#Dharmodas Ghose
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Mohori Bibee v. Dharmodas Ghose (1903)
Mohori Bibee v. Dharmodas Ghose, also known as the Minor’s Contract Case, is a landmark legal case in Indian jurisprudence. The case was decided by the Privy Council in London in 1903 and has had a significant impact on contract law in India.
The case involved a minor named Dharmodas Ghose who mortgaged his property to a moneylender named Mohori Bibee. At the time of entering into the mortgage…
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#Contract law#Dharmodas Ghose#Indian Contract Act#Landmark Case#Legal Capacity#Legal Precedent#Minor&039;s Contract Case#Mohori Bibee#Privy Council#Voidability of Contracts
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MOHORI BIBEE VS DHARMODAS GHOSE (Case Summary)
MOHORI BIBEE VS DHARMODAS GHOSE (Case Summary)
MOHORI BIBEE VS DHARMODAS GHOSE ILR (1903) 30 Cal 539 (PC)- Is a contract made by a minor void or voidable? This question was frequently asked before the Privy council. The ambiguity arose because neither Section 10 nor Section 11 of the Indian contract act addresses the issue. Section 10 requires that the parties to a contract must be competent and Section 11 declares that a minor is not…
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#case summary#DHARMODAS GHOSE#landmark judgement#LAW#lawyersgyan#MOHORI BIBEE#MOHORI BIBEE VS DHARMODAS GHOSE
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How to Draft a Lawyer-Friendly Contract ?
PUBLISHED ON 24.08.2021 BY MS. APARNA JAIN, MS. HARINDER NARVAN, MS. AASHRIKA AHUJA AND MR. DEBANJAN ROY CHOUDHURYINTRODUCTION
In legal parlance, a contract refers to any agreement which can be enforced by law. It includes offer by one party and acceptance of that offer by the other party in exchange of lawful consideration. All agreements are contracts if they are made with the free consent of parties who are competent to contract in exchange of a lawful consideration with a lawful object. The contract is a foundation of any business and the manner in which contract and agreements are drafted between the parties squarely determine the course of action the business will take in the future. At Knowledgentia, which is the best litigation firm in India, we have a competent team where we ensure that contract drafting and goals set by the parties for their businesses are simple, clear and specific. Contract drafting is a practice that involves specific techniques as
well as skill.
THE ESSENTIALS OF A VALID CONTRACT:-
to be formulated at least between two parties.
Parties should be competent to contract-free consent.
Involving a lawful consideration.
At Knowledgentia Consultants being the best corporate international law firm in India, we ensure to include specific details while drafting contracts and agreements for our clients including the details regarding parties to the contract, the date of the contract, the place of arrangement and the addresses of the place of business of the contracting parties. The contract also includes the list of parties expected to be bound, their lawful status, the place of business and the change in party proprietorship. Offering services across borders and global IPR Protection, we ensure that all contracts include declarative statements of facts and intentions. These are essential as they set out the phase of the agreement, giving the essential content, structure and setting of the transaction. All contracts are unique as the parties involved have unique preferences, line of business as well as arrangements between them but we ensure that all contracts that we draft on behalf of our clients express and record each and every term of agreement between the parties.
Few cases are illustrated as below that testify to the fact how our team at Knowledgentia takes into account all nitty gritties involved around contract drafting by keeping ourselves updated about significant legal principles. This is why you need not think twice before consulting with Knowledgentia which is the best law firm in India for drafting as well review of your contracts.
LALMAN SHUKLA VS. GAURI DUTT [1913] 40 ALJ 489
The case between the plaintiff Lalman Shukla and the defendant Gauri Dutt examined the validity of the contract in the absence of prior acceptance. According to the judgement given by the Allahabad high court, a contract without acceptance is void. Therefore, the communication of the proposals means that the party to whom the offer or the proposal is made must come to the knowledge of the other party before accepting the proposal.
MOHIRI BIBEE VS. DHARMODAS GHOSE ILR (1903) 30 CAL 539
In this case the argument given was that as per sections 64 and 65 of the Indian Contract Act, 1872 if any contract is void or voidable then the benefits received by both parties have to be restored. The Court cancelled this contention and stated that the said sections of the Indian Contract Act, 1872 are not applicable because it states that there has to be a contract and there was no contract as one party was minor.
UNION OF INDIA V. BHIM SEN WALAITI RAM, (1969), 3 SCC 146
The Court held that acceptance of any offer may be either absolute or conditional. If the acceptance is conditional, offer can be withdrawn at any moment until absolute acceptance has taken place.
