Contract Law 1 Short Notes by Kalyan

1 CONTRACT LAW 1 – SHORT NOTES
Contracts Law
Short Notes Questions & Answers
Unit – 1
1. Essential of valid contract?

According to Sec. 2(h) of Indian contract act 1872 explains what is
a contract. An agreement which is enforceable by law is known as the
contract.
Sec.10 of Indian contract act stated some essentials for an

agreement to become a valid contract.
Essentials:
1. Offer 2 (a).
2. Acceptance (2 (b)).
3. Intention to create legal obligations / Relationship.
4. Two or more parties.
5. Capacity of parties.
6. Lawful object.
7. Lawful consideration.
8. Free consent.
9. Writing & Registration.
10.Certainty.
11.Possibility of performance.
12.Not expressly declared void.
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2. Revocation of offer….?
Revocation means an offer is withdrawn by the offer.
- Sec.6 if Indian contract act 1872 explains the ways that

an offer may come to an end.
-
→ Ways for revocation of offer :
1. By notice of revocation.
2. By lapse of time.
3. By non-fulfilment of a condition precedent to
acceptance (also known as conditional offer)
4. By death or insanity (unsound) of the proposer.
5. By counter offer.
6. By acceptance not being accepted in the mode
prescribed.
7. By rejection of offer by offer.
8. By illegality / Change in law.
9. By deduction of subject matter of the offer.
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3. Consideration?
Sec. 2(d) of Indian contract act deals with the consideration.
A consideration means something in return. In an agreement consideration

is necessary to form a contract.
Sec 25 states that an agreement without consideration is void.
Exception also applies as follows,
Exceptions:
1. Natural love & Affection.
2. Gifts.
3. Past Voluntary services
4. Promise to pay a time barred debt.
5. Creation of agency,
6. Bailment
7. Charity.
For above things consideration is not required (exceptions) presence

of consideration is not enough, the consideration must be lawful also.
Sec 23 deals with unlawful considerations.
Consensus ad idem” (Meeting of minds at same time).
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4. Agreement…?
Agreement means the act of coming to a mutual decision,

position or arrangement
- All agreements are not contracts, but all contracts

are agreements”.
- Sec 2(e) of Indian contract act 1872 defines

agreement.
- 2(e) –agreements,
- 2(H) contracts,
- 2 (g) Void Contracts.
- Two or more parties coming together for agreeing

something related to omission or commission of
something known as agreement.
Agreement + Legality/ Essentials Elements = Contract.
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5. Executory Contract?
An executory contract is a contract that has not yet been fully
performed or fully executed, It is a contract in which both sides still have
important performance remaining. It is a contract made by two parties
in which the terms are set to be fulfilled at a later date.
The contract stipulates that both sided still have duties to perform
before it becomes fully executed. If duty performed by one party only it
means it is partly executed, still it is a executory contract, because it is
not executed fully because performance remaining from other party.
Example:
1. Most leases or contracts for sale of goods have not been delivered
by the seller and the buyer has not paid executory contracts
2. A purchased TV from B on installment basis. Till he made/ pays

the final installment/ payment, the contract has not been fulfilled.
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6. Invitation to offer ?
The term “offer as defined in sec 2(a) has two purposes:-
1. It reveals the expression of the offeror’s willingness to do or to abstain from

doing something
2. Secondly, it made with a view to obtaining the assent of the offeree to the
proposed act or abstinence.
“Invitation to Offer “ an invitation to offer is not the final willingness but the
interest of the party to invite the public to offer him.
Example:-
1. Let’s say /assume you have given advertisement in newspaper to sell the car
and mentioned price fixation after discussing. It is just invitation to offer but
not final willingness to sell car at 1000 $ only.
2. Tender
3. An advertisement in the newspaper, house to let or house for sale etc.
Case law: Harvey vs facie (1893 .A. C 552 )
Brief facts:- The plantiff telegraphed to defendants “ will you sell your bumper hall
pen estate? “ Telegraph lowest cash Price”
The defendants replied by telegram “ Lowest Price for Bumper estate is £ 900”
The plaintiff sent their last telegram “ we agree to buy bumper hall pen estate for £
900 asked by you.
Later the defendants for the breach of contract did not conclude as a successful
contract. In their telegram the plaintiff asked defandants two questions ; 1. About their
willingness to sell estate; 2. The lowest rate.
The defendants answered only the second question, they did not answer the first
question about “willingness”, it is the fundamental principal of law of contracts is that a
valid offer must contain” willingness”. Hence a ,mere statement of the lowest price itself
was not an offer. Therefore no contract arose between the plaintiff and the defendants and
the defendants were not bound to it.
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7. Revocation of acceptance?
Section 5 of Indian contract act, 1872 explains “Revocation of
proposals & acceptance.
– A proposal may be revoked at any time before the

communication of its acceptance is complete as against the proposer,
but no after wards.
→ General Principle:
The effect of acceptance of an offer has been explained by

