The document discusses key concepts related to contracts such as proposals, promises, consideration, agreement, void agreements, voidable contracts, communication of offers and acceptances, mistakes, and competency to contract. It provides examples to illustrate concepts like a proposal becoming a promise upon acceptance, bilateral vs unilateral mistakes, qualified vs unqualified acceptances, and the relationship between promisor and promisee in a contract.

1. Dr K M SONI
Retd. ADG, CPWD, N.Delhi

2.  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.

3.  WHEN THE PERSON TO WHOM THE
PROPOSAL IS MADE SIGNIFIES HIS
ASSENT THERETO, THE PROPOSAL IS
SAID TO BE ACCEPTED.
 A PROPOSAL, WHEN ACCEPTED,
BECOMES A PROMISE.

4.  AN ORGANIZATION INVITES TENDER
 A CONTRACTOR SUBMITS HIS BID. IT
IS A PROPOSAL
 THE ORGANIZATION ACCEPTS THE
BID/PROPOSAL
 PROPOSAL/BID BECOMES PROMISE

5.  THE PERSON MAKING THE PROPOSAL
IS CALLED THE “PROMISOR” I.E. THE
CONTRACTOR
 THE PERSON ACCEPTING THE
PROPOSAL IS CALLED THE “PROMISEE”
I.E. THE EMPLOYER/ORGANISATION

6.  WHEN, AT THE DESIRE OF THE
PROMISOR, THE PROMISEE OR ANY
OTHER PERSON HAS DONE OR
ABSTAINED FROM DOING,
SOMETHING, SUCH ACT OR
ABSTINENCE OR PROMISE IS CALLED A
CONSIDERATION FOR THE PROMISE.

7.  IT IS THE PRICE FOR WHICH THE
PROMISE OF THE OTHER IS BOUGHT,
AND THE PROMISE THUS GIVEN FOR
VALUE IS ENFORCEABLE
 CONSIDERATION IS MUST FOR AN
AGREEMENT
 IT MUST NOT BE A PAST CONSIDERATION
 CONSIDERATION MUST COME FROM THE
SIDE OF PROMISEE

8.  EVERY PROMISE AND EVERY SET OF
PROMISES, FORMING THE
CONSIDERATION FOR EACH OTHER, IS
AN AGREEMENT.

9.  AN AGREEMENT NOT ENFORCEABLE BY LAW IS
SAID TO BE VOID. VOID MEANS HAVING NO
LEGAL VALUE. SO VOID AGREEMENT MEANS AN
AGREEMENT THAT HAS NO LEGAL VALUE.
 AGREEMENT IN RESTRAINT OF TRADE IS VOID
 AGREEMENT WITHOUT CONSIDERATION IS
VOID
 AGREEMENT IN RESTRAINT OF LEGAL
PROCEEDINGS IS VOID
 AGREEMENT TO DO IMPOSSIBLE ACTS IS VOID
 AGREEMENTS VOID FOR UNCERTAINTY

10.  THERE WAS AN AGREEMENT FOR THE SALE OF
CEMENT WITH A STIPULATION THAT THE
PRICE, DATES OF PAYMENT AND MANNER OF
DELIVERY SHALL BE AGREED UPON FROM TIME
TO TIME. THE AGREEMENT IS VOID
(AGREEMENT TO AGREE IN FUTURE IS VOID
FOR UNCERTAINTY.)
 AN AGREEMENT IS MADE FOR SUPPLY OF 500
CEMENT BAGS, EACH AT THE RATE OF RS 300 OR
400. AGREEMENT IS VOID DUE TO
UNCERTAINTY.

11.  AN AGREEMENT ENFORCEABLE BY LAW
IS A CONTRACT
 AN AGREEMENT WHICH IS NOT VOID
 AN AGREEMENT WHICH IS NOT
VOIDABLE PROVIDED BOTH PARTIES
DECIDE TO HONOUR IT

12.  AN AGREEMENT WHICH IS
ENFORCEABLE BY LAW AT THE OPTION
OF ONE OR MORE OF THE PARTIES
THERETO, BUT NOT AT THE OPTION
OF THE OTHER OR OTHERS, IS A
VOIDABLE CONTRACT

13.  A VOIDABLE CONTRACT IS A FORMAL AGREEMENT BETWEEN
AT LEAST TWO PARTIES THAT MAY NOT BE LEGALLY
ENFORCEABLE
 ONE OR BOTH PARTIES HAS NOT DISCLOSED A MATERIAL
FACT.
 THE CONTRACT INCLUDES MISREPRESENTATION, ERRORS,
OR FRAUDULENT STATEMENTS.
 THE CONTRACT WAS SIGNED UNDER DURESS OR UNDUE
INFLUENCE.
 ONE OR BOTH PARTIES COULD NOT LEGALLY ENTER INTO A
CONTRACT.
 THE CONTRACT CONTAINS ONE OR MORE UNCONSCIONABLE
TERMS.
 BREACH OF CONTRACT OCCURS.
 A CONTRACT WITH ONE OR MORE OF THESE ISSUES CAN
STILL BE CONSIDERED LEGALLY ENFORCEABLE IF BOTH
PARTIES DECIDE TO HONOUR ITS TERMS ANYWAY

