Construction and law
UNIT 1
BY HUMAIB NASIR (18648)
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Indian contract act 1972
• The law relating to contracts in India is contained in INDIAN
CONTRACT ACT, 1872.
• The Act was passed by British India and is based on the
principles of English Common Law. It is applicable to all the
states of India except the state of Jammu and Kashmir.
• It determines the circumstances in which promises made by
the parties to a contract shall be legally binding on them.
• All of us enter into a number of contracts everyday knowingly
or unknowingly. Each contract creates some rights and duties
on the contracting parties.
• Hence this legislation, Indian Contract Act of 1872, being of
skeletal nature, deals with the enforcement of these rights and
duties on the parties in India
© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman
Development :
• The Act as enacted originally had 266 Sections, it had wide scope and
included.
❑ General Principles of Law of Contract- Sections 01 to 75
❑ Contract relating to Sale of Goods- Sections 76 to 123
❑ Special Contracts- Indemnity, Guarantee, Bailment & Pledge- Sections 124
to 238
Contracts relating to Partnership- Sections 239 to 266
• Indian Contract Act embodied the simple and elementary rules relating to
Sale of goods and Partnership. The developments of modern business world
found the provisions contained in the Indian Contract Act inadequate to
deal with the new regulations or give effect to the new principles.
Subsequently, the provisions relating to the Sale of Goods and Partnership
contained in the Indian Contract Act were repealed respectively in the year
1930 and 1932 and new enactments namely Sale of Goods and Movables
Act 1930 and Indian Partnership act 1932 were re-enacted.
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At present the Indian Contract Act may be divided into two parts
Part 1:deals with the General Principles of Law of Contract Sections
1 to 75
Part 2:deals with Special kinds of Contracts such as
(1)Contract of Indemnity and Guarantee
(2)Contract of Bailment and Pledge
(3)Contract of Agency
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1. Offer 2(a):- 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.
2.' Acceptance 2(b):- When the person to whom the proposal is made, signifies his assent there
to, the proposal is said to be accepted.
3. Promise 2(b) :- A Proposal when accepted becomes a promise. In simple words, when an
offer is accepted it becomes promise.
4. Promisor and promisee 2(c) :- When the proposal is accepted, the person making the
proposal is called as promisor and the person accepting the proposal is called as promisee.
5. Consideration 2(d):- When at the desire of the promisor, the promisee or any other person
has done or abstained from doing or does or abstains from doing or promises to do or to
abstain from doing something such act or abstinence or promise is called a consideration for
the promise. Price paid by one party for the promise of the other Technical word meaning
QUID-PRO-QUO i.e. something in return.
6. Agreement 2(e) :- Every promise and set of promises forming the consideration for each
other. In short,
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7. Contract 2(h) :- An agreement enforceable by Law is a contract.
Therefore, there must be an agreement and it should be enforceable by law.
8. Void agreement 2(g):- An agreement not enforceable by law is void.
9. Voidable contract 2(i):- An agreement is a voidable contract if it is
enforceable by Law at the option of one or more of the parties there to (i.e. the
aggrieved party), and it is not enforceable by Law at the option of the other or
others.
10. Void contract 2(j) :- A contract which ceases to be enforceable by Law
becomes void when it ceases to be enforceable.
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Acceptance
• According to Section 2(b), "When the person to whom the
proposal is made signifies his assent there to, the proposal is said
to be accepted."
Rules:
• Acceptance must be absolute and unqualified. If the parties
are not in ad idem on all matters concerning the offer and
acceptance, there is no valid contract. For example, "A" says to
"B" "I offer to sell my car for Rs.50,000/-. "B" replies "I will purchase
it for Rs.45,000/-". This is not acceptance and hence it amounts
to a counter offer.