Whether it be contract drafting or review of contracts, Knowledgentia can be your trusted partner in all matters concerning efficient and smooth conduct of your business through our expertise in securing your business interests through drafting contracts that are clear and succinct in expression leaving no room for any ambiguity.
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Mohori Bibee V/S Dharmodas Ghose
Mohori Bibee V/S Dharmodas Ghose
All of us enter into a number of contracts everyday knowingly or unknowingly and each contract creates some rights and duties on the contracting parties. Hence, Indian Contract Act of 1872, being of skeletal nature, deals with the proper enforcement of these rights and duties. Mohori Bibee V/S Dharmodas Ghose is a case that covers the ambit of minor’s agreement, it basically deals with a minor’s…
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Mohori Bibee v. Dharmodas Ghose(1903)
Mohori Bibee v. Dharmodas Ghose(1903) - Case Analysis
By Amit Sheoran (Symbiosis Law School, Nagpur)
Appellant:-Mohori Bibee
Respondent:-DharmodasGhose
Bench:-Sir Andrew Scoble, Lord Lindley, Lord Davy, Sir Andrew Wilson, Lord Mcnaughton, Sir Ford North
Facts of the case
In this case, Dharmodas was the defendant. He was minor and he was also the sole owner of the property (immovable). As per Calcutta High court, The mother of Dharmodas has…
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Essentials of a Valid Contract
This article is written by Abhay Pandey, student, K.S. Saket P.G. College, Ayodhya.
Introduction
A Contract is a legally binding agreement that exists between two or more parties to do or abstain from doing something.
According to section 2(h) of the Indian Contract Act,1872, ‘An agreement which is enforceable by law is a Contract’.
Pollock- “Every agreement and promise enforceable by law is a contract”.
Salmond- “A contract is an agreement creating and defining obligation between two or
or more persons by which rights are acquired by one or more to acts or
forbearance on the part of others”.
Anson- “The law of contract is that branch of law which determine the circumstances
in which a promise shall be legally binding on the person making it’.
Now after examining the definitions of contract we can say that-
Contract = Agreement + Enforceability
Illustration- There is an agreement between A and B that A will construct a house for B, and B will pay Rs. 10 lakhs to A.The agreement between A and B is a contract because it is enforceable by law.
Essential elements of a valid Contract
Offer and Acceptance
Intention to create a Legal relationship
Lawful Consideration
Competent parties
Free consent
Lawful Object
Not expressly declared void
Offer and Acceptance: There must be a lawful offer and acceptance for the formation of an agreement. The adjective ‘lawful’ implies that the offer and acceptance must satisfy the requirements of the contract act in relation thereto. The offer or proposal is defined under section 2(a) of the Contract Act. section 2(b) of the Act provides that when an offer is accepted then it becomes a promise.
Case laws
Felthouse v. Bindley– In this case, it was held that “An offer cannot prescribe silence
mode of acceptance”.
Carlil v. Carbolic Smoke Ball Co. – In this case, a medical firm carbolic smoke ball company advertised that any person caught influenza after using the medicine of the company (viz. Carbolic smoke ball), for a specified period, would be 100 pounds. Mrs. C, after using the medicine (as prescribed by the company) nevertheless caught influenza. It was held that she was entitled to recover 100 pounds because the Company’s advertisement was something more than an invitation to transact business.
Lalman Shukla v Gauri Dutt – In this case, it was held that ‘The mere knowledge of an offer does not imply acceptance by the offeree’.
Intention to create a legal relationship: There must be a clear intention among the parties that the agreement should be attached by legal consequences and create a legal obligation.
Agreements of a social or domestic nature do not contemplate a legal relationship, and as such, they do not give rise to a contract.
Case Laws.
Balfour v. Balfour– In this case, it was held that if an agreement is domestic in nature then that agreement is not enforceable by law.
Jones v. Padvattan– In this case, it was held that domestic agreements are presumed not to be legally binding unless there is a clear intention.
Lawful Consideration- (Quid Pro Quo)– Third essential element of the valid contract is a consideration. The term consideration has been defined under section 2(d) of the act.
In Currie v. Misa, Justice Lush defined consideration “A valuable Consideration in the sense of law may consist either in some Rights, Interest, Profit or Benefit accruing to one party or some forbearance detriment, loss or responsibility given, suffered or undertaken by the other’.
