indian contract act part 3

SERIES

2 days ago

Transcript

00:00Hello welcome to a new session. In this video we going to learn Indian Contract Act from

00:05from Business Law and Ethics. Free Consent

00:09Mutual Consent or Consensus ADIM that is Meeting of Mind Consent is free when it is not caused by

00:15Coercion Undue Influence

00:19Fraud Misrepresentation or

00:22Mistake

00:24Section 15

00:26Coercion

00:27Committing or Threatening to Commit

00:30Unlawful Detaining or Threatening to Detain

00:33Even a threat to third party also included

00:36Mere threat to prosecute does not amount to coercion

00:40Actually committing an offense forbidden by IPC

00:43Applicability of IPC is not relevant

00:47At the time when coercion is employed

00:50Or

00:51At the place where coercion is employed

00:54Coercion may proceed from

00:56A party to the contract, or

00:59Stranger to contract

01:02Coercion may be directed against

01:04A party to the contract, or

01:07Stranger to contract

01:10Some examples

01:121. X threatens to kill Y if he does not agree to sell his car to X for 10,000 Indian rupees

01:19Fearing death, Y enters into an agreement

01:23With X for the sale of his car for 10,000 Indian rupees only

01:282. A tells his wife that he would commit suicide, if she did not transfer her personal assets to him

01:35She does so

01:37Under this threat

01:39Can the wife avoid the contract?

01:41And the answer is yes for more details refer case study

01:45Chiksem Amaraja vs. Seshama

01:47Next topic

01:49Section 16

01:51Undue influence

01:53A dominant position i.e. one of the parties dominates will of the other

01:57The use of such position is to obtain an unfair advantage

02:01The dominant party obtains an unfair advantage by way of entering into a

02:06Contact

02:07Undue influence was employed or not employed its burden of proof

02:121. Unconscionable

02:15Transactions

02:17The burden of proof is on the dominant party

02:20The dominant party has to prove that undue influence was not employed

02:242. Any other transaction

02:27The burden of proof is on the weaker party

02:31The weaker party has to prove that undue influence was employed

02:35Example

02:36As son has forged B's name to a promissory note

02:40B, under threat of prosecuting A's son, obtains a bond

02:45From A for the amount of the forged note

02:48If B sues on this bond, the court may set the bond aside

02:52Refer case laws

02:54Kali Baksh vs. Ramgopal

02:57House vs. Bishop

02:59Kirparam vs. Sami Uddin ad

03:02Con

03:03Relationship, where undue influence arise

03:07Parent and child

03:09Trustee and beneficiary

03:12Guardian and ward

03:13Master and servant

03:16Religious guru and disciple

03:18Income tax officer in relation to an assessi

03:21A magistrate or police officer in relation to an

03:25Accused person

03:27Doctor and patient

03:29Financer and financi

03:31Solicitor and client

03:34Relationship, where undue influence does not arise

03:38Landlord and tenant

03:40Creditor and debtor

03:42Husband and wife

03:44Exception

03:45Pardanishin woman, seclusion or being away from the people

03:50Next tipoy we going to learn

03:52Fraud

03:54It must be proved that fraud was committed by

03:57A party to the contract, or

04:00Anyone with the connivance of a party to the contract

04:04The party has made a representation of a fact

04:07An opinion, a statement of expression, or a statement of intention does not constitute a fraud

04:14Essentials of fraud

04:16By a party to the contract

04:18The party makes a representation

04:21The representation is false

04:24The misrepresentation was made innocently

04:27The misrepresentation was not made with a view to deceive the other party

04:31The other party has actually acted

04:34Some examples for better understanding

04:371. A fraudulently informs B that his house is free from encumbrances

04:43B hereupon buys the house

04:45The house is

04:47Subject to a mortgage

04:49B may avoid the contract and get back his money

04:522. A man, by the name of Sham, called at jeweler's shop and chose a costly ring

05:00He tendered in payment a check

05:02Which he signed in the name of credit

05:05He took the ring and pledged it to Bolanath, who had no notice of the

05:10Fraud

05:11Can the jeweler recover the ring from Bolanath?

05:15And the answer is no

05:163. A woman fraudulently represented to a firm of jewelers that she was the wife of a certain baron and thus

05:24Obtained two pearl necklaces on credit on some pretext with a view to buying them

05:29She sold those necklaces to

05:31X, a third person

05:34Can the jewelers recover the necklace from X?

05:38And the answer is yes

05:394. A sells, by auction, to B, a horse which A knows to be unsound

05:46A says nothing to B about the horses

05:49Unsoundness

05:51This is not fraught in A

05:53Next is

05:55Misrepresentation conditions

05:57There was a representation or assertion

06:00Such assertion induced the party to enter into the contract

06:04The assertion related to a matter of fact not of law

06:08It was not a mere opinion

06:10It was made with an honest belief in its truth

06:14Here party can only avoid contract and cannot claim damages

06:18Damages for innocent misrepresentation

06:21In case of company's prospectus issued to public

06:25Breach of warranty of authority by an agent

06:28Negligent representation by person having confidential relation

06:33Types

06:341. Unwarranted statements

06:38When a person positively asserts, makes an absolute and explicit statements of facts, that fact is true, though he has no reliable source to form this opinion but he believe it to be true

06:50This is one type of misrepresentation

06:532. Breach of duty

06:56Any breach of duty which brings advantages to the person committing it by misleading the other to his prejudice is a misrepresentation

