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INDIAN CONTRACT ACT Q<gtoE-1872

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:t may be called Indian Contract Act of 1872. It came into force on l at September, 1872. Prior to the commencement of this Act, it was tlie English common Law which was applied to contra ling upon the facts and circumstances of each case. Courts of Bombay and Madras were empowered t< the cases arising out of contract. According to customs and usage and the personal lavv of the parties itracl. In case of Muslims, as a party to the contract, it was the Mohmmedian law which was applied and it 1 Hindu as party to the contract, Hindu law was applied. However, when one of the party was from nt religion, the personal law which was.applied was the personal law of the defendant [defendant is % against whom the suit is filed in a civil court]. Thus, the contract Act was h-acted with a view niform law on contract and to have a law which will cover, all general provisions in respect of contrac :t though covers all the general provisions of contract, there are separate and independent Act to gove nt kinds of special contracts, such as, Sale of Goods Act, Partnership Act, Negotiable Instrument Act, On and after commencement of this act it is this act which governs and regulates contract. VfBT.F, OF THF. ACT Nothing in this act shall affect the provisions of any act, regulation or statute not hereby expressly ed [canceled] or any customs or usage of trade or any incident, contract not in consistent with the ons of this act. ; Thus, the preamble of the act states that the law which was enforce prior to the cpmmencement of th t be applied even today, provided it is not expressly repeated by the contract act and it is not - istent with the provisions of this act. Similarly customs and usage which were governing the contract rior to the commencement of this act can also be applied to contracts even today provided it is not istent with the provisions of this act. Similarly, incident of contract which had taken place prior to the commencement of this .Act can be into provided it is not inconsistent with the provisions of the contract act OSAL: * The Act defines Proposal as, "When a person signifies to another, his willingness to do or abstain fron :something, with a view to obtain, assent of that otherperson, to such act or abstain, he is said to have i proposa/.[Section-2(a)]. ng:- The word proposal means an offer. The person making the proposal is called as the Proposer or r. Presence of request, express or implied is an essential element of a valid proposal. A contract comes istence only when parties come to some determination with a'view to create some legal rights and jbnding legal duties. As a preliminary step to this, it becomes necessary for the parties, to get into mication with each other. Thus, communication of an idea or desire to do a particular act or to abstain form doing something view to obtain consent of another person, to such idea or desire is called a Proposal. Thus a proposal Or an offer must be made with a view to obtain consent of another person. Mere ent of intention is not sufficient to have a proposal. If a person conveys to another that he intends to d 5 willing to do a particular act without any intention to have consent of that another person it is merel ment of his intention and such an expression cannot be called as Proposal or and Offer.

is used in a Proposal must apply to a definite number of persons, in other words, a proposal must to a specific person or persons with whom the proposer intents to enter into a contract. An sment, price-list, catalogue be called an offer. These are only statements of intentions and ons giving the advertisement a&kissuing the price-list is inviting offer from another. 1 making an offer should not reserve any right with himself for any further act to alter the . after it is accepted by the person to whom it is made. In other words, Proposer should intend to tby it as soon as it is accepted. ^ ovJyv i ie proposer desire to have a contract an offer made should be capable of creating and should intent 5 legal relationship between the parties. No sooner it is accepted by the person to whom the i is made. must not be vague or ambiguous but it must be certain. >N AND MEANING OF ACCEPTANCB:act defines acceptance as, When a person to whom a proposal is made signifies his assent there to, be accepted the

proposal. tance means to give consent to the proposal. In other 2 when the person to whom the mad signifies his words, consent to the proposal performance or nonsjtt any condition or alteration he is ; accepted the proposal. 5 r'ctP ~ V" <5. C^person accepting the proposal is called as an acceptor. A proposal when accepted create a set of eouirements Of A Valid Acceptance mce can be made only by the person to whom the proposal made, in other words a stranger to the il cannot accept the proposal. mce must be communicated to the proposer. Communication of acceptance may be either expressed ly be implied, mere silence does not amount to acceptance, silence of a person to whom the d is made cannot be regarded as an acceptance of the proposal, as communication of consent is a 0 have acceptance such communication may be either by words, written or spoken dr it may be 1 from the act or conduct of the party. ntal acceptance without communication is not sufficient to have an. agreement, Therefore sptance without communication is no acceptance in law. mce must be absolute and must not be qualified. Acceptance in order to be valid must be without idition, modification, reservation or any addition to the terms and conditions of the proposal en the consent is given to the proposal subject to some condition or alteration, it is called : conditional acceptance. Such acceptance is not invalid acceptance but it is said to be a counter store, there cannot be any agreement unless modified or conditional acceptance i.e., Counter spted by the original proposer. ance must be made in the manner prescribed by the proposer. A proposer has a right to prescribe ' nner in which the propo^l-sh^uld be accepted, when he prescribes the mode of acceptance^ be accepted in the manner pjescribed/vhen no mode is prescribed, acceptance should be expressed ; usual or i-easonable manner or by an appropriate way. ;nce must be made within the period prescribed by the proposser. When no time is prescribed, nee must be made within a reasonable period^ut in any case acceptance must be made before the ^ I is canceled or revoked by the proposer. nee of the proposal means, acceptance of all the terms and conditions of the proposal. The acceptor 0nma nf fhp mnditions of the cronosal and therefore he is not bound

