Assignment No: 1st

Subject :Business Law

Submitted to : Mam, ReemaIjaz

Submitted by :Asad Ali

Semester :4th
Section :D
Year :2018
Roll No : 164668
Phone No : 0308-7454790

G.C University Faisalabad

QUESTION No 1:

Define the term contact. What are the essential of a valid contract?

Answer:

Sometimes contract and agreement, both are used in the same sense but according to the law
there is a great difference between them.

AGREEMENT:-
Agreement is defined in the following words:
" Every promise or every set of promises forming the consideration for each other" Contract act
and its kind is an agreement.
There are two conditions for agreement:
1. Promise.
2. Consideration of both the parties.

In other words we can say that proposal which is offered by one party, it becomes an
agreement.
Agreement = proposal + acceptance.

Example: - Mr. Sam invites Miss Sarah to a marriage party at his house. Miss Sarah does not go
to the party; Mr. Sam cannot claim any compensation because this agreement is not
enforceable at law.

CONTRACT:-
It is defined in the following words "A contract is an agreement enforceable by law".
Salmon defines the contract in the following words "An agreement creating and defining
obligations between the parties". So there are two conditions for the contract.
1. An Agreement.
2. Enforceable by law.
Any agreement which enables a man to compel another to do something or not do something, it
is called contract. Agreement becomes a contract when it is enforceable by law.

Example: - Suppose there is an agreement between Mr. Khan and Miss. Lucy that Mr. Khan will
bring the car from Washington for Miss. Lucy and Miss Lucy will pay Rs. 10 lac to Mr. Khan. Now
this agreement is a contract because it enables Mr. Khan to compel Miss. Lucy for purchase of
car. It also compels to Mr. Khan for the sale of car. So agreement is a contract because it is at
law.
2. Acceptance:-
When the promise signifies the assent then proposal is said to be accepted. Acceptance must be
according the contract act rules.
3. Agreement:-
After the acceptance of proposal it will be only promise. For the valid contract there must be an
agreement enforceable by law.
4. Agreement must be in Writing:-
For the validity of the contract it is necessary that it must be in writing and registered with the
registrar if it is required by the law.
Example: - "A" verbally promises to sell his college to "B". It is not a valid contract because the
contract of movable property must be in writing.
5. Lawful Agreement:-
Lawful agreement is essential for the valid contract. Because unlawful agreement cannot be
enforceable at law.
7. Lawful Object:-
If the object of the contract is not lawful then it is invalid contract. Illegal and immoral object
makes the contract invalid.
Example: - Mr. Arum promises to pay one lac to Mr. Adit. If he kills Mr. Shan. The agreement is
illegal because the object is not lawful.
8. Competency of the Parties:-
Only competent parties can enter to the contract. According to contract act following persons
are competent.
1. Anyone who attained the age of majority.
2. Who are of sound mind?
3. Who are not disqualified to enter into any contract?

9. Consideration:-
It is also essential for a valid contract. When at the wish of the promisor the promise does or
abstains from doing such act or promise is called consideration for the promise. It may be past
or present.
11. Certain and definite:-
Contract meaning should be clear. It should be also certain and definite. If the performance of
the contract is not possible then it cannot be called a valid contract.

Example: - "A" promised to sell a car to "B" it is not clear. So the agreement is void.
QUESTION No 2:

Give a brief note on offer and acceptance and essential of a valid offer and
acceptance?

Answer:

Offer and Acceptance

An offer is a promise to do or not to do something in sufficiently clear terms that may be

accepted by another. An offer should be distinguished from an invitation to treat and a mere
expression of intention to do or not to do some act. Offers do not necessarily need to be made to
one person – that may be made to the world at large or to specific groups of people. The
significance of an offer is that when it is accepted, the contract is formed. In addition to being
accepted, an offer may be rejected, a counter-offer may be made, the offer may lapse or the
offer or may withdraw the offer, such that it is no longer available to be accepted.

The acceptance of the offer’s terms must be unconditional. In many cases this may constitute a
‘yes’ or ‘no’ reply to an offer made. There are situations where such a simple exercise may not
be possible and it requires the courts to give direction as to how acceptance may be established.
An offer may be accepted by conduct; silence, however, can never constitute acceptance.

Essentials of a Valid Offer

Following are the legal rules or essentials of a valid offer:

1. It may be express or implied:

An offer may be made either by words or by conduct. An offer, which is made by words spoken
or written, is called an express offer. The offer, which is made by the conduct of a person, is
called an implied offer.