• It should be Communicated to the offeror. To conclude a
contract between parties, the acceptance must be
communicated in some prescribed form. A mere mental
determination on the part of offeree to accept an offer does2 - 7
• Acceptance must be in the mode prescribed. If the acceptance is not according to
the mode prescribed or some usual and reasonable mode(where no mode is
prescribed) the offeror may intimate to the offeree within a reasonable time that
acceptance is not according to the mode prescribed and may insist that the offer be
accepted in the prescribed mode only. If he does not inform the offeree, he is
deemed to have accepted the offer. For example, "A" makes an offer to "B" says to
"B" that "if you accept the offer, reply by voice. "B" sends reply by post. It will be a valid
acceptance, unless "A" informs "B" that the acceptance is not according to the
prescribed mode.
• Acceptance must be given within a reasonable time before the offer lapses. If any
time limit is specified, the acceptance must be given within the time, if no time limit is
specified it must be given within a reasonable time.
• It cannot precede an offer. If the acceptance precedes an offer it is not a valid
acceptance and does not result in contract. For example, in a company shares were
allotted to a person who had not applied for them. Subsequently, when he applied
for shares, he was un aware of the previous allotment . The allotment of share
previous to the application is not valid.
• Acceptance by the way of conduct.
• Mere silence is no acceptance. Mere silence cannot amount to any assent. It does
not even amount to any representation on which any plea of estoppel may be
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Lawful consideration
According to Section 2(d), Consideration is defined as: "When at the desire of the
promisor, the promisee or any other person has done or abstained from doing, or does or
abstains from doing, or promises to do or abstain from doing something, such act or
abstinence or promise is called consideration for the promise". Consideration means
'something in return'.
In short, Consideration means quid pro quo i.e. something in return.
An agreement must be supported by a lawful consideration on both sides.
Essentials of valid considerations are
• It must move at the desire of the promisor. An act constituting consideration must
have been done at the desire or request of the promiser. If it is done at the instance of
a third party or without the desire of the promisor, it will not be good consideration. For
example, "A" saves "B"'s goods from fire without being ask him to do so. "A" cannot
demand payment for his service.
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• Consideration may move from the promisee or any other person. Under Indian law,
consideration may be from the promisee of any other person i.e., even a stranger. This
means that as long as there is consideration for the promisee, it is immaterial, who has
furnished it.
• Consideration must be an act, abstinence or fore bearance or a returned promise.
• Consideration may be past, present or future. Past consideration is not consideration
according to English law. However it is a consideration as per Indian law. Example of past
consideration is, "A" renders some service to "B" at latter's desire. After a month "B" promises
to compensate "A" for service rendered to him earlier. When consideration is given
simultaneously with promise, it is said to be present consideration .. For example, "A"
receives Rs.50/- in return for which he promises to deliver certain goods to "B". The money
"A" receives is the present consideration. When consideration to one party to other is to
pass subsequently to the maker of the contract, is said to be future consideration. For
example. "A" promises to deliver certain goods to "B" after a week. "B" promises to pay the
price after a fortnight, such consideration is future.
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• Consideration must be real, competent and having some value in the eyes
of law. For example, "A" promises to put life to "B"'s dead wife, if "B" pay him
Rs.1000/-. "A"'s promise is physically impossible of performance hence there is
no real consideration.
• Consideration must be something which the promiser is not already bound
to do. A promise to do something what one is already bound to do, either
by law, is not a good consideration., since it adds nothing to the previous
existing legal consideration.
• Consideration need not be adequate. Consideration need not be
necessarily be equal to value to something given. So long as consideration
exists, the courts are not concerned as to adequacy, provided it is for some
value.
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The consideration or object of an agreement is lawful, unless and until it is:
• Forbidden by law: If the object or the consideration of an agreement is for doing an act
forbidden by law, such agreement are void. for example,"A" promises "B" to obtain an
employment in public service and "B" promises to pay Rs one lakh to "A". The agreement is
void as the procuring government job through unlawful means is prohibited.
• If it involves injury to a person or property of another: For example, "A" borrowed rs.100/-
from"B" and executed a bond to work for "B" without pay for a period of 2 years. In case of
default, "A" owes to pay the principal sum at once and huge amount of interest. This contract
was held void as it involved injury to the person.
