V A contract is an agreement between two or

more parties to do, not do, or promise

something
V Contracts can come in many forms ³ they
can be oral or written, implied or express, and
legally enforceable or not.
V The strongest contract, in terms of
enforceability, has an offer, acceptance,
consideration for the exchange, clearly sets
out the terms of the agreement without
ambiguity, and is signed by the involved
parties with proper capacity to enter into the
contract.
V Weaker contracts include verbal agreements
or contracts drawn up by parties in
direct violation of state or federal laws.
V As per Contract Act, an agreement
enforceable by law is a contract. [section
2(h)]
V Every promise and every set of promises,
forming the consideration for each other, is
an agreement. [section 2(e)].
V A person makes a proposal (offer). When it
is accepted by other, it becomes a
promise.
V Promise cannot be one sided. Only a
mutual promise forming consideration for
each other is ¶agreement·
V the term ¶agreement· as defined in
Contract Act requires mutual consideration
V When one person 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, he is said to make a
proposal. [section 2(a)]
V Thus, a ¶proposal· can be to do a
positive act or abstinence from act (i.e.
negative act).
V [English Act uses the word ¶offer·, while
Indian Contract Act uses the word
¶proposal·
V When the person to whom the proposal
is made signifies his assent thereto, the
proposal is said to be accepted.
V A pro posal, when accepted, becomes
a promise. [section 2(b)].
V Thus, when a proposal (offer) is
accepted, it becomes a ¶promise·.
V Only person to whom proposal is made
can signify his assent. Other person
cannot accept a proposal.
V m

m
 x The person making
the proposal is called the ´promisorµ, and
the person accepting the proposal is called
the ´promiseeµ. [section 2(c)].
V
m

m
  x Promises which form
the consideration or part of the
consideration for each other are called
reciprocal promises. [section 2(f)].
V

 

m
 ½ The definition of
¶agreement· itself states that the mutual
promises should form consideration of each
other. Thus, ¶consideration· is essential for
an agreement. A promise without
consideration is not ¶agreement· and
hence naturally, it is not a ¶contract·.
V  



 
 x When, at
the desire of the promisor, the promisee
or any other person has done or
abstained from doing, 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
consid eration for the promise. [section
2(d)]
V The steps involved in the contract are ½
V proposal and its communication
V acceptance of proposal and its
communication
V Agreement by mutual promises
V Contract
V Performance of Contract.

All agreements are not contract. Only

those agreements which are
enforceable by law are ¶contracts·.
V Offer and its acceptance
V Free consent of both parties
V Mutual and lawful consideration for
agreement
V It should be enforceable by law. Hence,
intention should be to create legal
relationship. Agreements of social or
domestic nature are not contracts
V Parties should be competent to contract
V Object should be lawful
V Certainty and possibility of performance
V Contract should not have been declared
as void under Contract Act or any other
law
V Communication of proposal/
revocation/acceptance are vital to
decide validity of a contract.
V A ¶communication· is complete only
when other party receives it.
V In order to convert a proposal into a
promise, the acceptance must x
(1) be absolute and unqualified;
(2) be expressed in some usual and
reasonable manner, unless the proposal
prescribed the manner in which it is to be
accepted.
V Acceptance of offer is complete only when
it is absolute and
unconditional. Conditional acceptance or
qualified acceptance is no acceptance.
V Insofar as the proposal or acceptance of
any promise is made in words, the
promise is said to be express.
V Insofar as such proposal or acceptance
is made otherwise than in words, the
promise is said to be implied. [section 9].
V For example, if a person enters a bus,
there is implied promise that he will pay
the bus fair.
V An agreement which is enforceable by
law at the option of one or more of the
parties thereto, but not at the option of
the other or others, is a voidable
contract. [section 2(i)]
V a) When consent is obtained by
coercion, undue influence,
misrepresentation or fraud is voidable at
the option of aggrieved party i.e. party
whose consent was obtained by
coercion/fraud etc. However, other
party cannot avoid the contract.
V (b) When a contract contains reciprocal
promises and one party to contract
prevents the other from performing his
promise, the contract becomes voidable at
the option of the party to prevent. (section
53).
V Obvious principle is that a person cannot
take advantage of his own wrong (c) When
time is essence of contract and party fails
to perform in time, it is voidable at the
option of other party (section 55).
V A person who himself delayed the contract
cannot avoid the contract on account of
(his own) delay.
V A contract which ceases to be enforceable
by law becomes void when it ceases to be
enforceable. [section 2(j)]
V Thus, initially a contract cannot be void, i.e.
a contract cannot be void Ú



