What is a Contract

The word Contract was derived from a Latin word Contractum. The word contractum
means drawn together. The following are definition with regard to Contract.

Agreement enforceable by law is called contract. - Indian Contract Act, 1872 Sec.2
(h)

Features of Valid Contract

Features of Valid Contract can be clearly known under the heads Consensus ad idem,
Certainty, Free Consent, Capacity of Parties, Consideration, Legal Formalities, Lawful
Object, Legal Obligations, Possibility of Performance and, Agreements not declared void.

Consensus ad idem: Consensus ad idem means identity of minds. That means there
should be no difference between ways of thinking of offerer & offeree. Both of them should
understand the same thing in the same way. In the absence of consensus ad idem, the
contract is not valid.
Example: A has two houses one at City A and the other at City B. He wants to sell
his house situated at City A. Now he is making an offer to B to sell away one of his house to
which he gives his acceptance. Here A is thinking about house at City A and B has given
acceptance with a view to purchase house at City B. Here is no consensus ad idem.
A case on this point is Raffels Vs Wichelhaus. In this case there is a contract between
A & B according to the terms of which A has to supply raw cotton to B in peerless ship.
There are two ships with the same name. While entering into the contract A thinks about
second peerless and B thinks about first peerless. Here court decides that their contract has
no consensus ad idem & hence it is void.

Certainty: The wording used in the contract must be certain. Uncertain wording makes the
Contract Void.
Related case is Taylor Vs Portington. In this case there is a Contract between A and B
according to which A has to modernize his house and B has to join as tenant. If the mode of
modernization is satisfactory to B. Here court decides that their is no Certainty and
therefore it is Void.

Free Consent: Both parties should enter into the Contract with Free Consent. There
should be no physical pressure (coercion) or mental pressure (undue influence). Absence of
free consent makes the Contract Voidable. A Voidable Contract may become either Valid or
void depending upon intention of the suffering party.
A case on this point is Ranganayakamma Vs Alwar Setty. In this case B gives a
threatening to A saying that he (B) will not allow cremation of dead body of A`s husband,
unless A adopts B`s sons. Here it is decided that there is no free consent from the side of A.
There it is voidable, at the option of A.
 Capacity of Parties: Both parties should have eligibility or qualification to enter into a
Contract. Such eligibility is called Capacity of Contract. Minor insolvent person`s, lunatic
persons etc have no capacity to contract.
Related case is Mohiribeabee Vs Dharmades Ghosh. In this case A is a money lender
and B is a minor. A Contract gets formed between them according to which B has to pledge
his property with A to obtain a loan. On that occasion the minor executes a deed also saying
that money lender has write off lien on the pledged property till settlement of debt. There
after the minor sues to get in his property back without settling the debt. Money lender
claims that he has write-off lien as per the deed. Here court decides that the deed executed
by minor is void and therefore lender has no lien.

Consideration: Both parties presenting the Contract should get benefited mutually.
Consideration may be in the form of cash or goods or act or abstinence. Consideration need
not be adequate.

Legal Formalities: Contract may be oral or documentary. In case where it is oral, the
concept of legal formalities is not applicable. If the contract is of documentary nature, all
legal formalities like stamp duty etc must be properly fulfilled. If legal formalities are not
satisfied the contract becomes unenforceable.
Example: A and B have written their agreement on Rs. 10/- stamp where it is to be
written actually on Rs. 100/- stamp. It is not Valid Contract.

Lawful Object: To attain validity object of the contract must be lawful. Un-lawful object
makes the contract illegal & hence void.
Example: There is a contract between X and Z according to which Z has to murder Y
for a consideration of Rs. 10000/- from X. It is unlawful object.