07:03Will fool misrepresentation or fraud

07:06Section 17

07:08False representation or assertion of fact

07:12Made with intention to induce the other

07:14The statement made either with the knowledge that it was false or without belief in its truth

07:20The party defrauded can avoid the contract and also claim damages

07:24Contracts yabarami fide

07:27A contract's having a special duty to act with the utmost good faith

07:31For example

07:33Contract of insurance of all kinds

07:36Company prospectus

07:38Contract for the sale of land

07:41Contracts of family arrangements

07:44The representation is false that is misrepresentation

07:48The misrepresentation was made willfully

07:51The misrepresentation was made with a view to deceive the other party

07:55The other party is actually deceived

07:58The other party has suffered a loss

08:01So when is a representation considered as false?

08:05Where the person makes a representation of a fact knowing that such

08:09Fact is not true

08:11Where the person conceals a fact even though he has knowledge of such

08:15A fact

08:16Where a person makes a promise without any intention of performing it

08:21Any act omission declared by law as fraud also amounts to fraud

08:25Any other act fitted to deceive also amounts to fraud

08:29Example

08:31Mr. A, by a misrepresentation, leads Mr. B erroneously to believe that 500 mons of indigo are made

08:39Annually at S factory

08:41Mr. B examines the accounts of the factory, which show that only 400 mons of

08:47Indigo have been made

08:49After this Mr. B buys the factory

08:52The contract is not voidable on account of Mr. A's

08:56Misrepresentation

08:58Silence

09:00General rule

09:01Mere silence as to facts likely to affect the willingness of a person to enter into a contract

09:07Is not fraud, unless the circumstances of the case are such that, regard being had to them,

09:14It is the duty of the person keeping silence to speak, or unless his silence, is in itself, equivalent to speech

09:21However in the following two cases silence amounts to fraud, where there is change in circumstances

09:27When there is half-truth

09:29Exceptions

09:31Where the parties stand in fiduciary relationship

09:35When silence is equivalent to speech

09:38Partial disclosure of truth which deceives the other party is a fraud

09:42Next is

09:44Section 20 and 22

09:47Mistake

09:48If mistake of essential fact the agreement will be void

09:52Mistake of fact and not of law because mistake of law no excuse

09:56Mistake must be mutual or bilateral

09:59Miscalculation or error of judgment will not be considered as

10:04Mistake

10:05Mutual or common mistake as to subject matter

10:09Mistake as to existence of the subject matter

10:12Mistake as to identity of the subject matter

10:16Mistake as to quantity of the subject matter

10:19Mistake as to quality of the subject matter or promise

10:23Bilateral mistake

10:25The agreement is void if

10:27The mistake relates to a fact

10:30Such fact is material to the agreement, and

10:33Both the parties are at mistake

10:36Bilateral mistake may be

10:38Mistake as to the subject matter

10:41Mistake as to the possibility of performance

10:44Mistake as to subject matter covers following cases

10:48Mistake as to existence of subject matter that is mutual mistake

10:53Mistake as to identity of subject matter when both parties have different subject matter of contract in their mind

