Indian contract act 1872


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Indian contract act 1872

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Indian contract act 1872

  1. 1. Indian Contract Act, 1872 Essential Elements
  2. 2. Valid Contract: Essential Elements <ul><li>Proposal (Offer) & Acceptance </li></ul><ul><li>Consideration </li></ul><ul><li>Capacity of parties to Contract </li></ul><ul><li>Free Consent </li></ul><ul><li>Should not be a Void agreement </li></ul><ul><li>In Writing & Registered </li></ul><ul><li>Creates Legal Relationship </li></ul><ul><li>Certainty </li></ul><ul><li>Possibility of Performance </li></ul><ul><li>Enforceable by Law </li></ul>
  3. 3. Agreement (Sec. 2e) <ul><li>Agreement : “Every promise and every set of promises, forming the consideration for each other is an agreement” </li></ul><ul><li>Proposal when accepted = Promise </li></ul><ul><li>That is, Proposal or Offer + Acceptance = Agreement </li></ul><ul><li>What are the kinds of Agreements? </li></ul>
  4. 4. <ul><li>Valid Agreement: An agreement enforceable by law. </li></ul><ul><li>Void Agreement: Not enforceable by law. </li></ul><ul><li>Enforceable Agreement: A contract enforceable by law. </li></ul><ul><li>Voidable Agreement: It is valid so long as it is not avoided by the party entitled to do so. </li></ul><ul><li>Unenforceable Agreement: It is valid but not enforceable due to some technical defect. </li></ul><ul><li>Illegal Agreement: It is void ab-initio . </li></ul>
  5. 5. Contract (Sec. 2h) <ul><li>“ An Agreement Enforceable by Law is a Contract.” </li></ul><ul><li>Hence, Contract is a combination of agreement and enforceability. </li></ul><ul><li>What are the kinds of Contract? </li></ul><ul><li>Voidable Contract: It is when one of the parties has not exercised his free consent. </li></ul>
  6. 6. <ul><li>Void Contract: That which ceases to be enforceable by law becomes void. </li></ul><ul><li>Unenforceable Contract: Valid but incapable of proof, hence not enforceable. </li></ul><ul><li>Executed Contract: When parties have performed their obligations. </li></ul><ul><li>Executory Contract: When any party has not performed his share of obligation or promise. </li></ul><ul><li>Express Contract: When terms of contract are reduced in writing. </li></ul>
  7. 7. <ul><li>Implied Contract: Terms of contract inferred from conduct between parties. </li></ul><ul><li>Quasi Contract: Obligations which are not contracts but fall under the purview of law. </li></ul><ul><li>Contingent Contract: Where a promise contained in the contract is conditional. </li></ul><ul><li>Contracts of Record: Contracts made on the records of a court. </li></ul><ul><li>Specialty Contract: In writing, sealed and delivered by parties. “Contract under Seal” </li></ul><ul><li>Simple Contract: Not under seal. Made in writing or spoken words. </li></ul><ul><li>Statutory Contract: All or some terms & conditions are statutory. </li></ul>
  8. 8. Proposal (Sec. 2a) <ul><li>“ When one person signifies to another his willingness to do so or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence he is said make a ‘proposal’.” </li></ul><ul><li>In other words, a person should offer to do something. This offer must be sufficiently communicated to the person for whom he intends to do something with a view to obtaining his assent to it. </li></ul><ul><li>Maker of the offer = Proposer = Offerer = Promisor </li></ul>
  9. 9. Valid Proposal: Essentials <ul><li>Proposer cannot dictate terms. </li></ul><ul><li>Intended to create a legal relation. </li></ul><ul><li>Mere statement of intention is not a binding promise. </li></ul><ul><li>Offer must be made to definite person. </li></ul><ul><li>Offer terms must be unambiguous. </li></ul><ul><li>Offer can be expressed or implied. </li></ul><ul><li>Offer must be communicated even if conditional. </li></ul><ul><li>Proposer should intend to be bound by it. </li></ul>
  10. 10. Some Questions <ul><li>What is a Counter-Offer? </li></ul><ul><li>It is a rejection of the original offer and making a new offer. New offer is a counter offer. </li></ul><ul><li>What is Auction Sales? </li></ul><ul><li>It is an invitation to an offer. Only when a buyer makes a bid for the item that there is an offer. </li></ul><ul><li>What is a Standing (or Open) Offer? </li></ul><ul><li>The continuous supply of a certain article at a certain rate over a definite period is called a standing offer. Unless there is an order there is no contract. </li></ul><ul><li>What is ‘Invitation to an Offer? </li></ul><ul><li>It is not an offer. It is only an aim to circulate information of readiness to negotiate business with anybody who comes to the person sending it. </li></ul>
  11. 11. Acceptance (Sec. 2b) <ul><li>“ When the person to whom a proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise.” </li></ul><ul><li>To make the contract binding, there must be absolute and unconditional acceptance of the terms of a proposal. </li></ul><ul><li>Performance of conditions of a proposal is an acceptance of the proposal. </li></ul>
  12. 12. Valid Acceptance: Essentials <ul><li>Must be absolute and unconditional. </li></ul><ul><li>Must be expressed in usual & reasonable manner. </li></ul><ul><li>Mental acceptance is not sufficient. </li></ul><ul><li>Must be communicated to Proposer. </li></ul><ul><li>Must be by a certain person. </li></ul><ul><li>Doing it by ignorance of proposal is no acceptance. </li></ul><ul><li>Must be given within a reasonable time. </li></ul><ul><li>Must accept the proposal. </li></ul>