LAW OF CONTRACT-1872

Chanderprabhu Jain College of Higher Studies & School of Law
Plot No. OCF, Sector A-8, Narela, New Delhi – 110040
(Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India)
LAW OF CONTRACT-
1872
By: SHALINI TYAGI
(Associate Prof.& HOD School of Law)

Introduction-
Section-1:
Name- Indian contract act 1872;
Extent-It extends to the whole of India except
state of J&K.
Enforce-It shall came into force on 1stsep1872.

• ICA was compiled on 25 april 1872.
• It is act no.9 of 1872.
• The ICA is not a complete and exhaustive
law on all types of contract.It lays down only
general principles of contract law.Other
principles relating to contract are being given
in IPA,SGA,TPA,Company act,etc.
EXTRA NOTES-

The Purpose and Preamble of ICA is to define and
amend certain parts of the laws relating to contract.
It is a civil law becoz it enacted only about damages
not about punishment.
Before 1855 in India there was no fixed law on
contract.Parties of agreement were either regulated by
English law,Hindu law,Muslim law or by equity etc.

• To stop that uncertainity IInd law commission Prepares the draft
of ICA,which was later on Presented by IIIrd law commission.
But becoz of argumented situation b/w government and
commission,the draft was not fully accepted.Then James
Stephen made some amendments and it was finally enforced on
1stsep1872.Thats why credit of its making goes to James
Stephen.
• Its effect is not Retrospective,means it will not applicable on
the contracts dated before 1stsep1872

Proposal[S.2(a)] + Acceptance[S.2(b)]= Promise[S.2(b)]
+
Consideration[S.2(d)] = Agreement[S.2(e)]
If Enfocable by law If not Enfocable by law
= Contract[S.2(h)] = Void
Agreement[S.2(g)]

Proposal and Acceptance(Sec.2-9)-
Proposal/Offer[S.2(a)]---When one person signifies to another his
willingness to do or not to do abstain from doing anything,with a
view to obtain the ascent of that other to such act or omission,he is
said to make a proposal.
Example- A told B that he wants to sell his house to B in one lakh
Rs.It is a proposal.

Essentials of Proposal-
(A)Becoz nobody makes a proposal to itself, that’s why
atleast two persons must be needed for proposal.
Remember there is no limit on maximum persons i.e they
can be counted or countless.
(B) The parties ought to have the intention to create a
legal relationship b/w them through the form of proposal.
It must not be merely a moral or social one.

(C) Proposal should be in the form of request and not in order.[
Case-Felt House Vs Bindley]
(D) The Proposal must be certain,definite and not vague- If the
terms of a proposal are vague or indefinite,its acceptance cannot
create any contractual relationship.
Sec.29 of ICA enacted that-“Agreement the meaning of which is not
certain or capable of being made certain,are void.

two prices was to be given.The agreement is void.
(E) The Proposal must be communicated- A proposal to be
complete must be communicated to the person to whom it is
made,otherwise there can be no acceptance by him.An acceptance to
a proposal in ignorance of a proposal is not acceptance and doesnot
create any boundation on the acceptor.[Case- Lalmam shukl
Vs.Goridutt]
(F) The proposal should be made with a view to obtaining the
consent of the offere.

(G) The proposal should not contain a term the non compliance of
which would amount to acceptance. Thus a man cannot say that if
acceptance is not communicated by a certain time the proposal
would be considered as accepted.
(H)Types of proposal-
(i)Positive and Negative Proposal.
(ii)Express and Implied Proposal
(iii)General and Specific Proposal.
(iv)Standing Proposal.
(v)Discontinous Proposal.
(vi)Counter & Cross Proposal.

UNIT -II
CONTRACT
By: Ms SHALINI TYAGI
ASSOCIATE PROFESSOR
CUM HOD LAW

Consideration(Sec.2 & 25)-According to sec.2(d)- When
at the desire of the promisor,the promisee or any other
person has done abstained from doing,or does,or abstain
from doing or promise to do or to abstain from doing
something.Such act or abstainence or promise is called a
consideration for the promise.
Essentials of Considereation-
1)At the Desire of the Promisor – Consideration must be
offered by the promisee at the desire or request,of the
promisor,an act done at the desire of a third party is not a
consideration.

2)Consideration may move from Promisee or any other
Person- Consideration may move from Promisee or if
promisor has no objection ,it may also move by any other
person who is not a party to the contract.
3)Consideration may be Past,Present and future – In order
to support a promise a past consideration must be moved by a
previous request.

B)Present or Executed Consideration- In this consideration one
party of contract has done his liability and other have to fulfill his
liability.
Example– A pays 1000/-to B and B promises to deliver to him a
certain quantity of wheat with in a month.Here only B have to
fulfill his liability.This is Present Considertation.
C)Future and Executor Consideration- In this consideration
both the parties of contract do promise to each other for some
future act or omission,i.e both the parties have to fulfill their
liability.

English law- English law deals only with present and
future consideration i.e english law does not consider
past consideration as consideration.
4)Consideration must be Lawful- The consideration or
object of an agreement is lawful ,unless –
its forbidden by law; or is of such a nature that,if
permitted,it would defeat the provisions of any law,or is

fraudulent,or involues or implies injury to the person or property of
anthor;or the court regards it as immoral or opposed to public
policy.[Sec.23]
Example- A agrees to let her daughter to heir to B for
concubinage.The agreement is void because its immoral though the
letting may not be punishable under the Indian penal code.
5)Adequacy of Consideration– Consideration need not be
adequate, but should be real.Consideration need not be any
particular value.It need not be approximately equal value of the
promise for which it is exchanged but it must be something which
the law would regards as having some value.