“Anson” in law of contracts in the following words:
“Acceptance is to an offer what a lighted match is to a train

of gun powder”. This gives the meaning that when an offer is
accepted it cannot be recalled or revoked. It is similar incidence
that the gunpowder may have laid without explosion, “Until it has
been lighted. The man, who laid the train of gunpowder, can
remove it before the match is applied but when once a lighted
match is applied to the gunpowder, he cannot stop it from
explosion.
Similarly an acceptance may be revoked at any time before the

communication of the acceptance is complete as against the
acceptor, but not afterwards.
→ Ways to revoke acceptance:

1. Before the acceptance is communicated.
3. Death of proposer.
4. Insanity of proposer.
5. Qualified acceptance.
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8. (a) Tender & (b) Specific tender ?
(A ) Tender is an offer to do or perform an act which the party

offering, is bound to perform to the party to whom the offer is
made.
- A tender may be of money or of specific article.
- It is not an offer, it is just a invitation to offer.
- A tender is like a quotation of prices
- When tender is approved, then only it is converted into a
legal offer.
- A tenderer can be withdrawn his tender before its final
acceptance and after acceptance that must have to be
performed.
- Approving the tender means an agreement of contract is
formed.
(b) Specific tender:

A specific tender is also known as the selective tender. It is
similar to the specific offer.
It is an invitation of offer to the particular contracts / Persons /
Individuals only.
Only who are invited for tender are eligible for quoting the prices
at tender & for agreement of contract.
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9. Privity of contract?
The expression “Privity of contract” is a doctrine which means
stranger to contract. It means that a person, who is not a party to the
contract, cannot sue for carrying out the contract. That is, a person who
is not a party to the contract cannot enforce a contract.
Meaning:
1. Party = A person having a part of interest in any action, matter
of thing.
2. Privity = A relation between parties that is recognized by law.
Eg. that of blood, lease or service
3. Doctrine = It is a frame wok, set of rules, procedural step
established through precedent in the common law.
Exception to rule:
→ When an agent is involved
→ Trusts
→ Restric on condi onal agreements
→ Negligence
→ Assignment of contract
→ Insurance complainer.
Case Law: (Tweddle Vs. Atxinson (1861) 123 ER 762)

(Stranger to contract – Eng Law)
Brief facts: A & B were bride groom & bride contract between A’s
father & B’s father that each would pay certain sum of money to A &
that A would have the power to sue for such sums after the death of A’s
father & B’s father to recover the promised amount.
Judgment: Court held that a had no right to claim, as he was the
third person (Stranger) to the contract.
Principle laid down: The rule of Privity to contract (stranger to contract)
came existence.
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10. Types of offer?

Sec 2 (a) proposal / offer : When one person to another
signs his willingness to do or to abstain from doing anything with a
view to obtaining the assent of that other to such act or
abstinence, said to make a proposal / offer.
India English
 Equivalent words: * Section

Proposal = Offer Sec .2 (b) promise
Promisor / Proposer = Offeror Sec. 2 (C) promiser /
promise
Proposee / Promisee = Offeree Sec. 2 (f) reciprocal
promises
→ Types
→ Specific offer refers to an offer made to a specific individual or
group of individuals. It can only be accepted by the individual / group of
individuals to whom it is directed.
→ General offer: When an offer is made to general public, it is
called general offer and can be taken by any person who wishes to fulfill
the terms of the offer. When an offer is accepted by the individual to
whom it is directed, the offer or and the offeree enter into a contract. If
the offer is accepted by large number of people, the number of
contracts formed will be equal to the number of individuals who accepts
the offer. If a reward is offered for completing a certain task. Only the
person who completes the task can accept the offer.
→Counter Offer: In the event that the offeree is only willing to
accept the offer if certain modifications are made. He or she is offering a
counter offer. A counter offer is itself an offer. And it is considered a
rejection of the initial offer. It is a new offer that terminates the initial
offer.
Ex: A offered to sell his car for 1 lakh to B (offer) and B bargained
to sell his (A’s) car for 70,000 (counter offer)
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→Cross Offer: A cross offer is made when two parties make the
same offer to one another without knowing the party has made an offer,
and the terms of both offers are identical.
Ex: 1. A small company wants to sell itself to a larger company for

a specific amount. The lager company also want to buy the small
company for the same amount. They both send out correspondence to
each other at the same time. This is a cross offer.
→Standing Offer / Floa ng Offer / Con nuing Offer:bAn offer is

regarded as a standing offer if it is meant to remain open for a certain
amount of time and can be accepted any time before the deadline. Ex:
Tenders
→Express Offer: It is an offer that is done through words that can

be either oral or written. The oral offer can be made face to face or via
telephone. The written offer can be made via text messages,
advertisements, letters or emails.
→Implied Offer: An offer that can be understand by

circumstances of case or the conduct of parties is known as implied
offer.
Ex : 1. Bus transport company operates its bus on a certain route,
it is making an implied offer to transport passengers to a specified
location of a certain fare.
Ex. 2.. A public telephone or weighing machine in a public place
offers its service for a certain amount of money. Such a machine is
offering a implied offer.
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11. Lapse of offer?
An offer which comes to an end due to various reasons known as

