CS LLM Arjun Chhabra

(Law Maven)

INDEX

Business Laws

Chapter Chapter Name Page No

0 Basics of Law 1-6

1 The Indian Contract Act,1872 7-113

2 114-165
The Sale of Goods Act, 1930

3 The Indian Partnership Act, 1932 166-205

4 The Companies Act, 2013 206-234

5 The Limited Liability Partnership Act, 235-253

2008

©CS LLM Arjun Chhabra

YT Channel – ACT Arjun Chhabra Tutorial – Mo: 62 62 62 143 8
 Business law

What is Law

Act Rules Regulation Bye laws Ordinance Order

Act

Central State

Made by parliament eg. Made by state legislative assembly

[The Companies Act, 2013] [Maharashtra Muncipalities Act]

Rules

Central State

On those matter on those matters

mentioned in central act mentioned in state act
 Small Company Act

Paid up share capital Turnover

Not exceeding No exceeding

₹2 crores ₹20 crores

Such other limit as may be Such other limit as may be

prescribed by CG. prescribed by CG

Notification ₹10 crores

Offical hazette rules

Regulation

Made by regulatory body eg. SEBI, CCI, RBI, TRAI, etc

By Laws

Made by regulatory body to govern itself/itselves

Ordinance

Law made for time being in force in

case of necessity by

President Central Governor State

When parliament & state

legistature is not in function

Valid for 6 weeks from the date when both the houses
of parliament | st comes into session
 th
Example:- LS = 14 june Rs = 30th June
count
Order
6 weeks
Passed by adjudicating authority

Income tax officer for Cyber law

particular pesson inspector

Parliament

Lok Sabha Rajya Sabha

Expert committee

Draft - bill

Lok Sabha Approval

Rajya Sabha Approval

President Bill Signature

Act

Enactment
commencement
15 June
Enactment
date

20 June
Commencement
date
 Constitution of india

Legislative Executive Judiciary

Law makers To implement law To interrelate

the law in case
of dispute

Parliament Court Quasi Court

SLA District court/ NCLT

session court

President
High court NCLAT

Governor
Supreme court

Regulatory body

AA

NCLT - National Company law Tribunal

CCI - Competition Commission of India
 Constitution of India

Article 246 read with schedule (vii)

List - I List - II List - III

Union list State list Concurrent

97 items 59 items 52 items

Entry no. 43 Entry no. 8 Entry no.7

co. act 2013 liquour criminal law
LLP act 2008

Entry no. 59 tolls Entry no. 7

Indian contract IPA 1932 Sale of goods

act 1872 act 1930

Competition Act 2002

Legislative Executive Judiciary

Parliament CCI NCLT

(Competition commission India)

 Companies act

Legislative Executive Judiciary

Parliament MCA NCLT/NCLAT

(Ministry of Corporate Affairs)

(Shrimati Nirmala Sitaraman)

MCA

North South East West North East North West South East

RD (Regional Director)

ROC - 22 Offical liquidatory

 The India contract act 1872

Dividend into 6 units

22 marks

10 marks practical 12 marks direct/

question descriptive question

4M practical 6M
question or
3+3 mark

Unit - 1 Nature of contract/Basics of Contract

Agenda for unit - I

Basics Topics relevant Miscellaneous

for exam topic
 The Indian contract act, 1872

Section 1

Short litle Extent Commencement Applicability

To the whole Contracts

of India

Ministry of Home
Affairs

S.O. 3912 (E)

Enacted by Commencement
date
Imperial legislative council

25/Apr/1872 1/Sept/1872

Purpose of TICA, 1872

purpose is based on latin phrase

Pacta Sunt Promise/Agreement

Servanda must be kept
 Promise [section 2 (b)]

Proposal

Ritwik Autorickshaw

Accepted

Promise Signifies
his assent

When a person to whom the proposal is made signifies his assent, the proposal
is said to be accepted a proposal when accepted, becomes a promise

Contract [section 2 (h)]

An agreement Enforceable by Law

Contract

Aise waade Jisko Law poora

karwaega

Usko hum contract

bolenge
 Contract

Agreement Enforceable by Law

Offer + Acceptance Section 10 Intention to

Create legal
relationship/
with consideration Conditions of legal obligation
enforceability