Legal Obligations: To attain validity contract must be capable of creating legal

obligations. One directional consideration leads to friendly relations and two directional
consideration leads to legal relations.
A case on this point is Balfour Vs Balfour. In this case A and B are husband and wife
respectively. As per their contract, husband has to send money to his wife at regular
intervals of time for the purpose of medical treatment. Here Court decides that there is only
one directional consideration and hence their contract is not creating legal relations. So,
their contract is held to be void.

Possibility of Performance: It should be possible to perform the event agreed in the

contract. Impossibility makes the contract void.
Example: A contract to join two parallel lines, has no possibility for performance and
hence such a type of contract is void.

Agreement not declared void: Certain types of agreements are declared to be void by
statues. As such agreements are harmful to society and they are named as Agreement
opposed to public policy. Agreements in restraint of trade, Agreements in restraint of
marriage, Agreements in restraint of personnel freedom etc come under Agreement opposed
to public policy.
 Types of Contracts
In connection with contracts, there are four types of classifications. Types of contracts in
contract law are as follows;
1. On the basis of Formation,
2. On the basis of Nature of Consideration,
3. On the basis of Execution and
4. On the basis of Validity.

Types of Contracts on the basis of Formation

On this base Contracts can be classified into three groups, namely Express, Implied, Quasi
Contracts.

Express Contracts: The Contracts where there is expression or conversation are called
Express Contracts. For example: A has offered to sell his house and B has given acceptance.
It is Express Contract.

Implied Contract: The Contracts where there is no expression are called implied
contracts. Sitting in a Bus can be taken as example to implied contract between passenger
and owner of the bus.

Quasi Contract: In case of Quasi Contract there will be no offer and acceptance so,
Actually there will be no Contractual relations between the partners. Such a Contract which
is created by Virtue of law is called Quasi Contract. Sections 68 to 72 of Contract Act read
about the situations where court can create Quasi Contract.
Sec. 68: When necessaries are supplied
Sec. 69: When expenses of one person are paid by another person.
Sec. 70: When one party is benefited by the activity of another party.
Sec. 71: In case of finder of lost tools.
Sec. 72: When payment is made by mistake or goods are delivered by mistake.

Example: A case on this occasion is Chowal Vs Cooper. In this case A`s husband becomes
no more. She is very poor and therefore not capable of meeting even cost of cremation. B,
one of her relatives, understand`s her position and spends his own money for cremation. It
is done so without A`s request. Afterwards B claims his amount from A where A refuses to
pay. Here court applies Sec. 68 and creates a Quasi Contract between them.
 Offer in Contract
Offer is one of the components of agreement. It`s status is equal to that of question. Offer is
otherwise known as proposal. The person who is making the offer is called offerer or
promissory or proposer.

Definition of Offer
When a person signifies to another his willingness to do or to abstain from doing
anything, with a view to obtaining the ascent of that other to such act or abstinence he is
said to make a proposal. - Section 2 (a) of Indian Contract act.
Essentials of Offer

Offer may be General or Specific: Offers are of two types, namely specific offer and
general offer. If offer is made particularly to one person, it is called specific offer. On the
other hand if offer is made to a group of persons, it is called general offer. General offer also
is so powerful as specific offer.

A case on this occasion is Mrs. Cary Lli (Vs) Carbolic Smoke bal Company. In this
case Carbolic Smoke bal company is a pharmaceutical company. During contemporary
period of this case a fever called `Influenza` is in existence. This fever arises as a result of
rat bite. This fever is characterized by propagation from one person to the other. On that
occasion the company has invented capsules to cure influenza. Here the company makes a
general offer saying that those capsules can cure influenza very quickly and prior
consumption of their capsules will avoid attack by influenza. In addition to it the company
says that if any person gets attacked by influenza even after prior consumption, the
company will pay 100 pounds to such person. Mrs. Cary Lli makes prior consumption & gets
attacked by that fever. Court decides that general offer also is valid and hence the company
is under obligation to pay 100 pounds to her.

Offer must be Communicated: Offer attains validity only after Communication. Un-
communicated offer is not valid.