14.  A CONTRACT COMES INTO EXISTENCE
ONLY WHEN ALL THE TERMS AND
CONDITIONS HAVE BEEN FINALISED.

15.  AN OFFER IS ACCEPTED WHEN THE
ACCEPTANCE IS COMMUNICATED.
 THE COMMUNICATION MUST BE
MADE TO THE OFFEROR.
 A COMMUNICATION OF ACCEPTANCE
MADE TO A THIRD PERSON CREATES
NO CONTRACT.

16.  THE EXPOSURE OF GOODS BY A SHOPKEEPER
DOES NOT AMOUNT TO AN OFFER TO SELL. ON
PICKING THE GOODS, IT IS AN OFFER BY THE
CUSTOMER TO BUY, AND THE SALE IS NOT
AFFECTED UNTIL THE BUYER’S OFFER PRICE IS
ACCEPTED BY THE SHOPKEEPER.
 SIMILARLY, MERE EXPRESSION OF INTEREST BY
ANY ORGANIZATION IS NOT ANY OFFER. WHEN
A BIDDER SUBMITS THE BID IN RESPONSE TO
THE EXPRESSION OF INTEREST, IT IS AN OFFER
AND WHEN THE ORGANIZATION ACCEPTS THE
BID, CONTRACT IS FORMED.

17.  THOUGH AN OFFER CAN BE MADE TO
THE WHOLE WORLD, A CONTRACT
CAN ARISE ONLY BY ACCEPTANCE OF
THE OFFER. HENCE KNOWLEDGE OF
THE TERMS OF THE OFFER IS
ESSENTIAL FOR ACCEPTANCE.

18.  A MERE MAKING OF AN OFFER DOES NOT
FORM PART OF THE CAUSE OF ACTION FOR
DAMAGES FOR BREACH OF CONTRACT
WHICH HAS RESULTED FROM THE
ACCEPTANCE OF THE OFFER. ORDINARILY
IT IS THE ACCEPTANCE OF THE OFFER AND
INTIMATION OF THAT ACCEPTANCE WHICH
RESULTS IN A CONTRACT.
 UNACCEPTED OFFER CREATES NO RIGHT
OR OBLIGATION.

19.  THE COMMUNICATION OF A PROPOSAL IS
COMPLETE WHEN IT COMES TO THE KNOWLEDGE
OF THE PERSON TO WHOM IT IS MADE.
 THE COMMUNICATION OF AN ACCEPTANCE IS
COMPLETE AS AGAINST THE PROPOSER, WHEN IT IS
PUT IN A COURSE OF TRANSMISSION TO HIM SO AS
TO BE OUT OF THE POWER OF THE ACCEPTOR.
 THE COMMUNICATION OF A REVOCATION IS
COMPLETE AS AGAINST THE PERSON WHO MAKES
IT, WHEN IS PUT INTO A COURSE OF TRANSMISSION
TO THE PERSON TO WHOM IT IS MADE, SO AS TO
BE OUT OF THE PERSON TO WHOM IT IS MADE,
WHEN IT COMES TO HIS KNOWLEDGE.

20.  “A” PROPOSES, BY LETTER, TO SELL A HOUSE TO
“B” AT A CERTAIN PRICE.
THE COMMUNICATION OF THE PROPOSAL IS
COMPLETE WHEN “B” RECEIVES THE LETTER.
 “B” ACCEPTS A’S PROPOSAL BY A LETTER SENT
BY POST.
 THE COMMUNICATION OF THE ACCEPTANCE IS
COMPLETE,
 AS AGAINST “A” WHEN THE LETTER IS POSTED;
 AS AGAINST “B”, WHEN THE LETTER IS RECEIVED
BY A.

21.  A REVOKES HIS PROPOSAL BY TELEGRAM.
 THE REVOCATION IS COMPLETE AS AGAINST A
WHEN THE TELEGRAM IS DISPATCHED.
 IT IS COMPLETE AS AGAINST B WHEN B
RECEIVES IT.
 B REVOKES HIS ACCEPTANCE BY TELEGRAM.
 B’S REVOCATION IS COMPLETE AS AGAINST B
WHEN THE TELEGRAM IS DISPATCHED, AND AS
AGAINST A WHEN IT REACHES HIM.