lapse of offer. A termination of an offer as a result of passage of time,
death, or the nonfulfillment of a condition.
An offer comes to an end, and is no longer open to acceptance
under the following circumstance:
1. By notice.
3. After expiry of reasonable period.
4. By failure of a condition precedent
5. By death or insanity.
6. Counter offer.
7. By refusal.
→ Revoca on of offer Sec .5
→ Revoca on of acceptance Sec .5
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12. Acceptance ?
Sec 2 (b) of Indian contract act 1872 defines acceptance
An acceptance cannot be made without offer in the some

way an offer cannot become a agreement without acceptance.
Acceptance is an act or implication that provides of an offer which
then forms a binding contract. In legal terms when someone
accepts on offering they are agreeing to comply with the terms
made in offer.
Legal rules regarding acceptance:
1. Acceptance must be given only by the person to whom the

offer is mode.
2. Acceptance must be absolute and unqualified (unconditional).
3. Acceptance must be expressed in some usual reasonable

manner, unless the proposal / offer prescribes the manner in
which it is to be accepted.
4. Acceptance must be communicated by acceptor.
5. Acceptance must be given within a reasonable time & before

the offer lapses and or revoked.
6. Acceptance must succeed the offer.
7. Rejected offers can be accepted only, if renewed.
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13. Bailment ?
Sec 148 defines “bailment” as 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 off
according to the directions of person delivering them. An act of
delivering goods to a Bailee for a particular purpose without transfer of
ownership.
Ex: 1 Giving bike to mechanism for repair (Non transfer of ownership)

Ex: 2 Giving cloth to tailor to stitch a suit (non transfer of ownership)
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14. Pledge ?
Sec 172 of Indian contract act 1872 Defines pledge. A pledge is a
contract where a person deposits an article or good with a lender of
money as a security for the replacement of a loan or performance of a
promise. Pledge is known as pawn.
→Pledge is used only in case of movable assets.

→Mortgage is used for crea ng charge against immovable
property.
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15. Warranties in sale ?

A warranty is a stipulation collateral to the main purpose of the
said contract. The breach of warranty gives rise to claim the damages.
However, it does give a right to reject the goods or treat the

contract as repudiated (Sec 12 (3)).
A warranty is a “ A promise or guarantee for a product, and it

holds the maker of the product responsible to repair / replace a
defective product or its parts.
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Unit – 2
16. Free consent?

Sec13defines “consent” – “it is when two or more parson agree
upon the same thing and in the same sense”.(Ex: A wants to sell red
color car to B. B agreed B thought / thinks he is burning blue car (not
agreed upon same sense)).
Sec .14 defines “free consent” – The consent should be free & should
not be affected by,
1. Coercion.
2. Undue influence.
3. Fraud.
4. Miss presentation.
5. Mistake.
Coercion: The action or practice of persuading someone to do something

by using force or threat. Threat it is practice of forcing another party to
act in an involuntary manner by use of threats or forces.
Under Influence: Influence by which a person is induced to act otherwise

than by their own free will or without adequate attention to the
consequences.
Fraud: Fraud is a wrongful act which involves making others believe

something which is not true, for their financial or personal gain.
Miss presentation: Three Types: 1. Fraudulent, 2. Negligent, 3.Innocent.

The action or offence of giving a false or misleading account of the
natural of something.
Mistake: A mistake is an error in understanding facts, meaning of words

or law, which causes one party or bath parties to enter into a contract
without understanding the responsibilities or outcomes.
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17. Illegal agreement Sec (2(g))?

An illegal agreement under the common law of contract is one
that the court will not enforce because the purpose of agreement is to
achieve an illegal end. The illegal end must result from performance of
the contract itself
Example: 1.Agreement to harm someone.

2. Agreement to supply drugs.
3. Agreement to sell / buy arms.
An agreement without legality is illegal agreement. An illegal

agreement is any contract that is forbidden by law. This includes any
agreement that is against the law, is criminal or that is against public
policy.
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18. Immoral agreement?

Both immoral & illegal agreements are one & same in the
contracts law. An agreement that violates any law or whose nature is
criminal or is opposed to any public policy or immoral is an illegal
agreement. The law strictly prohibits such agreement, hence entering
into an illegal agreements is called a punishable offence in the eyes of
law.
Example: A contract based on sexual immorality, such as a contract of

prostitution. Such contracts are illegal contracts on the grounds that
they contravene public policy.
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19. (a) Void contracts Sec 2(j)

(b) Voidable contracts Sec .2(i)
(a) Void contract:
Void contract means invalid contract which means void.
Contract doesn’t have any value is illegal contract in the eyes of
law, because the contract on illegal act which are punishable
offences.
→ A void contract cannot be enforced by law, An agreement to

carry out an illegal act example of illegal agreement
Example: contract between drug dealers and buyers is a void

contract, simply because the terms of the contract are illegal.
→ Void contracts are “void ab ini o” means void from

beginning.
(b) Voidable contract:

A contract which is not void may be voidable at the option of
the one of the parties.
Example: A & B came to agreement that, A sold his house to B
& B bought it here it is a valid contract. But, suddenly if A says that B
threatened to kill, if A didn’t sell his house to B. Here the agreement
seems valid unless A came & told that his will was obtained by
threatening him, here it becomes void. It means a legal / valid
contracts may become invalid (which means voidable) at the option
of one the parties.
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20. Wagering contract Sec. 30?

