Indian Contract Act
•Section 1: Short Title
Extent, Commencement. -It extends to the whole of India [except the State of Jammu and Kashmir]; and it shall come into force on the first day of September 1872.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Indian Contract Act
• Section 1 to 75 : Deals with General Principles of contracts.
• Section 124 to 238 : deals withSpecific kinds of contracts only.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Indian Contract Act
Definition of a contract: Sec. 2(h) :
"An agreement enforceable by law is a contract.”
Flow of the definition:Contract Agreement Promise Accepted proposal Proposal/offer.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Section 2
Section 2a:
Defines Proposal.
Section 2b:
Defines Promise.
Section 2c:
Defines Promisor & Promisee.
Section 2d:
Defines Consideration.
Section 2e:
Defines Agreement.
Section 2i:
Defines Voidable Contracts.
Section 2h:
Defines Contract.
Section 2g:
Defines Void agreement.
Section 2f:
Defines Reciprocal Promises.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Definition Of a Proposal: Sec. 2(a)
When one person, signifies to another, his willingness to do or to abstain from doing anything,
with a view to obtaining the assent of the other to such act or abstinence,
he is said to have made a proposal.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Intention to create legal relationship.
Unambiguous Terms.
Communication.
Express the final willingness.
Specific Person or class or persons.
Express or Implied.
Positive or Negative.
Legal Rules for Valid Proposal.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Rules of a valid Proposal Sec. 2(a):
It may be express or implied.
It must contemplate to give rise to legal
relationship.
Terms must be certain.
It may be specific or general.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Rules of a valid Proposal- Sec 2(a) : (cont.)
Invitation to offer is not an offer.
Offer must be communicated
Special terms must be communicated in a
special manner
Offer should not contain a term the non-
compliance of which would amount to
acceptance.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Definition Of Acceptance: Sec. 2(b)
When a person to whom the offer is made,
signifies his assent thereto, the offer is said to be
accepted.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
1Absolute or unconditional.
2. Usual and reasonable mode.
3. Within the reasonable time.
4. Cannot precede an offer.
5.Before Lapse or Revocation of an offer.
6. By an ascertained person.
7. Fulfil Promise.
8. Express or Implied.
9. Acceptance of all terms.
10. Not implied from silence.
Essentials and legal rules of Valid Acceptance.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Rules of a valid Acceptance (sec 2b) Cont:
The person to whom the offer is made must
give it.
It must be absolute and unqualified.
Acceptance must show to fulfill a promise.
Acceptance of offer means, acceptance of all
terms attached to that offer.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Rules of a valid Acceptance Sec. 2(b) (Cont.):
Mental acceptance is ineffectual.
It must be expressed in the prescribed manner or
in some usual manner.
It must be given within a reasonable time.
It must succeed the offer.
Acceptance must be made before the lapse of an
offer.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
'Every contract is an agreement but every agreement may not be a contract'
3. Lawful Consideration.
8. Legal Formalities.
2. Legal Relations.
7. Certainty of performance.
6. Agreement not declared void.
5. Free and genuine Consent.
4. Capacities of parties.
1. Agreement.
Essentials of a Valid Contract.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Essentials of a valid Contract (Section 10):
Agreement
Intention to create legal relationship
Lawful consideration
Capacity of the parties
Free consent
Lawful object
Certainty of terms
Possibility of performance
Writing and registrationDepartment of Business Administration,
University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Kinds of Agreements
Void
Valid Agreement Invalid Agreement
UnenforceableVoidable Illegal
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Consideration: Sec. 2 (d)
When, at the desire of the promisor, the promisee or any
other person;has done or abstained from doing, or does or
abstains from doing, or promises to do or abstain from doing something,
such act or abstinence or promise is called as Consideration for the promise.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Essentials of valid consideration (sec 2d) cont:
Consideration must move at the desire of the promisor
Consideration may move from the promisee or any other person
It may be past, present or future
It must be something of value
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Exceptions to the rule
No consideration no contract:
• Agreement made on account of natural love and
affection
• Agreement to compensate for past acts
• Agreement to pay a time barred debt
• Completed gift
• Contribution to charity
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Competency of parties to a contract:
Sec.10 states:
“Essential ingredient of a valid contract
is that the contracting parties must be
competent”
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Competency of parties to a contract (cont.):
Sec 11 says:
“Every person is competent to contract;
who is of age of majority according to the law to
which he is subject,
and who is of sound mind,
and is not disqualified from contracting by any
law to which he is subject” Department of Business Administration,
University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Who is a Minor?
