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Indian Contract Act, 1872
Indian Contract Act, 1872
Indian Contract Act, 1872
CONTRACT
Meaning:-
from the
Contractum,
Latin
word
What is Contract?
Section 2(h) of 1872,
provides that an
agreement which is legally enforceable alone is a
contract. It creates legal obligations between
parties. While all contracts are agreements,
An Agreement
An agreement is a promise or commitment or
set of promises or commitments .
An agreement involves an offer or proposal by one
person and acceptance of such offer or proposal by
another person. If such agreement is capable of
being enforced by law then it becomes a contract.
What is a Promise?
What is an agreement?
1.
2.
3.
A diagrammatical representation of a
Contract.
OFFER + ACCEPTANCE
PROMISE
CONSIDERATION
AGREEMENT
Legally enforceable
Contract
Legally unenforceable
Voidable Contract
void agreement
Classification of
Contracts
Types of contract
Contracts are classified on the basis
of :VALIDITY FORMATION
PERFORMANCE
Valid contract express contract
Executed
contract
Void Agreement
Implied contract
Executory
contract
Void Contract Quasi contract Unilateral Contract
Voidable Contract
Illegal Contract
Bilateral
contract
Illegal
Agreement
Unenforceable contract
(A) VALIDITY
1. Valid Contract: (Sec 10). A contract which is an
agreement enforceable at law and which fulfills
all the essentials of a valid contract.
2. Void Agreement: An agreement not enforceable
by law Sec 2(g)] (Ex: an agreement with minor,
an agreement without consideration etc)
3. Void Contract: (Sec-2(i). A contract which ceases
to be enforceable by law.
4. Voidable Contract: A contract which is enforceable
by law at the option of one party thereto, but not
an option of the other.
5. Illegal Agreement: An agreement which involves
the transgression of some rule of basic public
policy and is criminal in nature or immoral. It is
not only void as between the immediate parties
but it also taints the collateral transactions with
illegality.
6. Unenforceable Contract:
A contract which cannot be enforced in a court
of law because of some technical defect such
as absence of writing or where the remedy has
been barred by Statute of Limitation, Doctrine
of Laches, or being unregistered or unpaid
stamp duty, etc.
(B) FORMATION
1. Express Contract: A contract in which the
terms are stated in words by the parties.
Example?
2. Implied or Tacit Contract: A contract which is
inferred from the circumstances of the case or
from the conduct of the parties. Example?
3. Quasi Contract An obligation created by law,
regardless of agreement. Example?
PERFORMANCE
1. Executed Contract: A contract which is
Offer or Proposal
Lapse of Offer
An offer lapses or comes to an end 1.By communication of notice of termination
of offer to the Offeree.
2.By lapse of the specified or reasonable time.
3.By death or insanity of the offeror.
4.By a counter-offer. Counter-offer is an offer
to the original offer.
5.By not being accepted according to the
prescribed or usual mode.
6.By non-fulfillment of a condition precedent.
CLASSIFICATION OF OFFER
1.Specific Offer (Offer to a specific individual or
section)
When an offer is made to a specific or an
ascertained person. Example?
2. General Offer. When an offer is not made to
any specific person, but it is made to the larger
public. Example?
Note:-Anson says that person Substantiate
with a case law? An offer need not be made to
an ascertained person, but no contract can arise
until it has been accepted by an ascertained
Acceptance
Meaning:
ACCEPTANCE
Acceptanceisoneperson'scompliancewitht
hetermsofanoffermadeby another.
be
absolute
and
2.Consensus Ad Idem.
3.Acceptance must be Communicated.
4.Acceptance must be made within responsible
time or fixed time.
5.Acceptance must be made in prescribed
mode or responsible mode.
6.Acceptance may be Express or Implied.
CONSIDERATION
CONSIDERATION
Meaning:Consideration means any thing given or
promised by one party in exchange of for the
promise or undertaking of another in a
contractual agreement.
Definition:Justice
Patterson
defines
Consideration
means something which is of some value in
the eyes of the law.it may be some benefit to
the plaintiff or some detriment to the
defendant.
LEGAL
RULES
CONSIDERATION
OF
the exceptions:-
Capacity to Contract
CAPACITY
CONTRACT
Section 11, of Indian
TO
2.
Idiots.
Drunken
or
Intoxicated
persons.
Their
3. Other persons.
Alien enemies.
. Corporations.
The contractual capacity of a statutory
corporation is limited by the Statute
governing it.
As regards a company
registered under the Companies Act, 2013,
its contractual capacity is regulated by its
MOA & AA.
(d). Insolvents.
When a debtor is adjudged insolvent he is
deprived of his power to deal in his property
divisible among his creditors.
(e). Convicts.
A Convict when undergoing imprisonment is
incapable of entering into a contract.
