01.

CONTRACT
Section 1-2 of the Indian Contract
1. Introduction
a. Meaning b. Definition c. Agreement and Contract d. Elements of Agreement & Contract

01 CONTRACT
1. INTRODUCTION The law relating to contracts is to be found in the Indian Contract Act, 1872. The law of contracts differs from other branches of law in a very important respect. It does not lay down so many precise rights and duties which the law will protect and enforce; it contains rather a number of limiting principles, subject to which the parties may create rights and duties for themselves and the law will uphold those rights and duties. Thus, we can say that the parties to a contract, in a sense make the law for themselves. So long as they do not transgress some legal prohibition, they can frame any rules they like in regard to the subject matter of their contract and the law will give effect to their contract.
MEANING: A contract is an agreement made between two (or) more

2. Essential Elements of Valid Contract

1. Offer and Acceptance 2. Intention to create legal relationship. 3. Free and genuine consent. 4. Lawful Object 5. Lawful consideration. 6. Capacity of Parties (Competency) 7. Agreements not declared void or illegal. 8. Certainty of meaning. 9. Possibility of performance.

10. Necessary Legal Formalities. 3. Classification

i. ii. iii. Validity Formation Performance

parties which the law will enforce.

DEFINITION: According to section 2(h) of the Indian contract act,

a. Contracts in English Law

4. History of Contract 5. Formation of Contract 6. Review of fundamentals

1872. An agreement enforceable by Law is a contract. Contract is An agreement creating and defining obligations between the parties

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Contract- 1 AGREEMENT AND CONTRACT

Contract

CONCLUSION: Contract = Agreement + Enforceability by law. Agreement = Offer + Acceptance+ consideration. Thus, all agreements are contracts but all agreements are not necessarily contracts.

While all Contacts are Agreements, All Agreements are not Contracts. An Agreement is a Promise or a commitment or set of reciprocal promises or commitments.
DEFINITION: The word Agreement is defined in section 2(e)

Every promise and every set of promises, forming the consideration for each other is an Agreement An Agreement involves an offer or proposal by one person and acceptance of such offer or proposal by another person. If the agreement is capable of being enforced by law then its a contract. Section 2(b) 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.
ELEMENTS OF AGREEMENT

2. ESSENTIAL ELEMENTS OF A VALID CONTRACT: According to section 10, All agreements are contracts if they are made by the free consent of the parties competent to contract, for a lawful consideration and with a lawful object and not here by expressly declared to be void In order to become a contract an agreement must have the following essential elements, they are follows:1. Offer and Acceptance 2. Intention to create legal relationship. 3. Free and genuine consent. 4. Lawful Object 5. Lawful consideration. 6. Capacity of Parties (Competency) 7. Agreements not declared void or illegal. 8. Certainty of meaning. 9. Possibility of performance. 10. Necessary Legal Formalities. These essential elements are explained briefly.

The TWO Elements of an Agreement are: (i) Offer or a proposal; and (ii) An acceptance of that offer or proposal.
ELEMENTS OF CONTRACT

Contract consists of TWO elements: (i) An agreement; and (ii) Legal obligation, i.e., it should be enforceable at law.

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Contract- 1 1. OFFER AND ACCEPTANCE.

Contract

If an agreement suffers from any legal flaw, it would not be enforceable by law.
5. LAWFUL CONSIDERATION:

To constitute a contract there must be an offer and an acceptance of that offer. The offer and acceptance should relate to same thing in the same sense. There must be two (or) more persons to an agreement because one person cannot enter into an agreement with himself.
2. INTENTION TO CREATE LEGAL RELATIONSHIP.

An agreement to be enforceable by law must be supported by consideration. Consideration means an advantage or benefit moving from one party to other. In other words something in return. The agreement is enforceable only when both the parties give something and get something in return. The consideration must be real and lawful.
6. CAPACITY OF PARTIES: (COMPETENCY).

The parties must have intention to create legal relationship among them. Generally, the agreements of social, domestic and political nature are not a contract. If there is no such intention to create a legal relationship among the parties, there is no contract between them
3. FREE AND GENUINE CONSENT.