ACT giving offer Rita

to provide
CA foundation @
40000

Consideration

Something in return
for each other

Agreement [section 2 (e)]

Every promise & every set of promises forming consideration for each other

(1) Contract [section 2 (h)]

Agreement + Enforceable by law

(2) Agreement [section 2 [e)]

Promise + Consideration

(3) Promise [section 2 (b)]

Offer + Acceptance

Contract = Offer + Acceptance + Consideration + Enforceability of law

 Usual Presumption

Social / domestic Commercial/Business

agreements agreements

Parties did not intend to Parties intent to create

create legal relationship legal relationship

Unless otherwise agreed

[honour clause]

Conclusion

Social/domestic Business/commercial
agreement agreement

Intention to create No intention

legal relationship LR

Contract Agreement

Intention to create LR

Balfour Merrit Rise & The agreement was not

vs vs frank co. enforceable by law as
Balfour Merrit vs parties never intended
[1919] [1970] Crompton Bros to create LR.
Despite being business
agreement

Conclusion
Honour clause

The agreement was not When the parties are

Express statement in a
enforceable by law as in process of separating
contract that an
these was no intention or separated.
agreement is intended
to create LF Presumption of no
to be binding in honour
intention to create LR
only & is therefor not
thus, not applied
legally enforceable
 Enforceable by law

Section - 10 Case law based Law based

What agreement Two parties eg. Certainly of

are contracts State of Gujurat meaning [Sec 29
v/s of ICA 1872]
Ramanlal Sand Co.

Free consent Possibility of

performance [sec 56
Competent parties of ICA, 1872

Lawful Parites must intend

consideration with to create LR
lawful object
3 cases already
discussed

Not expressly
declared void

Written Other formalities

in certain cases

Registered Section - 1 Nothing here in

contained shall affect the
provisions of any Statute Act or
Stampes Regulation

Certain - Clear
Definite - Complete
Not Vague - Confusion
 Section - 10

Section 14

1
Free Consent Section 13

The consent is Corporate law

not free when it
is obtained by

(a) Coercion Section 15

(b) Undue Influence Section 16

Voidable at the option of
aggrieved party
(c)cFraud Section 17

(d) Misrepresentation Section 18

(e) Mistake Section 20, 21, 22 Void

2
Competent Parties [section 11]

Age of Majority Sound Mind Not disqualified from

contracting by any law

Section 3 of Indian
Majority Act

On his completing the

To which he is
age of eighteen & not
subject
before
 Sound mind [section -12]

Capable of understanding And Of forming

the terms of the contract a rational judgement

Not disqualified from contracting

Alien enemy Convict Insolvent Desserter Foreign

Soverign

Not relevant
for exam

Foreign Soverign Immunities Act [FISA], 1976

Soverign

State / Country not controlled by another country Independent

India Recognizes the maxim

“Par in parem not habet imperium”

on soverign state is not subject to jurisdiction of another state

Exception under section 86 of Code of

Civil Procedure 1908. Any person may
 sue foreign state with consent of

CG Secretary of state

First case

Mirza Ali Akbar kashani

V.
United Arab Republic

Void :- No legal existence in the eyes of law.

Void [section 2]

Agreement (g) Contract (j)

A contract which
An agreement not
ceases to be
enforceable by law
enforceable by law

is void becomes void, when it

ceases to be enforceable

Also known as void

ab-initio [void from
the very beginning]

Example
i) Agreement with minor
ii) Agreement to be impossible acts
iii) Agreement the meaning of which is uncertain.
 Voidable Contract [section 2 (i)]

Enforceable at the option of aggrieved party

Aggrieved party chahe toh isko void bana sakta hai

Voidable at the option of AP

AP is having right to make a contract void in

which his consent was not freely obtained

Voidable Void

Exercise of option

Aggrieved party

Exercise do not exercise

AP OP AP OP

Void Valid

Key points
(1) The contract is valid until & unless the AP is exercising the option
(2) The AP must exercise the option within reasonable time
 Proposal/Offer [section 2 (a)
Offered/
Proposal/ Offence/Acceptor/
When Premise

