Introduction to the Indian Contract Act, 1872 for CLAT

The result is that if B later desires some coal, he is free to buy from whomever he wishes. Conversely, if B orders coal from S, S ordinarily has no duty to supply it. It must have some value in the eyes of law – A valuable consideration may consist either in some right, interest or property accruing to one party or some loss or responsibility suffered or undertaken by the other. A promise to give a reasonable sum in return for a service cannot be enforced on the grounds of uncertainty.

The portray company then bought the paint of Detel to carry out the renovation work. But the paint turned out to be of such a bad quality that Shanklin wished to sue Detel whereas he had no contractual link with it. However, the judges thought of that there was a collateral contract between Shanklin and Detel.

The Court added that in the absence of any contract between applicant and respondent no. 2, the parties could not be referred to arbitration. Any protection allowed to events of the original contract extend to third party beneficiaries. A latest instance is in England, where the Contract Act 1999 was introduced. Under Scots legislation, acceptance isn’t essential to be vested in a right of action, however is necessary to be liable. Before acceptance, nonetheless, the ius quaesitum tertio is tenuous in order that acceptance of a benefit doesn’t create a right, but quite entrenches that proper. The Delhi High Court held that as there was failure of defendant to keep the site ready, therefore agent could not be responsible for non-installation of machines and as such was entitled for commission.

What is Intellectual Property Law?

Consideration as an abstinence– To constitute abstinence as consideration, one must refrain or promise to refrain from doing something that he or she is privileged to do. A cannot demand payment for his services as it is a voluntary act on his part and B never asked him to do so. Thus if at the desire of A, B agrees to paint a picture for him at an agreed remuneration, the painting of the picture would be regarded as consideration moving from B and the remuneration as consideration moving from A.

Another duty of the agent is to pay his principal all sums received by him on principal’s account. Before making such payments to his principal, the agent is however entitled to make such deductions out of the same as are lawfully due to him. As we know when one party employs another party to represent him or work on his behalf, as in dealings with the third person. This relationship between them is known as agency.

For example, B promised by A, for consideration transferring from B, to pay C $ a hundred. For example, based on the doctrine of privity, the beneficiary of a life insurance policy would have no proper to enforce the contract since he or she was not a celebration to the contract and the signatory is useless. As this may be inequitable, third-party insurance contracts, which allows third-parties to submit claims from insurance policies issued for his or her profit, are one of many exceptions to the doctrine of privity. According to English law, a stranger to consideration cannot sue when a dispute arises, whereas, in India, a stranger to consideration can sue in that case. This means that only persons who are parties to the contract can take action to enforce it in English Law, whereas in the Indian perspective, beneficiaries can also file a suit. The article ‘Doctrine of Privity of Contract’ delves into the significance of parties of a contract in order to sue in a court of law.

• Where the opposite party or its agent fails to appear on the date of hearing the National Commission may decide the complaint ex parte.
• For illustration, A had mortgaged some property to X.
• 88, it was observed that it is a right to detain goods belonging to another not only for the discharge of a debtor’s liability incurred in respect of the goods bailed but also for the general balance of account subsisting between the owner and the person detaining them.
• Shanklin concluded a contract with a painting enterprise on condition that the painters of the enterprise would use the paint of the Detel Company.
• —For the purposes of the sub-clause , “commercial purpose” does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his liveli­hood, by means of self-employment.

The privity of a contract is a crucial precept and a fundamental expression of private autonomy. It was held that the case was covered by the exception of “compulsion of law”, when the duty of secrecy need not be observed by the bank. Moreover, the petitioner could not prove that his claim for interest was justified by any provisions of law. Apart from that his action claiming interest through a writ of mandamus was time barred.

Test: Constitution Of India – 1

The doctrine of privity of contract implies that only those concerned in hanging a bargain would have standing to implement it. There are some exceptions to the privity principle and these include contracts involving trusts, insurance companies, agent-principal contracts, and cases involving negligence. According to Section 222, the employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him. To claim from the agent any benefit which may have resulted to him from the transaction .

Scope of Law of Contract thus is much more than what is provided in Act, covering inter-connected acts, regulations to control different situations. Is a one-sided contract in which the expression privity of contract means only one party has to perform his promise or obligation. Read CLATapult’s post on offer and acceptance here. Also, try their mocks for more legal reasoning practice questions.

