3.Communicaon, acceptance and revocaon of proposals.
3.Communicaon, acceptance and revocaon of proposals.-The-The communicaon of proposals thecommunicaon of proposals the acc
acceptance of eptance of propprop osaosalsls, and t, and t hehe revocaon of proposals and acceptances, respecvely, are deemed revocaon of proposals and acceptances, respecvely, are deemed toto be m
be m ade by any acade by any act ot o r omr om isisssion of_ tion of_ t he party phe party p roposroposing,ing, accepng oraccepng orrevoking by which he intends torevoking by which he intends to com
com mm unicate sucunicate such pro- ph pro- p osaosal accl acceptanceeptance or revocaon, or which., has the effect of communicang it.or revocaon, or which., has the effect of communicang it.
5.Revocaon of proposals and acceptances.
5.Revocaon of proposals and acceptances.-A proposal may be revoked-A proposal may be revoked at any me before theat any me before the communicaon of
communicaon of its accits acceptance is compeptance is comp lete aslete as against the proposer, but not aerwards.against the proposer, but not aerwards.An An accacceptanceeptance may be revoked at any me before the communicaon
may be revoked at any me before the communicaonof tof t he acceptance is he acceptance is comcom plete as agplete as againsainst t thethe acc
acceptoepto r, r, but but notnot aerwards.aerwards.
Illustraons Illustraons
A proposes, by a leer sent
A proposes, by a leer sentby poby po sst, tt, t o sell his o sell his house to house to B. BB. Baccepts the proposal by a leer sent by post.accepts the proposal by a leer sent by post.
A may revoke his proposal at any me before or at
A may revoke his proposal at any me before or at the momentthe moment when B posts his leer of acceptance,when B posts his leer of acceptance, but not aerwards.
but not aerwards. B may revoke his acceptance at any B may revoke his acceptance at any me before or atme before or att h e m o m e n tt h e m o m e n t when the leerwhen the leer communicang it reaches A, but
communicang it reaches A, but not aerwards.not aerwards.
8.Acceptance by performing condions, or receiving
8.Acceptance by performing condions, or receiving consideraon.consideraon.--Performance of the condions of aPerformance of the condions of a prop
prop osaosal, l, or thor th ee acceptance of any consideraon for a reciprocal promise whicacceptance of any consideraon for a reciprocal promise which may beh may be offered with aoffered with a prop
prop osaosal, is l, is an accan acceptance oeptance o f tf t he phe p roposal.roposal.
10.Wh
10.Wh at agreementat agreement s s are care contont ractsracts.-All a.-All agreementgreement s s are care contont racts racts if they are mif they are m ade by the frade by the fr ee cee consent ofonsent of pares competent to contract, for a
pares competent to contract, for a lawful consideraon and with a lawful object,lawful consideraon and with a lawful object,and are not herebyand are not hereby express
expressly declared to bly declared to b e void.e void. Nothing herein contained shall affect any law in force inNothing herein contained shall affect any law in force in 1*1* [India[India] and not] and not hereby express
hereby expressly repealed by wly repealed by w hich any chich any contont ract isract is required to be made in wring2* or in the presencerequired to be made in wring2* or in the presence of w
of w itnessitnesseses, or any law re, or any law relang to the registraon of lang to the registraon of documents.documents.
11. Who are competent
11. Who are competent to contto cont racract.-Et.-Every persvery person is on is comcom petent tpetent t o contract wo contract w ho is of the age of majorityho is of the age of majority ac
according cording to tto t he law to he law to ww hichhich he is subject, 3*and who is of sound mind, and is not disqualifiedhe is subject, 3*and who is of sound mind, and is not disqualified fromfrom contrac
12.What is a sound mind for the purposes of contrac ng.-A person is said to be of sound m ind for the purpose of m aking a contract if, at the me when he makes it, he is capable of understanding it and of form ing a raonal judgment as to its effect upon his interests.A person who is usually of unsound m ind, but o ccasionally of sound m ind, may m ake a contract w hen he is of sound m ind. A person w ho is usually of sound m ind, but occasionally of unsound m ind, may not m ake a contract w hen he is of unsound m i n d .
