Indian Contract Act 1872 - Presentation Transcript

1. THE INDIAN CONTRACT ACT (ICA), 1872

2. What is a contract?
o Section 2(h)
o “ An agreement enforceable by law is a contract”.
o Thus,
o Contract = Agreement + Enforceability at Law
3. Agreement?
o Section 2(e)
Promise/(s ) Promise/(s) = Agreement (in exchange for)
4. Promise?
o Section 2(b)
o Promise = Proposal/Offer + Acceptance
o Proposal?
o Section 2(a)
o Expression of willingness
o With a view to seek the assent of the other
o Thus, mere expression of willingness doesn’t constitute offer/proposal.
5. Acceptance
o Section 2(b)
o Giving of assent to the proposal.
o Enforceability by Law
o Agreements which are not enforceable
o Illegal/unlawful agreements, e.g., to smuggle/to kill
o Social Agreements ( Balfour vs. Balfour )
6. Agreements Declared Void under ICA
o e.g.
 Agreement with or by a minor
 Agreement in restraint of trade
 Marriage brokerage contract
 Wagering/Betting Agreements
7. Kinds of Contracts
 From the point of view of Enforceability
 Void
 Voidable
 Valid
8. Void Agreement vs. Void Contract
o Void Agreement
o i.e., void-ab-initio i.e. unenforceable from the very beginning
o Becomes void (Void Contract)
o Voidable
o i.e., void + able
o i.e., capable of being declared void
o (unenforceable) at the option of one of the parties to the contract but not
at the option of the other.
9. Valid Contract
o Section 10
o To be a valid contract, it must satisfy the following:
o Offer and Acceptance
o Consensus-ad-idem (Meeting of minds) i.e., persons must agree to the
same thing in the same sense and at the same time.
o Intention to create legal relationship as against social relationship or
illegal/unlawful relationship.
10.
o Free and Genuine Consent , i.e., free from

 coercion
 undue influence
 fraud
 misrepresentation
 mistake
o Parties competent to contract
o Lawful consideration and object, i.e., something in return and that must
be lawful.
11. Valid Contract
o (‘Object’ and ‘Consideration’ usually overlap. However, there may be
difference at times e.g., object may be to kill competition and for that
purpose in view, a senior manager of the competitor may be paid a
certain amount to give unrealistically high quotation .)
o Here: Object is to kill competition.
o Consideration is :
o (i) payment of money
o (ii) giving high quotations
12. Valid Contract
o Agreement not declared void .
o Certainty of Meaning : e.g. sale and purchase of 100 tonnes of oil. But
which oil? Thus, agreement being uncertain – not valid.
o But, if the seller deals only in one kind of oil and one variety, then it shall
be valid since it is capable of being made certain.
13. Valid Contract
o Possibility of performance: Impossibility whether known to the parties or
not, renders a contract invalid.
o Necessary legal formalities : e.g. sale-deed of immovable property.
14. Void vs. Illegal Agreements Void Agreement Illegal Agreement
o Unenforceable
o Not Punishable
o Collateral transactions unaffected.
o Unenforceable
o Punishable (fine or imprisonment or both)
o Collateral transactions are also void.
15. Specific and General Offer
o Specific Offer:
 made to a specified person or a group of persons.
 can be accepted only by the person to whom made.
o Thus, if offer is addressed to ‘A’, ‘B’ cannot accept it.
o Case Law: Boulton vs. Jones
16. Specific and General Offer
o General Offer:
 which is not a specific offer.
 made to the world at large.
 can be accepted by anyone by complying with the terms of the offer.
o Case Law: Carlill vs. Carbolic Smoke Ball Co.
17. Offer vs. Invitation to offer
o Illustrations of Invitation to Offer:
 Prospectus issued by a college.
 Prospectus issued by a company.
 Invitation of bids in an auction.
 Price-catalogues, price lists, quotations
 Display of goods with a price-tag in a shop window.
18. Special Terms in a Contract
o Examples: Dry cleaner’s receipt, courier’s receipt, shipment receipt,
insurance policy, etc.
o Binding if communicated or attention drawn to the fact that there are
certain special terms and conditions.
o Not binding if attention is not drawn and the other party not aware of.
19. Cross Offers & Counter Offers
o Cross Offers
o Identical offers cross each other and none of the parties is aware of the
same. Doesn’t result in a contract unless one of them is accepted.
o Counter Offer
o Instead of accepting an offer, the offeree makes a counter offer, i.e.,
accepts the same subject to certain conditions or qualification.
20. Contracts through Post
o Communication of Offer
o is complete when the offeree has the knowledge of the same.
o Communication of Acceptance
 It has two aspects, viz.,
 As against the proposer
 As against the acceptor
21. As against the proposer
o Communication is complete as soon as a duly addressed letter of
acceptance is put into the course of transmission.
o Whether the same reaches the proposer or not.
o As against the acceptor
o Communication is complete only when the proposer has received the
letter and learnt the contents thereof.
22. Communication of Revocation
o Communication of revocation (of offer or acceptance) is complete:
 As against the person who makes it when it is put into the course of
transmission.
 As against the person to whom it is made, when it comes to his
knowledge.
23.
o Comparing ‘offer’ to a ‘train of gunpowder’ and ‘acceptance’ to a
‘lighted match stick’ – How far correct?
o William Anson’s observation though valid in the English context doesn’t
hold good in India since in India acceptance is revocable.
24. Claim for Damages Damages U/S Section 73
Damages U/S Section 74 Only damages naturally flowing From breach
(Ordinary Damages)
Special Damages (No claim for consequential loss unless in the
Contemplation of the parties ( Hedley v. Baxendale Exemplary Damages
Nominal Damages Pre-fixed Damages Penalty Liquidated Damages
(What can be recovered is actual loss or amount prefixed, whichever is
less)