One person 1 To another

Signifies

4 With a view 2 his willingness

to obtaining assent of abstain from

3 to do
that offer to such doing

or
Positive offer Negative offer
Act Abstinence
Anything

5 He is said to make a proposal.

 Essential of a Valid offer

It must be

Capable of creating Communicated to

legal relations the offeree

If it does not Acceptance of an offer, in

intend to give rise ignorance of an offer, is not
to legal consequences & acceptance and does not confer
creating legal relations any right on acceptor

[Colman Shukla V. Gauri Datt]

not a valid offer
in the eyes of law

Certain, definite
and not vague

Made with a view to

obtaining assent of
the other party
Certain - Clear
Definite - Complete
Not Cague - Confusion
 Classification of Offer

General offer Cross offer

- Offer made to - When two parties exchange

public at large identical offers in ignorance
- Anyone performing the of time of each other
condition of offer is
considered to have accepted
the offer [sec 8]
- Until offer retracted Counter offer
or withdrawn
- Offeree offers to qualified
acceptance of the offer
subject to modification &
variations

Specific offer

made to
or

Specific Ascertained

Standing offer
person

Remained open
for acceptance over a period
of time.
 Miscellaneous Points of offer

Offer

May be May be express

conditional or implies

Should not contain a term the

non compliance of which
amount to acceptance

Offer is different from

An invitation A mere communication

to offer of information

An answer to
Statement of price
question
or prospectus &
advertisement

Harvey V. Facie

A mere statement of
intention & announcement
 Invitation to offer

- An invitation to offer is an act precedent to making an offer.

- Quotations, menu cards, price tags, advertisement in newspaper
for sale are not offer.
But their is an exception when advertisement in newspaper is made for reward,
it is the general offer to public.
- Acceptance of an invitation to an offer does not result in the contract &
only an offer emerges in the process of negotiation.

Offer V. Invitation to Offer

Meaning

When a person shows his When a person invites others

willingness to enter into to make offer to him, called
contract, called an offer invitation to offer (ITO)
 Purpose

Offer is made with Purpose of ITO is to receive

the purpose of entering the offers or to negotiate
into contract the terms which the person
making the invitation
is willing to contract.

Legal effect

An offer, if acted upon (ie. An invitation to offer, if

accepted), acted upon, only results in
results into a contract. making an offer.
 Acceptance [Section 2 (b)]

Essentials of a valid acceptance

- The acceptance must be mere communicated.

mere mental determination to accept is not acceptance unless it is accompanied
by an external indication.

Principle :
An agreement does not result from or mere state of mind.

- Acceptance must be communicated to the offerer himself / the acceptance cannot

be presumed from silence If acceptance us communicated to the person other
than offerer, it will not create any legal relationship/silence does not amount to
acceptance. [Belt House V. Bindley]

- The acceptance must be communicated by a person who has the authority to accept
it is communicated by any unauthorized person, it will not create any legal relationship.

Communication of acceptance is made by authorized person.

 [Expecting a valid
[without any Condition] registration certificate is
not a condition]

- The acceptance must be absolute & unqualified-cate is not a condition

acceptance should be in toto [i.e of all terms of the offer]

A counter offer puts an end to the original offer, & it

cannot be revived by subsequent acceptance.

Communication of Offer & Acceptance

Section 3 Section 4 Section 5

Communication, Communication Revocation of

acceptance & when complete proposals and
revocation acceptance

of proposal Core Content 2nd priority

6 marks practical
3rd priority Dependent section
que

1st priority Depend on section 4

Independent
section
 Section 4 Communication when Complete

letter of offer by OP

1st April
Rahul Neha
(Offeror/Proposal) (Offeree/acceptor)
Receiving letter of
offer 5th April
Read letter of offer
7th April

Communication of
Letter of acceptance offer is complete on
10th of April by 7th april
Ordinary post

Communication of acceptance complete

As against offeror As against offeree

Simplified
language

The offeror becomes bound when letter of acceptance

by the acceptance (as soon as comes to the knowledge of
the letter of acceptance is offeror
posted by acceptor)

i.e. 10th april letter of acceptance i.e. 15th april

Law makers - when it is The acceptor becomes

put in a course of transmission bound by his acceptance
to him offeror

Only when it comes to the

knowledge of the
offeror i.e. 15th april
 Upto when Revocation can be done [section 5]

