CSEET Legal Aptitude Videos for Nov 2021 - Law related to Contract - Class 4
CSEET Legal Aptitude Videos for Nov 2021 – Law related to Contract – Class 4
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Topics covered in this Class
According to Section 2(b) of the Contract Act when a person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.
Essential Elements of Acceptance
- Like offer, acceptance may be expressed or implied
- Acceptance shall be absolute and unqualified
- Acceptance shall be made in the mode specified in the offer (if any)
- Acceptance shall be communicated to the offeror
- Mere silence on the part of the offeree does not amount to acceptance (Felthouse Bindley)
- If the offer is one which is to be accepted by being acted upon, no communication of acceptance to the offeror is necessary, unless communication is stipulated for in the offer itself (Harbhajan Lal v. Harcharan Lal).
- Acceptance must be given within a reasonable time and before the offer lapses or is revoked.
Communication when complete (Section 5)
Communication of a proposal
The communication of a proposal is complete when it becomes to the knowledge of the person to whom it is made.
Communication of an acceptance
The communication of an acceptance is complete –
- as against the proposer,
- when it is put in a course of transmission to him (means when such communication is out of the power of the acceptor);
- as against the acceptor,
- when it comes to the knowledge of the proposer.
The communication of a revocation
The communication of a revocation is complete –
- as against the person who makes it,
- when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it;
- as against the person to whom it
- is made, when it comes to his knowledge.
Revocation/Lapse of Offer (Expiration of offer) (Section 6)
An offer lapses if –
- by the communication of notice of revocation by the offeror to the offeree
- it is not accepted within the specified time or if no time is specified, after a reasonable time;
- it is not accepted in the mode prescribed or if no mode is prescribed in some usual and reasonable manner
- the offeree rejects it by distinct refusal to accept it;
- by the death or insanity of the offorer, if the fact of the death or insanity comes to the knowledge of the acceptor before acceptance;
- by the death or insanity of the offeree before acceptance;
- the acceptor fails to fulfill the conditions precedent to an acceptance;
- the offeree makes a counter offer
Counter offer means offer against an offer. It is a situation where offeree does not accept the offer and makes an offer in response of the offer of offeror. Counter offer amounts to rejection of the original offer made by offeror.
By what time or till what point offeror can revoke the offer [Section 5]
A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.
It means the revocation must reach the offeree before he sends out the acceptance.
If offeree wants offeror to keep the offer open for specific time, offeree shall pay certain consideration for that.
Revocation of Acceptance
By what time or till what point offeree can revoke the acceptance [Section 5]
An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but no afterwards.
Standing offer (Tenders)
Standing offer means an offer which stands for a particular duration. A standing offer is of the nature of a continuing offer. An acceptance of such an offer merely amounts to an intimation that the offer will be considered to remain open during the period specified and that it will be accepted from time to time by placing separate orders for specified quantities.
- Essential element of a contract
- A promise without consideration cannot be enforceable at law (except in certain cases)
- Consideration means “quid pro quo”, i.e. “something in return”
According to Section 2(d),
When at the desire of the promisor,
- the promisee or any other person
- has done or abstained from doing something, or
- does or abstains from doing something, or
- promises to do or to abstain from doing something,
such act or abstinence or promise is called a consideration for the promise.
Essentials of Consideration
- Consideration must be at the desire of the promisor
Voluntary/ gratuitous act or abstinence by one person shall not bound other person.
- In Indian Laws, consideration may move from the promisee or from any other person
It means a stranger to the consideration can sue on the contract.
It should be noted that In English law, consideration must move from the promisee, so that a stranger to the consideration cannot sue on the contract.
Kinds of Consideration
- Executory or Future Consideration
- Executed or Present consideration
- Past Consideration
In English law, past consideration is no consideration.
Rules Governing Consideration
- Every contract shall be supported by some consideration (except in certain cases)
- A gratuitous promise (promise without consideration like in case of charity, donation or gift) is not enforceable.
- Consideration may be an act of promise (to do something) or abstinence (not to do something)
- Consideration must be real, definite and not vague, or illusory
- Consideration need not to adequate
- Consideration must be lawful
- Consideration must be something more than the promisee is already bound to do for the promisor
When Consideration not Necessary
- If it is expressed in writing and registered and is made out of natural love and affection between parties standing in a near relation to each other; or
- If it is made to compensate a person who has already done something voluntarily for the promisor, or done something which the promisor was legally compellable to do; or
- If it is a promise in writing and signed by the person to be charged therewith, or by his agent, to pay a debt barred by the law of limitation.
- Besides, according to Section 185 of the Indian Contract Act, consideration is not required to create an agency.
- In the case of gift actually made, no consideration is necessary. There need not be nearness of relation and even if it is, there need not be any natural love and affection between them.
Whether Gratuitous Promise can be enforced
- When promisee has taken some action and/or create some liability due to the promise of promisor.
- Gratuitous Promise can be enforced only for that amount which promisee incurred due to the promise of promisor.
Doctrine of Privity of Contract
A stranger to a contract cannot sue. It means a person who is not a party to a contract is stranger to contract and cannot sue upon it even though the contract is for his benefit.
- A beneficiary under an agreement to create a trust can sue upon the agreement, though not a party to it, for the enforcement of the trust so as to get the trust executed for his benefit.
- An assignee under an assignment made by the parties, or by the operation of law (e.g. in case of death or insolvency), can sue upon the contract for the enforcement of his rights, tittle and interest. But a mere nominee (i.e., the person for whose benefit another has insured his own life) cannot sue on the policy because the nominee is not an assignee.
- In cases of family arrangements or settlements between male members of a Hindu family which provide for the maintenance or expenses for marriages of female members, the latter though not parties to the contract, can sue.
- In case of acknowledgement of liability.
- Whenever the promisor is by his own conduct estopped from denying his liability to perform the promise, the person who is not a party to the contract can sue upon it to make the promisor liable.
- In cases where a person makes a promise to an individual for the benefit of third party and creates a charge on certain immovable property for the purpose, the third party can enforce the promise though, he is stranger to the contract.
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