Illustraons
(a) A paent in a lunac asylum, who is at intervals of sound m ind, may contract durin g tho se interv als. (b) A sane man, who is delirious from fever or w ho is so drunk t hat he cannot understand t he term s of a contract or form a raonal judgment as to its effect on his interests, cannot contract whilstsuch
delirium or dr unkenness lasts.
13."Consent" defined.-Tw o or m ore persons are said to consent w hen they agree upon the same thing in the sam e sense.
14."Free consent" defined.-Consent is said to be fr ee w hen it is not caused by-(1) coercion, as defined in secon 15, or
(2) undue influence, as defined in secon 16, or (3) fraud, as defined in secon 17, or
(4) misrepresentaon, as defined in secon 18, or
(5) mistake, subject to the provisions of secons 20, 21 and 22.
Consent is said to be so caused w hen it w ould no t have been given but f or t he existence of such coercion, undue influence, fraud, misrepresentaon or mistake.
15. " Coercion" defined.-"Coercion" is the comming, or threatening to comm it, any act forb idden by the Indian Penal Code, or the u nlawful det aining, or threatening to d etain, any property , to the
prejudice of any person whatever, with the intenon o f causing anyperson to enter into an agreement.
Explanaon.-It is imm aterial whet her th e Indian Penal Code is or is not in force in th e place wh ere the coercion is em ployed. (45 of 1860.)
Illustraon
A, on bo ard an English ship on the high seas, causes B to enter into an agreement by an act amounng to criminal inmidaon underth e Indian Penal Code. (45 of 1860.) A aerwards sues B for breach of contract at Calcua.
A has employed coercion, although his act is not an offence by the law of England, and altho ugh secon 506 of t he Indian Penal Code was not in force at the me when orplace w here the act w as done.
16."Undue influence" defined.-(1) A cont ract is said to be induced by " undue influence where the relaons subsisng between the pares are such that one of the pares is in a posion todominate the will of the other and uses that posion to obtain an unfair advantage over the other.
(2) In parcular and without prejudice to the g enerality of theforegoing prin ciple, a person is deemed to be in a posion todominate the w ill of
another-(a) wh ere he holds a real or apparent auth ority over t he other or where he stands in a fiduciary relaon to the other
; o r
(b) where he m akes a contract w ith a person w hose mental capacity is tem porarily or perm anently affected by reason of age, illness, or m ental o r b odily d istress.
(3) Where a person who is in a posion to dominate the will of another, enters into a contract w ith him , and the transacon appears,on th e face of it or on t he evidence adduced, to b e unconscionable, the burden of proving that such contract w as not induced b y undue influence shall lie upon the person in a posion to dominate the willof the other.
Not hing in this sub-secon shall affect the provisions of secon Ill of the Indian Eviden ce Act, 1872. (1 of 1872.)
Illustraons
(a) A having advanced mo ney to his son, B, during his mino rity, upo n B's com ing of age obt ains, by misuse of parental influence, abond from B for a greater am ount t han the sum due in respect of the advance. A employs undue influence.
(b) A, a m an enfeebled by d isease or age, is induced, by B's influence over him as his medical aendant, to agree to pay B an unr easonable sum for his professional services. B employs undu e influence.
(c) A, being in debt to B, the m oney-lender of his village, cont racts a fresh loan on t erm s which appear to be unconscionable. It lies on B to prove that the contract w as not induced by undue influence.
(d) A applies to a banker for a loan at a me when there is strin gency in the m oney m arket. The banker declines to m ake the loan except at an un usually high rate of in terest. A accept s the loan on t hese terms. This is a transacon in the ordinary course of business, and the cont ract is not induced by und ue influence.]
