THE INDIAN CONTRACT ACT, 1872

Contract
According to sec.2(h), a contract is defined as
an agreement enforceable before the law.

Agreement
According to sec.2(e), every promise or set of
promises forming consideration for each other.

Promise
According to sec.2(b), when a person made a
proposal to another to whom proposal is made,
if proposal is assented there to

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OFFER
According to Sec.2(a), when a person made a
proposal, when he signifies to another his
willingness to do or to abstain from doing
something.

AGREEMENT = OFFER + ACCEPTANCE

CONSENSUS - AD IDEM
According to Sec.13, meeting of minds or identity
of minds or receiving the same thing in same
sense at same time












Contract
Enforceability of
agreement
Agreement
Offer or
proposal
Acceptance of offer
or proposal
Legal obligation
arising out of an
agreement

Contract




Legal Obligation
Agreement


The law of contracts is not the whole law of agreements
(intend to create legal obligation)

The law of contracts is not whole law of obligations (Obligation
arising out of agreement)

All contracts are agreements but all agreements are not
contracts.

Agreement vrs Contract
Basis of distinction Agreement Contract
What constitute?
Offer & its acceptance
constitute contract
Agreement & its
enforceability constitute
contract
Creation of legal
obligation
Agreement may or may
not create legal
obligation
. A contract necessarily
create a legal obligation
One in other
Every agreement need
not be necessarily be a
contract
All contracts are
necessarily agreements
Binding
Agreement is not
concluded or a binding
contract
Contract is concluded
and binding on the
concerned parties
ESSENTIAL ELEMENTS OF A
VALID CONTRACT

1.Offer & acceptance.
2.Intention to create legal relationship.
3.Consensus - ad - idem.
4. Lawful Consideration.
5.Capacity to contract.
6.Free consent.
7.Lawful of object.
8.Possibility of performance.
9. Legal formalities-Writing & registration.

VALID CONTRACTS

Absolute contract
Contingent contract
Express contract
Implied/Quasi contract

Void contract
Is void(Void - ab - initio)
Becomes void
Voidable contract
Illegal contract
Unenforceable contract
OTHER TYPES OF CONTRACTS

Classification of Contracts
Express Contract
Implied Contract
Creation
Executed
Executory
Partly Executed Partly
Executory
Execution
Valid Contract
Void Contract
Void Agreement
Voidable Contract
Enforceability
Valid contract - If all the condition are
fulfilled it is called as a valid contract.
Contingent contract - In a contract
to do or not to do something, if an event
is collateral, does or doesn't happen.
Express contract - When contracts
are either in writing or in oral.
Implied contract - When contracts
are neither in writing nor in oral.
Absolute contract - A contract which
is not dependent on fulfillment of any
condition.
Invalid contract - In a contact if any
one condition is not fulfilled.
Is void (Void-ab-initio) - An
agreement which is not valid from the
beginning.
Becomes void - An agreement
which is valid in the beginning but
due to some supervening
impossibility the contract becomes
void.
Illegal contract - An agreement
forbidden by law.
Unenforceable contract - It is
valid but due to some technical
defect the contract becomes void. In
case defects are removed the
contract is enforceable.(lack of
registration, lack of signature etc.,)
Voidable contract - A contract
which is valid unless until avoided
by either the party.
Executed contract - In a contract where both
the parties have performed their obligation,
there is remaining nothing to perform.
Executory contract - In a contract where both
the parties are yet to perform their obligation.
Unilateral contract - In a contract one party
has performed his obligation and other
person is yet to perform his obligation.
Bilateral contract - In a contract where both
the parties have performed their obligation.
Bilateral & Executory are same and inter -
changeable.
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Basis Void Agreement Voidable Contract
Void ab initio Void from the
beginning
Valid when made and continue to remain
valid till it is repudiated by the aggrieved
party
Essential element of
contract is missing
An essential element is
missing
Consent of party is not free
Enforceability Can not be enforced by
any party
Continues to be enforceable if the
aggrieved party does not repudiate
contract
Right of third party Third party does not
acquire any right
A third party who purchases goods in
good faith and for consideration before
the contract is repudiated, acquires good
title to those goods
Effect of lapse of time On expiry it can never
become valid contract
On expiry it may be valid if aggrieved
party does not repudiate
Damages Does not arise Aggrieved party can claim damages
Void Agreement vrs Voidable Contract
Void Agreement vrs. Illegal Agreement
Basis Void Agreement Illegal Agreement
Void/ Illegal All void agreements
need not necessarily
be illegal
All illegal
agreements are
always void
Effect on Collateral
agreements
Collateral
agreements do not
become void
Collateral
agreements also
become void
Restoration of
benefits received
If a contract
becomes void
subsequently, the
benefit received
must be restored to
the other party
The money
advanced or thing
given can not be
claimed back
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