FSection-1: Name- Indian contract act 1872; Extent-It extends to the whole of India except state of J&K. Enforce-It shall came into force on 1st sep1872. EXTRA NOTES- (A) ICA was compiled on 25 April 1872. (B) It is act no.9 of 1872. (C) The ICA is not a complete and exhaustivelaw on all types of contract.It lays down only general principles of contract law.Other principles relating to contract are being given in IPA,SGA,TPA,Company act,Railway act etc. (D) The Purpose and Preamble of ICA is to define and amend certain parts of the laws relating to contract. (E) It is a civil law becoz it enacted only about damages not about punishment. (F) Before 1855 in India there was no fixed law on contract.Parties of agreement were either regulated by English law,Hindu law,Muslim law or by equity etc.To stop that uncertainity IInd law commission Prepares the draft of ICA,which was later on Presented by IIIrd law commission.But becoz of argumented situation b/w government and commission,the draft was not fully accepted.Then James Stephen made some amendments and it was finally enforced on 1stsep1872.Thats why credit of its making goes to James Stephen. (G) Its effect is not Retrospective,means it will not applicable on the contracts dated before 1st sep1872 CHART Proposal[S.2(a)] + Acceptance[S.2(b)]= Promise[S.2(b)] + Consideration[S.2(d)] = Agreement[S.2(e)] If Enforceable by law If not Enforceable by law = Contract[S.2(h)]= Void Agreement[S.2(g)] Void Contract[S.2(i)] Voidable Contract[S.2(j)] ________________ Ques: Define the word Proposal with its essentials. Ans:Proposal/Offer[S.2(a)]--- When one person signifies to another his willingness to do or not to do abstain from doing anything,with a view to obtain the ascent of that other to such act or omission,he is said to make a proposal. Example- A told B that he wants to sell his house to B in one lakh Rs.It is a proposal. Essentials of Proposal-(A)Number of Persons-Because nobody makes a proposal to itself,that’s why at least two persons must be needed for proposal.Remember there is no limit on maximum persons i.e they can be counted or countless. (B)Offer must be made with an Intention to Legally Bind each other: A proposal must be made with an intention to legally bind each other. If there is no such intention to legally bind each other, the agreement will not result into a contract. Example: A invites B to a dinner party, B promised but does not attend the dinner party. In this case A can not sue B for breach of contract.[Kalai Haldar Vs Sheikh].There is no as such provision in ICA but it is a well settled rule in English Law that the parties ought to have the intention to create a legal relationship b/w them through the form of proposal.It must not be merely a moral or social one. (C)The Proposal must be communicated- A proposal to be complete must be communicated to the person to whom it is made, otherwise there can be no acceptance by him.An acceptance to a proposal in ignorance of a proposal is not acceptance and does not create any boundation on the acceptor.[Lalmann Shukl Vs Goridutt] (D)Offer & Invitation to an Offer are not the same thing- An offer should be distinguished from an invitation to an offer. An offer is definite and capable to converting an intention into a contract. Whereas an invitation to an offer is only a circulation of an offer. It is an attempt to induce offers and precedes a definite offer. Acceptance of an invitation to an offer does not result contract and only an offer emerges in the process of negotiation.An offer when accepted becomes an agreement on the other hand an invitations to offer when accepted becomes only an offer.[Harvey Vs Faisey] Like Railway time table, menu card of hotel, service charges table of bank, Auction, sale with tag are various egs of invitation to an offer. Example: A shopkeeper displays in his shop an article with a lable marking “Price Rs.500”. In this case the person who enters his shop & demands the article is really the proposer & it is upto the shopkeeper to accept or reject the offer. The same rule is applied to Quotations, Catalogues & Price Lists. (E)The Proposal must be certain,definite and not vague- If the terms of a proposal are vague or indefinite,its acceptance cannot create any contractual relationship. Sec.29 of ICA enacted that-“Agreement the meaning of which is not certain or capable of being made certain,are void. Example- A agrees to sell to B “my white horse” for rupees 500 or rupees 1000.There is nothing to show which of the two prices was to be given.The agreement is void. (F)Proposal should be in the form of request and not in order-It must be remembered that a proposer cannot make