17."Fraud" defined.-"Fraud" m eans and includes any of t he following acts commied by a party to a contract, or w ith his connivance, or by his agent w ith intent to deceive another party t hereto of his agent, or to induce him t o enter into the
contract:-(1) the suggeson, as a fact, of that which is not true,by one who d oes not b elieve it to be true ; (2) the acve concealment of a fact by one having know ledge or belief of th e fact ;
(3) a promise made without any intenon of performing it (4) any other act fied to deceive ;
(5) any such act o r om ission as the law specially declares to be fraudu lent.
Explanaon.-Mere silence as to facts likely to affect the w illingness of a person to ent er into a cont ract is not fraud, unless the circum stances of t he case are such t hat, regard being had to them , it is the dut y of the person keeping silence to speak,1* or unless his silence is, in it self, equivalent to speech.
Illustraons
(a) A sells, by aucon, to B, a horse which A knows to be unsound. A says not hing to B about the h orse's unsoundness. This is not f raud in A.
(b) B is A's daughter and has just com e of age. Here, the relaon between the pares would make it A's dut y to t ell B if the ho rse,is unsound.
(c) B says to A--"If you d o no t den y it , I shall assume t hat t he hor se is sound." A says not hing. Here, A's silence is equivalen t t o speech.
(d) A and B, being traders, enter up on a cont ract. A has private informaon of a change in prices which would affect B'sw illingness to proceed w ith the contract. A is not b ound t o inform B.
includes-(1) the posive asseron, in a manner not warranted by the informaon of the person making it, of that w hich is not t rue, though he believes it t o be tru e
(2) any breach, of dut y w hich, withou t an intent to deceive, gains an advantage to the person omming it, or any one claiming under him , by m isleading anoth er to his prejudice or t o the pr ejudice of any one claiming under him ;
(3) causing, how ever innocently, a party to an agreem ent t o m ake a m istake as to the substance of the thing w hich is the subject of t he agreem ent.
22.Contract caused by mistake of one party as to maer of fact.- A cont ract is not voidable m erely because it w as caused by one o f t he pares to it being under a mistake as to a maer of fact.
23.What consideraons and objects are lawful and what not.-The consideraon or object of an agreement is lawfu l, unless it is forbidden by law 1* ; or is of such a nature that, if permied, it would defeat th e provisions of any law; or is fraudulen t ; or involves or implies injury to th e person or pr opert y of another
or ;
the Court regards it as im m oral, or opposed to pu blic policy. In each of these cases, the consideraon or object of an agreem ent is said to be unlaw ful. Every agreem ent of w hich the object or consideraon is unlaw ful is void.
Illustraons
(a) A agrees to sell his house to B for 10,000 rupees. Here B's prom ise to pay th e sum o f 10,000 ru pees is the consideraon for A'sprom ise to sell the hou se, and A's prom ise to sell the hou se is the
consideraon for B's promise to pay the 10,000 rupees. These are lawful consideraons.
(b) A prom ises to p ay B 1,000 rupees at th e end of six m ont hs, if C, who ow es that sum t o B, fails to p ay it. B prom ises to grant me to C accordingly. Here the promise-of each party is the consideraon for the prom ise of the other party and th ey are law ful consideraons.
(c) A prom ises, for a certain sum p aid to h im by B, to m ake good to B t he value of his ship if it is w recked on a certain voyage. Here A's promise is the consideraon for B's payment and B's payment is t he
(d) A prom ises to m aintain B's child and B prom ises to pay A 1,000 rupees yearly for t he purp ose. Here the prom ise of each party is the consideraon for the promise of the 'other party. They arelawful consideraons.
(e) A, B and C enter int o an agreement for t he division am ong them of gains acquired, or- to b e acquired, by th em by fraud. The agreement is void, as its object is unlawfu l.
(f) A prom ises to o btain for B an em ploym ent in t he pub lic service, and B prom ises to pay 1,000 rupees to A. The agreem ent is void, as the consideraon for it is unlawful.
(g) A, being agent for a landed pro prieto r, agrees for m oney, wit hout the kno w ledge of his principal, to obt ain for B a lease of land belonging to his principal. The agreemen t bet w een A and B is void. as it im plies a fraud by concealment , by A, on his principal.
