INDIAN CONTRACT ACT 1872

SUMMARY PRESENTATION BY RAJDEEP SINGH

Roll No. 18184

ACADEMIC EXERCISE
Indian Contract Act 1872
01 Introduction

02 Offer/Proposal and Promise

Consideration and Agreement

03 Communication and Revocation

04 Cases
 INTRODUCTION
Objective and Overview of the Indian Contract Act 1872

Indian Contract Act 1872: An act meant to ensure that

SUMMARY rights agreed between parties in a contract are legally
enforced.

The objective of the contract act is to ensure that the rights and
obligations arising out of a contract are honoured and that the legal
OBJECTIVE remedies are made available to an aggrieved party against the party
failing to honour its part of the agreement. The Indian Contract Act
mandates this and compels the defaulter to honour their
commitments.

It extends to the whole of India except the State of Jammu and

EXTENT AND Kashmir. It came into force on the first day of September, 1872. The
COMMENCEMENT
sale of Goods was repealed from this Indian Contract Act in 1930.
Contracts relating to partnership were repealed in 1932
 OFFER/PROPOSAL AND PROMISE
Indian Contract Act 1872

When one person signifies to another his willingness to do

OFFER / or to abstain from doing anything, with a view to obtaining
PROPOSAL the assent of the other to such act or abstinence, they are
said to make a proposal.

When the person to whom the proposal is made signifies his

PROMISE assent thereto, the proposal is said to be accepted.
A proposal when accepted, becomes a promise.

The person making the proposal is called the “Promisor” and

the person accepting the proposal is called the “Promisee”.
REQUIREMENTS FOR A VALID CONTRACT
Indian Contract Act 1872

• Free consent of both parties

• Mutual and lawful consideration for agreement
• It should be enforceable by law. Hence, intention should be to create legal relationship.
Agreements of social or domestic nature are not contracts
• Parties should be competent to contract
• Object should be lawful
• Certainty and possibility of performance
• Contract should not have been declared as void under Contract Act or any other law
 RULES FOR A VALID ACCEPTANCE
Indian Contract Act 1872

• Acceptance can only be given to whom the offer was made

• It has to be absolute and unqualified
• Acceptance must be communicated
• It must be in prescribed mode
• Implied Acceptance: acceptance by conduct or actions of the promisee is acceptable
 COMMUNICATION AND REVOCATION
Indian Contract Act 1872

• The communication of proposals, the acceptance of proposals, and the revocation of

proposals and acceptances, respectively, are deemed to be made by any act or
omission of the party proposing, accepting or revoking, by which it intends to
communicate such proposal, acceptance or revocation, or which has the effect of
communicating it
• The communication of a proposal is complete when it becomes to the knowledge of
the person to whom it is made.
• The communication of an acceptance is complete
• as against the proposer, when it is put in a course of transmission to them so at to be out of
the power of the acceptor
• as against the acceptor, when it comes to the knowledge of the proposer.
• The communication of a revocation is complete
• as against the person who makes it, when it is put into a course of transmission to the person
to whom it is made, so as to be out of the power of the person who makes it
• as against the person to whom it is made, when it comes to his knowledge
 REVOCATION
Indian Contract Act 1872

• Revocation means an offer is withdrawn by the offeror.

• An offer can be revoked at any time before acceptance takes place.
• However, the revocation must be communicated effectively directly or indirectly to the offeree before
acceptance .
• Further, sufficient communication does not need to be made by the offeree personally but through a
third party
• The offer may still be able to withdraw even if it specifically stated that it would remain open for a fix
ed period when such promise to leave an offer open was not supported by any consideration given
by the offeree.
• However, once the offeree accepted the offer by post, namely, letter, the postal rule would strictly
apply and would not permit such withdrawal. Contrary, once the offer has been accepted and acted
upon, it cannot be revoked, the non compliance of it would be a breach of contract.
• Once the offeree relied on the offer and embarked upon it, the offer cannot be terminated.
• It is only after the acceptance of an offer that there arises a contract and then both the 'parties
become bound by their respective promises. Before the offer has been accepted, it can be revoked.
After an offer has been accepted it ripens into a contract and then it cannot be revoked.
• According to Section 5 : "A proposal may be revoked at any time, before the communication of its a
cceptance is complete as against the proposer, but not afterwards."
 CASES
Pertaining to or bear significance upon Indian Contract Act 1972

Balfour v Balfour
• Mr. Balfour is the Defendant and Mrs. Balfour is the Plaintiff in the given case. The two lived in
Ceylon and visited England on a vacation. The plaintiff remained in England for medical
treatment. The defendant has agreed to send her a specific amount of money each month
until she could return. The defendant later asked to remain separated. Mrs. Balfour sued for
restitution of her conjugal rights and for alimony equal to the amount her husband had agreed
to send. Mrs. Balfour obtained a decree nisi and five months later was granted an order for
alimony. The lower court entered judgment in favor of the plaintiff and held that the
defendant’s promise to send money was enforceable. The court held that Mrs. Balfour’s
consent was sufficient consideration to render the contract enforceable and the defendant
appealed. The court said that It is essential that both the parties should intend that an
agreement be legally binding so at to become enforceable And The courts will not interfere
between the spouses in their day to day affairs.
 CASES
Pertaining to or bear significance upon Indian Contract Act 1972

Managing Committee, SGA High School v State of Bihar

• This case presents a scenario whereby revocation of intent was successfully recognized by
law and was granted

Sharad Trading Co. v State of Madhya Pradesh

• This case presents a scenario whereby revocation of intent was not recognized by law and
the plaintiff was asked to continue the contractual agreement of supplying Tendu leaves till
the last date of validity of contract
 CASES
Pertaining to or bear significance upon Indian Contract Act 1972

Carlill v Carbolic Smoke Ball Co.

• A General Offer may be accepted by any person among the public who has the knowledge of it.
The performance of conditions of offer will amount to acceptance. The case of Carlill v Carbolic
Smoke Ball co. is an illustration of a contract arising out of a general offer. As per the facts of the
case, the company issued and advertisement in a newspaper about its product , “the smoke ball” a
preventive medicine against Influenza . In the advertisement , the company offered to pay a sum of
$1000 as compensation to anyone who contacted influenza or a cold after having used the smoke
ball as per printed directions. The advertisement also contained that a sum of $1000 has been
deposited with the Alliance Bank to show the sincerity of the company. A lady , Ms. Carlill relying on
the advertisement purchased the medicine and she caught influenza. She sued the company to pay
compensation for which the court held that it was a general offer and Mrs. Carlill had accepted it by
her act by performing the conditions for acceptance, she was therefore entitled to the claim.
THANK YOU
Indian Contract Act 1872

SUMMARY BY RAJDEEP SINGH

Roll No. 18184