Вы находитесь на странице: 1из 18

INDIAN CONTRACT ACT, 1872

INTRODUCTION

• Contract is simpler terms is nothing but a mere “understanding”


• The understanding is in written terms signifying legal obligations on both the parties
• Both the parties have to perform their respective obligations
• Non-performance would lead to legal consequences under various legislations
• The important legislation governing the contracts is Indian Contract Act, 1872.
INDIAN CONTRACT ACT,1872

• CHAPTERISATION:
• Preliminary- Section 1 to 2
• CHAPTER I- OF THE COMMUNICATION, ACCEPTANCE AND REVOCATION OF
PROPOSALS (Section 3-9)
• CHAPTER II- OF CONTRACTS,VOIDABLE CONTRACTS AND VOID
AGREEMENTS (Section 10-30)
• CHAPTER III- OF CONTINGENT CONTRACTS (Section 31-36)
• CHAPTER IV- OF THE PERFORMANCE OF CONTRACTS (Section 37-67)
• CHAPTER V- OF CERTAIN RELATIONS RESEMBLING THOSE CREATED BY
CONTRACT (Section 68-72)
• CHAPTER VI- OF THE CONSEQUENCES OF BREACH OF CONTRACT (Section
73-75)
• CHAPTER VII- SALE OF GOODS (Section 76-123) {Repealed by Indian Sale of Goods
Act, 1930}
• CHAPTER VIII- OF INDEMNITY AND GUARANTEE (Section 124-147)
• CHAPTER IX- OF BAILMENT (Section 148-181)
• CHAPTER X- AGENCY (Section 182-238)
• CHAPTER XI- OF PARTNERSHIP (Section 239-266) {Repealed by Indian Partnership
Act, 1932}
FORMATION OF CONTRACT

• Proposal or offer {(S. 2(a)}


• Promise or Acceptance {(S. 2(b)}
• Consideration {(S. 2(d)}
• Agreement {(S. 2(e)}
• Legally enforceable agreement is Contract {(S. 2(h)}
• Agreement enforceable at the option of one party is Voidable contract {(S. 2(i)}
• Agreement not legally enforceable is void agreement {(S. 2(g)}
ESSENTIALS OF CONTRACT

• Intention to create legal obligation through offer and acceptance should be present.
(Case: Balfour vs Balfour)
• Free consent of the parties. (read Section 13, 14 to 18)
• Competency or capacity to enter into contract.
(Case: Mohori Bibi v Dharmodas Ghose)
• Lawful consideration and Lawful object.
• Certainty of terms.
• Possible to perform.
TYPES OF CONTRACT

• On the basis of Formation


• Express Contracts
• Implied Contracts
• Quasi Contracs {Section 68 to 72}

• On the basis of Consideration


• Bilateral Contracts
• Unilateral Contracts
• On the basis of Execution
• Executed Contracts
• Executory Contracts

• On the basis of Validity


• Valid Contracts
• Void Contracts {read Section 24 to 30}
• Voidable Contracts {read Section 13 to 19}
• Illegal Contracts

• E-Contracts
OFFER/PROPOSAL

• Section 2(a): 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.
• Types:
• General offer
Cases: (Carlill v Carbolic Smoke Ball Co.), (Lalman Shukla v Gauri Dutt)
• Specific offer
• Cross offer
• Counter offer
• Standing offer/continuing offer
INVITATION TO OFFER

• Invitation to offer is different from offer.


• Some examples:
• (i) Subscription of share.
• (ii) Display of goods, catalogues, menus etc.
• (iii) Tenders
• (iv) Quotation of prices of goods and services.
• (Case: Fisher v Bell)
ACCEPTANCE/PROMISE

• “Acceptance is to offer what a lighted match is to a train of gun powder.”- Sir William Anson
• Section 2(b): A proposal or offer is said to have been accepted when the person to whom
the proposal is made signifies his assent to the proposal to do or not to do something.
• Acceptance must be absolute and unqualified
• The acceptance must be communicated
• Acceptance must be in the prescribed mode
• Acceptance by conduct
COMMUNICATION, ACCEPTANCE AND
REVOCATION OF PROPOSALS
• Section 3: Communication, acceptance and revocation of proposals
• Section 4: Communication when complete.—The communication of a proposal is
complete when it comes to the knowledge of the person to whom it is made.
Illustration: A proposes, by letter, to sell a house to B at a certain price. The
communication of the proposal is complete when B receives the letter.
• The communication of an acceptance is complete,— as against the proposer, when it
is put in a course of transmission to him, so as to be out of the power of the
acceptor;
as against the acceptor, when it comes to the knowledge of the proposer.
Illustration: B accepts A’s proposal by a letter sent by post. The communication of the
acceptance is complete, as against A when the letter is post;
as against B, when the letter is received by A.
• The communication of a revocation is complete,— as against the person who makes it, when
it is put into a course of transmission to the person to whom it is made, so as to be out of
the power of the person who makes it;
as against the person to whom it is made, when it comes to his knowledge.
Illustration: A revokes his proposal by telegram. The revocation is complete as against A when the
telegram is despatched. It is complete as against B when B receives it. B revokes his acceptance
by telegram. B’s revocation is complete as against B when the telegram is despatched, and as
against A when it reaches him
REVOCATION OF PROPOSALS AND ACCEPTANCES

• Section 5: Revocation of proposals and acceptances.—A proposal may be revoked at any time before the
communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance
may be revoked at any time before the communication of the acceptance is complete as against the
acceptor, but not afterwards.
• Eg: A proposes, by a letter sent by post, to sell his house to B.
B accepts the proposal by a letter sent by post.
A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance,
but not afterwards.
B may revoke his acceptance at any time before or at the moment when the letter communicating it
reaches A, but not afterwards.
REVOCATION HOW MADE

• Section 6: Revocation how made.—A proposal is revoked—


• (1) by the communication of notice of revocation by the proposer to the other party;
• (2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time
is so prescribed, by the lapse of a reasonable time, without communication of the
acceptance;
• (3) by the failure of the acceptor to fulfil a condition precedent to acceptance; or
• (4) by the death or insanity of the proposer, if the fact of his death or insanity comes to
the knowledge of the acceptor before acceptance.