BBS 3rd year business law important Question | Unit 2 (The Law of Contract and Other Liabilities)

THE LAW OF CONTRACT AND OTHER LIABILITIES

2.1 LAW OF CONTRACTS

👉🏻MEANING OF CONTRACT

The agreements creating obligations between the parties if enforceable by law are treated as contracts The contract in juristic concept consists of two constituent elements, viz; Agreement and Obligation.

👉🏻 NATURE OF CONTRACT

1. Contract is an agreement between two or more persons on a particular matter or matter.
2. Contract creates legal and binding obligations between the parties.
3. Contract establishes a course of actions between the parties which is to be performed by them.
4. Contract provides certain remedies if things go wrong for the affected party.
5. Contract is recognized and enforceable by law, Le.. contract law.

👉🏻 FUNCTIONS OF CONTRACT

1. Contract normally establishes the value of the exchange or transaction
2. The contract lays down the respective responsibilities of the parties and the standard of performance to be expected by them.
3. Contract enables the economic risks involved in the transactions
4. The contract provides remedies to the affected party if the promise is not fulfilled.
5. Contract, in effect is the instrument by which the separate and conflicting interests of the participants can be reconciled and brought into a common goal.

👉🏻 ESSENTIAL ELEMENTS OF A VALID CONTRACT

1. Two parties
2. Offer and Acceptance
3. Intention to create a legal relationship
4. Meeting of minds or consensus ad idem
5. Consideration
6. Free consent
7. Contractual capacity of the parties
8. Legality of object
9. Not expressly declared void
10. Possibility to perform
11. Certainty and clarity
12. Legal formalities

👉🏻 TYPES OF CONTRACT

1. On the basis of enforceability contracts a. Valid contract b. Void contract c. Voidable contract d. Unenforceable contract e. Illegal contract
2. On the basis of formation contracts a. Express contract b. Implied contract c. Quasi contract
3. On the basis of existing duty under a contract a. Unilateral contract b. Bilateral contract
4. On the basis of performance of contracts a. Executed contract b. Executory contract
5. On the basis of future contingency of contracts a. Simple contract b. Contingent contract

👉🏻 MAJOR PROVISIONS OF THE CIVIL CODE, 2074

1. Definition
2. Contractual capacity
3. Autonomous of parties
4. Offer and acceptance
5. Contingent contract
6. Void and voidable contracts
7. Specific contracts & Performance of contract
8. Breach of contract and remedies
9. Limitations

2.2 OFFER AND ACCEPTANCE

OFFER

Offer is an expression of willingness by one to another to do or not to do something with the intention of entering into a contract by obtaining assent from the other. It is the first step to enter into a contract

👉🏻CHARACTERISTICS OF OFFER

The characteristics of the offer are as follows:

1. Offer is an obvious expression of the offeror's intention to be bound by it.
2. It relates to do something or abstain from doing something.
3. It is made with a view to obtaining the assent of the offeree to such an act or abstinence.
4. It can be made by express words, written or spoken, or by the conduct of the parties or the circumstances of the case.
5. It may be general or specific.
6. It becomes a promise when it is accepted by the offeree.
7. It must be communicated to the offeree.

👉🏻 RULES REGARDING OFFER

1. An offer must be one capable of creating legal relations
2. The terms of an offer must be definite, unambiguous and certain
3. An invitation to make an offer is not an offer
4. A statement of the lowest price; or providing information is not an offer.
5. Offer may be general or specific.
6. Every offer must be communicated.
7. Offer must be made with a view to obtaining the assent.
8. Offer can be made with terms limiting or excluding the liability of the offeror

👉🏻 MEANING OF ACCEPTANCE

Acceptance is an assent or expression of willingness given by the offeree to be bound by the terms of the offer with a view to entering into a contract.

👉🏻CHARACTERISTICS OF ACCEPTANCE

Characteristics of acceptance can be stated as follows, numerically.

1. Acceptance is an expression of willingness to be bound by the terms of the offer.
2. It shows the consent of the offeree to do or abstain from doing something.
3. It is given with the intention to enter into a contract.
4. It may be expressed or implied.
5. It concludes the contract between the parties.
6. It is a communicated acceptance.
7. It is made by the offeree to whom the offer is made
8. It is given in the manner as prescribed or indicated by the offeror.

👉🏻 RULES REGARDING ACCEPTANCE

1. The acceptance must be absolute and must correspond with the terms of the offer
2. Acceptance must be communicated to the offeror in general.
3. It must be according to the mode prescribed or usual and reasonable mode.
4. The offeree must have knowledge of the offer.
5. Acceptance must be given within a reasonable time.
6. Acceptance cannot be implied from silence or inaction.
7. Acceptance must given by the offeree only.
8. Acceptance must be given before the offer lapses or terminates.