As a matter of fact though a wagering agreement is void and
enforceable, but it’s not forbidden by law. The wagering agreements are
void but not illegal.
→ When two persons or more promises to pay or render a

performance on the happening or non happening of event which is not
certain. (May or may not happen)
Example: Betting that tomorrow will rain.
→ what are not wagers?
Exceptions:
1. Contract of insurance are not wagers.

2. Skill competitions are not wagers: Reward for solving the puzzle
(News papers advertisement) If prizes depend upon a chance, that is
a lottery and therefore a wager.
3. Horse race competition is not wager.
4. Share market transactions are not wagers.
5. Sports competitions are not wagers.
6. Example: On line IPL betting’s.
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21. Contingent contract?

A contingent contract is a contract, the performance of which is
dependent on the happening or not happening of a future event. In a
wagering, the parties to the agreement do not have any interest in event
except winning or losing the amount of wager. Actually, these two are
similar but have much difference. It will be explained by distinction
between two contracts.
Basis of Wagering contract Contingent contract

difference
1. Meaning 1. The term “wager 1. Contingent means
literally means “something related
between wagering to possible future
contract is one by and uncertain
which two persons event “contingent
professing to hold contract is also
opposite views called as
touching the issue of conditional
future uncertain event contract”.
mutually agreed
dependent upon the
determination of the
event that one shall
win from the other a
sum of money neither
of the contracting
parties having any
other interests”.
2. Definition. 2. “Wager” has not been 2. Sec. 31 defines

defined in the Indian contingent
contract act 1872, Sir contract “ as a
Williams Anson defines contract to do or
“Wager” as a promise not to do
to give money or something, if some
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money’s worth upon event collateral to

the determine action such contract does
or ascertainment of an or does not
uncertain event. happen.
3. Example 3. “X” bets “Y” Rs 3. “A “contracts to

10,000/- that particular pay “B” Rs
party comes to power. 10,000/- if B’s
“Z” accepted the same house is burnt.
hoping that party This is a contingent
would not come into contract.
power. It is an
agreement by way of
wager. In this
agreement X cannot
sue Y for the amount
since it is a wagering
contract and is void.
4. Interest 4. In wagering parties 4. In contingent

may not have any contract, the
interest in the event promise may have
except the amount interest in the
they may win or lose? event.
5. Void / Valid 5. Sec . 30 – Wagering 5. It is valid &

agreement are void but enforceable by
not illegal. law.
6. Enforceable 6. Not enforceable by law 6. It is enforceable
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22. Agreement to oust jurisdiction of the court?

Parties often mutually agrees to subject their disputes in relation
to a contract to a court of their choice. Parties to contract are barred
from agreeing to absolutely oust the jurisdiction of all the courts which
would otherwise have the jurisdiction to decide a dispute in relation to a
contract between them.
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23. Restraint of trade?

Freedom of trade and commerce is a right protected by the
constitution of India (Article 301)
→ Art 301.
“Freedom of trade, commerce and inter course”. –Trade, commerce
and inter course throughout the territory of India shall be free.
The const of India gives every citizen to have his liberty to do

trade. But at the same time, he is not supposed to exploit to others.
Hence the terms which are against the public policy are void. If such
restriction are imposed in any agreement it becomes “agreements in
restraint of trade” and are void.
Sec.27 explains about “Agreement in restraint of trade”.
Sec.27 – Every agreement by which any one is restrained from exercise a

lawful profession, trade or business of any kind, is to that extent void.
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Unit – 3
24. Novation sec .62
The substitution of a new contract in place of an old one. It is the

act of replacing an obligation to perform with another obligation: adding
an obligation to perform; or replacing a party to an agreement with new
party.
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25. Rescission of contract?

In contract law, rescission is an equitable remedy which allows a
contractual party to cancel the contract.
Rescission is the unwinding of a transaction. This is done to bring

the parties, as far as possible, back to position (The status quo ante)
→ Rescission has been defined as the unmaking of a contract

between parties is the unwinding of a transaction. This is done to bring
the parties, as far as possible back to position.
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26. Death of promise?

If the promisor dies before performing the promise, then the legal
representatives become responsible for the same, it the promise
involves the utilization of personal skills or expertise, the consideration
ceases with the death of the promisor.
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27. Joint promisors ?