(h) A promises B to drop a prosecuon which he has instutedagainst B for robb ery, and B prom ises to restore th e value of the thin gs taken. The agreemen t is void, as its object is unlawfu l.
(i) A's estate is sold for arrears of revenu e under the pro visions of an Act of the Legislature, by w hich the defaulter is prohibit ed from purchasing, the estate. B, upon an understandin g wit h A, becom es the purchaser, and agrees to convey the estate t o A upo n r eceiving from him the p rice which B has paid. The agreement is void, as it renders the transacon, in effect a purchase by the defaulter,and w ould so defeat the object of t he law .
(j) A, who is B's mukhtar, promises to exercise his influence, as such, w ith B in favour o f C, and C prom ises to p ay 1,000 rupees to A . The agreement is void, because it is imm oral.
(k) A agrees to let her daughter to hire t o B for concubi nage. The agreement is void, because it is immoral, though the leng maynot be pun ishable under t he Indian Penal Code. (45 of 1860.)
24.Agreem ent void, if consideraons and objects unlawful inpart.-If any part of a single consideraon for one or m ore objects, or any one or any part of any one of several consideraons for asingle o bject, is unlaw ful, the agreement is void.
Illustraon
A prom ises to superint end, on behalf of B, a legal m anufacture of indigo, and an illegal traffic in other arcles. B promises to payto A a salary of 10,000 rup ees a year. The agreem ent is void, the object o f A's promise, and the consideraon for B's promise, beingin part unlawful.
25.Agreement without consideraon, void, uncles it is in wring and registered, or is a prom ise to compensate for som ething done, or is a promise to pay a debt barred by limitaon law.-An agreem ent made without consideraon is void,
unless-(1) it is expressed in wring and registered under the law for the me being in force for the registraon of 1* [document s], and is m ade on account of natural love and affecon between pares standing in a, near relaon to each other ; or unless
(2) it is a prom ise to com pensate, w holly or in part , a person w ho has already voluntarily done som ething for the prom isor, or som ething which the prom isor w as
legally comp ellable to do ; or u nless
(3) it is a promise, made in wring and signed by the person to be charged therew ith, or by his agent generally or specially authorized in th at behalf, to pay w holly or in part a debt of w hich t he creditor might have enforced payment but for the law for the limitaonof suits.
In any of these cases, such an agreement is a cont ract.
Explanaon 1.-Nothing in this secon shall affect the validity, as betw een the donor and donee, of any gi actually made.
Explanaon 2.-An agreement to w hich the consent o f t he prom isor is freely given is not void m erely because the consideraon is inadequate ; but the inadequacy of the consideraon may be taken into account by the Court in determining the queson whether the consentof t he prom isor w as freely given. Illustraons
(a) A promises, for no consideraon, to give to B Rs. 1,000.This is a void agreement .
(b) A, for natural love and affecon, promises to give his son, B, Rs. 1,000. A put s his prom ise to B int o wring and registers it.This is a cont ract.
(c) A finds B'spur se and gives it t o him . B prom ises to give A Rs. 50. This is a contract. (d) A support s B's infant son. B p rom ises to p ay A's expenses in so do ing. This is a cont ract.
(e) A owes B Rs. 1,000, but the debt is barred by the Limitaon Act. A signs a wrien prom ise to p ay B Rs. 500 on account of t he deb t. This is a contr act.
(f) A agrees to sell a horse w ort h Rs. 1,000 for Rs. 10. A's consent to the agreement w as freely given. The agreement is a contract notwithstanding the inadequacy of the consideraon.
(g) A agrees to sell a horse wo rth Rs. 1,000 for Rs. 10. A denies that h is consent t o t he agreem ent w as freely given. The inadequacy of the consideraon is a fact which the C ourtshould take into account in considering w heth er or not A's consent w as freely given.