Offer Acceptance

Anytime before acceptance. Anytime before acceptance is

is complete as against complete against acceptory
offeror i.e 10th April before
3:00 but not afterwards i.e 15th April
but not afterwards
Conclusion:-

Section 4 Communication when Complete

Offer Acceptance

When it comes to the

knowledge of the person As against As against
to whom it is made offeror offeree

Simplified Language:- The The acceptor becomes

offeror becomes bound by bound by his acceptance
the acceptance as soon as the
letter of acceptance is Only when it comes to the
posted by acceptor. knowledge of the offeror.

Law Maker:- When it us put

in course of transmission to
him.
Not relevant
for exam

Case Law - London & Northern bank V. Jones

24th Oct
Apply for shares (offer)
Arjun Reliance

26th October
withdrawl letter

27th October

Resolution
Withdraw letter
received by company at
10:00 am pass to allot
11:30 am
shares to Arjun

letter of allotment was

given to the peon to post,
but letter was not actually
posted till 11:30 am

Decision :- The acceptance was too late as the letter was not actually
posted till the offer had been revoked.
 What of letter of acceptance is lost in transit or delayed

Acceptance is still valid provided that acceptor has

Properly/correctly Properly Duely posted/

addressed to the stamped infact posted it at
offeror the post office.

Section 3

Offer can be Communicated by

Words Conduct

Spoken Written

Communication of acceptance
can be given

By act By omission by conduct eg.

eg. asfidont, gadi coolie, maggie

revocation eg. painter - Superwinning

See 5 Kab tak impossibility
Sec 6 Kaise daru - Subsequent illegality
 Section 6 - Revocation how made

Proposals may be revoked

1 3
By notice of Non acceptance /
revocation from failure to accept
the offeror to the condition precedent
offeree

2
by lapse of time

Prescribed if time is
not
prescribed

by lapse of
resonable time

4
Death or insanity of

offeror offeree

In fact of Terminates
Acceptor the offer
Death unaware &
or accepted
Insanity

Comes to the Valid

knowledge of the contract
acceptor before
acceptance

Other situation revocation of offer

(1) Counter offer/Cross offer
(2) By subsequent illegality/Change in law by superwining imposibility/change
in circumstance
 The Indian Contract Act 1872

UNIT - 1

Nature of Contract

Basics Topics/Section Relevant Miscellaneous

- Purpose of this Act for exam - Types of offers
- Basic definitions
- Contract 1) Intention to Create
- Agreement legal relationship
- Promise
2) Offer & its legal rus

3) Offer v. Invitation to
offer

4) Acceptance & its legal

rules

5) Communication of offer
& Acceptance

6) Modes of revocation of
offer.
 Coverage of sections under unii-1 of contract act

Section 1
- Short title
- Extent
- Commencement
- Applicability

Section 2 Interpretation Clause

(a) offer
(b) Promise/Acceptance
(c)cPromisor/Promisee
(d) Consideration
(e) Agreement
(f) Reciprocal Promise
(g) Void Agreement
(h) Contract
(i) Voidable Contract
(j) Void Contract

Other Sections
Section 3 - Communication, Acceptance & Revocation of Proposal.
Section 4 - When Communication is complete
Section 5 - Revocation of Offer & Acceptance
Section 6 - Revocation how made
Section 7 - Acceptance must be absolute
Section 8 - Acceptance by performing conditions
 Express
Section 9 Promises
Implied

Section 10 What Agreements are Contracts

Section 11 Competent parties

Section 12 Sound Mind

Section 13 Consent

Section 14 Free consent

Section 15 Coercion

Section 16 Undue Influence

Section 17 Fraud

Section 18 Misrepresentation.

Section 19 Voidability of agreement without free Consent.