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In other words it means rejection of original offer and making of a new offer. When a counter offer is the original proposal comes to an end, and it is then left to the original proposer whether to accept the r offer or to reject the same. f'/ However, under such circumstances the original proposer is not bound and liable tjy the original il or Jxfthe terms and conditions pu^tiy'theperson to whom the original proposal is made, by if be i the counter offer as his acceptance will create a binding agreement between him and the person ; the counter offer. NATION OF PROPOSAL :fCANCELLATION OF PROPOSALl iroposal can be revoked by the person making the proposal, at any time before the proposal is accepted.i In other words, as soon as proposal is accepted by the person to whom it is made, the proposal cannot ked as acceptance of the proposal will then create ah agreement between the parties. A proposal can be revoked or it stands revoked under following circumstances:A proposal can be revoked by a notice before it is accepted by the person to whom it is made i.e. before the acceptance it is put into the course of transmission. The proposal can revoke on expiry of the time limit prescribed for acceptance, provided the acceptance is not made within the time limit prescribed. When no time limit is fixed and it the acceptance is not made within a reasonable period^the proposal stands revoked, bn the expury of the reasonable time limit. A proposal stands revoked on the death, insanity or insolvency of the proposer or acceptor to the person to whom the proposal is made (takes place), provided such an incident takes place before the acceptance. A proposal stands revoked, if the acceptor fails to fulfill a condition. A proposal stands revoked when the person to whom the proposal is made, makes a counter offer or a counter proposal, Similarly a proposal stands revoked, when subject matter of the proposal is destroyed before acceptance. 1AION OF ACCEPTANCE: ~ Acceptance can be revoked by the acceptor at any time before acceptance comes to the knowledge of poser for example: If acceptance is being communication by the letter the acceptor can revoke the mce by sending a telegram which will reach before the letter of acceptance to the proposer. UNI CATION OF PROPOSAL WHEN COMPLETE: T Communication of idea or willingness is must, to have a proposal communication of proposal is ;e when if comes to knowledge of the person to whom it is made. UNICATTON OF A ACCEPTANCE WHEN COMPLETE: . Communication of consent is must to have an acceptance as mental acceptance without nication is no acceptance in law. Under English law, communication of acceptance is complete as soon as it comes to the knowledge of poser, However according to Indian law communication of acceptance is complete at two different >f time for acceptor and proposer. Communication of acceptance is complete as against the proposer, no sooner it is put into the course of ission, irrespective of the fact whether the proposer has received the letter or not provided the letter
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proposal when accepted creates a set of promises for the promise given by the proposer. The s known as a promisor & the acceptor is known as a promisee. For the promise given by the ;he acceptor is known as a promisee. A promise may be expressed or implied, in other words a tay be in writing or oral or it may be an implied promise which can be inferred from the act or ' the party. omises which form consideration for each other are called reciprocal promiser which give rise to an t. F!NT:fRection-2( c)l:le act defines agreement as Every promise: & every set of promises forming consideration for each ;lied an agreement". ius offer andacceptance together constitute, an agreement. An agreement is an expression of ntentions or more persons.