FREE CONSENT
FREE CONSENT
All agreements are contracts if they are made
by the free consent of the parties. It is the
general & basic principle of law of contract that
for a valid contract there must be consensus
ad idem (consent at the same time). Two or
more persons are said to consent when they
agree upon the same thing in the same sense
[Sec. 13.]
Consent is said to be free when it is not caused
by:(i) Coercion, or, (ii) Undue influence, or (iii)
Fraud, (iv) Misrepresentation, or (v) Mistake,
subject to the provisions of Secs. 20, 21, and 22
of act 1872.
Effect of agreement without free consent.
When consent to an agreement is caused by
1. COERCION
Coercion means force or compulsion. It is
the committing, or threatening to commit any
act forbidden by the Indian Penal Code, 1860,
or the unlawful detaining, or threatening to
detain, any property, to the prejudice of any
person whatever, with the
intention of
causing any person to enter into an
agreement (Sec. 15). A threat to commit
suicide amounts to coercion.
Essential ingredients of coercion
1. The consent is obtained by threat of an
offence, and the person is forced to give his
consent.
2. It is mainly of physical character.
3. The freedom of will is impaired.
4. It is of a violent character.
5. The agreement made by coercion is
2. UNDUE INFLUENCE
Meaning: In some circumstances, the
parties to an agreement are so placed to
each other in position to dominate the will
of the other. Consequently, the other party
is compelled to enter into an agreement
against his will as a result of unfair
influence. Such an agreement is said to be
induced by undue influence (sec 16,
1872).
Example of relations causing Undue Influence
Income tax officer-Assessee, Police officerAccused, Spiritual guru- Devotee, Doctor
Patient, Trustee and Beneficiary, ParentSon, Master- Servant, Solicitor and Client
etc.
No presumptions of undue influence in the
***Essential
ingredients
Misrepresentation
1.
2.
3.
of
4.The
effect
of
agreement
caused
by
misrepresentation is Voidable at the option
of the party whose consent has been
caused.
5. It may also arise from suppression of vital
facts. .It should be of facts material to the
contracts.
7.A
party
cannot
complain
of
misrepresentation if he had the means of
discovering
the
truth
with
ordinary
diligence.
8. It must be made before the conclusion of
contract with a view to inducing the other
party to enter into the contract.
9. The aggrieved party has two remedies
(a) He can avoid or rescind the contract, or
FRAUD
Sec,17, 1872 defines fraud. It means and
. includes any of the following acts committed
by a party to a Contract, or with connivance, or
by his agent, with intent to deceive the other
party thereof or his agent, or to induce him to
enter into the contract:1.The suggestion that a fact is true when it is
not true and the person making the suggestion
does not believe to be true.
2. The active concealment of a fact by a person
having knowledge or belief of the fact.
3. A promise made without any intention of
performing it.
4. Any other act fitted to deceive.
5.Any such act or omission as the law
specifically declares to be fraudulent.
6.Intentional misrepresentation which is the
4.
MISTAKE (Sec-20,21,22)
Mistake
is
erroneous
something. It may be a:(1)
Mistake of Law, or
(2)
Mistake of Fact.
belief
about
2. MISTAKE OF FACT.
It may be a Bilateral/Unilateral mistake
(1)Bilateral mistake.
b)POSSIBILITY
PERFORMANCE.
OF
LEGALITY OF
OBJECT
LEGALITY OF OBJECT
Introduction:An agreement is a contract if it is made
for a lawful consideration and with a lawful
object. [Sec. 10].
Every agreement of which if the object is
unlawful, it is void.
As per Sec-23, the consideration or object of an
agreement is unlawful if
(a) It is forbidden by law; or it is fraudulent;
or involves or implies injury to the person or
property of another; or
(b) If permitted, it would defeat the
provisions of Law.
If it is fraudulent.
(D) If it involves injury to person or property of another .
(E) The
Court regards it as immoral, or opposed to public
T
policy.
Effects of illegality.
No action is allowed on an illegal agreement.
This rule is based on the following two legal
maxims:
(1)No action arises from a bad cause.
(2)Where there is equal guilt, the defendant
is in a better position.
The effect of illegality are summed up as
follows:
(1)The collateral transactions to an illegal
agreement also become tainted with
illegality.
(2)No action can be taken for the:---a) Recovery of money paid or property
2.VOID AGREEMENTS
A
11. Agreements
events [Sec. 36].
contingent
on
impossible
4. Uncertain agreements
Section 29, All Agreements, the meaning of
which is not certain, or capable of being made
certain, are void.
Example:-A agrees to sell to B a hundred tons
of oil. There is nothing whatever to show
PERFORMANCE OF
CONTRACT
PERFORMANCE OF CONTRACT
Meaning:Performance of Contract means execution of
By
whom
performed?
must
contract
be
REMEDIES FOR
BREACH OF
CONTRACT