By Dr.

Reena Mehta

Business Law- Contract Act 1872

3 million cases are pending in India's 21 high courts

26.3 million cases are pending in subordinate courts

across the country.

Quarter million under-trials languishing in jails across the

country.
2,069 have been in jail for more than five years

(Home ministry's department of justice, under a Right to Information Act)

Business Law- Contract Act 1872

 704,214 are criminal

3.2 million are civil

cases
Gujarat 3.9 million
West Bengal 1.9
million

Karnataka 1.06 million

Rajasthan 1.05 million
Orissa 1 million
Andhra Pradesh
0900,000
Bihar 1.2 million

Business Law- Contract Act 1872

Rules
Enforced by the state
The state to enforce law should be sovereign state
It receives due recognition
It attempts to receive some sort of uniformity and security

in its application.

Business Law- Contract Act 1872

Proposal
Acceptance
Consideration
Capacities of Parties to Contract
Free Consent
The agreement should not be void
Writing & registration
Legal Relationship
Certainty
Possibility of Performance
Enforceable by law
Business Law- Contract Act 1872

Writing and registration

Legal relationship
Certainty
Possibility of performance
Enforced by law.

Business Law- Contract Act 1872

 All contracts are

agreements but all
agreements are not
contracts

Agreement
Every promise and set of promise, forming
consideration for each other is an agreement.
Contract
An agreement enforceable by law is contract.

Business Law- Contract Act 1872

Void contract
Voidable contract
Executed contract
Executory contract
Unenforceable contract
Express contract

Implied contract
Quasi contract
Contingent contract
Contract of records
Statutory contract

Business Law- Contract Act 1872

Certain relations between the parties resemble those

created by contract. Law requires a person who receives

the benefit to pay or compensate the person giving the
benefit, even though he receives benefits without the
contract. There is no contract infact but it is created by
law, it is quasi contract.

Business Law- Contract Act 1872

It is a contract to do or not to do something, is some event,

collateral to such contract, does or does not happen.

Business Law- Contract Act 1872

Sec 2(a)
When one person signifies to another his willingness to do
or 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.

Business Law- Contract Act 1872

Sec 2 (B)
When the 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

Business Law- Contract Act 1872

Sec 2(d)
When at the desire of promisor, the promisee or any other

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 a Consideration
for the promise.

Business Law- Contract Act 1872

Beyond expression of willingness, there must be

something in the nature of a request.

Proposer cannot dictate terms.

An offer

must be intended to create a legal

relationship.
Kalai halder v. sheikh
Balfour v. Balfour

Business Law- Contract Act 1872

A mere statement of intention does not constitute a

binding promise even though a person to whom it is

made acts upon it.
Harvey v. Facey
The words used must apply to definite persons to
create legal relations.
The term of offer must be certain and unambiguous.
An offer can be expressed or implied.

Business Law- Contract Act 1872

 An offer must be communicated to an offeree. A person cannot

accept an offer unless he knows of the existence of the offer.

Lalman Shukla v. Gauri Datta

The person making an offer should intend to be bound by it as

soon as it is accepted.

Offer can be conditional, but the conditions must be

communicated clearly.
Counter Offer
Offer and Invitation to offer

Business Law- Contract Act 1872

Be absolute and unqualified.

Neele v. Meritt
It should be accepted in some usual and reasonable

manner.
Mental acceptance is not sufficient in law.
Acceptance must be communicated to the offerer.
Acceptance of the proposal.

Business Law- Contract Act 1872

Acceptance of the proposal need not always be

expressed in words.
Acceptance must be by a certain person.
If the act is done in ignorance of the proposal, it is no
acceptance of the proposal.
Acceptance must be given within a reasonable time.
Acceptance must be given before the offer lapses or is
revoked.

Business Law- Contract Act 1872

It must move at the desire of the promisor.

It may move from promisee or any other person- stranger

to the contract.
Chinnaya v. Ramaya
It can be past, present, future.
Consideration need not be adequate.

Business Law- Contract Act 1872

It may be an act of doing or abstain from doing

something.
It should be real and not illusory.
It need not be unlawful, illegal, immoral and
opposed to public policy.
Performance of existing obligation is no
consideration.
Forbearance to sue is a good consideration.

Business Law- Contract Act 1872

Agreement made on account of natural love and affection.

Promise to compensate for past voluntary services.
Promise to pay time barred debt.

Business Law- Contract Act 1872

Minor

MohoribebeeV. Dharamdas Ghose.

Estoppel
Promisee or transferee
Agency
Partnership

Business Law- Contract Act 1872

Contracts by Lunatic
Contract by Drunkards
Contract by Parda Nishin Women
Contract by Married Women
Contract by Corporation
Contract by Insolvent

Business Law- Contract Act 1872

Coercion

It is committing , or threatening to commit, any

act forbidden by the Indian penal code , or the
unlawful detaining, or threatening to detain any
property, to the prejudice of any person, with the
intention of causing any person to enter into an
agreement
Amiraju v. Seshma
Purabi Bennerji v. Basudev Mukherjee.

Business Law- Contract Act 1872

Sec 16 (1)
A contract is said to be influenced 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.

Business Law- Contract Act 1872

Means and includes any of the following act

committed by 1. a party to a contract 2. with his

connivance or 3.by his agent , with intent to deceive
another party thereto or his agent or induce him to
enter in contract.
Active concealment
Suggestion which is not true
A promise made without any intention to perform it.
Any act fitted to deceive, Any act which is declared

fraudulent

Business Law- Contract Act 1872

Deceit which does not deceive is not a fraud

Negligence is no fraud
Ignorance is no fraud
Waiver
Silence whether fraud?

Business Law- Contract Act 1872

Like fraud, it is incorrect or false statement but the falsity

or inaccuracy is not due to any desire to deceive or

defraud the other party. It is innocent. Party making it
believes it to be true.

Business Law- Contract Act 1872

An enormous belief about something is called as mistake

Two kinds of mistakes
Mistake of Law
Mistake of Fact

Business Law- Contract Act 1872

Agreement in restraint of marriage

Agreement in restrain of trade
Agreement in restraint of legal proceedings
Agreement meaning of which is uncertain
Agreement by way of wager:-

Money is payable by one person to another conditional on

happening or not happening of future uncertain event
.there must be mutual chances of gain or loss

Business Law- Contract Act 1872

Agreement contingent on an uncertain future event if the

even become impossible.

Agreement contingent on an impossible act.
Agreement to do an act which subsequently becomes
impossible

Business Law- Contract Act 1872

 By performance sec (37)

By death
By refusing tender of performance
By breach of contract
Anticipatory breach of contract

By impossibility of performance
By agreement or by consent
Novation
By accord and satisfaction
By remission and waiver
By operation of law
By unauthorized material alteration of a contract.
Business Law- Contract Act 1872

Remedies to aggrieved party

Suit for specific performance
Suit for injunction
Suit for damages

Types of damages
Compensatory damages
Nominal damages
Exemplary damages
Special demages

Business Law- Contract Act 1872