27.Agreement in restraint of t rade void.-Every agreement b y w hich any one is restrained from exercising a lawfu l profession, trade or b usiness of any kind, is to t hat extent void. Saving of agreement not t o carry on bu siness of w hich good-w ill is sold.-Excepon 1.-One w ho sells the goo d-w ill of a business m ay agree with the bu yer to ref rain from carrying on a similar business, within specified local limits, so long as the b uyer, or any p erson deriving tle to the good-w ill from him , carries on a like business therein, provided that such limits appear to t he Court reasonable, regard being had to the nat ure of the
business.
37.Obligaon of pares to contracts.-The pares to a :contract must either perform, or offer to perform, their respecve prom ises, unless such perf orm ance' is dispensed w ith o r excused und er th e pro visions of this Act, or of any other law. Promises bind the representaves of the promisors in case of thedeath of such prom isors befor e perform ance, unless a cont rary inten onappears from the contract.
Illustraons
(a) A prom ises to deliver goods to B on a certain day on paym ent o f Rs. 1,000. A dies before that day. A's representaves are boundto d eliver the good s to B, and B is boun d t o pay t he Rs. 1,000 to A's
representaves.
(b) A prom ises to p aint a picture f or B by a certain day, at a certain pr ice. A dies before th e day. The contract cannot be enforced either by A's representaves or by B.
38.Effect of refusal to accept offer of performance.-Where a prom isor has made an offer of performance to t he prom isee, and the offer has not been accepted, the promisor is not responsible for
nonp erform ance, nor do es he thereb y lose his rights under th e cont ract. Every such offer must fulfil the following condions:
-(1) it must be uncondional;
(2) it must be made at a proper me and place, and under such circumstances that the person to w hom it is made m ay have a reasonable oppo rtu nity of ascertaining that t he person by w hom it is made is able and willing there and then to do the w hole of what he is bound by his prom ise to do
opportunity of seeing that the thing offered is the thing which the promisoris boun d by his prom ise to deliver. An offer to one of several joint promisees has the same legal consequences as an offer to all of t h e m ,
Illustraon
A contracts to deliver to B at his warehouse, on the 1st M arch, 1873, 100 bales of coon of a parcular quality. In order to m ake an offer of a performance with the effect stated in this secon, Am ust bring the coon to B's warehouse, on the appointed day, under such circumstances that B m ay have a
reasonable opportunit y of sasfying himself that the thing offered is coon of the quality contracted for , and that th ere are 100 bales.
39.Effect of refusal of party to perform promise wholly.-When a p arty to a contract has refused to perform , or disabled him self from performing, his promise in its enrety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its connuance.
Illustraons
(a) A, a singer, enters into a cont ract w ith B, the m anager of a theat re, to sing at his theatre t w o nights in every w eek during the next t w o m ont hs, and B engages to pay her 100 rup ees for each night's
perform ance. On the sixth night A w ilfully absents herself from the t heatre. B is at liberty to put an end to the contract.
(b) A, a singer, ent ers into a cont ract w ith B, the m anager of a theatre, to sing at his theat re tw o nights in every. week during the next tw o m onths, and B engages to pay her at the rate o f 100 rupees for each night. On t he sixth n ight A w ilfully absents herself. With t he assent of B, A sings on t he seventh night. B has signified his acquiescence in the connuance of the contract, and cannot now put anend to it, but is entled to compensaon for the damage sustained by him thr ough A's failure to sing on the sixth night. By w hom contracts must be performed
40.Person by w hom prom ise is to be perform ed.-If it appears from the nature of th e case that it w as the intenon of the pares to anycontract t hat any prom ise contained in it should be performed b y the prom isor him self, such prom ise m ust b e perform ed by t he prom isor. In other cases, the pr om isor or his representaves may employ acompetent person to perform it.
Illustraons
(a) A prom ises to pay B a sum of m oney. A m ay perform this prom ise, either b y personally paying the m oney to B or by causing it to be paid to B by another ; and, if A dies before the me appointedfor payment, his representaves must perform the promise, or employsom e proper person t o do so. (b) A prom ises to paint a picture for B. A must perfor m this prom ise personally.
