContractImplied Contract

TheThe termsterms ofof aa contractcontract areare inferredinferred fromfromthethe conductconduct oror dealingdealing betweenbetween thethepartiesparties.. WhenWhen thethe proposalproposal oror acceptanceacceptance

ofof anyany promisepromise isis mademade otherwiseotherwise thanthan ininwords,words, thethe promisepromise isis saidsaid toto bebe impliedimplied..SuchSuch anan impliedimplied promisepromise leadsleads toto ananimpliedimplied contractcontract.. ForFor example,example, AA boardsboards aa

busbus.. ItIt isis impliedimplied fromfrom hishis conductconduct thatthat AAhashas enteredentered ontoonto anan impliedimplied promisepromise totopurchasepurchase aa ticketticket..


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QuasiQuasi--ContractContract

CertainCertain relationsrelations resembleresemble thosethose createdcreated byby aacontractcontract.. CertainCertain obligationsobligations whichwhich areare notnotcontractscontracts inin factfact butbut areare soso inin thethe contemplationcontemplationofof lawlaw.. TheseThese areare calledcalled QuasiQuasi--ContractsContracts..

IllustrationIllustration:: A A suppliessupplies necessitiesnecessities toto BB whowho isis notnot capablecapable

ofof contractingcontracting andand reimbursingreimbursing toto AA.. AA isis entitledentitledtoto bebe reimbursedreimbursed fromfrom BsBs propertyproperty..

QuasiQuasi contractscontracts raiseraise outout ofof obligationobligation enjoyedenjoyed bybyoneone personperson fromfrom thethe voluntaryvoluntary actsacts ofof thethe otherotherwhichwhich areare notnot intendedintended toto bebe performedperformedgratuitouslygratuitously


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Contingent ContractContingent Contract

AA contingentcontingent isis oneone inin whichwhich aapromisepromise isis conditionalconditional andand thethecontractcontract shallshall bebe performedperformed onlyonly onon

thethe happeninghappening ofof somesome futurefutureuncertainuncertain eventevent..

IllustrationsIllustrations::

AA contractscontracts toto paypay BB RsRs 1010,,000000,, ififBsBs househouse isis burntburnt.. ThisThis isis aacontingentcontingent contractcontract


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Contracts ofRecordContracts ofRecord

AA contractcontract ofof recordrecord isis oneone whichwhich isistakentaken toto thethe recordsrecords ofof aa Court,Court, forforexampleexample judgmentjudgment ofof aa courtcourt.. SuchSuchjudgments judgments createcreate aa bindingbinding effecteffectthroughthrough thethe authorityauthority ofof thethe CourtCourt..


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Specialty ContractSpecialty Contract

AA specialtyspecialty contractcontract isis aa contractcontractwhichwhich isis inin writingwriting signed,signed, sealedsealed andanddelivereddelivered byby thethe partiesparties.. ItIt isis alsoalsocalledcalled aa contractcontract underunder sealseal..ConsiderationConsideration isis notnot necessarynecessary inin aaspecialtyspecialty contractcontract..


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Simple ContractSimple Contract

AA simplesimple contractcontract ss oneone whichwhich isis notnot underunder sealseal..AllAll contractscontracts whichwhich areare notnot underunder sealseal areare simplesimplecontractscontracts.. AllAll simplesimple contractscontracts requirerequireconsiderationconsideration.. TheyThey maymay bebe mademade byby writtenwritten oror

spokenspoken wordswords.. ContractsContracts ofof RecordRecord andand SpecialtySpecialtyContractsContracts areare alsoalso knownknown asas FormalFormal ContractsContracts..TheThe classificationclassification ofof contractscontracts intointo ContractsContracts ofofRecord,Record, SpecialtySpecialty andand simplesimple isis underunder thethe EnglishEnglishLawLaw.. IndianIndian LawLaw doesdoes notnot recognizerecognize contractscontracts

withoutwithout considerationconsideration.. AllAll contractscontracts mustmust havehaveconsiderationconsideration inin orderorder thethe validvalid subjectsubject totoexceptionsexceptions underunder sectionsection 2525 ofof thethe ActAct..


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Statutory ContractStatutory Contract

WhenWhen allall oror somesome ofof thethe termsterms andandconditionsconditions ofof contractcontract areare statutorystatutorythenthen thethe entireentire contract,contract, oror thatthatextentextent asas thethe casecase maymay be,be, wouldwould beberegardedregarded asas statutorystatutory contractcontract..


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Who is Competent to ContractWho is Competent to Contract

EveryEvery personperson isis competentcompetent totocontractcontract

whowho isis ofof thethe ageage ofof majoritymajority accordingaccordingtoto thethe lawlaw toto whichwhich hehe isis subject,subject, andand

whowho isis ofof soundsound mind,mind, andand

isis notnot disqualifieddisqualified fromfrom contractingcontracting byby

anyany lawlaw toto whichwhich hehe isis subjectsubject..