11:00Mistake as to the quality of the subject matter

11:03Mistake as to title of subject matter

11:06Mistake as to price of the subject matter

11:09Mistake as to possibility of performance of contract

11:13Unilateral mistake

11:16The contract is neither void nor voidable

11:19Unilateral mistake as to nature of the contract

11:22Person who signs an instrument is bound by its terms even if he

11:27Has not read it except in case of

11:30The blindness, illiteracy, or senility

11:33A trick or fraudulent misrepresentation as to the nature of the document

11:38Unilateral mistake as to the identity of the person contracted with

11:42Legality of object and consideration

11:45Section 23

11:47Unlawful object or consideration

11:50Meaning and effects

11:52Circumstances in

11:54Which object or

11:56Consideration is

11:58Unlawful

12:00An agreement to do

12:02Something forbidden by

12:04Law

12:05An agreement is unlawful if

12:07It involves doing of an act which is forbidden

12:11By any law for the time being in force

12:14Next

12:15Defeating the provisions of

12:17Any law

12:19An agreement is unlawful if

12:21It is of such a nature that if permitted

12:24It would defeat the provisions of any law

12:27Even though it is not directly prohibited by

12:30Any law

12:31Next

12:33Fraudulent

12:34An agreement is unlawful if

12:37It is made to make a fraud on any person

12:40Next

12:41Involves injury to any

12:43Person or his property

12:46An agreement is unlawful if

12:48It is made for the purpose of causing injury

12:51To any other person or property of another person

12:55Next

12:57Immoral or opposed to

12:59Public policy

13:01An agreement is unlawful if

13:04The court regards that object or

13:07Consideration of such agreement is

13:10Immoral or

13:12Opposed to public policy

13:14Next

13:15Legal effect

13:17Every agreement of which the object or consideration is unlawful is void

13:22When is object or consideration said to be against public policy

13:26Agreement for trading with enemy

13:29Agreement interfering with personal liberty

13:32Agreement interference with parental duties

13:35Agreement interfering with marital duties

13:39Agreement interfering with course of justice

13:42Agreement for improper promotion of litigation

13:45Agreement for stifling prosecution

13:48Maintenance agreement

13:50Champerty agreement

13:52Agreement to do an act against the duty of a person

13:56Marriage brokerage agreement

13:58Agreement not to bid

14:00Agreement to create monopolies or to eliminate or reduce competition

14:05Agreement for sale of public offices and titles

14:08Maintenance and Champerty agreement

14:11Meaning of maintenance

14:13Agreement

14:14A party agrees to provide assistance

14:17Financial or otherwise

14:19To

14:20Another party to institute or defend a suit

14:23The person providing such assistance has no interest in such suit

14:28The party who receives such assistance agrees to pay something

14:32In return to the person who provides such assistance

14:35Legal effect of

14:37Maintenance agreement

14:39The maintenance agreement is valid if it is bona fide and the

14:43Payment the person providing such assistance is reasonable

14:47Meaning of Champerty

14:49Agreement

14:51A party agrees to provide assistance, financial or otherwise, to

14:56Another party to institute or defend a suit

15:00The person providing such assistance has no interest in such suit

15:04The party who receives such assistance agrees to share the

15:08Proceeds from the suit received by him in return to the person

15:12Who provides such assistance, legal effect of Champerty

15:17Agreement

15:18The Champerty agreement is valid if it is bona fide and the

15:23Share of proceeds paid to the person providing such assistance is reasonable

15:29Section 25

15:31Agreements unlawful in part

15:33An agreement containing

15:35Legal and illegal parts

15:37Whether unlawful part can be separated from unlawful part

15:42If yes

15:43Lawful part can be enforced, or

15:46Unlawful part cannot be enforced

15:49If no

15:50The whole agreement is void

15:52Parts

15:53A reciprocal agreement

15:55Containing legal and illegal

15:57Parts

15:59A reciprocal agreement

16:01Containing legal and illegal

16:03Parts

16:04The reciprocal promise to do

16:07Legal things

16:08Can be enforced

16:10Illegal things

16:12Cannot be enforced

16:14An agreement containing

16:16Legal and illegal parts

16:19The alternate promise to do

16:21legal things can be enforced. Illegal things cannot be enforced.

16:29Section 30. Wagering Agreements. An agreement between two persons under which money or monies

16:36worth is payable, by one person to another on the happening or non.

16:42Happening of a future uncertain event is called a wagering agreement.

16:46Effects of Wagering. Agreements. The agreement is void.

16:51The agreement is illegal in the states of Maharashtra and Gujarat.

16:56No suit can be filed to recover the amount won on any wager.

17:00Agreements not held as. Wagers.

17:04Agreement to pay prize money not exceeding Rs. 1000.

17:08An agreement to pay a prize exceeding Rs. 500 to the winner of.

17:12A horse race is not a wager.

17:15Section 31. Contingent Contracts.

17:18A contingent contract is a contract to do or not to do something.

17:23If some event, collateral to such contract, does or does not happen.

17:28Essentials Features of.

17:31A contingent contract.

17:33It is a contract to do or not to do something.

17:35This contract is dependent on happening or non-happening of an.

17:40Event.

17:41Such an event is a collateral event, i.e., it is collateral to the contract.

17:47That is the event must not depend upon the mere will of a party.

17:51The event is uncertain.

17:53When contingent contract is enforced.

17:56When such event has happened.

17:58When the happening of such event.

18:00Becomes impossible.

18:02When such event has happened within.

18:05The specified time.

18:07When the happening of such event.

18:09Becomes impossible before the expiry.

18:13Of specified time.

18:14When such event has not happened.

18:17Within the specified time.

18:19When such person acts in the manner.

18:22As desired in the contract.

18:24Now let's see when does it become void in contingent contract.

18:28When the happening of such event.

18:31Becomes impossible.

18:33When such event has happened.

18:35When the happening of such event.

18:38Becomes impossible before the.

18:40Expiry of specified time.

18:43When such event has not happened.

18:45Within the specified time.

18:47When such event has happened.

18:50Within the specified time.

18:51When such person does anything.

18:54Which makes the desired future.

18:57Conduct of such person.

19:00Impossible, or.

19:02Dependent upon certain contingency.

19:05Lastly.

19:06Impossible events.

19:08Such an agreement cannot be enforced since it is void.

19:12Whether the.

19:13Impossibility of the event was known to the parties or not as immaterial.

19:18Void agreements.

19:19A void contract is one which is destitute which is great need.

19:23Of legal.

19:25Effects become void.

19:27An illegal contract too has no legal effect and also void.

19:31Any benefit received in void contract has to be restored.

19:35Consequences of illegal or void agreements.

19:38Illegal agreement is entirely void.

19:41No action can be brought by a party to an illegal agreement.

19:45Money paid or property transferred here cannot be recovered.

19:48If contract consists of two part that is legal and illegal and if separable then.

19:54Legal part become valid and other void.

19:56If not separable entire contract become void.

20:00Any future contract based on illegal contract also become void.

20:04I have listed out all the void agreements in the slide for your reference.

20:09Take a look.

20:09Section 26

20:11Agreements in Restraint of Marriage

20:14Every agreement in restraint of the marriage of any person is void.

20:19Section 27

20:20Agreements in Restraint of Trade

20:23Every agreement by which

20:25anyone is restrained from exercising

20:28a lawful profession, trade, or business of any kind

20:32is void.

20:34To that extent

20:35Burden of Proof

20:37Party supporting the contract

20:40Must show that the restraint is

20:42Reasonably necessary to protect his interests.

