Indian Contracts Act Ppt 2

Capacity of stranger to consideration

A Stranger to consideration can maintain suit

Quasi Contracts

When the obligations arising from transaction are such that can not be said as contractual but are still recognized and enforced like contracts, such transactions are called quasi contracts

Quasi Contracts

Example of Quasi Contract

Mr A, a grocery store manager, suppliedgrocery items to Mr B by mistake. However, he had a contract to supply it to Mr C. Mr B receives the goods and consumes it, here even if there is no contract between A and B, B will have to pay the price of the goods consumed on the basis of “Quasi Contract between him and Mr A

Quasi Contracts

Cases which are treated as Quasi Contracts

Claims for necessities supplied to a person, incapable of contracting

The goods must be necessities

Only the property of the incapable person is liable to pay

Quasi Contracts

Cases which are treated as Quasi Contracts (contd..)

Reimbursement to a person paying money due by another, of which he is interested The person making payment should have a

commercial interest It should not be voluntary Payment must have been made to third party

Quasi Contracts


Obligation of a person enjoying benefits of a non-gratuitous act The thing must be done lawfully Intention must be non-gratuitous The other person must have enjoyed the

benefits

Quasi Contracts


Responsibility of a finder of goods Finder of goods must take care of it as

any person with ordinary prudence will do.

Quasi Contracts


Liability of a person to whom money is paid, or thing delivered by mistake or coercion

Quasi Contracts


That is it!!!!!!

Performance of Contract

Meaning:-Performance of contract means carrying out of obligations under it. The parties to the contract should either perform or offer to perform their respective promises unless such performance is dispensed by the provisions of any Indian Law


Offer to perform

It may happen that the promisor offers performance under contract at proper time, place, this is called “tender” or offer to perform. If a valid tender is made and is not

accepted by the promisee, the promisor will not be liable for non performance


Who must perform the promise

Promisor or legal representative of promisor

In case where intention of the contract is to have performance by the promisor himself, than only promisor should perform


Who must perform the promise

If the promisor dies before the performance, his legal representative should perform

In case where intention is to have performance by promisor only, then on his death, the contract comes to an end.


Performance of joint promises

Assignment of joint promises All promisors jointly have to perform In case of any promisor’s death, his legal

representative will have to perform In case of death of all promisors, all

legal representative will have to perform



Liability of Joint promisors The promisee can compel anyone or

more promisor to perform the whole contract



Right to contribution amongst the promisors If the promisee has compelled any one

promisor or more promisor to perform the whole contract, they can recover the appropriate contribution from the remaining promisors


Contracts need not be performed

The parties may mutually agree to substitute the original contract by a new one or rescind it or alter it

The promisee may dispense with or remit, wholly or in part the performance made to him

Voidable contacts The promisee neglects or refuses to afford

the promisor reasonable facilities to perform


Rules regarding time, place and manner of performance

Where time is specified The promisor must perform it on the day

fixed during the usual business hours

Where time is not specified The promisor must perform in

reasonable timePerformance of Contract

Appropriation of payments Appropriation by debtor (s 59)

Where either express or implied intimation is given by debtor, then it must be appropriated to that particular debt

Appropriation by creditor (s 60) Where the debtor has omitted to intimate and

there are no other circumstances indicating to which debt payment is made, creditor may appropriate it to his discretion


Appropriation of payments

Where neither party appropriates (s 61) Where neither party makes any

appropriation, the payment is to be applied in discharge of the debts in order of time. If the debts are of equal standing, the payments is applied proportionately.


Discharge of Contracts

Performance Tender Mutual Consent Subsequent impossibility Operation of Law Breach


Discharge via performance or tender

Where both the parties have performed their obligations, the contract is discharged

Where the promisor has offered for performance, but promisee has neglected it, the promisor can get discharge from his obligations


Discharge via mutual consent

Novation Substitution of a new contract for the

original one

Recission Cancellation of all or some of the terms

of contract

Alteration Changing of some or all terms of

contract

Discharge via mutual consent Remission

It is the acceptance of lesser sum or fulfillment than what was contracted for.

Waiver Where a party waives his rights under the

contract, the other party is released from his obligations

Merger Where an inferior right of a person coincides

with a superior right of himself, the original contract is discharged

Discharge via subsequent impossibility

Destruction of the subject matter of contract

Death of the parties Subsequent illegality Declaration of war Non existence or non occurrence of a

state of thingsDischarge of Contracts

Exceptions to subsequent impossibility

Difficulty of performance Commercial impossibility Non performance or failure to

perform by a third party Strikes, lockouts and civil

disturbances Failure of one of the object


Discharge Via Operation of Law

All voidable contracts can be discharged with appropriate law application

Insolvency of any of the party to contract can discharge the contract

Unauthorized alteration of terms and conditions of a contract can discharge the contract


Discharge Via Breach

A breach of contract is one party’s failure without a legal excuse, to live up to any of its promises under a contract.

Breach of contract may arise through Anticipatory Breach Actual Breach

Discharge of Contracts (Breach)

Anticipatory Breach of Contract

The anticipatory breach of contract occurs when a party repudiates it before the time fixed for performance has arrived or when party by his own act disables himself from performing the contract


Consequences of anticipatory breach

The other party can rescind the contract as treat the contract as at an end, and at once sue for damages

He may elect not to rescind but to treat the contract operative and wait for the time of performance and then hold the other party liable for the consequences of non-performance


Case Study

A and B entered into a contract, where by A promised to load a cargo containing medicines into a ship on a particular date. Before that date, A refused to perform his duty. B did not rescind the contract but continued to demand A to perform his obligation. In a meanwhile, by operation of a law, export of such medicines were declared illegal and hence the contract was discharged


Case Study

Can B sue A for damages on the grounds of Anticipatory breach of contract or not?


The anticipatory breach of contract does not by itself discharges the contract. The contract is discharged only when the aggrieved party accepts the repudiation of the contract.

If the repudiation is not accepted and subsequently an event happens, rendering discharge, the party cannot claim for damages


Actual Breach of Contracts

Failure to perform as promised Failure to perform means that one party

must not have performed a material part of the contract. At the time when performance is due During the performance

Making it impossible for the other party to perform


Remedies for Breach of Contracts

The Indian Contracts Act provides basically two remedies for a breach

• Rescission of the contract• Damages for the loss sustained


Rescission of the contract

In such case the aggrieved party is freed from all his obligations under the contract.


Damages (s 75)

Compensation as general damages will be awarded only for those losses that directly result from the breach

Compensation for losses indirectly caused by breach may be paid as special damages if the party making the breach had knowledge that such losses will follow the breach


Damages (s75) contd..

The aggrieved party is required to take reasonable steps to keep his losses to minimum He cannot claim to be compensated by

the party in default for loss which is really not due to the breach but due to his own neglect to minimize loss after the breach


Types of damages

Ordinary These damages are those which naturally

arise in the usual course of things from such breach. The measure of ordinary damages is the difference between the contract price and the market price at the date of breach.

Ordinary damages cannot be claimed for any remote or indirect loss caused by the breach


Types of damages

Special damages When certain special or extraordinary

circumstances present and their existence is communicated to the promisor, the non-performance of the promise entitles the promisor to recover ordinary damages but also to the losses of these special circumstances


Types of damages

Vindictive or punitive damages These damages are not just awarded to

compensate the person who has suffered from breach but also to punish the person who has breached the contract.

Applicable to the severity of the shock to the sentiments of the promisee


Types of damages

Nominal damages These are awarded in cases of breach of

contract where there is only technical violation of the legal right but no substantial loss is caused.


Documents

Indian Contracts Act Ppt 2