A case on this point is Lalman (Vs) Gowridutt. In this case Gowridutt is fond of
children, but he has no children. Therefore he has brought his sister`s son. On one day, the
boy gets missed from the house. Lalman is Gowridutt`s servant. Gowridutt sends Lalman to
search for the missed boy. After Laman`s departure, Gowridutt makes an offer according to
which he will give a reward to the person who brings the boy back. Thereafter the boy is
found back by Lalman himself. After sometime Lalman comes to know about the reward
 and claims that reward. Here court decides that Lalman has no knowledge of the offer and
hence he cannot claim the reward.

Price Declaration, Advertisement, Prospectus etc are not offers: All these things
are only invitations to make offer, but not offers. Prospectus is invitation to make offer,
share application is offer and allotment is acceptance.

Related case is Harve (Vs) Facie. In this case A is owner of a pen corner and B is an
officer. On one day B sends a telegram to A requesting to inform the price of Bumper ball
pen. A sends Telegram to B saying that price of bumper ball pen is 10 pounds. Now B gives
telegram to A send one pen. Afterwards A gives telegram saying that he has no stock of
Bumper ball pens. B sues A. Here court decides that price declaration is invitation to make
offer and therefore there is no Contract at all between A and B.

Offer should be made with a view to obtain ascent of the other party: In the
absence of intention to get acceptance the offer is not valid.

Offer may be Expression or Implied: In presence of conversation it is called express

offer and in the absence at conversation it is called implied offer. Both types of offers are
Valid. It is well known that Implied Contract is Valid. On that ground it can be conformed
that implied offer is Valid offer.

Reticence leads to acceptance - This wording sound should not be included in

the offer: In case where offerer says that Silence indicates acceptance, that offer is not
Valid. As per the rules of Valid acceptance, acceptance must be communicated. Mere silence
is not sufficient.

A related case is Felthour (Vs) Bindley. In this case A makes an offer to B saying that
he (A) wants to purchase B`s property for 30 pounds and still says that B`s reticency
indicates acceptance. Court decides that the offer is not Valid.

Legal Obligations: Offer must be capable of creating legal relation. That means two
directional consideration must be reflected in the offer.

A case on this point is Balfour (Vs) Balfour. In this case husband offers to send
money to his wife at regular intervals of time for the purpose of medical treatment to which
she gives acceptance. Here the offerer is not willing to get any consideration from offeree.
Hence it is decided that the offer as well as contract are not creating legal relations.
 Certainty: The language used in the offer must be certain there should be no element of
un-certainty.

Acceptance in Contract
Offer and acceptance are components of an agreement. Offer constitutes question and
acceptance constitutes answer. One who gives acceptance is called Offeree or Promisee or
Acceptor.

Definition of Acceptance
When the person to whom the proposal is made, signifies his ascent there to, the proposal
(offer) is said to be accepted. A proposal (offer) when accepted becomes a Promise.
- Section 2(b) of Indian Contract Act
Features of Valid Acceptance
Acceptance must be given by that person only to whom the offer is made: If it is
specific offer, acceptance is to be given by that person only to whom the offer is made.
A case on this point is Balton Vs Jones. In this case A and B are traders and C is A`s
Customer. On one day C writes a letter to A requesting A to send goods. It Constitutes C`s
offer to A. By the time of receiving that letter, A has no such business & it had already been
sold to B, his fellow delivery. Here court decides that the acceptance given by B is not valid
because C has made this offer to A.
Acceptance must be Communicated: Offeree has to communicate his acceptance to
offerer. There after only, Acceptance adopts Validity.
A case on this point is Brogden Vs Metropolitan Railway Company. In this case Mr. A
obtains a coal mine on lease. He wants to supply the extracted coal to a railway company.
Therefore he writes a letter to the manager of Metropolitan Railway Company,
Communicating his willingness to Supply Coal. That letter constitutes offer. The Manager of
Railway Company gives his acceptance on the letter, but gets failed in communicating his
acceptance. In the court it is decided that un-communicated acceptance is not valid.
Same decision is made in Powell Vs Lee and Felthous Vs Bindley.

