Module 1 Part II Business Law

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<ul><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 1/35</p><p>Law of Contract</p><p>Prof. Gigimon V.S.</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 2/35</p><p>Acceptance</p><p> When the person to whom theproposal is made signifies his assent it</p><p>is an acceptance of the proposal.</p><p> Expressed Acceptance made inwords spoken or written</p><p> Implied Acceptance by conduct</p><p> Can be made only by the person towhom its been made</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 3/35</p><p>Rules Regarding</p><p>Valid AcceptanceAcceptance must be given by the person</p><p>to whom the offer is madeAcceptance must be absolute and</p><p>unqualifiedAcceptance must be in some usual and</p><p>reasonable manner, unless specified Communicated by the acceptorAcceptance must be given with a</p><p>reasonable time, before its lapseAcceptance must succeed the offer Rejected offer can be accepted only if</p><p>renewed</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 4/35</p><p>Communication of Offer,</p><p>Acceptance and Revocation When the parties are physically</p><p>present and negotiate in person,</p><p>agreement comes into existence</p><p> Sections 4 and 5 of the Contract Actdeals with rules regarding acceptance</p><p>of offer through post and other</p><p>communication modes</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 5/35</p><p>Rules of Communication</p><p> Communication of Offer complete when</p><p>its reaches the offeree</p><p> Communication of acceptance</p><p>As against the proposer, when it is put in</p><p>course of transmission to him, so as to be out</p><p>of the power of the acceptor to withdraw the</p><p>sameAs against the acceptor when it comes to the</p><p>knowledge of the proposer</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 6/35</p><p>Rules of Communication</p><p>A proposes by letter to the sell the house to Bfor 10 lakh. B accepts As proposal sent byPost. The communication of the acceptance</p><p>is complete a against A, when the letter isposted, as against B when the letter isreceived by A.</p><p> Communication of Revocation</p><p> As against the person who makes it, when it is putinto a course of transmission</p><p> As against the person to whom it is made, when itcomes to his knowledge</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 7/35</p><p>CONSIDERATION</p><p> Consideration is the price for which the promise ofother is brought and the promise thus given for valueis enforceable A agrees to sell his house to B for Rs.1 lakh. Here Bs</p><p>promise to pay the sum of Rs.1 Lakh is the consideration</p><p>for As promise to sell the house, and As promise to sell thehouse is the consideration for Bs promise to pay the sumof Rs.1 Lakh</p><p> Sec 2 (d) Indian Contract Act When at the desire of the promisor</p><p>The promisee or any other person Has done or abstained from doing or does or abstains from</p><p>doing, or promises to do or abstain from doing</p><p> Such act or abstinence or promise is called a considerationfor the promise</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 8/35</p><p>Essentials of a</p><p>Valid Consideration Consideration should move at the desire of the Promisor</p><p> A sees B drowning and saves his life. A cannot demand paymentfor his services as it is a voluntary act on his part and B neverasked his to do so</p><p> Consideration must move from the promisee or any other</p><p>person X, Y and Z enter into an agreement under which X pays Rs.1</p><p>Crore to Y and Y agreed to build a House for Z. Here Z is a partyto the contract but stranger to consideration and can enforce thecontract.</p><p> Consideration may be Past, Present or FuturePast Consideration - consideration for the promise is given before</p><p>Present Consideration - Consideration and Promise isSimultaneous</p><p>Future Consideration - Future or Executory Consideration</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 9/35</p><p>Essentials of a</p><p>Valid Consideration Consideration need not be adequate</p><p> Consideration must be real</p><p> Consideration must be Lawful</p><p> Consideration must be something</p><p>which the promisor is not already</p><p>bound to do</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 10/35</p><p>Exception to the Rule</p><p>No Consideration No Contract Agreement made on account of natural love and</p><p>affection A, for natural love and affection, promises to give his</p><p>son B Rs.1000. A puts his promise to B into writingand registers it. This is Contract</p><p> Agreement to compensate for past voluntaryservice A rescued B from drowning in the river, and B,</p><p>appreciating the service that had been rendered,promised to pay Rs.1000 to A. There is a contractbetween A and B.