Each of two or more joint promisors may compel every other joint
promisor to contribute equally with himself to the performance of the
promise, unless a contrary intension appears from the contract.
→ Contribution in joint and several liability can be defined as
“ The right that gives one of the several persons who are liable in
common debt the ability to recover ratably from each of others when
that one person discharges the debt for the benefit of all.
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28. Minor as shareholder →(2nd Unit)

A minor can only be a share holder through his or her guardian
furthermore, a minor cannot actively buy shares in a company. They
must either be gifted to him / her or transferred. The guardian
safeguards the interests of minor and must manage the shares. A minor
needs a guardian to perform any legal things or matters relations
contract. After becoming major an individual can perform any legal
obligation / contract.
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29. Remission?
Remission of contract means that parties to a contract may accept
perform only in part and accordingly discharge the promisor from the
contract simply we can say reduction of the work / performance of the
contract by mutual agreement.
Example: A contract is made between ‘A’ and ‘B’ to paint 50

paintings for “A”. However, later ‘B’ asks ‘A’ whether the contract can be
limited for 25 paintings only and ‘A’ agrees. The contract is accordingly
discharges by remission.
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30. Anticipatory breach ?

Breach: A breach be a failure to perform a contract (breaking its
terms).
→ * Anticipatory Breach: Anticipatory breach of contract is also

known as anticipatory repudiation of contract. It means that the party to
contract has clearly refused to perform his part of the contract even
before the actual due date of the contract. It is a declaration by the
promising party to contract that he or she does not intend to live up to
his/her obligations under the contract.
Example: “A” agrees to sell his car for 1 lakh to “B”. The two agree
on the purchase price 1,00,000/- the sale to occur on may 1st. on the 25th
“B” tells “A” that he cannot come up with money on time following this
communication. “A” can reasonably assume “B” is in anticipatory
breach. “A” can now sell his car to someone or can file a suit against “B”
for breach of contract.
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31. Doctrine of frustration (Sec.56) ?

If the performance becomes impossible, because of a supervening
event, the promisor is excused from the performance of the contract. In
English law, it is called “Doctrine of frustration”. In Indian law it is called
impossibility of performance.
Example: ““A” agreed to transport goods to “B” via some bridge”

(route) due to floods the bridge collapsed, so “A” not able to transport
goods due to impossible arising suddenly.
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32. Mistake of identity?

Where one of the parties represent himself to be a some person
other than he really is, it is called mistake of identity, simply we can says,
when someone represents himself as other, (which he is not actually) to
another person & he believes that known as the mistake of identity.
Example: A is an unemployed. He represents “B” that he was a

sale officer of “C” company and obtains some money from B on false
documents. It is called mistake of fact and the agreement is void.
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33. Contract is guarantee?

Contract of guarantee means a contract to perform the promises
made or discharge the promises made or discharge the liabilities of the
third person in case of his failure to discharge such liabilities.
The term guarantee may be defined as an undertaking by one person to

pay the amount due from another person.
A “Contract of guarantee” is a contract to perform the promise or

discharge the liability of a third person in case of his default.
Example: “A” lends money to “B” and “C” promises “A” that if “B”
fails to repay he will pay the money.
“A” → Creditor.
“B” → Principal debtor.
“C” → Surety.
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34. Discharge of contract ?

→Discharge: Generally the term means to be relieved from task, duty
or obligation etc however, in certain contexts, i.e where an officer
discharges a duty, the term means to fulfill, perform or execute.
→Discharge of contract: Discharge of contract means termination

(coming to an end). It is the act of making a contract or agreement null.
A discharged contract refers to contract that is fully performed. There
are various modes by which a contract / agreement comes to an end.
(Termination).
→ various modes:
1. Discharge by performance.
2. Discharge by agreement or consent.
a. By waiver.
b. By Novation.
c. By Rescission.
d. By Alteration.
e. By Remission.
f. By Merger.
3. Discharge by impossibility of performance
i. Impossibility existing at the time of formation of the
contract:
a. Known to parties.
b. Unknown to the parties.
ii. Impossibility arising subsequent to the formation of the
contract.
4. Discharge by lapse of time.
5. Discharge by operation of law.
a. By Death.
b. By Insolvency.
c. By authorized alternation.
d. By Rights & Liabilities becoming vested in the same person.
6. Discharge by breach of contract.
a. Actual breach
b. Anticipatory breach.
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35. Dissolution of firm?

→ *Dissolution:
The process by which a company is brought to an end. And

the assets & property of the company redistributed. Dissolution of
a partnership is the termination of a partnership.
→ *Dissolution of firms:
Section 30 of the Indian partnership act provides that “The

dissolution of the partnership between all the partners of a firm is
called the dissolution of a firm” it implies the complete
breakdown of relation of a partnership between all the partners.
→ *Causes of dissolution of partnership firms:

1. By Agreement.
2. By Notice.
3. Commitment of illegal business.
4. Death of partner.
5. Expiry of terms.
6. Completion of work or contract.
7. Registration of a partner.
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36. Discharge of surety (Sec – 130 to 141)?

Ex: “A” lends money to “B” and “C” promises “A” that if “B” fails to
repay, he (“C”) will pay the money.
“A” →Creator
“B” → Principal Debtor
“C” → Surety.
Discharge of surety means, liability of surety in contract comes to

an end (means discharge)
→ *When surety is discharged:

1. Death of Surety.
2. By notice of revocation.
3. Novation.
4. By Variance in terms of contract
5. By release or discharge of principle debtor.
6. Arrangement between principle debtor and creator.
7. Impairing surety’s remedy.
8. Loss of security.
9. Invalidation of contract.
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Unit – 4
37. Quasi contract?