i agreement may or may not create legal relations or legal obligations between the parties. An t which creates or in capable of creating legal relationship is only enforceable at law is a contract, i agreement is a wider conceprbffer & acceptance together constitutes an agreement whereas t & enforceability together constitutes an agreement whereas agreement & enforceability together s a contract. DID & VOIDABLE AGREEMENT:- A valid agreement is one which is enforceable at law, in other words, it is an agreement which is iperative in accordance with the intention of the parties as it fulfills all the requirements prescribed valid agreement by the Indian Contract Act. A void agreement is one which has no legal existence at all i.e. it is an agreement which does not : any enforceable right or obligation & therefore at law. d otherwise a valid agreement not enforceable at law due to happening of an event which performance of an agreement impossible or illegal for e.g. Mr. A enters into an agreement with ll goods which are to be arrived at the port of Bombay by a particular ship for RS. 1 lakh. This ;reement but if the ship is destroyed' before reaching the port of Bombay, performance of the t is not possible the agreement becomes a void agreement. * milarly & otherwise valid agreement may become void due to some technical defect for e.g. A note which is insufficiently stamped or not stamped at all is not enforceable at law. il illegal agreements are void but all void agreements are not illegal agreements for e g. An t with a minor is a void agreement not enforceable at law but it is not an illegal agreement. ble:- A voidable agreement is one wrhich is a valid agreement as long a,s it is not avoided i.e. r -xi by the party entitled to avoid it. A agreement induced by coercion (force), under influence, ^representation or mistake is a voidable agreement not enforceable at law. In a voidable i consent of one of the party is not free consent and the party whose consent is not free consent to avoid the contract (challenge the contract) on the ground that his consent was not free >. However if he does not challenge the agreement,' the agreement would be binding on both the nd it will be enforceable at law. user words voidable agreement is one which can be challenged at the option of one of the agreement but not at the option of another. ;T:ulian contract Act defines contract as An agreement enforceable at law.

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agreement must not have been expressly declared to be void under any law for the time being in force TOIA. Fhus an agreement which fulfill all the above requirements is called a contract, because only when an nt fulfills the above conditions it is enforceable at law. However, if one of the condition is not fulfilled ement merely remains an agreement but does not becomes an agreement enforceable at law and e it cannot be called a contract. in other words all agreements are not contracts but all contracts are agreement. TY OR COMPETANCY OF A PARTY TO ENTER INTO A CONTRACT igreement becomes a contract when it is entered in between two or more competent persons, ig to Indian Contract Act of 1872 every person who is of the age of majority according to the law to e is subject to and who is of sound mind & is not disqualified from entering into a contract by any hich he is subject to. s, following persons are not competent to contract as per the Indian Contract Act. inor. irson of unsound mind srson who is disqualified form entering into a contract by any law by which he is governed. or's Agreement:- According to Indian Majority Act, 1875 a minor is one who is below the age of 18 s. However, as per Guardian and Ward Act, a minor of whose person or property or for both a rtjian is appointed by the court, minority continues upto the age of 21 years. According to Indian Contract Act a minor is not a competent person to enter into a valid agreement inors agreement is treated as void ab-initio(means right from inception). The Indian Contract Act prohibits a competent person from entering into a valid agreement L the minor. This provision of the Indian Contract Act is based upon a presumption that a minor is a on incapable to form a rational judgement and to decide what is for his benefit and what will jrsely effect its interest. Thus, the object of this, provision is to safeguard the interest of a minor in a ing case of Mohri Bibi v/s Dharom Ghosh. A principle was laid

down that minor agreement is void ab o. In this case, the facts were the minor executed the Mortgage in respect of his property for a loan of 20,000/which the money lender had agreed to advance. After receiving RS 8,000/- form the loan of 20,000/- the minor filed a suit for setting aside the agreement of mortgage on the ground that lie was inor & the agreement is void. However, the money lender claimed refund of RS 8,000/- from the minor, which the money lender had ady given to the minor. as held by the Privy Council that minors agreement is altogether void and the money lender cannot ver the amount of Rs.8,000/- from the minor. It was further held that minors agreement is void and merely voidable and since minors agreement is void ab-initio, a minor is not liable either to perform t he had agreed to perform under the agreement or to repay the benefits received by him under the ement. TC PERFORMANCE OF MINORS AGREEMENT::ific performance of a contract means to perforin the agreement as agreed. However, there can be no performance of minors agreement as minors agreement is void. PEL AGAINST A MINOR:jrding to the principle of estopple when a person by words written or spoken or by his conduct induces person to believe that certain state of things exist, he is thereafter not allowed to deny the existence itate of things.
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ESSENTIALS ELEMENTS OF A VAILD CONTRACT.