V The simple reason is that in such a case, it is
not a contract at all to begin with.
V Hence, only a valid contract can become
void contract due to some subsequent
events. e.g. the person dies or property is
destroyed or Government imposes a ban
etc.
V A void agreement is void Ú


. It never
becomes a contract. It is nullity and cannot
create any legal rights.
V In a landmark case of a




Ú Ú

 the council held that a
minor·s contract is null and void from the
beginning.
V èeither of the parties acquires any rights
nor can they be held liable in cases where
the contract is formulated with a minor.
V The main reason for the contract with a
minor to be considered invalid is that a
minor is not capable of taking a rational
decision.
V Also, it is accepted by law that a minor
cannot judge his own interests.
V a

 m
  Although a contract
is considered void if it is entered with a
minor, a minor can gain benefit under a
contract and be a promisee. The benefits
specified for the minor can be derived only
by the minor.
V  




 
ΠA void contract
that a minor entered cannot be ratified
even after he reaches the age of majority.
This means it cannot be validated by law
when the minor reaches the age of
majority.
V ˜  mŒ A minor cannot be included
in a partnership. However, he can enjoy
the benefits of the partnership with the
approval of other partners. It is advisable
to avoid including a minor in a
partnership.
V a
m ΠThe parents of a minor
cannot be held liable for any agreement
that the minor enters into. However, they
can be held liable in case the minor is
acting as their agent.
V =
 
ΠA minor can be never
considered as insolvent.
V á

 Ú



Indian Contract Act

V
 Every person who has attained the  


,
 Who is of 
 and
V

 is not otherwise disqualified from

contractingis competent to contract.
V
V


 In India, the age of
majority is regulated by the Indian Majority
Act.
V Every person domiciled in India attains
majority on the completion of 18 years of
age.
V
V
 D   As per section 12 xxA
person is of sound mind if at the time when
he makes it, he is capable of understanding
it and of forming a rational judgement as to
its effect upon his interests.

V Dection further lays down that a person who

is usually of unsound mind but occasionally
of sound mind, may make a contract when
he is of sound mind.
V A person who is usually of sound mind, but
occasionally of unsound cannot make a
contract when he is of unsound mind.
V  





  




 
V The word void means ´void as against the
minorµ. Contract with or by a minor is
altogether void. The Act provides that a
person who is a major is competent to
contract.
V An agreement by a minor involves a
promise on his part and he is incapable of
giving a promise imposing a legal
obligation. Therefore, the agreement with
the minor is void ab initio
V
V 2. a 


   Though a
minor is not competent to contract. There is
nothing, which prevents him from making
the other party bound to the minor. Thus
minor though incompetent to contract may
accept a benefit.
V A promissory note executed in favors of a
minor is not void and can be sued upon by
him. In the case 
  
  it was held that a mortgage
executed in favor of minor and minor can a
get a decree for its enforcement.
V   




 





 
Minor can maintain a
suit for the recovery of price.
V3. a 
 
A
minor·s agreement is void. Any money
advanced to a minor on a promissory
note or otherwise, cannot be recovered.
V Even when a minor procures a loan by
falsely representing that he is full age, he
can plead his minority in a suit intended
to recover the amount from him (minor
the suit against him will be dismissed).
V °


 
 m






V (a) If an infant obtains property by
misrepresenting his age, he can be
compelled to restore it but only so long
as the same is traceable in his
possession. This is known as the equitable
doctrine of restitution.
V (b) But where the infant has sold the
goods, he cannot be made to repay the
value of the goods because that would
amount to enforcing a void agreement.
V (c) Again the doctrine of restitution is
not applied where the infant has
obtained cash instead of goods.
V The wellxknown authority on this point is
[  [ . Lord Dummer who
delivered the judgment pointed out that
the minor might have spent the money
as his own, there was no chance of
tracing it and no possibility of restoring
the very thing got and the court would
not pass a personal decree against the
minor.
V (d) A minor had fraudulently mortgaged
and sold certain properties.
V He invokes the aid of the court for the
cancellation of his contract. Thus he is
the plaintiff.
V The court may grant relief and may
compel him to restore all benefits
obtained by him under the contract or
make suitable compensation to the
other party.
V Reason is simple. He who seeks justice
must do justice.
V -. 
 


