Chapter 1: Elements of a Contract
(c) Consideration
Section 2(d): Something of value in return. Must be lawful, real, and not past (exceptions apply).
Definition of consideration.
The court accepted Currie's argument. The judgment defined consideration as a benefit to the promisor or a detriment to the promisee.
Natural love and affection must be in writing and registered.
Under Section 26(a), Contracts Act 1950, an agreement made out of natural love and affection is valid only if:
- It is in writing,
- It is registered, and
- It is made between parties standing in near relation.
(d) Intention to Create Legal Relations
Social agreements are usually not binding. Commercial agreements presumed binding.
Domestic agreement not legally binding.
The court held that the agreement was not legally binding. Domestic agreements are presumed not to have intention to create legal relations.
Commercial intent exists.
The court held that the promotion was a commercial arrangement with legal intent.
(e) Capacity to Contract
Section 11: Parties must be of age of majority, sound mind, and not disqualified.
Minor's contract is void.
A minor's contract is absolutely void from the beginning (void ab initio).
(f) Free Consent (Contracts Act 1950)
Under Section 10, an agreement becomes a contract only if it is made with free consent. Consent is not free if caused by:
- Coercion (S15): Committing or threatening to commit any act forbidden by law.
- Undue Influence (S16): One party is in a dominant position (e.g., Parent-child, Doctor-patient).
- Fraud (S17): Intentional deception.
- Misrepresentation (S18): False statement made without intention to deceive.
- Mistake (S21-23): Bilateral mistake (void) vs Unilateral mistake (generally valid).
Undue Influence. Contracts obtained through spiritual or moral dominance amount to undue influence and are voidable.
Fraud. Fraud requires intentional or reckless falsehood, not mere honest mistake.
1.3 Discharge of Contract
- Performance: Both parties fully perform obligations.
- Agreement: Novation, Rescission, Alteration, Remission.
- Frustration (Section 57): Impossible/unlawful due to unforeseen event (e.g., Destruction of subject matter).
- Breach: Failure to perform.
Doctrine of Frustration. Contract is frustrated and discharged when an unforeseen event (hall destroyed by fire) makes performance impossible.
1.4 Remedies for Breach of Contract
- Damages (Section 74): Monetary compensation.
- Specific Performance: Court order to perform contract.
- Injunction: Order restraining a party from doing something.
- Rescission: Contract is cancelled.
Rules on Damages. Damages are recoverable only for losses that are natural or foreseeable at the time of contract.
Chapter 2: Sale of Goods
Governing Act: Sale of Goods Act 1957
2.1 Meaning of Sale of Goods
Section 4(1): A contract whereby the seller transfers or agrees to transfer ownership (property) in goods to the buyer for a price.
2.2 Types of Goods
- Existing Goods: Already owned by seller.
- Future Goods: To be manufactured/acquired later.
- Specific Goods: Identified and agreed upon at time of contract.
2.3 Conditions and Warranties
Condition: Essential term. Breach = reject goods + damages.
Warranty: Secondary term. Breach = damages only.
1. Title (S14)
2. Correspondence with Description (S15)
3. Fitness for Purpose
4. Merchantable Quality
Fitness for purpose. Goods must be fit for purpose, even if defects (chemicals in underwear) are not visible.
2.4 Transfer of Ownership
Main Rule: Ownership passes when the parties intend it to pass (Sections 19-24).
2.5 Unpaid Seller (Sections 46-54)
Rights: 1. Right of Lien, 2. Right of Stoppage in Transit, 3. Right of Resale.
Chapter 3: Agency Law
Governing Law: Contracts Act 1950 (Sections 135–191)
3.1 Meaning
Section 135: An agent is a person employed to do any act for another or to represent another in dealings with third persons.
3.2 Creation of Agency
- Express Agreement
- Implied Agreement
- Agency by Necessity
- Agency by Ratification
- Agency by Estoppel
Agency by Necessity. Arises in emergencies to protect the principal’s property (horse left at station).
3.3 Duties of an Agent
- Follow Instructions (S164)
- Exercise Skill and Care (S165)
- Not to Make Secret Profits
Duty to act in principal's best interest. Agent must always act in the principal's best interest and disclose material information.
3.5 Termination
Revocation, Completion of business, Death/Insanity, Insolvency.
Chapter 4: Law of Tort
A tort is a civil wrong that causes harm or loss to another. Independent of contract.
4.1 Negligence
Elements: 1. Duty of Care, 2. Breach of Duty, 3. Damage.
Neighbour Principle. Manufacturers owe a duty of care to consumers (snail in ginger beer).
4.2 Nuisance
Unlawful interference with a person’s use or enjoyment of land (Noise, Smell, Smoke, Vibrations).
Nuisance depends on the nature and context of land use, not who came first.
4.3 Defamation
False statement that harms a person's reputation.
- Libel: Written/Permanent.
- Slander: Spoken/Temporary.
Defences: Justification, Fair Comment, Privilege.
4.4 Vicarious Liability
Employer is liable for torts committed by employee in course of employment.
Employers are liable for employee torts closely connected to their employment (warden abuse case).