:ording to section 10, All agreement are contracts if they are made by the free sent of tne parties competent to contract, for a lawful consideration and with a lawful sideration and with a lawful object and are not hereby expressly declared to be void. i analysis of the provisions of Section 10 shows that a valid contract must have owing certain essential (elements. They are 1. Proper offer and its proper Acceptance. 2. Intention to create legal relationship. 3. Free consent. 4. Capacity to contract. 5. Lawful consideration. 6. Lai#fiil object. 1 7. Agreement not expressly declared void. 8. Certainty of meaning. ?. Possibility of performance. 10. Legal formalities.
proceeding , agreement in restraint of trade and agreement by way of wager haven been expressly declared void. Certainty Of Meaning : The terms of the agreement must be certain and meaningful. According to section 29 of the Indian contract Act,1872, agreements the meaning of which is not certain or capable of being made certain are void. Possibility of Performance The terms of the agreement must be such as are capable of performance. According to section 56, An agreement to do an impossible act is Void. Legal FormalitiesThe agreement must comply with the necessary formalities as to writing, registration, stamping etc, if any 1 Proper offer and its proper Acceptance:- There must be two parties -one making the offer and the other accepting it. Such oiler and acceptance must be valid. An offer to be valid must fulfill certain conditions, such as it must intend to create legal relations, its terms must he certain , it must be communicated to the person to whom it is made, etc. An acceptance to be valid must fulfill certain conditions, such as it must be absolute and unqualified, it must be made in the prescribed manner etc.

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required in order to make it enforceable by law.

:atio'n means consenting to or adopting or accepting or to confirnj subsequently a past act. However agreement cannot be ratified as it is void ab-inito. nise by a person on attaining the age of maturity to i;epay the money sent in advance to him during ity by another person cannot be enforced, as consideration gives during minority is no consideration er words, a minor cannot ratify an act or an agreement entered into his minority after attaining the iority. If he desires he cain have a fresh contract to that effect. / of Minor:or cannot be declared as insolvent as he is incapable of entering into contract and therefore there is m of minor having excess liabilities over assets. ON TO THE RULE THAT MINORS AGREEMENT IS VOID:ment with a minor where minor is only a promisee or transferee or beneficiary:- There is no ion in the contract Act which prohibits a minor from being a promisee or transferee or beneficiary led there is no obligation imposed upon the minor. Law does not consider a minor an incompetent 1 to accept benefits. A minor can enforce a contract which is of some benefits to him and there is no tion. Therefore such types of agreements are treated as valid agreements for e.g. gift deed. v agreement:- As per law a Agency a minor can act as an agent but he cannot be held personally to principal or to a third person. ershin Agreement:- A minor cannot become a full fledged partner but he can be admitted to the ts of existing partnership firm with the consent of all partners. s contract for Necessaries:- The Indian Contract Act treats a minor as a person incompetent to into any kin^Sf valid agreement and therefore' an agreement with a minor is treated as void, ver when a person has supplied necessaries to a minor when he is under no obligation to supply, erson can recover the amount spent for providing necessaries to the minor form the property of the , if any, provided he proves that le infant did not have sufficient supply of necessaries, i has supplied reasonable necessaries for supporting the infant iing to Indian Contract Act, the relations which exists between the minor and the person providing ;aries resembles to the relations created by a contract as therefore it is called Quasi Contract. ms such a Quasi Contract gives a right to a person who has supplied necessaries of life to a minor to ;r reasonable amount from the property of the minor. However a minor is not personally liable for m amount. The term necessaries of life according to Indian Contract Act would include food, shelter, ig, educational & medical expenses. le Act further states that the necessaries of life differs from person to person depending upon the ard of living of the society to which minor belongs. . ENT WITH A PERSON OF UNSOUND MIND::on is said to be of sound mind for the purpose of making a contract if, at the time when he or she is D a contract. He or she is capable of understand & capable of forming a rational judgement as to the n his or her interest. .f a person does not fall within the scope of the definition stated above he is treated as a person of nind by the Indian Contract Act. A person of unsound mind is treated as an incompetent person and ment entered into with a person of unsound mind is treated as void. Thus an agreement with a ansound mind is treated on the same ground of minors agreement.
;nri who is nsuallv of unsound mind hut occasionally nf sound mind mav enter into an ao-reement
' ^ i f . -v For Private Circulation Only tA-flON:- S I 2- Ld>) lian Contract Act, defines consideration as When, at the desire of the promiser the promisee or. any othe is done or abstained from doing (ii) does or abstain form doing or (Hi) promises to do or abstain from. . thing, such act or