👉🏻COMMUNICATION OF OFFER, ACCEPTANCE AND REVOCATION

Where the parties are not face to face and the parties have used postal communication, there may arise a question regarding the time of communication of the offer, acceptance, or revocation.

👉🏻Communication of Offer

"The communication of an offer is complete when it comes to the knowledge of the person to whom it is made."

👉🏻Communication of Acceptance

The communication of an acceptance is complete and against the offeror when he receives it and; against the acceptor when it comes to the knowledge of the offeror.

👉🏻Revocation of Offer

Offeror, by giving notice, shall revoke his offer, at any time before its acceptance before the communication of acceptance to the offeror.

👉🏻Revocation of Acceptance

The offeree, by giving notice, shall revoke his acceptance;

👉🏻TERMINATIONS OR LAPSE OF OFFER

1. By revocation of the Offer
2. By lapse of time for acceptance
3. By death or Insanity of the offeror.
4. By death or insanity of the offeree.
5. By making counteroffer.
6. By nonfulfillment by the offeree of a condition precedent to acceptance.
7. By not being accepted in the mode prescribed.
8. By Operation of Law.

CONSIDERATION 2.3

👉🏻 MEANING OF CONSIDERATION

Consideration is a technical term used in the sense of 'quid pro quo': le. Something in return for something. It refers to what is of some value in the eye of the law. It may be some benefit to one party or some detriment to the another."

👉🏻CHARACTERISTICS OF CONSIDERATION

1. Consideration consists of some value in the eye of the law.
2. It is a promise to do or abstain from doing something
3. It consists either in some benefit to the promiser or some detriment to the promisee.
4. It must necessarily be given in return for the promise.
5. It is not the fulfillment of a condition.
6. It is a return promise by the promise at the desire of the promisor.

👉🏻TYPES OF CONSIDERATION

a. Past consideration b. Present or executed consideration c. Future or executory consideration

👉🏻RULES REGARDING CONSIDERATION

1. Consideration must move at the desire of the Promisor
2. It may move from the promisee or any other person
3. It need not be adequate
4. Consideration must be real
5. Performance of an existing duty is not a real consideration.
6. Consideration must not be illegal, immoral, or opposed to public policy

👉🏻DOCTRINE OF PRIVITY OF CONTRACT

It is a general rule of law that refers to the contractual relationship between the parties entered into an agreement to do or abstain from doing something. It is a legal bond or tie between the contracting parties which binds the parties in a common interest to a contract. A person who has no privity of contract, i.e... stranger to contract cannot sue and be sued.

👉🏻EXCEPTIONS TO THE RULE "NO CONSIDERATION NO CONTRACT"

Consideration is necessary for the formation of every simple contract, a promise (unless in a deed) made without consideration is not actionable as a contract. In each case of promise, it becomes necessary to ask whether the promisor gets any benefit or the promisee sustains any detriment in respect of the promise. If not, the promise is gratuitous and not binding. In some cases, a promise without consideration be treated as enforceable and binding upon the parties.

1. Natural love and affection
2. Compensation for past voluntary services
3. Promise to pay time-barred debt
4. Promise to subscribe to a charitable organization
5. Completed gift
6. Creation of an Agency and other contract

2.4 INCAPACITY TO CONTRACT

👉🏻MEANING OF CONTRACTUAL CAPACITY

Contractual capacity means the ability of a person to make a reasonable calculation of the effects of the terms of a contract upon his best interest. Under the

Civil Code, 2074 that all the persons have contractual capacity except minors, persons of unsound mind, and other persons disqualified by law-in-force.

👉🏻MINORS

Minors are the person not attaining the age of majority as fixed by the law to which they are subjected.

👉🏻MINOR'S CONTRACTS: EFFECTS OF MINORITY

1. Contracts for Necessaries and Other Beneficial Contracts
2. Contract Valid If for Minor's Benefit
3. Contract valid until avoided

👉🏻PERSONS OF UNSOUND MIND

The second group of persons who do not have contractual capacity by reason of mental deficiency are the persons of unsound mind. The persons of unsound mind are treated as minor and free from his liability as arising out of his promise. Persons of unsound mind include:

1. Idiot
2. Lunatic/Mad
3. Drunken/intoxicated persons

👉🏻PERSONS DISQUALIFIED BY LAW

The third group of persons who are incapable of entering into a contract is the person disqualified by any law to which they are subject. The law makes them disqualified and incapable as a result of their special status, position, circumstances, and responsibilities. Incapacity arising out of status circumstances or responsibilities may be divided into:

1. Political or Civil Status i. Foreign sovereigns and ambassadors ii. Alien Enemy iii. Criminals/Felons
2. Professional status
3. Corporate status
4. Married status

2.5 FREE CONSENT

👉🏻MEANING OF FREE CONSENT

When the consent has been given knowingly and voluntarily to the terms of the contract, it is known as free consent. Similarly, if the consent is not caused by coercion, undue influence, misrepresentation, fraud, or mistake, it amounts to free consent.