Section 25 of the Act declares that an agreement without the consideration is void.
Competent parties: Section 11 of the act declares that who are competent to contract. According to this section the contracting parties
Section 11 of the Act states the criteria of parties competent to contract, which is as follows:
Must attain the age of majority ( an agreement with a minor is void ab initio – Mohri bibi v. Dharmodas Ghose,1903 )
Person of sound mind-
The person should not be disqualified by law
Free consent- Free consent of the parties is another essential of the contract. Section 14 of the Act defined the term free consent as follows-
consent is said to be free when it is not caused by –
Coercion (S.15)– Committing any act forbidden by The Indian Penal Code 1860 or unlawful detaining of property, or threatening to commit these acts. Chickam Amiraju v. Chickam Sheshamma – Threat to suicide amounts to coercion
Undue influence (S.16)– The use by one party to the contract of his dominant position for obtaining an unfair advantage over the other party.
Fraud (S.17)– In Derry v. Peek, It was held that representation made with reckless indifference amount to fraud.
Misrepresentation (S.18)– It means a false representation.
Mistake (S. 20, 21 and 22): there are two types of mistakes i.e. mistake fact and mistake of law.
Lawful object – For the formation of a contract, it is also necessary that the parties to an agreement must agree to a lawful object. The object must not be fraudulent or illegal or immoral or against the public policy or must not imply injury to the person or the other of the reason mentioned above the agreement is void. if A forces B to sign a contract for murdering C. This is not a lawful object. Hence, the contract will be void.
Not expressly declared void- An agreement must not be one of those, Which have been expressly declared to be void.
For example, agreement without consideration(S.25), agreement in restraint of marriage(S.26), agreement in restraint of trade(S.27), agreements in restraint judicial proceedings(S.28), an agreement by way wager(S.30) etc.
Conclusion
Contracts play a very important role in the day-to-day life of every person. Contracts or agreements between various parties are framed and validate by the Contract Act. So for the formation of a contract, the above-given conditions must be fulfilled by the parties.
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On the 20th of July 1895 the Respondent Dharmodas Ghose executed a mortgage in favour of Brahmo Dutt, a money-lender carrying on business at Calcutta and elsewhere, to secure the repayment of Rs. 20,000 at 12 per cent, interest on some houses belonging to the Respondent.
Mohori Bibee and Ors v. Dharmodas Ghose
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Essentials of a Valid Contract
This article is written by Abhay Pandey, student, K.S. Saket P.G. College, Ayodhya.
Introduction
A Contract is a legally binding agreement that exists between two or more parties to do or abstain from doing something.
According to section 2(h) of the Indian Contract Act,1872, ‘An agreement which is enforceable by law is a Contract’.
Pollock- “Every agreement and promise enforceable by law is a contract”.
Salmond- “A contract is an agreement creating and defining obligation between two or
or more persons by which rights are acquired by one or more to acts or
forbearance on the part of others”.
Anson- “The law of contract is that branch of law which determine the circumstances
in which a promise shall be legally binding on the person making it’.
Now after examining the definitions of contract we can say that-
Contract = Agreement + Enforceability
Illustration- There is an agreement between A and B that A will construct a house for B, and B will pay Rs. 10 lakhs to A.The agreement between A and B is a contract because it is enforceable by law.
Essential elements of a valid Contract
Offer and Acceptance
Intention to create a Legal relationship
Lawful Consideration
Competent parties
Free consent
Lawful Object
Not expressly declared void
Offer and Acceptance: There must be a lawful offer and acceptance for the formation of an agreement. The adjective ‘lawful’ implies that the offer and acceptance must satisfy the requirements of the contract act in relation thereto. The offer or proposal is defined under section 2(a) of the Contract Act. section 2(b) of the Act provides that when an offer is accepted then it becomes a promise.
Case laws
Felthouse v. Bindley– In this case, it was held that “An offer cannot prescribe silence
mode of acceptance”.
Carlil v. Carbolic Smoke Ball Co. – In this case, a medical firm carbolic smoke ball company advertised that any person caught influenza after using the medicine of the company (viz. Carbolic smoke ball), for a specified period, would be 100 pounds. Mrs. C, after using the medicine (as prescribed by the company) nevertheless caught influenza. It was held that she was entitled to recover 100 pounds because the Company’s advertisement was something more than an invitation to transact business.
