Submitted To:

Barrister Ishtiaque Ahmed

Lecturer,
School of Business,
North South University
Course: Law 200
Section: 05
Semester: Fall 2013
Make up Mid term 1
Submitted By:
Sarker Md. Sadman Shabab Ratul

Date of Submission:
12th January, 2014

ID: 121 0458 030

Contents:
1.
2.
3.
4.
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9.

Essential Elements of a Contract

Offer and Acceptance
Acceptance
Consideration
Void and Voidable Agreements
Capacity of Parties
Free Consent
Contingent Contract
Quasi Contract

The Essential Elements of a

Contract
Defi nition of Contract
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An agreement enforceable by law is a contract. In a contract there must be two compulsory

things. The first is an agreement and the second is that the agreement must be enforceable by
law.
An agreement is considered valid and existent whenever one or more persons promise to one or
others, to do or not to do something. On the other hand, some agreements cannot be enforced
through the courts of law. For Example: if two people agree to play table tennis or go watch a
movie, this cannot be enforced by law. An agreement that can be enforced through the courts of
law is called a contract.

The Essential Elements of a Contract

When few conditions are fulfilled, an agreement becomes enforceable. The essential elements
are as follows:
1. Offer and Acceptance: There must be a lawful offer by one party and a lawful
acceptance of the offer by the other party or parties. The adjective lawful implies
that the offer and acceptance must conform to the rules laid down in the Contract Act
of Bangladesh regarding offer and acceptance.
2. Intention to create Legal Relationship: There must be an intention among the parties
that the agreement shall result in or create legal relations. An agreement to have
dinner at a colleagues house is not an agreement intended to create legal relations and
is not referred as a contract. But an agreement to trade goods or services or marriage
are agreements intended to create some legal relationship and are therefore contracts,
provided that the other essential elements are present.

3. Lawful Consideration: Apart from few exceptions, an agreement is legally

enforceable only when each of the parties to it gives something and gets something in
return. As mentioned earlier, and agreement to do something for nothing is usually
not enforceable by law. The something given or obtained in an agreement is called
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consideration. This consideration can be an act of doing something or forbearance,

i.e., not doing something, or a promise to do or not to do something. Consideration
can be past which is something already done or not done yet. It may also be present or
future. But only those considerations are valid which are lawful.
4. Capacity of Parties: The parties to an agreement must be legally capable of entering
into an agreement; otherwise it cannot be enforced by a court of law. Want of capacity
arises from minority, lunacy, idiocy, drunkenness and other factors. If the parties to
the agreement suffer from any such disability, the agreement is not enforceable by
law, except in some special cases
5. Free Consent: For an agreement to be enforceable, it must be based on the free
consent of all the parties. There is absence of genuine consent if the agreement is
induced by coercion, undue influence, mistake, misrepresentation and fraud. A person
guilty of the coercion cannot enforce the agreement. The other party can enforce it,
subject to rules laid down in the Act.
6. Legality of the Object: The object for which the agreement has been entered into
must not be illegal, or immoral or opposed to public policy.
7. Certainty: The agreement must not be vague. It must be possible to ascertain the
meaning of the agreement, for otherwise it cannot be enforced.
8. Possibility of Performance: The agreement must be capable of being performed. A
promise to do an impossible thing cannot be enforced.
9. Void Agreements: An agreement so made must not have been expressly declared to
be void.
10. Writing, Registration and Legal Formalities: An oral contract is a perfectly good
contract, except in those cases where writing and/or registration is required by some
statute. It is sometimes difficult to prove the terms of an oral contract. Therefore,
important agreements are usually entered into in writing even in cases where writing
is not compulsory.

Conclusion
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All the elements must be present to be considered a contract. If any is missing, the agreement
does not become a contract. An agreement which fulfills all the essential elements is enforceable
by law and is called a contract. Every contract is an agreement but all agreements are not
contracts.

Offer and Acceptance

All contracts are made by the process of a lawful offer by one party and the lawful acceptance of
the offer by the other party. For Example: When A says to B, Will you buy my car for TK.5
lacs? This is an offer. When B agrees, the offer is accepted and a contract is formed.

Proposal
An offer always involves the making of a proposal. In the Contract Act, proposal is defined as
When one person signifies to another his willingness to do or to abstain from doing anything,

with a view to obtaining the assent of that other to such act or abstinence, he is said to make a
proposal.

