INDIAN CONTRACT

ACT
 HISTORY OF LAW

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

1872.

Applicability :

 The act is applicable to whole India except the

state of Jammu & Kashmir.
 AGREEMENT – Section 2(e)
• Agreement is a promise or set of promise.
In General Terms:
 Contract = Agreement + Enforceability by law
 Agreement = Offer + Acceptance + Consideration

• Agreement (Section 2(e))

• Every promise and every set of promises,
• Forming the consideration for each other
 CONTRACT – Section 2(h)
• Agreement enforceable by law is Contract.
• Contract implies of these constituents:-
 An Agreement
 Enforceable by Law
 Creates obligation

• Legal obligation
• “an agreement to become a contract must give rise to a legal
obligation , i.e., a duty enforceable by law.
 ???
A offers to sell his iphone 6 to B for Rs.50,000
and Mr. B accepted the offer.
• Does the agreement gives rise to an
obligation?
Yes, this creates legal obligation between Parties
• Is this a contract?
• It is valid contract
 DEFINITIONS
1. Contract
According to Salmond –
“Contract is an legal agreement creating and defining
obligations between the two parties.”
2. Promise
According to Section 2(b) of Indian Contract Act,1872 –
“ A proposal when accepted becomes a promise.”
3. Jus in personam-Rights against particular
person
4. Jus in rem – Rights against Everyone
5. Consensus ad idem – Free Consent
 ???
My mother invited her sister to come and
stay with her for a week. Her sister accepts
the invitation but when she reaches at
mother’s house, she refuse on her stay
because of no room availability.

Can sister claim compensation from my

mother? Give reasons.
No, this is social agreement so no legal
obligation arises
 Comment……
“ All the contracts are agreements
but
all the agreements are not necessarily
contracts.”
 ESSENTIAL ELEMENTS OF A VALID
CONTRACT

1. Offer and acceptance

2.
3. Lawful consideration
4. Capacity of parties(minority, lunacy, idiocy, drunkedness)
5. Free consent
6. Lawful object

Entering into Contract for a Stolen Bike

7. Writing and registration

8. Certainity in Terms & Conditions

Be sure about which flowers you need to buy ??
9. Possibility of Performance

Contract for bringing stars from the sky is not possible to perform.
 KINDS OF CONTRACT

1. Point of view of enforceability(validity)

2. Point of view of mode of creation(formation)

3. Point of view of extent of execution(performance)

1. Point of view of enforceability

(a) Valid contract:- enforceable by law

(b) Voidable contract:- enforceable by law at option of the

aggrieved parties.
(A, threatens to shoot B if he does not sell his new
Bajaj bike to A for Rs. 2000, B agrees. The contract has been
brought about by coercion and is voidable at the option of B.)

(c) Void contract:- not binding in law

(d) Unenforceable contract:- is valid in itself but not capable of
being enforced in court of law because of some technical
defect such as absence of writing.

(e) Illegal or unlawful contract:- if either the consideration

given for the contract or the object of the contract is
illegal.
For example: Tom promises to give Jerry $5,000 if Jerry robs a
bank on Saturday. This is an illegal contract because the
object of the contract is illegal.
2. Point of view of mode of creation(formation)

a) Express contract:- offer and acceptance both are made in

words spoken or written.
A tells B on telephone that he offers to sell his car for Rs.
80000 and B in reply informs A that he accepts the offer

b) Implied contract:- offer and acceptance by acts and conduct

of the parties.
A, a coolie in uniform takes up luggage of B to be carried
out of railway station without being asked by B, and B
allows him to do so, law implies that B agrees to pay for the
services of A]
c) Constructive or Quasi Contract :- Contract created by
law not by intention of parties.

E.xample: A, came into contract with B, to deliver some

product to B but by mistake he delivers the same product
to C, now the contract formed between A and C in quasi
contract]
3. Point of view of extent of execution

a. Executed contract:- parties of contract completely

performed their share of obligation.

b. Executory contract:- obligations are outstanding.

Example: T agrees to coach R, a medical student, from first

day of next month and R agrees to pay a consideration of
Rs. 3000p.m., the contract is executory because it is yet
to be carried out.