Lalman Shukla v Gauri Dutt – In this case, it was held that ‘The mere knowledge of an offer does not imply acceptance by the offeree’.
Intention to create a legal relationship: There must be a clear intention among the parties that the agreement should be attached by legal consequences and create a legal obligation.
Agreements of a social or domestic nature do not contemplate a legal relationship, and as such, they do not give rise to a contract.
Case Laws.
Balfour v. Balfour– In this case, it was held that if an agreement is domestic in nature then that agreement is not enforceable by law.
Jones v. Padvattan– In this case, it was held that domestic agreements are presumed not to be legally binding unless there is a clear intention.
Lawful Consideration- (Quid Pro Quo)– Third essential element of the valid contract is a consideration. The term consideration has been defined under section 2(d) of the act.
In Currie v. Misa, Justice Lush defined consideration “A valuable Consideration in the sense of law may consist either in some Rights, Interest, Profit or Benefit accruing to one party or some forbearance detriment, loss or responsibility given, suffered or undertaken by the other’.
Section 25 of the Act declares that an agreement without the consideration is void.
Competent parties: Section 11 of the act declares that who are competent to contract. According to this section the contracting parties
Section 11 of the Act states the criteria of parties competent to contract, which is as follows:
Must attain the age of majority ( an agreement with a minor is void ab initio – Mohri bibi v. Dharmodas Ghose,1903 )
Person of sound mind-
The person should not be disqualified by law
Free consent- Free consent of the parties is another essential of the contract. Section 14 of the Act defined the term free consent as follows-
consent is said to be free when it is not caused by –
Coercion (S.15)– Committing any act forbidden by The Indian Penal Code 1860 or unlawful detaining of property, or threatening to commit these acts. Chickam Amiraju v. Chickam Sheshamma – Threat to suicide amounts to coercion
Undue influence (S.16)– The use by one party to the contract of his dominant position for obtaining an unfair advantage over the other party.
Fraud (S.17)– In Derry v. Peek, It was held that representation made with reckless indifference amount to fraud.
Misrepresentation (S.18)– It means a false representation.
Mistake (S. 20, 21 and 22): there are two types of mistakes i.e. mistake fact and mistake of law.
Lawful object – For the formation of a contract, it is also necessary that the parties to an agreement must agree to a lawful object. The object must not be fraudulent or illegal or immoral or against the public policy or must not imply injury to the person or the other of the reason mentioned above the agreement is void. if A forces B to sign a contract for murdering C. This is not a lawful object. Hence, the contract will be void.
Not expressly declared void- An agreement must not be one of those, Which have been expressly declared to be void.
For example, agreement without consideration(S.25), agreement in restraint of marriage(S.26), agreement in restraint of trade(S.27), agreements in restraint judicial proceedings(S.28), an agreement by way wager(S.30) etc.
Conclusion
Contracts play a very important role in the day-to-day life of every person. Contracts or agreements between various parties are framed and validate by the Contract Act. So for the formation of a contract, the above-given conditions must be fulfilled by the parties.
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Effect of Minority on the Agreement
This article is written by Abhay Pandey, Student, K.S. Saket P.G. College, Ayodhya.
Minor’s Agreements
Introduction
From section 11 of the Indian Contract Act, 1872, it becomes clear that a person who will be competent to contract if he has attained the age of majority. According to Section 3 of the Indian Majority Act, 1875, a person shall be deemed to have attained his majority when he completes the age of 18 years, but if for person or property or both the minor, a guardian has been appointed by the court, he will be deemed to have attained his majority when he completes the age 21 years.
However, it is to be noted that the Indian Majority Act has been amended in the year 2000, by this amendment the age of majority has been made uniform age of majority is 18 years.
Nature of minor’s agreement
From section 10 and section 11 of the Indian Contract Act, it is clear that the person who, by reason of infancy, is incompetent to contract, he cannot make a contract within the meaning of the Indian Contract Act. Consequently, a minor’s agreement is void ab initio and can not be enforced by either of the party to the contract.
Mohri Bibi v. Dharmodas Ghose (1903)
The plaintiff, A, while he was a minor, mortgaged his property in favor of the defendant, B, who was a moneylender to secure a loan of Rs. 20,000. The actual amount of loan given was less than Rs. 20,000. At the time of the transaction the attorney, who acted on behalf of the moneylender, had the knowledge that the plaintiff is a minor. The plaintiff brought an action against the defendant stating that he was a minor when the mortgage was executed by him and, therefore, the mortgage was void and inoperative and the same should be canceled. By the time of appeal to Privy Council the defendant, B died and the appeal was prosecuted by his executors. The defendant, amongst other points, contended that the plaintiff had fraudulently misrepresented his age and therefore no relief should be given to him.
