Stretegy (1)

Introduction to Law 1.What is law ? 2. How law came into existence ? How justice obtained ? 3. Branches of law 4. Constitutional Laws – Principal organs of Govt.Structure – Function – Interrelationship – guarantees Fundamental rights

Introduction to law • • • • • •

2. Civil Law 3. Criminal law 4. Administrative law Mercantile Law / Business law Sources : 1. British mercantile law 2. Judicial Precedents 3 Statute Laws 4. Customs & usages • British Mercantile law : • 1. Law of Merchants 2. Common Law 3. Statute • 4. Equity

Agreement & Contract • Every Promise or Set of promise forming consideration for each other is agreement • Requirement; • 1. Plurality of persons • 2. Consensus ad idem • 3. Offer & acceptance / promise / counter promise

Agreement & Contract • • • • • •

Social agreements Void agreements Voidable agreement Un enforceable agreement Illegal Agreement Agreement to agree in Future

Agreement & contact • What is Contract • An agreement Enforceable at law • All agreements are contact ,if they are made of free consent , by persons competent to contact & if consideration & purpose is Lawful & is other wise not prohibited by law

Agreement & contract • • • • • • • •

Essentials /Requirements 1. Plurality of persons 2. Offer & acceptance- Free consent 3. Must give rise to Legal Obligation Balfour Vs. Balfour , Weeks Vs. Tybold 4 Parties competent to contract 5. Lawful consideration 6. Lawful Purpose

Agreement & contact • 7.Not declared void / prohibited by law • Buying lottery • 8. Certainty & capable to perform • Contact to sale oil • 9 Legal Formalities • Writing – Stamping -Registration – • 10 Consideration must be there - Consideration should be lawful

Agreement & Contract • All contracts are agreements but all agreements are not contract • Contract : • Executed / Electuary • Unilateral /Bilateral • Void / Void able /Illegal – collateral contracts / unenforceable • Express / Implied /Quasi contact • Written / oral Enforceability- Restitution – CompensationPenalty -Punishment

Offer & Acceptance • 1. Plurality of persons- Separate individuals required • 2. Offer / Proposal / promise; • When one signifies to other his willingness to do or abstain from doing anything with intent to obtain assent of other person to such act or abstinence he has said to have made offer.

Offer & Acceptance • Essentials of offer & also legal rules of offer: • 1. Can be expressed or implied • A. Oral / written B. Running Bus / Weighing Machine/ Restaurant • 2. Positive or Negative • 3. General or specific • Carlill Vs. Carbolic smoke ball company

Offer & Acceptance • • • • • •

4.Must intend to create legal relationship 5.Terms must be certain not vague / uncertain 6. Must express final willingness of offerer. 7.Every offer must be communicated. Fitch Vs. Snedkar & Lalman shukla Vs. Gurudutt 8 Must be distinguished from invitation to offer i.e. inviting bids – goods in show room- Casual statement – declaration • 9. Must be made with intention to get assent from the person

Offer & Acceptance •

10 Must not contain a term non compliance of which would amount to acceptance. • 11 May be conditional Standing Offer – Cross offeres Lapse of offer – Revocation of offer 5. Lapse – Not accepted in stated time- Reasonable period – Death / Insanity of offerer- Revocation – rejection / cross offer Subsequent illegality/ destruction of subject matter – failure to accept in prescribed condition which is precedentFailure to accept in prescribed mode Distinction between Revocation & Rejection of offer

• Acceptance : • When a person to whom the proposal is made signifies his assent there to he is said to have accepted the proposal / offer • Essentials / legal rules of Acceptance: • 1. Must be absolute & unconditional • 2. In same mode as stated in offer • 3. Acceptance can not precede offer • Allotment of shares done before application • 4.Can be express or implied carlill Vs. carbolic smoke ball co.

Offer & Acceptance • • • •

5. Must be given within stated time /reasonable time 6. Acceptance must show readiness to fulfill promise 7.Can not accept after rejection 8 Acceptance means acceptance of all terms attached to offer • 9Acceptance must be before lapse / revocation of offer • 10 Acceptor must be aware of offer at the time of acceptance • 11. A mere mental acceptance not acceptance – exception : 1. Previous dealings silence as acceptance 2Offerer has dispensed with 3.Performance of conditions laid down by offerer 4. Has taken benefit of offer

Offer & Acceptance • Offer & acceptance through post: • 1. Communication of acceptance against offerer is complete as soon as letter duly stamped is posted. • Offer can be withdrawn any time before the letter is posted • 2.Communication of acceptance against the acceptor is complete only when it reaches offerer. • Acceptance can be withdrawn by the acceptor before it reaches the acceptor • Contract on telephone etc.