👉🏻IMPORTANCE OF FREE CONSENT

1. It binds the parties morally to their promises
2. It reduces the anarchy and injustice in society
3. It assures the knowledge of the parties regarding the subject matters of contract
4. It provides proof of the deliberate intention of the parties

👉🏻VITIATING ELEMENTS OF FREE CONSENT AND THEIR EFFECT

Where a responsibility is undertaken or a promise has been made voluntarily and knowingly by a person, he is bound to fulfill it morally as well as legally. His moral obligation might be watered down if his promise is not made with his knowledge or free will. In such a case the law cannot enforce the promise against him. By different reasons or factors or causes a consent cannot be a free consent, this factor, in totality, is known as vitiating elements of a fee consent. The vitiating elements of free consent are a. Coercion b. Undue influence c. Misrepresentation d. Fraud e. Mistake

👉🏻COERCION/DURESS

Coercion is unlawful detaining or threatening to detain any property or committing or threatening to commit any harm against the life or dignity of others, or any act forbidden by law-in-force with an intention to enter into a contract without one's will. Therefore coercion is: i. Committing or threatening to commit any harm against the life dignity or property of one. Detaining or threatening to detain any property. iii. The committing or threatening to commit any act forbidden by law-in-force. iv. Such must be done with the intention of causing the other to enter into a contract.

👉🏻UNDUE INFLUENCE

Where the contracting parties are, out of the time of agreement, in such a position by which one can easily dominate the will of another, and such relationship is used for some benefit from the transaction, the consent is said to have an undue influence. It may be:

1. Actual Undue Influence
2. Implied (Presumed) Undue Influence

👉🏻MISREPRESENTATION

Where a party represents something regarding the facts of the subject matter of a contract turns out to be untrue or false amounts to misrepresentation. Therefore, it is a false statement of one party made during the negotiation with a view to entering into a contract without the intention to deceive the other.

FRAUD

Where a contract is made or consent is taken by committing fraud, the party whose consent is so caused has got right to avoid the contract. Effects of Fraud

1. Where consent is caused by fraud, consent can not be free consent.
2. The party whose consent was so caused can go to the court to declare the contract void.
3. The legality of a contract caused by fraud is a voidable contract.
4. Contract until avoided is valid and binding.
5. Injured party can claim compensation for his loss
6. He can sue upon quantum-meruit and claim for his remuneration.
7. The party in default may be punished with imprisonment in jail.
8. The party injured can treat the contract as discharged or rescinded.

👉🏻 Can Silence be Fraud/ Misrepresentation?

As a general rule, mere silence is not fraud but he must refrain from making active concealment. In some cases, silence and inaction also amount to fraudulent representation in as much as positive language of conduct A person can be held liable for fraud on the basis of his silence provided there is an obligation for him to speak and hold his tongue in breach of that obligation.

👉🏻MISTAKE

Mistakes may be defined as an erroneous belief about something. The mistake is made by the parties without misleading the other but they believe something about the fact of something but it turns out to be another. Mistakes may be of two kinds a mistake of law or, a mistake of fact.

👉🏻Mistake of Law

Where there is a mistake of law, the legality of the contract is unchanged. It is not a ground for excuse. Under it, a contract cannot be avoided.

👉🏻Mistake of Fact

Where there is a mistake of fact, the contract can be avoided as a mistake negatively negates the consent of the parties to a contract. In this case, the contract becomes void. Mistakes of fact may be of two kinds: i. Bilateral mistake ii. Unilateral mistake

👉🏻BILATERAL MISTAKE

Where both of the parties mistook or misunderstood the facts of the subject matter of the contract, it is known as a bilateral mistake. The contract caused by a bilateral mistake is void. It may be

1. Mistake as to the existence of the subject matter
2. Mistake as to the title of the subject matter
3. Mistakes as to the identity of the subject matters
4. Mistake as to the price of the subject matter
5. Mistake as to the quality of the subject matter
6. Mistake at to quantity of the subject matter

👉🏻UNILATERAL MISTAKE

When, in a contract, only one of the parties is mistaken regarding the subject matter or in expressing or understanding the terms or the legal effect of the agreement, the mistake is a unilateral mistake. The rule is that a contract caused by a unilateral mistake is valid. He cannot blame the other for his mistake and cannot avoid the contract.

