Q.9.

Explain the following;

(A). Void Agreement.
An Agreement, through it might possess all the essential elements of a valid contract
must not have been expressly declared as void by any law in force in the country. The
contract act specifically declared certain agreement to be void. A void agreement is
one which is not enforceable by law [sec. 2(g)]. Such an agreement does not give rise
to any legal consequences and is void ab initio i.e. void agreement.

Q.10. Define agreement and discuss the types of agreements.

An agreement may be a social agreement or a legal agreement. If A invites B to a
dinner and B accepts the invitation, it is a social agreement. A social agreement does
not give rise to contractual obligations and enforceable in a court of law. It is only
those agreement which are enforceable in a court of law which are contracts.
Contract = Agreement + Enforceability at law
Thus all contract are agreement but all agreement are not necessarily contract.
CLASSIFICATION OF CONTRACTS
Void agreement - An agreement not enforceable by law [sec. 2(g)].
Void contract - A contract which ceases to be enforceable by law [sec. 2(f)].
Voidable contract - A contract which is enforceable by law at the option of one party
thereto, but not at the option of the other [sec. 2(4)].
Illegal agreement An agreement which involves the transgression of some rule of
basic public policy and is criminal in nature or immoral. It is not only void as between
the immediate parties but it also taints the collateral transaction with illegality.
Express contract A contract in which the term started in words (written and spoken)
by the parties.
Implied contract A contract which is inferred from the circumstances of the case or
from the conduct of the parties.
Quasi contract An obligation created by law, regardless of agreement.
Executed contract A contract which is fully performed by both the parties.
Executory contract A contract in which the promises of both the parties have yet to
be performed.
Partly executory, partly executed - A contract in which one party has performed his
obligation, but the other party has yet to perform his obligation.
Unilateral contract A contract in which only one party has yet to perform his
obligation.
Bilateral contract A contract in which both the parties have yet to perform their
obligations.

Q.11. Explain the rules regarding offer under the Indian Contracts Act, 1872.

(1) An offer must be capable of creating legal relations:

An offer must be such that when accepted it will result in a valid contract. A mere
social invitation cannot be regarded as an offer, because if such an invitation is
accepted it will not give rise to any legal relationship.

(2) The offer must be distinguished from mere statement of intention:

The terms of an offer should be clear so that there is no confusion whether; it is a
valid offer or a mere statement of intention. Sometimes, a person declares that he has
the intention to do something; this does not amount to an offer.
ADVERTISEMENTS:
Such statements merely indicate the intentions that an offer will be made in future or
an offer will be invited in future.

(3) The offer must be distinguished from an invitation to receive offer:

The terms of an offer should be clear so that there is no confusion whether it is a valid
offer or an invitations Jo receive offer. Sometimes, a party does not make an offer but
simply proposes certain terms and invites the other party to make an offer on
proposed terms.

(4) An offer may be express or implied:

An express offer is made by words of mouth or it is written, while an implied offer
means an offer made by conduct.

(5) An offer may be general or specific:

A specific offer is one which is made to an ascertained person. And a general offer is
one which is not made to a specific person, but to the public at large. It may be noted
that in case of a general offer, the contract is not made with the entire world.
ADVERTISEMENTS:
But it is made only with the person, who having the knowledge of the offer, comes
forward and acts according to the conditions of the offer.
(6) An offer may be conditional:
An offer to be valid may contain a condition and in that case it has to be accepted
along with the condition stated therein. However, no offer can contain a term or
condition the noncompliance of which would amount to acceptance.

(7) The terms of an offer must be certain, definite and not vague:
The terms of an offer must be definite, clear and certain. If the terms of the offer are
vague and uncertain, no contract will come into existence.
ADVERTISEMENTS:
The reason for the same is that when the offer is vague or uncertain, it cannot be said
what exactly the parties intended to do.

(8) An offer must be communicated to the other party:

It is an important and essential element of a valid offer. The first part of the definition
of the offer emphasizes this requirement. According to this, the willingness to make
offer should be signified (i.e. indicated or declared).
In other words, the offer is completed only when it has been communicated to the
offeree. It may be noted that until the offer is communicated, it cannot be accepted.
Thus, an offer accepted without its knowledge, does not confer any legal rights on the
acceptor.

(9) The offer must be made with a view to obtain the consent of the offeree:
The second part of the definition of offer emphasiss the requirement that an offer
must be made with a view to obtain the consent of the offeree to the proposed act or
abstinence.
Thus, when a person is making an offer it means that he is making it with a view to
obtain the consent of the offeree. As soon as the offeree accepts it, the offeror is
bound by it.