22.  THE ADVERTISEMENT OF AN ORGANIZATION FOR
TENDERS WAS AN INVITATION TO MAKE AN OFFER.
 THE TENDERS WHEN SUBMITTED TO THE
ORGANIZATION WERE “PROPOSALS” OR “OFFERS”.
 THE COMMUNICATION OF PROPOSAL/OFFER WAS
COMPLETE WHEN RECEIVED BY THE
ORGANIZATION.
 THE ACCEPTANCE OF PROPOSAL/OFFER IS
COMPLETE WHEN IT IS SENT EITHER BY POST OR
OTHER COMMUNICATION SO AS TO BE OUT OF THE
POWER OF THE ORGNIZATION.

23.  THE ORGANIZATION DID NOT MAKE ANY
COMMUNICATION TO ACCEPT THE OFFER.
 THE ACCEPTANCE WAS NOT COMPLETE AS IT
WAS NEVER MADE AND NEVER PUT TO
TRANSMISSION.
 THE OFFERS ON TENDERS WERE REVOKED
BEFORE IT WAS ACCEPTED. THERE WAS NO
CONTRACT.

24.  THE COMMUNICATION OF ACCEPTANCE OF
THE BID IS NECESSARY FOR COMPLETED
CONTRACT.
 WITHOUT COMMUNICATION, CONTRACT IS
NOT CONCLUDED. INTERNAL NOTE SHEETS
AND NOTING HAS NO FACE VALUE.

25.  A PROPOSAL (OF THE CONTRACTOR) MAY BE
REVOKED AT ANY TIME BEFORE THE
COMMUNICATION OF ITS ACCEPTANCE IS
COMPLETE AS AGAINST THE PROPOSER
(CONTRACTOR), BUT NOT AFTERWARDS.
 AN ACCEPTANCE (BY THE ORGANIZATION) MAY
BE REVOKED AT ANY TIME BEFORE THE
COMMUNICATION OF THE ACCEPTANCE IS
COMPLETE AS AGAINST THE ACCEPTOR
(ORGANIZATION), BUT NOT AFTERWARDS.

26.  A PROPOSES, BY A BID SENT BY POST, TO SELL THE
COMPUTERS TO B.
 B ACCEPTS THE PROPOSAL BY A LETTER SENT BY
POST.
 A MAY REVOKE HIS PROPOSAL AT ANY TIME
BEFORE OR AT THE MOMENT WHEN B POSTS HIS
LETTER OF ACCEPTANCE BUT NOT AFTERWARDS.
 B MAY REVOKE HIS ACCEPTANCE AT ANY TIME
BEFORE OR AT THE MOMENT WHEN THE LETTER
COMMUNICATING REACHES A, BUT NOT
AFTERWARDS.

27.  WHEN AN OFFER GIVES THE OFFEROR AN
OPTION TO ACCEPT WITHIN A FIXED PERIOD,
IT MAY BE WITHDRAWN EVEN BEFORE THE
EXPIRY OF THAT PERIOD UNLESS THERE IS
SOME CONSIDERATION FOR KEEPING IT OPEN.

28.  ACCEPTANCE MUST BE ABSOLUTE AND
UNQUALIFIED
 BE EXPRESSED IN SOME USUAL AND
REASONABLE MANNER, UNLESS THE
PROPOSAL PRESCRIBES THE MANNER
IN WHICH IT IS TO BE ACCEPTED.

29.  OFFER AND ACCEPTANCE MUST BE
BASED ON THREE COMPONENTS;
 CERTAINTY
 COMMITMENT AND
 COMMUNICATION
FOR A VALID CONTRACT

30.  IF A NEW CONDITION IS PUT WHILE
ACCEPTING THE BID, CONTRACT
ALREADY SIGNED BY THE PROPOSER
(CONTRACTOR) IS NOT COMPLETE
 UNTIL THE PROPOSER
(CONTRACTOR) ACCEPTS THE
CONDITION

31.  AN ACCEPTANCE WITH A VARIATION IS
NO ACCEPTANCE; IT IS SIMPLY
COUNTER PROPOSAL WHICH MUST BE
ACCEPTED BY THE ORIGINAL
PROPOSER (CONTRACTOR) BEFORE A
CONTRACT IS MADE.

33.  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.

34.  EVERY PERSON IS COMPETENT TO
CONTRACT WHO IS OF THE AGE OF
MAJORITY ACCORDING TO THE LAW
TO WHICH HE IS SUBJECT, AND WHO
IS OF SOUND MIND AND IS NOT
DISQUALIFIED FROM CONTRACTING
BY ANY LAW TO WHICH HE IS SUBJECT.