As per Indian Majority Act:
a person below age of eighteen years under normal circumstances
and
a person below age of twenty one years in case of a guardian being appointed for his person or property
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Effects of agreement with or by a minor
Usually it is Void – ab - initio (absolutely void
and inoperative)
No ratification on attaining age of majority
No estoppel against a minor
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Effects of agreement with or by a minor
Minor is however responsible for necessaries provided to him during his minority
Minor can be admitted to benefits of partnership
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Cont.
Beneficial agreements are valid
minor is eligible to get benefits but can not be responsible towards liabilities
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Sound mind: Sec. 12 :
“A person is said to be of sound mind
for the purpose of making a contract, if,
at the time when he makes it, he is
capable of understanding it and of
forming a rational judgement as to its
effects on his interests”
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Disqualified from contracting:
Alien enemies
Foreign sovereigns
Convicts
Insolvent
As per any other law applicable
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Consent = consensus ad-idem
• i.e. 'Agreeing upon the same thing in the same sense'
• Free Consent: Section 14--
Consent is said to be free when it NOT caused by any one of the following
• Coercion . Undue influence• Misrepresentation . Fraud • Mistake
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Coercion: (Sec 15)
" It is • a) Committing or threatening to commit, any
act forbidden by Indian Penal Code, or • b) unlawful detaining or threatening to detain
any property,• to the prejudice of any person whatever,• with the intention of causing any person to
enter into an agreement"
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Coercion: (Sec 15) cont.
• Effect of Coercion:
• Contract is voidable at the option of the
party whose consent was so obtained
• Burden of proof that coercion was used
lies on the aggrieved party.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Undue Influence: Sec 16(1)
"A contract is said to be induced by undue influence where,
i) the relations subsisting between the parties
are such that one of the parties is in a
position to dominate the will of the other,
and
ii)he uses the position to obtain an unfair
advantage over the other."
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Undue Influence: Sec 16(1) cont.
Effects of Undue influence
• Agreement is voidable at the option of the
party whose consent is so caused
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Undue Influence (Sec 16-1) cont.
In a position to dominate the will of the
other means:
a) Where he holds a real or apparent
authority over the other, for eg. master
& servant, judge and the accused,
doctor and a patient etc.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
In a position to dominate the will of the other means:
b) where he stands in a fiduciary relation to the other
• (fiduciary relation = relation of mutual trust and
confidence) eg. Father & son, Guru & disciple
c) where he makes a contract with a person whose
mental capacity is temporarily or permanently
affected by reason of age, illness, or mental or
bodily distress.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Misrepresentation: Sec 18—
"It means and includes-a) the positive assertion in a manner not warranted
by the information of the person making it, of that which is not true, though he believes it to be true:
or
b) any breach of duty, which without any intent to deceive, gains an advantage to the person committing it, by misleading other person to his prejudice
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Misrepresentation (Sec 18) cont.
or
c) causing, however innocently, a party, to make a mistake as to the substance of the thing which is the subject of the agreement
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Fraud: Sec 17—
It means and includes any of the following acts
committed by a party to the contract—
i)The suggestion that a fact is true when it is not
true, by the one who does not believe it to be true
ii)The active concealment of a fact by a person who
has knowledge or belief of the fact
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Fraud: (Sec 17) cont.