offer in the form of order so as to compel the offeree to reply to his offer rather he must make a request to this effect. [Felthouse Vs Bindly] (G) The proposal should be made with a view to obtaining the consent of the offeree. (H) The proposal should not contain a term the non compliance of which would amount to acceptance. Thus a man cannot say that if acceptance is not communicated by a certain time the proposal would be considered as accepted. (I)Types of proposal- (i) Express and Implied Proposal-A proposal in oral or written form is called express one while a proposal other than oral or written form(expressed by behavior) is called implied one. (ii) General and Specific Proposal- When a proposal made to a specific group of people(countable) is called specific one. Specific can be accepted only by the person to whom it is made while when a proposal made to the whole world or a group of people is called general proposal. Eg- Advertisement in a newspaper or a T.V. In Carlill Vs Carbolic smoke Ball Co.Lord Justice Bowen ruled that in case of public advertisement the performance of the conditions of advertisement is sufficient acceptance of the offer & the same need not to be notified to the offeror. (iii) Positive and Negative Proposal-A proposal to do anything is called positive one while a proposal not to do anything is called negative one. (iv) Conditional and Unqualified Proposal- A proposal with one or more conditions is called conditional one while a proposal without condition is called unqualified proposal. (v)Counter & Cross Proposal- when two parties make an identical proposals to each other in ignorance of each other proposals, the proposals are known as cross proposal. There is no binding contract in such a case as ones proposal cant be constructed as acceptance by the other[Case-Tenn Vs Holfmen]. while when the offeree offers to qualified acceptance to the offer subject to modification and variation in the terms of original offer,he is said to have made a counter offer(Acceptance with variation). Counter offer amounts to rejection of the original offer and hence no contract will be done.[Case-Hide Vs Raeinj]Example- Bargaining. (v)Standing Proposal-A proposal is allowed to remain open for acceptance over a period of time is known as standing(open,continuing,continuous) proposal.Example- karlil Vs karbolic smoke ball & co. (vi)Discontinuous Proposal-A proposal which can accepted only once or a proposal which when accepted by once cannot be accepted by other is called Discontinuous Proposal.Example- Lalmam shukl Vs.Goridutt. _________________ Ques: Define the word Acceptance with its essentials. Ans:Acceptance-Acceptance plays a very important role for proposal. In order to convert a proposal into agreement an acceptance should be there.In the words of Anson- “Acceptance is to offer what a lighted match is to a train of gunpowder” it means gunpowder remains dormant unless it has been contracted with a lighted match similarly mere offer does not create legal rights & obligations between the contracting parties unless it has been accepted by the acceptor. Sec2(b)defines acceptance as when the person to whom the proposal is made signifies his assent there to the proposal is said to be accepted. A Proposal when accepted become a promise. Promisor and Promisee—2(c)- The person making the proposal is called the promisor. The person accepting the proposal is called the promisee. Essentials of valid Acceptance- (A)The Proposal must be communicated- A proposal to be complete must be communicated to the person to whom it is made, otherwise there can be no acceptance by him. An acceptance to a proposal in ignorance of a proposal is not acceptance and does not create any boundation on the acceptor.[Lalmann Shukl Vs Goridutt] (B) A mere answer to a question can neither constitutes an offer nor acceptance. There must be an expression of willingness to be bound. [Harvey Vs Faisey] (C) Communication of an Acceptance- An acceptance must be communicated to offeror or his authorised agent also an acceptance can be given only by offeree or his authorised agent.Acceptance given by other than offeree or his authorized agent will be invalid[Case- Pawel Vs Lee.] (D) Acceptance of an Offer is Acceptance of all its Terms: Acceptance of an offer is the acceptance of all the terms even if the Offeree is ignorant of some of the terms of the offer. (E)Acceptance should be absolute & unqualified- According of sec.7(1)- In order to convert a offer in to promise acceptance must be absolute and unqualified otherwise it amounts to revocation an of the original offer and convert in to counter offer. In Hide Vs Raeinj it was held that when