• If courts regards it as immoral: An agreement in which consideration object of which is
immoral is void. For example, An agreement between husband and wife for future separation
is void.
• Is of such nature that, if permitted, it would defeat the provisions of any law:
• is fraudulent, or involves or implies injury to the person or property of another, or
• Is opposed to public policy. An agreement which tends to be injurious to the public or
against the public good is void. For example, agreements of trading with foreign enemy,
agreement to commit crime, agreements which interfere with the administration of justice,
agreements which interfere with the course of justice, stifling prosecution, maintenance and
champerty.
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• Agreements in restrained of legal proceedings: This deals with two category. One is,
agreements restraining enforcement of rights and the other deals with agreements
curtailing period of limitation.
• Trafficking in public offices and titles: agreements for sale or transfer of public offices and
title or for procurement of a public recognition like Padma Vibhushan or Padma Shri etc.
for monetary consideration is unlawful, being opposed to public policy.
• Agreements restricting personal liberty: agreements which unduly restricts the personal
liberty of parties to it are void as being opposed by public policy.
• Marriage brokerage contact: Agreements to procure marriages for rewards are void
under the ground that marriage ought to proceed with free and voluntary decisions of
parties.
• Agreements interfering marital duties: Any agreement which interfere with performance
of marital duty is void being opposed to public policy. An agreement between husband
and wife that the wife will never leave her parental house.
• consideration may take in any form-money,goods, services, a promise to marry, a
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"fraud
"Fraud" means and includes any of the following acts committed by
a party to a
contract, or with his connivance, or by his agents, with intent to
deceive another
party thereto his agent, or to induce him to enter into the contract;
(1) the suggestion as a fact, of that which is not true, by one who
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 to be
fraudulent.
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"Misrepresentation" defined
"Misrepresentation" means and includes -
(1) the positive assertion, in a manner not warranted by the information of the
person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an
advantage to
the person committing it, or anyone claiming under him; by misleading another
to
his prejudice, or to the prejudice of any one claiming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake
as to
the substance of the thing which is subject of the agreement.
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Compensation of loss or damage caused by breach of contract
When a contract has been broken, the party who suffers by such breach is
entitled to
receive, form the party who has broken the contract, compensation for
any loss or
damage caused to him thereby, which naturally arose in the usual course
of things
from such breach, or which the parties knew, when they made the
contract, to be
likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss of
damage
sustained by reason of the breach.
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"Contract of indemnity" defined
A contract by which one party promises to save the other from loss
caused to him by
the contract of the promisor himself, or by the conduct of any other
person, is called
"Contract of guarantee", "surety", "principal debtor" and "creditor" -
aA"contract
"contractof of
indemnity
guarantee" is a contract to perform the promise, or
discharge the
liability, of a third person in case of his default. The person who gives the
guarantee
is called the "surety", the person in respect of whose default the
guarantee is given
is called the "principal debtor", and the person to whom the guarantee
is given is
called the "creditor". A guarantee may be either oral or written.
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valid contract
A contract that complies with all the essentials of a contract and is
binding and enforceable on all parties.
Valid Contracts- if a contract has all of the required elements, it is
valid and enforceable in a court of law.
Example
A homeowner (who is over the age of 18 and of sound mind)
signed a contract with the appliance store to buy a refrigerator.
The homeowner pays for the refrigerator and the appliance store
presents the refrigerator for the home owner to take home.
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Void Contracts - a void contract is not a contract and has no effect in a court of
law and cannot be enforced in a court of law. Most commonly, a void contract will
be missing one or all of the essential elements needed for a valid contract. Neither
party needs to take action to terminate it, since it was never a contract to begin
with.
Example
A contract that was between an illegal drug dealer and an illegal drug supplier to
purchase a specified amount of drugs for a specified amount. Either one of the
parties could void the contract since there is no lawful objective and hence
missing one of the elements of a valid contract.