Example:

1. M says to N that he will sell his motorcycle to him for Rs.40, 000. It is an express offer.

2. A railway coolie carries the luggage of B without being asked to do so B allows him to do so. It
is an implied offer.

3. The new Khan Transport Company runs buses on different routes to carry passengers at the
scheduled fares. This is an implied offer by the company.
2. It must create legal relation:

The offer must be made in order to create legal relations otherwise, there will be no agreement.
If an offer does into give rise to legal obligations between the parties it is not a valid offer in the
eye of law.

Example:

1. A invites B to dinner B accept the invitation. It does not create any legal relations, so there is
no agreement.

2. A offers to sell his watch to B for Rs.200 and B agrees. There is an agreement because here
the parties intend to create legal relations.

3. Three friends joined to enter a newspaper competition and agreed to share any winnings. It
was held the intended to create legal relations and their agreement was therefore a contract.

3. It must be definite & clear:

An offer must be definite and clear, if the terms of an offer are not definite and clear, it cannot
be called a valid offer. If such offer is accepted it cannot create a binding contract.

Example:

A has two motorcycles. He offers B to sell one motorcycle for Rs.27, 000. It is not a valid offer
because it is not clear that which motor cycle a wanted to sell.

4. It is different from invitation to offer:

An offer is different from an invitation to offer. It is also called invitation to treat or invitation to
receive offer. An invitation to offer looks like offer but legally it is not offer.

In the case of an invitation to offer, the person sending out the invitation does not make an offer
but only invites the other party to make an offer. His object is to inform that he is willing to deal
with anybody who after getting such information is willing to open negotiations with him. Such
invitations for offers are not offers according to law and so cannot become agreement by
acceptance.
Example:

1. Quotations, Catalogues of prices, display of goods with prices issue of prospectus by

companies are examples of invitation to offer.

2. Display of goods in an auction sale is not an offer rather it is an invitation to offer. The offer
will come from the buyer in the form of bids.

5. It may be specific or general:

When an offer is made to a specified person or group of persons, it is called specific offer. Such
an offer can be accepted only by the person or persons to whom it is made. A general offer, on
the other hand, is one, which is made to public in general and it may be accepted by any person
who fulfills the conditions mentioned in it. Both specified and general offers are valid.

Example:

1. M makes an offer to N to sell his bicycle for Rs.800, it is a specific offer. In this case, only N
can accept it.

2. A announces in a newspaper a reward of Rs.1, 000 for anyone who will return his lost radio. It
is general offer.

6. It must be communicated to the offered:

An offer is effective only when it is communicated to the offered. If an offer is not

communicated to the offered it cannot be accepted. Thus an offer, which is not communicated,
is not a valid offer. It applies to both specific and general offers.

Example:

A without knowing that a reward has been offered for the arrest of a particular criminal,
catches the criminal and informs the police. A cannot recover the reward as he was not aware of
it.

7. It should not contain negative condition:

An offer should not contain a condition the non-compliance of which may be assumed as
acceptance. An offered cannot say that if acceptance is not communicated up to a certain date,
the offer would be presumed to have been accepted. If the offered does not reply, there is no
contract, because no obligation to reply can be imposed on him, on the ground of justice no
agreement because such condition cannot be imposed on the offered. It is only a one sided offer.
Example:

A wrote to B offering to sell his book for Rs.500 adding that if he didn’t reply within 5 days, the
offered would be presumed to have been accepted. There is no agreement b/c such condition
can’t be imposed on the offered. It is only a one sided offer.

8. It may be subject to any terms & conditions:

An offered may attach any terms and conditions to the offer he makes. He may even prescribe
the mode of acceptance. There is no contract, unless all the terms of the offer are accepted in
the mode prescribed by the offered. It must be noted that if the offered asks for sending the
acceptance by telegram and the offered sends the acceptance by letter and the offered may
reject such acceptance.

Example:

A asks B to send the reply of his offer by telegram but B sends reply by letter, A may reject such
acceptance because it is opposed to the prescribed mode of communication.

9. It must not contain cross offers:

When two parties make similar offers to each other, in ignorance of each other’s such offers are
called cross-offers. The acceptance of cross-offers does not result in complete agreement.