Off er
A proposal is also called an offer. The person making the offer, also known as promisor, is called
the offerer. The offer made to a person is called offeree. For Example: A offering B to buy his
car for TK.5 lacs is an offer. Here A is the offerer and B is the offeree.

Promise and Acceptance

The book defines a promise as When the person to whom the proposal is made signifies his
assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a
promise.
The person making the proposal is the promisor and the person accepting the proposal is the
promise.
For Example: Mr. J puts an advertisement in the newspaper for the sale of a car for TK.10 lakhs.
Mr. Y replies by showing interest to buy the car. Mr.Js(promisor/offerer) advertisement is an
offer and Mr. Y(promise/offeree) is the acceptor.

Rules regarding Off er

1. An offer may be express or may be implied from the circumstances: There are two
ways of making an offer. Either it is by words, spoken/written or by conduct. When an
offer is made by stating so in words or writing, it is referred as an Express Offer. An
offer that is implied from the conduct of a person is called an Implied Offer.
2. An offer may be made to a definite person, definite class of persons or to the world at
large: An offer made to a person or a group of people is called a Specific Offer.

An

offer sent to a lot of people or the world at large is a General Offer.

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3. Legal relationship is required: As one of the essential elements of contract, an offer must
be capable of creating a legal relationship. For Example: an invitation to play football
with friends does not bind a legal relationship and it does not lead to a binding contract.
4. The terms of the offer must be certain, definite, unambiguous and not vague: An offer
must provide with some sort of promise that is certain and definite. Mr. X says he will
pay Ms. Y some money for getting a report done. This is not a valid or definite offer since
the amount of money to be paid is not specified.
5. A mere statement of intention is not an offer: Pricelists and catalogues, and enquiries
for customers are merely statements of intention. They are rather regarded as invitation
to others to made offers. A newspaper advertisement is usually an invitation to make
offers. The price list on fast food restaurants in their menus is an invitation of an offer to
be made rather than being an offer by itself.
6. An offer must be communicated to the offeree: Unless an offeree knows about the offer,
the person cannot accept the offer. For Example: John offers to pay anyone TK. 5000
who finds his dog. Peter, without knowing the offer, brings the dog to John. Therefore,
Peter was not entitled to the reward since he was not aware of it.
7. An offer may be conditional: An offer may be made subject to conditions. The
conditions must be clearly communicated to the offeree. If a person accepts an offer
without knowledge of the conditions, the offerer cannot claim fulfillment of the
conditions. But when the conditions are clearly stated, the offeree cannot plead for
ignorance of the conditions.
8. Printed Contracts: Printed contracts contain a large number of terms and conditions
which exclude liability under the contract. During a student admission in North South
University, the student has to sign the form where all the rules and regulations along with
the code of conduct are included. The student has a contract with the university to abide
by the rules.

Acceptance
An offer can be accepted only by the person or persons for whom the offer is intended. An offer
made to a particular person can only be accepted by him because he is the only person intended
to accept. Offer made to a class of persons can be accepted by any member of that class and the
same goes for an offer made to the world in general.

