THE INDIAN CONTRACT ACT,1872

NATURE OF CONTRACTS
The act came into force on the first day of september 1872.
Applies all over india except in the state of jammu and kashmir.
Only those agreements which are enforceable at law are contracts.
Section 2(h) defines contract"as an agreement enforceable by law".
Section 2(e) defines agreement as"every promise and every set of promises formin
g the consideration for each other".
Section 2(b) defines promise as"When the person to whom the proposal is made sig
nifies his assent thereto,the proposal is said to be accepted.Proposal when acce
pted becomes a promise.
Section 10 deals with the essentials of a valid contract.
Essentials are: Proper offer and acceptance
Lawful consideration
Consideration
Free consent
Lawful agreement
Consideration means something in return:"quid pro quo".
Section 11 deals with the capacity to contract
A person is competent to contract provided
:he is of the age of majority according to the law to which he is subjec
t.
:he is of sound mind
:he is not disqualified from contracting by any law to which he is subje
ct
The consent of the parties must be free and genuine.
Consent is said to be not free when it is vitiated by coercion,undue influence,f
raud,misrepresentation or mistake.In such cases the contract becomes viodable.
The agreement must not be one,which the law declares to be either illegal or voi
d.Those agreements are prohibited by the Indian Penal Code.
Void Contract:Section 2(j):cannot be enforced in a court of law:"a contract whic
h ceases to be enforceable by law becomes void when it ceases to be enforceable.
"
eg: when both parties are under mistake of fact:section 20
when the consideration or object is unlawful:section 23
agreement without consideration:section 25
agreement in restraint of marriage:section 26
agreement in restraint of trade:section 27
agreement in restraint of legal proceedings:section 28
agreement by way of wager:section 30.......are instances of void contrac
t.
Voidable contract:Section 2(i):"an agreement which is enforceable by law at the
option of one or more parties but not at the option of the other or others is a
voidable contract.
Illegal Contract:It is a contract which the law forbids to be made.
An illegal agreement is always void but void is not always illegal.
collateral transactions of illegal agreements are illegal but collateral agreeme
nts of void agreements may be enforced.
Void-ab-initio:Illegal agreements are void from the very beginning.
Unenforceable contract:Where a contract is good in substance but because of some
technical defect one or more parties cannot sue on it,it is described as an une
nforceable contract.
Express Contract:A contract which is made by words either spoken or written is s
aid to be an express contract.
Implied contract:Implied contract means implied by law.
Tacit contract:A contract is said to be tacit when it has to be inferred by the
conduct of the parties.
Executed contract:If the consideration for the promise is given or executed.
Executory contract:It is so called because the reciprocal promises or obligation
which serves as consideration is to be performed in future.
Unilateral contract:A unilateral contract is a one-sided contract in which only
one party has to perform his promise or obligation to do or forebear.
Bilateral contract:Where the obligation or promise in a contract is outstanding
on the part of both the parties,it is known as bilateral contract.
PROPOSAL/OFFER
When one person signifies to another his willingness to do or not to do somethin
g with a view to obtain the assent of that other to such act or abstinence,he is
said to make a proposal.
General offer:It is an offer made to the public in general and hence anyone can
accept and do the desired act.Section 8 points that the performance of the condi
tions of a proposal is the acceptance of the proposal.
Special offer:When offer is made to a definite person.it is known as specific of
fer and such offer can be accepted only by that person.
Cross offer:When two parties exchange identical offers in ignorance at the time
of each others offers,the offers are said to be cross offers.
Counter offer:when the offeree offers to qualified acceptance of the offer subje
ct to modifications in the original offer is said to have made a counter offer.
Standing/open/continuing offer:an offer which is allowed to remain open for acce
ptance for a long period.
RULES:
The offer must be capable of creating legal relations.
The offer must be certain,definite and not vague.
The offer may be expressed or implied.
The offer must be distinguished from an invitation to offer.
An offer may be specific or general.
The offer must be communicated.
OFFER AND INVITATION TO OFFER
An offer is definite and capable of creating an intention to a contract.
Invitation to an offer is only a circulation of the offer.it precceds an actual
offer.
ACCEPTANCE
Acceptance must be absolute and unqualified.
It must be communicated to offeror.
Acceptance must be in the mode prescribed.
Acceptance must be given within a reasonable time.
Mere silence is not acceptance.
Acceptance by conduct: Section 8 points that the performance of the conditio
ns of a proposal is the acceptance of the proposal.
COMMUNICATION OF OFFER AND ACCEPTANCE
communication of offer:is complete when it comes to the knowledge of the person
to whom it's made.
communication of acceptance is complete: as against the proposer---when i
t is put in the course of transmission to him.
as against the acceptor---when it comes
to the knowledge of the proposer.
REVOCATION OF OFFER AND ACCEPTANCE
communication of revocation is complete :as against the person who makes
it,when it is put in transmission to the person to whom it is made.
:as against the person to whom it is mad
e,when it comes to his knowledge.
UNDER SECTION 5
A proposal may be revoked at any time before the communication of its acceptance
is complete as against the proposer.
An acceptance may be revoked at any time before the communication of it's accept
ance is complete as against the acceptor.