Example:

On 23rd December 2007, A wrote B to sell him 100 ton of iron at Rs.10, 000 per ton. On the same
day, B wrote to A to buy 100 tons of iron at Rs.10, 000 per ton. There is no contract between A &
B because the offers were similar and made in ignorance of the other and so there is no
acceptance of each other’s offer.

7. The acceptance must be communicated to the offer or himself:

A valid contract arises only if the acceptance is communicated to the offered himself. If
acceptance is communicated to the person, other than the offered, it will not create any legal
relationship. In fact, such communication is no communication at all.

8. The acceptance must be in the prescribed manner:

It is the legal rule of the acceptance that it must be accepted in the prescribed manner. If the
offer is not accepted in the prescribed manner, then the offered may reject the acceptance
within reasonable time.It may, however, be noted that, if the offered does not reject the
acceptance within a reasonable time then he becomes bound by acceptance. [Sec. 7(2)]
9. The acceptance must be given in some usual and reasonable manner:

It is another important legal rule of an acceptance that where no mode is prescribed,

acceptance must be given in some usual and reasonable manner. In such cases, the mail course
is considered, a very reasonable manner.

10. The acceptance must show an intention that acceptor is willing to fulfill the terms of the
offer:

A valid contract can arise only when the acceptance is given with the intention of fulfilling the
terms of the contract. An acceptance which is made jokingly and without any intention of
entering into a contract is invalid and does not create any legal relationship.

11. The acceptance may be express or implied:

An acceptance, which is expressed by words written or spoken, is called an express acceptance.

12. The acceptance cannot be presumed from silence:

Sometimes, the acceptor does not convey his decision to the offer or/and keeps silent. In such a
case, his silence does not amount to acceptance. Similarly, the offered does not have the legal
rights to say that if no answer is received within a certain time, the offer shall be deemed to
have been accepted.
QUESTION No 3:

What is Consideration? Discuss its important rules and elements.

Answer:

CONSIDERATION:-
It is defined in the following words: "When at the desire of the promise the promise has done or
abstained from doing or does or abstains from doing such act is called a consideration for the
promise."
In other words "Consideration is a reward accepted or given in return for the promise. it is a fact
that without consideration agreement is not valid."
ESSENTIALS OF CONSIDERATION
1. By Promise:-
Consideration by the promise or any other person.
2. Desire of the Promisor:-
It should be given at the desire of the promisor.

Example 1:- Mr. Shah agrees to sell his "house for Rs. Twenty lac to Mr. Amit. Now Mr. Amit
promises to pay such amount is the consideration for Mr. Shah's promise.

Example 2 :- Mr. Donalnd a promisor agrees with Mr. Kim that if he will abstain himself from
filling a suit then he ( Mr. Donald ) will pay him Rs. Ten thousand. In this situation Mr. Kim
abstained from filling suit is a consideration for Mr. Donald.

3. Consideration May Be Past, Present or Future:-

Consideration is an act which has already been done or in progress or to be done in future at the
desire of the promisor.

i. Past Example: - Mr. Nash lost his car and Mr. Frank a finder delivers it to him. Mr. Frank
cannot demand payment of his services due to the past consideration.

ii. Present Example: - Mr. Ali sells a house to Miss Sana. She pays its price immediately. It is
called present consideration.

iii. Future Example: - Mr. Shah promises to deliver a shop to Mr. Khan after a one month for Rs.
1 lac upon the promise of Mr. Khan to pay the agreed price at the time of delivery. It is called
future consideration.
4. Must be real:-
Consideration must be realistic and competent. If consideration is physically impossible, illegal
and uncertain it will be not valid.

5. Needs Not To Be Adequate:-

The law only insists on the presence of consideration and not on its adequacy. Inadequacy may
create the doubt about the free consent of two parties but it is valid if free consent is proved.

Example: - Mr. Kullo agrees to sell his house for Rs. 25 lac. If the consent of Mr. Kullo is free then
agreement is valid contract, without consideration.

6. Lawful Consideration: -
Consideration should be unlawful because it cannot form a valid contract. It should not be
against the public policy.

EXCEPTIONS:-
No doubt without consideration agreement is void but it has also exceptions which are
following:

1. Case of Love :-
Consideration is not compulsory if an agreement made between the parties for natural love and
affection.

2. Case of An Agent:-
The contract of agency requires consideration, where the contract is a promise to appoint an
agent.

3. Case of Voluntary Services:-

In case of compensation for voluntary services there is a relaxation of consideration.