The court held that unless the parties have competence under section 10, no agreement is a contract.
Exceptions of minor’s agreement
Restitution of benefits: In English law, when the minor makes a false representation as to his age and induces other parties to make a contract with him. The minor can be compelled to return the benefit or property received under the contract only when it is identifiable and still in minor’s possession. While in Indian law the minor’s agreement is void ab initio and therefore cannot be enforced by either party even when minor falsely represents to be major and induces other parties to make a contract with him.
Case Laws
Khangul v. Lakha Sing: In this case, the Lahore High Court has held that the power to give equitable relief was more extensive in India than in England and ordered monetary compensation in a case where the minor had misrepresented his age.
Ajudhia Prasad v. Chandan Lal: In this case, it was held that the mortgagee was not entitled to a mortgage decree, nor was he entitled to a decree for the principal money under any equitable principles other than those recognized in England.
No estoppel against a minor: Section 115 of the Indian Evidence Act, 1872, lay down the law of estoppel but the Indian Contract Act make it clear that a minor is incompetent to contract thus a minor cannot incur liability under any contract and the rule of evidence cannot be invoked to defeat this section.
Case Law
Gadigeppa Bhimappa Meti vs Balangowda Bhimangowda: In this case, the Bombay High Court has observed that there can be no estoppel against an act of parliament or against an act of the legislature and the principle of estoppel cannot be invoked against the plain provision of the statute.
Ratification of minor’s agreement: An agreement with a minor is void and therefore it cannot be ratified by the after attaining the age of majority and the consideration given to the minor during minority cannot be a valid consideration for the promise made by him after attaining the majority.
Contract of apprenticeship: Under Indian Apprentice Act, 1850, a contract of apprentice entered by guardian on his behalf is binding on the minor.
Necessities supplied to a minor(section 68): The general rule is that if a person is incapable of entering into a contract is supplied by another person with necessities of life, the person who has supplied is entitled to get reimbursement from the property of such incompetent person, including a child as well.
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 B’s property.
But if the minor has no property of his own, then he cannot be bound to reimburse the other person.
Minor as a partner
According to Section 30 of the Indian Partnership Act, 1932, a minor cannot be a partner but can be admitted into the benefits of partnership.
Case laws
In Commissioner of Income Tax v. Dwarka Das, it was held that an agreement of partnership making a minor full-fledged partner is invalid qua all partners.
In Gurusaran Lal v. Seral Kumar, it was held that if the guardian of a minor agrees to get a share of profits in lieu of interest on the minor’s advanced by the guardian to a partnership, the agreement is not void.
Conclusion
From the above discussion, it is very clear that an agreement with a minor is void ab initio in India. A minor is generally liable in tort, but he cannot be liable for what was in truth a breach of contract by framing the action ex delicto. In Manmatha Kumar Saha v. Exchange Loan Co., it was held that ‘You cannot convert a contract into a tort to enable to sue minor’.
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Effect of Minority on the Agreement
This article is written by Abhay Pandey, Student, K.S. Saket P.G. College, Ayodhya.
Minor’s Agreements
Introduction
From section 11 of the Indian Contract Act, 1872, it becomes clear that a person who will be competent to contract if he has attained the age of majority. According to Section 3 of the Indian Majority Act, 1875, a person shall be deemed to have attained his majority when he completes the age of 18 years, but if for person or property or both the minor, a guardian has been appointed by the court, he will be deemed to have attained his majority when he completes the age 21 years.
However, it is to be noted that the Indian Majority Act has been amended in the year 2000, by this amendment the age of majority has been made uniform age of majority is 18 years.
Nature of minor’s agreement
From section 10 and section 11 of the Indian Contract Act, it is clear that the person who, by reason of infancy, is incompetent to contract, he cannot make a contract within the meaning of the Indian Contract Act. Consequently, a minor’s agreement is void ab initio and can not be enforced by either of the party to the contract.
