6103 contract chapter 32

7/30/2019 6103 Contract Chapter 32

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There are the basic factors which are essentials to constitute

a valid contract, such as;-

1. Agreement

2.Consent which is free

3. Capacity to make a contract 4. Lawful consideration and Lawful object 5. Void agreement 6. Where writing, attestation or registration

in accordance with Law

Under section 2(h) of the Contract Act 1872 provides that "A

Contract is an agreement enforceable by law".

-

Section 10 of the said Act adds further qualification to the

agreement as follows:-

"All agreements are contracts if they are made by the free

consent of parties competent to contract, for a lawful

consideration and with a lawful object, and are not hereby


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expressly declared to be void. Nothing here in contained shall

affect any law in force in the Republic of the Union of Myanmar,

by which any contract is required to be made in writing or in the

presence of witnesses, or any law relating to the registration ofdocuments.

-

Thus, the followings are the essential elements to form a

valid contract:-

(1) Proposal or offer;

(2) Acceptance of such proposal or offer;

(3) The contracting parties must be competent tocontract;

(4) Free consent of the contracting parties;

(5) Lawful consideration and lawful object;

(6) The agreement must not be expressly declared to be

void;


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(7) In writing if so required by law; and

To form a Contract:-

The first essential element is a proposal which is made by

one person and accepted by another.

-

The second essential element is an acceptance by which the

person to whom the proposal is made signifies his assent to such

proposal.

-

Thus, when a proposal made by one person to another and it

is accepted by that another person, it becomes a promise.

]

Every promise or every set of promises forming the

consideration for each other is an agreement. An agreementenforceable by law is a contract.


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Therefore, proposal and acceptance are the two basic e lements of acontract.

Section 11 of the Contract Act lays down about the capacity

as follows:-

"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 towhich he is subject."

This section deals with the capacity of the parties in three

parts. Every person is competent to contract who,

(i) has attained the age of majority

(ii) is of sound mind and

(iii) is not disqualified from contracting by any lawto which he is subject.


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In Myanmar, attaining the age of majority was provided in

the Section. 3 of the Majority Act that, Eve ry person shall bedeemed to have attained his majority when he shall have

completed the age of eighteen years and not before.

Therefore, a person who domiciled in Myanmar iscompetent to make a contract at the completion of the age of

eighteen.

However, the ward under a guardian appointed by the court may be

majority after attaining 21 years of age. The ward may not attest the

agreement before reaching majority age. The parents of the minor may

not attest and the guardian only may contract on behalf of the minor.

Section 12


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A person is said to be of sound mind for the purpose ofmaking a contract if, at the time when he makes it, he is capable of

understanding it and forming a rational judgment as to its effect

upon his interests.

(a) A person who is usually of unsound mind, by occasionally of

sound mind, may make a contract when he is of sound mind.

(b)A person who is usually of sound mind, but occasionally of

unsound mind, may not make a contact when he is of unsound

mind.

Illustration

A sane man, who is delirious from fever or who is so drunk

that he cannot understand the terms of a contract or from a rationaljudgment as to its effect on his interests, cannot contract whilst

such delirium or drunkenness lasts.


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A person of unsound mind is incompetent to contract. The

law as regard to minors is equally applicable to persons of

unsound mind.

A person may be disqualified from contracting by his or her

own law to which he or she is subject. For example, in England, a

married woman cannot enter into contract without the authority of

her husband.

*

For example :

(1) A statutory company cannot enter into a contract out of itsmemorandum

(2) An alien enemy is incompetent to contract.

In Myanmar, the capacity of a woman to contract is not

affected by her marriage either under Myanmar Customary Law .It

is also the same in Hindu or Mohammedan Law.

* Michelle v.Sultan of Johore, (1894) 1 Q.B., 149


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Section 13

Consent is defined as Two or more persons are said toconsent when they agree upon the same thing in the same sense.

Free Consent

Section 14

Consent is said to be free when it is no caused by;-

(a)coercion, as defined in section 15 , or

(b)undue influence, as defined in section 16, or

(c )fraud, as defined in section 17 ,or

(d)misrepresentation, as defined in section 18, or

(e)mistake, subject to the provisions of section 20,22 and 22.


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Section 15

Coercion is the committing, or threatening to commit, any

act forbidden by the Penal Code, or the unlawful detaining, orthreatening to detain, any property, to the prejudice of any person

whatever, with the intention of causing any person to enter into an

agreement.

-

*

It is immaterial whether the Penal Code is or is not in forcein the place where the coercion is employed.

-

In the case of Ma Ain Yu vs. Dr. Miss A. G. D. Netto and

others , 1952 B.L.R.S.C. 65, it was held that torture is an act

forbidden by the Penal Code. A threat to commit such an act

would come within the purview of Section 15 of the Contract Act.

* Ma Ain Yu v. Miss A.G.D. Netto, 1952, B.L.R. (S.C) 65.


