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indian contract and negotiable instrument

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indian contract and negotiable instrument

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indian contract and negotiable instrument

  1. 1. INDIAN CONTRACT ACT “1872” BY: Saurabh sen sky
  2. 2. AGREEMENT  “Every promise and every set of promises forming consideration for each other, is an agreement” {Sec 2(e)} AGREEMENT= OFFER+ACCEPTANCE
  3. 3. CONTRACT { MEANING}  The term contract is used to denote an agreement or a promise made by two or more persons.  A contract is an agreement.  The agreement is enforceable by law.
  4. 4. CONTRACT {DEFINITION}  According to {Sec2(h)} of the act “ An agreement enforceable by law is a contract”  CONTRACT=AGREEMENT+ENFORCEABILITY OF AGREEMENT “ A contract is an agreement creating and defining the obligations between the parties” “SIR SALMOND J.”
  5. 5. ENFORCEABILITY OF THE AGREEMENT  Every agreement is not a contract. An agreement enforceable by law is a contract. An agreement is enforceable by law only when it creates legal rights and obligations of the parties.
  6. 6. ESSENTIALS/ CHARACTERISTICS  Plurality of parties  Offer and acceptance  Intention to create legal relations  Contractual capacity  Consent  Free consent  Lawful consideration  Lawful object  Certainty of meaning  Possibility of performance  Agreement must not be expressly declared void  Legal formalities
  7. 7. DEFINITION OF OFFER  {Sec2(a)} “ when one person signifies to another willingness to do or to abstain from doing anything with a view to obtaining the assent of that other to such act. Hence he is said to make a proposal.”
  8. 8. TYPES OF OFFERS On the basis of On the basis of On the basis of Mode Offerees Nature Express offer Specific offer Cross offer Implied offer General offer Counter offer Standing offer
  9. 9. DEFINITION OF ACCEPTANCE  {sec.2(b)} “ when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.”  A proposal when accepted becomes a promise.
  10. 10. CAPACITY TO CONTRACT  (Sec.10) “Capacity to contract means legal capacity of parties to enter into a contract”
  11. 11. WHO ARE COMPETENT TO CONTRACT (SEC 11)  Major  Sound Mind  Not disqualified by any law.
  12. 12. WHO ARE NOT COMPETENT TO CONTRACT  Minors  Unsound Minds  Disqualified by any Law
  13. 13. MINORS (Sec 3) “A minor is a person who has not completed 18 years of age”. But the same act also mention's that in the following two cases a person attains majority only after we completes his age of 21 years.  Where a court has appointed guardian of a minors person or property.  Where the minors property has been placed under the superintendence.
  14. 14. UNSOUND MIND Sec 12 “A person is said to be of sound mind for the purpose of making a contract if at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interest”.
  15. 15. TYPES OF PERSONS OF UNSOUND MIND  Idiot  Lunatic  Drunken  Senile person
  16. 16. PERSONS DISQUALIFIED BY LAW There are certain persons who are disqualified from contracting by the other laws of our country. They are as under :  Foreign Enemy  Privileged persons (a) President (b) Prime Minister (c) Mantri’s  Artificial Persons  Insolvent  Convict
  17. 17. FREE CONSENT  Sec 14 “Free Consent is the consent given by the will of the parties and not caused by any form of physical or mental force or any kind of mistake”. Consent is said to be free when it is not caused by
  18. 18. COERCION 15 UNDUE INFLUENCE 16 FRAUD 17 MISREPRESE NTATION 18 MISTAKE 20,21.22
  19. 19. COERCION  Coercion means and includes the use or threatening to use the physical force against person or property, to compel him to enter into a contract.
  20. 20. UNDUE INFLUENCE  When a dominant party misuses his influence to dominate the will of weaker party, to get unfair advantage, in a contract, the contract is said to be influenced by undue influence.
  21. 21. FRAUD  Fraud is the intentional misrepresentation of material fact of an agreement by a party to or by his agent with an intention to deceive or induce the other party to enter in an agreement.
  22. 22. MISREPRESENTATION  Any innocent or unintentional of false statement of fact made by one party to the other during the course of negotiation is called Misrepresentation.
  23. 23. MISTAKE  Mistake is a misunderstanding about something when the consent of both the parties to a contract is caused by misconception belief, the contract is said to be induced by mistake.