Rules regarding Acceptance

1. It must be an absolute and unqualified acceptance of all the terms of the offer: When
there is any variation of the terms between the time an offer is made and the offer is
accepted, there is no contract. For Example: a person gets a loan from a bank of
monthly payment of TK. 1000 each. After the loan has been taken, if the Bank claims that
he has to pay TK. 1500 each month, the contract is invalid.
2. Conditional Acceptance: According to the English law and the terms of the Contract Act,
an acceptance with a variation is no acceptance. It is a counter-proposal which must be
accepted by the original promisor before a contract is made. X offers to sell his car to Y
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for TK. 5 lakhs but Y makes a counter proposal for buying the car at TK. 4 lakhs. On the
other hand, an acceptance is not conditional if an immaterial term is added or if there
occurs any misunderstanding between parties for the interpretation of collateral terms.
3. Contracts subject to condition: There are cases where an immediate binding contract is
formed although some of the parties rights and obligations may be dependent upon the
happening of a particular event.
4. Clarification: The seeking clarification of offer neither amounts to the acceptance of the
offer nor to the making of a counter offer.
5. The acceptance must be expressed in some usual or reasonable manner: The usual
methods of communicating an offer are word of mouth, telephone, telegram or by post.
The offeree may express his acceptance using the modes mentioned above. An offer may
be accepted by conduct. If the offeree does what the offerer wants him to do, there is
acceptance of the offer by conduct.
6. Mental acceptance or uncommunicated assent does not result in a contract: If an
offeree does not show any reply to the offer or remains silent and does nothing to show
that he has accepted the offer, there is no contract.
7. The mode of acceptance: When the promisor makes a specific mode of acceptance, the
offeree must follow that specific mode of acceptance. If mode of acceptance is by email,
the offeree must refer his acceptance by email. The promisor may not accept the offer
otherwise and force the offeree to follow the mode of acceptance.
8. Time of acceptance: If a time frame is specified in the offer, the offeree must accept the
offer within the time. When no time is mentioned, the offer must be accepted within
reasonable time.
9. When acceptance is complete: A proposes, by letter, to sell a house to B at a certain
price. The communication of the proposal is complete when B receives the letter.
10. Before offer: Acceptance is given after an offer has been made. There cannot be
acceptance before the offer is given from any party. When B shows his acceptance to buy
the house before A proposes, there is no contract.

11. The acceptance must be made while the offer is in force: The acceptance must be made
before the offer has been revoked or the offer has lapsed.

Communication of Off er and Acceptance

In the book, the Contract Act states : The communication of proposals, the acceptance of
proposals and the revocation of proposals and acceptance, respectively, are deemed to be made
by any act or omission of the party proposing, accepting or revoking by which he intends to
communicate such proposal, acceptance or revocation or which has the effect of communicating
it.
An offer can be communicated to the offeree via word of mouth, by writing or by conduct.

Off er and Acceptance by Post

An offer can be made by post and also can be accepted by post if no other mode of acceptance is
mentioned by the proposer. The post office is usually the agent when an offer is made by post.
When the acceptance is posted it is enough for the offer to be accepted even though it may take
time to reach the offerer. The letter must be correctly addressed and dated for the contract to be
valid.

Off er and Acceptance through Telephone

Telephone is another mode of communicating an offer. There are certain rules regarding oral
communication. The offer and acceptance must be audible, heard and understood. When these
conditions are met along with the essentials of a contract, the parties are bound through a
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telephone conversation. When two people have a deal over the phone, an offer is made and
accepted by both parties, the contract is valid.

Options
A conditional contract to do something is an option. A promise to keep an offer open to
acceptance for a certain time is not binding on the proposer unless there is a consideration
separately given for that promise is a conditional contract or an option.

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Consideration
In a contract, consideration is an essential element. Subject to certain exceptions, an agreement
is not enforceable unless each party to the agreement gets something. This something is called
consideration.
The Contract Act defines consideration as some right, interest, profit or benefit accruing to one
party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the
other.
For Example: P agrees to sell a house to Q for TK. 80 lakhs. For Ps promise, the consideration
is TK. 80 lakhs and for Qs promise, the consideration is the house.

Types of Consideration
1. Past consideration: When the consideration of one party was given before the date of
the promise, it is said to be past. X does an assignment for Y in the month of March. In
April Y promises to pay X some money. This is referred as past consideration.
2. Present consideration: Consideration which moves simultaneously with the promise is
called present consideration.

Present consideration is also known as executed

consideration. A buys a book form a shop and pays immediately. The consideration from
A is present or executed consideration.

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3. Future consideration: when the consideration is to move at a future date, it is called

future consideration, also known as executor consideration.

In a contract the

consideration may be executor on both sides. A promise may support a promise.

Therefore, a promise to pay money at a future date for goods to be delivered at a future
date is a valid contract.

Rules (essential factors) of Consideration

1. Desire of the promisor is essential: the act done or loss suffered by the promise must
have been done or suffered at the desire of the promisor. An act done without any request
is a voluntary act and does not come within the definition of consideration.

For

Example: X sees Qs house on fire and helps in extinguishing it. Q did not ask for help
so X cannot demand payment for his services to extinguish the fire.
2. The consideration must be real: The consideration must have some value in the eye of
law. It must not be sham or illusory.
goods cannot support a contract.