4. Case of Donation:-
Agreement made for donation is not enforceable for want of consideration. A promised amount
cannot be legally recovered where the promise has done nothing on the basis of promise.

Example: - If Mr. Shah promised to donate one lac for the repair of college. College principal did
nothing for repair. Mr. Shah refused to pay. On a suit by principal it was held the Mr. Shah is not
liable because it did not result any loss to promisee.
5. Case of Gift:-
In case of gift there is no need of any consideration. According the law any gift which is actually
delivered will be valid. It cannot be demanded back on the ground that there was no
consideration for him.

6. Extension in Time Limit:-

There is no need of any consideration if agreement is made to extend time for the enforcement
of the contract.

Example: - Mr. Chun agrees to construct the shop for Mr. Raju within one year against Rs. 20
lac. Mr. Raju accepts the request. It is a valid agreement without consideration.

7. Case of Time Barred Debt:-

If a debtor promises to pay a time barred debt, then there is no need of consideration. The
promise must be in written and signed by the debtor or his agent.

8. Contract under Seal:-

A contract without consideration is valid if it is made under seal.

Example: - Mr. Nehra and Mr. Adit enter into agreement by writing the partnership deed to
form a partnership. This contract is valid.
QUESTION No 4:

Discuss the Law relating to the validity of contracts by minor?

Answer:

Contracts made by Minors

Minors suffer from mental deficiency. They have no Capacity to Contract. According to Indian
law those persons who have not completed the age of 18 years are minors and in England
Minority extends up to 21 years.

Contracts made by Minors as per England law

In accordance with England law Minor Contracts can be classified into 3 groups. Namely; Valid
Minor Contracts, Voidable Minor Contract and Void Minor Contracts.

Valid Minor Contracts: If Minor Contract is made for necessaries, then it is Valid.

 Example: A case on this point is Nash Vs Inman. In this case A is a tailor and B is a minor
and under graduate. In England Court is necessary to graduate and luxury to
undergraduate. By means of that Contract B gets 11 coats from A on Credit basis.
Thereafter B gets failed in the graduation examination and doesn't pay amount to it.
Files a suit. Court decides that coat is not necessary and hence the Contract is Void.

 Another case on this point is Robert Vs Grey. In this case A is a billiards player and B is a
minor. As per their Contract A has to provide for coaching to B upon certain
consideration where B has selected billiards game as his livelihood. Afterwards B fails in
paying amount to A. Court decides that the Contract is related to necessaries and
therefore Valid.

 Another case on this point is Ryder Vs Woombwell.

 Example: A case on this occasion is Mohirb bee Vs Dharmabas Ghosh.

Ratification is not valid: A Contract made by minor cannot attain Validity though it is ratified
after becoming a major. Since minor contract is ab-initio Void, ratification cannot bring Validity.

 Example: Related case is Arumugan Vs Dorai Singh. In this case A is a money lender and
B is a minor. A contract of loan gets formed between them before repayment of loan, B
becomes a major and upon money lender`s request, B executes another deed in support
of debt which is taken during minority. Upon his failure from A files a Suit on the basis of
 second deed which is given after attaining majority. Court decides that the Second bond
also is not valid because it is just ratification of Minor Contract.

Estoppel principle is not applicable to Minors: Though there is very strong evidence to say that
a person is a major, without applying Estoppel principle, chance will be given to that person to
prove minority.

 Example: Related case is Sadiq Ali Khan Vs Jaikishore. In this case A and B is moneylender
and minor respectively. Upon A`s suggestion, the minor executes a deed saying that he
(B) is a major and thus obtains loan. Thereafter a Suit is filed for recovery. Court decides
that the situation is out of applicability of Estoppel principle and hence a chance is given
to B to prove his minority.

 Example: Related case is Polaram Vs Ayubkhan. In this case A is a law practitioner and B
is a minor. A contract gets formed according to which A has to safe-guard B`s property
for certain consideration from B. Afterwards B comes across default in paying
remuneration to A. Court decides that though it is minor Contract, it is Valid because it is
made for necessaries.

Minor and Negotiable Instruments: A minor can execute all types of negotiable Instruments in
his capacity as agent.

Minor and Parents: To Contracts made by minors, their parents are not answerable. Other party
to the Contract cannot proceed against minor`s parents to obtain consideration concern.

Minor as beneficiary: In a trust arrangement minor can be a beneficiary. Though he is a

stranger to Contract, he can proceed legally against the trustee in case where trustee comes
across breach of trust.