Consideration • Consideration :When at the desire of promisor, promisee or any other person does or abstain from doing, has done or abstain from doing , promises to do or abstain from doing some thing , such an act or abstinence is called consideration. • Essentials / legal rules regarding consideration : • 1. Consideration can be positive or negative • 2. Consideration can be past , Present or Future • Unlike English act.

Consideration • • • • • • • •

3. Must move at desire of promissor 4. No contract without consideration 5. Consideration need not be adequate 6. Consideration must be real 7. Consideration must be substantial 8.Consideration need not be by Promisee 9. It must not be what one has duty to do. 10Consideration must be law ful

Cosideration • • • • • • • • •

Exception to rule that no contract without consideration 1. Agreement out of natural love & affection – writing – between near relatives – Registered Venkataswamy vs. Rangaswami Rajukhidebi vs. Bhootnath 2. Compensation for voluntary services To Promissor-Voluntary only- existence – competent – intention to compensate 3. Promise to pay time barred debt In writing – Not disputed- definite debt – absolute & unconditional promise to pay – debt lawful & binding except time barring 4. Completed gift 5, Agency 6. Remission 7. Guarantee 8 Bailment

Consideration & capacity • Stranger to consideration can sue but stranger to contact can not • Exceptions : 1. Beneficiary of trust • 2. When immovable property is given as security for performance • Khwaja Mohamedkhan Vs. Husaini Begum • 3. Family settlements 4 Acknoledgement of payment received on behalf

Capacity • Every person is competent to contract who is of age of majority according to the law one is subject to , and who is of sound mind & is otherwise not disqualified by law to which is subject. • Majority 18/21 • Sound mind – Able to understand nature of the contract & able to its impact on his interest. • Idiots- Insane – Lunatic – Drunkard • Lucid Interval

Capacity • Minor ; Void ab initio – Moharibibi vs. Dharmdas Ghose • For necessaries to him & his dependents • His estate liable • Guardian not personally liable • When Restitution possible • Incapacty / protection by law • 1.Foreign sovereigns , ambassadors , envoys • 2. Alien Enemy- Corporate –Bankrupt/insolventFelons / convict

Free Consent • Consent : • Parties to contract agree for same thing in same sense. • Consent not free if caused by coercion, undue influence , Fraud , Misrepresentation & mistake • General meaning -Coercion means consent obtained by force

Free Consent • Coercion defined as • Commiting or threatening to commit any act prohibited By IPC • Detaining or threatening to detain property to prejudice of any body • With intent to causing any person to enter into an agreement • Rangayakama Vs. Alwer sety • Amiraju vs. Sheshma • Muthian chettiar Vs. karuppan shety • Filing suit – Charging higher interest • Party hurt Can refuse to perform

Free consent • • • • • • • • •

Undue Influence : Other party in a dominating position Has obtained unfair advantage Presumption 1. When holds real or apparent authority over the other person Employee employer – ITO- Police officer - accused 2. Fiduciary relation -Beneficiary trustee – Father son – Fiancée Fiancé 3 Mental capacity permanently or temporarily effected – Aged , Sick , Incapacited – Teacher student No assumption – Husband wife , Debtor creditor – Principal agent Can avoid the contract- Has to prove dominating influence & unfair advantage – less consideration to substantial extent is an evidence of unfair advantage taken

Free consent • • • • • • • •

Coercion Undue influence 1. Physical 2.Crime/ May involve punishment 3 May be based on property 4. Consent absent 5 Place 6. No presumption 7. Third party

Free consent • Fraud ; Any of following acts commited by party or with his convince or by his agent • To deceive other party or to induce him to enter into contract • 1. Making a statement to a fact which is not true by one who knows it is not true. - Reckless disregard regarding truth or otherwise - - casual statement – general praising by seller - 2. Active concealment of a fact when one has duty to speak

Free consent • • • • • • •

1. Contract of insurance 2 Transfer of property 3 Family settlement 4.Allotment of shares – Prospectus 5.Agent 6. Contract of surityship 7 Contract to marry Silence equivalent to speech Partner by holding out

Free consent • • • • •

3.Promise made without any intention of performing it 4. any other act to deceive 5. Any other act which may be declared as fraudulent Effect of fraud ; 1 Voidable 2. Can insist to be put on same position if the statement true 3 can sue for damages • 4. Fraudulent silence ; Can not avoid if victim party had means to discover with simple diligence • Has to prove : 1. A a statement 2. It was false 3. Made by party / agent / connivance 4. Made to deceive 5 actually deceived 6. Suffered damage

