Indian Contract

Act,1872
• Bare Act
• Reference Books
• Civil law- Compensation
• Criminal law- punishment
• Breach of contract
  
• Section
• A section refers to a distinct portion or provision of a legal code or set of laws, often
establishing a particular legal requirement. For example- Section 5 of the Indian Contract Act.
 
• Article
• When any fundamentally critical document is framed or drafted which might be a
grundnorm. For example - United Nations Charter, International Conventions, Constitution of
a country, and so on, from where different laws or rules originate. Otherwise, municipal laws
normally contain sections.
 Rule
• A Rule is a subsidiary enactment that helps in governing law. They are secondary in nature,
meaning thereby that they don’t have an independent existence of their own. They are made
to make the parent Act function.
 Act
• An Act is a law that is passed by the legislature. It is also known as a statute. However, most
laws are not complete code in themselves, i.e. certain provisions as to their application or
enforcement, etc. are deliberately left out by the legislature due to which rules come into the
picture. For example- Companies Act 2013 is an Act. It has several rules governing its
operations such as Companies (Incorporation) Rules 2014.
The Act as enacted originally had 266 Sections, it had wide scope and applicable
all over India.

General Principles of Law of Contract – Sections 01 to 75

Contract relating to Sale of Goods – Sections 76 to 123
Special Contracts- Indemnity, Guarantee, Bailment & Pledge and Agency –
Sections 124 to 238
Contracts relating to Partnership – Sections 239 to 266

Indian Sale of Goods Act 1930

The Indian Partnership Act, 1932

At present the Indian Contract Act may be divided into
two parts:
•Part 1: deals with the General Principles of Law of
Contract Sections 1 to 75
•Part 2: deals with Special kinds of Contracts such as
1. Contract of Indemnity and Guarantee
2. Contract of Bailment and Pledge
3. Contract of Agency.
How is an agreement formed?
To form an agreement, the following ingredients are required:
Parties: There need to be two or more parties to form an agreement
Offer/ Proposal: When a person signifies to another his willingness of
doing or omitting to do something with a view to obtain other’s
assent. [Section 2(a)]
Acceptance: When the person to whom the proposal is made signifies
his assent for the same thing in the same sense as proposed by the
offeror. [Section 2(b)]
Promise: When a proposal is accepted, it becomes a promise. [Section
2(b)]
Consideration: It is the price for the promise. It is the return one gets
for his act or omission. [Section 2(d)]
Quid pro quo means Something in return of something.
All contracts are agreements but all agreements are not contracts

To make agreement a contract it should be legally enforceable.

If a 7-year-old boy is buying an ice-cream from an ice-cream vendor and giving

Rs. 10 in return, it becomes an agreement. This is because the boy offers to buy
ice-cream and the vendor accepts the offer which makes it a promise. The
consideration for both was ice-cream and money respectively.

Now, the law says that any contract entered with a person below the age of 18
years is not enforceable. In the above case, the deal between the boy and ice-
cream vendor was an agreement but it cannot be termed as a contract because
it is not legally enforceable.
 Promise = Offer/proposal + Acceptance

Agreement = Promise + Consideration

Contract = Agreement + Enforceability

Elements of contract
1) Two or more person
2) Offer and acceptance
3) Intention to create legal relationship
4) Free consent
5) Possibility of performance
6) Capacity
7) Lawful object and consideration
8) Not declared void
9) Legal formality
 Balfour v Balfour
Brief Facts
 In case of Balfour vs Balfour 1919, Mr Balfour and his wife went to
England for a vacation, and his wife became ill and needed medical
attention. They made an agreement that Mrs Balfour was to
remain behind in England when the husband returned to Ceylon
(Sri Lanka) and that Mr Balfour would pay her £30 a month until he
returned. This understanding was made while their relationship
was fine. However, the relationship later soured and the husband
stopped making the payments. The wife sought to enforce the
agreement. Later the parties separated and were divorced. The
wife brought this action for the money her husband had promised
to pay to her but had failed to do so.
 Balfour v Balfour
Held that :

Agreements made between a husband and wife to provide capitals are

generally not contracts because generally, the parties do not intend that
they should be attended by legal ends. Commonly parties to a marriage
will make arrangements for personal or household expenses. 

So the balfour law made it very clear that the legal intention to enter into a
contract is very necessary. The balfour law mostly moves around the
concept of legal intention as a basic and for most necessity to validate a
contract.