Que.12 (a) who can enter into contract? Discuss.

As per section 11 of the Act every person who (a) has attained the age of majority (b)
is of sound mind and (c) is not otherwise disqualified from contracting, it competent
to contract
(a) Age of majority
In India, the age of majority is regulated by the Indian Majority Act.
Every person domiciled in India attains majority on the completion of
18 years of age
Where a guardian is appointed to the person on property of a minor
before 18 years of age, he or she (i.e. minor) attain majority on
completion of 21 years.
(b) Person of sound mind
A person is said to be of sound mind for making a contract if he, at the
time of making contract, is capable of understanding it and also
capable of forming a rational judgement as to its effect upon his
interest.
 A person who is usually of unsound mind, but occasionally of sound
mind may make a contract when he is of sound mind.
A person who is usually of sound mind, but occasionally of unsound
mind may not make a contract when he is of unsound mind.
(c) Contract by a person of unsound mind
A person who is always in state of unsound mind e.g. Idiot cannot
enter into contract.
In case of Lunatics or Drunken person, whether a party to a contract is
of sound mind or not is question of fact to be decided by the court.
Agreements entered in to by persons of sound mind are void.
(d) Contract by disqualified persons
If by any legislation, a person is declared disqualified proprietor he is
not competent to enter into any contract in respect of the property.
An alien enemy, (i) during war, cannot enter into contract with an
Indian subject, and (ii) before war, existing contracts may either be
suspended or dissolved.
A statutory corporation cannot enter into contract, which is ultra vires
its memorandum.
Municipal bodies are disqualified from entering into contract, which
are not within their statutory power.
Ambassadors, diplomatic courtiers enjoy certain special privileges with
the result that they cannot legally proceed against in Indian Court.
Insolvent persons are also disqualified for entering into the contract.
And all its properties lies to court and managed by only assignee
appointed by court itself.
While Convicts are incapable of entering into the contract unless
permitted lawfully. This incapability to contract comes to an end when
the period of sentence expires or when he is pardoned.

(b). what do you know about free consent and when the consent is not free?
Explain

Consent means an act of assenting to an offer. Two or more persons are said to
consent when they agree upon the same thing in the same sense.
Consent is said to be free when it is not caused by:

1. Coercion.
2. Undue influence.
3. Fraud.
4. Misrepresentation.
5. Mistake.
1. Coercion.

When a person is compelled to enter in to a contract by use of force by other

Party or under a threat, coercion is said to be employed.

Coercion is the committing, or threatening to commit, any act forbidden by

the Indian Penal Code, 1860 or the unlawful detaining, or threatening to
detain, any property, to the prejudice of any person whatsoever with the
intention of causing any person to enter in to an agreement.

2. Undue influence

A contract is said to be induced by undue influence where the relations

subsisting between the parties are such that one party is in a position to
exercise undue influence over the other.

A contract is said to be induced by undue influence where the relations

subsisting between the parties are such that one of the parties is in position to
dominate the will of the other and uses that position to obtain unfair
advantage over the other.

3. Fraud

A representation, which wrongly made, intentionally, is fraud.

Fraud exists when it is known that:
False representation has been made
- Knowingly or
- Without belief in its truth or
-recklessly,
Not caring whether it is true or false, and the maker induced the other party to
act upon it.
There is concealment of a material fact or there is a partial statement of fact in
such a manner withholding of what is not stated makes that which is stated
false.
The intention of the party making fraudulent representation must be to
deceive the other party to the contract or to induce him to enter in to contract.
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4. Misrepresentation

A statement of fact which one party makes in the course negotiations with a
view to inducing other party to enter in to a contract is known as
representation.
It must relate to some fact which is material to the contract.
It must be expressed by words spoken or written or implied from the acts and
conduct of the parties.
A representation, which wrongly made, innocently, is misrepresentation.
 5. Mistake

Mistake may be defined as erroneous belief about something.

Types of Mistakes:
- A mistake of law.
-A mistake of fact.

-Mistake of law is categorized as follows:-

1. Mistake of law of the country: Rule: Ignorance of law is no excuse.
2. Mistake of law of the foreign country: Treated as mistake of fact and the
agreement in such case is void.
- Mistake of fact is categorized as follows:
1. A Bilateral Mistake
2. A Unilateral Mistake
3: Bilateral Mistakes: Where both parties to an agreement are not under an
agreement as to matter of fact essential to the agreement, there is a bilateral
mistake. In such a case, the agreement is void.

When it is done by coercion, undue influence, fraud, misrepresentation,

mistake willing fully the consent is not free.

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