20:47Party challenging the contract must show that the restraint is

20:50Injurious to the public

20:52Exceptions to Sector 27

20:55Sale of Goodwill

20:56Such restriction must relate to a similar business

21:00Such restriction must be within specified local limits

21:04Such restriction must be for the time so long as the buyer or any

21:09Person deriving title to the goodwill from him

21:12Carries on alike

21:13Business in the specified local limits

21:16Such specified local limits should be reasonable having regard to

21:21The nature of the business

21:23Next

21:24Restriction on Existing

21:26Partner

21:28An agreement by a partner not to carry on any business other than that

21:32Of the firm is valid

21:34Next

21:36Restrictions on Outgoing

21:38Partner

21:39An agreement may provide that an outgoing partner will not

21:43Carry on a similar business after dissolution of the firm

21:47Such restriction must be within specified local limits or within a

21:52Specified period

21:54The restriction should be reasonable having regard to the nature

21:57Of the business

21:59Next

22:00Restrictions on Partners

22:03Upon or in anticipation of the dissolution of the firm

22:09An agreement may provide that some or all of the partners will

22:12Not carry on a similar business

22:14Such restriction must be within specified local limits or within a

22:19Specified period

22:21The restriction should be reasonable having regard to the nature

22:25The restriction should be reasonable having regard to the nature

22:25Of the business

22:27Next

22:28Restriction in case of sale

22:31Of goodwill of a firm

22:33At the time of sale of goodwill of the firm

22:36A partner may agree

22:37That he will not carry on a similar business

22:40Such restriction must be within specified local limits or within a

22:45Specified period

22:47The restriction should be reasonable having regard to the nature

22:51Of business

22:52Section 28

22:54Agreements in restraint of legal proceedings

22:57An agreement by which

23:00Any party is restricted absolutely

23:02From enforcing his legal rights under any contract is void

23:06An agreement which limits the time within which an action may be

23:10Broad is void

23:12Execptions to section 28

23:15An agreement is not void merely because it provides that any

23:19Dispute arising between two or more persons shall be referred to

23:23Arbitration

23:25An agreement is not void merely because it provides that any

23:29Dispute that has arisen between two or more persons shall be

23:33Referred to arbitration

23:35Quasi-contracts

23:37It means a contract which lacks one or more of the essentials of a contract

23:42Quasi-contracts are declared by law as valid contracts on the basis of

23:47Principles of equity that is no person shall be allowed to enrich himself at

23:52The expense of another

23:54The legal obligations of parties remain same in case of a quasi-contacts

24:00Also, i.e., the parties will have same obligations and rights as if such

24:05Quasi-contracts fulfills all the essentials of a contact

24:09Section 68

24:11Supply of necessaries to persons incompetent to contract

24:15A person who is incompetent to contact is made liable under section

24:20Section 68

24:21Conditions of Section 68

24:24The liability of an incompetent person arises if necessities are supplied

24:29To

24:30Such person that is incompetent person

24:33Or

24:34Any other person who is dependent on such incompetent person

24:39Liability of incompetent person

24:41The person who supplies necessities to the incompetent person is

24:46Entitled to be reimbursed from the property of such incompetent

24:50Person

24:51However, the incompetent person is not personally liable

24:56Necessities

24:57Means necessaries suitable to the conditions in life of

25:01The person to whom such necessities are supplied

25:04Example

25:06Mr. A supplied rice and wheat to the wife and children of Mr. B, who is a lunatic

25:12Mr. B has assets worth 1

25:14Lock of rupees

25:16On non-payment, Mr. A can proceed against the assets of Mr. B

25:21Section 69

25:23Payment by a person who is interested in a transaction

25:26Reimbursement of a person paying money due by another in payment of which he is interested

25:32Conditions of Section

25:3469

25:35One person is legally bound to make a payment

25:39Some other person makes such payment

25:42The person making such payment is not legally bound to make such payment

25:46The person making such payment is interested in paying such amount

25:50Legal effect of Section 69

25:53If all the conditions of Section 69 are satisfied, the person who is interested in paying such amount

26:00Shall be entitled to recover the

26:02Payment made by him

26:04Refer case law

26:06Exol versus

26:07Partridge

26:09Mr. A left his carriage on Mr. B's premises

26:13Mr. B's landlord seized the carriage as distress

26:16For rent

26:18Mr. A paid the rent to obtain the release of his carriage

26:22Mr. A can recover the amount from Mr. B

26:25Section 70

26:27Obligation of person enjoying benefit of non-gratuitous act

26:31Conditions of Section 70

26:34A person has lawfully

26:36Done something for another person, or

26:39Delivered something to another person

26:42Such person must have acted

26:44Voluntarily

26:46And

26:47Non-gratuitously

26:49The other person has enjoyed the benefit of

26:52The act done for him

26:55Or

26:56The thing delivered to him

26:58Legal effect of Section 70

27:00If the conditions of Sector 70 are satisfied, there will be a quasi-contract between the parties