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Age of MajorityAge of Majority

everyevery personperson domicileddomiciled inin PakistanPakistanshallshall isis deemeddeemed toto havehave attainedattained hishismajoritymajority whenwhen hehe hashas completedcompleted hishisageage ofof eighteeneighteen years,years, andand notnotbeforebefore..


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Of Sound Mind

AA personperson isis saidsaid toto bebe ofof soundsound mindmind forforthethe purposepurpose ofof makingmaking aa contractcontract if,if, atat thethetimetime whenwhen hehe makesmakes it,it, hehe isis capablecapable ofof

understandingunderstanding itit andand ofof formingforming aa rationalrationaljudgment judgment asas toto itsits effecteffect uponupon hishisinterestsinterests..

AA personperson whowho isis usuallyusually ofof unsoundunsound mind,mind,butbut occasionallyoccasionally ofof soundsound mind,mind, maymay makemakeaa contractcontract whenwhen hehe isis ofof soundsound mindmind..

AA personperson whowho isis usuallyusually ofof soundsound mind,mind,butbut occasionallyoccasionally ofof unsoundunsound mind,mind, maymaynotnot makemake aa contractcontract whenwhen hehe isis ofof

unsoundunsound mindmind


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Consent

TwoTwo oror moremore personspersons areare saidsaid toto consentconsentwhenwhen theythey agreeagree uponupon thethe samesame thingthing ininthethe samesame sensesense..

ConsentConsent isis saidsaid toto bebe freefree whenwhen itit isis notnotcausedcaused byby::((11)) coercion,coercion,((22)) undueundue influence,influence,

((33)) fraud,fraud,((44)) misrepresentation,misrepresentation,((55)) mistakemistake


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Performance and ContractsPerformance and Contractsof Contractsof Contracts


46/77

Six Rules ofTime, Place, & Manner ofSix Rules ofTime, Place, & Manner of

Performance of ContractPerformance of Contract

11.. Where,Where, byby thethe contract,contract, aa promisorpromisor isis toto performperformhishis promispromis withourwithour applicationapplication byby thethe promiseepromiseeandand nono timetime forfor performanceperformance isis specifiedspecified thetheengagementengagement mustmust bebe performedperformed withinwithin aareasonablereasonable timetime.. WhatWhat isis aa reasonalbereasonalbe timetime isis aaquestionquestion ofof everyevery particularparticular case,case, thethe usageusage ofofthethe businessbusiness andand thethe factsfacts whichwhich thethe partiesparties hadhadinin viewview atat thethe timetime whenwhen thethe contractcontract waswasenteredentered intointo..

-- But,But, whenwhen aa dayday isis fixedfixed forfor performanceperformance byby thethe

contract,contract, thethe rulerule isis thatthat thethe promisorpromisor hashas totoperformperform itit atat anyany timetime duringduring thethe usuallusuallbusinessbusiness hourshours onon thethe dayday fixedfixed andand atat thethe placeplaceatat whichwhich thethe promisepromise ought,ought, toto bebe performedperformed..


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22.. WhenWhen aa promisepromise isis toto bebe performedperformed onon aacertaincertain dayday andand onlyonly onon thethe appilicationappilication bybythethe promisee,promisee, itit isis thethe dutyduty ofof thethepromiseepromisee toto demanddemand performanceperformance atat aa

properproper placeplace andand timetime.. WhatWhat isis aa properproperplaceplace andand timetime isis inin eacheeache particualrparticualr casecaseaa questionquestion ofof factfact.. WhenWhen aa promisepromise isis totobebe performedperformed forfor thethe performanceperformance itit isis thethedutyduty ofof thethe promisorpromisor toto applyapply toto thethe

promiseepromisee toto fixfix aa reasonablereasonable placeplace forforperformanceperformance andand toto performperform itit atat thethe placeplacesoso fixedfixed..

Six Rules ofTime, Place, & MannerSix Rules ofTime, Place, & Manner

ofPerformance of ContractofPerformance of Contract


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33.. TheThe performanceperformance ofof anyany promisepromise maymay bebemademade inin anyany mannermanner oror atat anyany timetime whichwhichthethe promiseepromisee prescribesprescribes oror santionssantions..

IllustrationIllustration:: BB owesowes RsRs.. 20002000//--.. AA desiresdesires BBtoto paypay thethe amountamount toto AsAs accountaccount withwith C,C, aabankerbanker.. B,B, whowho alsoalso banksbanks withwith C,C, ordersordersthethe amountamount toto bebe transferredtransferred fromfrom hishisaccountaccount toto AsAs credit,credit, andand thisthis isis donedone bybycc.. Afterwards,Afterwards, andand beforebefore AA knowsknows ofof thethetransfer,transfer, CC failsfails.. ThereThere hashas beenbeen aa goodgoodpaymentpayment byby BB..




