INTRODUCTION TO LAW

DR. M.K. PANDEY, LL.M, ACS,

ACMA,MBA,Ph.D

09871548899

 In Mans association with people in different

capacities, he is expected to observe a code of conduct or a set of rules. The objective of these rules is to make human association possible & conducive for the welfare of the state & its people LAW IS A GENERAL TERM:

Citizen : rules to obey Lawyer: vocation Legislator: rules which he has created Judge: guiding principles to apply to decision.

 Since it is not possible to give a single accurate

definition, the term law is preceded by an adjective e.g. Civil Law, Criminal Law, Mercantile Law Law includes all the rules and principles which regulate our relation with other individuals and with the State. State regulates the conduct of its people by a set of rules. Such rules of conduct, if recognised by the State and enforced by it on people is termed as Law.

IS LAW STATIC?
Law is not static. As circumstances &

conditions in a society change, laws are changed to fit the requirements of the society. As such, law prevailing in a society at any point of time must be in conformity with the general sentiments, customs & aspirations of its people.

OBJECT OF LAW
Object of law is order; result of order is that

men are enabled to look ahead with some sort of security as to the future. In the Indian Context it is to establish Socio - Economic Justice and remove existing imbalance in the socio- economic structure.

NEED FOR THE KNOWLEDGE OF LAW

IGNORENTIA JURIS NON EXCUSAT (IGNORANCE OF LAW IS NOT AN EXCUSE)

A businessman should be aware of legal principles so as to help him in avoiding conflict with the persons with whom he comes into business contact.

SOURCES OF LAW (With respect to Mercantile Law)

THE ENGLISH MERCANTILE LAW

a. Customs, usage and tradition b. Decisions of Judges in similar situations c. Act of parliament d. Laws prevailing among traders e. Roman law LAW ENACTED BY PARLIAMENT OR STATE LEGISLATURE PRECEDENTS SET BY PREVIOUS JUDICIAL DECISIONS CUSTOMS AND USAGE

INDIAN SCENARIO
FLAWS & LAWS

THE INDIAN LEGAL SYSTEMS COULD

CONSIDER MIGRATING FROM JURASSIC PARK WHY DO WHEELS OF JUSTICE GRIND SLOWLY?

LAW OF CONTRACT

Contract: An agreement made between two or more parties which the law will enforce.

An agreement comes into existence by the process of offer by one party and unqualified acceptance by the other party. Agreements are: Social & legal. Only a legal agreement is a Contract.

 What is an agreement ? When a person to whom a

proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise. Every promise and every set of promises, forming the consideration for each other is an agreement.

ESSENTIALS OF A VALID CONTRA

There must be an offer: When one person signifies to another his willingness to do or abstain from doing anything, with a view to obtain the assent of that other to such act or abstinence he is said to make a proposal.

 Essentials of offer :
Offer must be communicated to

the offeree.
It is the duty of the offeror to

communicate all the terms of the offer to the offeree. Actual communication may not be required.
Offer constitutes a willingness to

do some act or abstinence.

Offer must be made to some

other person.
Offer to one particular

person.
Offer to a group of persons.. Offer to the whole world..

(Continuing offer Vs Offer of Reward for Information).

Offer may be expressed or

implied.
Offer must be made with a

view to obtaining the assent of the other and should not be an expression of intention or enquiry.

Offer may be conditional.

Offer must be capable of

creating legal relationship.

The terms of the offer must

be certain.

 An offer must not thrust the

burden of acceptance on the offeree. - Offer must be distinguished from:

- Cross offers, - Counter offers, - Invitation to offer, - Declaration of intention, - Auctions & Tenders.

Price lists, catalogues and advertisements are not offers.

 An offer can be revoked, it

may come to an end due to lapse of time, it may be revoked when the acceptor fails to fulfil the condition precedent to acceptance or it may be revoked by the death or insanity of the proposer.