Voidable Contracts - a voidable contract is a contract which may appear to be
valid and has all of the necessary elements to be enforceable, but has some type
of flaw which could cause one or both of the parties to void the contract. The
contract is legally binding, but could become void. If there is an injured party
involved, the injured party or the defrauded must take action, otherwise the
contract is considered valid.
Example 2 - 19
Unenforceable Contracts - an unenforceable contract is a contract which cannot be
enforced in a court of law. This could happen because the terms of the contract are
ambiguous, if one party has a voidable contract or if the Statute of Limitations has
expired.
The statute of limitations requires that lawsuits be filed within a certain period of time
following a breach. Another reason a contract might be unenforceable could be
because of the Doctrine of Laches. This principal states that a court has determined a
contract is unenforceable due to needless delay or neglect in filing a claim even
though the statute of limitations may not have expired.
Example #1
Bill bought a property from Harry through a written contract for sale. Seven years after
the purchase Harry wanted to claim that the contract was unenforceable. The statute of
limitations for written contracts in Oregon is six years and Harry would not be able to
challenge the contract.
Example #2
Mary bought a house from Pete using a written purchase and sale agreement. After
taking possession, Mary discovers a small leak in a pipe in the crawl space of the 2 - 20
a
Arbitration & Conciliation Act, 1996
© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman
• Arbitration, a form of alternative dispute resolution (ADR), is a technique for the
resolution of disputes outside the courts. The parties to a dispute refer it to arbitration
by one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), and agree
to be bound by the arbitration decision (the "award"). A third party reviews the
evidence in the case and imposes a decision that is legally binding on both sides
and enforceable in the courts.
• Arbitration is often used for the resolution of commercial disputes, particularly in the
context of international commercial transactions.
• Conciliation is an alternative dispute resolution (ADR) process whereby the parties to
a dispute use a conciliator, who meets with the parties both separately and
together in an attempt to resolve their differences. They do this by lowering tensions,
improving communications, interpreting issues, encouraging parties to explore
potential solutions and assisting parties in finding a mutually acceptable outcome.
• Conciliation differs from arbitration in that the conciliation process, in and of itself,
has no legal standing, and the conciliator usually has no authority to seek evidence
or call witnesses, usually writes no decision, and makes no award.
• Conciliation differs from mediation in that in conciliation, often the parties are in
need of restoring or repairing a relationship, either personal or business. 2 - 22
Introduction
• An Act covering:
– domestic arbitration
– international commercial arbitration
– enforcement of foreign arbitral awards
– conciliation
• Modern concept of harmonious working partnership
between the Court and Arbitration.
• Has far reaching effect on reducing court litigation
• Gives more importance to Arbitration and Conciliation
by adding speed and economy to settlement of
disputes.
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Alternative Dispute Resolution (ADR)
Mechanism used across the world - effective, faster
and less expensive.
4 methods of ADR:
➢Negotiation – unrecognized
➢Mediation – unrecognized
➢Conciliation – recognized
➢Arbitration - recognized
Recognized by the Arbitration and Conciliation Act,
1996
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Necessity of the Act
• Shrinking Boundaries, Free trade & International
Commerce have become global necessities.
• Competition often leads to conflicts between
entrepreneurs resulting in commercial disputes.
• Growing strength and role of India in the global
economy
• Increasing FDI and other forms of collaboration -
increasing disputes between Indian and foreign parties
• Quick redressal to commercial disputes through private
Arbitration.
• Settlement of dispute in an expeditious, convenient,
inexpensive and private manner so that they do not
become the subject of future litigation between the
parties.
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Acts addressing ADR in India
• The law on arbitration in India was
substantially contained in three
enactments, namely:
– The Arbitration (Protocol & Convention)
Act, 1937
– The Arbitration Act, 1940
– The Foreign Awards (Recognition and
Enforcement) Act, 1961.