27:07Consequently, the party who has done something or delivered a

27:11Thing shall be entitled to recover its value from the person who

27:15Obtained the benefit of the same

27:18Example

27:19Mr. A, a tradesman, sends some goods ordered by Mr. B

27:24Mr. A's servant delivers the goods by mistake at Mr. C's

27:29House

27:30Mr. C uses the goods

27:33Mr. A can recover the price of the goods from Mr. C

27:36B, not from Mr. B

27:38Section 71

27:40Finder of goods

27:42A finder of goods has same rights and duties as that of a Bailey

27:46Example

27:48Mr. X finds the lost dog of Mr. Y and takes into his custody

27:53Here, Mr. X has the same responsibility

27:56As Bailey

27:58Section 72

28:00Money paid under a mistake or coercion

28:03Conditions of Section 72

28:06A person has

28:08Paid money to another person, or

28:11Delivered something to another person

28:13Such person must have acted

28:16Under a mistake, or

28:18Under coercion

28:20Legal effect of Section 72

28:23If the above conditions are satisfied, there will be a quasi-contract

28:28Between the parties

28:30Consequently, the party who has paid money or delivered a thing

28:34Shall be entitled to recover its value from the person who obtained

28:38The benefit of the same

28:40Example

28:42Mr. A and Mr. B jointly owe two zero zero to Mr. C

28:46Mr. A pays the amount to Mr. C

28:49Mr. B, not knowing this fact, pays ours point one hundred over

28:54Again to Mr. C

28:56Mr. C is bound, to repay the amount to Mr. B

29:01Performance of a contract

29:03Every contract creates certain obligations on each of the parties involved in it

29:08When both the parties to the contract fulfill their obligation towards each other the contract is said to be performed

29:15When both the parties to the contract have performed their obligation the contract is said to be discharged by performance

29:22Example

29:24Mr. A desires Mr. B, who owes him ours point one hundred, to send him a note for ours point one hundred by post

29:32The debt is discharged, promise

29:35Is fulfilled, as soon as Mr. B puts into the post a letter containing the note duly addressed to Mr. A

29:42Section 37 and Section 38

29:45Obligations of parties to contracts

29:49Actual performance

29:51Promiser makes an offer of performance to the promisee

29:55The offer has been accepted by the promisee

29:58As per the terms and conditions

30:00Prescribed manner

30:02One party performs and other party duty is to

30:06Perform

30:07Example

30:09Jin buys a house from J-Hope for ours

30:12Five locks

30:14Jin pays

30:15The price and J-Hope delivers the papers of the house

30:19Next

30:20Offer to performance

30:22Offer to performance

30:22Tender performance

30:24Attempted performance

30:26Promiser makes an offer of performance to the promisee

30:30The offer has not been accepted by the promisee

30:34When the performance becomes due, the promisee

30:37Does not lose his right

30:39Offers to perform his

30:42Obligation but the promisee refuses to accept the performance

30:46Example

30:48Mr. Jimin promises certain goods to Mr. Namjoon

30:51Mr. Jimin takes the

30:54Goods to the appointed place during business hours

30:57But Mr. Namjoon refuses to take the delivery of goods

31:01Types of tenders and their effects

31:04Tender of goods and services

31:08Goods or services need not be offered again if

31:11The promiser is

31:13Discharged

31:14Not required to offer again

31:17Not responsible for non-performance

31:20Is entitled to sue the other party

31:232.

31:25Tender of money

31:26The debtor remains liable to pay the debt

31:29The debtor is discharged from liability for payment of interest from the date of tender

31:34Section 38

31:36Conditions or essentials for a valid tender

31:39The tender must be unconditional

31:41The tender must be for the whole obligation

31:45The tender must be given at a proper time

31:48The tender must be given at a proper place

31:52The tender must give a reasonable opportunity of inspection

31:55The party giving the tender must be willing to perform his obligation

31:59The tender must be made to the proper person

32:02The tender must be made for the exact amount of money

32:06Persons liable for and entitled to performance

32:101.

32:12Persons liable for performance promiser

32:15Persons entitled to performance promisi

32:18Example

32:19Mr. X promises to paint a picture for Mr. Y

32:23He will have to do himself as it involves his personal skill

32:27Cannot be enforced either by Mr. X's representatives

32:312.

32:33Persons liable for performance agent of promiser

32:36Persons entitled to performance agent of promise

32:403.

32:42Persons liable for performance in of the several joint promisers

32:45Persons entitled to performance joint promises

32:49Any one promiser may be compelled to pay

32:52and the loss may be shared by the others in the case of default

32:55A legal representative is liable only to the extent of property of the deceased received by him

33:01Example

33:03Mr. A, Mr. B and Mr. C jointly promise to pay Mr. D ours

33:083,000 Mr. A and Mr. B are untraceable

33:12Mr. D shall compel Mr. C to pay in full

33:15Mr. A, Mr. B and Mr. C jointly promise to pay Mr. D the sum of ours

33:213,000 Mr. C is compelled to pay the whole

33:25Mr. A is insolvent, but

33:28His assets are sufficient to pay one half of his debts

33:32Mr. C is entitled to receive ours

33:350.500 from Mr. A's estate and

33:371,250

33:39From Mr. B

33:41Mr. F, B and G jointly borrowed ours

33:455,00,000 from Mr. W

33:50The whole amount was repaid to Mr. W by Mr. B

33:54Decide whether

33:55Solution

33:57Mr. B can recover the contribution from Mr. F and Mr. G because Mr. F, B and G are joint promisers