   
 


 As a minor·s agreement is void
he cannot validate it by ratification on
attaining majority.
V For instance, a minor borrows money
and executes a promissory note. On
attaining majority, he executes a fresh
promissory note in substitution of the one
executed as a minor.
V The second promissory note is void as it is
without consideration.
V 5. ÷

   



 Though a minor·s agreement is void. His
guardian can, under certain circumstances
enter into a valid contract on the minor·s
behalf.
V Where the guardian makes a contract for the
minor and which is within his {guardian}
competence and which is for the benefit of
the minor.
V Duch a contract is valid which minor can
enforce.
V For instance a guardian can make an
enforceable contract of marriage for a minor.
It is customary among most of communities in
India for parents to arrange marriages
between minor children and the law has to
adapt itself to the habits and customs of the
people.
V Dimilarly, when the father of the
bridegroom contracts with the father of
the bride to pay the bride an allowance
the bride can sue her fatherxinxlaw to
recover arrears of the allowance But all
contracts made by guardian on behalf
of a minor are not valid.
V For instance, the guardian of a minor has
no power to bind the minor by a
contact.
V ·. [  



 However,
the contract with minor for necessaries is
valid and minor·s property is liable. This is
illustrated in Dection ·8 of the act to the
effect
V If a person incapable of entering into a
contract or anyone whom he is legally
bound to support, is supplied by another
person with necessaries suited to his
condition in life, the person who has
furnished such supplies is entitled to
be reimbursed from the property of such
incapable person
V Thus any person would be entitled to
reimbursement out of the minor·s estate,
for necessaries supplied to him or to his
family whom he is bound to support A
minor cannot be held personally liable
for necessaries but his property is liable.
V èecessaries as defined by the English Dale
of Goods Act, mean goods suitable to the
condition in the life of infant as required by
him at the time of sale and delivery.
V It includes not only food and clothing and
housing but also includes the education
and the instruction needed.
V èecessaries also include services offered.
Articles of mere luxury offered are always
excluded though luxurious articles of utility
are in some and relevant appropriate cases
may be allowed.
V Even the money advanced to buy the
goods and services necessary are also
included and covered.
V The infant·s need of things may also
sometimes depend upon the peculiar
circumstances under which they are
purchased and the use to which they
are put.
V For instance, articles purchased by an
infant for his wedding may be deemed
necessary, while under ordinary
circumstances the same articles may not
be so considered.
V A person of unsound mind is incapable of
entering into a contract.
V An agreement by a person who is not of
sound mind is void.
V However, such a person can enter into a
valid contract during an interval of lucidity.
V Unsoundness of mind is one who is x
V (i) Incapable of understanding the
contract
V (ii) and of forming a rational judgement as
to its effect upon his interest.
V Idiots, lunatics and drunken persons are
examples of those having an unsound
mind. Where a person is usually of
sound mind, but occasionally
becomes a person of
V Unsound mind cannot enter into
agreement when he turns unsound.
V Dimilarly, a person who is unsound mind
can make a contract when he turns
sound mind.
V For example a patient in a lunatic
asylum, who is at intervals of soulmind
may contract during such intervals.
V Besides minors and persons of unsound mind,
there are also other persons who are
disqualified from contracting, partially or
wholly.
V Contracts by such person and with such
persons are void. If, by any provincial
legislation, person is declared ¶disqualified
proprietor·, he is not competent.
V An alien enemy during war cannot enter into a
contract with an Indian subject. He cannot sue
in Indian Courts without a licence from the
Central Government Contracts made before
the war may either be suspended or
disallowed if they are against the public policy
or if their performance would benefit the
enemy
V Dimilarly, a statutory corporation cannot
enter into a contract which is ultra vires its
memorandum. Likewise, municipal bodies
are disqualified from entering into contracts
which are not within their statutory powers.

V Dovereign Dtates, Ambassadors and

Diplomatic Couriers enjoy certain special
privileges with the result that they cannot
be legally proceeded against in Indian
Courts and Indian Citizen has to obtain a
prior sanction of the Central Government to
enable himself to sue them in our law
courts.
V However, they can, at their will enter into
contracts which may be enforceable in
Indian Courts.
V =
  When a debtor is adjudged
insolvent, his property vested in the official
receiver or the official assignee.

V As such the insolvent is deprived of his power to

deal in that property It is only the official
receiver or the official assignee who can enter
into contract in respect of that property and
can sue and be sued on his behalf.

V ÷

Πx A convict while undergoing
imprisonment is incapable of entering into
contract. This incapacity to contract comes
to an end when the period of sentence expires
or when he is pardoned.
V As per constitution minors are given
prime importance.
V It is prime duty of courts to take care of
minors and give them appropriate and
judicious treatment as and when
required.