Acceptance Period: In case where offerer specify certain period to give acceptance, then
acceptance is to be given before expiry of such specified period. But at times, offerer does
not specify any period to give acceptance. In such a case acceptance should be given within
reasonable period. The Concept of reasonable period depends upon nature of situation.
A case on this point is Rarmsgate Victoria Hotel Company Vs Montiforie. In this case
an investor applies for shares, in a company. It is well known that share application
constitutes offer. Therefore allotment becomes acceptance. Here the company makes
allotment after five months from the date of share application. Court decides that
acceptance is not made within reasonable period and hence the allotment is not valid.

Acceptance must be Un-Conditional: No conditions should be linked to acceptance.

Conditional acceptance is not valid. On the other hand it can be analyzed that conditional
 acceptance is not at all acceptance, But counter offer. Whenever it is taken as counter offer,
it can be conformed that there is no contract.
A case on this point is Union of India Vs Mrs. Babulal. In this case A makes an offer
to sell his car to B at a price of Rs. 5000/-. B gives acceptance conditionally saying that he
wants to purchase that car at Rs. 4500/-. Here court decides that conditional acceptance
carries no validity and moreover it is Bs counter offer to A.

Acceptance should be made in the method specified by offerer: When offer is

made, acceptance should be made in the method specified by offerer. For Example: Mr. A
has made an offer and adds that if any person wants to give any acceptance he has to raise
his hand. Now, to give acceptance that method only is to be adopted.

Acceptance given to revoked offer is not valid: When an Offer is revoked, the
acceptance given to revoked offer is not valid. Offer must be revoked before acceptance.

Acceptance given to renewed offer is Valid: It might have been revoked previously. It
is sufficient if offer is in force at the time of acceptance.

Acceptance must be absolute: That means acceptance should be given to entire offer.
Partial acceptance is not Valid. It can be analyzed that partial acceptance is nothing but
conditional acceptance and therefore Counter offer.

Acceptance must be communicated in the method specified by offerer: When an

offer is made for the same, acceptance must be communicated in the method specified by
offerer. For example: an offerer has suggested to communicate acceptance by means of
registered post then such channel only should be adopted.

Acceptance is Irrevocable: When once acceptance is given. It cannot be taken back

under any circumstances. Soon after acceptance contract comes into force and binds over
the parties. So, revocation of acceptance is nothing but breach of contract.

Consideration in Contract
No Consideration, No Contract
To attain Validity and to create legal relations, the Contract should be with two directional
consideration. In the absence of two directional consideration, it can be said that there is no
contract at all (only Social agreement). But, the following are situations where Contract
attains Validity with one directional consideration.

Essentials of Consideration
Presence of consideration is one of the requisites of Valid Contract. Consideration must be
of two directional nature. That means both parties should get benefited mutually. Then only
the Contract becomes capable of creating legal relations. Consideration may be in the form
of cash, goods, act or Abstinence.
 Definition of Consideration
When at the desire of the promissor, the promisee or any other person has done or
abstained from doing or does or abstains from doing or promise to do or abstain from
doing something, such act or abstinence or promise is called consideration for the
promise. -Sec.2 (d), Indian Contract Act.
Essentials of Consideration
Consideration should be passed at the request of offerer: Offeree should send only
such consideration which is wanted by offerer. In case where offeree sends un-wanted
consideration, he has no right to claim counter consideration.

A case on this point is Durga Prasad Vs Baldeo. In this case there is a contract
between A and B according to which A has to provide for all requirements to B to run a
market and the profits are to be shared between them. Upon C`s request B makes the
market 24 hours market for a consideration from C. There after C refuses to give
remuneration to B on the ground that he (C) has no consideration from B. Afterwards B
claims remuneration from A for rendering additional work to which A refuses. Here Court
decides that the additional work done by B is not wanted by A and hence B cannot claim
anything from A.

