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Laws Means?

Law includes all the rules and principles which

regulate our relations with other individuals and with
the State
Indian contract Act, 1872
• Sections 1 to 75 deals with the general principles of the law of
contract

• Section 124 to 238 – special contract, viz., indemnity and guarantee,

bailment & pledge and agency

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Indian contract Act, 1872
• A owes a certain amount of money to D. D has a right to recover this
amount from A. This right can be exercised only by D and by none else
against A.

• A is the owner of a car. She has a right to have quite possession &
enjoyment of that car against every member of the public.

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Contract
• An agreement made between two or more parties which the law will
enforce
• Contract = Agreement + enforceable by law (Sec. 2(h))

Law of contract
• Purpose
• To ensure the realization of reasonable expectation of the parties who enter
into a contract

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Contract
• Agreement – every promise and every set of promises, forming
consideration for each other.

• Promise - 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

Agreement = offer + Acceptance

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Contract
• Consensus ad idem – meeting of the minds of the parties
• Obligation – Imposes legal tie upon a definite person/persons the
necessity of doing or abstaining from doing a definite act
• Agreement is a very wide term – Social Vs Legal agreement

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Scenarios
• A, agrees to sell his car to S for $1000. The agreement gives rise to a
commitment on the part of A to deliver the car to S.

• K, who owns two hotels at Rome named ABC & CBA, K is selling hotel
ABC to J. J thinks he is purchasing hotel CBA.

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Valid Contract
• Offer and Acceptance
• Intention to create a legal association
• Lawful consideration
• Capacity of parties – competency
• Free and genuine consent
• Lawful object
• Agreement not declared void
• Certainty and possibility of performance
• Legal formalities
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 Classification of
Contracts

Validity Formation Performance

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Validity
• Voidable contract
• 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
• Occurs when there is no free consent in contract formation or involvement of coercion,
undue influence, fraud
• Voidable contract remains as a valid contract till it is avoided by the party entitled to do
so.

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Validity
• Voidable contract - Situations
• When a person promises to do something for another person for a
consideration but the other person prevents him from performing his
promise, the contract becomes voidable at his option
• When a party to a contract promises to perform an obligation within a
specified time, any failure to do makes the contract voidable at the option of
the promisee

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Validity
• Void agreement - An agreement not enforceable by law (i.e., void ab
initio)

• Void contract - A contract which ceases to be enforceable by law

becomes void when it ceases to be enforceable

• Illegal agreement - Lapses certain rules of basic public policy/criminal

in nature/immoral

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Formation
• Express contract - promises made in writing or by word of mouth

• Implied contract – A contract that is not written or spoken, but which

is assumed to exist based on the words and actions of the parties
involved

• Quasi-contract – contract created by law

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Performance
• Executed contract – Both the parties involved in the contract have
performed their respective obligations

• Executory contract – Both the parties have yet to perform their

obligations

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Constituents of offer
Offer is a proposal

• Obvious intention on the part of the offeror to be bound by it (signifies to the offeree
- his/her willingness to do or abstain from doing something)

• Offeror must make the offer with a view to obtain the acceptance from the offeree

• Offer must be definite

• Must be communicated to the offeree

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Legal rules as to offer
• Offer must give rise to legal obligation
• Terms of offer must be definite, unambiguous and
certain (not loose & vague)
• X says to B, I will sell you a book (?)
• Distinguished from
• Declaration of intention and an announcement
• An auctioneer advertised in newspaper that sale of a house will be
held
• A college publicized about the upcoming conferences
• An invitation to make an offer or do business
• Call for tenders/proposals for a civil contract

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Legal rules as to offer
• Offer must be communicated & must be done to gain
the assent of the other party
• Offer should not contain a term the non-compliance
of which may be assumed to amount to acceptance
• If you do not reply, I shall the assume the offer is accepted
• A statement of price is not an offer
• Will you sell your book? For the lowest price?
• Lowest price is Rs.1000

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Special Terms in contract
• Special terms when included should be brought to the notice of the
offeree at the initial phase of proposal
• If not the offeree will not be bound by them
• E.g. Terms and conditions associated with the purchase of travel ticket
or deposit of luggage in a cloak roam

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