  24. 24. LAWFUL OBJECT Any agreement for an unlawful object is void.  If Agreement is forbidden by law.  If it defeats the provision by any law.  Fraud.  If it involve injury to the person or property of another.  Immoral.  Against public policy.
  25. 25. AGREEMENT NOT EXPRESSLY DECLARED VOID  Agreement by incompetent person.(SEC 11)  Agreement made under mistake.(SEC 20)  Agreement of which the consideration or the object is unlawful.(SEC 23)  Agreement of which the consideration or the object is unlawful in part and cannot be separated in lawful part.(SEC 24)  Agreement made without consideration(SEC2 25)  Agreement in the restraint of marriage.(SEC 26)  Agreement in the restraint of trade.(SEC 27)  Agreement in the restraint of legal proceedings.(SEC 28)
  26. 26. CONTINUE….  Agreement the meaning of which is uncertain.(SEC 29)  Agreement by way of wager.(SEC 30)  Agreement on impossible event.(SEC 32)  Agreement to do impossible act.(SEC 56)  Reciprocal promises to do thing illegal.(SEC 21)
  27. 27. BASIS OF DISTINCTION FRAUD MISREPRESENTATION MEANING A deceptive act done intentionally by one party in order to influence the other party to enter into the contract is known as Fraud. The representation of a misstatement, made innocently, which persuades other party to enter into the contract, is known as misrepresentation. Defined in Section 2 (17) of the Indian Contract Act, 1872 Section 2 (18) of the Indian Contract Act, 1872 Purpose to deceive the other party Yes NO Variation in extent of truth In a fraud, the party making the representation knows that the statement is not true. In misrepresentation, the party making the representation believes the statement made by him is true, which
  28. 28. TYPES OF CONTRACTS/AGREEMENT On the basis of On the basis of On the basis of Enforceability Mode of Formation Execution Valid Agreement Express Contract Executed Contract Void Agreement Implied Contract Executory Contract Void Contract Quasi Contract Voidable Contract Illegal Agreement Unenforceable Contract
  29. 29. DISCHARGE OF CONTRACT  A contract is discharged when parties to a contract no longer have no obligation under the contract.
  30. 30. MODES OF DISCHARGE OF CONTRACT  By performance  By agreement or consent  By lapse of time  By operation of law  By impossibility of performance  By breach of contract
  31. 31. BY PERFORMANCE ACTUAL ATTEMPTED
  32. 32. NOVATION ALTERATION REMISSIONRESCISSION WAIVER DISCHARGE BY MUTUAL AGREEMENT
  33. 33. BY LAPSE OF TIME  When a contract is to be performed within a stipulated time period and a party does not perform it within that time, the contract is discharged by lapse of time.
  34. 34. BY OPERATION OF LAW BY OPERATION OF LAW DEATH INSOLVE NCY MERGER LOSS OF EVIDENCE
  35. 35. BY IMPOSSIBILITY OF PERFORMANCE Initial Subsequent
  36. 36. BY BREACH OF CONTRACT  Breach of contract means refusal or failure fo any one party to perform his contractual obligations.  Types of breach of contract:-  Actual breach  Anticipatory breach
  37. 37. REMEDIES FOR BREACH OF CONTRACT Suit for rescission Suit for damages Suit for quantum meruit Suit for specific performance Suit for injunction
  38. 38. INDEMNITY CONTRACT  A contract where one party promises to save the other from any loss caused to him by the conduct of promissor himself or any other person is called contract of indemnity, (Section 124) Indian Contract Act, 1872.  Indemnity contract includes two parties namely; Indemnifier and Indemnity holder. The person who is promising to pay compensation is called Indemnifier and the person who`s loss is compensated is called Indemnity holder
  39. 39. EXAMPLE  Example: There is a contract between X and Y according to which X has to Sell a tape recorder (which is selected) to Y after three months. On the next day of their contract Z has come to X and has insisted on selling the same tape recorder to him (Z). Here Z is promising to compensate X for any loss faced by X, due to selling the tape recorder to Z. X has agreed. Now the contract which has got formed between X and Z is called indemnity contract, where Z is indemnifier and X is indemnity holder.
  40. 40. GUARANTEE CONTRACT  A contract to perform the obligation or to discharge the liability of a third party in case of its default is called contract of guarantee, (Section 126) Indian Contract Act, 1872.  Guarantee contract includes three parties namely; Creditor, Principal Debtor and Surety.  The person who is granting the loan is called creditors, the person who is utilizing the amount of loan is principal debtor and the person who is giving guarantee is called surety or guarantor
  41. 41. BAILMENT MEANING  The bailment is derived from the word “bailllier” which means to deliver.