Consideration may move from promise or any other person:According to Indian

law, consideration may move from promise or any other person. It is specified in Section
2(d) of Indian Contract Act definition itself. But according to England law Consideration
should move from promise only. Though it is said so England law has given an exception
where consideration may move from a person other than promise. Here condition is there
should be blood relationship between promisee and that other person who is sending the
consideration.

A case on this point is Dutton Vs Poole. In this case A has a son called B and a
daughter called C. A wants to conduct his daughter`s marriage out of the sale proceeds of
branches of mango plantation which is inherited property. But B does not like it. A Contact
gets formed between A and B according to the terms of which B has to conduct C`s marriage
out of his (B`s) own savings and A should not destruct the plantation. Afterwards B says to
C that it is his (B`s) obligation to perform her marriage to which C has given her acceptance.
Thereafter A becomes no more and B does not render her (C) marriage on the ground that
he (B) has no consideration from C. Here Court decides that there is blood relation between
C and A. B had already obtained consideration from A in the form of abstinence. There it is
decided that B has to perform C`s marriage.

Consideration may be Past, Present or Future: Consideration are of three types

namely Past, Present and Future consideration. The consideration which is sent before
formation of contract is called past consideration. The consideration which gets passed at
the time of formation of contract is called Present Consideration. The Consideration which
is to be passed in future i.e. after the contract is called Future Consideration. As per Indian
Law three types of considerations are Valid. But as per England law Past Consideration is
not valid.
 Consideration need not be adequate: Consideration of the Contract need not have
equal magnitudes. In adequacy of consideration will not infect Validity of the Contract.

A case on this point is Thomas Vs Thomas. In this case there is a Contract between A
and B according to the terms of which A has to provide his house to B at a rent of one rupee.
Court decides that it is a Valid Contract because Consideration need not be adequate.

Consideration must be Lawful: Presence of unlawful Consideration makes the Contract

illegal and hence Void.

Example: there is a Contract between X and Z according to which Z has to murder Y

for a Consideration of Rs. 10000 from X. Here Consideration from Z to X is unlawful and it
is illegal contract.

Consideration Must be Real: Consideration should not be of illegal contract. It must be

a believable concept.

What is Incapacity to contract due to Status

Foreign Rulers: The effect of Contracts made with foreign rulers will differ from England
law to Indian Law. According to England law, England citizens can enter into Contracts with
their foreign rulers. In case where the foreign ruler breaches the Contract, England citizen
can sue the foreign ruler only when such foreign ruler has given permission to Sue.

A case on this point is Mighel Vs Sulthan of Johore. In this case Ms. Mighel an
England citizen. Sulthan of Johore is a foreign ruler. A marriage agreement has got formed
between them. But Sulthan breaches that agreement. Mighel Sues. It is to be noted that she
has filed the suit without permission from Sulthan. So her suit is striked off.

According to Indian law, Indian citizens can enter into contracts with foreign rulers. If that
foreign ruler breaches the Contract and Indian citizen wants to file a suit, permission from
Central Government is required.

Aliens: Aliens are foreign people who have obtained citizenship in one Country (other than
their own) in accordance with the Constitutional law. The Contract made with aliens
become Void when war breaks out, between the two Countries.

A case on this point is Metropolitan Water Board Vs Dick Kerr and Company. In this
case Metropolitan water board is a municipality board. On one occasion, It wants to
Construct a dam. In this Connection it enters into a Contract with engineers who are aliens.
The Contract is breached. Afterwards War breaks out between the nations. Thereafter the
water board files a suit and Court decides that their Contract has lost Validity. Soon after
declaration of war.

