MERCANTILE LAW

Mercantile +
Law
INDIAN CONTRACT
ACT
Learning Outcomes
L1: Recognize the importance of the course
L2: Comprehend the essentials for creating a valid
contract
L3: Compare and contrast between various types of
contracts
HISTORY OF LAW

 Indian Contract Act came into force on 1st Sept,

1872.

 The act is applicable to whole India except the

state of Jammu & Kashmir.

 Nature of Law
DEFINITIONS
 CONTRACT IS AN AGREEMENT MADE BETWEEN 2
OR MORE PARTIES WHICH THE LAW WILL
ENFORCE.
 Contract

According to Salmond –
“Contract is an agreement creating and
defining obligations between the the parties.”
 CONTD…..

Promise
According to Section 2(b) of Indian Contract
Act,1872 –
“ A proposal when accepted becomes a
promise.”
AGREEMENT – Section 2(e)
 Agreement is a promise or set of promise.
In General Terms:
 Contract = Agreement + Enforceability by law

 Agreement = Offer + Acceptance + Consideration

CONTRACT – Section 2(h)
• Agreement enforceable by law is Contract.
• Contract implies of two constituents:-
 An Agreement

 Enforceable by Law

 Creates obligation
???
A agrees to sell his iphone 7 to B for Rs.50,000.
 Does the agreement gives rise to an obligation?

 Is this a contract?
 DEFINITIONS

1. Jus in personam
1. a right of legal action against or to enforce a legal duty of a particular
person or group of persons
2. Jus in rem
"a right to a thing:" that is, a right exercisable by one person over
a particular article of property in virtue of a contract or obligation
incurred by another person in respect to it and which is enforceable
only against or through such other person.
3. Consensus ad idem
Meeting of the minds (also referred to as mutual agreement,
mutual assent orconsensus ad idem)
???
My grandmother invited my brother to come
and stay with her for a week. My brother
accepts the invitation but when he reaches at
grandmother’s house, she could not
accommodate him because of no room
availability.

Can my brother claim compensation from

her? Give reasons.
Comment……

“ All the contracts are agreements

but
all the agreements are not
necessarily contracts.”
ESSENTIALS ELEMENTS OF VALID
CONTRACT

An agreement becomes enforceable by law

when it satisfies the essentials laid under
SECTION 10 of Contract Act.
1. Offer & acceptance – An Agreement
2. Intention to create legal relationship
3. Free & Genuine consent
4. Parties competent to contract
ESSENTIALS ELEMENTS OF VALID
CONTRACT

5. Lawful consideration
6. Lawful Object
7. Not declared to be illegal or void
8. Certainty of meaning
9. Possibility of performance
10. Necessary Legal formalities
Offer & acceptance
 A offers to sell his horse to b for 10,000 , B agrees
to buy it.
Intention to create legal relationship
 Agreement of a social or domestic nature do not
contemplate legal relationship
A husband promises his wife a house hold allowance of
$30 every month. later parties separated and the
husband failed to pay the amount. The wife sued for
the allowance.
 what would be the decision?
Lawful consideration
 Advantage or benefit moving from 1 party to
another.
 A agrees to sell his house to B for 5000rs.
 Is this a lawful consideration?
Capacity of parties - competency
 Age of majority
 Sound mind
 Not disqualified by law
Free & genuine consent
 Consensus
 Coercion
 Undue influence
 Fraud
 misrepresentation
Lawful object
 Illegal
 Immoral
 Opposed to public policy
 Agreement not declared void
 Agreement must not be expressly declared void by
law.
Certainty and possibility of performance

 Agreement should not be vague.

A agrees to sell b 100 tons of oil.
 Is it a valid contract?
Legal formalities
 A contract may be made by words spoken or
written.