Section 20 Bilateral Mistake Void

Section 21 Mistake of law

Section 22 Unilateral mistake Valid

 The Indian Contract Act 1872

UNIT -II - Important Unit

Definition of Validity of Case law

Consideration Agreement based concept

Without Suit by 3rd party to

consideration the contract
Section 2 (d)
Section 25
legal rules of
valid consideration Section 25 (1)

Section 25 (2)

Section 25 (3)

Explanation to
Sec 25

Section 148

Section 185
 Consideration

Section 2 (c)c

Promisor Promisee

who makes promise to whom promise is made

Section 2 (d) + Consideration

(1) When at the desire of promisor

(2) The promisee or any other person,

has

done does promises to do

or or or
abstained abstains abstain from doing

Something

such act or
abstinence or promise

is
called consideration
 Chinnayya V. Ramayya

Three parties involved in this case

1) Old lady [mother]
2) Daughter
3) Maternal uncle

Gift deed

1
Old lady With a direction/ Daughter
condition
Other person

Daughter has to pay annuity to

her maternal uncle

Promisee deed

Promisor Promisee

2
Daughter Maternal uncle

Promisee to
pay annuity

- Daughter received the property as gift

- But refused to pay annuity on plea that no consideration had moved from uncle.
 Legal Rules / Essentials of valid consideration

1) Consideration must move at the request of promisor.

2) Consideration may come from promisee or any other person
3) It is not necessary that person providing consideration should be benefitted
4) Consideration may be an act & may be an abstinence
5) Consideration may be past, present and future
6) Consideration can be inadequate/Consideration need not be adequate
- Adequacy of consideration should be decided from the viewpoint of promisor
- Explanation to section 25 provides that an agreement to which consent of
the party is freely given is not void is inadequate.
- However, inadequacy of consideration may be taken into account by court to
determine whether the promisor's consent was freely given.
7) Consideration must be more than the performance of the existing duties

Legal Contractual
obligations obligations
8) Consideration must be real & not illusory
- Physically impossible
- Legally not permicible
- Uncertain
- Illusory

9) Consideration must not be unlawful, immoral, oppose to public policy.

Validity of Agreement without Consideration

General rule An agreement made without

=
(sec 25) Consideration is void

Section 2 (e) = Agreement = promise consideration

Agreement made without

Section 25 =
consideration is void

Enceptions to the General Rule

Agreement = promise = Valid

Where agreement can be valid even without

consideration.
An agreement is valid and enforceable even if it
is made without consideration.

(1) Natural love & affection [section 25(1)]

The agreement must be

in writing & Based on natural b/w the parties

registered love & affection who are in near relation
to each other

(2) Promise to pay for past voluntary services [sec 25 (2))

- Services should have been rendered voluntarily
- Services should have been done for promisor,
- Promisor intended to compensate for past voluntary services.

(3) Promise to pay time barred debt [sec 25 (3)]

Limitation Act

Arjun Vijay
Loan

Creditor Debtor

Due date of loan

30th June 2022

3 yrs

30th June 2025

Debt will become

time barred
A promise to pay time barred debt is valid and enforceable of such promise is
- In writing
&
- Signed by the promisor
or
his authorised agent

(4) Agency [section 185]

- No Consideration is required

(5) Completed Gift

- Gift given & accepted (valid)
- Promise to gift is not valid

(6) Gratitious bailment [sec 148]

- Bailment contract is contract where one party delivers the goods to another party
for some specific purposes on condition that once the purpose is accomplished,
the goods shall be returned to the person deliverted it.

Person delivering the goods - Bailer

To whom goods are delivered - Bailee

• Bailment contract can be gratitious & non gratitious.

• No consideration is required in case of gratitious bailment.
(7) Charity
- If promisee takes liability
- On promise of person
- To contribute to charity
- Contract shall be valid

Case law

Kedarnath Abdul Aziz

V. V.
Gorie Mohammed Masum ali

Agreement is valid. The agreement is void

because it was supported the absence of any
by consideration in the in consideration
form of a detriment to
nuksan the trustee who had
incurred liability on faith
of promise made by x
Concept theory

Doctrine of Privity of contract [A stranger to contract cannot sue]

Only those persons, who are parties to who are parties to a contract,
can sue and be sued upon the contract. This rub is called
"Doctrine of privity of contract". A third party to a contract cannot sue upon it,
even though the contract may be for his benefit.

