The Contract Act 1872 lays down the general principles of contract law in India. It establishes the requirements for a valid contract such as offer, acceptance, lawful consideration, capacity to contract, free consent, lawful object and intention to create legal relations. The Act also defines different types of contracts and addresses how contracts are formed, performed and discharged. It provides remedies for breach of contract such as damages, specific performance and injunctions. The Act aims to ensure parties to a contract are bound by certain core obligations while allowing flexibility in agreements.

1. CONTRACT ACT 1872 Basics of Contract Act

3. Contracts create personal rights and obligations for the parties to the contract: particularly vital for business community:It means, specific persons who are parties to contract have rights and duties against each other

5. Promise? Section 2(b) Promise = Proposal/Offer + Acceptance Proposal? Section 2(a) Expression of willingness to do something With a view to seek the assent of the other party. Thus, mere expression of willingness doesn’t constitute offer/proposal.

6. Acceptance Section 2(b) Giving of assent to the proposal. Enforceability by Law Agreements which are not enforceable Illegal/unlawful agreements, e.g., to smuggle/to kill Social Agreements (Balfour vs. Balfour)

7. CONTRACT ACT Every Agreement is not a Contract. AGREEMENT ENFORCEABLE IN LAW IS CONTRACT. Contract : Agreement + enforceable by law. i.e. legal obligations to do or abstaining from doing anything. ( Social, illegal) All contracts are agreement but all agreements are not contracts Legal Contracts creates “Rights in Personam” not right in “rem”

8. Essential of Contract Section 10 : states elements of Contract which are 1)Agreement & Legal Obligation ; Agreement ( Offer+ Acceptance) Two parties ( Promisor & Promisee) 2)Intention to create legal relationship 3)Free Consent ( Sec 13,14)

9. 4)Parties competent to Contracts 5)Lawful consideration 6)Lawful Object ( Not illegal/immoral) 7)Agreements not declared void or illegal ( S 24-30) 8)Certainty of Meaning (29) 9)Possibility of performance 10) Necessary Legal Formalities

10. CONTRACT ACT Classification/Types of Contracts: Classification according to Enforceability : Valid, Void & Voidable, Illegal, Unenforceable Valid = section 10 elements Enforceable at the option of one or more parties = Voidable Section 23-30 = Void Classification according to Formation Express, Implied & Quasi Judicial Classification according to Performance : Executed, Executory, Unilateral, Bilateral

11. OFFER & ACCEPTACE : Offer – Section 2 (a) : 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 Essential of Valid Offer : Must be made with a view to obtain consent Must be made with the intention of creating legal relation Terms of offer must be definite, unambiguous & certain of capable of being made certain

12. CONTRACT ACT Elements of OFFER: It must be distinguished from mere declaration of intention or invitation of offer. ( A Tender is an offer) It must be communicated to offered. The offer must not be contain a term the non-compliance of which may be assume to amount to acceptance Special Terms Cross offers

13. CONTRACT ACT ACCEPTACE : Meaning: When a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when a accepted, becomes a promise Elements of ACCEPTANCE : It must be absolute & Unqualified It must be communicated to the Offerer It must be according to the mode prescribed It must be given in specified time

14. CONTRACT ACT ACCEPTACE : Meaning Acceptance how made and by whom Elements of ACCEPTANCE : It must be absolute & Unqualified It must be communicated to the Offeror It must be according to the mode prescribed It must be given in specified time

15. CONTRACT ACT ACCEPTACE : Meaning Acceptance how made and by whom Elements of ACCEPTANCE : It must be absolute & Unqualified It must be communicated to the Offeror It must be according to the mode prescribed It must be given in specified time

16. Every promise and every set of promises, forming the consideration for each other, is an agreement An agreement enforceable by law is a contract

17. CONTRACT ACT Communication of Revocation : The communication of revocation is complete : Against the person who makes it – when it is put into a course of transmission so as to be out of power of the person who makes it. Against the person to whom it is made – when it comes to his knowledge.

18. CONTRACT ACT Communication of Revocation : The communication of revocation is complete : Against the person who makes it – when it is put into a course of transmission so as to be out of power of the person who makes it. Against the person to whom it is made – when it comes to his knowledge.

19. Consideration As per sec 25 a contract without consideration is void. A contract without consideration is called nudumpactum. Means bare promiss. Consideration means something in return to the promisor.

