Law of Contracts

Indian Contract Act 1872

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Indian Contract Act 1872

The bedrock of Indian Business law Relevance even now Based on British Contract Act Developed further due to important cases Basis of other important laws

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Applicability

Section 1 : Applies to the whole of India except the state of Jammu & Kashmir

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Meaning of Contract

An agreement enforceable by Law

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Agreement

Every promise and every set of promises, forming the consideration for each other.

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Proposal & Promise

When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of the other to such act or abstinence,he is said to make a proposal. 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.
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Promisor & Promisee

The person making the proposal is called the Promisor and The person accepting the proposal is called the promisee

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Consideration

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

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What agreements are Contracts

Fee consent of parties Parties Competent to Contract lawful consideration

lawful object
Not expressly declared to be void

offer and acceptance

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Parties Competent to a Contract

Major Sound mind

Not disqualified by law Case : Dharmodas ghose v/s Mohori Bibi

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Acceptance

Absolute and Unqualified Expressed in some usual and reasonable manner Performance of conditions of a proposal or Acceptance of consideration for a reciprocal promise offered with a proposal

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Free Consent
When not caused by : coercion undue influence fraud misrepresentation mistake

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Lawful Consideration & Object

Unless : Forbidden by law If permitted defeat the provisions of law Fraudulent Involves or implies injury to the person or property of another Court regards it as immoral Opposed to public policy.
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How Revocation is made?

By notice Lapse of specified time or within reasonable time By not fulfilling the conditions precedent to acceptance. By the death or insanity of proposer

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Communication is complete

For Proposal / Acceptance with regards to proposer with regards to acceptor Revocation with regards to proposer with regards to acceptor in practice
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Void Agreement

Considerations and objects are unlawful Without consideration In restraint of marriage In restraint of trade In restraint of legal proceedings Uncertain Wager
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Agreements without consideration are void except :

When made out of natural love and affection Promise to compensate voluntary services in the past or compliance of law Promise to pay time barred debt Gift actually made Creating an agency

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When is a Contract is Voidable?

When consent obtained by coercion fraud or misrepresentation Undue influence

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Contingent Contract

contract to do or not to do some thing, if some event, collateral to such contract does not happen.

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Quasi Contract

Claims for necessaries supplied to person incapable of contracting or on his account. Reimbursement of a payment, for paying money due by another, in payment of which he is interested. Obligation of person enjoying benefit of non-gratuitous act. Responsibility of finder of goods. Liability of person to where money is paid or thing delivered by mistake or under coercion.
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Special Contracts

Governed by Indian Contract Act 1872 Indemnity & Guarantee Bailment ( includes Pledge ) Agency

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Special Contracts Contd.

Sale of Goods Sale of Goods Act 1930 Partnership - Indian Partnership Act 1932

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