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A, on board an English ship on the high seas, caused B to

enter into an agreement by an act amounting to criminal

intimidation under the Penal Code.

Section 16

A contract is said to have been induced by "undue influence"

where the 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.

(a)where he holds a real or apparent authority over the other, or

where he stands in a fiduciary relation to the other, or


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(b)where he makes a contract with a person whose mental

capacity is temporarily or permanently affected by reason

of age, illness, or mental or bodily distress.

-

This Sub-Section 2 shows the different forms of influence.

Undue influence is ordinarily presumed in relationship, such as -

(a)parent and child

(b)guardian and ward

(c)trustee and beneficiary

(d)solicitor and client

(e)doctor and patient

(f)spiritual adviser and disciple

Illustration


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(1)A having advanced money to his son, B, during hasminority, upon B's coming of age obtains, by misuse of

parental influence, a bond from B for a greater amount than

the sum due in respect of the advance. A employs undueinfluence.

(2)A, a man enfeebled by disease or age, is induced, by B'sinfluence over him as his medical attendant, to agree to pay

B an unreasonable sum for his professional services. B

employs undue influence.

(3)A applies to a banker for a loan at a time when there isstringency in the money market. The banker declines to

make the loan except at an unusually high rate of interest. A

accepts the loan on these terms. This is a transaction in the

ordinary course of business and the contract is not induced

by undue influence.


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In the case of Daw Maw Nwee and seven others vs. L. Ahnin

(a) U Par and three others 1962, B.L.R.C.C. 232, it was contented

that appellants Daw Maw Nwee, wife of the deceased and, U Ah

Kee and U Ah Lone, who were sons of the deceased used undue

influence to make a contract of gift and so that the contact was

void.

It was held that even though the deceased U Ah Choine was

ill, it could not be considered to be influenced by his wife and

sons since he was to be able to bring himself up until to be a rich

man.

*

It was also held that since there was no position of influence,

it was necessary to consider whether undue influence was used or

not.

* -() () - () -


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.Section 16

(1)" Where a person, who is in a position to dominate the will of

another, enters into a contract with him, in the transaction appears,

on the face of it on the evidence adduced, to be unconscionable ,

the burden of proving the said contract was not induced by undue

influence shall lie upon the person in a position to dominate the

will of the other.

Nothing in this sub-section shall affect the provisions of

section 111 of the Evidence Act.

`

A, being in debt to B , the money-lender of his village ,

contracts a fresh loan on terms which appear to be

unconscionable . It lies on B to prove that the contract was not

induced by undue influence.


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Section 19

"When consent to an agreement is caused by undue

influence, the agreement is a contract voidable at the option of the

party whose consent was so caused.

Any such contract may be set aside either absolutely or, if the

party who was entitled to avoid it has received any benefit

thereunder, upon such terms and conditions as to the Court may

seem just."

(c) Fraud

Section 17

Fraud means and includes any of the following actscommitted by a party to a contract, or with his connivance, or by

his agent, with intent to deceive another party thereto or his agent,

or to induce him to enter into the contract:-

fraud


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-

(1) the suggestion, as a fact, of that which is not true, by onewho does not believe it to be true.

(2)the active concealment of a fact by one having knowledge

or belief of the fact,

(3) a promise made without any intention of performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law specially declares tobe fraudulent.

-

Mere silence is not fraud unless there is-

(1) a duty to speak or


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(2) unless it is equivalent to speech.

A sells, by auction, to B a horse which A knows to be

unsound. A says nothing to B about the horse's unsoundness. This

is not fraud in A.

(b) B says to A "if you do not deny it, I shall assume that the

horse is sound". A says nothing. Here A's silence is equivalent to

speech. Here, the relation between the parties is that A's duty to

tell B if the horse is unsound.

Section 18

"Misrepresentation" means and includes-

(1)the positive assertion, in a manner not warranted by

information of the person making it, of that which is not true,

though he believes it to be true;

]


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(2)any breach of duty which, without an intent not deceive, gains

an advantage to the person committing it, or any one claiming

under him, by misleading another to his prejudice or to the

prejudice of any one claming under him.

(3)causing, however innocently, a party to an agreement to make a

mistake as to the substance of the thing which is the subject of the

agreement.

Section 19A

when consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the

option of the party whose consent was so caused.

ExceptionIf such consent was so caused by misrepresentation or by

silence, fraudulent within the meaning of section 17, the contract,

nevertheless, is not voidable, if the party whose consent was so

caused had the means of discovering the truth with ordinary

diligence.


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-

Agreement is void where both parties are under mistake as to

matter of fact essential to the agreement.

An erroneous opinion as to the value of the thing which

forms the subject-matter of the agreement is not to be deemed a

mistake as to a matter of fact.

(

Section 21A contract is not voidable because it was caused by a

mistake as to any law in force in the Union of Myanmar, but a

mistake as to a law not in force in the Union of Myanmar has the

same effect as a mistake of fact.mistake of foreign law


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Illustration

A and B make a contact grounded on erroneous belief that a

particular debt is barred by the law of limitation, the contract is

not voidable.