Convicts: Convicts means prisoners. So long as they are in the Prison, they have no
capacity to enter into a Contracts. After completion of Period of imprisonment, they can
enter into Contracts. Contract made by them attain Validity when they are made at the time
ticket of leave.

Insolvent Persons: Insolvent persons have no eligibility to enter into Contracts.

Therefore Official receiver of the insolvent person enters into Contracts in Connection with
Sale of insolvent persons property.

Professional Disqualification: In India there is no profession based Incapacity.

Professional disqualification is seen in England. Physicians (doctors) from Royal medical
College cannot enter into Contracts with their patients. Similarly barristers cannot enter
into Contracts with their clients.

Married Woman: Married Woman has capacity to Contract. If that Contract is in

connection with necessaries, She is capable of making her husband liable to sent the
consideration concerned. If the Contract is related to luxuries, her husband is not liable.

Companies and Corporations: These are artificial persons created by law like a natural
person, companies and corporations can enter into Contracts.

What is Incapacity to contract due to Mental Deficiency

Mental deficiency means lack of mental maturity. Minor suffer from mental deficiency.
According to Indian law those persons who have not completed the age of 18 years and in
England those who have not completed 21 years become minors.

What is Incapacity to contract due to Unsound Mind

The following persons suffer from Unsound mind.

Idiots: Idiots are the persons who suffer from Unsound mind from birth itself. Therefore
they cannot enter into Contracts throughout their life. In such a way they suffer from
permanent Incapacity.
 Insane Persons: Insane persons will have two states namely; state of Sanity and State of
Insanity. During state of Sanity, they can enter into Contracts. Thus they suffer from
temporary Incapacity.

Drunkards: These persons also suffer from Unsound mind temporary after getting
recovered from the effect, they can enter into Contracts.

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. A 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.
Voidable Minor Contracts: Partnership agreements and marriage agreements made by
minor are Voidable Contracts as per the provisions of England law. After becoming major,
he may or may not execute that Contract. It should be noted that those Contracts are
Voidable at the option of minor.

Void Minor Contracts: On all other situations, Contracts made by minor become Void.

Contracts made by Minors as per Indian law

Minor Contracts are ab-initio Void: Contracts made by minors are Void from the
beginning itself.
Example: A case on this occasion is Mohirb bee 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 are
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.
Restitution of fraud: Law has given and certain protection to minor. Minor should make
use of such protection for defense purposes only and not for offence purposes. If minor
fraudulently obtains property, then he is under obligation to return that property to person
concerned. But the provision differs if it is matter of money.
Example: A case on this point is Lesly Vs Sheele. In this case A is a money lender and
B is minor. A minor, convinces the money lender that he is a major and thus obtains loan.
Here a minor has committed fraud. It should be noted that is matter of money. Hence the
suit filed by money tender for recovery, is dismissed.
Minor as Partner: According to the provisions of partnership act , Partnership is result of
agreement. As minor has no capacity to contract he cannot be a partner. But partnership act
reads about minor partner. With the consent of all other partners, A minor may be admitted
as a part to the benefits of the firm and with limited liability.

Minor as Share Holder: Obtaining shares in a Company is also a Contract. (It is

known that prospectus is invitation to make offer, share application is offer and Allotment is
acceptance.) Therefore minor cannot attain membership in a company. But by obtaining
fully paid up shares on the basis of transfer, minor can get share holder ship in a Company.

Minor as Agent: A minor can act as an agent according to the provision of law of agency
principle should have capacity to contract. But no emphasis is seen with regard to agent`s
capacity to Contract. Whenever agent enters into a Contract in his capacity as agent, It is
implied that the Contract is made by principle himself. So minor can act as an agent.