34:05If F has died

34:06Legal representatives of F are liable to pay the contribution to B

34:11However, a legal representative is liable

34:15Only to the extent of property of the deceased received by him

34:19G is insolvent B also can recover the contribution from G's assets

34:244. Persons liable for performance legal representative of a promisor

34:30Persons entitled to performance legal representative of a promisee

34:34Example

34:36Mr. A promises to deliver goods to Mr. B on a certain day on payment of ours

34:411,000 Mr. A dies before that day

34:45Mr. A's representatives are bound to deliver the goods to Mr. B, and Mr. B is bound to pay ours

34:521,000 to Mr. A's representatives

34:555. Third parties

34:58Stranger

34:59If the performance is accepted by the promisee, authorization or ratification is

35:05Immaterial

35:07Example

35:08Mr. A received certain goods from Mr. B promising to pay ours

35:131,00,000

35:16Later on, Mr. A expressed his inability to

35:21Pay

35:22Mr. C, who is known to Mr. A paid ours

35:2660,000

35:2760,000 on behalf of Mr. A

35:29However, Mr. A was not aware of this payment

35:32Here

35:33Mr. B can sue only for the remaining amount ours

35:3740,000

35:39Performance of joint promise

35:41All the joint promisers are jointly and severally liable

35:45However, the contract between the

35:49Joint promisers may provide otherwise

35:52A joint promiser may claim contribution from other joint promisers, if he is compelled to

35:58Perform the whole promise

36:00A joint promiser may claim contribution from other joint promisers, if any other joint

36:06Promiser makes a default in performance of his promise

36:10Where one of the joint promisers is released, other joint promisers shall continue to be

36:16Liable

36:17Appropriation of payments

36:201. Application of payment where debt to be discharged is indicated

36:25A debtor owes several distinct debts to the creditor

36:28The debtor makes a payment to the creditor

36:31The debtor intimates the creditor that the payment made is to be applied to

36:36The discharge of some particular debt

36:38The creditor has no option but to apply such payment for the discharge of

36:43Such particular debt

36:452. Application of payment where debt to be discharged is not indicated

36:51A debtor owes several distinct debts to the creditor

36:54The debtor makes a payment to the creditor

36:57The debtor does not indicate the debt for which the payment is to be

37:01Applied

37:02The creditor has the discretion to apply such payment for any lawful debt

37:07Which is due to him from the debtor

37:103. Application of payment where none of the parties makes the appropriation

37:15A debtor owes several distinct debts to the creditor

37:19The debtor makes a payment to the creditor

37:21The debtor does not indicate the debt for which the payment is to be

37:25Applied

37:27The creditor accepts such payment but does not apply such payment for

37:31Any lawful debt which is due to him from the debtor

37:35The payment shall be applied in discharge of the debts in order of time

37:39Reciprocal Promises

37:41Section 2f Promises that form the consideration or part of the consideration for each other are called

37:48Reciprocal Promises

37:49Example

37:50Mr. A and Mr. B contract that Mr. A shall build a house for Mr. B at a fixed price

37:57Mr. A's promise to build the house must be

38:00Performed before Mr. B's promise to pay for it

38:04Next

38:05Simultaneous promise

38:07The promiser is not bound to perform, unless the promisee is ready and willing to

38:13Perform his promise

38:15Next

38:16Alternative promise

38:19Contracts with legal and illegal object

38:22Examples

38:23Mr. A and B agree that Mr. A shall pay Mr. B ours .1000 rupees for which Mr. B shall

38:31afterwards deliver to Mr. A either rice or smuggled

38:34Opium

38:35Valid contract to deliver rice, and avoid agreement as to the opium

38:41Mr. A and B agree that Mr. A shall sell to Mr. B a house for ours .10,000 but that, if Mr. B uses it as a gambling house, he shall pay Mr. A

38:54R's 5,000 for it. The first set of promises is a contract, but the second set is a void agreement.

39:01Discharge of a contract

39:03Meaning of discharge of a contract

39:08Discharge of contract means termination of contractual relations between the parties to a contract

39:13When the rights and obligations created by a contract come to an end, the contract is said to be discharged or terminated

39:20Modes of discharge of a contract

39:22Modes of discharge of a contract

39:241. Discharge by performance

39:272. Discharge by impossibility of performance

39:313. Discharge by mutual agreement

39:354. Discharge by lapse of time

39:395. Discharge by operation of law

39:436. Discharge by breach of contract

39:47Next. Discharge by performance

39:52Performance is the usual mode of discharge of a contract

39:55Performance may be classified into two types actual performance, attempted performance, or tender performance or offer of performance

40:031. Actual performance

40:07When both the parties perform their respective obligations in

40:11In accordance with the terms of the contract, the contract is discharged

40:162. Attempted performance

40:19Or tender performance

40:21Where a valid tender is not accepted by the other party, the promissor

40:26Is discharged

40:28That is

40:29When promissor offers to perform his obligation, but the promissor refuses to accept the performance, it amounts to attempted performance

40:38A valid tender of performance is equivalent to performance

40:43Next

40:44Discharge by impossibility of performance

40:47Impossibility of performance results in the discharge of the contract

40:52An agreement which is impossible is void, because law does not compel to do impossible things to do

40:58Supervening impossibility

41:02Meaning

41:03No impossibility existed at the time of making of the contract

41:07The impossibility arises subsequently to the formation of the contract

41:12The impossibility arises because of

41:15Change in circumstances beyond the contemplation of parties, or

41:20Change in law

41:22The impossibility is of such a nature that it makes the performance of a contract impossible or illegal