Mohri Bibi v. Dharmodas Ghose (1903)
The plaintiff, A, while he was a minor, mortgaged his property in favor of the defendant, B, who was a moneylender to secure a loan of Rs. 20,000. The actual amount of loan given was less than Rs. 20,000. At the time of the transaction the attorney, who acted on behalf of the moneylender, had the knowledge that the plaintiff is a minor. The plaintiff brought an action against the defendant stating that he was a minor when the mortgage was executed by him and, therefore, the mortgage was void and inoperative and the same should be canceled. By the time of appeal to Privy Council the defendant, B died and the appeal was prosecuted by his executors. The defendant, amongst other points, contended that the plaintiff had fraudulently misrepresented his age and therefore no relief should be given to him.
The court held that unless the parties have competence under section 10, no agreement is a contract.
Exceptions of minor’s agreement
Restitution of benefits: In English law, when the minor makes a false representation as to his age and induces other parties to make a contract with him. The minor can be compelled to return the benefit or property received under the contract only when it is identifiable and still in minor’s possession. While in Indian law the minor’s agreement is void ab initio and therefore cannot be enforced by either party even when minor falsely represents to be major and induces other parties to make a contract with him.
Case Laws
Khangul v. Lakha Sing: In this case, the Lahore High Court has held that the power to give equitable relief was more extensive in India than in England and ordered monetary compensation in a case where the minor had misrepresented his age.
Ajudhia Prasad v. Chandan Lal: In this case, it was held that the mortgagee was not entitled to a mortgage decree, nor was he entitled to a decree for the principal money under any equitable principles other than those recognized in England.
No estoppel against a minor: Section 115 of the Indian Evidence Act, 1872, lay down the law of estoppel but the Indian Contract Act make it clear that a minor is incompetent to contract thus a minor cannot incur liability under any contract and the rule of evidence cannot be invoked to defeat this section.
Case Law
Gadigeppa Bhimappa Meti vs Balangowda Bhimangowda: In this case, the Bombay High Court has observed that there can be no estoppel against an act of parliament or against an act of the legislature and the principle of estoppel cannot be invoked against the plain provision of the statute.
Ratification of minor’s agreement: An agreement with a minor is void and therefore it cannot be ratified by the after attaining the age of majority and the consideration given to the minor during minority cannot be a valid consideration for the promise made by him after attaining the majority.
Contract of apprenticeship: Under Indian Apprentice Act, 1850, a contract of apprentice entered by guardian on his behalf is binding on the minor.
Necessities supplied to a minor(section 68): The general rule is that if a person is incapable of entering into a contract is supplied by another person with necessities of life, the person who has supplied is entitled to get reimbursement from the property of such incompetent person, including a child as well.
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 B’s property.
But if the minor has no property of his own, then he cannot be bound to reimburse the other person.
Minor as a partner
According to Section 30 of the Indian Partnership Act, 1932, a minor cannot be a partner but can be admitted into the benefits of partnership.
Case laws
In Commissioner of Income Tax v. Dwarka Das, it was held that an agreement of partnership making a minor full-fledged partner is invalid qua all partners.
In Gurusaran Lal v. Seral Kumar, it was held that if the guardian of a minor agrees to get a share of profits in lieu of interest on the minor’s advanced by the guardian to a partnership, the agreement is not void.
Conclusion
From the above discussion, it is very clear that an agreement with a minor is void ab initio in India. A minor is generally liable in tort, but he cannot be liable for what was in truth a breach of contract by framing the action ex delicto. In Manmatha Kumar Saha v. Exchange Loan Co., it was held that ‘You cannot convert a contract into a tort to enable to sue minor’.
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Conditions When an Agreements becomes a Contract
This article is written by Abhay Kumar Pandey, Student, K.S Saket P.G college, Ayodhya.
“All contracts are agreements but all agreements are not contracts”
The first thing we have to know what is a contract. The definition of contract is given under section 2(h) of the Indian Contract Act, 1872, as follows:
“An agreement enforceable by law is a contract”.
Similarly, Sir Fredrick Pollock has defined the word “Contract” as follows:-
“Every agreement and promise enforceable at law is a contract”.
Anson has defined ‘contract’ in the following words
“A contract consists of an actionable promise or promises. Every such promise involves two parties, a promisor and a promisee, an expression of the common intention and of expectation as to the act or forbearance promised”.
According to Salmond, “Contract is an agreement creating and defining obligation between parties”.
For example, A promises to sell a mobile phone to B for Rs. 6,000, and B promises to buy a mobile phone at that price.
Form the above definitions, we find that a contract essentially consists of two elements:-
An agreement;
Enforceability of that agreement.