Free Consent • Misrepresentation ; Untrue statement by party to contract on fact which is material & not regarding law [ Not laws not applicable in the land]which induced the party to enter into contract • Misrepresentation Fraud • 1. Intention • 2. Damages • 3. Rescission even after execution of contact • 4. will not be criminal • 5. Not when only silence kept • 6 When truth can be discovered with ordinary deligence

Free Consent • • • • •

Mistake – erroneous belief regarding some thing Unilateral – Bilateral [ All parties] Mistake of law / fact International law is fact Contact void in following cases in case of bilateral mistake if mistake is regarding fact essential to agreement • Subject matter – Quantity – Title – Price • Possibility of performance – Legal/ Phisical

Free Consent Unilateral mistake ; Mistake as to Identity of person with whom one makes deal. Mistake as to nature of transaction When contact void restoration of benefit required

Consideration & object not lawful • When object or consideration of an agreement is not legal it is not enforceable. • It is so if, 3. If forbidden by law – bribe for public office /dropping prosecution for robbery 4. If permitted will defeat provision of some or other law – Indirect purchase of property which has defaulted [a]Salary $ 19 divided as salary $ 13 & allowance$6 [b]Exicise duty act forbade sale , transfer or lease of licence – Partnership void [c]Rent bifurcation as rent and other services amount as service charge not recoverable

Consideration & object unlawful 3 It is fraudulent [a] Sharing proceeds of Cheating / defrauding third party [b] Commission by agent to obtain lease for other party from his principal

Consideration & purpose not lawful • 4. If involves or implies injury to a person or property • [a] aqgreement to work without pay for Two years for a loan & also to pay high interest on default & repay entire amount of loan immediately in case of non payment of loan • [b] To purchase shares for pushing price up • [c] Lebel article 5 If it is immoral • [a] Agreement for husband & wife for future separation – Loan given for divorce seeking expense with stipulation of marriage • [b] Official using influence for favour to a party • [c] Sexual immorality

Consideration & object unlawful 6.If opposed to public policy: Agreement involving [1] Trading with enemy [2] To commit suicide [3] Interferes with administration of justice [4]restrain of legal proceedings – curtailing limitation [5] Trafficking public office / titles [6] Creating interest opposed to duty – Agent buys house himself [7] Restricting personal liberty [8] Restricting parental rights [9] Restraint of marriage [10] Marriage brokerage [11] Interfering with martial duty – Married person to marry after death of partner[12] Restraint of trade- Exception cases – provided reasonable for period / area etc Service agreements

Unlawful & illegal agreements • Unlawful agreement is void & not enforceable. • Illegal Agreement is void & not enforceable & collateral transactions are also void – Borrowing for purchase of prohibited goods – lending for committing crime • Unlawful agreements do not involve committing crime / against public safety • Consideration one illegal for a promise or promises – One of several consideration is illegal for a promise

Void Agreements- Wagering Agreements- Contingent contracts • •

•

Void – Not enforceable - Not meeting requirements / prohibited/ against public policy – Wagering agreements illegal / void One agrees to pay money or moneys worth on happening or not happening of uncertain event & other person promises to pay if reverse happens. Contingent contracts – One agrees to do or not to do something on happening or not happening of collateral event

Contingent contract • Contingent contract Wagering contract • 1. Legal • 2. Both party interested in protection of subject matter • 3. Both the parties have chance to gain /loss • 4.Event only collateral • 5 Not reciprocal promises • 6. Wagering is contingent in nature while contingent not in nature of wagering

Performance of contract • • • •

• •

Actual performance / Tender / attempted performance. Non performance – other party can avid contact / can claim damages. Valid tender releases promisor. Requirements of valid tender / attempted performance; 1. Unconditional 2. Whole Quantity 3. By person willing & able to perform 4. Tender must be at proper time & place 5. Made to proper person 6. To one of joint promisee 7. Reasonable opportunity to inspect goods 8. Proper legal tender Performance by Promissory / Agent for non personal contracts / some times third party. Performance can be demanded by promisee / authorized agent / legal hair- In case of joint promise all promisee can jointly only demand performance while promisor can perform for any of the joint promisees

Performance of contract • If joint promise is performed by one he can demand contribution from remaining joint promissors. • Time & place of performance • 1. If agreed 2. If not – if without Application by promisee reasonable time /Usual hours of business. • Reciprocal promises – Inter dependent – Independent – Perormance of one promise to precede • Time essence of contract – Yes for delivery etc. • Payment of money / time not essence - It is advisable to record time being essence for each performance if si desired