35.  CONSENT IS SAID TO BE FREE (AGREEING
TO SAME THING AND SAME SENSE) WHEN
IT IS NOT CAUSED BY-
 COERCION
 UNDUE INFLUENCE
 FRAUD
 MISREPRESENTATION
 MISTAKE, SUBJECT TO CERTAIN
PROVISIONS

36.  MISTAKE OF LAW
 This mistake may relate to the mistake of the
Indian laws, or it can be a mistake of foreign
laws. If the mistake is regarding Indian laws,
the rule is that the ignorance of the law is not
a good enough excuse. This means either
party cannot simply claim it was unaware of
the law. The Contract Act says that no party
shall be allowed to claim any relief on the
grounds of ignorance of Indian law.
 MISTAKE OF FACT

37.  MISTAKE OF FACT
Then there is the other type of mistake, a
mistake of fact. This is when both the
parties misunderstand each other leaving
them at a crossroads. Such a mistake can be
because of an error in understanding, or
ignorance or omission etc. But a mistake is
never intentional, it is an innocent
overlooking. These mistakes can either be
unilateral or bilateral.

38. WHEN BOTH PARTIES OF A CONTRACT ARE UNDER A MISTAKE OF FACT
ESSENTIAL TO THE AGREEMENT, SUCH A MISTAKE IS A BILATERAL
MISTAKE. HERE BOTH THE PARTIES HAVE NOT CONSENTED TO THE
SAME THING IN THE SAME SENSE, WHICH IS THE DEFINITION OF
CONSENT. SINCE THERE IS AN ABSENCE OF CONSENT ALTOGETHER THE
AGREEMENT IS VOID.
HOWEVER, TO RENDER AN AGREEMENT VOID THE MISTAKE OF FACT
SHOULD BE ABOUT SOME ESSENTIAL FACT THAT IS OF IMPORTANCE IN
A CONTRACT. SO IF THE MISTAKE IS ABOUT THE EXISTENCE OF THE
SUBJECT MATTER OR ITS TITLE, QUALITY, QUANTITY PRICE ETC THEN
IT WOULD BE A VOID CONTRACT. BUT IF THE MISTAKE IS OF
SOMETHING INCONSEQUENTIAL, THEN THE AGREEMENT IS NOT VOID
AND THE CONTRACT WILL REMAIN IN PLACE.
FOR EXAMPLE, A AGREES TO GET A BUILDING DISMANTLED FROM B.
BUT AT THE TIME OF THE AGREEMENT, THE BUILDING ALREADY
COLLAPSED. NEITHER A NOR B WAS AWARE OF THIS. AND SO THERE IS
NO CONTRACT AT ALL, I.E. THE CONTRACT IS VOID DUE TO A MISTAKE
OF FACT.

39. A UNILATERAL MISTAKE IS WHEN ONLY
ONE PARTY TO THE CONTRACT IS UNDER A
MISTAKE. IN SUCH A CASE THE CONTRACT
WILL NOT BE VOID. SO THE SECTION 22 OF
THE ACT STATES THAT JUST BECAUSE ONE
PARTY WAS UNDER A MISTAKE OF FACT
THE CONTRACT WILL NOT BE VOID OR
VOIDABLE. SO IF ONLY ONE PARTY HAS
MADE A MISTAKE OF FACT THE CONTRACT
REMAINS A VALID CONTRACT.

40.  THE OFFEROR CANNOT SAY THAT IF
NO ANSWER IS RECEIVED WITHIN A
CERTAIN TIME, THE SAME SHALL BE
DEEMED TO HAVE BEEN ACCEPTED.

41.  THERE MUST BE NOTICE OF
ACCEPTANCE FROM THE
CONTRACTING PARTY IN SOME WAY.
INFORMATION BY AN UNAUTHORIZED
PERSON IS AS INSUFFICIENT AS
OVERHEARING FROM BEHIND THE
DOOR.

42.  ACCEPTANCE SHOULD BE OF THE WHOLE OF
THE OFFER. THE OFFEREE CANNOT ACCEPT A
PART OF ITS TERMS WHICH ARE FAVOURABLE
TO HIM AND REJECT THE REST.
 SUCH AN ACCEPTANCE IS ANOTHER KIND OF
COUNTER PROPOSAL. AND DOES NOT BIND
THE OFFEROR UNLESS HE AGREES TO THE
QUALIFIED ACCEPTANCE.
 A MERE INQUIRY INTO THE TERMS OF A
PROPOSAL IS NOT THE SAME THING AS A
COUNTER PROPOSAL.

43.  PARTIES HAVE RELATION OF PROMISOR AND
PROMISEE AND NOT OF EMPLOYER AND
EMPLOYEE
 PROMISE IS BINDING TO THE PARTIES
 PROMISE HAS TO BE FULFILLED
 PARTIES ENTERING INTO THE CONTRACT HAVE
THEIR OBLIGATIONS OR PROMISE
IF ABOVE IS IMPLEMENTED BY BOTH THE
PARTIES, CONTRACT MANAGEMENT BECOMES
SUCCESSFUL