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44.. WhenWhen aa partyparty toto aa contractcontract promisespromises totododo aa certaincertain thingthing atat oror beforebefore aa specifiedspecifiedtimetime oror times,times, andand failsfails toto dodo anyany suchsuch

thingthing atat oror beforebefore thethe specifiedspecified time,time, thethecontractcontract (or(or soso muchmuch ofof itit asas hashas notnot beenbeenperformed)performed) becomesbecomes voidablevoidable atat thetheoptionoption ofof thethe promisee,promisee, ifif thethe intentionintention ofof

thethe partiesparties waswas thatthat timetime shouldshould bebe ofof thetheessenceessence ofof thethe contraftcontraft..




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Six Rules ofTime, Place, & Manner ofSix Rules ofTime, Place, & Manner of

Performance of ContractPerformance of Contract

55.. IfIf itit waswas notnot thethe intentionintention ofof thethepartiesparties thatthat timetime shouldshould bebe ofof thetheessenseessense ofof thethe contract,contract, thethe contractcontractdoesdoes notnot becomebecome voidlevoidle byby thethefailurefailure toto dodo suchsuch thingthing asas oror beforebeforethethe specifiedspecified time,time, butbut thethe promiseepromisee

isis entitledentitled toto compensationcompensation fromfrom thethepromisorpromisor forfor anyany anyany lossloss occasionedoccasionedtoto himhim byby suchsuch failurefailure..


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66.. If,If, inin casecase ofof contractcontract voidablevoidable onon accountaccountofof thethe promisorspromisors failurefailure toto performperform hishispromisepromise atat thethe timetime agreed,agreed, thethe promiseepromiseeacceptsaccepts performanceperformance ofof suchsuch promisepromise atatanyany timetime otherother thanthan thatthat agreed,agreed, thethepromiseepromisee cannotcannot claimclaim compensationcompensation forforanyany lossloss occassionedoccassioned byby nonnon--performanceperformanceofof thethe promisepromise atat thethe timetime agreedagreed unlessunless

atat thethe timetime ofof suchsuch acceptance,acceptance, hehe givesgivesnoticenotice toto thethe promiserpromiser ofof hishis intentionintention totododo soso..




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Obligation of parties to contractsObligation of parties to contracts[S.37][S.37]

TheThe partiesparties toto aa contractcontract mustmust eithereitherperformperform oror offeroffer toto perform,perform, theirtheirrespectiverespective promise,promise, unlessunless suchsuchperformanceperformance isis dispenseddispensed withwith oror excusedexcusedunderunder thethe provisionsprovisions ofof thisthis Act,Act, oror ofof anyanyotherother lawlaw..

-- PromisesPromises bindbind thethe representativesrepresentatives ofof thethepromisorspromisors inin casecase ofof thethe deathdeath ofof suchsuchpromisespromises beforebefore performancesperformances unlessunless aacontrarycontrary intentionintention appearsappears fromfrom thethecontractcontract..


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IllustrationsIllustrations


(a)(a) AA promisespromises toto deliverdeliver goodsgoods toto B,B, onon aa certaincertaindayday onon paymentpayment ofof RsRs.. 11,,000000.. AA diesdies beforebefore thatthatdayday.. A'sA's representativesrepresentatives areare boundbound toto deliverdeliver thethe

goodsgoods toto B,B, andand BB isis boundbound toto pitypity thethe RsRs.. 11,,000000toto A'sA's representativesrepresentatives..

(b)(b) AA promisespromises toto paintpaint aa picturepicture forfor BB byby aacertaincertain day,day, atat aa certaincertain priceprice.. AA diesdies beforebefore thethe

dayday.. TheThe contractcontract cannotcannot bebe enforcedenforced eithereither bybyA'sA's representativesrepresentatives oror byby BB..


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Effect of refusal of party to perform promiseEffect of refusal of party to perform promise

whollywholly

SS..3939:: WhenWhen aa partyparty toto aa contractcontract hashasrefusedrefused toto perform,perform, oror disableddisabledhimselfhimself fromfrom performing,performing, hishis promisepromiseinin itsits entirety,entirety, thethe promiseepromisee maymay putputanan endend toto thethe contract,contract, unlessunless hehe hashassignifiedsignified;; byby wordswords onon conduct,conduct, hishis

acquiescenceacquiescence inin itsits continuancecontinuance..