An obligation of one party to another imposed by law independently
of an agreement between the parties. An obligation that the law creates in
the absence of an agreement between the parties.
A quasi contract is a contract that exists / created order, not by

agreement of the parties. Court create quasi contracts to avoid the un just
enrichment of a party in a dispute over payment for a good or service.
→* Principles & legal maxim (Quasi contract)
 Principle behind quasi contract : Justice, equity & good

conscience
 Legal Maxim: “No man must grow rich out of another
person loss”
Example: “A” & “B” enters into a contract under which “A” agrees
to deliver a basket of fruits at B’s residence instead of “B”. when
“C” gets home he assumes that the fruit basket is a birthday gift &
consumes them.
→Although there is no contract between “A” & “C” the court

treats this as a quasi contract and orders “C” to either return the
basket of fruits or pay “A”.
39 | P a g e
38. Quantum Meruit?
Quantum meruit is a latin phrase meaning “what one has earned”.

In the context of contract law, it means “Reasonable value of services”.
A reasonable sum of money to be paid for services rendered or work
done when the amount due is not stipulated in legally enforceable
contract. If a person sues for payment for services in such circumstance
the judge or jury will calculate the amount due based on time and usual
rate of pay or the customary charge, based on quantum meruit by
implying a contract existed.
Example: “A” the car owner, travelling outstation / trip in his car
suddenly a accident happened & “A” s car was damaged. A nearby
walker “B” (car mechanic) saw that he went at “A” asked him that I’m a
car mechanic can I repair your car? “A” agreed & said that he didn’t have
enough money so, he will pay the amount for B’s services after one
week & gave his address / contact details and left from there after
getting his car repaired by him (B). After a week B did not receive any
amount. B sued A on quantum meruit basis because, there was no
contract / a official or written agreement between them. It was just a
oral promise by “A”. Here, B sued A on quantum meriut basis & got the
amount for the services he rendered to A by court’s order.
40 | P a g e
39. Remote damages?

Sec.73 lays down the provision relating to damages it provides
that the party, who breaches a contract, is liable to compensate the
injured party for any loss or damage caused, due to breach of contract.
→ Remote damages are damages from an injury not occurring directly

from and as a natural result of the wrong complained of. They are
damages of an unusual and speculative nature.
Remote damages are such as are the anticipated from an accidental or

unexpected result / unusual combination of circumstances, a result
beyond and over which the negligent party has no control.
Case law:[Braunvs Craven, 175 111 401 (111.1808)]
41 | P a g e
40. Finder of lost goods sec.71

A person who finds goods belonging to another and takes them in
to his custody, is subject to the same responsibility as a Bailee. Since the
position of the finder of goods is that of a Bailee. He is supposed to take
the same amount of care with regard to the goods as is expected of a
Bailee under sec 151. He is also subject to all the duties of a Bailee,
including a duty to return the goods after the true owner is found. If he
refuses to return, he could be made liable for conversion.
→* Rights of finder of goods:
1. May sue for specific reward offered.

2. Right to lien.
3. Right of claiming the reward, if announced by the owner.
4. When finder of thing commonly on sale may sell it.
5. Right to sell the goods found.
42 | P a g e
41. Duty to mitigate?

When a person suffers damages as a result of a breach of
contract, he/she has the legal obligation to minimize the effects and
losses resulting from the injury. The duty to mitigate works to deny
recovery of any part of damages that could have been reasonably
avoided.
Example: A creditor must mitigate his damages when a debtor

breaches. For Ex: if a debtor breaches on his car loan the creditor must
mitigate by attempting to sell the car. He cannot keep the car and sue
debtor for damages.
Example: An employee who has been wrongly terminated must

mitigate his damages by finding another job. He cannot sit around idly
and sue the employee for his lost wager.
→ mi gate meaning: make (something bad) less server serious, or

painful.
43 | P a g e
42. Exemplary Damages ?

Exemplary damages are awarded against the defendant as a
punishment, so that the assessment goes beyond mere compensation of
the plaintiff. Exemplary are damages assessed in order to punish the
defendant for outrageous conduct.
Example: when there is a breach of promise to marry
(case law: Dennis Vs Sennvah)
44 | P a g e
43. Damages ?
Damage is defined as a loss or harm resulting from injury too
person, property or reputation. Damages on the other hand, refers to
compensation – such as a monetary judgment – provided to a person
who has suffered a loss or harm due to the unlawful act or omission of
another.
The amount of money allowed by a court as a compensation for

the violation of a duty or the commission of a tort. Damages are usually
granted at law only to a plaintiff. Only if they file a suit for. In almost no
instances will greater damages be granted than are asked for. In equity
however, the assessment and amount of damages, where the court has
power to grant them are wholly within the discretion of the court.
45 | P a g e
44. Kinds of damages?
1. Ordinary damages: (Liquidated damages)

- Breach of contract happens. Injured party can recover
from the other party.
- → (Ordinary/General Damages).
2. Special Damages: Example →

- Loss of business opportunities, contract and profits.
Damage to business reputation, loss of time and other
inconveniences
- → (Consequen al Damages).
3. Vindictive Or Exemplary Damages: which are punishable in

nature.
4. Nominal Damages: Where party (injured) has not, in fact,

suffered any financial loss. Damages awarded for the breach of
contract.
5. Damages for loss of reputation:
6. Damages for inconvenience & discomfort: (“Un liquidated

damages”).
46 | P a g e
45. Liquidated damages:

Liquidated damages are damages whose amount the parties
designate during the formation of a contract for the injured party to
collect as compensation upon a specific breach. Liquidated damages are
known as ascertained damages.
47 | P a g e
46. Rights of unpaid seller?