The impossible acts and illusory or non-existing

Therefore, real consideration comes from good

consideration.
3. Public duty: Where the promise is already under an existing public duty, an express
promise to perform, or performance of, that duty will not amount to consideration. There
will be no detriment to the promisee or benefit to the promisor over and above their
existing rights and liabilities.
4. Promise to a stranger: A promise made to a stranger to perform an existing contract is
enforceable because the promisor undertakes a new obligation upon himself which can be
enforced by the stranger. X wrote to his nephew B, promising to pay him an annuityof
TK. 5000 in consideration of him marrying C. B was already engaged to marry C. The
fulfillment of Bs contract with C was consideration to support Xs promise to pay the
annuity.
5. Consideration need not be adequate: An agreement to which the consent of the party is
freely given is not void merely because the consideration I inadequate but the inadequacy
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of the consideration may be taken into account by the court in determining the question
whether the consent of the promisor was freely given. The reason behind this rule is that
it is impossible for the court to decide what adequate consideration is. The parties to the
contract must decide the quantum of consideration and if consent was freely give,, the
court will enforce the agreement. If the consideration is inadequate, the Court may hold
that consent of the promisor was not freely given and the agreement may become void.
6. The consideration must not be illegal, immoral, or opposed to public policy: If either
the consideration of the object of the agreement is illegal, the agreement cannot be
enforced. The same principle applies if the consideration is immoral or oppose to public
policy.
7. The consideration may be present, past, or future: It has been discussed earlier.
8. The consideration may move from the promise or from any other person: A person
granted some properties to his wife C directing her at the same time to pay an annual
allowance to his brother R. C also entered into an agreement with R promising to pay the
allowance to R. This agreement can be enforce by R even though no part of the
consideration received by C moved from R.

No Consideration No Contract Exceptions to the

Rule
Consideration is essential for the validity of a contract. A promise without consideration is a gift;
one made for a consideration is a bargain and is a gratuitous undertaking and cannot create a
legal obligation.

Exceptions
There are exceptional cases where a contract is enforceable even though there is no
consideration. The exceptions are listed below

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1. Natural love and affection: an agreement made without consideration is valid if it is

expressed in writing and registered under the law for the time being in force for the
registration of documents and is made on account of natural love and affection between
parties standing in near relation to each other. An agreement is valid when
i.
The agreement is made by a written document.
ii.
The document is registered according to the law relating to registration in force at
iii.
iv.

the time.
The agreement is made on account of natural love and affection.
The parties to the agreement stand in a near relation to each other.

2. Voluntary compensation: A promise made without any consideration is valid if it is a

promise to compensate wholly or in part, a person who has already voluntarily done
something for the promisor, or something which the promisor was legally compellable to
do. For Example: D finds Bs purse and gives it to him. B promises to give D TK. 500.
This is a contract.
3. Time-barred debt: a promise to pay, wholly or in part, a debt which is barred by the law
of limitation can be enforce if the promise is in writing and is signed by the debtor or his
authorized agent. Therefore, a promise to repay such a debt is without any consideration.
4. Agency: There is no required consideration to create an agency.
5. Completed gift: The rule no consideration no contract does not apply to completed gifts.
Nothing in this section shall affect the validity as between the donor and the done, of any
gift actually made.

Stranger to a Contract

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A stranger to a contract, one who is not a party to it, cannot file a suit to enforce it. But a stranger
to the consideration can sue to enforce it provided he is a party to the contract.

Exceptions
1. Beneficiaries in the case of trust: An agreement to create a trust can be enforced by the
beneficiary. D agrees to transfer certain properties to T to be held by T in trust for the
benefit of C. C can enforce the agreement though he was not a party to the agreement.
2. Assignee of a contract: In considerable circumstances, a party to a contract can transfer
right under the contract to third parties.
3. Family settlement: When family disputes are settled and is written down in a document,
it is called family settlement. Members of the family can enforce such agreements who
were not original parties to the settlement.
4. Acknowledgement or Estoppel: Where the promisor by his conduct, acknowledges
himself as an agent of the third party, a binding obligation is thereby incurred towards
him.

With the exception of the above cases, a contract cannot confer rights upon a person who is
not a party to it. A contract cannot impose a liability upon a person who is not a party to it.

Void and Voidable Agreements

Void Agreement
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According to the book, an agreement not enforceable by law is said to be void. It has no legal
effect and confers no rights on any person and creates no obligations.
An agreement which was legal and enforceable when it was entered into may subsequently
become void due to impossibility of performance, change of law or other reasons. When it
becomes void, the agreement ceases to have legal effect.