abstinence or promise is called consideration for the promise, Consideration:sration is the price for which the promise of another person is bought. A promise given for value is only: at law. An agreement without consideration is treated as avoid agreement. An analysis of any contraci lat it consists of 2 separate parts i.e. promise on one hand and consideration for promise on the other n who gives promise to do or abstain form doing something a legatMuty u^Mly'^oes so as written 01 to some benefits accuring to him or written or equivalent to some loss , damage'or inconvenience that r not have been caused to another person in respect of the promise given. The benefit so received br logs inconvenience so caused is regarded in law as consideration for the promise. iration is the backbone and a very important element of any contract to create legal rights and duties. 3 parties law has no means nor it offers any remedy to compel a party to perform his promise under an which is made without consideration. iise or an agreement without consideration is null & void and not enforceable at law. PACTO NON ORITUR ACTIO "Out of a bare promise no cause of action can arise". s from a mere promise no right of action arries. Thus a promise in order to be ,enforceable must have m. Consideration can only establish legal rights between the parties. Thus as a rule an agreement sideration is void. .se to abstain form exercising an enforceable right is good consideration. However a promise to do vhich a person is already bound to do by layv is no consideration at all. L REQUIREMENTS OF A VALID CONSIDERATION:ration must move only at the desire of the promiser: In order to have valid consideration, it is necessar; act done or agreed to Be done by another must be done at the desire of the promisor. This desire or need not be expressed. It can be implied. Thus an act done or services rendered voluntarily would not te consideration. ration may move form the promisee or form any other person: For a valid consideration it is sufficient i >r abstinence or the promise constituting consideration was done or given at the request of the promisol necessary that the promiser himself should be benefited by the consideration. A stranger to the contrac jnforce a contract in certain cases namely viz. when he is a beneficiary for e.g. Mr. A agreed to gift his ' in favour of Mr. B on a promisse form Mr. B to pay RS. 10,000 every month to the daughter of Mr. A . xample daughter of Mr. A who is a stranger to the contract can enforce the contract as she is a iry to the contract. Though no consideration has moved from her side, it is sufficient that Mr. A gave a in return for Mr. Bs promise. ration may be either a positive act or a negative act or a promise given to the effect:- In other words ation may be either to do something or not to do something or a promise to that' ffijpr.t.. ration may be past, present or future:- A valid consideration may be past, present?q^feare. In other > per the definition of consideration a past act is also a sufficient consideratiife-Jtfj*^^6|o{'necessarily sent or a future act. A promise given by a person to compensate for the past act already; jejrformed by is valid promise enforceable at law as the past act is treated as valid consideration the contract act /lr. A promised to pay RS. 10,000 to Mr. B having found out a valuable article cost by .Mr. B. this is an VO
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ation must be real and not illusion:- Consideration is not real when it exists merely in words without ition of performing it. It is an illusion when it is physically or legally impossible to perform. For e.g. IV) :ed to Mr. B to put life into the dead body of father of Mr. B. Mr. B promised to pay RS. 2,00,000/- to M 3 an example of consideration which is void being illusion. ation need not be adequate:- Consideration need not be adequate however it should be of some value i of law. Law will not enforce a promise given for nothing. It is for the parties to decide adequacy of ation and the court will not sit to decide adequacy of consideration. However under certain ances inadequate consideration may be taken as one of the ground or as an evidence to prove that the )f the party was not free consent. 0 the rule that the agreement without consideration is void:iment made out of natural love and affection:- An agreement made out of natural love and affection the parties standing in near relations to each other is a valid agreement enforceable at law even if it i; consideration provided it

is in writing. wing persons are generally said to be related to each other act of natural love and affection by the act viz. father and son, brother and sister, mother and daughter, husband and wife etc. ;ment to pay time barred debts:- A promise or an agreement without any fresh consideration to pay the rred by law of limitation is enforceable provided it is in writing and signed by the debtor or his duly , ed agent. int of gift:- An agreement which is entered into to give gift is valid agreement enforceable at law and it require any consideration. However when a gift is in respect of immovable property. The agreement in writing and must be registered. :v agreement:- An agreement where by ap agency is created is a valid agreement enforceable at law =n there is no consideration. 5 PUBLIC POLICY AND AGREEMENTS AGAINST PUBIC POLICY ?. never an agreement is harmful to public interest or the welfare of the public it is void being against When any agreement conflicts with morale of time and violates any established interest of the society momical or social is void as it is created as against public policy. In other words the agreement which i; public welfare or against the interest of the society is said to be opposed to public policy. )licy cannot be precisely defined because public policy cannot be considered to be always the same. It is i. Many things which had been held as contrary to public policy in the past are not so need now in othe: policy refers to policy and accepted principles which are in the interest and for the welfare of the ge. ses to recognize certain kinds of agreement on the ground that they are injurious to the interest of the blic. ' . | g are some of the agreements which are treated as against public policy and therefore void, not it law. with an Alien enemy all agreement mad between the citizens of alien country where such agreements ibited by government or when two countries are at war are considered to be void and are treated as lublic policy. Larly, all agreements which tends to assist an alien enemy are treated as against public policy and 1 void. ; brokerage agreement:- Any agreement by which parties agree to give or take brokerage towards mce of marriage, is treated as against public policy and therefore void. nt to bribe a judge, magistrate or a public officer:- An agreement where by a person promises to pay or imrfliiniT fn a iuderp nr a mncrisf-.rnta in rnnsidprnt.irm fnr a iudcrfi nr mfltri strata to five a iudpmfint in his

