 Salmond- defines - “Contract is an

agreement creating and defining obligations

between the parties.”
 2. William Anson defines - “A legally binding
agreement made between two or more
persons by which rights are acquired by one
or more to acts or forbearances on the part
of other or others.”
 SirFredrick Pollock defines – “Every
agreement and promise enforceable at law is
a contract.”
 Halsbury’s Laws of England— “An agreement
made between two or more persons, which is
intended to be enforceable at law.”
 Sec.2(h) of Indian Contact Act 1872 defines a
Contract as “an agreement enforceable by
law.”
 Essential elements of a contract:

 (1) An Agreement and

 (2) Enforceability at Law.
Section 10, “All agreements are contracts if they
are made by the free consent of the parties,
competent to contract, for a lawful
consideration and with a lawful object and are
not expressly declared to be void.”
Every Contract is an agreement, but every
agreement is not a Contract. An agreement
becomes a contract when the following
conditions are satisfied.
Consideration;[Sec2(d) & Sec.25]
Parties Competent to Contract;[Sec.11 & 12]
Free Consent;[Sec.13-22]
Lawful Object.[Sec.23-30]
 1.Agreement:
 2. Intention to Create Legal Obligation;
 Balfour v. Balfour;
 Rose & Frank Co v. Crompton Bros,;
 Jones v. Padavatton;
 Spellman v. Spellman;
3. Consideration;[Sec2(d) & Sec.25]
4. Parties Competent to Contract;[Sec.11 & 12]
5. Free Consent;[Sec.13-22]
6. Lawful Object.[Sec.23]
7. Agreement not declared void;[Sec.24-30]
8.Certainity and possibility of
performance;[Sec.29 & Sec.56]
9. Legal Formalities
 1. Classification According to Formation:
 (a) Express Contract:
 According to Sec.9 of the Act
 (b) Implied Contract
 (c) Quasi-Contract
 (d) E- Contract
 2. Classification According to Validity:
 (a) Valid Contact – [Sec2(h)]
 (b) Voidable Contract [Sec.2(i)]
 (c) Void Contract[Sec.2(j)]
 (d) Void Agreement [Sec.2(g)]
 (e) Illegal Contract
 (f) Unlawful Contract
 (g) Unenforceable Contract
3. Classification According to Performance:
(a) Unilateral Contract
(b) Bilateral Contract
(c) Discharged Contract
(d) Executory Contract
(e) Executed Contract
 4. Classification under English Law:
(a) Formal Contracts
(b) Simple Contracts
Sec.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.
Sec.2(c) The person making the proposal is
called the “promisor”, and the person
accepting the proposal is called the
“promisee”;
 General Offer;
 Special Offer;
 Counter Offer;
 Cross Offer;
 Standing or Continuous Offer;
 Express Or Implied Offer.
 Weeks Vs. Tybald;
 Carlill Vs. Carbolic Smoke Ball Co;
 Harbhajanl Lal Vs. Harcharan Lal
 Sec.8Acceptance by performing conditions,
or receiving consideration –
 1. Offer must be capable of creating legal
relations ---
 Balfour Vs Balfour;
 Merrit Vs Merrit.
 2. It must be certain, definite and not vague
---
 Taylor Vs. portington;
 Gould Vs Gould;
 3. Offer must be communicated to offeree –
 Lalman Shukla Vs. Gauri Dutt;
 4.Offer must be made with a view to
obtaining the assent of the other –
 Harris Vs. Nickerson
 5. Offer should not contain a term the non-
compliance of which would amount to
acceptance --
 6. An offer may be conditional –
 Thomson Vs. London, Midland & Scottish
Railway Co;
 Henderson Vs. Stevenson;
 Parker Vs. South Eastern Railway Co
 7.An invitation to offer is not an offer –
 Harvey Vs.Facie;
 Mc.Pherson Vs. Appana;
 Pharmaceutical Society of Great Britain v Boots Cash
Chemists (Southern) Ltd.(display of goods for sale)