Minor and Torts: The only tort which can be committed by the minor is breach of Contract for
all other torts minor is answerable and punishable
QUESTION No 5:

Discuss the law relating to contract by person of unsound mind. Also discuss person
disqualified from contracting?

Answer:

Person of Unsound Mind

As explained earlier, as per Section 11 of contract Act, for a valid contract each party to the
contract must have a sound mind. Contract made by person of unsound mind are void. The
reason is that a contract requires assents of two minds but a person of unsound mind has
nothing which the law recognizes as a mind.

Section 12 deals with the question as to what is a sound mind for the purpose of entering into
contract. It lays down that, "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 effects upon his interest."

Unsoundness of mind may arise from:

(a) Idiocy:

An Idiot is a person with no intervals of saneness. He is in capable. His mental powers of

understanding even ordinary matters are absent because of lack of development of brain. The
agreement with an idiot is void.

(b) Lunacy or Insanity:

It is disease of brain. A lunatic loses the use of his reason due to some mental strain or disease.
He may have Lucid Intervals of sanity. He can enter into contract during that period when he is
of sound mind.

(c) Drunkenness:

It produces temporary incapability till the man is under the effect of intoxication creating
impotence of mind. He stands on the same footing as a lunatic.
(d) Hypnotism:

It also produces temporary incapability till the person is under the impact of artificially induced
sleep.

2. Foreign sovereigns and ambassadors:

Foreign sovereigns and accredited representatives of a foreign state or ambassadors enjoy

special privilege, by which they cannot be sued in Indian courts. However, they can, if they
choose, enter into contracts and can enforce such contracts in Indian courts.

Ex-kings are not entitled to this privilege and therefore, can be sued in Indian courts just as
ordinary citizens.

In India, under Sec. 86 of the Civil Procedure Code, previous sanction of the Central Government
is to be obtained, for suing the rulers of foreign states, ambassadors and envoys.

3. Convicts:

A convict is a person, who is sentenced by a competent court to the death sentence or

imprisonment. A convict cannot enter into a valid contract while undergoing sentence, nor can
sue. His incompetency is over, when the period of his sentence is over or he is pardoned.

Thus, the competency right to make a contract or sue is only suspended during the course of his
sentence and is not lost. Whenever he is freed, he regains such rights.

4. Professional persons:

It is only in England, where the barristers cannot sue their clients for their professional fees. In
India, no such rule exists.

In India, every barrister, who has got himself enrolled as an advocate of an Indian High Court
can sue his clients for his fees. Under Indian Bar Councils Act, 1927, enrolment of an advocate is
necessary before he can practice.

5. Corporations:

Corporations include registered companies, local bodies and city corporations. Corporations are
legal artificial persons. Since they have legal existence, they can acquire property, transact their
business and are capable of suing and being sued. But they cannot do so without their seals.

Powers of a corporation are limited by its Memorandum of Association, beyond which it cannot
do anything. This is because contracts which are ultra vires of the objects of the company, shall
QUESTION No 6:

Define Consent, when is consent said to be free?

Answer:

Under Section 10 of the Contract Act, a contract is made when two or more parties have the
same thinking and agree upon to same thing. Under Section 10 all contracts must be, made with
free consent.

Free Consent:

Free consent was a consent which is given in the absence of the, followings:

1. Coercion.

2. Undue-Influence.

3. Fraud.

4. Misrepresentation.

Example

“A” under threat of “B” compels “'C” to enter into a sale agreement. Held, it is made without
free consent.

Doctor threatens the patient to disclose his disease to public and gets a pronote for the payment
of Rs. 1 lack. Held, it is without free consent.

“A” by posing himself as an owner of a house and fraudulently enters into an agreement to sell
with “B” for certain price. Held, it is made free consent, e.g. of misrepresentation; by
misrepresentation

Section 2(i): An agreement which is enforceable by law at the option of one or more of the
parties thereto, but not at the option of the other or others, is a voidable contract;

Section 2(g): when a consent is caused by mistake, the agreement is void. A void agreement is
not enforceable at the option of either party.
QUESTION No 7:

How will you differentiate between?

I. Coercion and under influence

II. Fraud and mispresentation

Answer:

Coercion Vs Undue Influence

Definition of Coercion

Coercion is a practice of unlawfully intimidating a person or property, employed to induce a

person to enter into an agreement without his independent will. This involves physical pressure.
It is an act of compelling a person in such a manner that he doesn’t have any choice rather than
entering into an agreement with the other party.