Minor and Necessaries: According to Indian law also, If minor Contract is made for
necessaries, It attains Validity.
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

Remedies for Breach of Contract

Whenever contract is breached by one of the Party in a contract, the other party comes
across some suffering. Therefore, contract act has given certain rights to such suffering
party. Those rights are called remedies for breach of contract. Those are given below:

What are the remedies for breach of contract

Right to sue for Damages.
Rights to sue for Specific Performance.
Rights to sue for Injunction Order.
Rights to sue for Quantum Meruit.
Rights to sue for Recession of Parties.
Right to sue for Damages
Rights to sue for Specific Performance
At times the suffering party may file a suit claiming specific performance form the party
which has breached the contract. But this type of suit very rarely becomes successful. The
following are some circumstances where suit for specific performance will not be taken into
consideration.

Example 1: When performance depends upon personal talent and the party has list
Such talent.
Example 2: When court thinks that it is just and equitable to arrange for
compensation.
Rights to sue for Injunction Order
The order issued by court restrict in a person from doing a particular thing is called
injunction order. Upon breach of contract the suffering party may proceed legally for
injunction order.
 A case on this point is Barner Bros.Vs Nelson. In this case a contract gets formed
between A and B according to which B has to conduct his dance programs at A`s theater
only for certain period. But B breaches the contract and arranges his programs at other
theaters also before expiry of agreed period. A`s sues for injunction order. Then court issues
injunction order saying that B should not conduct his programs at other theaters before
expiry of agreed period.
Rights to sue for Quantum Meruit
Whenever a party performs the contract partially and then the other party breaches the
contract, Suit can be filed claiming proportionate remuneration. It is called suit for quantum
meruit.

A case on this point is Flanch Vs Karlbarn. In this case A is editor of a magazine and
B is a writer. According to their contract B has to supply story to A`s magazine for certain
number of weeks for a particular consideration. B supplies story for some weeks and there
after A closes down his magazine. B sue`s for proportionate remuneration and it is allowed
by court.
Rights to sue for Recession of Parties
At times, the suffering party may sue for recession for contract.

Example: A contract has got formed between A and B on 1st January. According to
their contract A has to supply 100 pairs of ready made dresses to B, on 1st April on 28th
March strike by transport companies is announced which will be called off on 3rd April. It
should be noted that A cannot supply on 1st April. But B is in need of those dresses only on
1st April. Hence B can sue for recession on contract.

Termination of Contract
Contract creates relation between the parties and binds them over. Termination of such
contractual relations is called discharge of contract. The following are different modes of
discharge or termination of contract.
1. Discharge by Performance.
2. Discharge by Breach of Contract.
3. Discharge by Impossibility.
4. Discharge by Operation of Law.
5. Discharge by Lapse of Time.
6. Discharge by Mutual understanding or by Agreement.

Discharge of contract by Performance

 As said by Salmond, contract creates obligations to parties. If both parties perform their
contractual obligations promptly, the contract is said to be discharged by performance. It is
the ideal method that number of contracts gets terminated in this way.

Discharge of contract by Breach

Failure in performance of contractual obligation is called breach of contract. Discharge of

contract takes place by breach of contract also. Breach of contract is of two types. Namely;

Actual breach and

Anticipatory breach.

In case where contract is breached by party on the date of performance, it is called actual
breach. If breach of Contract takes place before data of performance, it is called anticipatory
breach.

Discharge of contract by Impossibility

The element of impossibility terminate contractual relations. impossibility is of two types.

Namely;

Pre Contractual impossibility and

Post Contractual impossibility.

If impossibility has already come into force before the contract itself, it is called Pre-
Contractual impossibility. Here discharge of Contract takes place soon after formation of
Contract. The impossibility which comes into force after the contract is called Post-
Contractual Impossibility. Here contractual relations will exists only up to occurrence of
impossibility.

Discharge of contract by lapse of time

Limitation act has specified duration to perform different contracts. The duration thus
specified is called limitation period. Soon after expiry of limitation period, the contract gets
discharged.

Example: There is a contract of loan between A and B. Her limitation period is 3 years. After
completion of 3rd year discharge of contract takes place and debtor creditor relationship
comes an end. Thus it becomes time bared debt which cannot be recovered by means of
legal proceedings.