 There must be unqualified

acceptance of the offer :

Acceptance is to an offer what a

lighted match is to a train of gunpowder. ( But before a lighted match is brought in contact with gunpowder, it can be removed from the train)

 Elements of acceptance:
Must be made by the party to

whom the offer is made. It must be absolute & unqualified. It must be expressed in some usual or reasonable manner. It must be given within reasonable time.

It cannot be made in

ignorance of the offer. It must be given before the offer lapses. It must be communicated to the offeror. Mere mental acceptance is no acceptance.

 Intention to create legal

relationships:
e.g.

A husband promises to pay a monthly allowance to his wife. This cannot be a contract as there is no intention on the part of the husband to create a legal relationship Balfour Vs Balfour

 Lawful consideration:

Consideration is the price for which the promise of the other is bought. Consideration means something in return (give something & get something) It may also be a loss or detriment suffered by one party & profit or benefit to another party.

 Justice Lush in the Case

Currie Vs. Misa

a valuable consideration in the sense of

the law may consist either in some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other

 According to the Contract Act: When at the desire of the

promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing something, such act or abstinence or promise is called a consideration for the promise.

 Essential elements: Consideration must move at

the desire of the promisor. Consideration may move from the promisee or any other person. It is an act, abstinence, forbearance or detriment. Consideration can be past, present or future.

Consideration need not be

adequate. It must have some value in the eyes of law. It must be real not illusory. It must be something which one is not already bound to do.

Consideration must be

lawful..

It is not forbidden by law. It should not be of such a nature

that if allowed it would defeat the provisions of some law of the country. It should not be fraudulent. It should not involve injury to the property or person of the other. Court should not regard it as immoral or opposed to the public policy.

 Subject to certain

exceptions, an agreement made without consideration is a nude contract and is void. Exceptions:
Love and affection. A written and registered agreement based on natural love and affection between near relatives.

 Compensation for past

voluntary services. Promise to pay a time barred debt.

Completed gift.
Transfer of property by one

person to another as a gift according to the provisions of Transfer of Property Act.

 Contract of agency does not

require consideration.
Consideration is not required

for remission of debt.

A contract of guarantee is

made without consideration.

 Competency of Parties: The

following persons are incompetent to contract: 1.Minors,

A contract with a minor is void

abinitio. Payment can be made out of the property of a minor for the necessaries of life supplied to him.
Necessaries are those without which an individual cannot

reasonably exist.

 A minor cannot ratify any

contract made during his minority. A minor may be admitted to the benefits of a partnership. The minors contracts do not impose any liability on his parents even if the contract is for necessaries. A minor cannot be declared insolvent because he is incapable of contracting debts.

 2. Persons of unsound mind Idiot Lunacy or insanity Drunkenness or intoxication 3. Disqualified persons Alien enemies Foreign sovereigns & ambassadors Convicts Undischarged insolvent

 What about the following

persons?

Married woman. Corporations.

Free & genuine consent:. Consent is said to be free when it is not caused by (i)coercion, (ii)undue influence, (iii)fraud, iv)misrepresentation or (v)mistake.

Coercion: 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 whatever, with the intention of causing any person to enter into an agreement.

 Even threat to commit

suicide amounts to coercion.

The threat need not proceed from the party

to the contract, it may proceed from a third person also. A threat to file a civil or criminal suit is not forbidden by the Indian Penal Code. The burden of proving that the consent was obtained by coercion shall lie upon the aggrieved party who wants to set aside the contract.

 Effect of Coercion:
The contract is voidable at the option of the

party whose consent was so obtained. When the aggrieved party decides to set aside the contract, it must give back any benefit received from the other party under the contract. Moreover, the other party need not perform his part of the contract. If the aggrieved party does not opt to set aside the contract, it works as a valid contract.

 Undue Influence: where

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

 When a person is in a position to

dominate the will of the other: Real or apparent authority. Fiduciary relation. Persons with affected mental capacity. When a transaction appears to be unconscionable, it is presumed that the stronger party has exercised undue influence over the weaker party.