Example: A threatens B to marry him, or else he will kill her whole family. In this situation, the
consent of B is not free i.e. coercion influences it.

Definition of Undue Influence

Undue Influence is a situation in which one person influences the free will of someone else by
using his position and authority over the other person, which forces the other person to enter
into an agreement. Mental pressure and moral force are involved in it.

Example: A teacher forces his student to sell his brand new watch, in a very nominal price, to
get good grades in the examination. In this situation, the consent of the student is affected by
the undue influence.
Comparison Chart

BASIS FOR
COERCION UNDUE INFLUENCE
COMPARISON

Meaning Coercion is an act of Undue Influence is an act of influencing

threatening which involves the the will of the other party.
use of physical force.

Sections It is governed by Section 15 of It is governed by Section 16 of the Indian

the Indian Contract Act, 1872. Contract Act, 1872.

Use of Psychological pressure or Mental pressure or Moral force

Physical force

Purpose To compel a person in such a To take unfair advantage of his position.

way that he enters into a
contract with the other party.

Criminal Nature Yes No

Relationship The relationship between The act of undue influence is done only
parties is not necessary. when the parties to the contract are in
relationship. Like teacher - student,
doctor - patient etc.
QUESTION No 8:

What is a quasi-contract and under which circumstances it arises?

Answer:

A quasi contract is a contract that is created by the court when no such official contract exists
between the parties, and there is a dispute with regard to payment for goods or services
provided. Courts create quasi contracts to prevent a party from being unjustly enriched, or from
benefitting from the situation when he does not deserve to do so.

Consider the following example of a quasi-contract:

A quasi contract, or an “implied-in-law” contract, may offer less recovery than an implied-in-fact
contract. This is because an implied-in-fact contract lays out the terms of an agreement in its
entirety, as the parties initially intended, even if only in a verbal agreement. As a result of an
implied-in-fact contract, a party may be entitled to recover any and all expected profits, as well
as the cost of any labor and materials he may have laid out to complete the project.

A quasi contract will only afford as much recovery as necessary to prevent one party from being
unjustly enriched. In the example above, it would be unfair for Teresa to benefit from the new
greenhouse at John’s expense, even though she never intended to enter into a contract with
him.

History of Quasi Contract

The history of quasi contract can be followed back to the middle Ages, under a practice that was
referred to back then as indebitatus assumpsit. In that period, the law dictated that
plaintiff would receive a sum of money from the defendant, in an amount dictated by the courts,
as if the defendant had always agreed to pay the plaintiff for his goods or services.

Indebitatus assumpsit was a method used by the courts to make one party pay another as if a
contract had been created between the two parties. The defendant’s agreement to be bound by
a contract that required compensation was implied by the law. The early days in the history of
quasi contract saw such contracts being used to enforce obligations related to restitution.

Unjust Enrichment

The term “unjust enrichment” refers to an individual receiving a benefit unfairly, whether it be
by chance, or as the result of another person’s misfortune. When one is unjustly enriched, he has
not paid or worked for the benefit he has received, and it is therefore morally and ethically
appropriate for him to return it. Five elements must be shown in order to prove unjust
enrichment:
 1. The defendant must have received enrichment.

2. The claimant must have suffered a disadvantage as a result of the enrichment.

3. The enrichment must be established as unjust.

4. There must be an absence of explanation for the enrichment and related disadvantage.

5. There must be an absence of a remedy provided to the claimant by law.

The remedy available to a claimant in a case involving unjust enrichment is restitution.

Restitution is payment to compensate him for what the claimant was originally promised so as
to correct an injustice. Restitution can either come in the form of an order for the defendant to
pay the cash value of the benefit he received, or he might be ordered to return an item that is
the subject of the enrichment.

Requirements for Quasi Contract

In order for a judge to make a ruling in this type of case, there are certain requirements for
quasi contract. The first of the requirements for quasi contract is that the plaintiff must have
provided a tangible good or service to the defendant, with the impression that the plaintiff
would receive payment for that good or service. The second of the requirements for quasi
contract is that the plaintiff must be able to express why it would be unjust for the defendant to
receive the good or service without paying for it, and would therefore be unjustly enriched.

Related Legal Terms and Issues

 Appellate Court – A court having jurisdiction to review decisions of a trial-level or other

lower court.