Discharge of contract by Operation of law

This can be as following;

By Death: Whenever one of the parties comes across death, contractual relations will come
to an end.

By Insolvency: When one of the parties to the contract becomes insolvent, he forgoes
capacity to contract and those contracts which were made by that person will get discharge.

By lunacy: When one of the parties gets attached by lunacy discharge of contract takes
place.

Right and liability going into the hands of same party: Contract creates right to one
party and liability to the other when right and liability reach the same person, the result is
discharge of contract.

Example: X has drawn a bill on Y. Here X has right to collect amount on the bill and Y has
liability to pay. There after X has endorsed the bill to Z. Where Z has got the right and
liability is with Y. Assume that Z has endorsed the bill to Y. Now right as well as liability are
with Y. This situation discharges the contract.

Discharge of contract by Agreement

This can be as following;

By Alterations: Whenever Material alterations in contract are made, then it is said that
old contract has got discharged and a new contract has come into force.

By Novation: At times parties to the contracts may substitute completely new contract in
the place of old contract. Now the old contract has got discharged.

By Recession: In case of recession old contract gets discharged and there will be no
formation of new contract.

Example: There is a contract between A and B according to which A has to supply 100 pairs
of ready made dresses to B on 10th January. Where date of formation of contractee`s 1st
 January. On 2nd January A says to B that those dresses have become out of fashion and
hence not possible to assemble 100 pairs. Still B says that though he (B) supplies 100 pairs
by taking a lot of risk, B cannot sell them because they are outdated. Thus by mutual
understanding, they have terminated their contract.

Quasi Contracts
In case of Quasi Contract, there will be no offer and no acceptance either on express base or
on implied base. But under certain circumstances Court creates contract between the parties
artificially and thus binds over the parties. Such contracts which are created by virtue of law
are called Quasi Contracts. Section 68 to 72 of Contract Act read about the situations where
court can create Quasi Contract.

Section 68 - when necessaries are supplied: When one party supplies necessaries to
the other (without request), a quasi contract comes into force.
A case on this point is Chaval Vs Cooper.
Section 69 - When expenses of one person are paid by the other:When expenses
which are to be paid one party are paid by another party, the parties are said to be under
quasi contract.
A case on this point is Hazarilal Vs Navaranglal. In this case B purchases A`s
agricultural land. On that land cess is in arrears for a longer period which are actually to be
cleared by A, But B pays that amount. Here Court creates a quasi contract between them
under
Section 69 and thus capacitates B to recover that amount from A.

Another case on this point is Govindram Govardhan Das Vs State of Gondal.

Section 70 - When one party is benefited by the activity of another party: When
one party Conducts an activity and its benefit is attained by another party, then also Court
can create a quasi Contract.
A Case on this point is DamodarModaliar Vs Secretary of State for India. In this case
A is resident of a Village. The local government conducts repairs to the tank situated at A`s
village. As a result A gets benefited because the surrounding lands belong to A. Here Court
creates a Quasi Contract and decides that A has to bear cost of repairs.
Section 71 - In case of finder of lost goods: Court can create a quasi contract in case of
finder of lost goods.
Related case is Hallius Vs Fowler. In this case B finds a diamond at A`s shop and
hands it over to A, requesting A to send the diamond to true owner. True owner is not
found. When true owner is not found. Finder gets the title. No one can claim share in it.
Here court creates a bailment contract between B and A and thus capacitates B to get
diamond back.
Section 72 - When payment is made by mistake: When ever payment is made by
mistake or goods are delivered by mistake , Court can create a quasi Contract.
 A case on this point is Khaniyalal Vs Sales Tax Officer of the Banaras. In this case Mr.
A pays Sales tax by mistake though he is need to pay. Here Court creates a quasi Contract
and capacitates A to recover that amount.