Contract 5.

Death of promisor Contract of Guarantee means a contract to perform the promises made
Act and agreement enforceable by law or discharge the liabilities of the third person in case of his failure to
6. Lapse of time
discharge such liabilities.
Purpose of contract a. Time period decided in contract
 Law full purpose b. Time period settled under limitation act
 Moral purpose Salient features of contract of Guarantee
Mistake
 Not to injure any party and other person In contract law, a mistake is an erroneous belief, at contracting, that 1. A valid contract
Essentials of contract certain facts are true. It can be argued as a defense, and if raised 2. Written or oral
1. Free consent of parties successfully can lead to the agreement in question being found void ab 3. Consideration
2. Lawful and moral object initio or voidable, or alternatively an equitable remedy may be provided 4. Numbers of parties
3. Acceptance by the courts. 5. Tripartite agreement
4. Lawful consideration 6. Nature of liability
Kinds of Mistake and effects of mistakes 7. Arising of liability of security
5. Capacity of party
i. Mistake of fact 8. Express or implied contract of guarantee
6. Certainty of party
ii. Mistake of law Contract of sale of goods:
7. Legal relations Mistake of fact is a contract, whereby, the seller transfers or agrees to transfer
8. Enforceable by law Overview. Any mistaken belief other than a mistake of law. Examples the property in goods to the buyer for a price. There can be a
Essentials of valid acceptance are: include erroneous beliefs about the meaning of some term or about the contract of sale between one part-owner and another.
 Free consent identity of some person. In criminal law, a mistake of fact can usually ESSENTIALS ELEMENTS OF A CONTRACT OF SALE
 Correspondence between proposal and acceptance operate as a defense so long as it is reasonable. The following six features are essential elements of any contract of sale
 Communication of acceptance of goods.
 a. Unilateral Mistake

Absolute acceptance
before revocation of proposal b. In other words, a unilateral mistake occurs when only  Goods

 Who can make acceptance?

one party is mistaken as to the subject matter or the  Price
terms contained in the contract agreement. This type
 Same meeting of mistake is generally more common than other types of  Two parties
Consideration
Payment or money. A vital element in the law of contacts, consideration
contract mistakes, such as a mutual mistake (an error  Transfer of ownership

is benefit which must be bargained for between the parties, and is the
that is shared by both parties).
 Party’s own mistake
 All Essentials of a Valid Contract of Sale
essential reason to a party entering into a contract.  Mistake cause by fraud etc.  Includes both a ‘sale‘ and ‘an agreement to sell‘
Rules relating to consideration c. Bilateral Mistake Ingredients of contract of sale
 Lawful consideration An error on the part of both parties of a transaction regarding  Competent parties
 Doubtful consideration the same matter, such as if two people sign a contract under a
 Immoral consideration certain understanding, while the contract actually conveys a  Mutual consent
 Imposible consideration
different meaning than they each may have expected.  Transfer of property
Essentials of bilateral mistake
 Unlawful consideration
 Mistake of both parties  Consideration
 Inadequate consideration
Parties of contract
 Relation between mistake and fact  Oral or written agreement

Competency of parties
Relation between fact & agreement
Types of Bilateral Mistake
 Absolute or conditions
i. Major Difference between sale and agreement to sell
 Mistake about the subject matter
ii. Minor  Mistake about the price of subject matter  Nature of contract
iii. Person of sound mind  Mistake about the quality of subject matter  Risk of loss
iv. Person of unsound mind  Mistake about the quantity of subject matter
 Lunatic  Mistake about the identity of the subject matter  Types of goods
 Idiot  Mistake about the ownership of subject matter  Consequences of breach


Insane
Intoxicated Obligation of a person, who has received advantage under void
 Transfer of property

Novation Contract agreement or contract, which has been become void  Jus in tem and jus in personum
Novation, in contract law and business law, is the act of – replacing an Delivery
obligation to perform with another obligation; or. adding an obligation Transfer of possession from one person to another person. Transfer of
goods from seller to buyer
to perform; or. replacing a party to an agreement with a new party.
65. Obligation of person who has received advantage under void Modes of Delivery:
Essentials of Novation of Contract
agreement, or contract that becomes void i. Actual delivery
I. Extinction of old contrat and creation of new valid ii. Symbolic delivery
contract iii. Implied or constructive delivery.
II. Free consent of the parties When an agreement is discovered to be void, or when a contract becomes
III. Creation of new right void, any person who has received any advantage under such agreement
IV. Specific liability present in old contract or contract is bound to restore, it, or to make compensation for it, to the
Contingent Contract person from whom he received it.Illustrations
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.
Illustration. A contracts to pay to B Rs. 10,000 if B's house is burnt. This (a) A pays B 1,000 rupees, in consideration of B's promising to marry C,
is a contingent contract. A's daughter. C is dead at the time of promise. The agreement is void, but
B must repay A the 1,000 rupees.
Enforcement or performance of contingent contract
(i) Happening of a future uncertain event (b) A contracts with B to deliver to him 250 maunds of rice before the first
(ii) Non-Happening of a future uncertain event of May. A delivers 130 maunds only before that day, and none after. B
(iii) Furture conduct of a live person retains the 130 maunds after the first of May. He is bound to pay A for
them.
(iv) Happening event within fixed time
(v) Non- Happening event within fixed time
(vi) Impossible event (c) A, a singer, contracts with B, the manager of a theatre, to sing at his
theatre for two nights in every week during the next two months, and B
Discharge of contract engages to pay her hundred rupees for each night's performance. On the
Discharge of a Contract Law and Legal Definition. Discharge of sixth night, A willfully absents herself from the theatre, and B, in
a contract means termination of a contract. It is the act of making consequence, rescinds the contract. B must pay A for the five nights on
a contract or agreement null. A discharged contract refers which she had sung.
to contract that is fully performed.

Various ways in which contract can be discharged: (d) A contracts to sing for B at a concert for 1,000 rupees, which are paid
1. Performance of contract in advance. A is too ill to sing. A is not bound to make compensation to B
for the loss of profit which B would have made if A had been able to sing,
a. Fulfillment of promise
b. Fulfillment of conditions and obligations but must refund to B the 1,000 rupees paid in advance.
c. Fulfillment within decided time period
Void agreement and exceptions to example of void agreement
2. Agreement or consent of parties to contract
a. Consent of both the parties to contract Legally, a void agreement means which is not enforceable by
b. Release from obligations law.the contract or agreement is no longer enforceable.
c. Free consent
i. Invalidity
3. Breach of contract
a. Non-observation of contractual obligations ii. Performance
b. Break if contractual conditions iii. Binding
4. Frustration iv. Enforcement
a. Change in circumstances v. Legal effect
b. Non fault of either of parties vi. Not rights and obligations
c. impossibility