The parties to a contract should be capable of entering into a valid contract. Every person is competent to contract if i. He is the age of majority. ii. He is of sound mind and iii. He is not dis-qualified from contracting by any law. The flaw in capacity to contract may arise from minority, lunacy, idiocy, drunkenness, etc..,
7. AGREEMENT NOT TO BE DECLARED VOID.

The consent of the parties to the agreement must be free and genuine. Free consent is said to be absent, if the agreement is induced by i. Coercion iii. Fraud. v. ii. iv. Mistake. Undue influence Mis-representation

4. LAWFUL OBJECT.

The agreements must not have been expressly declared to be void u/s 24 to 30 of the act.
EXAMPLE:

The object of the agreement must be lawful. In other words, it means the object must not be a) Illegal, (b) immoral, (c) opposed to public policy.
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Agreements

in

restraint

of

trade,

marriages,

legal

proceedings, etc..,
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Contract- 1 8. CERTAINTY:

Contract
THE ABOVE DISCUSSION CAN BE DIAGRAMMATICALLY REPRESENTED AS

The meaning of the agreement must be certain and not be vague (or) indefinite. If it is vague (or) indefinite it is not possible to ascertain its meaning.
EXAMPLE:

PROPOSAL PROMISE CONSIDERATION AGREEMENT LEGALLY ENFORCEABLE CONTRACT VOIDABLE AGREEMENT LEGALLY NOT ENFORCEABLE VOID AGREEMENT

A agrees to sell to B a hundred tons of oil. There is nothing whatever to show what kind of an oil intended; the agreement is void for uncertainty.
9. POSSIBILITY OF PERFORMANCE:

The terms of an agreement should be capable of performance. The agreement to do an act impossible in itself is void and cannot be enforceable.
EXAMPLE:

3. CLASSIFICATIONS OF CONTRACTS

Contracts is classified according to as follows

TYPES OF CONTRACT ON THE BASIS OF

A agrees with B, to put life into Bs dead wife, the agreement is void it is impossible of performance.
VALIDITY 10. NECESSARY LEGAL FORMALITIES: FORMATION PERFORMANCE

According to Indian contract Act, oral (or) written are perfectly valid. There is no provision for contracting being written, registered and stamped. But if is required by law, that it should comply with legal formalities and then it should be complied with all legal (or) necessary formalities for its enforceability.

VALID CONTRACT

EXPRESS

EXCUTED

VOID CONTRACT

IMPLIED

EXECUTORY

VALIDABLE CONTRACT ILLEGAL AGREEMENT

QUASI

UNILATERAL

BILATERAL

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Contract- 1 3.1. ON THE BASIS OF VALIDITY: 1. VALID CONTRACT

Contract

is fraudulent; or (4) involves or implies injury to the person or property of another; or (5) the court regards it as immoral, or opposed to public policy. These agreements are punishable by law. These are void-ab-initio. All illegal agreements are void agreements but all void agreements
are not illegal.

An agreement which has all the essential elements of a contract is called a valid contract. A valid contract can be enforced by law.
2. VOID CONTRACT [SECTION 2(J)].

A Contract which ceases to be enforceable by law becomes void when it ceases to be enforceable Thus a void contract one which cannot be enforced by a court of law.
3. VOIDABLE CONTRACT [SECTION 2(I)].

5. UNENFORCEABLE CONTRACT:

Where a contract is good in substance but because of some technical defect cannot be enforced by law is called unenforceable contract. These contracts are neither void nor voidable.

An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of other or others, is a voidable contract. If the essential element of free consent is missing in a contract, the law confers right on the aggrieved party either to reject the contract or to accept it. However, the contract continues to be good and enforceable unless it is repudiated by the aggrieved party.
4. ILLEGAL CONTRACT:

3.2 ON THE BASIS OF FORMATION:

1. EXPRESS CONTRACT:

Where the terms of the contract are expressly agreed upon in words (written or spoken) at the time of formation, the contract is said to be express contract. Section 9 of the Act provides that if a proposal or acceptance of any promise is made in words the promise is said to be express.
2. IMPLIED CONTRACT:

An implied contract is one which is inferred from the acts or An illegal agreement is one the consideration or object of which (1) is forbidden by law; or (2) defeats the provisions of any law; or (3) conduct of the parties or from the circumstances of the cases.