46.Time for performance of promise, when no applicaon is to be made and no me is specified. -W here, by the contract, a prom isor is to perform his promise without applicaon by the promisee, and no me for performance is specified, the engagement must be performed within a reasonable me. Explanaon.-The queson " what is a reasonable me " is, in each parcular case, a queson of fact.
47.Time and place for performance of promise, where me is specified and no applicaon to be made. -W hen prom ise is to be perform ed on a certain day, and the prom isor has undertaken to perform it without applicaon by the promisee, the promisor may perform it at any me during the usual hours of business on such day and at the place at w hich th e prom ise ought t o be perform ed.
Illustraon
A promises to deliver goods at B's warehouse on the first January. On th at day A b rings the goods to B's warehouse, but aerthe usual hour fo r closing it, and t hey are not re ceived. A has not p erfor m ed his promise.
182."Agent" and "principal" defined.-An "agent" is a person em ployed to do any act for another or to represent anot her in dealings w ith t hird persons. The person for w hom such act is done, or w ho is so represented, is called the " principal".
183.W ho m ay employ agent.-Any person w ho is of the age of m ajority according to t he law t o w hich he is subject, and w ho is of sound m ind, may em ploy an agent.
184. Who m ay be an agent.-As betw een the prin cipal and third p ersons any person m ay become an agent, but n o person who is not of the age of m ajority and of sound m ind can become an agent, so as to be responsible to his principal according to t he pro visions in that beh alf herein contained.
185.Consideraon not necessary.-No consideraon is necessary tocreate an agency,
186. Agent's auth orit y m ay be expressed or im plied.-The auth ority o f an agent m ay be expressed or implied.
187.Definions of express and implied authority.-An author ity is said to b e express w hen it is given by words spoken or wrien. An authority is said to be imp lied when it is to be inferred from the
circumstances of the case; and things spoken or wri en, or theordinary course of dealing, may be account ed circum stances of t he case.
Illustraon
A owns a shop in Serampore, living himself in Calcua, and vising the shop occasionally. The shop is m anaged by B, and he Is in the habit of o rdering goods from C in the nam e. of A for t he purposes of t he shop, and of paying for them out of A's funds with A's know ledge. B has an im plied authority from A to order goods from C in the nam e of A for the purpo ses of the shop.
188. Extent of agent's auth ority.-An agent having an author ity to d o an act has auth orit y to do every lawf ul th ing w hich is necessary in ord er to d o such act. An agent h aving an auth orit y to carry on a
business has aut horit y to do every law ful t hing necessary for t he purp ose, or u sually done in t he course, of conducng such business.
Illustraons
(a) A is em ployed by B, residing in Londo n, to recover at Bom bay a debt d ue to B. A may adopt any legal process necessary for the purp ose of recovering th e debt , and m ay give a valid discharge for t he same. (b) A constutes B his agent to carry on his business of aship-builder. B may purchase mber and other m aterials, and hire w orkm en, for the pu rpose of carrying on the business.
211.Agent's duty in conducng principal's business.-An agent is bound t o conduct the business of his principal according to t he direcons given by the principal, or, in the absence of any such direcons, according t o th e custom w hich prevails in doing business of t he sam e kind at th e place wh ere the agent conducts such bu siness. W hen t he agent acts otherw ise, if any loss be sustained, he m ust m ake it good to his principal, and, if any profit accrues, he must account for it.
Illustraons
(a) A, an agent en gaged in carrying o n fo r B a business, in which it is the custom to invest from me to me, at interest, them oneys w hich may be in hand, om its to m ake such investm ent. A m ust m ake good to B th e interest usually obt ained by such investm ents.
(b) B, a broker , in w hose business it is not the custom to sell on credit , sells goods of A on credit t o C, whose credit at the mew as very high. C, before paym ent, becom es insolvent. B m ust m ake good the loss to A.
213.Agent's accounts.-An agent is bound t o render p rop er account s to h is principal on dem and.
214.Agent's duty t o com m unicate w ith principal.-It is the duty of an agent, in cases of difficulty, to use all reasonable diligence in communicang wit h his principal, and in seeking to obt ain his instrucons.