 8. Lapse of an offer: An offer lapses:

 (a) if either of the party dies before acceptance;
 (b) If offer is not accepted within the time
reasonable or specified;
 (c) If the offeree does not make a valid acceptance;
 (d)An offer can also lapse by revocation.
 Counter Offer: A Counter offer is a rejection
of the original offer and making a new offer.
 Hyde v. Wrench
 Standing Offer/Printed or Standard form of Contracts:
 A large scale and widespread practice of concluding
contracts in standardized forms is known as “Standard
form or Printed form of contracts”.
 Conditions for a valid Standard form of contracts--------
 1. Offeror must take reasonable care to communicate the
special conditions to the knowledge of acceptor;
 Thomson Vs. London, Midland & Scottish Railway Co;
 Henderson Vs. Stevenson;
 Parker Vs. South Eastern Railway Co;
 Interforto Picture Library Ltd Vs. Stiletto Visual
Programmes Ltd; (Notice of unusual terms);
 L’Estrange vs. F.Graucob Ltd
 2.Notice to be contemporaneous with contract;
 Olley Vs. Marlborough Court Ltd;
 Thornton Vs. Shoe Lane Parking Ltd;
 3.Fundamental Breach of the agreement clause;
 Davies Vs. Collins;
 J.Spurling Ltd v Bradshaw
 Alexander Vs. Railway Executive;
 Giband v Great Eastern Railway
 Suisse Atlantique D’Armement S.A. Vs N.V.Rotterdamsche Kolen
Centrale (theory of fundamental breach is not an independent
rule of law, but is only a rule of construction).
 4.Strict Construction of the terms and conditions and contra
proferentem;
 Lee(John) & Sons (Grantham)Ltd Vs. Railway Executive;
 Akerib v Booth.
 Hollier Vs. Rambler Motors AMC Ltd.
 Referred cases:
 Henry Kendall & Sons Vs. William Lillico & Sons Ltd;
 McCutcheon Vs. David McBayne Ltd;
 5.Tortious Liability:
 White Vs. John Warwick & Co. Ltd;
 Rutter v Palmer(open to the parties to exclude
liability even for negligence by express words or
necessary implication);

 6.It should be free from unreasonable terms;

 Lilly White Vs. Mannuswami;
 Levison Vs. Patent Steam Carpet Cleaning Co;

 7. Exemption clauses not to affect the liability of

third parties;
 Haseldine v C A Daw & Son Ltd;
 Adler Vs. Dickson
A tender is an invitation to ‘Offer’. A tender
when accepted becomes an standing offer.
 Essentials for a valid tender:
 1.It must be unconditional;
 2.It must be made at the proper place;
 3.It must conform to the terms of obligation;
 4. It must be made at the proper time;
 5. It must be made in the proper form;
 6.the person by whom tender is made must
be able and willing to perform his
obligations;
 7.There must be reasonable opportunity of
inspection;
 8.Tender must be made to the proper person;
 9.It must be of full amount.
 PerclvalLtd. v. London County Council
Asylums and Mental Deficiency Committee;
 Bengal Coal Co.Ltd Vs. Homee Wadia & Co;
 Mrs. Chand Kunwar And Ors. vs State Of
Rajasthan;
 Union Of India v. Maddala Thathiah;
 Rajasthan State Electricity Board and others
Vs. M/s.Dayal Wood Works;
 ." A contract to which The Central
Government or a State Government is a party
is called a "Government Contract".
 Government contracts have been accorded
Constitutional recognition.
 Art.298: Power to carry on trade, etc The executive
power of the Union and of each State shall extend to
the carrying on of any trade or business and to the
acquisition, holding and disposal of property and the
making of contracts for any purpose: Provided that ---
 (a) the said executive power of the Union shall, in so
far as such trade or business or such purpose is not
one with respect to which Parliament may make
laws, be subject in each State to legislation by the
State; and
 (b)the said executive power of each State shall, in so
far as such trade or business or such purpose is not
one with respect to which the State Legislature may
make laws, be subject to legislation by Parliament
 The Constitution, under Article 298 clearly
lays down that the executive power of the
Union and of each State extends to "the
carrying on of any trade or business and to
the acquisition, holding and disposal of
property and the making of contracts for any
purpose".
 The Constitution therefore, provides that a
Government may sue or be sued by its own
name.
 Article 299 in The Constitution Of India----
 Art.299. Contracts(1) All contracts made in the exercise of
the executive power of the Union or of a State shall be
expressed to be made by the President, or by the Governor
of the State, as the case may be, and all such contracts
and all assurances of property made in the exercise of that
power shall be executed on behalf of the President or the
Governor by such persons and in such manner as he may
direct or authorise
 (2) Neither the President nor the Governor shall be
personally liable in respect of any contract or assurance
made or executed for the purposes of this Constitution, or
for the purposes of any enactment relating to the
Government of India heretofore in force, nor shall any
person making or executing any such contract or assurance
on behalf of any of them be personally liable in respect
thereof
 Requirements of the Contract according to
the Article 299:
 1.Every contract must be expressed to be
made by the President or the Governor (as
the case may be);
 Every contract must be executed on behalf
of the President or the Governor (as the case
may be).
 3.Every contract must be executed by a
person authorized by the President or the
Governor (as the case may be);
 4. The use of the word “executed” in
proportions (2) and (3) above, indicates that
the contract between the government and
any person must be in writing. A mere oral
agreement is not valid for the purpose of
Article 299(1).
 Article 299(1) is mandatory and must be in
writing :-
 K.P.Chowdhary v.State of Madhya Pradesh, the
Apex Court held that---
 "In view of the provisions of Article299(1) there
is no scope for any implied contract. Thus
no contract can be implied under this Article.if
the contract between the Government and a
person is not incompliance with Article 299(1), it
would be no contract at all and would not be
enforceable as a contract either by the
Government or by the person."
"it is clear from the words "expressed to be made" and "executed" that there must be a formal written contract... The provisions of Article 299(1) are mandatory in