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Contract- 1

Contract 3. UNILATERAL CONTRACT.

Where a proposal or acceptance is made otherwise than in words, promise is said to be implied.
3. QUASI CONTRACT:

A unilateral contract is one sided contract in which only one party as to perform his duty or obligation.
4. BILATERAL CONTRACT

A quasi contract is created by law. Thus, quasi contracts are strictly not contracts as there is no intention of parties to enter into a contract. It is legal obligation which is imposed on a party who is required to perform it. A quasi contract is based on the principle that a person shall not be allowed to enrich himself at the expense of another. Contract which are created neither by word spoken, nor written, Nor by the conduct of the parties but these are created by the Law.
3.3 ON THE BASIS OF PERFORMANCE:
1. EXECUTED CONTRACT:

A bilateral contract is one in which the obligation on both the parties to the contract is outstanding at the time of the formation of the contract. Bilateral contracts are also known as contracts with executory consideration.
CLASSIFICATION OF CONTRACTS IN THE ENGLISH LAW

In English Law, contracts are classified into TWO Types a. Formal Contracts b. Simple Contracts.

An executed contract is one in which both the parties have performed their respective obligation.
2. EXECUTORY CONTRACT:

A. FORMAL CONTRACTS

Formal contracts are those whose validity or legal force is based upon form alone. Formal Contracts again classified in to TWO Types i. Contracts of Record ii Contracts Under seal
E CONTRACT: An e contract is one, which is entered into

An executory contract is one where one or both the parties to the contract have still to perform their obligations in future. Thus, a contract which is partially performed or wholly unperformed is termed as executory contract. An executory contract is one which is wholly unperformed, or in which there remains something further to be done.
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between two parties via the internet.

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Contract- 1

Contract

4. HISTORY OF CONTRACT Indian contract Act 1872 is the main source of law regulating contracts in Indian law.

Indian contract deals with the enforcement of these rights and duties upon the parties in India. The Third Law commission of British India formed in 1861 under Act No. 9 of 1872 Parliament of India 25th April 1872 1st September 1872 the stewardship of Chairman Sir John Romilly, with initial members as Sir Edward Ryan, R. Lowe, J.M. Macleod, Sir W. Erle (succeeded by Sir. W.M. James) and Justice Wills (succeeded by J. Henderson), had presented the report on contract law for India as Draft Contract Law (1866). The Draft Law was enacted as The Act 9 of 1872 on 25th April 1872 and the Indian Contract Act, 1872 came into force with effect from September 1, 1872. Before the enactment of the Indian Contract Act, 1872, there was no codified law for contract in India. In the Presidency Towns of Madras, Bombay and Calcutta law

Citation Enacted by Date Enacted Date Commenced

: : : :

The law relating to contracts in India is contained in Indian

Contract Act, 1872.

The Act was passed by British India and is based on the principles of English Common Law. It is applicable to the All the States of India except the State of Jammu & Kashmir. It determines the circumstances in which promise made by the parties to a contract shall be legally binding on them. All of us enter into a number of contracts everyday knowingly or unknowingly. Each contract creates some right and duties upon the contracting parties.

relating to contract was dealt with the Charter granted in 1726 by King George I to the East India Company. Thereafter in 1781, in the Presidency Towns, Act of Settlement passed by the British Government came into force. Act of Settlement required the Supreme Court of India that questions of inheritance and succession and all matters of

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Contract- 1

Contract

contract

and dealing

between

party

and party should be

Subsequently the provisions relating to the sale of goods and partnership contained in the Indian Contract Act were repealed respectively in the year 1930 and 1932 and new enactments namely Sale of Goods and Movables Act 1930 and Indian Partnership act 1932 were re-enacted. At present the Indian Contract Act includes.