Exceptions to the Privity Rule

However, privity has confirmed to be problematic; as a result, numerous exceptions are now accepted. After appointing a sub-agent, the agent continues to be responsible for the acts of the sub-agent towards the principal. A sub-agent is responsible for his acts to the agent and the agent in his turn is responsible for the sub-agent’s acts to the principal. According to Section 214, it is the duty of an agent in case of difficulty to use all reasonable diligence in communicating with his principal and in seeking to obtain his instructions. When the principal, expressly or impliedly, agrees to the appointment of a sub-agent for doing certain work, which has been otherwise assigned to the agent, a sub-agent may be validly appointed.

P, an eye surgeon, purchased a machine from R for the hospital run by him. R contended that P was not a consumer under the Act as the ma­chine was bought for commercial purposes. The National Commis­sion rejected this contention and held that P is a medical prac­titioner, a professional working by way of self employment by using his knowledge and skill to earn his livelihood. It was not proved by any evidence that P is running a huge hospital. Thus the purchase of machinery is in the nature of self employment. [Rampion Pharmaceuticals v. Dr. Preetam Shah I CPJ 23 ].

Doctrine of Privity of Contract – Meaning, Types, Essentials, Exceptions

How the work will be done is at the wish of the performer. Like when a person gives a suit to the tailor for stitching, he does not tell him which method he should use to stitch it. We have discussed that a consumer can make a complaint when an unfair or a restrictive trade practice is followed by a trad­er. What can be termed as an unfair or a restrictive trade prac­tice is another question of law. A complaint after expiry of limitation period is not permitted.

Additional authorization is provided under the Indian Evidence Act, whereby the expression document includes computer output which is all information found in an electronic record that is printed on a paper, stored, documented, or copied in computer-generated optical or magnetic media . The High Court held that the applicant sought to invoke arbitration proceedings on the basis of the tax invoices issued by the respondent no. 1, which had been signed by the applicant and respondent no. 1. The Court ruled that only the disputes between the signatories to the tax invoices could be referred to arbitration. The applicant issued a legal notice to the respondents for compensating the applicant for the loss incurred by it. The applicant also invoked the arbitration clause as per the tax invoices issued by the dealer of the vehicles, i.e., the respondent no. 1, and nominated an arbitrator.

– An agent is entitled to remuneration for the work of agency done by him, but an agent’s remuneration does not become due to him until the completion of the act assigned to him. If the agent’s efforts are the effective cause of making the contract, he is entitled to his commission. Duty to Follow Principal’s DirectionsAn agent is bound to conduct the business of the principal according to the directions given by the principal. In the absence of any directions, the agent should conduct the business according to the custom which prevails in doing business of the same kind at the place where the agent conducts the business. When the agent does not act as stated above, if any loss is sustained by the principal, he must make it good to his principal, and if any profit accrues, he must account for it.

Neither Andrew nor Bethany is getting into into the contract with the particular intent to benefit Charlie. Andrew merely wants his home properly renovated; Bethany merely needs to be paid to do the renovation. Here A and B are events to the contract or can also be mentioned as privy to the contract. C is not a celebration to the contract and cannot sue A is A fails to pay C the sum of $ a hundred.Dunlop Pneumatic Tyre Co Ltd v Selfridge & CoAC 847,is the classic authority for the doctrine.

Three main parties are involved in the relationship of agent and principal these are the agent, the principal and the third party. The orders of the Consumers Forums are like orders of the Civil Court and are enforceable like a decree of the court. The order of a junior Forum is appealable with the senior Forum, and when no appeal is instituted, the order is final.

There was an agreement between A and B which provided that after termination of his employment B shall not practice as a Dr. within radius of 3 km of A’s dispensary for period of 3 years and if B did so, B should pay Rs. 50,000 as liquidated damages. Immediately after the termination of his employment B started his practice as De next to A’s dispensary. Contracts determining the mutual rights and duties of the partners of a firm may provide that a partner shall not carry on any business other than that of the firm while be is a partner. The Section declares that all agreements in restraint of trade are void, being opposed to public policy, because they tend to create monopolies and discourage industry.

The assignee of insurance policy is entitled to sue on the contract made between the insurer and insured. Place of acceptance- When the contract is made through post the place of contract shall be the place of acceptance i.e. from where the letter of acceptance is posted. The place of contract in case of a contract on phone shall be where the acceptance is heard.