Law of Contract Under Contract Act 1872

8/7/2019 Law of Contract Under Contract Act 1872

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Prepared By: Kavita Ravindran Nair


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A contract is an agreement, enforceable by law, made

between at least two parties by which rights are acquired

by one and obligations are created on the part of another,


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Section 2(h) defines a contract as

an agreementenforceable by law.


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Agreement

Its enforceability by law


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Section 2(e) defines an agreement as

every promise and every set of promises forming consideration

for each other.


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Plurality of persons

Consensus ad idem


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The agreement must be such which is enforceable by law so

as to become a contract


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Offer & Acceptance

Intentions tocreate legal

relations

Lawful

ConsiderationCapacity of Parties

Free Consent

Lawful Object Certainty


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From the point of view of enforceability.

From the point of view of mode of creation.

From the point of view of the extent of execution.


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ValidContract

VoidableContract

VoidContract

UnenforceableContract

Illegal orunlawfulcontract


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Express Contract

Implied Contract

Constructive orQuasi Contract


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Executed Contract Executory Contract


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According to Section 2 (a) of the Indian Contract Act defines aproposal 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 said to make a

proposal.


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Express offer

Implied offer

Offer by abstinence

Specific and general offer


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An offer may be express or implied.

An offer must contemplate to give rise to legal consequences and

be capable of creating legal relations.

The terms of the offer must be certain and not loose or vague.

An invitation to offer is not an offer.


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An offer may be specific or general.

An offer must be communicated to the offeree.

An offer can be made subject to any terms and conditions.

Two identical cross-offers do not make a contract


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An offer lapses after stipulated or reasonable time.

An offer lapses by not being accepted in the mode prescribed, or

if no mode is prescribed, in some usual and reasonable manner.

An offer lapses by rejection.

An offer lapses by the death or insanity of the offeror of the

offeree before acceptance.


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Section 2(b) states that

when the person to whom the proposal is made signifies his assent

therto, the proposal is said to be accepted.


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Acceptance must be give only by the person to whom the offer is

made.

Acceptance must be expressed in some usual and reasonable

manner, unless the proposal prescribes the manner in which it is

to be accepted.

Acceptance must be communicated by the acceptor.


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Acceptance must be given within a reasonable time and before

the offer lapses and/or is revoked.

Acceptance must succeed the offer.

Rejected offers can be accepted only, if renewed.


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when at the desire of the promisor, the promisee or any other

person has done or abstained from doing, or does or abstains

from doing, or promises to do or to abstain from doing,

something, such act or abstinence or promise is called a

consideration for the promise.


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Consideration must move at the desire of the promisor

Consideration may move either from the promisee or any other

person

Consideration must be real and competent.

Consideration must be legal

Consideration may be present, past or future.


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Forbidden by law

Defeats the provision of any law

Is fraudulent

Involves or implies injury to the person or property of another or

The court regards it as immoral or opposed to public policy


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An essential ingredient of a valid contract is that thecontracting parties must be competent to contract (Sec. 10)

Section 11 lays down that Every person is competent to

contract who is of the age of majority according to the law to

which he is subject, and who is of sound mind, and is not

disqualifies from contracting by any law to which he is

subject.


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If he is a minor, according to the law to which he is subject,

If he is of unsound mind, and

If he is disqualified from contracting by any law to which he is subject.


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According to section 3 of the majority Act 1875, as amended

by the majority (Amendment) Act, 1999, a person, domiciled

in India, who is under 18 years of age is a minor.


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An agreement by a minor is absolutely void and inoperative as

against him.

Beneficial agreements are valid contracts.

No ratification on attaining the age of majority.

The rule of estoppel does not apply to a minor.


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Alien enemies

Foreign sovereigns and ambassadors

Convict

Married women

Insolvent


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Section 13 of the Contract Act defines the term

consent and lays down that Two or more personsare said to consent when they agree upon the same

thing in the same sense.


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Free Consent defined. Section 14 lays down that Consent is said to be

free when it is not caused by-

Coercion

Undue influence

Misrepresentation

Fraud

mistake


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The object or consideration of an agreement must be lawful, in order to

make the agreement a valid contract, for section 10 lays down that all

agreements are contracts if made for lawful consideration and with a

lawful object.

The words object and consideration used in section 23 are not

synonymous. The word object here means purpose or design


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If it is forbidden by law.

If it is of such a nature that, if permitted, it would defeat the provisions

of any law.

If it is fraudulent.

If it involves or implies injury to the person or property of another.

If the court regards it as immoral

If the court regards it as opposed to public policy.


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Performance of Contract means fulfilling of their

respective legal obligations created under the contract byboth the promisor and the promisee.


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By the promisor himself

By the promisor or his agent

By the legal representatives

Performance by a third person:


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When the rights and obligations arising out of a contract are

extinguished, the contract is said to be discharged or terminated.

By performance

By mutual consent or agreement

By subsequent or supervening impossibility or illegality

By lapse of time

By breach of contract


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When there is breach of a contract, the injured party becomes entitled

to any one or more of the following remedies against the guilty party:

Recession of the contract

Suit for damages

Suit upon quantum meruit

Suit for an injunction


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THANK YOU

Law of Contract Under Contract Act 1872

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