 Contract – An agreement between two or more parties in which a promise is made to do

or provide something in return for a valuable benefit.

 Defendant – A party against whom a lawsuit has been filed in civil court, or who has
been accused of, or charged with, a crime or offense.

 Plaintiff – A person who brings a legal action against another person or entity, such as in
a civil lawsuit, or criminal proceedings.

 Remedy – The enforcement of a right, or imposition of a penalty by a court of law.

 Unjust Enrichment – A legal principle that prohibits one person from profiting, or being
enriched, at the expense of another person. In such a case, the unjustly enriched party
may be ordered to make restitution for the reasonable value of the services rendered,
property transferred or damaged, or other benefits received.
QUESTION No 9:

Define discharge of contract and discuss various forms of discharging a contract?

Answer:

Discharge of a contract implies termination of contractual obligations. This is because when the
parties originally entered into the contract, the rights and duties in terms of contractual
obligations were set up. Consequently when those rights and duties are put out then the
contract is said to have been discharged. Once a contract stands discharged, parties to it are no
more liable even though the obligations under the contract remain incomplete.

A Contract is deemed to be discharged, that is, concluded and no longer binding, in the
following circumstances:

Discharge by performance.

Discharge of Contract by Substituted Agreement.

Discharge by lapse of time.

Discharge by operation of law.

Discharge by Impossibility of Performance.

Discharge by Accord and Satisfaction.

Discharge by breach.

Discharge of a contract means termination of the contractual relations between the parties to a
contract. A contract is said to be discharged when the rights and obligations of the parties under
the contract come to an end. Modes of discharge of contract

Discharge by Performance
A contract can be discharged by performance in any of the following ways:

(a) By Actual Performance A contract is said to be discharged by actual per-formance when the
parties to the contract perform their promises in accordance with the terms of the contract.

(b) By Attempted Performance or Tender A contract is said to be discharged by attempted

performance when the promisor has made an offer of performance to the promisee but it has
not been accepted by the promisee.
Discharge by Mutual Agreement
Since a contract is created by mutual agreement; it can also be discharged by mutual
agreement. A contract can be discharged by mutual agreement in any of the following ways:

a) Novation [Section 62] Novation means the substitution of a new contract for the original
contract. Such a new contract may be either between the same parties or between different
parties. The consideration for the new contract is the discharge of the original contract.

(b) Rescission [Section 62] Rescission means cancellation of the contract by any party or all the
parties to a contract.

(c) Alteration [Section 62] Alteration means a change in the terms of a contract with mutual
consent of the parties. Alteration discharges the original contract and creates a new contract.
However, parties to the new contract must not change.

(d) Remission [Section 63] Remission means acceptance by the promisee of a’ lesser fulfillment
of the promise made. According to Section 63, “Every promisee may dispense with or remit,
wholly or in part, the performance of the promise made to him, or may extend the time for such
performance, or may accept instead of it any satisfaction which he thinks fit.”

(e) Waiver means intentional relinquishment of a right under the con-tract. Thus, it amounts to
releasing a person of certain legal obligation under a contract.

Discharge by Operation of Law

a contract may be discharged by operation of law in the following cases:

(a) By Death of the Promisor a contract involving the personal skill or ability of the promisor is
discharged on the death of the promisor.

(b) By Insolvency when a person is declared insolvent, he is discharged from his liability up to the
date of his insolvency.

(c) By Unauthorized Material Alteration If any party makes any material alteration in the terms
of the contract without the approval of the other party, the contract comes to an end.

(d) By the Identity of Promisor and Promisee When the promisor becomes the promisee, the
other parties are discharged.
Discharge by Impossibility of Performance
The effects of impossibility of the performance of a contract may be discussed under the
following two heads:

(a) Effects of Initial Impossibility

(b) Effects of Supervening Impossibility

(c) Declaration of War The pending contracts at the time of declaration of war are either
suspended or declared as void.

(d) Change of Law The contract is discharged if the performance of the contract becomes
impossible or unlawful due to change in law after the formation of the contract.

Discharge by Lapse of Time

A contract is discharged if it is not performed or enforced within a specified period, called period
of limitation. The Limitation Act, 1963 has prescribed the different periods for different
contracts, e.g. period of limitation for exercising right to recover a debt is 3 years, and to recover
an immovable property is 12 years. The contractual parties cannot exercise their rights after the
expiry of period of limitation.