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(a)(a) A,A, aa singer,singer,--entersenters intointo aa contractcontract withwith B,B, thethemanagermanager ofof aa theatre,theatre, toto singsing atat hishis theatretheatre twotwonightsnights inin everyevery weekweek duringduring thethe nextnext twotwo months,months,andand BB agreesagrees toto paypay herher 100100 rupeesrupees forfor eacheach night'snight'sperformanceperformance:: OnOn thethe sixthsixth nightnight AA willfullywillfully absentsabsentsherselfherself fromfrom thethe theatertheater.. BB isis atat libertyliberty toto putput anan

endend toto thethe contractcontract..(b)(b) A,A, aa singer,singer, entersenters intointo aa contractcontract withwith B,B, thethemanagermanager ofof aa theatre,theatre, toto signsign atat hishis theatretheatre twotwonightsnights inin everyevery weekweek duringduring thethe nextnext twotwo months,months,andand BB agreesagrees toto paypay herher atat thethe raterate ofof 100100 rupeesrupees

forfor eacheach nightnight.. OnOn thethe sixthsixth nightnight AA willfullywillfully absentsabsentsherselfherself.. WithWith thethe assentassent ofof B,B, AA signssigns onon thetheseventhseventh nightnight.. BB hashas signifiedsignified hishis acquiescenceacquiescence ininthethe continuancecontinuance ofof thethe contract,contract, andand cannotcannot nownowputput anan end,end, toto it,it, butbut isis entitledentitled toto compensationcompensation forforthethe damagedamage sustainedsustained byby himhim throughthrough A'sA's failurefailure toto

singsing onon thethe sixthsixth nightnight..


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Person by whom promise is to be performedPerson by whom promise is to be performed

[S.40][S.40]

IfIf itit appearsappears fromfrom thethe naturenature ofof thethe casecase thatthat itit waswas thetheintentionintention ofof thethe partiesparties toto anyany contractcontract thatthat anyany promisepromisecontainedcontained inin itit shouldshould bebe performedperformed byby thethe promisorpromisorhimself,himself, suchsuch promisepromise mustmust bebe performedperformed byby thethe promisorpromisor..InIn otherother casescases thethe promisorpromisor oror hishis representativesrepresentatives maymayemployemploy aa competentcompetent personperson toto performperform itit..

IllustrationsIllustrations (a)(a) AA promisespromises toto paypay BB aa sumsum ofof moneymoney.. A,A, maymay performperform

thisthis promisepromise eithereither byby personallypersonally payingpaying thethe moneymoney toto B,B, ororbyby causingcausing itit toto bebe paidpaid toto BB byby anotheranother;; and,and, ifif A,A, diesdiesbeforebefore thethe timetime appointedappointed forfor payment,payment, hishis representativesrepresentatives

mustmust performperform thethe promise,promise, oror employemploy somesome properproper personpersontoto dodo soso.. (b)(b) A,A, promisespromises toto paintpaint aa picturepicture forfor B,B, AA mustmust performperform

thisthis promisepromise personallypersonally..

Eff t ti f fEff t ti f f


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Effect or accepting performance fromEffect or accepting performance from

third personthird person

SS..4141:: WhenWhen aa promiseepromisee acceptsacceptsperformanceperformance ofof thethe promisepromise fromfrom aa thirdthirdperson,person, hehe cannotcannot afterwardsafterwards enforceenforce itit

againstagainst thethe promisorpromisor..

ThereThere isis nono occasionoccasion toto discussdiscuss thethe pointpointasas thethe wordswords ofof thethe ActAct leaveleave nono roomroom forfor

doubtdoubt.. ItIt needneed hardlyhardly bebe addedadded thatthat thisthissectionsection appliesapplies onlyonly whenwhen aa contractcontract hashasinin factfact beenbeen performedperformed byby aa thirdthird personperson..


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Devolution of joint liabilitiesDevolution of joint liabilities

SS.. 4242:: WhenWhen twotwo oror moremore personspersons havehavemademade aa joint joint promise,promise, then,then, unlessunless aacontrarycontrary intentionintention appearsappears byby thethe

contract,contract, allall suchsuch persons,persons, duringduring theirtheirjointjoint lives,lives, andand afterafter thethe deathdeath ofof anyany ofofthem,them, hishis representativerepresentative jointly jointly withwith thethesurvivorsurvivor oror survivors,survivors, andand afterafter thethe deathdeath

ofof thethe lastlast survivor,survivor, thethe representativesrepresentatives ofofallall jointly,jointly, mustmust fulfillfulfill thethe promisepromise


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Any one of joint promisors may beAny one of joint promisors may be

compelled to performcompelled to perform

SS.. 4343:: WhenWhen twotwo oror moremore personspersonsmakemake aa jointjoint promise,promise, thethe promiseepromiseemay,may, inin thethe absenceabsence ofof expressexpress

agreementagreement toto thethe contrary,contrary, compelcompelanyany [one[one oror more]more] ofof suchsuch jointjointpromisorspromisors toto performperform thethe wholewhole ofof

thethe promisepromise..