determined in case of Hindu as per Hindu law and in case of Muslim as per Muslim law and when parties to a suit belonged to different persuasions, then the law of the defendant was to apply. In outside Presidency Towns matters with regard to contract was mainly dealt with English Contract Laws; the principle of justice, equity and good conscience was followed.
NOTE

General Principles of Law of Contract Special kinds of Contracts (Includes indemnity, guarantee, bailment & pledge)

1 to 75

125 to 238

The Act as enacted originally had 266 Sections, it had wide scope and included. General Principles of Law of Contract Contract relating to Sale of Goods Special kinds of Contracts (Includes indemnity, guarantee Bailment & pledge Contracts relating to Partnership : : 1 to 75 76 to 129 5. FORMATION OF CONTRACT In addition to the elements of a contract:
A party must have capacity to contract; The purpose of the contract must be lawful; The form of the contract must be legal;

125 to 238

The parties must intend to create a legal relationship; and The parties must consent.

239 to 266 As a result, there are a variety of affirmative defenses that a party may assert to avoid his obligation. ************************************* ******************************************

Indian Contract Act embodied the simple and elementary rules relating to Sale of goods and partnership. The developments of modern business world found the provisions contained in the Indian Contract Act inadequate to deal with the new regulations or give effect to the new principles.

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02. Offer and acceptance

Section 3 9 of the Indian contract
2. Introduction a. Offer b. Acceptance 3. Communication a. Offer b. Acceptance 4. Revocation a. Communication of revocation 5. 6. 7. Classification of offer Invitation to offer Essential elements a. Offer b. Acceptance 8. Tenders

02 OFFER AND ACCEPTANCE

1. INTRODUCTION OFFER
DEFINITION: According to section 2(a) of Indian contract act, 1872,

defines offer as 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. ACCEPTANCE
DEFINITION: According to section 2(b) of the Indian contract Act,

1872, defines an acceptance is when the person to whom the proposal is made signifies is assent thereto, the proposal is said to be accepted becomes a promise.
On the acceptance of the proposal, the proposer is called the

promised/offer or and the acceptor is called the promise/offered. 2. COMMUNICATION

COMMUNICATION OF OFFER:

An offer its acceptance and their revocation (withdrawal) to be

complete when it must be communicated.

When the contracting parties are face to face and negotiate in person,

a contract comes into existence the movement the offere gives his absolute and unqualified acceptance to the proposal made by the offeror.
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Contract- 1
RULES REGARDING COMMUNICATION OF OFFER:

Offer and Acceptance

a. As against the proposer when the letter of acceptance is posted.

i. ii. iii.

The communication of an offer is complete when it comes to the knowledge of the person to whom it is made. An offer may be communicated either by words spoken (or) written (or) it may be inferred from the conduct of the parties. When an offer/proposal is made by post, its communication will be complete when the letter containing the proposal reaches the person to whom it is made.

b. As against the acceptor when the letter reach the proposer.

3. REVOCATION
REVOCATION OF OFFER:

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.
REVOCATION OF ACCEPTANCE

COMMUNICATION OF ACCEPTANCE.

An acceptance may be revoked at any time before the communication

An offer, its acceptance and their revocation (withdrawal) to be

of the acceptance is complete as against the acceptor, but not afterwards. Section 16, of the Indian contract act, 1872 deals with various modes of revocation of offer
A PROPOSAL IS REVOKED -

complete when it must be communicated.

