Contract Law

Dr. Sairam Bhat

Assistant Professor
NLSIU
 All contracts are agreements, but all agreements
are not contracts
• 1. Offer
– Various methods of making a proposal
– Who can make an offer [Powell v Lee: Interview case]
– Invitation to treat [Harris v Nickerson: auction case]
– Advertisement as General Offer [Carlil v carbolic smoke ball
case]
– Offer made with the intention to create a legal relationship
– Counter Offer
• 2. Acceptance
– Mirror Image rule
– Knowledge of offer relevant [Lalman Shukla case]
– Acceptance in conduct [Carlil case]
– Silence no acceptance [Horse case]
• Revocation of Offer and Acceptance [Errington case:
father promise to son abt mortgage house]
 3. Capacity of parties: Sec. 10
• Mental Incapacity
– Minor
• Mohoribibi v Dharmodas Ghose
• Minor liable for necessaries of life [sec. 68]
– Unsound persons
– Drunkards
• Physical Incapacity
– Visually impaired/oldage
– Parsanashin woman
• Legal incapacity
– Juristic person
– Insolvency
– Alien enemy
 4. Consideration

• No consideration- no contract
– Exception: Love/compensation for voluntary acts/time
barred debts/agency
• Adequacy of consideration
• Third party consideration is also valid
• Types of consideration
– Future considerations
– Present consideration
– Past consideration
• Privity of contract
• Promissory estoppel
 5. Free consent
• Coercion/Economic duress
– Ranganayakamma v Alwar Chetty
– Hawker Pacific Pty Ltd v Helicopter Charter Pty
• Undue Influence
– Presumed undue Influence: Position of domination
[Fiduciary] Allcard v Skinner
– Actual undue Influence: Tate v Williams
• Misrepresentation
• Fraud
– Ward v Hobbs
– Sykes V Rose
– O Sarojam v UOI
• Mistake
– Raffles v Wichelhaus
– Mistake unilateral: ITC Ltd v G J Fernandes AIR 1989
SC 839
 6. Legality of object and Consideration
• 1. It is forbidden by law
• 2. Defeat the provision of any law
• 3. Injurious to person or property
• 4. Agreement Injurious to public policy
• 5. Immoral
• 6. Agreement opposed to public policy Sec. 23
– Trading with an enemy
– Trafficking in public offices
– Interference with the administration of justice
– Marriage brokerage contracts: Herman v Charlesworth
1905 2 KB 123
 7. Void Agreements
• 1. Agreement in restraint of marriage: sec. 26
– Rao Rani v Gulab Rani AIR 1942
• 2. Agreement in restraint of trade [sec. 27]
– Herbert Morris Ltd v Saxelby 1916
– Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co 1894
– Gujarat Bottling Co v Coca Cola Company AIR 1995 SC 2372
• Exception to an agreement in restraint of trade
– 1. Sale of Good will
– 2. Exception under Indian Partnership Act
– 3. Restraint by a contract of service [employment]
• Niranjan Shankar v Century Spinning and Manufacturing Co AIR 1967
• 4. Trade combinations
– Sheikh Kalu v Ram Sharan Bhagat 1909 13 CNN 388
• 5. Agreement in restraint of legal proceedings: sec. 28
– Ghose v Reliance Insurance Co 1934
• 6. Wagering Contracts
 8. Quasi Contracts
• Sec. 71: Finder of lost goods
• Obligation of person enjoying benefit of
non-gratuitous act
– Indu Mehta v State of UP AIR 1987 ALL 309
– P C Wadhwa v State of Punjab AIR 1987 PH
117