the offeree offers to qualified acceptance to the offer subject to modification and variation in the terms of original offer,he is said to have made a counter offer(Acceptance with variation). Counter offer amounts to rejection of the original offer and hence no contract will be done. ii)Acceptance must expressed in prescribe and reasonable mode –According of sec.7(2) where the mode of an acceptance is prescribed in the offer in that manner it must be accepted in that manner.But if any mode is not prescribed it should be accepted in usual and reasonable manner. (F)Mere silence is not Acceptance – Acceptance should be signified by some overt or external manifestation of the intention by speech, writing or other act. Even if the offeree has made up his mind to a final acceptance the agreement is yet not complete. Sec.3 says that–the acceptance of proposal are deemed to be made by any act or omission of the party accepting by which he intends to communicate such acceptance or which has the effect of communicating it. Acceptance has been signified either in writing or by words or by performance of some act.Sec.9 says –when acceptance of any offer is made in words it said to be express acceptance while acceptance is made otherwise than in words,its said to be implied.Sec.8- Performance of the condition of a proposal,or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal,is an acceptance of the proposal. In Carlill Vs Carbolic smoke Ball Co. Lord Justice Bowen ruled that in case of public advertisement the performance of the conditions of advertisement is sufficient acceptance of the offer & the same need not to be notified to the offeror. _________________ Ques-Discuss the provisions of ICA regarding revocation of an offer & revocation of an acceptance. Ans- According to Sec.3 -Revocation of proposal/acceptance are deemed to be made by any act or omission of the party revoking, by which he intends to communicate such revocation of proposal/acceptance or which has the effect of communicating it. Sec.6 deals with types of revocation of an offer- (1) Notice of Revocation- According to sec.6(1) an offer is revoked by the communication of notice of revocation by the proposer to the other party. According to sec.5- An offer may be revoked at any time before the communication of its acceptance is complete against the proposer. According to sec.4- Communication of an acceptance is complete as against the proposer when it is put in course of transmission to him so as to be out of the power of the acceptor to with draw the same. Example-A proposes by a letter sent by post to sell his house to B. B accepts the proposal by a letter sent by post. Against A the communication is complete when the letter is posted by B. So A may revoked his proposal at any time before or at the moment when B posts his latter of acceptance , but not afterwards. (2)Laps of Prescribed or Reasonable Time- According to sec.6(2) an offer is revoked by the laps of time prescribed in such proposed for its acceptance or if no time is so prescribed, by the laps of a reasonable time without communication if the acceptance. The Reasonable time will depend upon facts & circumstances of each & every case. (3) Not fulfilment of a condition Precedent-According to sec.6(3) an offer is revoked by the failure of the acceptor to fulfill a condition precedent to acceptance. (4) Death or Insanity of Proposer-According to sec.6(4)an offer is revoked by the death or insanity of the proposer ,if the fact of his death or insanity comes to the knowledge of the offeree before acceptance.It means if acceptor knows about the death or insanity of proposer before acceptance the consent will be illegal otherwise legal and valid. Revocation of Acceptance - According to Sec.3- The communication of proposal , the acceptance of proposal and the revocation of the proposal and acceptance ,respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking , by which he intends to communicate to such proposal, acceptance or revocation or which has the effect of communicating it. According to Sec.5- An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor , but not afterwards. According to Sec.4- The communication of an acceptance ,is complete against the acceptor, when it comes to the knowledge of the proposer. Example- A proposes by a letter sent by post to sell his house to B. B accepts the proposal by a letter sent by post. The communication of the acceptance is complete as against B when the letter is received by A. So B may revoked his acceptance at any time before or at the moment when the letter communicating it reaches A,but not afterwards.
Posted on: Fri, 26 Dec 2014 22:21:29 +0000