Exceptions:

1. Mistake as to the nature of contract and,
2. Mistake as to identify the person contracted with.

2.6 LEGALITY OBJECT AND CONSIDERATION

👉🏻MEANING OF LEGALITY OBJECT AND CONSIDERATION

The consideration or object of an agreement is unlawful-

1. If is prohibited by law
2. if it defeats the provisions of any law
3. If it is fraudulent
4. If it involves or property of another implies injury to the person or
5. If the court regards it immoral
6. Where the court regards it as opposed to public policy

👉🏻NEED FOR LEGALITY OF OBJECT

1. Contract law should not be instrumental in committing a wrong or harm, or an offense prohibited by law. If an act is forbidden by one law cannot be done by way of making contracts.
2. Where public policy imposes certain limitations upon freedom of dealings or action, such limitations should not be lifted by way of contract.
3. It saves the time and effort of the court from engaging in such unintended dealings.
4. It brings certainty by the imposition of various conditions where the remedy is not available even to the injured party, so, a person may remain far from such dealings.
5. The court should not be a means to enforce rights in unlawful transactions.
6. It helps to keep good morals in a society or state.

👉🏻UNLAWFUL AND ILLEGAL AGREEMENT

An unlawful agreement is one which, like a void agreement, is not enforceable as it is discountenanced by law. An unlawful agreement may be illegal, immoral, or opposite to public policy.

👉🏻ILLEGAL AGREEMENTS

An illegal agreement, while resembling the void contract, in that it also has no legal effect between the immediate parties, has this further effect that even transactions collateral to it become tainted with illegality and are therefore, not enforceable and in certain circumstances punishable by law as like that of the principal agreement. If an agreement is illegal, the law will help neither party to the agreement. This means that as a result of the refusal of the court to help the plaintiff recover the amount, the defendant who is equally guilty stands to gain.

👉🏻IMMORAL AGREEMENT

If an act, in the opinion of the court, is immoral, the court refuses to enforce the obligations in it. In most cases, morality is related to personal affairs either marital or sexual but such affairs must affect negatively the public morality recognized in a particular society at a particular period of time. An agreement is unlawful for immorality in the following set of circumstances:

1. Where an agreement between a husband and wife from future separation
2. Illicit co-habituation
3. Misuse of influence
4. Where the consideration is an act of sexual immorality
5. Where the object of the agreement is the furtherance of sexual immorality

👉🏻AGREEMENTS OPPOSED TO PUBLIC POLICY

An agreement is said to be opposed to public policy when it is harmful to the public welfare, Public is a vague and elastic term, therefore, it is not possible to give a precise or exact definition of the term public policy. Some of the agreements which the courts will not enforce because they are contrary to public policy and are unlawful may be arranged under certain heads as given here below:

1. Agreement to commit a crime or civil wrong or to perpetrate a fraud
2. Agreement of trading with an alien enemy
3. Agreements to the sale of public office and titles
4. Agreements to interfere with the administration of justice a. Interference with the course of justice b. Agreements for stifling prosecution c. Agreements for maintenance and champerty d. Agreements of ousting the jurisdiction of courts e. Agreement to vary the period of limitation
5. Agreement in restraint of parental rights
6. Agreements in restraints of marriage
7. Agreements in restraint of trade
8. Agreement in restraint of personal liberty
9. Agreements in restraints of using common facilities provided by state
10. Agreements to defraud tax or revenue

👉🏻VOID AGREEMENTS

Void agreements are those which are not enforceable by law and have no legal effect from the beginning. Where an agreement does not fulfill all the essential elements of a valid contract, it becomes void. Void agreements, in some cases punishable by law if they are made to commit a crime.

An agreement is called a void agreement if: a. It has no legal effect from the beginning, le. vold-ab-initio. b. It does not bind the parties.

c. it does not make arise legal actions and remedies even for the injured party. d. It is not enforceable by law. e. It is either illegal, immoral, or opposed to public policy.

2.7 CONTINGENT CONTRACTS

👉🏻MEANING OF CONTINGENT CONTRACT

A contingent contract is a contract to do or not to do something. If some event, collateral to such contract does or does not happen.

👉🏻CHARACTERISTICS OF A CONTINGENT CONTRACT

1. The performance of a contract depends upon the happening or non-happening of some events.
2. The event must be a future event.
3. The future event must be uncertain. If the event is certain or is bound to happen, the contract is not valid. But, if the time of happening of the future event is uncertain it amounts to an uncertain event and the contract is valid.
4. The uncertain future event is collateral, i.e....... incidental to the contract. Where the event is the sole determining factor the contract is leveled as a wagering agreement.

