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✐ “Chapter-2*(5th*Proof)” — 2012/5/28 — 15:00 — page 7 — #1 ✐
CHAPTER
INDIAN CONTRACT ACT, 1872 2
2.1 INTRODUCTION
In commerca fe prome are mae ometme prome are honore t ometme
reach ao commtte In cae of reach t oo to etermne the remee that
are aaae n a cort of a agant a peron ho fa to honor h prome an the
conton ner hch the remee are aaae he a of contract that ranch of
ne a hch etermne the crcmtance n hch prome mae
the parte to
a contract ha e ega
nng on them It affect a of n one a
or the other It
hoeer more appcae to peope engage n trae commerce an ntr
ecae
of ther tranacton are ae on contract
2.1.1 TheIndian Contract Act, 1872
Pror to the enactment of the Inan Contract ct 1872 ngh common a a appe
ncrmnate
to Inan nate hch e to man
nconenence herefore eparate
tatte ere enacte to peree ngh a an to regate the contract here parte
ere n an ohammean If oth the parte ere n the
ere regate
the n a an here oth parte ere ohammean ohammean a appe
here hoeer one part
a a n an the other ohammean then a of efenant
appe n
here a an age of n or ohammean ere ent on an
pont
ngh a a appe raa
mportance of the enactment of genera a regatng
the contract an to efine an amen certan part of a reatng to contract common
to a a fet an th gae rth to the Inan Contract ct 1872
he Inan Contract ct came nto force on 1t eptemer 1872 he ct appe to the
hoe of Ina ecept the tate of amm an ahmr
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✐ “Chapter-2*(5th*Proof)” — 2012/5/28 — 15:00 — page 10 — #4 ✐
10 Business Law
of those agreements whh reate ega ogatons n agreement whh reates ega
ogaton n orer to e a an nng mst possess ertan essentas hese essentas
are the essenta eements of a ontrat he foowng are the essentas or haratersts
or featres of a a ontrat
1. Offer and Acceptance
here mst e two partes to an agreement e one part ma
ng the offer an the other
part aeptng t he terms of the offer mst e efinte an the aeptane of the offer
mst e asote an nontona n other wors offer an aeptane mst e oth
awf e t mst onform to the res a own n the nan Contrat t
2. Consideration
nagreement to e enforeae aw mst e spporte onseraton Conseraton
means an aantage or enefit mong from one part to the other n short t means
‘somethng n retrn’ n agreement s ega enforeae on when oth the partes ge
somethng an get somethng n retrn promse to o somethng gettng nothng n
retrn s sa not enforeae aw
3. Capacity of Contract
hepartes to the agreement mst e ompetent of enterng nto a a ontrat person
s sa to e ompetent f he s (a) of age of maort () of son mn an () not
safie from ontratng aw to whh he s set
4. Free Consent
n agreement mst e ase on free onsent of the partes n orer to eome a a
ontrat he onsent of the partes s sa to e free when the are of the same mn on
a the matera terms of the ontrat he partes are sa to e of the same mn when
the agree aot the set-matter of the ontrat n the same sense an at the same tme
ree onsent oes not est when t s otane oeron ne nflene fra msta
e
or msrepresentaton
5. Lawful Object
he oet of the agreement mst e awf t s nawf f the oet s foren
aw ega mmora or oppose to p po n agreement wth an nawf oet
annot e enfore aw
6. Leal elationsip
he ntenton of the partes to the agreement mst reate ega reatonshp etween them
e an agreement n the natre of a ommera argan n the asene of sh ntenton
the agreement annot e enfore aw
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✐ “Chapter-2*(5th*Proof)” — 2012/5/28 — 15:00 — page 12 — #6 ✐
12 Business Law
Express contracts
When the terms of a ontrat are epress agree pon ( hether ors spoen or
rtten) at the tme of the formaton of the ontrat the ontrat s sa to e an epress
ontrat
Example:
rtes a etter to hs offer to se sooter for |20000 aepts t an
repe n a etter
Implied Contracts
nmpeontrat s one hh s nferre from the ats or ont of the partes or orse
of eangs et een them
n other ors the proposa or aeptane of an promse s mae other se than n ors
the promse s sa to e mpe
Example:
oars a C s t s mpe from hs ont that he has entere nto
a ontrat th C to trae n the s prhasng a tet
Quasi Contract
as ontrat s a ega ogaton that has a nmer of smartes to a ontrat t s
not eat the same
as ontrat arses not from an agreement t from a mere
reatonshp that omes aot et een nas t s a reatonshp ase on aton
thot searhng of an agreement t smp means that the atons of one person hae
onferre a enefit on other
Example:
eaes goos at C’s hose mstae C treats the goos as hs o n C s
on to pa for the goos
Contingent Contract
ontngent ontrat s one n hh a promse s ontona an the ontrat sha e
performe on on the happenng of some ftre nertan eent
Example:
ontrats to pa |10000 f ’s hose s rnt
Valid Contract
ontrat hh satsfies a the ega rerements a o n n seton 10 of the
t s
no n as a a ontrat
Void Contract
ontrat hh as a hen t as first entere nto t sseent eomes nen-
foreae e to mposst of performane hange of a or other reason s ae a o
ontrat
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✐ “Chapter-2*(5th*Proof)” — 2012/5/28 — 15:00 — page 14 — #8 ✐
14 Business Law
Example: A agrees to engage B as hs serant fro the net onth the ontrat s
ee tor
Unilateral Contract
A natera or one-se ontrat s one n hh on one part has to f fi hs ogaton
at the te of foraton of the ontrat the other part hang f fie hs ogaton at
the te of the ontrat or efore the ontrat oes nto estene h ontrats are aso
non as ontrats th ee te onseraton
Example: r perts a ooe to arr hs ggage an eep t n the ar A ontrat
oesntoesteneassoonasthe ggageseptnthear B tthattetheooehas
area perfore hs ogaton o on r has to f fi hs ogaton e paent
of reasonae harges
Bilateral Contract
Aatera ontrat s one n hh the ogatons on the part of oth the partes to the
ontrat are o tstanng at the te of the foraton of the ontrat n ths sense atera
ontrats are sar to ee tor ontrats an are aso non as ontrats th ee tor
onseraton
2.2 OFFER
ffer s the first an foreost essenta eeent of a a ontrat t s the first step n
the proess of ang a ontrat or the foraton of a ontrat there st e a efinte
offer one person to another an ts n afie aeptane the person to ho t s
ae he or ‘proposa’ se n seton 2(a) of the nan Contrat At s snono s
n ngsh se th ‘offer’
2.2.1 MeaningandDefinition
Anoffer s a stateent one person of hat he ge n ret rn for soe at or prose
of another n other ors an offer s a proposa one person here he epresses
hs ngness to enter nto a ontrat a ogaton n ret rn for a prose or at or
forearane n short an offer s a proposa one part to another to enter nto a ega
nng agreeent th h
eton 2(a) of the At efines offer as “A person s sa to hae ae a proposa hen he
sgnfies hs ngness to o or to astan fro ong anthng th a e to otanng
the assent of that other to s h at or astnene”
Example: A sas to B “ o p rhase ar for |50000 n ths ase A s ang
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