Indian Contract Act-1986

Indian Contract Act-1986

Indian Contract Act1986 Definition[Sec-2(h)]:

A contract is an agreement, enforceable by law

Elements:

1.

An agreement.

2.

Enforceability by law.

Nature of Contract.
It was passed in 1972.

It is an indispensible part of our life.

A contract is an agreement that can be enforced

in the courts of law. Parties to the contract must be competent.

Classification of Contract:
1. Unilateral Contract.
2. Bilateral Contract. 3. Voidable Contract.(which can be made void) 4. Void Contract.(Not legally valid) 5. Unenforceable Contract. 6. Express Contract.

Cont..
Implied Contract. 8. Formal Contract. 9. Informal Contract. 10. Executed Contract.(that which is done) 11. Executory Contract.(which is still being carried out) 12. Quasi Contract.(which seems like)
7.

Essential Elements of a Valid Contract:

1.

2.
3. 4.

5.

Offer/Proposal and Acceptance. Intention to create a legal relationship. Lawful Consideration. Capacity to Parties/ Competency of Parties. Free Concent.

Cont..
Lawful Object. 7. Agreement not declared void. 8. Certainity of Terms. 9. Possibility of Performance. 10. Legal Formalities.
6.

Proposal/Offers-2(a)
Definition:

When one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining assent or that other to such act or abstinence he is said to make a proposal.

Cont..
Example:

A says to B will u buy this car for Rs 20000?

Person making the offer is called The offeror or

Proposer or Promisor. The person to whom it is made is called the offeree.

Modes of Giving Proposal:

By Express words Spoken. In writing.

By conduct.

To whom can An Offer Be Made:

To definite person.

To definite class of persons.

To the world at large

Offer must create legal relationship

A statement of price is not an offer.

Terms of offer must be definite.

Rules as to offer

Must not thrust the burden of acceptance. Offer must be made with a view to obtaining the assent.

Offer must be communicated.

Acceptance.
Meaning:

1. It is an expression by the offeree;

2. Of his willingness to be bound;

3. By the terms of the offer.

Cont..
Definition:[Sec-2(b)]

When the person to whom the proposal is made,

signifies his assent thereto,

the proposal is said to be accepted.

Essentials of a Valid Acceptance.

1.

2.
3. 4. 5.

It must be absolute and unqualified. It must be expressed in usual and reasonable manner. It must be communicated to the offeror. It must be given within reasonable time. Acceptance cannot be in ignorance of the offer.

Acceptance of the Proposal.

1. 2. 3.

By communicating the Acceptance (express or implied). By Performance of a condition in the offer. By acceptance of any consideration for a reciprocal promise.

Capacity to Contract.
S-11: Every person is competent to contract who is

Of the age of majority;

Who is of sound mind; and

Not disqualified from contracting by any law to which he is subject.

Persons who are not capable of entering into a contract:-

Minor;

Insane Person;

Disqualified Person.

Consent.[Sec-13]
Definition:-

Two or more persons are said to consent when they agree upon the same thing in the same sense.

Free Consent.[Sec-14]
1. 2.

3.
4.

5.

Definition:- Consent is said to be free when it is not caused by coercion, as defined in section 15, or undue influence, as defined in section 16, or fraud, as defined in section 17, or misrepresentation, as defined in section 18, or mistake, subject to the provisions of sections 20, 21 and 22.

"Coercion Sec-15
1.

2.

3.

"Coercion" is the committing, or threatening to commit, any act forbidden by the Indian Penal Code, or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. (45 of 1860.)

Cont..
Illustration :
A threatens to kill B, if he does not lend money to C.

B agrees to lend money to C. The agreement is entered into by coercion.

Undue influence Sec-16

1.

2.
3.

A contract is said to be induced by "undue influence where the relations subsisting between the parties are such that one of the partiesis in a position to dominate the will of the other and; uses that position to obtain an unfair advantage over the other

Cont..
Illustration : A, a man enfeebled by disease or age, is

induced, by B's influence over him as his medical attendant, to agree to pay B an unreasonable sum for his professional services. B employs undue influence.

"Fraud" defined.-Sec-17
1. the suggestion, as a fact, of that which is not

2.

3. 4. 5.

true, by one who does not believe it to be true; (Suggestio falsi) the active concealment of a fact by onehaving knowledge or belief of the fact;(Suggestio veri) a promise made without any intention of performing it any other act fitted to deceive; any such act or omission as the law specially declares to be fraudulent.

Cont..
Ex:-A purchase goods from B. He has no

intention to pay the price. This is fraud on the part of A.

"Misrepresentation"
1. It means and includes the positive assertion

of a fact which is not true, though he believes it to be true. 2. any breach, of duty which, without an intent to deceive, gains an advantage to the person committing it, 3. or any one claiming under him, by misleading another to his prejudice or to the prejudice of any one claiming under him;

Mistake
1.

2.

Mistrake of fact. Mistake of law.

Consideration:
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 consideration for the promise. [section 2(d)].

Types of Consideration:-

Executed.

Executory.

Past.

Unlawful.

Unreal or Illusory.