In the case of Haji Abdul Rahman Allerakhia vs. The

Bombay and Persia Steam Navigation Co.1 ,the plaintiffs chartered

a steamer from the defendants to sail from Jedda on the 10 th

August 1892 (15 days after the Haj), in order to convey pilgrims

returning to Bombay. The plaintiffs believed that "the 10 th August

1892" corresponded with the fifteenth day after the Haj, but the

defendants had on belief on the subject, and contracted only withrespect to English date. The 19

thJuly 1892, and not the 10

th

August 1892, in fact corresponded with the fifteenth day after the

Haj. On finding out the mistake the plaintiffs sued the defendants

for ratification of the charter party

-

Haj

1Haji Abdul Rahman Allerakhia vs. The Bombay and Persia Steam NavigationCo.(1892)16 Bom 561.)p.45


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It was held that the agreement was one for the 10 th August

1892, that the mistake was not mutual, but on the plaintiffs partonly, and therefore there can be no ratification."

-

The next ingredient of a valid contract is that its

consideration and object must be Lawful.

Section 23Lawful considerations and objects are shown as follows:-

The consideration or objects of an agreement is Lawful,

unless-

(a)it is forbidden by law (or)

(b) is of such a nature that, if permitted, it would defeat the

provisions of any law (or)

(b)

is fraudulent (or)


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(c) involves or implies injury to the person or property ofanother (or)

(d) the court regards it as immoral, or opposed to publicpolicy.

Section 57

Where persons reciprocally promise, firstly, to do certainthings which are legal, and secondly, under specified

circumstances, to do certain other things which are illegal, the first

set of promises is a contract, but the second is a void agreement.

Illustration

A and B agree that A "shall sell B a house for kyats

10,00,00, but that , if B uses it as a gambling house , he shall pay

A Kyats 50,000 for it.

The first set of reciprocal promises, namely, to sell the house

and to pay Kyats 10,0000 for it, is a contract. The second set is for

an unlawful object namely, that B may use the house as a

gambling house, and is a void agreement.


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Section 58

In the case of an alternative promise, one branch of whichis legal and the other illegal, the legal branch alone can be

enforced.

Illustration

A and B agree that A shall pay B Kyats. 10,00,00 for which

B shall afterwards deliver to A either rice or smuggled opium.

This is a valid contract to deliver rice and void agreement as to the

opium.

In order to be a valid contract, the agreement must not beexpressly declared to be void. There are fourteen kinds of

agreement which the Contract Act has expressly declared to be

void. They are ;-


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(1)Agreements made by incompetent persons: [Section 11]

(2) Agreements made under mutual mistake as to a matter of fact

[Section 20] or Law[Section 21]

(3) Agreements of which consideration or object is unlawful,

[Section 23]

(4) Agreements of which consideration or object is unlawful in

part[Section 24]

(5) Agreements without consideration[Section 25]

(6) Agreements in restraint of marriage [Section 26]

(7) Agreements in restraint of trade [Section 27]

(8) Agreements in restraint of legal proceedings[Section 28]

(9) Agreements the meaning of which is uncertain or not capable

of being made certain [Section 29]


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(10) Agreements by way of wager [Section 30]

(11) Agreements contingent on an event happening, and the event

becomes impossible [Sections 32 , 36]

(12) Where the agreement is to do an act which subsequently

becomes impossible or unlawful [Section 56]

(13) Where the agreement is to do an act which subsequently

becomes impossible or unlawful [Section 56]

(14) Where persons reciprocally promise firstly, to do something

which are legal, and secondly, under specified circumstances, to

do certain other things which are illegal, the second set of

promises is a void agreement [Section 57]

Contracts which require to be in writing under section 25

are-

(1) Contract out of natural love and affection[Section 25(1)]


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(2) Promise to compensate for voluntary services

[Section 25(2)]

(1) Promise to pay time-barred debt [Section 25(3)]

Section 25"An agreement made without consideration is void unless-

(1) It is expressed in writing and registered under the lawfor the time being in force for the registration of

documents and is made on account of natural love and

affection between parties standing in a near relation to

each other"

Section 25(2)

"An agreement without consideration is void unless;-


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when it is a promise to compensate wholly or in part a person who

has already voluntarily done something for the promisor, of

something which the promisor was legally compellable to do"

Section 25(3)

"An agreement made without consideration is void unless-

when it is a promise made in writing and signed by the person to

be charged there with or by his agent generally or specially

authorized in that behalf, to pay wholly or in part a debt of which

the creditor might have enforced payment but for the law for the

limitation of suits"

Section 28 Exception (2), that "Nor shall this section render

illegal any contract in writing by which two or more persons agree

to refer to arbitration any question between them which has

already arisen, or affect any provision of any law enforce for the

time being as to references to arbitration ."


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6103 contract chapter 32

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