In this context explanation 2 of sec 25 states that an agreement
to which the consent of the promises is freely given is not void
just because the consideration is inadequate.
Example- A agrees to sell a horse worth Rs1000/- for Rs10. A’s
consent to the agreement was freely given.The agreement is a
contract,not with standing the inadequacy of the consideration.
ii) A agrees to sell a horse worth Rs.1000/- for Rs10.A denies
that his consent to the agreement was freely given.The
inadequacy of the consideration is a fact which the court should
take into account in considering whether or not A's consent was
freely given.

Validity of an agreement without Consideration – For every valid
contract consideration is important. Sec25 states the general rule is
that an agreement made without consideration is void,i.e "no
consideration no contract" An agreement without consideration is
called "Nudum Pactum".
Point– Ex nudo pacto non oritur actio(agreement without
consideration doesn’t create any right).
Example–A agrees B to given 1000/- without consideration.
Agreement is void .

But in the following situations an agreement without
consideration is also valid-
1)Natural Love and Affection– Sec.25(1) states that– “A written
and registered agreement based on natural love and affection
between the parties standing in near relation (like husband and
wife,son and father etc) to each other is enforceable even without
consideration.[Case-Rajlukhi Devi Vs Bhoot Nath Mukherjee.]
Example– A for natural love and affection promises to give his
son B, Rs1000/-. A puts his promise to B in to writing and
registers it.This is a contract.

UNIT - III
INTRODUCTION TO
CONTRACT
By: Ms SHALINI TYAGI
ASSOCIATE PROFESSOR
CUM HOD LAW

UNIT - IV
By: SHALINI TYAGI
(Associate Prof.& HOD School of Law)

Contingent Contract (Ss. 31-36) -
According to Sec-31 "A contingent contract is a contract to do or
not to do something, if some event, collateral to such contract,
does or does not happen."
Example - A contracts to pay B ` 10,000 if B's house is burnt. This
is contingent contract.

EXTRA NOTES-
Performance of Contract(Ss. 37-61) -
According to Sec-37 - "The parties to a contract must either
perform or offer to perform their respective promises, unless
such performance is dispensed with or excused under the
provision of the Indian Contract Act, or of any other law.
Promises bind the representatives of the promisors in case of
the death of such promisor before performance, unless a
contrary intention appears from the contract."

2) A promises to deliver goods to B on a certain day on payment of
` 1,000. 'A' dies before that day. A's representatives are bound to
deliver the goods to B, and B is bound to pay ` 1,000 to A's
representatives. According to Section 39 - "When a party to a
contract has refused to perform or disabled himself from
performing his promise in its entirety the promise may put an end
to the contract unless he had signified by words or conduct, his
acquiescence in its continuance." (Anticipatory Branch of contract)

• night A willfully absents herself form the theatre. B is at liberty
to put an end to the contract.
• If B rescinds the contract than B is entitled to compensation for
the damages which he has sustained through the non fulfillment
of the contract under Sec-75.
• Section 75 states that - "A person who rightfully rescinds a
contract is entitled to a compensation for any damage which he
has sustained through the non-fulfillment of the contract.

2) A, a singer enters into a contract with B, the manager of a
theatre, to sing at his theatres two nights in every week during the
next two months, and B engaged to pay her ` 100 for each night's
performance. On the sixth night A willfully absents herself form the
theatre. With the assent of B, A sings on the seventh night. B is has
signified his acquiescence in the continuance of the contract and
cannot now put an end to it; but is entitled to compensation for the
damages sustained by him through A's failure to sing on the sixth
night Under Sec-39.

3) A, a singer enters into a contract with B, the manager of a
theatre, to sing at his theatres two nights in every week during the
next two months, and B engaged to pay her ` 100 for each night's
performance. On the sixth night A willfully absents herself form the
theatre, and B continuance, rescinds the contract, B must pay A for
the five nights on which she had sung under Sec-65.
Section 65 states that - "When an agreement is discovered to be
void, or when a contract becomes void, any person who has
received any advantage under such agreement or contract is bound
to restore, it, or to make compensation for

it, to the person from whom he received it." (Doctrine of Quantum
Merit)
According to Section 55(Time Contract) - When a party to a
contract promises to do a certain thing or certain things at or before
a specified time and fails to do such things at or before a specified
time, the contract or so much of it as has not been performed,
becomes voidable at the option of the promisee, if the intention of
the parties was that time should be of essence of the contract.

If, In case of a contract voidable on account of the promisor's
failure to perform his promise at the time agreed, the promisee
accepts performance of such promise at any time other than agree,
the promisee cannot claim compensation of any loss occasioned by
the non-performance of the promise at the time agreed, unless, at
the time of acceptance, he give notice to the promisor of his
intention to do so.
If it was not the intention of the parties that time should be of the
essence of the contract, the contract does not become voidable by
the failure to do such thing at or before the

specified time; but the promisee is entitled to compensation
from the promisor for any loss occasioned to him by such
failure.”
According to Section 56 - An agreement to do an act
impossible in itself is void.
Example - A agrees with B to discover treasure by magic. The
agreement is void.
A contract to do an act which, after the contract is made,
becomes impossible or, by reason of some event which the
promisor could not prevent, unlawful, becomes void when the
act becomes impossible or unlawful.

Example - A and B contract to marry each other, before the
time fixed for the marriage, 'A' goes mad. The contract
becomes void.
Where one person has promised to do something which he
knew or, with reasonable diligence, might have known, and
which the promisee did not know to be impossible or unlawful,
such promisor must make compensation to such promise for
any loss which such promisee sustains through the non-
performance of the promise.

THANK YOU

LAW OF CONTRACT-1872

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