Contract

Contract : An Agreement enforceable by law (Agreement + Enforcability by Law) Agreement : Offer + Acceptance Social Agreement vs Legal Agreement

Essentials of a Valid Contract

Offer and Acceptance. Intention to create legal relationship. Lawful Consideration (Consideration is a benefit from
one party to another)

Capacity of Parties. Free and genuine consent. Lawful Object. Agreement not declared void. Possibility of performance. Legal formalities.

Classification of Contracts
As per Validity.
Valid Contract (All the things in line). Voidable Contract (Free consent missing, Time frame
not adhered, enforceable at option of only 1 party).

Void Contract (Unforceable by law, may be due to

circumstances).

Illegal Contract (Activities prohibited as per law). Unforceable Contract (Due to technical reasons like
absence of writing, lapse of time).

Cont
As per Formation.
Express Contract (Agreed upon in spoken or written at
time of formation).

Implied Contract (Inferred from acts or conduct of

parties).

Quasi-Contract (More of a legal binding rather than a

contract).

E-Commerce Contract.

Cont
As per Performance.
Executed Contract (Obligations carried out by both
parties).

Executory Contract (Obligations yet to be carried out

by both parties).

Unilateral Contract (Obligations to be carried out only

by one party with other one having carried it out already at time of formation of contract). Bilateral Contract (Obligations yet to be carried out by both parties at time of formation of contract).

Indian Contract Act - 1872

Deals with General Principles of Law of Contract (Sections 1-75). Some other Special Contracts only (Sections 124 to 238). Not Dealt with : Partnership, Sale of Goods, Negotiable Instruments, Insurance (Separate Acts altogether).

Offer.
Proposal by one party to another to enter into a legally binding agreement with him.
Express Offer. Implied Offer. Specific Offer. General Offer.

Valid Offer
Serious Intention. Must be definite. Must be communicated to the other party
(Offeree).

Legal Rules of Offer

Offer must be capable of being accepted and giving rise to legal relationship. Terms of offer must be definite (Certain and
Unambiguous).

Offer must be communicated. Offer must be made with a view of obtaining consent. Offer should not contain term of NonCompliance which may be assumed to amount to acceptance. Mere statement of price is not an Offer.

Cont
Tenders
Definite Offer (One Time) Standing Offer (Over a period of time)

Special Terms in an Offer to be mentioned before hand (Provide all information). Cross Offer : When 2 people make an identical offer to each other (Out of Ignorance).

Acceptance
Act of Assenting by the Offeree to an offer. However it can accepted only by the person to whom Offer is made to. Express : Communicated in words, written. Implied : As per scenario / Circumstances.

Legal Rules of Acceptance

Absolute. To be communicated to Offeror. Mode of Communication has to be Reasonable / as prescribed. Consent within Reasonable time. Cannot precede an Offer. Intention on part of party to accept the term of promise. Only Relevant party can accept. Must be given before Offer is withdrawn. Cannot be Implied from Silence.

Communication of Offer, Acceptance, Revocation.

Mode of Communication.
(Completion of Communication) acceptance is complete).

Time for Revocation (Before Communication of its Loss of Letter of Acceptance??? Acceptance over Phone / Oral ???

End of Offer
Revocation. Lapse. Non Fulfilment of Condition(s). Death / Insanity of Offerer (Knowledge before
acceptance).

Counter Offer is made. Offer not accepted as per norms. Law gets changed.

Consideration
Consideration is a right/benefit (Cash/Kind) that a party derives from other person in Contract. It is possible that it might be detrimental to one party. It may be : An Act. An Abstinence. Return Promise.

Legal Rules to Consideration

Must move at desire of Promisor. May move from Promisee to other person. May be an Act, Abstinence or Return Promise. May be in Past, Present or Future. Need not to be adequate. Must be Real, not illusory (Not in case of Physical or
Legal impossibility, Uncertain or Illusory Consideration).

Should be something that Promisor is not bound to do by law. Must be Legal, Moral.

Contract without Consideration

Agreement without Consideration is Void. Exceptions: Compensation for Voluntary Services. Promise to pay time-barred debt. Love and Affection. Completed Gift. Creation of an Agency. Charitable Institutes.

Stranger to Contract
Only Parties to Contract may sue or get sued on that Contract.

Exceptions :
A Trust Marriage / Family Settlement Contracts entered through an Agent Acknowledgement (Empowering some one)

Agreement running with the land.