Voidable Agreement
An agreement which can be avoided or set aside some of the parties to it is a voidable agreement.
If not avoided, the agreement is a good contract. The book defines as an agreement which is
enforceable by law at the option of one or more of the parties thereto, but not an option of the
other or others, is a voidable contract.

Unenforceable Agreement
An agreement which cannot be enforced in a court of law, one or both of the parties, because of
some technical defect which can be nonpayment of the stamp duty.

Illegal Agreement
An illegal agreement is one which is against a law in force in the country and in our case
Bangladesh.

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Illegal agreement is void but void agreement is not necessarily illegal. An agreement may be
void but it may not be contrary to law. If the terms are uncertain in an agreement, it is void but
not illegal. On the other hand, when an agreement is illegal, other agreements which are
incidental or collateral to it are void. The courts will not enforce any agreement entered into
with the object of assisting or promoting an illegal transaction.
In conclusion, an agreement that satisfies all the essential elements of a contract and which is
enforceable through the courts is called valid contract.

Capacity of Parties

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One of the essential conditions for the validity of an agreement is that all the parties to it must
have capacity to enter into contracts. The Contract Act states every person is competent to
contract who is of the age of majority according to the law to which he is subject and who is of
sound mind, and is not disqualified from contracting by any law to which he is subject.
A person cannot enter a contract if:

he has not attained the age of majority according to the law to which he is subject.
he is not of sound mind.
he is disqualified from contracting by any law to which he is subject.

Minority
A minor is one who is not at the age of 18. After the age of 18, a person becomes a major. There
are two exceptions to this rule. The first rule is when a guardian of the minors person or
property is appointed by a court of law. The second rule is when a minors property is taken over
by the Court of Wards for management.
Minors are often exploited and ill treated. Law provides that it is the duty of the Court to protect
against minors lack of knowledge and experience.

Law regarding Minors Agreement

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1. Minors agreement is void: An agreement by a minor is absolutely void and inoperative.

A minor is supported to be incapable of judging what is good for him. He may not be
mature enough and the law protects him. With few exceptions, promises made by a
minor will not be enforced against him.
2. A Minor can be a Promisee: An agreement under which a minor has received a benefit
can be enforced as against the other party.
3. Minors Liability for Necessaries: The minors property is liable for the payment of a
reasonable price for necessaries supplied to the minor or to anyone whom the minor is
bound to support. The necessary article is determined by the status and social position of
the minor.
4. Law regarding compensation or Restitution: A minor cannot be compelled to
compensate for or refund any benefit which he has received under a void agreement. But
it has been held in a number of cases that the court may require the minor to make
compensation to the other party.
5. No Estoppel: A minor who falsely represents himself to be a major and thereby induces
another person to enter into an agreement with him cannot plead minority as a defense in
an action on the agreement. There can be no estoppels against a minor.

6. No Ratification: A minor on attaining majority cannot ratify an agreement entered into,

while he was a minor. A void agreement cannot be validated by any subsequent action
and a minors agreement is void ab initio.
7. No specific performance: An agreement by a minor being void, the court will never
direct specific performance of such an agreement by him.
8. No insolvency: A minor cannot be declared insolvent even though there are dues payable
from the properties of the minor.
9. Partnership by minor: A minor cannot enter into a contract of partnership but can be
admitted into the benefits of a partnership with consent of all the partners.

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10. A minor can be an agent: A minor can draw, make, indorse, and deliver negotiable
instruments so as to bind all parties except himself. A minor cannot be adjudicated an
insolvent. When a minor and a major jointly enter into an agreement with another
person, the minor has no liability but the contract can be enforced against the major if his
liability can be separately ascertained.
11. Position of Minors Guardian: An agreement entered into by the guardian of a minor on
his behalf stands on a different footing from an agreement entered into by the minor
himself. An agreement by a minor is void but his guardian on his behalf is valid provided
the obligations undertaken are within the powers of the guardian.
12. Company shares of a minor: A minor cannot apply for and be a member of a company. If
a minor is recorded as a member, the company has to rescind the transaction and remove
the name from the register.