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a person bargains for a share in the result to be ultimately declared in a suit or proceeding in for helping another to bring prosecute any action, it is called agreement of champarty and ;he above kind of agreement are treated as against public policy as it interferes with administration of it in restraint of lawful trade business or profession it in restraint of marriage nent in restraint legal of proceedings. ' ' FREE CONSENT :ree consentrent is an important ingredient of a valid agreement. Absence of free consent of the parties makes the )lable. consent is defined as To agree upon the same thing in same sense." >ent is must to have an agreement if there is no consent there is no agreement therefore it is essential parties agree upon the same thing in same sense. ties agree to the some thing in same sense they are said to be at ad-idem. If the parties are not at ad- ubject matter about which they are negotiating there can be no agreement between them for e.g. A s put before an old illiterate man who was falsely represented that the document was a document of lereas infact it was a bill of exchange. It was held, that the old man is not liable on bill of exchange were not at ad-idem. en there is ho consent there is no agreement. However to create a contract mere consent is not there should be free consent of the parties to the agreement. s said to be not free consent. When it would not have been given but, for the existence of coerison ice, misrepresentation or mistake. ire is no consent there is no agreement. However when there is consent but not free consent the voidable at the

option of the party whose consent was not free consent. vords a party whose consent is not free consent can avoid the agreement by challenging the agreement f law and if it is proved that the consent of the party was not free consent he will be relieved form the nder the agreement and the agreement will be set aside. At the same time he is entitled to get back parted or delivered under the agreement. in Contract Act defines coercion as Committing or threatening to commit an act forbidden by Indian unlawfully detaining or threatening to detain the property of another to the prejudice of any person h an intention to induce another person to enter into an agreement. is simple words means force but under Indian contract act coercion is either actually committing an act jats to commit an act which is an offence under Indian penal Code. e Indian contract act coercion also includes any act of unlawfully detaining the property or giving ;ain the property of another person with an intention to force another person to enter into a contract, rcion includes physical compulsion, fear, force or any act or threat which is an offence under Indian ovided the act is done or threat is given with an intention to force another person to give consent for an lowever it is not necessary that Indian penal code should be in force at the place where such act is done iven. en the consent of another person is obtained by coercion, such a party is entitled to have the agreement he ground that his consent is not free consent and the agreement is voidable. It is for the party whose J 1 ------------------------------ ,oo rvVifdirvorl hv mprr'inri Such a oartv is not only entitled to