👉🏻RULES REGARDING THE PERFORMANCE OF CONTINGENT CONTRACTS

1. In the event of happening: The contract is not enforceable until the future event happens.
2. In the event of non-happening: Contract is enforced if the happening of future events becomes impossible.
3. Happening of event within a specified period: Contract is enforced only if the future event happens within the specific time.
4. Non-happening of event within a specified period: Contract is enforced only if the happening of future event becomes impossible within the fixed time.
5. Specified person
6. Impossible event: Contract becomes void.
7. Supervising impossibility: Contract becomes void.
8. Effect of illegality: Contract becomes void.
9. Certainty of event: Contract becomes void.
10. Uncertain as to the time of happening: Contract becomes valid.

👉🏻WAGERING AGREEMENTS

A wagering agreement is a promise to give money or money's worth upon the determination or ascertainment of an uncertain event. "A contract by A to pay money to B on the happening of a given event in consideration of B's promise to pay money to A on the event of not happening." There are three points to be noticed:

1. It must be a promise either to pay money or to give something, which has a monetary value.
2. This promise must necessarily be conditional, on the happening of an event specified at the time of promise.
3. This event must be an uncertain one in the sense that it is to happen in the future and nobody knows whether it will happen or not.

👉🏻ESSENTIALS OF A WAGERING AGREEMENT

1. Nature of promise- Price to pay money or money's worth
2. Uncertain event
3. Mutual chance of gain or lose
4. No control over the event
5. Future event is the sole determining factor

👉🏻EFFECT OF WAGERING AGREEMENTS

1. Wagering agreements are expressly declared as void under the Contract Act, 2056.
2. Money deposited with a person to be paid to the party winning upon wager cannot be recovered by the winner from the stakeholders.
3. In case of agent and principal relation; (a) an agent cannot recover against the principal any money paid on a wager entered into on behalf of his principal, (b) The principal cannot sue the agent where he fails to carry out his instruction in respect of a wagering transaction and (c) where the agent receives the winnings on successful bets made on behalf of his principal, he is bound to hand the over he had received the money in respect of a void transaction.
4. The transactions collateral to the wagering agreements are not affected and stand valid as they are only void.

2.8 PERFORMANCE OF CONTRACT

👉🏻MEANING OF PERFORMANCE

The term performance refers to the fulfillment of contractual obligations by the parties in accordance with the terms and conditions of the agreement. The general rule of performance is that the performance of a contract must be exact and precise.

👉🏻IMPORTANCE FOR PERFORMANCE

1. To fulfill the expectations of the parties.
2. To avoid the legal consequences of punishment that may arise from the non-performance.
3. To fulfill the legal duty as the performance is a binding obligation of the parties.
4. All contracts are made for performance.
5. If the performance is impossible, the contract is not valid. The validity of the contract depends upon the matter of performance.
6. It is an essential element of a valid contract that if the contract need not be performed or cannot be performed, there is no valid contract.

👉🏻TYPES OF PERFORMANCE

It can be classified into two divisions.

1. Actual performance
2. Tender or offer to perform Requisites of a valid tender: An offer or tender to perform is considered valid and binding if. a. It is unconditional. b. It is made at the proper time and place. c. It is made for the whole performance of a contract. d. It is expressed by the promisor or the person obliged and willing to perform the promise. e. It is made to the proper person. f. It is made at such a period of time where the promisee is able to accept the delivery of goods or the performance of the contract.

👉🏻RULES REGARDING PERFORMANCE

1. Time of performance
2. Place of performance
3. Manner of performance
4. Person bound to perform The other persons, then the promisor, who can perform the contract are a. Agent b. Legal representatives c. Third person d. Joint promisor
5. Person entitled to demand performance a. Joint promisee b. Agent duly appointed c. Legal representatives d. Official assignee Official receiver e. Trustee of a trust.
6. Performance of reciprocal promises a. Simultaneous performance of reciprocal promises b. Order of performance of reciprocal promises c. Effect of default as to promise to be performed first d. Effect of one party preventing another from performing promise
7. Contract need not be performed

👉🏻ASSIGNMENT OF CONTRACTS

It may take place in the following ways:

1. By the act of the parties a. Contractual obligations are generally not assignable b. Contractual obligations involving personal skill or diligence never be assigned c. Contractual rights or benefits are generally assignable d. An actionable claim can always be an assignment
2. By operation of law e. Assignment of rights affecting third person a. By death b. By insolvency

2.9 TERMINATION OF CONTRACT

👉🏻MEANING OF TERMINATION OF CONTRACT

When the parties of a contract become free from their contractual relationship, when the contract comes to an end, or when the contracting parties are released from the contractual obligation is called the discharge or termination of the contract

