INDIAN CONTRACT ACT

This is a law that helps establish a legal relationship and regulate the same between two individuals in the public domain. This law is a very important tool of commerce in globalised era. This content will help and prepare the students for understanding the world of contract..

IMPORTANT DEFINITIONS

Section 2: Interpretation clause and Definitions

1) Proposal Section 2 (a)

2) Promise Section 2 (b)

3) Consideration Section 2(d)

4) Agreement Section 2 (e)

5) Contract Section 2 (h)

CHAPTER-1: COMMUNICATION, ACCEPTANCE AND REVOCATION OF PROPOSALS

Section 3-9: Communication, acceptance and revocation of proposals

section 4: Communication when complete

section 5: revocation of proposals and acceptance

section 6: revocation how made

section 7: acceptance must be absolute

section 8: acceptance by performing conditions or receiving consideration

section 9: promises, express and implied

Section 10: WHAT AGREEMENTS ARE CONTRACT

General principles in the formation of a Contract–

1. Intention to create Legal Relations.

2. Offer and Acceptance.

3. Lawful Consideration.

4. Capacity of the involved parties

5. Free Consent.

6. Object of the contract must be legal.

7. The agreement must also have the elements of certainty and possibility of performance for it to be enforceable by law and it must not be void.

Section 11 and 12: COMPETENCY TO CONTRACT (READ WITH SECTION 68)

1. Attaining the age of majority

2. Being of sound mind

3. Not disqualified from entering into a contract by any law that he is subject to.

4. Important landmark judgment (Mohiribibi v. Dharmodas)

Section 68: Claim for necessaries supplied to person incapable of contracting, or on his account

VOIDABLE AGREEMENTS/CONTRACTS

Section 2(i) of the Indian Contract Act, 1872 defines voidable agreements

section 13: Consent defined

section 14: Free consent defined

Section 19 and 19 A: Lack of free consent

section 15: coercion

section 16: undue influence

section 17: fraud

section 18: misrepresentation

section 53: prevention of performance by other party

section 55: failure to perform in fixed timefraud

section 64: consequences of recession

VOID CONTRACTS

Section 2(g) of the Indian Contract Act, 1872 defines voidable agreements

Section 20: Mistake of fact

Sections 23 and 24: Mistake of law

Section 25: Agreements without consideration

Section 26: Agreements in restraint of marriage

Section 27: Agreements in restraint of trade

Section 28: Agreement in restraint of legal proceedings

Section 29: Agreement void for uncertainty

Section 30: Wagering agreements

CONTINGENT CONTRACTS: Sections 31 to 36

Section 31: contingent contract defined

Enforcement of contingent contract

Provisions related to the enforcement of the contingent contract are given under section 32 to 36 as follows:

Section 32: Enforcement of contract contingent on the happening of an event

Section 33: Enforcement of contract contingent on an event not happening

Section 34: When an event on which contract is contingent to be deemed impossible if it is the future conduct of a living person

Section 35 para 1: Contracts contingent on an event happening within the fixed time

Section 35 para 2: Contracts contingent on an event not happening within the fixed time

Section 36: Contract contingent of impossible event void

IMPOSSIBILITY OF PERFORMANCE AND FRUSTRATION OF CONTRACTS

Section 56

1) Initial Impossibility

2) Subsequent impossibility

Specific grounds for frustration

1) Death or incapacity of party

2) Government, legislative and administrative interventions

3) Non-occurrence of contemplated event

4) Change of circumstance

5) Destruction of subject-matter

Effects of frustration

1. Frustration should not be self-induced

2. Section 65: Restitution under frustration

a. Discovered to be void

b. Becomes void

Sections 68 to 72: QUASI CONTRACTS

Quasi contract Sections 68 to 72 of the Indian Contract Act 1872 provide for 5 kinds of quasi-contractual obligations, they are:

1. section 68: Supply of necessities

2. section 69: Payment by interested persons

3. section 70: Liability to pay for non-gratuitous acts

4. section 71: Finder of goods

5. section 72: A mistake of coercion

Essentials of Quasi-Contract:

1. It is enforced by law. It is not formed by contract.

2. It is a right in personam.

3. The individual who incurs expenses is entitled to receive money (unjust enrichment).

4. It is raised through a legal fiction.

CONSEQUENCES OF BREACH OF CONTRACT: sections 73 to 75

Section 39 of the Indian Contract Act, 1872 defines the breach of contract

Section 73

Section 74: Penalties in regard to breach of contract

Section 75: compensation to the party rightfully rescinding the contract

Sections 124 to 147: INDEMNITY AND GUARANTEE

Sections 148 to 171: BAILMENT

Sections 172 to 181: PLEDGE

Sections 182 to 238 : AGENCY