iii)A promise made without any
intention of performing it
iv)Any other act fitted to deceive
v)Any such act or omission as the law
specially declares to be fraudulent
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Representation :
• statement of fact made by one party to
another
• either before or at the time of contract
• relating to some matter essential to the
formation of the contract
• with an intention to induce the party to enter
into the contractDepartment of Business Administration,
University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
An innocent wrong statement
= Misrepresentation
A deliberate or intentional statement to deceive the
other = Fraud
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Effects of Misrepresentation
• The aggrieved party has two options
1. He can rescind the contract, treating it as
voidable
2. He may affirm the contract and insist that he shall
be put in a position in which he would have been,
if the statement was true.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
• Effects of Fraud:
The aggrieved party has three remedies
1. He can rescind (set aside) the contract, treating it as voidable
2. He may affirm the contract and insist that he shall be put in a position in which he would have been, if the statement were true.
3. He can also sue for damages, if any, because fraud is a civil wrong and hence compensation is payable
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Mistake= erroneous belief concerning something
Mistake can be of Law Or of Fact
Mistake of law
|
| |• Mistake of Law Mistake of law
of the country of foreign country
Mistake of Fact
|
| |
Bilateral Unilateral
Mistake Mistake
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Mistake of law of one's own country is no excuse.
Mistake of foreign law however stands on the same
footing as mistake of fact
Bilateral mistake =
a) Both parties to an agreement misunderstood each other and are at cross purposes
b) Mistake relates to a fact and not to judgment or opinion etc.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
• Bilateral mistake:
1. Mistake as to the existence of the subject matter of the agreement
Effect: (agreement void)
2. Mistake as to the identity of the subject matter
Effect: (agreement void)
3. Mistake as to the title of the subject matter
Effect: (void ab-initio)
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Bilateral mistake cont.:
4. Mistake as to the quantity of the subject matter
Effect: (agreement void)
5. Mistake as to the quality of the subject matter
Effect: (agreement void)
• Department of Business Administration,
University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Unilateral Mistake :
• only one of the contracting parties is mistaken
as to a fact material to the contract
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Effect of Unilateral Mistake:
• Contract remains valid unless caused by misrepresentation or fraud.
• Where the mistake is caused by misrepresentation or fraud the contract becomes voidable at the option of the aggrieved party.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Cases where agreement does not give rise to any
contract in spite of a unilateral mistake:
1. Mistake as to the identity of the person contracted with, where such identity is important
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
2. Mistake as to nature and character of the written document.
• Reason for these two exceptions is that the mistake is so fundamental as to go to the roots of the agreement
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Department of Business Administration, University of Lucknow
Discharge of contract
o by performance- actual or attempted (tender)
o by mutual consent or agreement
o by supervening impossibility
o by lapse of time
o by operation of law
o by breach of contract
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Essentials of a valid tender:
1. It must be unconditional
2. At a proper time and place
3. Must be of the whole obligation contracted for
4. Must give a reasonable opportunity to the
promisee for inspection of goods
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Essentials of a valid tender:
1. Must be made to the proper person
2. Must be made by a person who is in a position
and is willing to perform
3. In case of money, the exact amount should be
tendered
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Refusal to accept a properly made ‘Tender’:
• The contract is deemed to have been performed by the tenderer (promisor).