Free Consent
Consent is said to be free when it is not caused by:
1. Coercion
2. Undue influence
3. Fraud
4. Misrepresentation or
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5. Mistake

COERCION
Coercion is: The committing or threatening to commit any act forbidden by the Indian Penal
Code, 1860. Or,The unlawful detaining, or threatening to detain any property to the prejudice
of any person whatever, with the intention of causing any person to enter into an agreement.

Some important facts about Coercion

Even threat to commit suicide amounts to coercion.

The threat need not proceed from the party to the contract; it may proceed from a third

person also.
A threat to file a civil or criminal suit is not forbidden by the Indian Penal Code.

Burden of Proof: Burden of Proof is that the consent was obtained by coercion shall lie upon the
aggrieved party who wants to set aside the contract.
Effect of Coercion: The contract is voidable at the option of the party whose consent was so
obtained. When the aggrieved party decides to set aside the contract, it must give back any
benefit received from the other party under the contract. Moreover, the other party need not
perform his part of the contract. If the aggrieved party does not opt to set aside the contract, it
works as a valid contract.

Elements of Coercion
The first and the foremost element is the coercion must be committing any act forbidden by
Indian Penal Code. Any act which is prohibited by Indian Penal Code, if we take help of that act
and compel a person, or threaten a person by that act and he or she enters into the contract that is
known as contract has been entered into by the coercion. A person must be threatening to commit

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any act, forbidden by Indian Penal Code. Now there are two things either we are committing an
act which is forbidden by Indian Penal Code or we are threatening to commit any act forbidden
by Indian Penal Code. There are two things we are committing an act or we are threatening to
commit an act forbidden by Indian Penal Code. Then we say the coercion has been exercised.
The third element in it is coercion must be unlawful detaining or threatening to detain any
property of other party then coercion is set to be exercised. When one party is unlawful detaining
the property or threatening to detain the property coercion is exercised.
For Example: A forcibly kidnaps the son of the B and asks the B that he will kill the son of
the B if B will not execute a promissory note of rupees one lac in his favor. Now under this
threatening B execute a promissory note of rupees one lac in favor of the A. Then we can say
now B has given this promissory note under coercion because A has threatened to B that he
will damage or he will kill the son of the B if he will not give a promissory note of one lakh
rupees.
Next point is coercion must be done with the intention of causing the other party to enter into the
contract. This point itself explain that one party when it is exercising the coercion on the other
party the intention is to enter into the contract, but we can analyze on this point that coercion has
been exercised. We are threatening another party or we are committing an act but there is no
intention that contract should be formulated out of it. Then it will be called that coercion was not
exercised because after exercising the coercion a contract should emerge out of it. If contract is
not emerging out of it by exercising the coercion then the aggrieved party will not have any
sufficient ground to go in the court of law and to say that they enter into the contract on behalf of
the coercion, because of the coercion because they dont have any proof to go into the court of
law, therefore if one party is exercising the coercion that should lead to the emergence of the
contract. The coercion may be initiated by any person. It is not necessary that offeror, if he gives
an offer to the offeree, the coercion should be exercised by the offeror himself. Even coercion
can be exercised by a stranger. If offeror appoint somebody on his behalf to exercise the coercion
and compel the other party to enter into the contract that will be a valid ground for the aggrieved
party to go in the court of law and to declare the contract either void or voidable. Meaning
thereby, even a stranger can be involved, it is not necessary that party himself should be directly
involved while exercising the coercion.
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Now next point related to the coercion is the IPC Indian Penal Code may or may not be enforce
where the coercion is exercised and the next important relevant rule is that in coercion, if we are
giving a threatening to file a suit against the other party then it will not be called as coercion.
For Example: A has given a loan to the B and B promised to the A that he will return the
loan within the three months. Now after the expiry of the three months B fails to return the loan
and after repetitive requests B is not returning the loan of the A and A threatens to the B
that he will go in the court of law to recover the loan. Now A in this case is threatening to the
B to go in the court of law. This threatening will not be included in the coercion because it is a
valid argument, it is a valid case and A is free to go in the court of law.

UNDUE INFLUENCE
Undue Influence is: Where relations subsisting between the parties are such that one of the
parties is in a position to dominate the will of the other and uses that position to obtain an unfair
advantage over the other.

When is a person in a position to dominate the will of the other:

Real or apparent authority.

Fiduciary relation.

Persons with affected mental capacity.

