[Act No.

9 of 1872]
By: Amit Kr. Jha (2K14G010)
Parikshit Shome (2K14G063)
Rajesh Pandey (2K14G071)
Ritesh Kr. Singh (2K14G076)
Suresh Dash (2K14G098)
Lokender Singh (2K14G137)
 Contents
1. Introduction 7. Acceptance
1. Legal rules of Valid Acceptance
2. What is a Contract?
8. Consideration
3. Essentials Elements of a Valid Contract
9. Free Consent
4. Types/Classification of Contracts
1. Elements Vitiating free Consent
4.1 Validity
4.2 Formation 10. Remedies for Breach of Contract
4.3 Performance
11. Quasi-Contracts
5. Contract & Agreement
12. Interpretation of The Indian Contract Act, 1872
6. Proposal/Offer
1. Classification
 Introduction
Law relating to contracts is contained in Indian Contract Act, 1872.

TheAct was passed by British India & is based on the principles of English
Common Law.

It is applicable to all the states of India except Jammu and Kashmir.

Itdetermines the circumstances in which promises made by the parties to

a contract shall legally bind on them.
 contract
{Section 2(h) of the Indian Contract Act 1872}

“An Agreement enforceable by law is a contract.”

CONTRACT = AGREEMENT + ENFORCEABILITY OF THE

AGREEMENT

An analysis of this definition reveals that a contract consists of the following two most important
elements:
1. A contract is an agreement; and
2. The agreement is enforceable by law.
 Essential elements of a valid contract
{Section 10 of the Indian Contract Act 1872}

1. Agreement - Offer and Acceptance

2. Intention to create legal relationship
3. Lawful Consideration
4. Capacity of parties- Competency
5. Free and genuine consent
6. Lawful object
7. Agreement not declared void
8. Certainty and possibility of performance
9. Legal formalities like Writing, Registration etc.

All the above ingredients must be satisfied in every valid contract.

Note: All contracts are agreements, but not all agreements are contracts.
 Types of contract
Contract classified on the basis of:

VALIDITY FORMATION PERFORMANCE

Valid contract Express contract Executed contract

Void contract Implied contract Executory contract

Voidable contract
Quasi contract Unilateral contract

Illegal agreement
Bilateral contract
E-Commerce contract
Unenforceable
 contract & Agreement
CONTRACT - A contract is defined as an agreement enforceable before the
law. {Sec.2(h)}

AGREEMENT - Every promise or set of promises forming consideration for

each other. {Sec.2(e)}

PROMISE - When a person made a proposal to another to whom

proposal is made, if proposal is assented there to. {Sec.2(b)}

OFFER - When a person made a proposal, when he signifies to

another his willingness to do or to abstain from doing
something. {Sec.2(a)}

AGREEMENT = OFFER + ACCEPTANCE

 contract & Agreement Contd.

Agreement Legal Obligation

Contract
“All agreements are contracts but all
contracts are not agreements.”

CONTRACT = AGREEMENT + ENFORCIBILITY BEFORE LAW

 contract & Agreement Contd.

“All agreements are not contracts” Why?

Certain domestic and family agreements
Certain friendly or social agreements
Political agreements/promises
Commercial transactions without legal binding
Agreement not possessing all essentials of contracts
Agreements expressly declared to be void
Agreement to make a contract
 contract & Agreement
Agreement
• Every promise and every set of
promises forming consideration for
each other is an agreement.
• An agreement is created by acceptance
of an offer
• An agreement may not create legal
rights and obligations of the parties.
• No contract is required to make an
agreement.
Contd.
Contract
• An agreement enforceable by law is a
contract.
• Agreement and its enforceability
together create a contract
• An contract create legal rights and
obligations between the parties.
• Valid agreement is necessary for
making a contract
 Proposal / offer
{Section 2(a) of the Indian Contract Act 1872}
When one person signifies to another his willingness to do or to abstain
from doing something with a view to obtaining the assent of the other to
such an act or abstinence, he is said to make a proposal.

{Section 2(c) of the Indian Contract Act 1872}

The person making the offer is called the ‘promisor’, ‘proposer’ or ‘offeror’;
The person to whom the offer is made is called the ‘offeree’.
When the offeree accepts the offer, he is called the ‘acceptor’ or ‘promisee’
 Classification of offer
1. General Offer: Which is made to public in general

2. Special Offer: Which is made to a definite person.

3. Cross Offer: Exchange of identical offer in ignorance of each other.

4. Counter Offer: Modification and Variation of Original offer.

5. Standing, Open or Continuing Offer: Which is open for a specific period

of time.
 acceptance
Acceptance is the manifestation or the act of assenting by the offeree of his willingness
to be bound by the terms of the offer.
According to sec. 2 (b) “when the person to whom the proposal is made signifies his
assent there to, the proposal is said to be accepted. A proposal when accepted, becomes a
promise.”
Acceptance may be express (communicated by words, spoken or written or by doing any
required act.) or implied (circumstances). However, silence cannot be prescribed as a mode of
acceptance.

E.g.: A) At an auction sale, S is the highest bidder. The auctioneer accepts the offer by striking the
hammer on the table. This is implied acceptance.
B) A widow promised to settle some immovable property on her niece if the niece stayed
with her in her residence. The niece stayed with her in her residence till her death. Held, the niece
was entitled to the property [V. Rao v. A. Rao, (1916) 30 Mad. 509]. This is expressed acceptance.
 Legal Rules Of Valid Acceptance
Acceptance must be absolute and unqualified
It must be communicated to the offeror
It must be in prescribed manner
Acceptance may be given by performer of conditions
It may be given by acceptance of consideration
It may be express or implied (cannot be implied from silence)
It must be given within specified or reasonable time
It must be given while the offer is in force
It must not precede an offer
It must be given by the person to whom offer is made
 consideration
{Section 10 of the Indian Contract Act 1872}

One of the essential elements to constitute a contract.

Consideration means 'something in return'.

Definition: “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 a consideration
for the promisee.“
E.g.: A (promisor) promises B (promisee) to guarantee payment of price of the goods
which B sells on credit to C. Here selling of goods by B to C is consideration for A’s
promise.
 Free consent
• Consent according to Section 13: “Two or more persons are said to be
consented when they agree upon the same thing in the same sense
(Consensus-ad-idem).”
It means the parties agreeing upon the same thing in the same sense
at the same time & that their consent is free & real.
According to Sec. 10: “All agreements are contracts if they are made by
the free consent of the parties.....”
E.g.: A is forced to sign a promissory note at the point of pistol. A knows what he is
signing but his consent is not free. The contract in this case is voidable at his option.
 Elements vitiating Free consent
• Free consent according to Section 14: A consent is said to be free when it is
not caused by-
1) Coercion (Sec. 15), or

2) Undue influence (Sec. 16), or

3) Fraud (Sec. 17), or

4) Misrepresentation (Sec. 18) or

5) Mistake of fact (Sec. 20, 21 & 22)

 Remedies for Breach of Contract
{Section 73 to 75 of the Indian Contract Act 1872}
When a contract is broken, the injured party is entitled to one or more of the following remedies:
1. Rescission of the contract
E.g.: A promises B to supply 10 bags of cement on a certain day. B agrees to pay the price after the receipt of the goods. A
does not supply the goods. B is discharged from liability to pay the price.

2. Suit for damages

a. Ordinary damages: Damages arising naturally;
b. Special damages: Damages in contemplation of the parties;
c. Vindictive or exemplary damages
d. Nominal damages
e. Loss of reputation
f. Damages for inconvenience & discomfort
g. Mitigation of damages
h. Difficulty of assessment
i. Cost of decree
j. Damages agreed upon in advance in case of breach
 Remedies for Breach of Contract Cont.

3. Suit upon quantum meruit

4. Suit for specific performance of the contract

5. Suit for injunction

 Quasi-Contract
Under special circumstances, obligations resembling those created by a contract are
imposed by law although there is no contract between the parties. Such contracts are
called Quasi-Contracts.
Sections 68 to 72 deal with Quasi-Contractual Obligations.
1. Claim for Necessaries supplied to a person incapable of contracting or on his
account
2. Reimbursement of person paying money due by another, in payment of which he is
interested
3. Obligation of person enjoying benefit of non-gratuitous act
4. Responsibility of finder of goods
5. Liability of person to whom money is paid, or thing delivered by mistake or under
coercion.
 interpretation of the Act
1. 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. 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;
3. The person making the proposal is called the “promisor”, and the person accepting the proposal is
called the “promisee”;
4. 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;
5. Every promise and every set of promises, forming the consideration for each other, is an agreement;
6. Promises, which form the consideration or part, of the consideration for each other are called
reciprocal promises;
7. An agreement enforceable by law is a contract or else it is void;
8. An agreement which is enforceable by law at the option of one or more of the parties - thereto, but
not at the option of the other or others, is a voidable contract;
9. A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.
Thank You