basic concepts Part 1

2. INDIAN CONTRACT ACT 1872
 In India laws relating to contract are contained in The
Indian Contract Act, 1872
 it applies to the whole of INDIA
 The Indian Contract Act consist of 2 parts
 General principles of the Law of Contract
 Special kind of contracts

3. General principles of the Law of
Contract
 The general principles of the law of contract are
contained in sections 1 to 75 of the The Indian Contract
Act.
 These principles apply to all kinds of contact irrespective
of their nature.
 The general principles of contract deal with the different
stages in the formation of a contract, its essential
elements, its performance or breach and remedies of
contract.

4. SPECIAL CONTRACTS
 Special contracts are contained in section 124
to 238 of The Indian Contract Act.
 These special contracts are
 Indemnity
 Guarantee
 Bailment
 Pledge
 Agency

5. CONTRACT – meaning
 The word “Contract” is derived from the Latin word
“CONTRACTUM” which means “DRAWN TOGETHER”.
 It denotes drawing together the minds of two or
more persons to form a common intention giving
rise to an agreement.
 A contract is an agreement made between two or
more parties which the law will enforce.
 Section 2(h) of the Indian Contract Act defines a
contract as “An agreement enforceable by law”

6. Thus it is clear that
 Contract = Agreement + Enforceability by law

7. AGREEMENT
 Section 2(e) of the Indian Contract Act defines agreement
as “every promise and every set of promises, forming the
consideration for each other”
 For an agreement there must be proposal or offer by one
party and its acceptance by another party
 Agreement = Offer + Acceptance
 Obligation = legal duty to do or abstain from doing a
definite act or acts

8. Jus in Rem & Jus in Personam
Jus in Rem means a right against or in
respect of a thing
Jus in Personam means a right against
or in respect of a specific person

9. Essentials elements of a Valid Contract
 There must be two parties
 Agreement
 Intention to create legal relationship
 Lawful consideration
 The parties must be competent to contract
 Consensus ad idem or identity of mind
 There must be free consent of the parties
 Lawful object
 Performance must not be impossible
 Legal formalities
 Agreement not expressly declared void

10. Agreement - Definition
 According to Sec 10 of the Indian Contract Act
1872 “All agreements are contracts if they are
made by the FREE CONSENT of parties
COMPETENT TO CONTRACT for a LAWFUL
CONSIDERATION and with a LAWFUL
OBJECT and are not hereby EXPRESSLY
DECLARED to be VOID.”

11. Conclusion
All contracts are agreements
but all agreements are not
contracts

12. Agreement VS Contract

13. Classification of contracts
On the basis of
Validity
Performance
formation

14. On the basis of VALIDITY
Valid Contract
Void Agreement (Sec 2[g])
Void Contract (Sec 2[ j ])
Voidable Contract (Sec 2[ i ])
Unenforceable Contract
Illegal Agreement

15. On the basis of performance
Unilateral contract or one sided contract
Bilateral contract or Two sided contract
Executed contract
Executory contract

16. On the basis of formation
Express contract
Implied contract

17. Other types of contract
Contingent contract
Quasi contract

18. THANK YOU