When a transaction appears to be unconscionable, it is presumed that the stronger party

has exercised undue influence over the weaker party.

Some important facts about undue influence

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Undue influence may be exerted by a person who is not a party to the contract.
Lack of foresight is not a ground for establishing a case of undue influence.
The law presumes undue influence in a contract with a pardanashin woman, and the
courts throw the burden on the other party to prove that undue influence was not
exercised.

Burden of proof: It is on the party who is in a position to dominate the will of the other.
Effect of undue influence: The contract is voidable at the option of the party whose consent was
so obtained. The court may direct the aggrieved party to refund the benefit whether in whole or
in part or set aside the contract without any direction for refund of benefit. If the aggrieved party
does not opt to set aside the contract, it works as any other valid contract.

Essentials of undue infl uence

Now we will talk about somehow the essentials and legal rules for valid undue influence, when
we can say that undue influence was exercised? The first and the foremost point is that one party
must be in a position to dominate the will of the other party and that I have explained the party
should be in a dominating position to impose its condition. Take the example of a doctor, take the
example of a lawyer, and take the example of a preacher. So they are in a dominating position by
using the dominating position you have taken the advantages out of it. Now when we talk about
the dominating position it means that dominating position sometime comes to you because of the
authority you have got. It can be called as an apparent authority. The authority which is available
and we are exercising the authority over the weaker party. Had undue influence be not exercised?
The weaker party would not have entered into the contract. So we have got the apparent
authority and by exercising that apparent authority that is giving us a dominating position.
Another important point is that the dominating party uses its superior position to obtain the
undue advantage. Suppose I am a stronger party but I am not using my position. Then it will be
called that I am not exercising the undue influence. All the three conditions of the undue
influence should be fulfilled simultaneously. The dominating position should be hold by the
party. He should exercise that dominating position and should have taken the advantage. I am in
a dominating position, as a University teacher I am in a dominating position before the students.
Students has to obey whatever I say but suppose I am not using my dominating position then it
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will not be called that undue influence was exercised. So dominating position should be used in
spite of being having a dominating position it should be used and it should be used to take the
undue advantage out of it. The weaker party is come to the pressure on unwillingly following the
stronger partys instruction. Now these are the three very important elements in an undue
influence.

Eff ects of Undue Infl uence

Now we come to the effect of the undue influence. The effect is also the same. The weaker party
can go in the court of law and can declare the contract voidable. Then when we say voidable
meaning thereby the same logic will be applicable here also, when weaker party exercises this
option which was available in the coercion. The same rule is applicable here. The weaker party
has to go in the court of law and has to prove here the burden of proof is on weaker party.
Weaker party will say that if the undue influence would not have been exercised on him the party
would not have entered into the contract. The contract emerged; contract kept up, contract got
framed, contract was enacted, contract was coined, contract was enter into by the weaker party
because stronger party dominated the will of the weaker party and burden of proof lies on the
weaker party.

Contingent Contract
Contingent contract is a contract to do or not to do something if some event. Collateral to such
contract does or does not happen. Insurance contract provide the best example of contingent
contracts. The performance of a contingent contract depends upon the happening or nonhappening of some future event.

Law of Contingent contract

According to the section 31 of the contract Act 1872, 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.
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A Contingent contract contains a condition promise. A promise is absolute or unconditional

when the promise undertakes to perform it in any event. A promise is conditional when
performance is due only if an even, collateral to the contract, does or does not happen.
Collateral means subordinate but from same source, connected but aside from main line.

Characteristic of Contingent contract

From the above discussion it follows that there are two essential Characteristics of Contingent
contract

The performance of such contracts depends on a Contingency on the happening or non

happening of the future event.

In a Contingent contract, the event must be collateral incidental to the contract.

The Contingency is uncertain. If the Contingency is bound to happen, the contract is due
to be performed in any case and is not therefore a Contingent contract.

Contingent contract

Wagering contract

A contingent contract has been defined as a A wager is a promise to pay money or money's
contract to do or not to do something, if some worth on the happening or non-happening of
event collateral to such contract does or does an uncertain event.
not happen. A contingent contract is wider in
scope.
A contingent contract thus includes a wager. In A contingent contract need not necessarily be a
other words a wagering agreement is a wager. Thus we can say that all wagering

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contingent agreement (contract).

agreements are contingent but all contingent

contracts are not wager.