Exception. i.e stranger to contract has the right to sue

Trust Marriage Acknowledgment

Contract or estoppel

Beneficary may before A provision may be Contract entered into

the right even though made for the benefit through an agent
he was not party to the of a pesson,
contract he may file the suit Principal can enforce
though he is not a party the contract entered
to the contract. through an agent

Family Assignment of Covenant running

Settlement contract with the land

- If terms of Where a benefit under The person who

contract in writing a contract has been purchases land with,
- Member of family who assigned, the notice that the owner
was not a party to assignee can of land is bound by
contract can enforce enforce the contract certain duties auecting
the same. land, the convenant
auecting
the land may be
enforced by the
successor of the seller.

Estoppel - Once you have made any representation/statement,

you cannot denie from that representation/statement afterwards
Complete
unit is imp Blue print

Unit II Consideration

1st Category 2nd Category

Most imp topic/hot topics Miscellaneous

1) Definition of Consideration & its Just read

legal rules [5-7 marks] - direct
question

2) No Consideration no contract
[section 25)

25(1) Exceptions
25 (2) pa/da
25(3)

3) Charity

4) Consideration can be inadequate Theory

practical
[Explanation to Section 25] IMP

5) Convenant running with the land

MOST
IMP
6) Consideration must be more that
performance of existing rules.
 Coverage of sections under unit - III

Promisor
Section 2 (c)c
Promisee

Section 2 (d)c Consideration

Section 25 General rule

Section 25 (1) Natural love & affection

Section 25 (2) Promise to pay for past voluntary services.

Section 25 (3) Promise to pay time barred debt

Section 148 - Gratitious bailment

Section 185 - Agency

Important case laws

Chinnaya Abdul Aziz

V. V
Rammayya Masum Ali

Kedarnath
V.
Gorie mohammed
 Unit - III

Other Essential Elements of a valid Contract

Section 10 - what agreements are contracts

Free Consent Competent lawful objects Not expressly

parties and lawful declared void
consideration

Detailed in unit III

Agenda of unit -III

Free Consent Lawful object & Void agreements

Consideration
Section 15 Coesion Section 24-30
Section 23
Section 16 UI MOST
Agreement Section 27 IMP

Section 17 F opposed to PP
Agreement in restraint
Section 18 MR of trade

MOST
Section 20 Mutual mistake Corporate law Section 28 IMP

Section 21 Mistake of law Corporate law Agreement in

restraint of LP
 Miscellaneous

provisions relating to agreements

entered with minor

Section 68 & necessaries

supplied to minor

Coercion - Section 15

Corporate
is
or
Committing Unlawful detaining of
or any property
threatening to
Commit

any act forbidden With the intention

by IPC of causing any
person to enter into an
agreement

Examples
383 - Entercion
391 - Dacoity
378 - Theft
377 - Unnatural offences
307 - Attempt to murder
506 - Punishment for criminal intimidation
 Corporate law

Pranti Vaishnavi

Cruze trip

UK

Diamond ring

Explainition to section 15
-It is immaterial whether IPC is or is not in force in ithe place where
the coercion is employed.

* Effect of Coercion
(a) Voidable at the option of the aggrieved party.
(b) Repay money or thing obtained under coercion
 Section -16 [undue influence]

Definition (1) A contract is said to be induced by UI.

where the relations between the

parties are such that

And

One of Uses
the parties is that position

in a position to
dominate the will
of the other

To obtain unfair.
advantage over other

Sub section (2)

Deemed dominant Position

Clame (a)

Where he

or

Holds real or apparent Stands in a

authority over other fiduciary relation to other
Bharosa
 (b)

where he makes a
contract with a person

Mental capacity
or

Temporarily Permanantly

Affected

by reason of

Age Illness Mental

or
Bodily stress

Sub Section (3) Burden of proof

Transaction

Appears to be Other than

unconscionable unconscionable

party in a position Weaker

to dominate party
the will of other

unconsionable
- Where dominonant party makes extraordi
- Nary profits of the others distress. (dusre ki mazburi)
 Section 19 A Power of Court) to set aside contract
induced by UI.