41:28If particular state of things, which forms the basis of a contract, ceases to exist or occur, the contract is discharged

41:37Let's look into a case study for better understanding

41:41Krell vs. Henry

41:43X hired a room from Y for viewing the coronation process of Kind Edward

41:48The procession was cancelled because of Kind's illness

41:52Since the ultimate and only purpose of the contract was defeated, the contract was discharged

41:58Partial failure of objects or partial impossibility does not discharge a contract

42:04Next case law

42:06HB

42:07Steamboat Company

42:09Vs. Hulton

42:11X agreed to hire a boat from Y for the purpose of viewing the naval review on the eve of coronation of Kind and for sailing around the fleet

42:19Due to King's illness, the naval review was cancelled, but the fleet was assembled

42:25X used the boat for sailing around the fleet

42:28Although the primary purpose of the contract was defeated, the secondary purpose was fulfilled and therefore, the contract was not discharged by Supervening impossibility

42:39Effects of Supervening impossibility

42:42The contact becomes void

42:44All the parties are discharged from their respective obligations

42:49Restitution is allowed

42:51Next

42:52Discharge by Mutual Agreement

42:541.

42:56Novation

42:57Novation means substitution of a new contract in place of the original

43:02Contract

43:03In other words, new contract between the same parties or new parties or new terms

43:09Applicable before the expiry of the original performance and substitution in present contract only

43:15The new contract may be

43:18Between the same parties or between different parties

43:22A new contract is entered into in consideration of discharge of the old

43:27Contract

43:28In other words, the consideration for the new contract is the

43:33Discharge of the original contract

43:36I hope made it clear to you all

43:39Example

43:40Mr. X has to pay 1,000 Indian rupees to Mr. Y, while Mr. Y has to pay the same amount to Mr. Z

43:48Under which Mr. X will pay to

43:51Mr. Z

43:52This is a new contract between Mr. X and Mr. Z terminating the old one between Mr. X and Mr. Y

43:592.

44:01Alteration

44:02Alteration means a change in one or more of the terms of a contract

44:07With mutual consent of parties

44:10That is change in terms

44:12Keep in mind that reviving of the original contract is possible

44:16An alteration discharges the original contract and creates a new contract between the parties

44:22However, the parties to the new contract remain the same

44:26Example

44:28Mr. X agreed to supply to Mr. Y 50 bags of rice at the rate of 100 Indian rupees per bag

44:35The delivery was to be made in 5 equal

44:38Installments, the first supply was to commence from June 1

44:43Subsequently, Mr. X and Mr. Y entered into an agreement

44:48That the deliver would be made in 2 equal installments and the price would be 105 Indian rupees per bag

44:55To change in terms

44:57Terms

44:583.

44:59Remission

45:00Remission means acceptance of a lesser consideration than agreed to in the contact

45:05In simple words lesser fulfillment or acceptance of less money, while the sum is due

45:10A promise may

45:12Dispense with, wholly or in part, the performance of a promise made to him, or

45:19Extend the time for performance due by the promissor, or

45:23Accept a lesser sum instead of the sum due under the contract

45:27Or

45:28Accept any other consideration than agreed to in the contract

45:33No consideration is necessary for remission

45:36Example

45:38Mr. X owed 5,000 Indian rupees to Mr. Y, Mr. X paid 2,000 Indian rupees to Mr. Y, and Mr. Y accepted it in full satisfaction

45:49In this case, Mr. X is discharged from

45:53His liability of 5,000 Indian rupees

45:564.

45:58Rescission

45:59It means cancellation of a contract by one or all the parties to the contract

46:04That is cancellation of terms

46:07A party whose consent was not free may avoid the contract

46:11A party to the contract may rescind a contract if breach of contract is made by the other party to the contract

46:18All the parties may mutually agree to bring the contract to an end

46:22Example

46:24Case law

46:25Long vs. Lloyd

46:27S induced R to buy his motorcycle saying that it was in a very good condition

46:32After taking the motorcycle, R complained that there were many defects in the motorcycle

46:38S proposed to get it

46:405.

46:41Waiver

46:42Waiver means intentional relinquishment of a right under a contract

46:47That is abandonment of the rights.Withdrawal by giving reasonable notice is possible

46:52Example

46:53Mr. X promised to paint a picture for Mr. Y

46:58Afterwards, Mr. Y forbade him to do so

47:01In this case, Mr. Y has waived

47:04His right to claim the performance

47:07And thus, Mr. X is no longer liable to perform the promise

47:126.

47:13Merger

47:14Merger

47:15Conversion of an inferior right into a superior right is called as merger

47:20The effect of conversion is that the contract under which inferior right is created is discharged

47:26Next

47:27Discharge by lapse of time

47:30Where the time of performance by a party is due but the party fails to perform within the time specified, the contract is discharged by non-performance

47:40In simple words every contract must be performed within a fixed or reasonable period of time

47:46Lapse of time discharges the contract

47:48The Indian Limitation Act has prescribed the period within which the existing rights can be enforced in court of law

47:55Next

47:57Discharge by operation of law

47:59Death

48:01Contracts involving personal skill, knowledge, or ability of the deceased party are discharged automatically

48:07Example

48:09Mr. X

48:10An expert, agreed with Mr. Y to translate some part of book from French to English died before