20. The term consideration is defined as “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”

21. Elements of consideration 1) Consideration may move from promisee or any other persons 2) Consideration must be at the desire of the promisee 3) Consideration may be past preset or future 4) Consideration need not be adequate. 5) Consideration must be real not illusionary

22. Privity of contract and cosideration Under Indian contract third person in the contract can sue. Privity of consideration is allowed. Privirty of contract is third person in the contract he is not the party of contract. There is no offer and acceptance between third party. Privity of contract is not allowed.

23. Exception to privity of contract cannot sue. 1)When a trust is created 2) Contract through an agent 3) When a charge is created on a specific immovable property 4) In case of family arrangement of HUF 5) When promisee by his act created privity of contract.

24. Exception to rule “no consideration no contract” 1)Agreement based on love and affection 2) Agreement to pay past voluntary services 3) Agreement to pay time bared debt 4) Gift agreement 5) Agency

25. Capacity to contract Capacity means legal ability of a person to enter in to contract. As per sec 10 every person who are competent to enter in to contract if He is of the age of majority He is of sound minded He is not disqualified by law from contracting

26. Minor and legal rules A person who is not attained the age of majority is a minor. Law regarding minors agreements Agreement by or with minor is void Minor is not bound to return the benefit received(leslieVssheil) Minor cannot rectify his act Restitution of property in case of fraud Minor is liable of necessaries supplied Minor as a beneficiaries Minor as agent Minor as a partner Minor as an insolvent

27. Persons of unsound mind A person is said to be sound minded for the purpose of making contract if at the time of making the contract he is capable of underrating and forming a rational judgment on the contract. Following are the persons of unsound mind Idiot Lunatic Drunken

28. Person disqualified from contracting Foreign ambassadors Alien enemies Companies Professionals Felons Insolvent

29. Free consent According to sec 14 the consent is said to e free when it is not caused by Coercion Undue influence Fraud Misrepresentations Mistake

30. When a person obtain the consent of the other party by force or under the fear caused by threat of bodily violence and imprisonment he is said to make coercion. When the relationship between the parties of a contract is such that one of the party can dominate the will of the other and uses the position to claim an unfair advantages over the others, the contract is caused by undue influences

31. Fraud is will full representations made by a party to a contract with the intention of cheating others. The representation refers to a statement or assertion made by one party to another either before or at the time of making contract regarding some matters related to the contract. When it is wrongly made it is called misrepresentations Mistake is error a) mistake of fact b) mistake of law

32. Legality of Object and Considerations Under following circumstances object and consideration may be unlawful It is forbidden by law When it is defeating any provision of law When it is fraudulent When it cause to injury to a person or property of a person When it is opposed public policy or immoral

33. Agreement opposed to public policy 1)Trading with enemy 2) Champerty and maintenance contract 3) Agreement for trifling prosecution 4) Marriage brokerage agreement 5) Agreement for sale of public office 6)Agreement to create monopoly 7)Waiver of illegality 8) Agreement in restraint of marriage 9) Agreement in restraint of trade 10) Agreement between pleader and client 11) Agreement in restraint of legal proceedings 12) Agreement for not to bid

34. Wager and contingent contract Wager means promise to give money or monies worth up on the determination of an uncertain event in which both parties have no material interest and with mutual chance for gain or loss. Wager means betting A contract is said to be contingent when the performance depends on happening or non happening of certain events. The performance will become due only after happening of certain event

35. Discharge of contract Discharge of contract means terminating the contractual relationship between the parties to a contract. When the contract is discharged all the right and liability of contracting parties are extinguished and their relationship comes to an end Contract can be discharged by By Performance By agreement By laps of time By operation of law By impossibility of performance By committing breach of contract

36. Discharge by performance Actual performance Attempted performance ( tender) Discharge by agreement By novation By altration By recession Remission By waiver Merger

37. Discharge by operation of law By death By insolvency Discharge by impossibility of performance Impossibility at the time of contract Impossibility subsequent to the formation of contract( supervening impossibility) Destruction of subject matter Death of personal or incapacity of personal Contract becoming

38. Remedies for Breach of Contract Recession of contract Restitution of contract Suit for specific performance Suit for injunction Suit for quantum merit suit for damages a) general damages b)Special damages c)Exeplary damages d) Nominal damages

39. Quasi contract This are relationship created by parties between two person. There is no contractual relationship between two parties. Types: Necessaries supplied to a person incapable of contracting Payment by an interested person(Damodarmudaliar Vs secretary of the state ) Liability by non gratuitous act obligation of finder of goods Payment by mistake or coercion (sales tax officer , benares Vs kanhyalal)