Agreements
As per section 2(e) of the Act:
“Every promise and every set of promises, forming the consideration for each other, is an agreement”. After observing the definition of the agreement it is clear that a ‘promise’ is an agreement.
Promise
Section 2(b) of the Indian Contract Act, 1872, defines the term “promise”. It provides: “when one 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”.
Thus, an ‘agreement’ is a bilateral transaction between two or more than two persons which involves proposal or offer by one and acceptance of such proposal by the other. In other words, it requires ‘plurality of persons’ because a single cannot enter into an agreement with himself.
As stated above, an agreement to become a contract must give rise to a legal obligation. If an agreement is not enforceable by law. It is not a contract.
Enforceability of Agreements
Section 10 of the Act deals with the conditions of the enforceability of an agreement. It provides: “All agreements are contracts if they are they made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void”.
The second paragraph of section 10 further says-
“Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents”.
Thus, according to section 10 of the Act, the following conditions must also be essential to become a contract valid:-
Competent parties
According to section 11 and 12 of the Act, the following persons are not competent to contract-
Minors (in Mohri bibi v. Dharmodas Ghose it was held that an agreement with a minor is void ab initio);
Persons of sound mind;
Persons disqualified from contracting by any law to which they are subject.
Free consent
They must have agreed to something in the same sense and the consent of the party must not have been obtained by
Coercion-(S.15)– An act is forbidden by the penal code.
(In Chikam Amiraju v. Chickam Seshamma it was held that the threat of suicide amounts to coercion within section 15 of Contract Act)
Undue influence-(S.16)– Influence by which a person is induced to act otherwise than by their own free will or without adequate attention to the consequences.
Fraud-(S.17)–
Misrepresentation-(S.18)– Fraudulent, negligent, or innocent misstatement, or an incomplete statement, of a material fact.
Mistake- Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement the agreement is void.
Lawful consideration and lawful object-(S.23)–
For the formation of a Contract, it is very important that the consideration and object of the contract must be lawful. Consideration or object is said to be unlawful if-
It is forbidden by law;
Or
It would defeat the provision of any law;
Or
It is fraudulent;
Or
It involves or implies an injury to the person or property of another;
Or
The court regards it as immoral or against public policy.
The agreement must be made for some consideration(S.25)
Section 25 of the act declares that an agreement without consideration is void. However, there are certain conditions enumerated under section 25 under which a contract without consideration is treated to be a valid one.
The agreement must not have been expressly declared to be void
Under the Indian Contract Act, the following agreements are declared void-
Where both the parties to an agreement are under a mistake of fact essential to the agreement[Section 20];
Or
An agreement without consideration[Section 25];
Or
Agreement in restraint of the marriage of any person other than the minor[Section 26];
Or
Agreement in restraint of trade[Section 27];
Or
An agreement is an absolute restraint of judicial proceeding[Section 28];
Or
An agreement the meaning of which is uncertain and incapable of being made certain[Section 29];
Or
Agreement by way of wager[Section 30];
Or
Agreement contingent on impossible events[Section 36];
Or
Agreement to do an act which is impossible in itself or which subsequently becomes impossible without any default of a party[Section 56].
Other legal requirements- An agreement must fulfill the requirements or formalities necessitated by any particular law. An agreement must be in writing, attested and registered, if so required by any law in force in India. Certain agreements, such as:-
Agreement to pay a time-barred debt;
Or
Agreement for the transfer of immovable property;
Or
Agreement to refer the matter to arbitration in case of dispute
Are such agreements which must be reduced to writing and registered.
Conclusion
A contract is a legally binding agreement that exists between two or more parties to do or not do something. An agreement starts from an offer and ends on consideration but a contract has to achieve another target i.e. enforceability. Due to this breach of the contract provide a legal remedy to the aggrieved party against the guilty party. So we can say that all contracts are agreement but all agreements are not contracts.
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Text
Conditions When an Agreements becomes a Contract
This article is written by Abhay Kumar Pandey, Student, K.S Saket P.G college, Ayodhya.
“All contracts are agreements but all agreements are not contracts”
The first thing we have to know what is a contract. The definition of contract is given under section 2(h) of the Indian Contract Act, 1872, as follows:
“An agreement enforceable by law is a contract”.
Similarly, Sir Fredrick Pollock has defined the word “Contract” as follows:-
“Every agreement and promise enforceable at law is a contract”.
Anson has defined ‘contract’ in the following words
“A contract consists of an actionable promise or promises. Every such promise involves two parties, a promisor and a promisee, an expression of the common intention and of expectation as to the act or forbearance promised”.
