Legality of Object

Section 10 of the Contract act provides that

an agreement is a contract if it is made for a
lawful consideration and object.
Consideration and object of an agreement
shall be unlawful in following cases:-

If it is forbidden by law
e.g.- Mr X, a Hindu already married and having
living wife, enters into a marriage agreement
with Miss Y, an unmarried girl. The
agreement is void as second marriage is
prohibited by Hindu Law

 If it defeats provision of any law

e.g.- An agreement before marriage
between wife and her husband who are
Muslims, that the wife shall be at liberty
to live with her parents after the
marriage, will defeat the provision of
Muslim Law and hence void( Abdul
Nabab V. Hussenbi 1904)
If it is fraudulent
e.g.- X,Y,Z enter into an agreement for
the division among them of gains
acquired or to be acquired by them by
fraud. The agreement is void as object

 If it involves injury to the person or property of

another
e.g.- Mr P agrees to pay Rs 2 Lac to Mr Q if he
murders Mr Z. The agreement is void.
If the court regards it immoral- Interfering with
marital relations
If it is opposed to public policy
According to Lord Truro, Public policy is that
principle of law which holds that no subject can
lawfully do that which has a tendency to be injurious
to the public
Agreement against Public Policy:1 Agreement for trading with enemy
2 Agreements interfering with the course of
Justice

 Agreement for stiffing prosecution

Agreements of champerty and maintenance-
Maintenance means the act of promoting that
litigation in which a person has no interest of his
own . Champerty is bargain whereby one party
agrees to assist the other in recovering property
and in turn is to share the proceeds of his action.
Agreement for marriage brokerage- A marriage
brokerage agreement is an agreement whereby a
person promises for reward to procure the marriage
of another.
Agreement creating interest opposed to dutye.g.- Mr A agrees to pay Rs 5000 to a municipal
officer not to report unauthorised construction to
the Municipal Authorities. The agreement is void

 Trafficking in Public offices

Agreement tending to create
monopolies
Agreement restraining personal liberty
Agreements in restraint of parental
rights
Agreements interfering with martial
duties- An agreement to lend money to
woman in consideration of her getting a
divorce and marrying the lender is void.

Agreement in Restraint of
Trade
Every agreement
by which any one

is
restrained from exercising a lawful profession,
trade or business of any kind, is to that extent
void
The restraint may be complete or partial:- (In
Partial restrain, one is prevented from carrying
on a particular kind of business within a
particular locality or for a particular time)
1. e.g.- An agreement that one party will close a
mill for one month and an agreement that
one party would sell meat for 14 days in a
month are held void.

1-Statutory Exceptions:a)On the sale of goodwill of a business, the seller

may agree not to carry on similar business
within specified local limits as long as the buyer
carries on like business therein, provided that
such limits appear to the court as resonable
1. Such restriction should be to carry on a similar
business
2. Such restriction should be within specified local
limits
3. Such specified local limits must be reasonable
having regard to the nature of business
4. As long as the buyer or a person who gets titled
to the said goodwill , carries on like business.

b) Certain agreement by partners:1. Restraint on a continuing partner

2. Restraint on a retiring partner
3. Restraint on sale of goodwill of a firm
4. Restraint on or in anticipation of the
dissolution of a firm
2- Exceptions based on Judicial decisions
a) Service agreements
b) Trade combination
c) Agreements in restraint of legal
proceedings

 Contingent contract
A contingent contract is a contract to do
or not to do something
Quasi contract
Sometimes there is no intention on the
part of parties to enter into contract but
obligations resembling those created by
a contract are imposed by law.
1Claim for necessary supplied
2Obligation of a person enjoying
benefits of non-gratuitous
3 Responsibility of finder of loast goods

Performance of Contract
Performance means where a contract is
duly performed by both the parties and
contract comes to an happy ending and
nothing more remains.
According to Section 37, The parties
to a contract must either perform or
offer to perform their respective
promises, unless such performance is
excused under the provision of this Act

Types of Performance
Actual Performance- performance by both
the parties.
Attempted performance(Tender)- Offer of
performance from one party not accepted
by promisee.
Offer of performance or tender
A valid tender of performance is considered
to be the performance of promise and it
discharges a party from his obligation under
a contract.(under the rejection of offer)

Essentials of valid tender

It must be unconditional
It must be made at a proper time and place
Person making the tender must be able
and willing to perform it
Reasonable opportunity must be given to
the other party to examine the goods
A tender must be for the whole obligation
It must be made to the proper person i.e.
the promisee or his authorised agent.
It must be made in the proper form

Contracts which need not be performed

When it is illegal
When its performance becomes
impossible
When the parties to it agree to
substitute a new contract
When the person at whose option it is
voidable

By Whom contract must be

performed?

Promisor himself
Agent
Representatives
Joint Promisors

Persons entitled to Demand

Performance

Time and Place for Performance of Contract

Time or place is decided by both the parties to
the contract.
1. Performance within reasonable time where
no time is specified
2. Performance during working hours where
time is specified
3. Performance at a reasonable place and time
on a particular date
4. Enquiry about place for performance of
contract by promisor where no place is fixed

When Time is Essence of

Contract
Time is the essence of Contract

Time is not the essence of contract

Discharge of Contract
A contract is discharged when parties to
a contract no longer have any
obligation under the contract.
Various modes:-----Discharge by performance
Mutual agreement
Impossibility of performance
Operation of Law
Lapse of time
Breach of contract

Discharge by Performance
Actual performance
Attempted performance or tender

Discharge by Mutual agreement

According to Section 62, if the parties to a
contract agree to substitute a new contract
for it or to rescind or alter it, the original
contract need not be performed
Novation, Alteration, Rescission, Remission,
waiver

Discharge by Impossibility of performance

An agreement to do an impossible in itself

a void
Impossibility existing at the time of
contract
Known to parties
Unknown to parties

Subsequent Impossibility-Arises after

formation of contract
Declaration of war
Subsequent illegality
By the death of the parties

Discharge by Operation of Law

The contract is terminated by operation

of law under following cases:By death
By Insolvent
Discharge by merger
Unauthorised material alteration

Discharge by Lapse of time

Where contract is to be performed within a
stipulated time period and a party does not perform
it within time limit.
Act of Limitation

Discharge by breach of
contract

Breach of contract means failure of a

party to perform his obligations.
Actual Breach- On due date of performance,
During the course

of performance

Anticipatory breach- Anticipatory breach

of contract occurs when the party
declares his intention of not performing
the contract before the performance is
due.

Doctrine of supervening Impossibility

Initial impossibility- Agreement is void
ab-initio
Supervening impossibility- A contract
which is initially valid becomes void
when the act becomes impossible or
unlawful
Destruction of subject-matter of contract
By death or personal incapacity of the party
Non existence or non occurrence of a particular state
of things
Subsequent change of law
Declaration of war

Exceptions where impossibility does

not discharge the contract
Performance becoming difficult or
burdensome
Commercial impossibility
Default by third person on whom the
promisor relies
Strikes, lock outs, riots and civil
disturbance