  42. 42. BAILMENT DEFINITION  Sec 148 “ Bailment is the delivery of goods by one person to another for some purpose upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them”
  43. 43. PARTIES IN BAILMENT  Bailor  Bailee  Sub-bailee
  44. 44. ESSENTIAL ELEMENTS  Contract  Goods  Delivery of goods  Purpose  Return of goods  Return of the same goods
  45. 45. DUTIES OF BAILOR  Duty to deliver the goods  To disclose faults in the goods  To repay expenses  To pay remuneration  To receive back the goods
  46. 46. DUTIES OF BAILEE  To take care of the goods bailed  To indemnify in case of negligence  Not to make unauthorised use of goods  Not to mix the goods with his own goods  To return the goods
  47. 47. RIGHTS OF BAILOR  To claim damages  To avoid the contract  To require return of goods  To claim increase or profit from the goods  To enforce the rights
  48. 48. RIGHTS OF THE BAILEE  To claim damages  To claim necessary expenses  Right to be indemnified  To return goods  To apply court to stop delivery
  49. 49. AGENCY MEANING  An agency is the relationship between and agent and his principal created by an express or implied agreement whereby an agent is authorised by his principal to represent him and establish contractual relations with third parties.
  50. 50. ESSENTIAL ELEMENTS  Name of a relation  Agreement  Competence of the principal  Consideration not necessary  Free consent  Intention to create contractual relations
  51. 51. DUTIES OF AGENT  To conduct business according to the directions given by the principal.  To conduct the business with skill and diligence.  To compensate for neglect, misconduct etc.  To render proper account.  To communicate with principal
  52. 52. RIGHTS OF AN AGENT  Right to retainer  Right to receive remuneration  Right of lien  Right to be indemnified against consequences of lawful acts  Right to compensation  Right of stoppage in transit.
  53. 53. NEGOTIABLE INSTRUMENT ACT “1881” UNIT-3
  54. 54. MEANING OF NEGOTIABLE INSTRUMENT  The term negotiable instrument consist of two words ‘Negotiable’ and ‘instrument’. Negotiable means transferable from one person to another and instrument means a written paper or document creating a right of a person to claim certain sum of money.
  55. 55. DEFINITION  Acc to sec. 13(1) “a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer”
  56. 56. CHARACTERISTICS  Written instrument  Signature  Unconditional  Transferable  Certain sum  Good title  Payment in money
  57. 57. TYPES OF NEGOTIABLE INSTRUMENTS  Promissory note  Bill of exchange  cheque
  58. 58. PROMISSORY NOTE  Section 4 “A "promissory note" is an instrument in writing (not being a bank-note or a currency-note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.”
  59. 59. CHARACTERISTICS  Written  Unconditional  Signature  Stamp  Certain sum  Payment in money  Promise to pay
  60. 60. BILL OF EXCHANGE  Section 5 “A "bill of exchange" is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.”
  61. 61. CHARACTERISTICS  Written  Signature  Stamp  Unconditional  Three parties  Certain sum  Order to pay
  62. 62. CHEQUE  Section 6 “A cheque is bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.”
  63. 63. CHARACTERISTICS  Written  Signature  Drawn on a bank  Unconditional  Certain sum  Payable in money  Certain person
  64. 64. CROSSING OF CHEQUE  Crossing of a cheque means "Drawing Two Parallel Lines" across the face of the cheque. Thus, crossing is necessary in order to have safety. Crossed cheques must de presented through the bank only because they are not paid at the counter.
  65. 65. TYPES OF CROSSING  General crossing  Specific crossing  Restrictive crossing  Not negotiable
  66. 66. HOLDER  Holder has three characteristics : 1. Document is in hand. 2. He is entitled to receive the amount written on the document. 3. He is entitled to sue against the refusal.
  67. 67. HOLDER IN DUE COURSE 1. A holder in due course must have become a holder of the instrument before the date of its maturity. He must be entitled to transfer it. 2. He must be a holder for a valuable consideration. 3. He must be valid holder of the instrument. 4. He must be a holder of the instrument in good faith. 5. Amount of document will be payable on that date when it will be presented. 6. He should be entitled to sue in case of refusal of payment. 7. He must have taken instrument complete and regular on the face of it.

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