Presentation on theme: "WHAT IS A CONTRACT ? Agreement enforceable by law"— Presentation transcript:
1 WHAT IS A CONTRACT ? Agreement enforceable by law Lawful proposal by one party and the other party must accept it (promisor & promisee)There must be a lawful cosiderationAn agreement may be oral or writtenAn agreement may be without consideration if it is made out of nature, love and affection between close relativesFree consent & Capacity to contract (section 11)
2 CONTRACT OF INDEMNITYIt is a contract by which one party promises to save the other party from any loss caused to him either by the conduct of promisor himself or by that of any other person.Indemnifier & IndemnifiedIndemnified is entitled to receive all damages and all costs made by him in suits
3 GUARANTEEIt is a contract to perform the promise or discharge the liability of a third person in case of his default. It may be either written or oral.The person who gives the guarantee is called ‘Surety’ and in respect of whom the guarantee is given is called ‘Principal Debtor’. The person to whom the guarantee is given is called “Creditor”Anything done or any promise made for the benefit of principal debtor is a consideration
4 CONTINUING GUARANTEEA guarantee which extends to a series of transactionsDeath of surety ends the guarantee then and thereAny variance made in the terms of contract between the Creditor and Principal Debtor without the consent of the Guarantor discharges the surety after such varience
5 Misrepresentation by creditor discharges the surety Surety is discharged if the Principal Debtor is released by the creditorRelease of one surety does not discharge the other co-suretiesSurety can claim his debt from the principal debtorForbearance on the part of creditor does not discharge the surety
6 CONTINUEDImplied promise by the principal debtor to indemnify the suretyCo-sureties are liable to pay equal share of the whole debt or the part which remains unpaid by the principal debtorIndemnity & Guarantee are different because the liability of indemnifier is primary and that of the surety is seciondary
7 CONTRACT OF BAILMENTIt is the delivery of goods by one person to another for some purpose. The person delivering the goods is called bailor or the person to whom they are delivered is called the bailee.Bailor is bound to disclose the faults in the goods to bailee of which he is aware. The fault which may expose the bailee to extraordinary risk should also be made known by the bailee.
8 RIGHTS AND DUTIES OF BAILEE To take care of goods (as for his own goods)To return the goods at expiry of the time or purpose, for which it was bailedTo receive due remuneration for any service rendered in respect of the goods bailed. He has a right to retain the goods until he receives such remuneration.
9 PLEDGEThe bailment of goods as security for payment of a debt or performance of a promise is called a pledge.The bailor is called ‘pawnor’ and the bailee is called ‘pawnee’.In case of default the pawnee can sell the things after giving due notice of the sale to the pawnor. If there is a shortfall or surplus, the pawnor is liable for that or entitled to receive that.
10 CONTRACTS OF AGENCYIf a person is authorised to act for a person in such a manner as to bind that person, then a contract of agency is created.The person for whom the act is done is called the Principal and the person who represents other person is called the Agent.No consideration is necessary although it is a contract in itself.
11 ESSENTIALS OF AGENCYThe principal and agent both should be major and of sound mindThe authority of an agent may be expressed or implied.Agent is authorised to do every lawful thing necessary to conduct the functions of agent. In emergency agent is authorised to do all acts to protect the interest of principal.
12 OTHER FEATURESRatification by the principal for any act done by the agent without knowledge or authority from principalTermination of agency (either the principal or agent becomes of unsound mind or dies or the principal is adjudicated insolvent)The principal may repudiate any transaction concealed or dishonestly done by agent
13 CONTINUED Agent guilty of misconduct is not entitled to remuneration Agent is entitled to retain property/papers received for principal if the amount due to him is not paid to himAgent to be indemnified for consequences of lawful acts or acts done in good faith
14 CONTRACT OF SALEA contract of sale of goods is a contract under which the seller transfers or agrees to transfer the property in goods to the buyer for a price.Goods means every kind of moveable property other than actionable claims and money. i.e. stock, shares, growing crops etc.The contract may be written or oral
15 OTHER FEATURES OF SALE Bilateral contract Only movable property is coveredMay be immediate delivery or payment or payment or delivery in instalments.A contract of sale may be absolute or conditional. If delivery is at a future time ,it is Agreement to sell.
16 DIFFERENCE BETWEEN SALE AND AGREEMENT TO SALE Ownership passed to the buyer (irrespective of delivery of goods)Risk in goods with buyerBuyer can sue seller for non-delivery or qualitySeller can claim price or stop delivery of goods in transit or can resell itPromises are not performedOwnership not passed to the buyer and risk of goods with the sellerBuyer can claim damages, if the seller does not deliver the goodsThe seller can only sue fore damages
17 INDIAN CONTRACT ACT 1872Sec11: Minors, lunatics are incompetent to enter into any contractSec25(3): An agreement without consideration is void unless it is a promise to pay a time barred debtSec68: Advances to minors for necessities of life(quasi contract) are valid contractsSec124: Defines Indemnity
18 INDIAN CONTRACT ACT,1872 Sec126: Defines guarantee Sec128: Surety’s liability is co-extensiveSec130: A continuing guarantee may be revoked by the surety as to future transactions by notice to the creditorSec131: Death of surety revokes a continuing guarantee for future transactions
19 INDIAN CONTRACT ACT,1872Sec134: Discharge of surety by release or discharge of principal debtor by account of omission of the creditorSec140: Rights of surety on payment or performance: he is invested with all the rights which the creditor has against the principal debtorSec133: Any variance made without the surety’s consent in terms of contract discharges the surety
20 INDIAN CONTRACT ACT,1872Sec151: Bailee is bound to take reasonable care of goods bailed to himSec190: An agent cannot generally delegate his authoritySec201 Termination of agency on the death or insolvency or insanity of the principalSec202: Agency is not terminated where agent himself has an interest in the property which forms the subject matter of agency