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The Arbitration & Conciliation Act, 1996
• An Act to consolidate and amend the law
relating to domestic arbitration, international
commercial arbitration and enforcement of
foreign arbitral awards as also to define the law
relating to conciliation and for matters
connected therewith or incidental thereto.
• "Arbitration is the reference of dispute between
not less than two parties, for determination,
after hearing both sides in a judicial manner, by
a person or persons other than a court of
competent jurisdiction.”
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Law Based on UNCITRAL Model Law
The present Act is based on model
law drafted by United Nations
Commission on International Trade
Laws (UNCITRAL), both on domestic
arbitration as well as international
commercial arbitration, to provide
uniformity and certainty to both
categories of cases.
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WHAT CAN BE REFERRED TO
ARBITRATION
All disputes of a civil nature or quasi-civil nature which can be decided by a civil
court can be referred to arbitration:
– Relating to property
– Right to hold an office
– Compensation for non-fulfillment of a clause in a contract
– Disputes in a partnership
• Generally speaking, all disputes of a civil nature or quasi-civil nature which can be decided
by a civil court can be referred to arbitration. Thus disputes relating to property, right to hold
an office, compensation for non-fullfilment of a clause in a contract, disputes in a partnership
etc. can be referred to arbitration. Even the disputes between an insolvent and his creditors
can be referred to arbitration by the official receiver or the official assignee with the leave of
the court. Thus disputes arising in respect of defined legal relationship, whether contractual or
not, can be referred to Arbitration.
• It is necessary that there is a defined legal relationship between persons, companies,
association of persons, body of individuals etc. created or permitted by law, before a
reference can be made to arbitration.
• However, the relationship may not be a contractual one. A dispute may arise out of quasi
contracts e.g. the division of family property. The same may be validly referred to Arbitration.
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Disputes excluded from the Arbitration
Act
The law has given jurisdiction to determine certain matters
to specified tribunal only; these cannot be referred to
arbitration:
– Matters involving questions about validity of a will.
– Relating to appointment of a guardian.
– Pertaining to criminal proceedings
– Relating to Charitable Trusts
– Winding up of a company
– Matters of divorce or restitution of conjugal rights
– Lunacy proceedings
– Disputes arising from an illegal contract
– Insolvency matters, such as adjudication of a person as an
insolvent.
– Matters falling within the purview of the Competition Act.
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Scheme of the Act
The Act is divided in to the following parts
(a) Part I - Domestic arbitration.
(b) Part II - Enforcement of foreign awards.
(c) Part III - Conciliation procedures.
(d) Part IV - Supplementary provisions.
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© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman
Arbitration Agreement
• Arbitration Agreement - an agreement by
the parties to submit to arbitration all or
certain disputes which have arisen or which
may arise between them in respect of a
defined legal relationship, whether
contractual or not.
• Power to refer parties to arbitration when
there is an arbitration agreement.
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Arbitration Agreement
Interim Measures by Court
✓ appointment of a guardian for a minor or person of
unsound mind for the purposes of arbitral proceedings
✓ protection in respect of preservation, interim custody or
sale of any goods which are the subject-matter of the
arbitration agreement
✓ securing the amount in dispute
✓ the detention, preservation or inspection of any property
or thing which is the subject-matter of the dispute
✓ interim injunction or the appointment of a receiver;
✓ Any other interim measure of protection as may appear
to the Court to be just and convenient
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Appointment of Arbitrator
• Any person can be appointed as an arbitrator.
• Generally impartial and independent persons –
• C A’s, engineers, retired judges, advocates and
other professionals are preferred.
• Parties are free to determine the number of
arbitrators
• Number shall not be an even number.
• The arbitrator shall disclose in writing to the parties
anything that may give rise to justifiable doubts
about his independence or impartiality.
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Appointment of Arbitrator
• If they are unable to agree-
Each party will appoint one arbitrator and the two
appointed arbitrators will appoint the third arbitrator
who will act as a presiding arbitrator.
• If not appointed within 30 days, the party can
request Chief Justice of High Court to appoint an
arbitrator.