When the contracting parties are face to face and negotiate in

person, a contract comes into existence the movement the offeree gives his absolute and unqualified acceptance to the proposal made by the offeror.
RULES REGARDING COMMUNICATION OF ACCEPTANCE:-

According to it, an offer is revoked/lapses (or) comes to an end under following circumstances.
1. BY COMMUNICATION OF NOTICE: An offeror may revoke his offer at

i. Communication of an acceptance is complete:a. As against the proposer/offeror when it is put into the certain course of transmission to him, so as to be out of the power of the acceptor. b. As against the acceptor, when it comes to knowledge of the proposer. ii. When a proposal is accepted by a letter sent by the post the communication of acceptance will be complete:Vivekanand.M.Bonal (M.Tech)

any time before the acceptance by giving a simple notice of revocation, which can be either oral (or) written.
2. BY LAPSE OF REASONABLE TIME: An offer will revoke if it is not

accepted within the prescribed/reasonable time. If however, no time is prescribed it lapses by the expiry of a reasonable time.
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Contract- 1 3. BY NON-FULFILLMENT OF SOME CONDITIONS: When offeror has 8. By death (or) insanity of the offeree/acceptor. 9. By destruction of the subject matter. COMMUNICATION OF REVOCATION.

Offer and Acceptance

prescribed some conditions to be fulfilled and offeree/ acceptor fails to fulfill the conditions required to acceptance. In such a case offer will be revoked.
4. BY DEATH (OR) INSANITY OF THE OFFEROR: The death of the offeror

An offer, its acceptance and their revocation (withdrawal) to be complete when it must be communicated. When the contracting parties are face to face and negotiate in person, a contract comes into existence the movement the offeree gives his absolute and unqualified acceptance to the proposal made by the offeror.

does not automatically revoke the offer. When the death (or) insanity of the offeror provided the offeree comes to know before its acceptance it will be revoked. Otherwise if he accepts an offer in ignorance of the death (or) insanity of the offeror, the acceptance is valid.
5. BY A COUNTER OFFER:

counter

offer

means

when

the

RULES REGARDING COMMUNICATION OF REVOCATION: 1.

offeree/acceptor offers to qualified acceptance of the offer subject to modifications and variations in the terms of original offer. Therefore counter offer amounts to rejection of the original offer.
6. BY CHANGE IN LAW: An offer comes to an end if the law is changed so

As against the person who makes it, when it put into a course of transmission.

2.

As against the person to whom it is made, when its comes to his knowledge.

as to make the contract contemplated by the offer illegal (or) incapable of performance.
7. AN OFFER IS NOT ACCEPTED ACCORDING TO THE PRESCRIBED (OR) USUAL MODE: If the offer is not accepted according to the prescribed

4. CLASSIFICATION OF OFFER. Classification of Offer is as follows 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

(or) usual mode, provides offeror gives notice to the offeree within a reasonable time that the offer is not accepted according to the prescribed/usual mode. If the offeror keeps quite, he is deemed to have accepted the offer.
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Contract- 1 1. GENERAL OFFER.

Offer and Acceptance

5. INVITATION TO OFFER If a person makes an invitation to make an offer/proposal, the other person makes an offer/proposal in response. The offer/proposal may or may not be accepted. "An invitation to offer" is only a circulation of an invitation to make an offer, it is an attempt to induce offers and precedes a definite offer. Acceptance of an invitation to an offer does not result in formation of a contract and only an offer emerges in the process of negotiation. A statement made by a person who does not intend to bound by it but, intends to further act, is an invitation to offer. 6. TENDERS
EXAMPLE:

The general offer may be accepted by any one by complying with the terms of the offer. An offer can be made a public is called General Offer.
2. SPECIAL OFFER OR SPECIFIC OFFER

An offer can be made a definite person or a group of persons, is called Special Offer.
3. CROSS OFFER.

When two (or) more identical offers exchanged between the parties in ignorance at the time of each others offer, the offer are called as cross offers. In such a case, the courts construe one offer as the offer and the other as the acceptance. Thus a cross offers will not create any contract.
4. COUNTER OFFER.

Tender notice is an invitation to make a proposal/offer.

Then the response to a tender notice is an offer and can be in two ways:
A DEFINITE OFFER:

When the offeree offers to qualified acceptance of the offer subject to modifications and variations in the terms of the original offer, he is said to have made a counter offer. Counter offer amounts to rejection of the original offer. In such a case an offer may be revoked.
The offer must be distinguished from an invitation to offer.