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is having real or apparent authority over another for e.g. father and son, advocate and client, doctor :nt, teacher and /Vstudent etc. stands in fiduciary position(in the position of a trustee) for e.g. Guardian and ward, directors and lers etc. enters into a contract with a person whose mental capacity is permanently or temporarily affected by old age, illness, mental or bodily distress. , undue influence is an unbelievable use of power arising out of certain circumstances or relations. Tli< the Indian contract act empowers the court to protect a person from being forced or misled by a persoi . dominating position. i consent to an agreement is obtained by undue influence agreement is voidable at the option of the 5 consent was so obtained. The party whose consent is obtained by undue influence is not only entitled Ltract set aside but is also entitled to get back what he had paid or delivered under the contract. Len of proof that the agreement was not caused by undue influence lies heavily on the person benefitin 3ient ,i.e. when a person who is in a domination position enters into a contract with another and the ears on the face of it to have been caused by undue influence, the burden of proof that the contract was Dy undue influence shall be on the person who is in a position to dominate the will of another, who stands in a dominating position and who is said to have obtained consent by undue influence ler to prove that the consent was free consent and that it was not obtained by undue influence will hav the agreement was duly explained and interpreted and the person understood the agreement and he dent advise and he signed the agreement at his own will and desire. JT WITH A PARDAH NISHIN WOMEN:1 nishin woman is one who by customs or usage of a particular community is required to remain in lusion, & it is always presumed that such a woman easily becomes an object of undue influence and s a special protection from the court. :ontract is entered into by a pardah nishin woman the burden of proof lies on the person who has a contract with her to prove that the contract was not only explained to her but it was read over and erstood the effect there off and that she signed the contract at her own will. contract is entered into with a pardah nishin woman and if she challenges the contact on the ground sent is not a free consent, the court generally presumes that the contract was entered into, due to undi; less the person who has entered into a contract with a pardah nishin woman proves that he contract 3d and interpreted and that she understood the contract and has signed the contract at her own will. ract act defines fraud as Fraud means and includes any of the following acts committed by a party to or with his connivance by his agent with an intention to deceive?cheat) another or his agent and thereby 0 enter into a contract" on of a fact which is not true by one who does not believe it to be true, mcealment of material fact by one having knowledge of the fact. Be may without any intention of performing it. fitted to deceive. 1 act or omission which the law specifically declares to be fraudulent. 3 fraud includes all tricks and unfair ways adopted by a person to deceive another and thereby induce nter into an agreement. snce does not always amount to fraud unless the fact likely to affect the willingness of a person are sue duty of the person keeping silence to speak or otherwise silence itself will amount to speech. The A-o,iri nntii whon (->1(3 pirriimstaiKftR nf the case are such that regard been had to them, it is tt

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3king the contract to be set aside he may ask that the contract should be specifically performed and he it in a position

in which he would have been had there been no fraud. SENT ATION: Qent made which in fact is not true under a reasonable belief that it is true is called misrepresentation, ef must not only be reasonable but should be based on some information. If a false representation is at knowing that it is false and if there is no intention to deceive(cheat)it is misrepresentation. However tement is made deliberately with an intention cheat it is fraud. \ of duty without any intention to deceive whereby a person gains advantage by misleading another to 3 it is called misrepresentation when consent is obtained due to misrepresentation, the consent is not and the agreement becomes a voidable agreement and the person whose consent is not free consent avoid the contract but he can ask back what he had parted under the contract. SfT IN RESTRAINT OF LAWFUL TRADE BUSINESS OR PROFESSION:srson is entitled to carry on any lawful trade business or profession as our constitution guarantees this ndamental right. Therefore any agreement which interferes with right to carry on lawful trade, profession is called as agreement in restraint of lawful trade business or profession. I teral rule our agreement is restraint of lawful trade etc. Is void and is treated as against public policy, aents are void respective of the fact whether the restriction imposed is general or partial, qualified or Following are the exceptions to the general that agreement in restraint of lawful trade business or is void. j ant of sale and purchase of Goodwill:- One who sells goodwill of his business may agree with the buyer c will to the fact that he will not carry on the similar business within the specified local limit and for a I period or as long as buyer in the same area. Such an agreement is a valid agreement provided the ons imposed are reasonable. ant under partnership act:- A partner of a firm may be restrained form carrying on similar business as le remains a partner in a partnership firm. Similarly on retirement of a partner, the existing partners train the retiring partners from carrying on similar business within the specified local limit and for a I period. ilarly on dissolution of a partnership firm, partners may agree between themselves that some of the or sm shall not carry on similar business within the specified local area and for a specified period and that ;hem shall use the name of the partnership firm, these kinds of agreements are valid agreements [ the restrictions imposed are reasonable. | mt of service:- An agreement of service by which the employee binds himself, that during the term of th nt or during the employment, he shall not carry on competing business with that of his employer and will not render his services to another employer is a valid agreement provided the restrictions imposed snable. mt to limit competition and maintain reasonable price level:- By an agreement, parties may agree to npetition to some extent with an object to maintain reasonable price level. This is not a void agreement., y, an agreement between the manufactures of the same kind of product whereby they agree not to sell s below the agreed price level and to collect profits in common funds and to share business andprofits i proportion is not a void agreement. iment which imposes restriction on freedom of action:- An agreement which restricts freedom of action 1 agreement. If the restrictions imposed are reasonable for e.g. An agreement entered into between a itures and a sole selling agent whereby the sole selling agent agrees not to deal in the products of manufacturer is a valid agreement. Thus agreements which are necessary for carrying on lawful