48:17The translation work started

48:19The contract involves personal qualification of promisor Mr. X

48:24Insolvency

48:26The insolvent is discharged from liability on all contracts entered into upto the date of insolvency

48:32Unauthorized material alteration

48:35An alteration which changes the substance that is legal effect or basic character of a contract is called as material alteration

48:43Example

48:45Mr. X contracted to sell his plot of 500 square yards to Mr. Y for 10 Indian rupees lox

48:52The sale deed was executed

48:54Which was in possession of Mr. A

48:57Before the registration of the sale deed Mr. X altered the deed and made it a

49:02deed for the sale of 300 square yards plot for 10 Indian rupees lox

49:07Mr. Y is not bound to purchase the plot

49:10Merger of rights

49:12If the rights and liabilities arising under a contract vest in the same person, the contract is discharged

49:19Discharge by breach of contract

49:22Failure of a party to perform his part of contract is called as breach

49:27Consequences of breach

49:29The other party is relieved from performing its part of obligation

49:34It gets a right to proceed against the party at fault

49:37Next topic

49:39Kinds of breach

49:41Actual breach

49:431. Time when breach takes place

49:46On the due date of performance

49:48During performance

49:502. Manner in which actual breach may take place

49:54Where a party fails to perform

49:59Where a party refuses to perform

50:01Where a party acts in such a manner that it becomes impossible for him to perform

50:06Next

50:08Anticipatory breach

50:10Where a party declares his intention of not performing the contact before the performance of contract is due

50:16Modes of anticipatory breach

50:20Express repudiation

50:21Where a party refuses to perform his obligation before the performance has become due

50:27Party disables himself

50:29Where a party acts in such a manner that it is impossible for him to perform that is the party has disabled himself from performance that he had promised

50:37Remedies for breach of a contract

50:40Remedies for breach of a contract

50:42Following remedies are available in case of breach of a contract

50:461. rescission

50:472.

50:48Sued for damages

50:493.

50:504.

50:51Sued for injunction

50:525.

50:53Sued for quantum marriott

50:556.

50:56Sued for specific performance

50:58Rescission

51:00Rescission

51:01Rescission means a right available to an aggrieved party to terminate a

51:05Contract

51:06Effects of rescission

51:08The aggrieved party is not required to perform his part of obligation

51:12The aggrieved party can claim compensation for any loss caused to him

51:17Sued for damages

51:19Monetary compensation allowed for loss suffered by the aggrieved party

51:23Due to breach of a contract

51:26Object of awarding damages

51:29Not to punish the party at fault

51:31To make good the financial loss

51:34Breach of contract

51:36Next topic is

51:38Kinds of damages

51:40Ordinary damages

51:42These damages are awarded for such loss suffered by a party which is a proximate consequence of breach

51:48Damages are not awarded if they have resulted because of an indirect consequence

51:53Next point

51:55Special damages

51:57Special damages are awarded to cover such loss which through does not arise naturally, but was in the contemplation of both the parties at the time when the contract was made.

52:08These damages can be recovered only if the special circumstances which would result in a special loss in case of breach of a contract are communicated to the other party.

52:17Next point

52:18Exemplary or punitive or vindictive damages

52:23These damages are awarded only in the following two cases

52:261.

52:28Breach of a contract to marry

52:30The damages shall be calculated on the basis of mental injury sustained by the aggrieved party

52:362.

52:37Unjustified dishonor of a check

52:39The damages shall be calculated on the basis lower the amount of check, greater will be the damages.

52:46Next point

52:47Nominal damages

52:50Where no loss is suffered by the aggrieved party, the court generally awards nominal damages.

52:57Damages for inconvenience etc.

53:00Next point

53:01Where a party has suffered physical inconvenience, discomfort, or mental agony as result of breach, the court may award damages for the same.

53:13Next point

53:14Liquidated damages and penalty

53:17Where the parties to a contract specify a certain sum in the contract

53:22Which will become payable as a result of breach, such specified sum is

53:27Called as liquidated damages or penalty

53:30If the specified sum represents a fair and genuine pre-estimate of the

53:35Damages likely to result due to breach, such specified sum is called as

53:41Liquidated damages

53:43If the specified sum is disproportionate to the damages which are likely

53:48To result as a result of breach, such specified sum is called as penalty.

53:53In India, damages shall be restricted to a reasonable compensation not

53:58Exceeding the specified sum

54:01Forfeiture of security

54:03Deposit

54:05If any loss is suffered by a party as a result of breach, the damages

54:10Awarded to him shall be limited to the loss suffered by him

54:14Any clause in the contract entitling the aggrieved party to forfeit the

54:18Security deposit is not valid

54:21Payment of interest

54:23Payment of interest is permissible

54:26If no rate of interest is mentioned in the contract, the party shall be

54:31Liable to I interest

54:33A. As per any law for the time being in force

54:37B. As per the custom or usage of trade

54:41However, if the interest is in the nature of penalty, the court may grant

54:46Relief

54:48Next point

54:49Sued for specific performance

54:52Specific performance means demanding an order from the court that the

54:56Promise specified in the contract shall be carried out

55:00When is specific performance allowed?

55:03Actual damages arising from breach are not measurable

55:07Monetary compensation is not an adequate remedy

55:10When is specific performance not allowed?

55:13Where damages are an adequate remedy

55:16Where the performance of contract involves numerous or minute details, and therefore it is not possible for the court to supervise the performance of the contract