According to Salmond, “Contract is an agreement creating and defining obligation between parties”.
For example, A promises to sell a mobile phone to B for Rs. 6,000, and B promises to buy a mobile phone at that price.
Form the above definitions, we find that a contract essentially consists of two elements:-
An agreement;
Enforceability of that agreement.
Agreements
As per section 2(e) of the Act:
“Every promise and every set of promises, forming the consideration for each other, is an agreement”. After observing the definition of the agreement it is clear that a ‘promise’ is an agreement.
Promise
Section 2(b) of the Indian Contract Act, 1872, defines the term “promise”. It provides: “when one 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”.
Thus, an ‘agreement’ is a bilateral transaction between two or more than two persons which involves proposal or offer by one and acceptance of such proposal by the other. In other words, it requires ‘plurality of persons’ because a single cannot enter into an agreement with himself.
As stated above, an agreement to become a contract must give rise to a legal obligation. If an agreement is not enforceable by law. It is not a contract.
Enforceability of Agreements
Section 10 of the Act deals with the conditions of the enforceability of an agreement. It provides: “All agreements are contracts if they are they made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void”.
The second paragraph of section 10 further says-
“Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents”.
Thus, according to section 10 of the Act, the following conditions must also be essential to become a contract valid:-
Competent parties
According to section 11 and 12 of the Act, the following persons are not competent to contract-
Minors (in Mohri bibi v. Dharmodas Ghose it was held that an agreement with a minor is void ab initio);
Persons of sound mind;
Persons disqualified from contracting by any law to which they are subject.
Free consent
They must have agreed to something in the same sense and the consent of the party must not have been obtained by
Coercion-(S.15)– An act is forbidden by the penal code.
(In Chikam Amiraju v. Chickam Seshamma it was held that the threat of suicide amounts to coercion within section 15 of Contract Act)
Undue influence-(S.16)– Influence by which a person is induced to act otherwise than by their own free will or without adequate attention to the consequences.
Fraud-(S.17)–
Misrepresentation-(S.18)– Fraudulent, negligent, or innocent misstatement, or an incomplete statement, of a material fact.
Mistake- Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement the agreement is void.
Lawful consideration and lawful object-(S.23)–
For the formation of a Contract, it is very important that the consideration and object of the contract must be lawful. Consideration or object is said to be unlawful if-
It is forbidden by law;
Or
It would defeat the provision of any law;
Or
It is fraudulent;
Or
It involves or implies an injury to the person or property of another;
Or
The court regards it as immoral or against public policy.
The agreement must be made for some consideration(S.25)
Section 25 of the act declares that an agreement without consideration is void. However, there are certain conditions enumerated under section 25 under which a contract without consideration is treated to be a valid one.
The agreement must not have been expressly declared to be void
Under the Indian Contract Act, the following agreements are declared void-
Where both the parties to an agreement are under a mistake of fact essential to the agreement[Section 20];
Or
An agreement without consideration[Section 25];
Or
Agreement in restraint of the marriage of any person other than the minor[Section 26];
Or
Agreement in restraint of trade[Section 27];
Or
An agreement is an absolute restraint of judicial proceeding[Section 28];
Or
An agreement the meaning of which is uncertain and incapable of being made certain[Section 29];
Or
Agreement by way of wager[Section 30];
Or
Agreement contingent on impossible events[Section 36];
Or
Agreement to do an act which is impossible in itself or which subsequently becomes impossible without any default of a party[Section 56].
Other legal requirements- An agreement must fulfill the requirements or formalities necessitated by any particular law. An agreement must be in writing, attested and registered, if so required by any law in force in India. Certain agreements, such as:-
Agreement to pay a time-barred debt;
Or
Agreement for the transfer of immovable property;
Or
Agreement to refer the matter to arbitration in case of dispute
Are such agreements which must be reduced to writing and registered.
Conclusion
A contract is a legally binding agreement that exists between two or more parties to do or not do something. An agreement starts from an offer and ends on consideration but a contract has to achieve another target i.e. enforceability. Due to this breach of the contract provide a legal remedy to the aggrieved party against the guilty party. So we can say that all contracts are agreement but all agreements are not contracts.
The post Conditions When an Agreements becomes a Contract appeared first on iPleaders.
Conditions When an Agreements becomes a Contract published first on https://namechangers.tumblr.com/
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