</p><p> Agreement to pay a time-barred debt.</p><p> Completed gift</p><p> Contract of Agency</p><p> Remission by promise, of performance of the</p><p>promise </p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 11/35</p><p>Capacity of Parties</p><p> Competent Persons to contract. (Sec. 10)</p><p> Every person is competent to contract who</p><p>is of the age of majority according t the</p><p>law to which he is subject, and who is of</p><p>sound mind, and is not disqualified form</p><p>contracting by any law to which he is</p><p>subject.</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 12/35</p><p>Capacity of Parties Minor Sec 3. of Indian Majority Act 1875 A person</p><p>under 18 years of age. Absolutely - Void contracts because their mental faculties</p><p>are not mature</p><p> Beneficial agreements valid</p><p> No ratification at the age of majority</p><p>The rule of estoppel does not apply for minor Specific Performance</p><p> Minor Partner</p><p> Minor agent</p><p> Minor and insolvency</p><p>Contract by minor and adult jointly Surety for a minor</p><p> Position od minors parents</p><p> Minor shareholders</p><p> Minors liability in tort</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 13/35</p><p>Capacity of Parties</p><p> Person of Unsound mind</p><p> Sec.12 A person is said to be of sound</p><p>mind for the purpose of making a contract,</p><p>if at the time when he makes it, he is</p><p>capable of understanding it and of forming</p><p>a rational judgement as to its effect upon</p><p>its interests.</p><p>Absolutely void and inoperative againsthim.</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 14/35</p><p>Capacity of Parties</p><p>Disqualified personsAlien Enemies</p><p> Foreign Sovereign and Ambassadors</p><p> Convict</p><p> Insolvent</p><p> Married Women with regard to</p><p>husbands property</p><p> Joint Stock Company and corporation</p><p>incorporated under a specific Act</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 15/35</p><p>Free Consent</p><p> Sec 13 Two or more persons are saidto consent when they agree upon thesame thing in the same sense.</p><p>Absence of Consent void or voidable</p><p> Consent to be free and caused by Coercion threatening to commit voidable</p><p>contract</p><p>Undue influence (a) one party in a positionto dominate the will of the other (b) Uses theposition to obtain an unfair advantage overthe other voidable contract</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 16/35</p><p>Free Consent</p><p> Misrepresentation wronglyrepresenting of fact by one party to theother either before or at the time of thecontract with the intention to induce the</p><p>other to enter into the contract voidablecontract Fraud intentionally deceive the other</p><p>person voidable contract or restitution</p><p>Mistake erroneous belief concerningsomething Mistake of law not an excuse</p><p> Mistake of fact bilateral mistake &amp; unilateralmistake</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 17/35</p><p>Legality of Object &amp;</p><p>Consideration Object and Consideration of agreement</p><p>must be lawful Sec. 23 kinds of consideration and</p><p>objects are lawful</p><p> Forbidden by Law Defeat the provisions of Law Fraudulent Implies or involves injury to the person or</p><p>property Immoral Opposed to Public Policy</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 18/35</p><p>Void Agreement Sec. 2. (g) An agreement not enforceable by</p><p>law is void. Minor</p><p> Unsound person</p><p> Unlawful Consideration</p><p> Unlawful object</p><p> With consideration</p><p> Impossible events or Acts</p><p> Restraint of marriage</p><p> Restraint of Trade</p><p>Restraint of Legal Proceedings Uncertain Meaning</p><p> Wager Agreement</p><p> Impossible Events</p><p> Impossible Acts</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 19/35</p><p>Performance of Contract</p><p>A person cannot acquire rights undera contract to which he is not a party</p><p> Promisee can demand the</p><p>performance of Contract ExceptionLegal heirs</p><p> Competent person to perform a</p><p>contract Promisor</p><p>Agent of Promisor</p><p>Legal Representatives </p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 20/35</p><p>Quasi Contracts</p><p> Obligations resembling those created by acontract are imposed by law even though theparties have not entered into contract</p><p> Claims for necessaries supplied to a personincapable of contracting or on his account.