When the buyer of goods does not pay his dues to the seller, the
seller becomes an unpaid seller and now the seller has certain rights
against the buyer, such rights are the seller remedies against the breach
of contract by buyer.
→ Rights:
1. Suit for price.

2. Suit for damages for non acceptance.
3. Repudiation of contract before due date: If the buyer
repudiates the contract before the delivery date of the goods
the seller can still sue for damages such a contract is
considered as a “rescinded contract”. (Anticipatory breach of
contract)
4. Suit for interest.
5. Rights to lien.
48 | P a g e
Unit-5
47. Perpetual injunction?

An injunction is a court order prohibiting a party form specific
course of action. A perpetual injunction is a permanent remedy granted
by the court that prohibits the commission of a wrong threatened or the
continuance of a wrongful course of action already begun. If a party fails
to comply with an injunction granted by court, then the party could face
criminal offence at the time of final judgment.
49 | P a g e
48. Injunctions ?
A judicial orders restraining a person from beginning or continuing an action
threatening or invading the legal right of another or compelling a person to carry out
certain act.
Example: To make restitution to an injured party.
1. Temporary injunction: A temporary injunction is a court order prohibiting an action

by a party to a law suit until there has been trail or other court action.
Example: Giving stay order by court to statutory authority, not to demolish the
houses of plaintiff until court decides whether it is authorize are Govt. lands private lands.
2. Perpetual Injunction: It is a permanent injunction/Granting injunction. It is a

permanent remedy granted by court. It is ordered at the time of final judgment.
Example: Court giving decision/order on lands that belongings to private one’s – means
private lands not Govt. lands & issued permanent injunction stating that Govt. Should not
intervene & demolish saying that it is a Govt. land.
3. Mandatory Injunction: Mandatory means compulsory, an order of the court not

only restraining a person from future wrongful acts but direction him further to
restore, as far as possible the former state of things.
Example: The plaintiff hold right of way to his shop. The defendant constructed a building.
The plaintiff refused the compensation as there was no other way to approach his shop.
Court ordered to remove building
(Case law: Kaehal Vs burrel (1877 Ch D551)) – Mandatory injunction.
4. Prohibitory injunction: Order prohibits from doing or continuing or repeating some

wrong act constitutes a breach of a legal obligation or duty.
Example:
1. Injunctions against environmental pollution.
2. Injunctions against exceeding limit of natural right to drainage.
50 | P a g e
49. Rectification of instruments?

Chapter III of the specific relief act, 1963 explains the provisions
about “rectification of instrument”. This chapter contains only one
section Viz. Section 26.
Rectify = Correcting: amending: refining by distillation: purifying:

adjusting.
→when two parties entered into a contract, and such contract

contained certain mistakes, one of the parties to the contract may
approach the court for correcting those mistakes in rectifying a written
instrument. The court may inquire what the instrument was intended to
mean, and what were intended to be its legal consequences, and is not
confined to the enquiry what the language of instrument as intended to
be for the purpose of rectifying a contract in writing, the court must be
satisfied that all the parties there to make an equitable and
conscientious agreement. It is called rectification of agreement.
→”Rec fica on is a term which may be understand as the

correction of an error in an instrument with a view to give effect to the
real intention of the parties.
→It is an equitable remedy which is being granted (when facts of

the instrument are not according to intention of parties) when parties
come to a genuine agreement and instrument fails to record it.
51 | P a g e
50. Declaratory decree?

Chapter IV explains the provisions about “declaratory decree”.
It has two sections 34 & 35
Section 34 → “Desecra on of the courts as to declara on of status

of right”.
Section 35 → “Effect of declara on”.
Declaratory decree is that decree that declares that a person is

entitled to a “legal character” & Right as to any property.
1. Legal character: Any status / position recognized by law with

which a right / liability merges.
Example:
1. “A” is a son of “B” (declaration)
2. I am a eligible voter (declaration).
3. I am an Indian (declaration of Nationality).
4. Caste (Declaration).
5. Legitimate (illegitimate (declaration)).
6. Rank / official position (declaration).
2. Right as to any property: Even slightest right towards any

property acknowledges.
Example:
1. Creditors right to safe the property of debtor to recover
debts.
2. Declaration of ownership.
3. Declaration of tenancy.
4. Sale of property void declaration
Declaration related to any property is acknowledged by
court & gives declaratory decrees approaching the
declaration.
52 | P a g e
51. Preventive relief ?