Power of court

To set aside
or
Either absolutely if the party who was entitled
to avoid it

has received any benefit

Upon such terms &

conditions as the court may
seen just

Section 17 Fraud

Mis representation

representation of fact by
False
one party to other

Intentionally, deliberate, Innocent, unintentional,

with the intention to deceive without intent to deceive

Fraud MR
 Every fraud = MR
Every MR = Fraud

Fraud - Section 17

And
Means Includes

Any of the following acts. (4) any other act filled to deceive

(1) the suggestion as a fact, (5) any such that or omission as

which is not true, by one who the law
does not believe it to be true.
specifically declares to be
(2) The active concealment of fradulent.
fact by one having knowledge
or belief of fact

(3) A promise made without an

intention of performing it.
 Concealment

Active Passive

Silence + fraud Explaination to section

mere silence as to facts
Silence = fraud likely to affect the willingness
of a person to enter into a
Duty to speak contract is not fraud.

where steps are taken by a seller Explaination is based on the

concealing some material facts so principle - let the buyer beware
that the buyer even after a
reasonable examination examination
Reasonable examination
Cannot trace the defects.

Exception of Explanation to section 17

or

Circumstances are such that, it is Example

duty of the person keeping silence Ekta:- If you Rudra don't say
to speak anything about anything about
soundness of horse. I presume
(a) Fiduciary relationship that horse is of sound mind
(b) Marriage contract
(c)cInsurance contract Rudra: silent
(d) Family settlement =
(e) Share allotment contract Horse sound [speech]

Any of the following acts

1-5

Committed by With the intention

(1) by a party to a contract, or (1) To decline another
(2) With his connivance or party or his agent
(3) By his agent or
(2) To induce him to enter
into the contract
 Misrepresentation [section 18]

Means and includes

marriage w

eg apple
Реn

(1) The positive assertion, in a manner not warranted by the information of person making it),
of that which is not true though he believes it to be true.
fact
(2) Any breach of duty, without an intent to deceive gains an advantage to
the person committing it.

(3) Causing, however innocently, a party to angreement to make mistake as

to substance of the subject of agreement.

Marriage Apple pencil

Misrepresentation in simple words :-

(1) Positive false statement made without information.

(2) A breach of duty which brings advantage to committing it

(3) Inducement of mistake about subject matter.

 Section-19
Voidability of agreement without free consent

Section - 19

Exception Explanation (celerity)

(1) If such consent was Caused by A fraud or MR which did not cause
- Brand MR the consent to a contract of the
party on whom such fraud was
or practiced, does not make contract
voidable
- MR by silence fradulent within
the meaning of section 17.

(2) Provision:- The Contract is not

voidable, if the party whose
consent was so caused had the
means of discovering the truth
with ordinary dilengence.

[Reasonable examination]
 Mistake [section 20, 21 and 22]

20 21 22

Agreement void where Effect of Corporate law

both parties are under mistakes of law
mistake as to matter of
fact
Unilateral mistake
Bilateral mistake

Agreement void A contract is not voidable

merely because it was
caused by
one of the party to it
being under a mistake.

Contract valid
 Section 21, Effect of mistake as to law

As to any law in As to any law

force in India not in force in India
[mistake of Law of [foreign law]
your own country] is
NO EXCUSE

Has the same effect.

as mistake of fact
[section 20 and 22]
a contract is
not voidable

Contract valid
 *lawful object and lawful consideration

Section 23 Section 24

What consideration and Agreement void

objects are lawful & what not.
If
1) forbidden by law.
01
Consideration Object
2) Is of such nature, if permitted,
it would defent "the provision of law
Unlawful in of part
3) Is fradulent

4) Involves injury to the person or

property of another.

5) Court regards it as immoral or

oppose to public policy

Indefail in after some topic

Party unlawful consideration/object

Test of severability

If illegal part Possible to severe

Cannot be severed from legal

Lawful part of Unlawful part

agreement will be will be void
Agreement valid
altogether void
 Void agreements

Section 11 Section 23 Section 25

Incompetent Unlauful object & Agreement void

parties consideration without consideration

Section 20 Section 24

Bilateral mistake Part unlawful

Void agreements

Section 26 Section 27 Section 28

Agreement in Agreement in restraint Agreement in

restraint of of trade restraint of legal
marriage, void proceeding

Other than a minor

Section 29 Section 30

Agreement void Agreement by

for uncertainity wages is void
Section 27 Agreement in restraint of trade

Every agreement by which any one is restrained from exercising a lawful profession,
trade or business of any king, is to that extent void

Exceptions i.e restraint of trade of valid.