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;eral mistake renders the agreement void whereas unilateral mistake does not render the agreement jes the % agreement voidable. bilateral mistake both the parties are under mistake whereas in unilateral mistake only one of the er mistake. ( larly mistake could be in respect of identity of; a person on it may be in respect of subject matter of the istake of law not in force in India will have sthejSame effect as mistake affect. However , contract enter< erroneous belief as to the law _in force in IhdS is not a void agreement but is very much valid This provision of law is based on a rule that ignorance of law is no excuse. CEMENT i

1 AGREEMENT:ig agreement consists of promises to give money or moneys worth upon the determination of int of an uncertain event. In other words wagering agreement is one by which two or more persons Dsite views in respect of future issue whicfcis an uncertain event or in respect of an unascertained past' illy agree that depending upon .the determination or ascertainment of the uncertain event one shall wi ir and that another shall pay of hand over to him a sum of money or moneys worth. Thus, in wagering leither of the contracting part}' has any personal interest in the subject matter of the contract i.e. in th /ent itself for e.g. Mr. A and Mr. B agreed that.if it rains tomorrow Mr. A will pay RS. 1000/- to Mr. B s not rain tomorrow Mr. B will pay RS. 1000/- to Mr. A. in example of wagering agreement. The event whether it will rain tomorrow or pot is an uncertain ler of the party have any control over the event nor they have any personal interest in the event itself, ent also involves mutual chance of gain and loss. Thus wagering agreement is an agreement between to the effect that if an agreed uncertain event happens one party shall pay a certain sum of money to

in the contrary i.e. the uncertain event not happening another shall pay to first. I
words an agreement which has following features is called a wagering agreement. Lse must be conditional i.e. dependent upon happening or non-happening of an uncertain future event o e conditional as to ascertainment of a past uncertain event. to the agreement should have no control over the happening or non-happening of the event nor the to the agreement should have any personal interest in the uncertain event. ; lust be mutual chance of gain and loss i.e. gain if one must be the loss of another. 3 must be to pay money or moneys worth., eement by way of wager is a void agreement as per the Indian contract act and no suit can be filed to right arising out of wagering agreement. ng are some of the agreement or transaction which are similar to wagering agreement but are not calle, freement and are enforceable at law:larket transactions acing tickets of skill and athletic ice c o n t r a c t I n an insurance contract there is always an insurable interest i.e. Parties are interested i ject matter for which the insurance is taken whereas there is no such insurable interest in wagering ent and neither of the parties to the contract has any personal interest in the event itself. ,NT IN RESTRAINT OF LEGAL PROCEET)INGS:-AGREEMENT IN RESTRAINT OF LEGAL [NGS:--iSi *

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ahge to recover the amount can be filed within the period of 3 years form the date on which the amoi e for payment. But if parties agree that the suit on Bill Of Exchange if at all is to be filed should be f the period of 1 year. Such king of agreement would amount to agreement in restraint or legal at the agreement is reducing the time limit prescribed by law of limitation which is 3 year to 1 year, ng are the exceptions to the rule that the agreement in restraint of legal proceeding are void. tration Agreement:- An agreement whereby parties agree to refer the dispute if any to arbitrator ins! a suit in the court is a valid agreement. ent to file a suit in a particular court:- When parties to the agreement are entitled to file a suit or ing in more than one count, they may enter into an agreement that in the event of any dispute betwe suit if any should be filed only in the court agreed between them out of various courts in which parti* tied to file such suit or proceedings such agreements are treated as valid agreements. NT IN RESTRTANT OF MARRIAGES:ement whereby a person who is a major and of sound mind is restrained form marrying a person of h e is treated as void agreement as per contract act.

NT TO DO AN IMPOSSIBLE ACT:ement where by parties to the agreement promise to perform or do an act which is impossible to per# void agreement. 2. Intention to create legal relationship:- There must be an intention among the parties to create legal relationship. In case of social or domestic agreements, the usual presumption is that the parties do not intend to create legal relationship but in commercial or business agreements the usual presumption is that the parties intend to create legal relationship unless otherwise agreed upon. . 3. Free Consent:- There must be free consent of the parties to the contract. According to section 14, consent is said to be free when it is not caused by;(i)Coercion.(ii)Undue influence,(iii)Fraud,(^Misrepresentation, (v) Mistake. If the consent of the parties is not free, then no valid contract comes into existence. 4. Capacity of Parties The parties to an agreement must be competent to contract. In other words they must be capable of entering into a contract. According to section 11 of Indian contract Act, 1872, Every person is competent to contract who is of the age of majority according to law and who is of sound mind and not disqualified from contracting by any law to which he is subject. 5. Lawful ConsiderationAn agreement must be supported by lawful consideration. .