• A suit for breach can lie against the promisee.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Modes of discharge by Mutual consent –
• Novation
• Alteration
• Rescission
• Remission
• WaiverDepartment of Business Administration,
University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Cases where doctrine of supervening impossibility applies--- • Destruction of subject matter • Failure of ultimate purpose
• Death or personal incapacity of the Promisor • Change of law • Outbreak of war Department of Business Administration,
University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Discharge by operation of law – • Death of any of the parties • Insolvency • Merger of rights • Unauthorized material alteration Discharge by Breach of contract--
Actual Anticipatory Department of Business Administration,
University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Remedies for Breach of contract: • Rescission of the contract
• Suit for damages
• Suit upon quantum meruit
• Suit for specific performance
• Suit for injunction
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Remedies for Breach of contract:
• Rescission of the contract when not available:
when owing to change in circumstances parties can’t be put in original position
Where third party has acquired rights for value
Where only part of contract is rescinded and contract is not severable
Department of Business Administration,
University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Remedies for Breach of contract:
• Specific performance not allowed:
where damages is adequate
contract of personal volition
impossible to supervise
contract ultra-vires
Department of Business Administration,
University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Remedies for Breach of contract:
• Quantum Meruit arises when:
A contract is subsequently discovered to be void for some technical reasons
a person rendering goods or services has not done so gratuitously
when there is no contract as to remuneration for work rendered, a reasonable amount is to be paid
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Damages
are decided based on remoteness of consequences
only for loss actually suffered
Also for inconvenience suffered or loss of reputation
aggrieved party should try to mitigate loss
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Different kinds of damages:
• Ordinary or general or compensatory damages
• Special damages (i.e. damages in contemplation of the parties at the time of the contract)
• Exemplary, punitive or vindictive damages
• Nominal damages
• Liquidated
• Penalty
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
• Quasi Contracts:
1. Claim for necessaries supplied to a person
incapable of contracting
2. Reimbursement to a person paying money due
by another in payment of which he is interested
3. Responsibility of finder of goods
4. liability of a person to whom money is paid or
things delivered by mistake or under coercion
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
• Contract of Indemnity:
It is a contract by which one person promises to
save the other from any loss caused to him by the
conduct of the promisor himself or by conduct of
any other person.
Indemnity holder or indemnified = one protected
Indemnfier = one who gives protwection
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Rights of indemnified:
Can recover all damagesAll costs which he may be compelled to pay in any
Suit
Rights of Indemnifier:
Right of SubrogationMost other rights of a suerty
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Contract of Guarantee:
Three parties
Contract of surety is independent of one with principal debtor
Contract between creditor and surety is fiduciary – creditor should disclose everything material
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Types of Contract of Guarantee:
Oral or Written
Specific and Continuing (specific = irrevocable, continuing = can be revoked for further transactions)
Whole or partial debt
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Rights and obligations of creditor:
Demand payment from surety
If surety insolvent proceed against him too
Not to change terms of contract
Not to release principal debtor
No extension or other facility to be given to
principal debtor
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Rights of Surety:
• Against principal debtor.o Right of subrogation
• Right s against co-sureties.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Discharge of Surety:
• By notice of revocation
• By death of surety
• By variance in terms of contract
• By release of principal debtor
• By loss of securityDepartment of Business Administration,
University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Contract of Bailment and Pledge
Section 148 of ICA 1872 defines bailment as:“The delivery of goods by one person to another
for some purpose, upon a contract, that they shall, when the purpose is accomplished, be return or otherwise disposed of according to the direction of the person delivering them”
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
• Bailor:The person delivering the goods is called asd
bailor.
• Bailee:The person to whom the goods are to be
delivered is called the bailee.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
3. Possession of goods must change
2. Delivery of goods..
7. Bailment with goods.
6. Return of specific goods.
5. Ownership not changed.
4. Some purpose
1. Contract.
Essential of Bailments
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Classification of contracts.• 1. Validity or enforceability.• 2. Mode of formation.• 3. Performance.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Classification according to validity.
1. Valid: Contract must have all the essential elements.2. Voidable: Agreement enforceable by law at the option
of one or more parties there to, but not at the option of the other or others. Section 2(i).
3. Void Contracts or agreements: Not enforceable by law. Section 2(g).
4. Illegal5. Unenforceable: Cannot be enforced because of
technical defects.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Classification by: Mode of formation
1.Express Contract: Express by word spoken or written.
2.Implied Contract: Inferred from the circumstances.
3.Quasi Contract: Obligation imposed by the law
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
Classification by: Performance
1.Executed Contract: Wholly performed by both the parties.
2.Executory Contract: Promises of both the parties are yet to be performed.
Department of Business Administration, University of Lucknow
By: Avijit Tiwari, Devesh Chandra, Abhishek Gupta, Harshit Batham, Narendra Pandey, Shwetanshu Gupta
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