Preventive relief is said to be such a relief by which a person is
prevented from commission or omission of some according to sec 36 of
the specific relief act, 1963 preventive relief is granted at discretion of
the court by injunction, temporary / permanent.
53 | P a g e
52. Specific performance of contract?

Specific performance is a remedy provided by the court in case of
any of parties fails to perform the obligation / duty of a contract then
court orders the party to perform that specific duty/performance which
was not performed. When the plaintiff brings this to the notice of court
then court orders for specific performance.
Example: A political party/plaintiff entered into an agreement

with the municipality to conduct a meeting in the hall, belonging to
municipality/defendant. Later municipality revoked. Court gave
judgment in favor of plaintiff/political party. It was held that
defendant/municipality had to perform the contract.
54 | P a g e
→ * More questions:
53. Standard form of contract?

A contract between two parties, where the terms and conditions
of the contract are set by one of the parties and the other party has little
or no ability to negotiate more favorable terms and is thus placed in a
take it or leave it position.
Example: 1. “A” passenger in plane was informed that his luggage was
lost in which “2,00,000 worth gold was there “A” sued airport authority.
They told / argued that they can only give/their liability is 10,000/- only
as per the terms & conditions printed on ticket
→ “A” only got 10,000 claim → standard form of contract.
55 | P a g e
54. Pardanashin women?
A women in Parda. Just like a Hindi word. A contract with a

Pardanashin women is presumed to have been induced by undue
influence. That’s why contract with them treated as void.
A women who live in complete section (the state of being private

and away from other people). Most of the time there are illiterate. Need
to depend on others. These are the reasons, act/law not allow to form a
contract or agreement.
→* Person entering into a contract with pardanashin women has

to prove.
1. No undue influence is used.

2. She had free and independent advice.
3. She fully understand the contents of the contract.
4. She exercised her free will.
→ She has been giving a special cloak of protection by Indian law.
56 | P a g e

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Contract Law 1 Short Notes by Kalyan

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1 CONTRACT LAW 1 – SHORT NOTES

1. Essential of valid contract?

Sec.10 of Indian contract act stated some essentials for an

- Sec.6 if Indian contract act 1872 explains the ways that

A consideration means something in return. In an agreement consideration

Sec 25 states that an agreement without consideration is void.

Exception also applies as follows,

For above things consideration is not required (exceptions) presence

Sec 23 deals with unlawful considerations.

Consensus ad idem” (Meeting of minds at same time).

Agreement means the act of coming to a mutual decision,

- All agreements are not contracts, but all contracts

- Sec 2(e) of Indian contract act 1872 defines

- 2 (g) Void Contracts.

- Two or more parties coming together for agreeing

Agreement + Legality/ Essentials Elements = Contract.

2. A purchased TV from B on installment basis. Till he made/ pays

1. It reveals the expression of the offeror’s willingness to do or to abstain from

Case law: Harvey vs facie (1893 .A. C 552 )

– A proposal may be revoked at any time before the

The effect of acceptance of an offer has been explained by

“Acceptance is to an offer what a lighted match is to a train

Similarly an acceptance may be revoked at any time before the

→ Ways to revoke acceptance:

8. (a) Tender & (b) Specific tender ?

(A ) Tender is an offer to do or perform an act which the party

(b) Specific tender:

Case Law: (Tweddle Vs. Atxinson (1861) 123 ER 762)

10. Types of offer?

 Equivalent words: * Section

Ex: 1. A small company wants to sell itself to a larger company for

→Standing Oﬀer / Floa ng Oﬀer / Con nuing Offer:bAn offer is

→Express Oﬀer: It is an offer that is done through words that can

→Implied Oﬀer: An offer that can be understand by

11. Lapse of offer?

An offer which comes to an end due to various reasons known as

An acceptance cannot be made without offer in the some

Legal rules regarding acceptance:

1. Acceptance must be given only by the person to whom the

2. Acceptance must be absolute and unqualified (unconditional).

3. Acceptance must be expressed in some usual reasonable

4. Acceptance must be communicated by acceptor.

5. Acceptance must be given within a reasonable time & before

6. Acceptance must succeed the offer.

7. Rejected offers can be accepted only, if renewed.

Ex: 1 Giving bike to mechanism for repair (Non transfer of ownership)

→Pledge is used only in case of movable assets.

15. Warranties in sale ?

However, it does give a right to reject the goods or treat the

A warranty is a “ A promise or guarantee for a product, and it

16. Free consent?

Coercion: The action or practice of persuading someone to do something

Under Influence: Influence by which a person is induced to act otherwise

Fraud: Fraud is a wrongful act which involves making others believe

Miss presentation: Three Types: 1. Fraudulent, 2. Negligent, 3.Innocent.

Mistake: A mistake is an error in understanding facts, meaning of words

17. Illegal agreement Sec (2(g))?

Example: 1.Agreement to harm someone.

An agreement without legality is illegal agreement. An illegal

18. Immoral agreement?

Example: A contract based on sexual immorality, such as a contract of

19. (a) Void contracts Sec 2(j)

→ A void contract cannot be enforced by law, An agreement to