 Undue influence may be exerted by a

person who is not a party to the contract.

Lack of foresight is not a ground for

establishing a case of undue influence.

The law presumes undue influence in a

contract with a pardanashin woman, and the courts throw the burden on the other party to prove that undue influence was not exercised.

 Effect of undue influence: The contract is voidable at the option of the party whose consent was so obtained. The court may direct the aggrieved party to refund the benefit whether in whole or in part or set aside the contract without any direction for refund of benefit. If the aggrieved party does not opt to set aside the contract, it works as any other valid contract.
Burden of proof: is on the party who is in a

position to dominate the will of the other.

Fraud: Fraud exists when it is shown that a 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 intended the other party to act upon it. It also exists when there is a concealment of a material fact.

 The fraud cannot be committed

by a stranger to the contract. The fraud must have been committed upon the other party. The following acts constitute a fraud:
Suggestion that a fact is true, by

one, who does not believe it to be true. An active concealment of fact, by one, having knowledge of the act.

 A promise made without any

Mere silence is not fraud,

intention of performing it. Any such acts or omission which law specifically declares to be fraudulent.
When silence itself is equivalent

except;

to speech. When it is the duty of the person keeping silence to speak. When it is the duty of the seller to disclose latent or hidden defect.

 Effect of fraud. The contract is voidable at the option of the defrauded party. The defrauded party is entitled to compensation for any damage he has sustained. The defrauded party may insist that the contract shall be performed and that he should be put in the position in which he would have been if the representation made was true.

Misrepresentation is a misstatement of a material fact made innocently with an honest belief as to its truth or non-disclosure of a material fact, without any intent to deceive the other party.
The effect of misrepresentation is

that the agreement is voidable by the party whose consent is obtained by misrepresentation.

Mistake is erroneous belief about something. It may be mistake of law or mistake of fact.
Mistake of law does not result in a

voidable contract. Bilateral mistake of fact renders a contract void. (lack of consensus ad idem). The mistake must relate to fact, not opinion. The fact must be essential to the agreement & the fact must be existing at the time of contract.

 Instances of Bilateral Mistake:

Mistake as to.

1. the existence of the subject matter. 2. the identity of the subject matter. 3. title or rights.

4. the quantity of subject matter.

5. the quality of subject matter.

6. assumptions.

 Unilateral mistake does not effect the

validity of an agreement. However, if it can be proved that the mistake was caused by fraud or misrepresentation it can be avoided.
Instances of Unilateral Mistake:

Mistake as to.

1. Identity of the contracting party. 2. The character of document.

 Lawful object: The object of

an agreement is unlawful if: it is forbidden by law; or it is of such a nature that, if permitted, it would defeat the provisions of any law; or it is fraudulent; or it involves or implies injury to the person or property of another; or the court regards it as immoral, or opposed to public policy.

 Agreements opposed to Public Policy

1. Trading with an enemy 2. Agreements interfering with the course of justice. 3. Stifling prosecution. 4. Maintenance and champerty agreement 5. Traffic in public offices 6. Agreements creating interest opposed to duty 7. Agreements unduly restraining personal liberty...................

 Agreements opposed to Public

Policy
8. Agreements interfering with parental
9. Marriage brokerage agreements 10. Agreements creating monopolies 11. Agreements to defraud creditors 12. Agreements to defraud revenue authorities

duties

 Agreement should not be

expressly declared void by any law in force in the country. Agreements in restraint of marriage Agreements in restraint of trade (exception is the sale of goodwill, or agreements by partners under the partnership act) Uncertain agreements (the meaning of which is uncertain)......

 Agreements in restraint of legal

proceedings Curtailing the period of limitations Wagering agreements

Possibility of performance:
An agreement to do an impossible act is in itself void.

 Legal formalities: A contract

may be made by words spoken or written. It is in the interest of the parties that the contract should be in writing. In some cases the document in which the contract is incorporated is to be stamped. In some other cases, the contract, besides being a written one, has to be registered.