We enter into contracts so many times

in a day , & DAY TO DAY also,

‘contract’ has become an indispensable
part of our life.
When you purchase milk or
newspaper in the morning or
go to movie in the evening, or when you
eat ice-cream with your girl friend,
you are entering into a contract.
Indian Contract Act really
codifies the way we enter
into a contract, execute a
contract, implement
provisions of a contract and
effects of breach of a
contract.
Basically, a person is free to
contract on any terms he
chooses.
The Contract Act consists of limiting factors
subject to which contract may be entered
into, executed and breach enforced. It only
provides a framework of rules and
regulations which govern formation and
performance of contract. The rights and
duties of parties and terms of agreement
are decided by the contracting parties
themselves. The court of law acts to
enforce agreement, in case of non-
performance.
It must be noted that contract need not
be in writing, unless there is specific
provision in law that the contract
should be in writing. [e.g. * contract for
sale of immovable property must be in
writing, stamped and registered. *
Contracts which need registration
should be in writing * Bill of Exchange
or Promissory Note must be in writing.
* Trust should be created in writing *
Promise to pay a time barred loan
should be in writing, as per Limitation
Act *
Contract made without
consideration on account of
natural love and affection should
be in writing  ].
A verbal contract is equally
enforceable, if it can be proved.. A
contract can be enforced or
compensation/damages for breach
of contract can be obtained
through Civil Court
INDIAN CONTRACT ACT
This Act may be called the Indian
Contract Act, 1872.

-It extends to the whole of India

1
[except the State of Jammu and
Kashmir];
and it shall come into force on the
first day of 1st September 1872.
What is rem and what is personam?
Rem means a right upon a thing against the
whole world
Personam is the right against a person.
Example:
Anand purchases a house from Amar
He has a right of rem
i.e. he is the owner of house against the world
Akbar takes a loan from ICICI bank
ICICI bank can recover the loan from Akbar
only
It cannot recover from any other person.
What is a promise?
When one person signifies to another his willingness to do
or not to do something with a view to obtain the assent of
the other to such act or abstinences he is said to make a
proposal = promise = offer

What is consideration?
Consideration is some thing in return- quid pro quo,
When an offer is made by one person to another and when
such offer is accepted by the other
It will result in an agreement
UNILATERAL

BILATERAL
According to section 10 of Contract Act,
“ all agreements are contract if they are made
by
Free consent of parties
Competent to contract
For lawful consideration and
With a law full object and
are not expressly declared to be void”
The following are the essentials/components/legal rules

1.PLURALITY OF PERSONS
An agreement is the common intention of two or more
persons. For making a valid contract there must be at least
two persons.
2.Consensus ad idem
It means two persons must understand the same thing in the
same sense.
Example : Amitab bachan is having two cars one white car
and one red car. He wants to sell his red car. Sharukhan
wants to buy the white car from Amitab bachan.
In the conversation when Sharukkhan says I want to buy
one car from you, Amitab bachan says ok I want to sell one
car. Agreement is reached for 3 lakhs of rupees. When
delivery date came, Amitab sends the red car to sharuk ,
where as sharuk was expecting white car. The contract here
is not valid as there is no consensus ad idem i.e , meeting of
the mind is not there, one is thinking white car and other is
thinking it is red car.
3. It must be capable of creating legal relationship
or legal consequence.
There must be intention to create legal obligation and there
must be an intention to create legal relationship when the
contract is made.
The social obligation is not a contract; simply joking is
not a contract, The famous case on this point is
BALFOUR VS BALFOUR
A husband agreed to pay £ 30 every month to his wife
while he was abroad. On failure to pay the amount the
wife filed a suit in the court to recover the amount. The
court held, that she cannot recover the amount since it
was domestic agreement or a social agreement and not
capable of enforcing.
4. Law full consideration
The agreement must be supported by consideration to
be a valid agreement.
The consideration must be a Law full consideration. The
consideration must be real and it must be within the frame
work of law if not it is not valid.
Example :Don agreed to kill Dawood for 10 Lakhs of
rupees, Here the agreement is not valid because killing one
person is not permitted in law, not allowed in IPC.
5. The Parties must be competent to enter into contract.
The parties to the contract must have legal capacity to enter
into a valid contract, In law certain persons are not having
legal capacity to make a contract , for example a MINOR is
not having capacity to enter enter into a contract, a person
of UNSOUND MIND
an, Insolvent , An alien enemy, a lunatic , an idiot etc are not
having competence to make a contract.
6. Free Consent
When one party agrees to do something , he must agree on his
own with his free mind. If he I forced to enter into a contract
which he is not willing such consent is an invalid consent and
contract will not result. It should not be influenced , or there
should not be a miss representation or Fraud in getting the
consent. If the consent is obtained by using any of these
methods it is not a valid contract.

7. Law full Object

The purpose of the contract must be for a lawful
Purpose if the intention of the parties is to cheat some one
or Govt. it is not a valid contract. In simple , the object of
the contract must not be illegal or it must not be against
public policy.
8. It must not have been declared by law as VOID
The law has declared certain agreement as void
agreement and hence no one van enter into such
agreement,
Example Agreement by minor, agreement by mistake,
etc.
9.It must be do a possible thing
If there is an agreement to do the
impossible act it is void.

Example:
Bringing moon from sky,
Bringing stars from sky
convert brass into gold .
10. Legal Formalities
Sometimes the contract needs to be in accordance with some
law or rules, in such case it must be having all legal
formalities.
Example : a negotiable instrument must in writing
A gift deed must have two witness
A sale deed must have two witness and must be on a stamp
paper
The property sale or transfer must be on stamp paper and
also needs registration at sub-Register office.
 WHAT ARE THE ESSENTIALS OF A
VALID CONTRACT
1. THERE MUST BE TWO PERSONS
2.CONSENSES AD IDEM
3.SHOULD CREATE LEGAL CONSEQUECES
4.LAW FUL CONSIDERATION
5.CAPACITY TO CONTRACT MUST BE THERE
6. THERE MUST BE FREE CONSENT
7.THE OBJECT MUST BE LAW FUL
8.IT MSUT NOT HAVE BEEN DECLARED AS VOID
9. IT MUST NOT BE FOR DOING IMPOSSIBLE THINGS
10. LEGAL FORMALITIES MUST BE OBSERVED