The following are valid agreements even if they in restraint of trade

a. Agreement with buyer of goodwill (as per exception of section 27]

b. Trade combination to the extent they do not create monopoly or oppose to public policy.

c. Service agreements with employees (eg. Chartered accountant trainee, surgeon - trainee)

d. Agreements under the partnership act 1932

i. Agreement between partners not to carry on any business during continuance

of partnership is valid.

ii. Agreement between partners not to carryon competitive business during

continuance of partnership is valit

iii. Dut going partner agreeing not to carryon competitive business is valid.

The restraint given above in point a, c & d is valid provided

i. Where restraint is to refrain from carring on a similar business.

ii. The restraint should be within the specified local limits

iii. The restraint should be not to carry on similar business after sale of goodwill to
the buyer for a price (this condition is applicable only for point a)

iv. The restriction should be reasonable (i.e reasonable local limits & for reasonable time)

Note :- Reasonableness of restriction will depend upon number of factors

as considered by court.
 Section 28

Agreement in restraint of legal

proceeding void

Every agreement

- By which away party is restricted absolutely.

- From Tenforcing his rights.

or

Under In respect of

Any contract

[Ex-partnership, insurance, loan]

- By the usual legal proceeding in the ordinal tribunals.

Curtail / Abridge or
(2) limits the time within which he may enforce his rights.
 Exceptions

(1) Saving of contract to (2) Saving of Contract to refer

refer to arbitration dispute question that have
that may arise
Already arisen

and only the amount

Writting
awarded in such arbitration
shall be recoverable.

Section - 29

Agreements void for uncertainity

Agreements

The meaning of which

or
Is not certain Not capable of
being made certain

Void
 Section - 30

Agreement by way of wager is void.

Agreement by way of
wager is void.

And no suit shall be brought for recovering anything

to be won on any wager.

Principle on which Section - 30 is based

- Crossword puzzles
- Picture competitions
- Athletic Competition
- Where price are awarded on basis of skill & intelligence are valid.

- Lottery transaction is game of chance

and
not of skill or knowledge is void
Agreement opposed to public policy
- Not section oriented
- Conceptual oriented
- Concept derived Practically
Case laws

ADTPP

Relevant/Important Exam Read only

point of view
1) Trading with enemy
1) Trafficking relating to 2) Stifling of prosecution
public offices and titles 3) Maintainance and champtery
4) Interest against obligations
2) Agreements tending to
create monopoly V. Imp

3) Interference with the

course of justice See 23

Trafficking relating to public offices and

titles (under Section 23)

An agreement to trafficking in public office is

opposed to public policy

Because it interferes with appointment of person best

qualified for service of public

Public policy requires that there should be nо

money consideration for the appointment to an office
in which the public is interested
Interferance with course of Justice

- As per section io & section 23 every agreement of which object is unlawful is void

- The given instance is a case of interferance with the course of justice the object
of which is to induce any judicial judge offer or any executive officer of state or
country to act partially or corruptly results oppose to public property & is to void

Interest against obligation

Stiffling of progestion

Principle :- one should not make trade of belony

Compoundable offence Non compoundable

Agreement to drop Oppose to

prosecution of such public policy
offence
Valid
With or without
permission of court

Not opposed
to public policy

Valid
 Provisions relating to agreement with minor

Based on

Section 10 E Logically/practically Case law

Section 11 evolved concept

Minor is incompetent
to enter into agreement

Agreement with minor

is void ab initio

Agenda

Relevant for exams Miscellaneous/reading category

(1) Sec 68 - Liabilities relating to (1) No rectification (subsequent

necessaries supplied to minor approval) after attaining
majority.
(2) Minor can always plead
minority (2) Minor can be a beneficiary

(3) Minor can be an agent. (3) Minor can never became

insolvent.
(4) Minor's liability in tort (civil
wrong) (4) Joint contract by minor &
adult

(5) Surety for a minor.