Discharge by Breach of Contract

a contract is said to be discharged by breach of contract if any party to the contract refuses or
fails to perform his part of the contract or by his act makes it impossible to perform his
obligation under the contract. A breach of contract may occur in the following two ways:

(a) Anticipatory Breach of Contract Anticipatory breach of contract occurs when party declares
his intention of not performing the contract before the performance is due.

(b) Actual Breach of Contract Actual breach of contract occurs in the following two ways:

(i) On Due Date of Performance: If any party to a contract refuses or fails to perform his part of
the contract at the time fixed for performance, it is called an actual breach of contract on due
date of performance.
QUESTION No 10:

What remedies are available to an aggrieved party against the guilty party in case of
a breach of contract?

Answer:

Breach of Contract:-
Breach means violation of law. The breach of contract means to break the contract or not to act
upon the contract. When any party fails to perform its duties in a lawful contract it is called
breach of contract. The injured party has a right to take action against the party who has failed
to perform his part of contract.

REMEDIES or RIGHTS OF AGGRIEVED PARTY:-

On the breach of contract following remedies are available to an injured party.

1. Claim for Damages:-

If contract is broken, the injured party has a remedy to claim for damages and losses suffered by
him. Injured party is entitled to receive compensation of loss from the party who has broken the
contract. The aim of this remedy is to provide the injured party the same benefits which it would
receive in case of the performance of contract.

Following are important types of damages:

i.:- Special Damage: - Under a special circumstances special damages takes place from breach
of contract.

Example: - If the machinery of any factory arrives late and due to this reason one party suffers a
loss or profits it is called special damage.

ii. General Damage :- If injured party suffers a loss due to nonperformance of the contract it is
called general damage. The injured party can recover from the guilty party the ordinary
damages suffered by him.

Example: - Mr. Robin contracts to pay 3 lac to Mr. Peter on 1st April. Mr. Robin does not pay the
money on that day. Mr. Peter is unable to pay her debts and suffer a loss. Mr. Robin is liable to
pay Mr. Peter principal amount and also interest on it.

iii. Exemplary Damages: - These damages are awarded in order to punish the guilty party for
the breach of contract and not to compensate the loss of the injured party.

These damages are awarded in dishonor of cheques and case of breach of contract to marry.

IV: - Nominal Damages: - When the injured party suffers no loss the contract may award him
nominal damages to recognize his right.

2. Suit for Injunction:-

Injunction means the order of the court. It may be used to prevent any wrongful act. In case of
contract it is used to prevent that act which is involved in breach of contract.

Example: - Suppose Mr. Yuvraj a film producer contracts with Miss. Neha to sign in his movies
for ten years and not to sign in any other film. After one year she contacts with other film
producer Mr. Sethy during the period of contract. The court may issue injunction on a suit by Mr.
Yuvraj to restrain Miss. Neha from signing in film of Mr. Sethy.

3. Specific Performance:-
A degree of specific performance is an order of the court. It is usually granted in those contracts
related to house, land and plot. In some cases compensation to pay. So court may issue the
degree of specific performance and can compel to defaulter party the performance of contract.

Example: - Mr. Tipu agrees to sell his house to Mr. Amir, who agrees to purchase. But due to
some reasons Mr. Tipu commits breach. At the suit of Mr. Amir Court may ask Mr. Tipu to carry
out the contract?

4. Recession of The Contract:-

For the breach of contract it is an equitable remedy. When one party of the contract commits
breach and other party may rescued the contract that he may get free from all its obligations
for the performance of contract. Due to such recession and nonperformance injured party is
entitled to get compensation for the damages and loss.

Example: - Mr. Sanjay pledges the defence savings certificates to Mr. Panday and get loan. But
Mr. Sunjay does not return the loan. Mr. Panday may file a suit for recession of the contract
responsibility to return the defence savings certificates on payment.

5. Quantum Merit:-
It means “As much as deserves" we can explain it by the following example:

Example: - Suppose Mr. Ali entered into contract with Mr. Shawn that they will construct one
room jointly. Mr. Ali will construct the wall while Mr. Shawn will build the roof. Now Mr. Ali
completes his job but Mr. Shawn fails to build the roof of the room. Now in this case Mr. Ali is
entitled to receive the award according to his work done by him. This claim of Mr. Ali will be
called a claim of "Quantum Merit." The court will award to Mr. Ali keeping in view the work or
services performed by him.