👉🏻MODES OF TERMINATION OF CONTRACT

1. Termination by Performance
2. Actual performance il. Tender/ offer to perform or Attempted performance
3. Termination by Agreement Forms of Agreement:
4. Novation Recession Alteration iv. Waiver v. Remission vi. Merger
5. Termination of Contract by Operation of Law: It may take place:
6. By death ii. By insolvency iii. By unauthorized alteration Iv. By merger v. Rights and liability vesting in the same person
7. Termination of contract by Lapse of time
8. Termination of Contract by Supervening Impossibility Supervening Impossibility: The impossibility arising subsequent to the formation of a contract is called supervening impossibility. It was held that in these circumstances the contract must be treated as at an end. a. Cases where the rule of supervening impossibility may apply i. Destruction of the subject matter of contract ii. Non-occurrence of a particular event iii. Death or incapacity iv. Change in law v. Outbreak of war vi. Failure of all objects set forth b. Cases where the rule of supervening impossibility does not apply: i Difficulty of performance Commercial impossible ii. Impossibility due to failure of a third party iv. Strikes, lockouts, and civil disturbances v. Failure of one or more of the objectives
9. Termination by Breach a. Actual breach of contract i. On the due date of performance

ii. During the performance b. Anticipatory breach of contract Effects of anticipatory breach: Where there is an anticipatory breach, the other party: May treat the contract as terminated, or May wait till the date of performance. If he treats the contract as dead or terminated, the contract comes to an end immediately and he can go to court for damages and need not wait till the due date of performance.

2.10 REMEDIES OF BREACH OF CONTRACT

👉🏻MEANING

The breach of contract affects negatively the rights created and defined in a contract and the law recognizes the different remedies to the injured party or the party other than default by which he or she may fulfill the loss suffered by him or her. Therefore, the remedies are those means assured by law which the innocent party can use for the enforcement of his rights. Remedies are given as under.

👉🏻RECESSION

In Recession is the right of an innocent party of a contract to refuse to perform his obligation under it when it has already been breached by the other party. In such a case, on one hand, he becomes free from the contractual obligations and, on the other hand, he can sue the other party for damages.

👉🏻DAMAGES

The damages refer to a monetary compensation allowed to the injured party awarded by the court for the loss or injury suffered by him by the breach of contract. The fundamental object of awarding damages is to put the injured party in the same position if money can do it as if the contract had not been breached or the contract had been performed.

👉🏻SPECIFIC PERFORMANCE

It is an order of the court which directs the party in default to perform the contractual obligation in accordance with its terms. The performance is specific as the contract once breached but defaulting party has to perform the contract by the order of the court. An order of specified performance is issued if it is established that Where the damages are not an adequate relief. That is, the monetary compensation cannot fulfill the loss caused by him because of the breach. • Where there exists no standard for ascertaining the actual loss and awarding damages caused by the breach of contract. The specific performance will not be granted in the following cases:

i.Where the damages are an adequate relief. ii. Where the damages can be ascertained.

iii. Where the contract is not certain. iv. Where the contract is unequal to either party. v. Where the contract is entered by the trustee in breach of their trust vi. Where the contract is entered by an agent beyond the limit of his authority. vii. Where the contract is of a personal nature, for example, a contract to marry. vii. Where the contract is entered into by a company in such a manner ultra-virus to its memorandum and articles of association. ix. Where the court cannot supervise its carrying out. x. Where the contract is impossible. xi. Where the contract is unlawful.

👉🏻QUANTUM MERUIT

An action upon quantum merit may arise when an act has done or service has been rendered by one to another without to do so gratuitously whether or not there is a contract between them for such act or service or its remuneration, he is entitled to recover the reasonable remuneration of his act or service from that another. It may be contractual or quasi-contractual obligation.

👉🏻INJUNCTION

It is an order of a court, on the request of a party of a contract, where the other party of the contract is going to breach of contract or do such acts for which he had promised not to restrain him from doing what he promised not to do to.

2.11 QUASI CONTRACTS

👉🏻MEANING OF QUASI-CONTRACT

Under some circumstances, or relation existing between the parties where a person may render some services or may act something or incur some expenses to another or a person may receive some benefit to which the law regards he should pay to the other party from whom he has received such benefits even though there is no contract between the parties for such work, service or expenses. Such kinds of relationships are termed quasi-contracts as there is no offer, acceptance consent, or agreement to establish a contract that relation.