When tenders are invited for the supply of specified goods or services, Each tender submitted is an offer. The party inviting tender may accept any tender he chooses Thereby bringing about a contractual relationship with the person (tender) so chosen.

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Contract- 1 A STANDING OFFER

Offer and Acceptance

4. OFFER MUST BE DISTINGUISHED FROM AN INVITATION TO OFFER:

Where goods or services are required continuously over a certain period, a trader may invite tenders as a standing offer which is a continuing offer. The effect is that as and when goods or services are required, an order is placed with the person whose tender has been accepted. However, at each such time a distinct contract is made. 7. ESSENTIAL ELEMENTS
LEGAL RULES OF A VALID OFFER / PROPOSAL:-

proposer/offer must be distinguished from an invitation to offer. In the case of invitation to offer, the person sending out the invitation does not make any offer, but only invites the party to make an offer. Such invitations for offers are not offers in the eyes of law and do not become agreement by the acceptance of such offers.
5. OFFER MAY BE EXPRESSED (OR) IMPLIED:

An offer may be made either

by words (or) by conduct. A social An offer which is expressed by words (i.e.., spoken or written) is called an EXPRESS OFFER and offer which is inferred from the conduct of a person (or) the circumstances of the case is called an IMPLIED OFFER.
6. OFFER MUST BE MADE BETWEEN THE TWO PARTIES:

1. OFFER MUST BE CAPABLE OF CREATING LEGAL RELATIONS:

invitation, even if it is accepted does not create legal relationship because it is not so intended to create legal relationship. Therefore, an offer must be such as would result in a valid contract when it is accepted.
2. OFFER MUST BE CERTAIN, DEFINITE AND NOT VAGUE:

There must be two

If the terms of the

(or) more parties to create a valid offer because one person cannot make a proposal/offer to himself.
7. OFFER MAY BE SPECIFIC (OR) GENERAL:

offer are vague, indefinite, and uncertain, it does not amount to a lawful offer and its acceptance cannot create any contractual relationship.
3. OFFER MUST BE COMMUNICATED:

An offer is said to be specific

when it is made to a definite person, such an offer is accepted only An offer is effective only when it is by the person to whom it is made. On the other hand general offer is one which is made to a public at large and maybe accepted by anyone who fulfills the requisite conditions.

communicated to the person whom it is made unless an offer is communicated; there is no acceptance and no contract. An acceptance of an offer, in ignorance of the offer can never treat as acceptance and does not create any right on the acceptor.

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Contract- 1
8. OFFER MUST BE MADE WITH A VIEW TO OBTAINING THE ASSENT:

Offer and Acceptance

A offer to

A mere mental acceptance is no acceptance.

3. ACCEPTANCE MUST BE ACCORDING TO THE MODE PRESCRIBED (OR) USUAL AND REASONABLE MANNER:

do (or) not to do something must be made with a view to obtaining the assent of the other party addressed and it should not made merely with a view to disclosing the intention of making an offer.

If the offeror prescribed a mode of acceptance, acceptance must

9. OFFER MUST NOT BE STATEMENT OF PRICE:

A mere statement of

give according to the mode prescribed. If the offeror prescribed no mode of acceptance, acceptance must give according to some usual and reasonable mode. If an offer is not accepted according to the prescribed (or) usual mode. The proposer may within a reasonable time give notice to the offeree that the acceptance is not according to the mode prescribed. If the offeror keeps quite he is deemed to have accepted the acceptance.
4. ACCEPTANCE MUST BE GIVEN WITH IN A REASONABLE TIME:

price is not treated as an offer to sell. Therefore, an offer must not be a statement of price.
10.

Offer should not contain a term the non-compliance of which may be assumed to amount to acceptance.

