Indian Contract Act 1872

Agreement, Contract and Proposal

- Contract is defined in Section 2(h) as follows
Agreement enforceable by law is a contract
Thus to arrive at a Contract there must be a) An Agreement b) Agreement should be enforceable by law

Indian Contract Law

- Agreement Definition An Agreement is defined as every promise and every set of promise forming the consideration for each other. - Promise Definition An Accepted proposal. A proposal when accepted is called as Promise

Process of Definition
The process of definition finally binds down to
A Contract is an Agreement, an Agreement is a Promise and Promise is an accepted Proposal. Hence every agreement is composed of a proposal from one side and its acceptance by other.

Agreement enforceable at law

An agreement is a contract when is made for consideration, between parties who are competent, with their free consent and for a lawful object.

- What Agreements are Contracts:

All agreements are contracts if they are made by free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared as void. Thus every contract is an agreement, but every agreement is not a contract

When Agreement becomes Contract

There is consideration for it. The Parties are competent to contract. Their consent is free The object is lawful

Proposal or Offer
Section 2 (a) defines proposal as follows: When one person signifies to another his willingness to do or 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 The person who makes the Proposal is called Promisor or Offerer and the person to whom it is made is called Offeree and when Offeree accepts the offer he is called as promisee

Communication of Proposal
Offerer has to communicate the offer to the offeree. The offer made has to be then Accepted. A communication is complete when it comes to the knowledge of the person to whom it is made. The communication of Acceptance is complete a) As against the proposer when it is put in course of transmission to him so as to be out of the power of the acceptor. b) As against acceptor when it comes to the knowledge of the proposer The communication of Revocation is complete a) As against the person who makes it when it is put into course of transmission to the person to whom it is made, so as to be out of power of the person who makes it b) As against the person to whom it is made, when it comes to his knowledge

Illustrations:
1) A proposes by letter, to sell a house to B at certain Price. - The communication of the proposal is complete when B receives the letter. 2) B accepts As proposal by letter sent by post - The communication of acceptance is complete as against A when the letter is posted; as Against B when the letter is received by A. 3) A revokes his Proposal by Telegram - The revocation is complete as against A when the telegram is dispatched. It is complete Against B when B receives it 4) B revokes his acceptance by telegram. Bs revocation is complete as against B when telegram is dispatched and as Against A when it reaches him.

Offer and Invitation to Treat

An offer should be distinguished from invitation to receive offers. Ex: When a man advertises that he has a stock of books to sell, or house to let, there is no offer to be bound by any contract. Such advertisements are offers to negotiate offer or offer to receive offer.

Standard Form of Contracts

Contracts entered with LIC, Banks, Online terms and conditions are called standard form of contracts. The terms and conditions are printed and generally are non-negotiable. Will be difficult for these organization to draft different T&C for every individual. Individual has only one choice which is to accept the offer

Agenda for Next Lecture

Topics to be covered Acceptance Consideration Competency of Parties Consideration Free Consent Mistake Legality of Object