👉🏻KINDS OF QUASI-CONTRACTUAL OBLIGATIONS

1. Supply of necessaries to a person incapable of contracting
2. Maintenance of incompetent person
3. Taking care of the property of others. Not to be abandoned the other's property managed voluntarily, (Negotiorum gestio) b. To care for or manage property taken in custody
4. Obligation under acts done in case of emergency or necessity
5. Payment by an interested person
6. Obligation to pay for non-gratuitous acts a. To pay price or remuneration

b. Right to claim for maintenance 7. Reimbursement of expenses incurred in obsequies. Of deceased 8. Recovery of money paid by one for the benefit of another a. Treatment expenses to be reimbursed b. To bear expenses made by public bodies 9. Obligation of finder of lost goods

👉🏻QUANTUM MERUIT

The term Quantum meruit literally means as much as one has earned; a reasonable amount. An action upon quantum meruit arises where some work has been done or service has been rendered or incurred some expenses by one for the benefit of another in such circumstances entitling the former to receive a reasonable remuneration therefor. The types of cases of Quantum Meruit are given as under:

1. Where there is no contract but the act has been done, he can recover a reasonable remuneration.
2. Where there is a contract for work or service but no agreement as to the payment, can recover the price of work done or service rendered.
3. Where the agreement is discovered to be void, remuneration can be claimed.
4. Where a contract is divisible
5. Where the completion of the contract has been prevented by the act of the other party than the party claiming the price
6. Where a contract is discharged by breach
7. Where a contract is fully performed but not exactly

2.12 UNJUST ENRICHMENT

👉🏻MEANING OF UNJUST ENRICHMENT

"If any person gets any benefit or advantage from another person, without for the reason of doing any lawful act or fulfilling any obligation, the person who so gets the benefit or advantage shall be deemed to have got an unjust enrichment." Under the doctrine of unjust enrichment, no person shall be allowed to enrich himself unjustly at the expense of another. The doctrine is applied in the satisfaction of the following conditions: a. A person (the defendant) has been enriched by the receipt of a benefit. b. This enrichment is at the expense of others (the plaintiff). c. The retention of the enrichment amounts to injustice.

👉🏻OBLIGATIONS UNDER UNJUST ENRICHMENT

1. Things taken by mistake to be returned (solution indebted)
2. To pay back debt paid by mistake
3. To return goods or amount taken with Mala fide intention
4. To pay debt paid by a third person
5. Right to claim reimbursement if payable tax paid by another person Failure of consideration
6. Money of one obtained by another from third parties which the first party seeks to recover

2.13 LEASE CONTRACT

👉🏻LEASE CONTRACT

A lease is an implied or written agreement specifying the conditions under which a lessor accepts to let out a property to be used by a lessee. The agreement promises the lessee use of the property for an agreed length of time while the owner is assured consistent payment over the agreed period. Both parties are bound by the terms of the contract, and there is a consequence if either fails to meet the contractual obligations.

👉🏻RIGHTS AND DUTIES OF LESSOR AND LESSEE

👉🏻Rights of Lessor

1. Right to receive lease rent
2. Right to sue for damages
3. Right to get information as to the condition of leased goods
4. Right to inspect the leased goods
5. Right to terminate the contract

👉🏻Duties of Lessor

1. To repair and maintain leased goods
2. To indemnify/reimburse the lessee
3. Duty to compensate lessee
4. To terminate the contract
5. To ensure the lessee

👉🏻Rights of Lessee

1. Right to possess and use the goods
2. Right to be indemnified for expenses incurred in the goods
3. Right to claim compensation for loss
4. Right to be informed about the leased goods
5. Right to sub-lease
6. Right to terminate the lease

👉🏻Duties of Lessee

1. Duty not to change the form of the leased goods
2. Duty to use the leased goods in good faith
3. Duty to inform lessor if goods are not usable
4. Duty to take reasonable care and caution of the goods from being lost or damaged
5. Duty to compensate for loss or damage of goods leased
6. Duty to pay lease rent
7. Duty to return leased goods

👉🏻SUB-LEASE

The lessee may, with the prior consent of the lessor, sub-lease to any person the goods or any part thereof leased under the contract of lease, by concluding another contract of lease to that effect without prejudicing in any manner the right which the lessor may exercise under the contract of lease. In such a case the lessee shall not be free from his or her obligation towards the lessor for the reason that he or she has made a sub-lease.

👉🏻LEASE OF IMMOVABLE PROPERTY

Section 620 of the Civil Code, 2074 has provided some special provisions in relation to the contract of lease of immovable property.

👉🏻TERMINATION OF LEASE CONTRACT

Sub-section (1) of Section 621 of the Civil Code, 2074 has provided the various circumstances where the lessor may terminate the contract of the lease as follows:

• Non-payment of lease amount.
• Misuse of the goods.
• if the lessee fails to give information on whether the leased goods or any part thereof are lost, damaged, or destroyed
• If the lessee fails to restore the leased goods to their original condition.
• If the goods leased are sub-leased without the prior consent of the lessor.