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Performance and Contracts of ContractsPerformance and Contracts of Contracts

NoNo periodperiod forfor performanceperformance ofof contractcontract fixedfixed--ContractContract mustmust bebe performedperformed withinwithinreasonablereasonable timetime..TheThe agreementagreement betweenbetween thethe partiesparties diddid notnotspecifyspecify thethe datedate onon oror thethe periodperiod withinwithin whichwhich thethecontractcontract waswas toto bebe perfumed,perfumed, itit waswas requiredrequired totobebe performedperformed withinwithin aa reasonablereasonable timetime.. WhatWhat isis"reasonable""reasonable" timetime mustmust necessarilynecessarily dependdepend uponuponthethe factsfacts andand circumstancescircumstances ofof eacheach case,case,includingincluding inin thethe casecase ofof aa commercialcommercial contractcontract forforthethe salesale ofof goods,goods, thethe usageusage ofof thethe trade,trade, thethe

naturenature ofof goods,goods, thethe placeplace andand modemode ofof deliverydeliveryandand whetherwhether thethe goodsgoods areare alreadyalready availableavailable withwiththethe sellerseller andand inin aa deliverabledeliverable stagestage oror havehave toto bebemanufacturedmanufactured oror acquiredacquired byby thethe sellerseller oror putput inindeliverabledeliverable statestate

Wh N ti fi d f fWh N ti fi d f f


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When No time fixed for performanceWhen No time fixed for performance

of contractof contract

NoNo timetime fixedfixed forfor performanceperformance ofofcontractcontract--OneOne partyparty maymay fixfix timetime bybynoticenotice providedprovided itit isis reasonablereasonable..

InIn thethe casecase ofof mercantilemercantile andand commercialcommercialcontractscontracts forfor salesale ofof specificspecific readyready goods,goods,wherewhere nono timetime hashas beenbeen specificallyspecifically fixed,fixed,itit isis permissiblepermissible forfor oneone ofof thethe parties,parties, byby

notice,notice, toto fixfix thethe timetime forfor thethe performanceperformanceofof thethe contractcontract providedprovided suchsuch timetime isisreasonablereasonable..


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Breach of ContractBreach of Contract

SS.. 7373.. CompensationCompensation forfor lossloss oror damagedamagecausedcaused byby breachbreach ofof contractcontract::WhenWhen aa contractcontract hashas beenbeen broken,broken, thethe partyparty whowhosufferssuffers byby suchsuch breachbreach isis entitledentitled toto receive,receive, fromfromthethe partyparty whowho hashas brokenbroken thethe contract,contract,compensationcompensation forfor anyany lossloss oror damagedamage causedcaused totohimhim thereby,thereby, whichwhich naturallynaturally arosearose inin thethe usualusualcoursecourse ofof thingsthings fromfrom suchsuch breach,breach, oror whichwhich thethepartiesparties knew,knew, whenwhen theythey mademade thethe contract,contract, totobebe likelylikely toto resultresult fromfrom thethe breachbreach ofof itit..

SuchSuch compensationcompensation isis notnot toto bebe givengiven forfor anyanyremoteremote andand indirectindirect lossloss oror damagedamage sustainedsustained bybyreasonreason ofof thethe breachbreach..


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Compensation for failure to discharge obligationCompensation for failure to discharge obligation

CompensationCompensation forfor failurefailure toto dischargedischargeobligationobligation resemblingresembling thosethose createdcreated bybycontractcontract..

WhenWhen anan obligationobligation resemblingresembling thosethose createdcreated bybycontractcontract hashas beenbeen incurredincurred andand hashas notnot beenbeendischarged,discharged, anyany personperson injuredinjured byby thethe failurefailure totodischargedischarge isis entitledentitled toto receivereceive thethe samesamecompensationcompensation fromfrom thethe partyparty inin defaultdefault asas ifif suchsuchpersonperson hadhad contractedcontracted toto dischargedischarge itit andand hadhadbrokenbroken hishis contractcontract..

ExplanationExplanation..------InIn estimatingestimating thethe lossloss oror damagedamagearisingarising fromfrom aa breachbreach ofof contract,contract, thethe meansmeanswhichwhich existedexisted ofof remedyingremedying thethe inconvenienceinconveniencecausedcaused byby thethe nonnon--performanceperformance ofof tiletile contractcontractmustmust bebe takentaken intointo accountaccount..


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(a)(a) AA contractscontracts toto sellsell andand deliverdeliver 5050maundsmaunds ofof saltpetresaltpetre toto BB atat aa certaincertainprice,price, toto bebe paidpaid onon deliverydelivery.. A,A, breaksbreaks hishis

promisepromise BB isis entitledentitled toto receivereceive fromfrom AA bybywayway ofof compensation,compensation, thethe sum,sum, ifif any,any, bybywhichwhich thethe contractcontract priceprice fallsfalls shortshort ofof thethepriceprice forfor whichwhich BB mightmight havehave obtainedobtained 5050

maundsmaunds ofof saltpetresaltpetre likelike qualityquality atat thethetimetime whenwhen thethe saltpetresaltpetre oughtought toto havehavebeenbeen delivereddelivered..


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Late deliveryLate delivery

LateLate deliverydelivery..------ThereThere isis notnot anyany generalgeneral rulerule thatthatdamagesdamages cannotcannot bebe recoveredrecovered forfor lossloss ofof marketmarket onon aavoyagevoyage byby seasea:: whereverwherever thethe circumstancescircumstances admitadmit ofofcalculationscalculations asas toto thethe timetime ofof arrivalarrival andand thethe probableprobablefluctuationsfluctuations ofof thethe marketmarket beingbeing mademade withwith thethe samesamedegreedegree ofof reasonablereasonable certaintycertainty inin thethe casecase ofof aa seasea asas ofof aa

landland transit,transit, therethere cancan bebe nono reasonreason whywhy damagesdamages forfor thethedeliverydelivery shouldshould notnot bebe calculatedcalculated accordingaccording toto thethe samesameprinciplesprinciples inin bothboth casescases..

AA ContractsContracts toto repairrepair B'sB's househouse inin aa certaincertain manner,manner, andandreceivesreceives paymentpayment inin advanceadvance.. AA repairsrepairs thethe house,house, butbut notnotaccordingaccording toto contractcontract.. BB isis entitledentitled toto recoverrecover fromfrom AA thethe

costcost ofof makingmaking thethe repairsrepairs conformconform toto thethe contractcontract..


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Delivery by installmentsDelivery by installments

DeliveryDelivery byby installmentsinstallments------AnticipatoryAnticipatorybreachbreach..------IfIf thethe ironiron waswas toto bebe delivereddelivered bybyinstallmentsinstallments atat certaincertain dates,dates, ee..gg..,, atat thethe endend ofofthethe threethree monthsmonths ofof September,September, October,October, andandNovember,November, thethe measuremeasure ofof damagesdamages isis thethe sumsum

ofof thethe differencesdifferences betweenbetween thethe contractcontract andand thethemarketmarket priceprice ofof thethe severalseveral installmentsinstallments onon thetherespectiverespective finalfinal daysdays forfor performanceperformance;; andand thethesamesame rulerule isis appliedapplied wherewhere thethe seller,seller, beforebefore thetheexpirationexpiration ofof thethe wholewhole timetime forfor performance,performance, hashasrefusedrefused toto completecomplete thethe contract,contract, andand thethe buyerbuyerhashas treatedtreated thethe refusalrefusal asas anan immediateimmediate breachbreachunlessunless thethe sellerseller cancan showshow thatthat thethe buyerbuyer couldcouldhavehave obtainedobtained aa newnew contractcontract onon betterbetter termsterms


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WarrantyWarranty

WarrantyWarranty-- TheThe CourtCourt ofof AppealAppeal hashas emphasizedemphasized thatthat inin aacasecase ofof breachbreach ofof warrantywarranty thethe plaintiffplaintiff cannotcannot combinecombine aaclaimclaim forfor capitalcapital lossloss withwith aa claimclaim forfor lossloss ofof profitprofit.. AAhypotheticalhypothetical casecase elucidateselucidates thethe positionposition.. IfIf AA sellssells BB aaheiferheifer forfor poundpound 100100//--,, andand warrantswarrants itit aa fourfour gallongallon aa daydaycowcow forfor thethe nextnext fivefive lactations,lactations, whereaswhereas inin factfact itit isis aa oneone

gallongallon aa dayday cowcow worthworth poundpound 1010//--,, BB cancan claimclaim asasdamagesdamages eithereither poundpound 9090//--,, oror thethe lossloss ofof threethree gallonsgallons aaday,day, butbut hehe cannotcannot combinecombine thethe twotwo claimsclaims..

AA contractscontracts toto paypay aa sumsum ofof moneymoney toto BB onon aa dayday specifiedspecified..AA doesdoes notnot paypay thethe moneymoney onon thatthat dayday .. B,B, inin consequenceconsequenceofof notnot receivingreceiving thethe moneymoney onon thatthat day,day, isis unableunable toto paypay hishis

debts,debts, andand isis totallytotally ruinedruined.. AA isis notnot liableliable toto makemake goodgood totoBB anythinganything exceptexcept thethe principalprincipal sumsum hehe contractedcontracted toto pay,pay,togethertogether withwith interestinterest upup toto thethe dayday ofof paymentpayment..


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Where no time fixed for deliveryWhere no time fixed for delivery

WhereWhere nono timetime fixedfixed forfor deliverydelivery..------IfIf inin thethecasecase putput aboveabove AA gavegave noticenotice toto BB thatthat hehe wouldwouldnotnot taketake deliverydelivery beyondbeyond aa certaincertain date,date, andanddeliverydelivery isis notnot mademade withinwithin thatthat time,time, thethemeasuremeasure ofof damagesdamages wouldwould bebe thethe differencedifference

betweenbetween thethe contractcontract priceprice andand thethe marketmarket pricepriceonon thatthat datedate..

AA contractscontracts toto buybuy B'sB's shipship forfor 6060,,000000 rupees,rupees, butbutbreaksbreaks hishis promisepromise.. A,A, mustmust paypay toto B,B, byby wayway ofof

compensation,compensation, thethe excess,excess, ifif any,any, ofof thethe contractcontractpriceprice overover thethe priceprice whichwhich BB cancan obtainobtain forfor thetheshipship atat thethe timetime ofof thethe breachbreach ofof promisepromise..


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Delay in payment of moneyDelay in payment of money

DelayDelay inin paymentpayment ofof moneymoney-- SettledSettled law,law, butbuttreatedtreated asas anomalousanomalous.. IllustrationIllustration (n)(n) toto SS.. 7373 "does"doesnotnot conferconfer uponupon aa creditorcreditor aa rightright toto recoverrecover interestsinterestsuponupon aa debtdebt whichwhich isis duedue toto him,him, whenwhen hehe isis notnotentitledentitled toto suchsuch interestinterest underunder anyany provisionprovision ofof thethe

lawlaw......AsAs observedobserved SS.. 7373 isis merelymerely declaratorydeclaratory ofof thetheCommonCommon LawLaw asas toto damagesdamages.. "The"The lawlaw doesdoes notnotregardregard collateralcollateral oror consequentialconsequential damagesdamages arisingarisingfromfrom delaydelay inin thethe receiptreceipt ofof moneymoney..

AA givesgives anan ijaraijara pattapatta ofof certaincertain properlyproperly toto BB.. ItIt isis aaconditioncondition ofof thethe pattapatta thatthat BB shouldshould paypay toto thethe

superiorsuperior landlordlandlord thethe rentrent whichwhich AA waswas boundbound toto paypaytoto himhim.. BB failsfails toto paypay thethe rentrent.. TheThe superiorsuperior landlordlandlordthereuponthereupon suessues AA forfor thethe rent,rent, and,and, inin executionexecution ofofthethe decreedecree obtainedobtained byby himhim inin thethe suit,suit, thethe tenuretenure isissoldsold.. BB isis notnot liableliable toto AA forfor thethe lossloss ofof thethe property,property,forfor AA couldcould havehave paidpaid thethe rentrent onon defaultdefault byby B,B, andandsavedsaved thethe propertyproperty fromfrom salesale..


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Quantum of damagesQuantum of damages

BreachBreach ofof contractcontract--QuantumQuantum ofofdamages,damages, howhow calculatedcalculated

UnderUnder sectionsection 7373 thethe plaintiffsplaintiffs cancan getget

compensationcompensation forfor suchsuch lossloss oror damagedamage asaswaswas causedcaused toto themthem byby thethe commissioncommission ofofthethe allegedalleged breachbreach andand whichwhich naturallynaturallyarosearose inin thethe usualusual coursecourse ofof thingsthings ororwhichwhich thethe partiesparties knew,knew, whenwhen theythey mademade

thethe contract,contract, toto bebe likelylikely toto resultresult fromfrom thethebreachbreach.. ButBut theythey cannotcannot claimclaim remoteremote ororindirectindirect damagesdamages


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DamagesDamages

DamagesDamages forfor breachbreach ofof contractcontractOppositeOpposite partyparty mustmust proveprove hishisreadinessreadiness andand willingnesswillingness totoperformanceperformance allall thethe timetime.. TheThe factfact thatthatthethe appellantsappellants hadhad beenbeen guiltyguilty ofof breachbreach ofofcontractcontract wouldwould notnot absolveabsolve thetherespondentsrespondents toto establishestablish thatthat theythey werewerealwaysalways readyready andand--willingwilling toto performperform theirtheir

partpart ofof thethe contractcontract.. InIn law,law, unlessunless thisthisfactfact isis proved,proved, aa partyparty isis notnot entitledentitled totoclaimclaim anyany damagesdamages..


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Unlawful dismissal from serviceUnlawful dismissal from service

UnlawfulUnlawful dismissaldismissal fromfrom serviceservice------DismissedDismissedpersonperson mustmust dodo allall hehe cancan toto mitigatemitigatedamagesdamages.. QuantumQuantum ofof damagesdamages payablepayable..

InIn determiningdetermining reasonablereasonable compensationcompensation aa CourtCourt

ofof lawlaw shallshall havehave toto taketake intointo considerationconsideration thethemeansmeans availableavailable toto aa partyparty toto mitigatemitigate thethedamagesdamages.. ButBut thethe factfact thatthat aa partyparty failedfailed toto utiliseutilisesuchsuch opportunityopportunity wouldwould notnot necessarilynecessarily absolveabsolvethethe partyparty atat faultfault fromfrom hishis liabilityliability underunder thethe

contractcontract.. ItIt wouldwould bebe forfor considerationconsideration inin eacheachcasecase whetherwhether anyany suchsuch opportunityopportunity waswas notnotacceptedaccepted forfor goodgood andand reasonablereasonable groundsgrounds..


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Wrongful dismissal from serviceWrongful dismissal from service--damagesdamages

WrongfulWrongful dismissaldismissal fromfrom serviceservice------HowHow damagesdamages maymay bebe calculatedcalculated..------InIndisputesdisputes arisingarising betweenbetween mastermaster andandservantservant ordinarilyordinarily thethe measuremeasure ofof

damagesdamages wouldwould bebe determineddetermined accordingaccordingtoto thethe covenantscovenants inin thethe contractcontract.. ButBut thethepartyparty atat faultfault wouldwould bebe entitledentitled toto claimclaimthethe exclusionexclusion ofof anyany earningearning mademade byby thetheservantservant duringduring thethe periodperiod forfor whichwhich

damagesdamages areare claimedclaimed onon thethe possiblepossiblechancechance ofof obtainingobtaining aa suitablesuitableappointmentappointment elsewhereelsewhere..


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Remedies for breach of contractRemedies for breach of contract

RemediesRemedies forfor breachbreach ofof contractcontract

TheThe principalprincipal remediesremedies forfor breachbreach ofofcontractcontract areare::

(a)(a) damagesdamages;;

(b)(b) specificspecific performanceperformance ofof thethecontractcontract;; andand

(c)(c) injunctioninjunction..


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WhenWhen aa contractcontract hashas beenbeen broken,broken, thethe partyparty whowho sufferssuffers bybysuchsuch breachbreach isis entitledentitled toto receive,receive, fromfrom thethe partyparty whowho hashasbrokenbroken thethe contract,contract, compensationcompensation forfor anyany lossloss oror damagedamagecausedcaused toto himhim thereby,thereby, beingbeing lossloss oror damagesdamages whichwhichnaturallynaturally arosearose inin thethe usualusual coursecourse ofof thingsthings fromfrom suchsuchbreachbreach oror whichwhich thethe partiesparties knew,knew, whenwhen theythey mademade thethe

contract,contract, toto bebe likelylikely toto resultresult fromfrom thethe breachbreach ofof itit.. SuchSuch compensationcompensation isis notnot toto bebe givengiven forfor anyany remoteremote andand

indirectindirect lossloss ofof damagedamage sustainedsustained byby reasonreason ofof thethe breachbreach.. TheThe samesame principleprinciple appliesapplies forfor determiningdetermining damagesdamages forfor

breachbreach ofof anan obligationobligation arisingarising fromfrom quasiquasi--contractcontract.. InIn estimatingestimating thethe lossloss oror damagedamage arisingarising fromfrom aa breachbreach ofof

contract,contract, thethe meansmeans whichwhich existedexisted ofof remedyingremedying thetheinconvenienceinconvenience causedcaused byby thethe nonnon--performanceperformance ofof thethecontractcontract mustmust bebe takentaken intointo accountaccount.. ThisThis isis referredreferred to,to, asasthethe dutyduty toto mitigatemitigate..


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IllustrationIllustration

AA stipulationstipulation forfor increasedincreased interestinterestfromfrom thethe datedate ofof defaultdefault maymay beberegardedregarded asas aa stipulationstipulation byby "way"way ofofpenalty",penalty", ifif thethe amountamount isis excessiveexcessive..TheThe courtcourt isis empoweredempowered toto reducereduce itit

toto anan amountamount reasonablereasonable inin thethecircumstancescircumstances..


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SpecificSpecific performanceperformance andand injunctionsinjunctions

InIn certaincertain specialspecial casescases dealtdealt withwith inin thethe SpecificSpecificReliefRelief Act,Act, thethe courtcourt maymay directdirect againstagainst thethe partypartyinin defaultdefault "specific"specific performance"performance" ofof thethe contract,contract,

thatthat isis toto say,say, thethe partyparty maymay bebe directeddirected totoperformperform thethe veryvery obligationobligation whichwhich hehe hashasundertaken,undertaken, byby thethe contractcontract.. ThisThis reliefrelief isisawardedawarded onlyonly inin exceptionalexceptional casescases..

ThatThat ActAct alsoalso dealsdeals withwith permanentpermanent injunctionsinjunctions..

TemporaryTemporary injunctionsinjunctions areare governedgoverned byby thetheprovisionsprovisions ofof orderorder ofof thethe CodeCode ofof CivilCivil Procedure,Procedure,19081908..

Documents

Contract Act_1872 Modified