The Indian

Contract Act,
1872
Prof. Bidhi Kashyap
Contract
 A contract is an agreement enforceable by
law.
 Agreement – every promise and set of
promises, forming consideration for each
other.
 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.
 Agreement = Offer + Acceptance
Consensus ad idem &
Obligation
 Consensus ad idem - The parties to an
agreement must have agreed about the
subject-matter of the agreement in the
same sense and at the same time.
 Obligation – an agreement must give rise
to a legal obligation or duty to qualify as
a contract.
Essential elements of a valid
contract
 Offer and acceptance
 Intention to create legal relationship
 Lawful consideration
 Capacity of parties – competency
 Free and genuine consent
 Lawful object
 Agreement not declared void
 Certainty and possibility of performance
 Legal formalities
Classification of Contracts
 Validity– voidable contract, void
agreement and void contract, illegal
agreement, unenforceable contract
 Formation – express, implied, quasi, e-
commerce
 Performance – executed, executory,
unilateral, bilateral
Offer
A person is said to have made a proposal,
when he 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.
Offer – legal rules
 Legal relationship
 Terms of offer
 Distinct from – declaration of intention
and an announcement, an invitation to
make an offer
 Communicate
 Assent
 Non-compliance term
 Statement of price
Acceptance
 Acceptance is the act of assenting by the
offeree to an offer. It may be express or
implied.
Acceptance – legal rules
 Absolute and unqualified
 Communicate
 Mode
 Reasonable time
 Cannot precede offer
 Intention to fulfill terms
 Given by party to whom offer is made
 Given before offer lapses
 Silence
Communication of Offer,
Acceptance
 Mode of communication
 When is communication complete?
 Communication of offer
 Communication of acceptance
 Time for revocation of offer and acceptance
 Loss of letter of acceptance in postal transit
 Contracts over telephone or oral
communication
Revocation of Offer
 By communication
 By lapse of time
 By non-fulfillment of condition
 By death or insanity
 If counter-offer is made
 If offer is not accepted in prescribed
mode
 If law changes
Rejection of offer
 Express
 Implied
– counter-offer, conditional
acceptance
Consideration
 Sec.2 (d): When at the desire of the
promisor, the promisee or any other
person has done or abstained from doing,
something, or does or abstains from
doing, or promises to do or to abstain
from doing, something, such act or
abstinence or promise is called a
consideration for the promise.
Legal rules as to consideration
 It must move at the desire of the promisor.
 It may move from the promisee or any other
person.
 It may be an act, abstinence or forbearance or a
return promise.
 It may be past, present or future.
 It need not be adequate.
 It must be real and not illusory: physical
impossibility, legal impossibility, uncertain
consideration, illusory consideration
 It must be something which the promisor is not
already bound to do.
 It must not be illegal, immoral or opposed to
public policy
Stranger to contract
 Only parties to a contract may sue and be
sued.
 ‘Privity of contract’: relationship subsisting
between the parties who have entered into
contractual obligations.
 Consequences:
 A person not party to a contract cannot sue
even though the contract is for his benefit and
he provided consideration.
 A contract cannot confer rights or impose
obligations arising under it on any person other
than the parties to it.
Exceptions to Stranger to
Contract
A trust or charge
 Marriage settlement, Partition or other
family arrangements
 Acknowledgement or estoppel
 Assignment of a contract
 Contracts entered into through an agent
 Covenants running with the land
A Contract without
Consideration is void -
Exceptions
 Love and affection
 Compensation for voluntary services
 Promise to pay a time-barred debt
 Completed gift
 Agency
 Charitable subscription
Remedies for Breach of
Contract
A remedy is the means given by law for
the enforcement of a right.
 Remedies:
 Rescission of the contract
 Suit for damages
 Suit upon quantum meruit
 Suit for specific performance of the
contract
 Suit for injunction
Rescission
Damages
 Ordinary
 Special
 Exemplary
 Nominal
 Loss of reputation
 Inconvenience and discomfort
 Mitigation of damages
 Difficulty of assessment
 Cost of decree
 Damages agreed upon in advance
Quantum Meruit
Specific Performance
Injunction