Similarly, the lessee may terminate the contract of lease in any of the following circumstances:

• If the leased goods cannot be possessed or used for the purpose or object for which the goods have been leased,
• If the lessor fails to reimburse the repair and maintenance costs or make its adjustment to the lease rent
• If the lessor does not reduce or agree to reduce the lease rent amount

2.14 HIRE PURCHASE CONTRACT

👉🏻MEANING OF HIRE PURCHASE

Hire purchase agreements are used as an arrangement when purchasing expensive goods or services. In a hire purchase agreement, the purchaser pays the initial installment or down payment at the beginning, followed by additional payments in the future to pay off the remaining balance of the good, plus interest. Section 624 of the Civil Code, 2074 defines that a hire purchase contract is an agreement in writing whereby a person lets any goods to another person for hire on the following terms and conditions: Payment will be made in installments, The possession and use of the goods is given to the buyer immediately, The property (ownership) in the goods remains with the vendor till the last installment is paid, The seller can repossess the goods in case of default in payment of any installment, and • Each installment is treated as hire charges till the last installment is paid.

👉🏻FEATURES OF HIRE PURCHASE

The payment is in installments over a specified period of time. The possession of the goods is transferred to the buyer immediately. The property in the goods remains with the vendor (hiree) till the last installment is paid. • The hiree or the vendor can repossess the goods. • The installments in hire purchase include interest as well as repayments of principal. • The hiree charges interest on a flat rate.

👉🏻TRANSFER OF OWNERSHIP OF GOODS

According to Section 628 of the Civil Code, 2074, the ownership of the goods related to a hire purchase contract shall be transferred to the hirer upon the payment of the last installment of the hire purchase price according to the hire purchase price determined in accordance with the contract concluded. Further, the right to possession and use shall immediately transfer at the time of receiving such goods by the hirer.

👉🏻RIGHTS AND DUTIES OF HIRER AND HIREE

👉🏻Rights of Hirer

1. Right to transfer his or her right and interest
2. Right to be discharged and refund the paid amount
3. Rights in case of forfeiture of goods

👉🏻Duties of Hirer

1. Duty to care for and maintain the goods on hire
2. Duty to pay installment
3. Duty not to use goods contrary to the terms and conditions
4. Duty to give information on the actual condition of goods Rights of Hiree (Owner of Goods)
5. Right to receive installments
6. Right to recover back the goods delivered to the hirer
7. Right to terminate the contract
8. Rights in the event of termination of contract

👉🏻Duties of Hiree

1. Duty to deliver the goods at the time of contract
2. Duty to pay compensation for defective goods
3. Duty to refund the paid amount in case of unlawful termination
4. Duty to refund the paid amount in case of forfeiture of goods

👉🏻MODES OF TERMINATION OF CONTRACT

Termination of contract by giving a written notice by the hirer

1. Termination of contract by paying installment
2. Termination of contract by returning goods
3. Termination of contract by non-furnishing information
4. Termination of contract by non-payment of installments
5. Termination of contract by non-performance

2.15 CONCEPT OF TORTS

👉🏻MEANING OF TORT

A tort is an act or omission that gives rise to injury or harm to another and amounts to a civil wrong for which courts impose liability. In general, no person shall cause loss or damage, in any manner, to another person's body, life or property or legally protected right or interest by the reason of commission or omission, whether by any default, negligence, or recklessness on the part of himself or herself or of anyone else to whom he or she must bear obligation if there is no any prior contractual relationship in relation to any commission or omission the loss or damage resulting from such a commission or recklessness, such act or omission in known as tort.

👉🏻CHARACTERISTICS OF TORT

1. A tort is a civil wrong
2. A tort is an infringement of a right in rem
3. Torts deal with cases related to legal rights
4. Remedy in the form of Compensation
5. Rights are to be fixed by law
6. The Law of Torts is totally based on precedents
7. Torts law is un-codified

👉🏻PRINCIPLES OF TORT LIABILITY

1. Damnum Sine Injuria
2. Injuria Sine Damno
3. Vicarious Liability
4. Volenti Non-Fit Injuria
5. Strict Liability and Absolute Liability

👉🏻REMEDIES FOR TORT

The law recognizes forts as civil wrongs and allows injured parties to recover for their losses. In the majority of tort cases, the court will award compensatory damages to an injured party that has successfully proven his or her case. Thus, courts may award damages for incurred as well as expected losses. In certain cases, courts will award punitive damages in addition to compensatory damages to deter further misconduct. TORTIOUS LIABILITY UNDER THE CIVIL CODE, 2074

1. Parents to bear liability
2. Guardian or curator to bear liability
3. Employer to bear liability
4. The owner of the animal is to bear liability for loss or damage caused by the animal
5. House-owner to bear liability for loss or damage caused by its collapse
6. Owner of the property to bear liability
7. House-head to bear liability
8. To bear liability for trespass
9. To bear liability jointly
10. Compensation to be paid for liability
11. Not to bear liability if a separate provision is made