Performance of contract • Application of payments; • 1. Debtor’s instructions 2. Demand for particulat payment 3. Creditors wish • Clayton’s case – Chronological order • Loss due to insolvency of a partner • How proceeds of assets are divided amongt partners of firm in dissolution. • Assignment of rights & obligation of parties to contract

Discharge of contract • 1. By performance – Actual - Attempted / valid tender • 2. By new agreement- a. Novation b. Rescission c. Remission d. waiver e. Alteration f.Merger • 3. By impossibility of performance • Doctrine of supervening impossibility • Commercial difficulties in performance / behavior of Third parties not ground • Impossibility – a. Subject mater destroyed b. Non existence / non occurrence of particular state of things c. Death / incapacity for personal services D. Change of law E. war

Discharge of Contract • 4. Lapse of Time – Limitation act • 5. By operation of law ; a. Death B. Insolvency c. Unauthorized Alteration • D. Merger e. Right liability coming to same person • 6. Breach of contract • Actual - On due date / during execution • Anticipatory breach- Option of promisee to ignore and wait for due date

Remedies in case of Breach • 1. Contract voideble at option of suffering party. • 2. Can claim damages. – a. Ordinary b. Extra ordinary /special c. Nominal 4. Exemplary 5.. Personal inconvenience 6 Liquidated / nature of penalty • Duty to control / reduce damages – At time accepting performance must reserve right for damages • 3. Can sue for specific performance • 4. Can seek injunction • 5. Quantum de merit • 6. Ratification / cancellation

Quasi contract • • • • • • • • •

What is quasi contract ? Type of quasi contract: 1. Rights & obligation of finder of goods. 2. Supply of necessaries to incompetent persons. 3. Obligation for non gratuitous act 4. Payment by interested persons 5. Quantum Meruit 6. Money had & received / consideration failed 7. money / goods paid / given by Mistake / coercion

Contract X opens a Two year term deposit account no. 101with Y Bank & also open a special type of saving account having at par cheque payment facility. X did not desire to open SB account however bank officials told her to please open the SB account also & gave assurance that their was no requirement of balance.. The SB account remained inoperative through out the TWO years. The SB account had balance of only Rs. 100/-thoughout Every Month the bank sent statement of account for term deposit as well as SB account .. SB account did not have any transections /debit. X also gave authority to bank to auomatcaly renew the term deposit on maturity After 2 years deposit matured. On maturity day X approaches Y Bank at business commencement hours & requests to credit the matured deposit to her SB account & close the SB account. Y bank refuses to pay saying it has automaticaly renewed the deposit for another 2 years & hence it will pay the deposit only after 3 days . On numerous requests the Y bank credits the proceeds next day & allows withdrawal of entire amount except Rs. 3000/-.Copy of theSBbank account shows proceeds of term deposit account 101 were credited on day next to maturity day

Contract After a week X receives Pay order of Rs. 1000/- with bank`s letter that it has debited Rs. 2000/- being charges for not keeping adequate balance for Four half years ending on maturity day of term deposit. On inquiry X is informed that the special category account required average balance of Rs. 100000/- & that the applicable charges were disclosed on Bank`s sight on Internet. It also informs that charges schedule was given in separate wellcome kit posted to X along with the cheque book from which he had used only one cheque. Cheque book & wellcome kit are reported to have been posted to X in same envelope What X can Do ? Y bank is an International Bank . X is a Housewife.

Contract • 1; In connection with term deposit payment delay: • 1. Authority for automatic renewal stand withdrawn by personal demand for repayment of deposit on date of maturity at business commencement hours. • 2.The authority is to be exercised only if no instructions received. • 3. Bank liable for refusal to pay on maturity. • Damages may be very high. • 4. Bank`s claim of renewal of deposit is likely to be wrong as account no. of deposit credited is same as old one

Contract • • • • • •

2 In connection with SB account. 1.Account opening form does not stipulate any minimum balance. 2. Not obligatory for X to see bank`s sight . Rules not included in account opening form should be informed to X i.e. Minimum balance / charges 3. Bank should have informed X regarding in adequate balance and also of charges becoming due because of in adequate balance. 4. Banks not charging any charges during last two years is implied evidence of its concurrence to employees assurance at the time of opening SB account that there is no minimum balance requirement 5. Bank has no evidence that along with cheque book well come book was sent as X says she has received only cheque book