</p><p> Reimbursement of person paying money dueby another, in payment of which he isinterested</p><p> Obligation of person enjoying benefit of non-</p><p>gratuitous act. Responsibility of finder of goods</p><p> Liability of person to whom money is paid, orthing delivered by mistake</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 21/35</p><p>Breach of Contract &amp;</p><p>Remedies Available Breach of Contract is another mode of</p><p>discharge</p><p> When one party fails to perform thecontract</p><p>Anticipatory before the time fixed forperformance Expressly by words spoken or written</p><p>Impliedly by conduct of parties Effects either sue for damages or make the</p><p>party responsible for consequences of nonperformance of contract</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 22/35</p><p>Breach of Contract &amp;</p><p>Remedies Available Actual Breach When one party fails to perform thecontract on the actual date of the performance of the</p><p>contract</p><p> Injured party is entitled to Rescission of the Contract cancel the contract file suit</p><p>for damages</p><p> Suit for damages Ordinary</p><p> Special</p><p> Exemplary</p><p> Nominal</p><p>Suit upon Quantum Meruit as much as he earned or inproportion to work done</p><p> Suit for Specific Performance</p><p> Suit for injunction</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 23/35</p><p>Indemnity and Guarantee</p><p> Contract of Indemnity A contract bywhich one party promises to save the</p><p>other from loss caused to him by the</p><p>conduct of the promisor himself or bythe conduct of any other person</p><p>A person who promises to make good</p><p>the loss is called the indemnifierA person whom the loss is to be made</p><p>good is indemnified</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 24/35</p><p>Indemnity and Guarantee</p><p> Contract of Guarantee A contract toperform the promise, or discharge theliability of a third person in case of hisdefault</p><p>A person who gives the guarantee iscalled a surety</p><p>A person in respect of whose default the</p><p>guarantee is given is called the principaldebtor</p><p> Consideration is important</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 25/35</p><p>Nature and Extent of</p><p>Suretys Liability The liability of the surety is co-extensive</p><p>with that of the principal debtor unless itis otherwise provided by the contract.</p><p> Extent of Liability</p><p> Surety is liable only on the default of theprincipal debtor</p><p> Liability of surety arises immediately on thedefault of the principal debtor</p><p> Principal debtor need not resort to securitiesbefore suing the surety</p><p> Surety will not be liable for creditor guaranteeby misrepresentation</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 26/35</p><p>Continuing Guarantee</p><p> When a guarantee is given for a singleor specific debt single or specific</p><p>guarantee</p><p> When a guarantee extends to seriesof distinct or separable transactions</p><p>continuing guarantee</p><p> Revocation of Continuing Guarantee Notice to Creditor by surety</p><p> Death of the surety</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 27/35</p><p>Discharge of Surety</p><p> Notice of Revocation Death</p><p> Variance of Terms of Contract</p><p>Release by principal debtorArrangement by creditor with principal</p><p>debtor</p><p> Creditors Act or omission impairing</p><p>suretys remedy Loss of security</p><p> Invalidation of contract of Guarantee</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 28/35</p><p>Problems</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 29/35</p><p>Problems</p><p>A invites B for a Dinner. B accepts theinvitation. A makes an elaborate</p><p>arrangement but fails to turn up.</p><p> B sues for the loss sustained</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 30/35</p><p>Answer</p><p> No , A cannot sue B for the loss hehas suffered, because the agreement</p><p>of a social nature and hence lacks the</p><p>intention to create legal relationship. Essentials of a valid contract</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 31/35</p><p>Problem</p><p> N agrees to pay Rs.100, and inconsideration M agrees to write 100</p><p>pages of report form him in five</p><p>minutes. Is it a valid contract</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 32/35</p><p>Answer</p><p> No, it is not a valid contract.</p><p> It is a void agreement because an</p><p>agreement to do an act impossible in</p><p>itself is void.</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 33/35</p><p>Problem</p><p>A aged 15 yrs obtains a loan form B.Can A be asked to repay the money.</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 34/35</p><p>Answer</p><p> No, A cannot be asked to repay themoney.</p><p>A minors agreement is void abnitio</p></li><li><p>7/31/2019 Module 1 Part II Business Law</p><p> 35/35</p><p>THANK YOU</p></li></ul>