In a contingent contract mutual promises are In case of a wagering agreement promise must
not necessary.

be mutual.

Example: A promises B to pay Rs. 1,000 if a Example: In wagering agreement A agrees to

ship does not return. Here A is making a pay B 20 rupees if it rains on Monday and if it
promise to pay but B is not making a similar does not rain B will pay 20 rupees to A. In the
promise to pay A. thus there is no mutuality of above example there is mutuality of agreement
promises in a contingent contract.

but this mutuality of promises is not necessary

in case of a contingent contract.

In a contingent contract there is an independent In

interest.

wagering

agreement

there

is

no

independent interest apart from the money to

be won or lost.

Example: A gets his house insured. It is a Example: A promises to pay Rs. 100 to B if it
contingent contract as A has independent rains on Monday. It is a wagering agreement as
interest in this case.

A has no independent interest.

In a contingent contract determination of an In a wagering agreement determination of an

uncertain event is not the sole condition.

uncertain event is the main condition of the

A contingent contract is valid.

contract.
A wagering agreement is void/ illegal.

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Quasi Contract
A valid contract contains certain essential elements. It is possible that law under certain
circumstance, conduct and relationship of parties may impose obligations on one party and give
right to other party. There is no offer and acceptance. In fact quasi contracts are not contracts are
not contracts at all. The law considers them as relations resembling those of contracts. These
relations are enforceable as if they were contracts in real sense. As per English law these
contracts are called quasi contracts or implied contracts. Quasi contract is a kind of contract by
which one party pays money for something done or expense incurred by another party. There is
no contract between parties but law makes out a contract for them. Such contract is called quasi
contract. The basis of such contract is that no man should become rich at the wealth of other.

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Claim for necessaries supplied

If a person, incapable of entering into a contract, or any one whom he is legally bound to
support, is supplied by another person with necessaries suited to his conditions in life, the person
who as furnished such supplies is entitled to be reimbursed from the property of such incapable
person.
Illustration: A supplied B, a lunatic, with necessaries suitable to his condition in life. A is
entitled to be reimbursed from Bs property.
Illustration: A supplies the wife and children of B a lunatic with necessaries suitable to their
condition in life. A is entitled to be reimbursed from Bs property.
1. Payment by interested person: A person, who is interest in the payment of money
which another is bound by law to pay, and who therefore pays it, is entitled to be
reimbursed by the other.
Illustration: B holds lands in Bengal in a lease granted by A the zamindar. The revenue payable
by A to the Government being in arrear, his land is advertised for sale by the Government under
the revenue law, the consequence of such sale will be the annulment of As lease. B, to prevent
the sale and the consequent annulment of his own lease, pays to the Government the sum due
from A. A is bound to make good to B the amount so paid.
2. Liability to pay for non-gratuitous Acts: Where a person lawfully does anything for
another person, or delivers anything to him, not intending to do so gratuitously, and such
other person enjoys the benefit thereof, the latter is bound to make compensation to the
former in respect of, or to restore the thing so done or delivered. [Section 70]
Illustration: A, a tradesman, leaves goods at Bs house by mistake. B treats the goods as his
own. He is bound to pay for them.
Illustration: A saves Bs property from fire. A is not entitled to compensation from B, if the
circumstance show that he intended to act gratuitously.
3.

Responsibility for finder of goods: A person, who finds goods belonging to another and
takes them into his custody, is subject to the same responsibility as bailee. [Section 71]
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Illustration: H picked up a diamond on the floor of Fs shop and handed it over t F to keep it till
the true owner appeared. In spite of the wide advertisement in newspapers no one appeared to
claim it. After the lapse of some week H tendered to F the cost of advertisement and an
indemnity bond and requested to him to return the diamond to him. F refused to do so. Held, F
must return the diamond to H as he was entitled to retain goods as against everyone except the
true owner.
4. Liability for payment of money or delivery of anything by mistake or under
coercion: A person to whom money has been paid or anything delivered by mistake or
under coercion must repay or return it.
Illustration: A and B jointly owe 100 rupees to C. A alone pays the amount to C and B, not
knowing this fact, pays 100 rupees over again t C. C is bound to repay the amount to B.
Illustration: A railway company refuses to deliver up certain goods to the consignee, except
upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order
obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.

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