• In case of international commercial dispute, the
application for appointment of arbitrator has to be
made to Chief Justice of India.
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Termination of Arbitrator
Appointment of Arbitrator can be challenged only if
• Circumstances exist that give rise to justifiable doubts
as to his independence or impartiality
• He does not possess the qualifications agreed to by
the parties.
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The mandate of an arbitrator shall terminate if---
he becomes de jure or de facto ie unable to perform his functions or
for other reasons fails to act without undue delay; and
he withdraws from his office or the parties agree to the termination of
his mandate.
where he withdraws from office for any reason; or by or pursuant to
agreement of the parties.
Where the mandate of an arbitrator terminates, a substitute
arbitrator shall be appointed according to the rules that
were applicable to the appointment of the arbitrator being
replaced.
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Conduct of Arbitral Proceedings
The Arbitral Tribunal is not bound by Code of Civil
Procedure, 1908 or Indian Evidence Act, 1872.
The parties to arbitration are free to agree on the
procedure to be followed by the Arbitral Tribunal.
Law of limitation (1963) applicable
Flexibility in respect of procedure, place & language.
Submission of statement of claim & defense maybe
amended/ supplemented at any time
Hearings & Written Proceedings – at the discretion of the
tribunal
Can be oral at the request of either party
Settlements during Arbitration
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Arbitral Award
The decision of Arbitral Tribunal will be by
majority
The arbitral award shall be in writing and signed
by the members of the tribunal.
States the reasons for the award unless the
parties have agreed that no reason for the
award is to be given.
The award should be dated and place where it
is made should be mentioned.
Copy of award given to each party.
Tribunal can make interim award also.
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Arbitral Award - Appeal
An arbitral award may be set aside by the Court only if;
The party furnishes proof of some incapacity
the arbitration agreement is not valid under the law to which
the parties have subjected it
the party was not given proper notice of the appointment of
an arbitrator or of the arbitral proceedings or was otherwise
unable to present his case; or
the arbitral award deals with a dispute not contemplated by
or not falling within the terms of the submission to arbitration,
or it contains decisions on matter beyond the scope of the
submission to arbitration
the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of the
parties
the arbitral award is in conflict with the public policy of India.
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Cost of Arbitration
Fees and expenses of arbitrators and witnesses,
legal fees and expenses, administration fees of
the institution supervising the arbitration and
other expenses.
Tribunal can decide the cost and share of each
party.
If parties refuse to pay the costs, the Arbitral
Tribunal may refuse to deliver its award; thus any
party can approach Court.
The Court will ask for deposit from the parties
and on such deposit, the award will be
delivered by the Tribunal. Then Court will decide
the costs of arbitration and shall pay the same
to Arbitrators. Balance, if any, will be refunded
to the party.
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Intervention by Court
The earlier arbitration law was that the party could
access court almost at any stage of arbitration.
Now, approach to court has been drastically curtailed.
If an objection is raised by the party, the decision on that
objection can be given by Arbitral Tribunal itself & the
arbitration proceedings are continued
The aggrieved party can approach Court only after
Arbitral Award is made.
Appeal to court is now only on restricted grounds.
Tribunal cannot be given unlimited and uncontrolled
powers and supervision of Courts cannot be totally
eliminated.
ARBITRATION ACT HAS OVER-RIDING EFFECT
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© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman
Enforcement of Foreign Awards
• Foreign award" means an arbitral award on
differences relating to matters considered as
commercial under the law in force in India. The
foreign awards which can be enforced in India are
as follows : -
• New York convention award - made after 11th
October, 1960
– New York convention awards are enforceable in India.
– New York convention was drafted and kept in United
Nations for signature of member countries on 21st
December, 1958.
• Geneva convention award - made after 28th July,
1924.
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Enforcement of Foreign Awards
To enforce a foreign award party has to
produce arbitral award, agreement of arbitration to the
district court having jurisdiction over the subject matter of
the award.
The enforcement of award can be refused by court
only in cases specified in law.
