Lecture-1

Law of Contracts-I

What is Law? In physical and natural sciences: In practical and moral sciences:
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Law of Contracts-I

Classification of Law: Public and Private Private Law: Substantive Law and Adjective Law Right: Right in rem and Right in personam Law of Obligation:
o o o o What is an obligation? Sources of obligation Agreement SLIDE-2 Contract

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Law of Contracts-I

Juristic concept of contract has two constituent elements: i. Obligation and ii. Agreement

Justification for the enforcement of a contract: i. Principle of moral justification ii. Principle of economic justification (Paton: Credit
depends essentially on ability to rely on the promises of others and can flourish only when there is a fully developed law of contract.)
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Law of Contracts-I

Law relating to contractsprior to the enactment of the Indian Contract Act 1872 Administration and Application of law by the Mayors Courts, Recorders Courts and the Supreme Courts In Presidency towns In Moffussil Areas
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Law of Contracts-I

The Indian Contract Act 1872

o Structure, Extent, and Commencement Effect of the ICA:
o The Act amends and defines certain parts only and is not exhaustive; o The Act is, in general, conclusive on all matters covered by it; o The Act applies to all contracts entered into after it came into force, and not before; o The Act applies to all contracts entered into in India and not those entered into outside India; o The Act admits application of the native law of the land in cases in which the Act is silent o The Act neither has any preponderance over the enactments made later, nor is superseded by the later enactments.
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After the enactment of ICA, following Acts have a bearing on contracts:

o o o o o Negotiable Instruments Act 1881 Transfer of Property Act 1882 Specific Relief Act 1963 Merchant Shipping Act 1883 (now repealed) Indian Railways Act 1890

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Law of Contracts-I
Exceptions:

Statutes, Acts or Regulations not expressly repealed

o o o o o o o o o The Interest Act 1839 The Usury Loans Repeal Act 1855 The Bills of Lading Act 1856 The Conveyances of Land Act 1854 The Workmens Breach of Contract Act 1859 (now repealed) The Common Carriers Act 1865 The Policies of Insurance, Marine and Fire Assignment Act 1866 The Carriage of Goods Act by Sea Act 1925 The Carriage by Air Act 1934

Usage or Custom of Trade Any incident of any contract not inconsistent with the express provisions of this Act
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Ways by which a contractual relation can be created:

o o o By Agreement and Contract By Standard Form Contract By Promissory Estoppel

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Contract
upon satisfaction of S. 10

Agreement
consideration

Promise
when accepted

Proposal
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1. 2. 3. 4. 5. 6. 7.

Law of Contracts-I Essentials of a Contract (S. 10) An agreement [S. 2 (e)]; The agreement should be made by the free consent (Ss 1322); The agreement should be entered into between parties competent to contract (Ss 11-12); It should be for a lawful consideration [Ss 2 (d), 25]; It should be with a lawful object (Ss 23-30); and It should not have been expressly declared to be void. Formalities under different laws: Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.
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1. 2. 3. 4. 5.

Proposal (Offer) [S. 2(a)] Plurality of persons; Communication of the proposal to the offeree; Object of making the proposal; Terms of the proposal should be certain and clear; and Intention to create legal relationship
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Communication of Proposal How is it made? (S. 3) When complete (S. 4) Lalman Shukla v Gauri Datt (1913) 11 All LJ 489 at p.492. Fitch v Snedkar (1868) 38 NY 248 at p.249. R v Clarke (1927) 40 CLR 227. Williams v Carwardine (1833) 4 B & Ad 621.
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