LEGAL RULES AS TO ACCEPTANCE:

A valid acceptance must satisfy the following rules:1. ACCEPTANCE MUST BE ABSOLUTE AND UNQUALIFIED:

An acceptance to be valid it must be absolute and unqualified and in accordance with the exact terms of the offer. An acceptance with a variation, slight, is no acceptance, and may amount to a mere counter offer (i.e.., original may or may not accept.
2. ACCEPTANCE MUST BE COMMUNICATED TO THE OFFEROR:

If any time limit is specified, the acceptance must be given within that time. If no time limit is specified, the acceptance must be given within a reasonable time.
5. IT CANNOT PRECEDE AN OFFER:

For a valid acceptance, acceptance must not only be made by the offeree but it must also be communicated by the offeree to the offeror. Communication of the acceptance must be expressed or implied.
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If the acceptance precedes an offer, it is not a valid acceptance and does not result in a contract. In other words acceptance subject to contract is no acceptance.

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Contract- 1

Offer and Acceptance

6. ACCEPTANCE MUST BE GIVEN BY THE PARTIES (OR) PARTY TO WHOM IT IS MADE:

REVIEW QUESTIONS

An offer can be accepted only by the person (or) persons to whom it is made. It cannot be accepted by another person without the consent of the offeror.
7. IT CANNOT BE IMPLIED FROM SILENCE:

Silence does not amount to acceptance. If the offeree does not respond to offer (or) keeps quite, the offer will lapse after reasonable time. The offeror cannot compel the offeree to respond offer (or) to suggest that silence will be equivalent to acceptance.
8. ACCEPTANCE MUST BE EXPRESSED (OR) IMPLIED:

An acceptance may be given either by words (or) by conduct. An acceptance which is expressed by words (i.e.., spoken or written) is called EXPRESSED ACCEPTANCE.

An acceptance which is inferred by conduct of the person (or) by circumstances of the case is called an IMPLIED OR TACIT
ACCEPTANCE.

9.

Acceptance may be given by performing some condition (or) by accepting some consideration. ***************************

10.

Acceptance must be made before the offer lapses (or) before the offer is withdrawn.

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Definitions

DEFINITIONS (SEC 2)
1. OFFER OR POPOSAL) [SECTION 2(A)] When one person signifies to another his willingness to do or to

from doing something, such act or abstinence or promise is called a consideration for the promise.
Price paid by the one party for the promise of the other Technical

abstain from doing anything, with a view to obtaining the assent of that other person either to such act or abstinence, he is said to make a proposal.

word meaning QUID-PRO-QUO i.e. something in return.

6. AGREEMENT 2(E) Every promise and set of promises forming the consideration for

2. ACCEPTANCE 2(B) When the person to whom the proposal is made, signifies his assent

each other. In short, agreement = offer + acceptance.

7. CONTRACT 2(H) An agreement enforceable by Law is a contract.

there to, the proposal is said to be accepted.

3. PROMISE 2(B) 8. VOID AGREEMENT 2(G) A Proposal when accepted becomes a promise. In simple words,

when an offer is accepted it becomes promise.

4. PROMISOR AND PROMISE 2(C) When the proposal is accepted, the person making the proposal is

An agreement not enforceable by law is void. 9. VOIDABLE CONTRACT 2(I) An agreement is a voidable contract if it is enforceable by Law at

the option of one or more of the parties there to (i.e. the aggrieved party), and it is not enforceable by Law at the option of the other or others.
10. VOID CONTRACT A contract which ceases to be enforceable by Law becomes void

called as promisor and the person accepting the proposal is called as promisee.
5. CONSIDERATION 2(D) When at the desire of the promisor, the promisee or any other

person has done or abstained from doing something or does or abstains from doing something or promises to do or abstain

when it ceases to be enforceable.

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CONTRACT

AGREEMENT

1 2 3 4 5 6 7

Section. 2(h) A contract is an agreement enforceable by law. Every contract is enforceable A contract includes an agreement. The scope of a contract is limited, as it includes only commercial agreements. Only legal agreements are called contracts. Every contract contains a legal obligation.

Sec. 2(e) Every promise or every set of promises forming consideration for each other is an agreements. Every promise is not enforceable. An agreement does not include a contract. Its scope is relatively wider, as it includes both social agreement and commercial agreements. An agreement may be both legal and illegal. It is not necessary for every agreement to have legal obligation