Otherwise, the foreign award is enforceable through
court as if it is a decree of the court.
If the court declines to enforce the arbitral award,
appeal can be made to the court where appeal
normally lies from the district court.
No further appeal can be made (except appeal to
Supreme Court) .
Indian courts can be approached only at the time of
implementation of award.
The courts can refuse to implement the award only on
limited grounds.
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© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman
Conciliation
The act makes provision for conciliation proceedings. In
conciliation proceedings:
There is no agreement for arbitration.
Conciliation can be done even if there is arbitration
agreement.
The conciliator only brings parties together and tries to
solve the dispute using his good offices.
The conciliator has no authority to give any award.
Helps parties in arriving at a mutually accepted settlement.
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Conciliation
• In such agreement they may draw and sign a
written settlement agreement. Duly signed by the
conciliator
• However after the settlement agreement is signed
by both the parties and the conciliator, it has the
same status and effect as if it is an arbitral award.
• Conciliation is the amicable settlement of disputes
between the parties, with the help of a
conciliator.
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Offer for Conciliation
• The conciliation proceedings can start when
one of the parties makes a written request to
other to conciliate, briefly identifying the
dispute.
• The conciliation can start only if other party
accepts in writing the invitation to conciliate.
• Unless there is written acceptance, conciliation
cannot commence. If the other party does not
reply within 30 days, the offer for conciliation
can be treated as rejected
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What Can Be Referred To
Conciliation
Matters of a –
• Civil nature
• Breach of contract
• Disputes of movable or immovable property
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What Cannot Be Referred To
Conciliation
Matters of –
• Criminal nature
• Illegal transactions
• Matrimonial matters like divorce suit etc.
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© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman
Supplementary Provisions
• The High Court has the power to make rules
under this act
• Removal of difficulties by central
Government through provisions made
under the Act
• Rules made by Central Government
subject to approval by parliament
• The present Act overrules the previous Acts
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Settlement (litigation)
In law, a settlement is a resolution between disputing parties about a
legal case, reached either before or after court action begins. The
term "settlement" also has other meanings in the context of law.
Structured settlements provide for a periodic payment
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Settlement Conference
• Federal court rules and most state
rules allow for a pretrial hearing or
settlement conference
• Ninety percent of all cases settle
before trial
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Cost-Benefit Analysis of a Lawsuit
• The following factors should be
considered in deciding whether to
bring or settle a lawsuit:
– The probability of winning or losing.
– The amount of money to be won or lost.
– Lawyers’ fees and other costs of litigation.
– Loss of time by managers and other personnel.
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The Trial
• Pursuant to the Seventh Amendment to the
U.S. Constitution, a party to an action at
law is guaranteed the right to a jury trial in
cases in federal court.
• Most state constitutions contain a similar
guarantee for state court actions.
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Arbitration and Conciliation Act 1996
The Government of India decided to amend the Arbitration and Conciliation Act, 1996 by
introducing the Arbitration and Conciliation (Amendment) Bill, 2015 in the Parliament. The
Union Cabinet chaired by the Prime Minister, had given its approval for amendments to the
Arbitration and Conciliation Bill, 2015 taking into consideration the Law Commission's
recommendations, and suggestions received from stake holders.
In an attempt to make arbitration a preferred mode of settlement of commercial disputes
and making India a hub of international commercial arbitration, the President of India on
23rd October 2015 promulgated an Ordinance ("Arbitration and Conciliation (Amendment)
Ordinance, 2015) amending the Arbitration and Conciliation Act, 1996
The following was the important salient feature of the new ordinance:
The first and foremost welcome amendment introduced by the ordinance is with respect to
definition of expression 'Court'. The amended law makes a clear distinction between an
international commercial arbitration and domestic arbitration with regard to the definition of 'Court'.
In so far as domestic arbitration is concerned, the definition of "Court" is the same as was in the 1996
Act, however, for the purpose of international commercial arbitration, 'Court' has been defined to
mean only High Court of competent jurisdiction
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