Law of Contract

S.2(h) of the Indian Contract Act,1872 defines the term contract as: AN AGREEMENT ENFORCEABLE BY LAW IS A CONTRACT. Thus, to arrive at a contract there must be:

1. An agreement, and 2. The agreement should be enforceable by law.

Contract agreement Enforceability By law

Law of Contract

What is an agreement?

According to s.2(e) of Contract Act,1872 an agreement is defined as, every promise and every set of promise forming the consideration for each other.
What do you mean by enforceable by law? An agreement that the law will enforce is a contract. S.10,29,56 of the Act deals with conditions enforceability.

of

Essential elements of valid contract

1.

2.

3. 4.

5.

6.

Lawful offer and lawful acceptance Intention to create legal relations: not social or domestic but legal relationship eg Balfour v. Balfour Lawful consideration Capacity of parties s.11 majority, sound mind and must not be disqualified by law Free Consent: willfully it should not be induced by Coercion, undue influence, fraud, misrepresentation or mistake Lawful object i.e. it should not be opposed to public policy or immoral or fraudulent or illegal or must not imply to cause injury to the property or person of anr. Otherwise it will be void.

Essential elements of valid contract

7.

8.
9.

10.

Writing and registration Certainty Possibility of performance not expressly declared void s.56 An agreement to do an act which in itself is void. Eg A agrees with B, to discover treasure by magic. Not expressly declared void. S.24-30 eg. An agreement in restraint of marriage, trade and wagering are declared to be void.

CLASSIFICATION OF CONTRACTS
LAW OF CONTRACT CREATES jus in personam: The term jus in personam means a right against or in respect of a specific person. 1. Classification according to validity or enforceability. i. Valid ii. Voidable iii. Void contracts or agreements iv. Unenforceable: technical defects v. Illegal i.e. contrary to law. Those agreements whose object or consideration is (a) forbidden by law, (b) is of such nature that, if permitted, it would defeat the provisions of any law, ( c )is fraudulent, (d) involves or implies injury to the person or property of anr, (e) the court regards it as immoral or opposed to public policy. AN illegal agreement is Void ab-initio.

CLASSIFICATION OF CONTRACTS
2.
i. ii.

iii.

Classification according to Mode of formation Express contract :written or spoken words Implied contract : by act or conduct eg coolie, shoe-shine Constructive or Quasi contract s.68-72: constructive contracts are not true contracts. They dont depict traits of real contracts. Indian Contract Act recognises such Five instances of quasi contracts.

CLASSIFICATION OF CONTRACTS
3.
1.

Classification according to mode of execution

Executed Contract: when both the parties to a contract have

2.

completely performed their share of obligations and nothing remains to be done by either party under contract, it is an executed contract. For eg. (1)When a bookseller sells a book on cash payment, it is an executed contracts. Both the parties have fulfilled their obligations and nothing remains. (2) however even if one side performs his or her share of obligations then comes into existence unilateral executed contracts. For eg. A announces reward of Rs.10K to whosoever finds his missing son. B does so. Now contract is executed as far as B is concerned , now A has to discharge his obligation by giving reward. Executory contract are those where obligations of both parties are outstanding in toto. Eg A agrees to Sell Car to B for 10K. B gives 1K as token money and promises to give remaining amt by coming Sunday, A give him car keys and promises to give car papers etc on coming Sunday. Obligations of both sides remains outstanding.