 Execution by authorized person:-

 It has been held by the Hon'ble Supreme Court in the
case of ------
 Bhikaraj Jaipuria v. Union of India
 "it is clear from the words "expressed to be made"
and "executed" that there must be a formal
written contract... The provisions of Article 299(1)
are mandatory in character and any contravention
thereof nullifies the contract and makes it void. The
provisions of Article 299(1) have not been enacted for
the sake of mere form but they have been enacted
for safeguarding the Government against the
unauthorisedcontracts. The provisions are embodied
in the constitution on the ground of public policy on
the ground of protection of general public and these
formalities cannot be waived or dispensed with."
 The Judicial attitude to Article 299 has
sought to maintain stability especially
under two motivations
 On the one hand, to protect the
Government from unauthorized contracts;
and
 On the other hand, to safeguard the
interests of unsuspecting and unwary
parties who enter into contracts with
government officials without fulfilling all the
formalities laid down in the Constitution.
 Article 300 provides that :
 (1) The Government of India may sue or be sued by the name of
the Union of India and the Government of a State may sue or be
sued by the name of the State and may, subject to any provisions
which may be made by Act of Parliament or of the Legislature of
such State enacted by virtue of powers conferred by this
Constitution, sue or be sued in relation to their respective affairs
in the like cases as the Dominion of India and the corresponding
Provinces or the corresponding Indian States might have sued or
been sued if this Constitution had not been enacted.
 (2) If at the commencement of this Constitution :
 (1) any legal proceedings are pending to which the Dominion of
India is a party, the Union of India shall be deemed to be
substituted for the Dominion in those proceedings; and
 (2) any legal proceedings are pending to which a Province or an
Indian State is a party, the corresponding State shall be deemed
to be substituted for the Province or the Indian State in those
proceedings
 Contractual Liability:
 State of Bihar v. Abdul Majid, it was held that
 “The governmental liability is practically the
same as that of a private person, subject, of
course, to any contract to the contrary”
A similar provision is found in the Code of
Civil Procedure 1908 under Section 79.
 Sec.2(b)When the person to whom the
proposal is made signifies his assent thereto,
the proposal is said to be accepted. A
proposal, when accepted, becomes a
promise.
 1.It may be expressed or implied;
 Brogden Vs. Metropolitan Railway &Co( Acceptance
by external manifestation or overt act)
 Hindustan Co-operative Insurance Society Vs. Shyam
Sunder--- (Acceptance by conduct);
 LIC Vs. Raja Vasi Reddy
 2.An Offer can be accepted by the person to whom it
is made
 Boulton Vs. Jones
 3.It must be communicated to the offeror;
 Felthouse Vs. Bindly;


 4.Acceptor must be aware of the proposal :
 Powell Vs. Lee
5. It must be according to the mode prescribed
or usual or reasonable mode;
 Eliason vs. Henshaw;
 Yales Building Co.Ltd vs. R.J.Pedlyn & Sons;
 Surendra Nath Vs. Kedar Nath
6.Acceptance must be absolute and
unqualified; (Sec.7)
Hyde Vs. Wrench;
 ButlerMachine Tool Co.Ltd Vs. Ex-Cell-O
Corpn(England) Ltd;(Acceptance of counter
proposal);
 Hargopal Vs. People’s Bank of Northern India
 When Contract concluded (Postal
communication):
 Adams Vs. Lindsell;
 Household Fire & Accident Insurance Co Vs.
Grant ;
 Dunlop Vs. Higgins;
 Ramdas Chakrabarthy Vs. Cotton Ginning
Co.Ltd;
 EntoresLtd Vs. Miles Far East Corporation ;
 Bhagawan Das Goverdhana Das Vs. Giridhari
Lal Parshottam Das & Co.
 Revocation of Proposal:

 London and Northern Bank Vs. Jones;

 J.K.Enterprises Vs. State of M.P;
 Bank of India Vs. O.P.Swarankar (Under
Voluntary Scheme)
 State Bank of Patiala Vs. Ramesh Chander
Kanoji.

 Revocation of Acceptance :
 Countess of Dunmore Vs. Alexander
 1. By Notice of Revocation:

 Dickinson Vs. Dodds---(Knowledge of acceptor regarding

cancellation of offer deemed to be revocation of offer).
 Alfred Schonlank Vs. Muthunayna Chetti;( withdrawl before
the expiry period

 2.By lapse of time:

 R.Vinod Kumar Vs. Secretary Kilpauk Medical College,
Madras;

 3.By Failure to accept the condition precedent:

 State of West Bengal Vs. Mahindra Chandra Das

 4. By Death or insanity of offeror: