3. FORMATION-What is a contract
• It must have an offer and acceptance
• It must have the 3 C’s.
• It must not be prohibited by law.
(note : a social agreement is not a contract
because it does not have any legal
intention between the parties.
4. What is an Offer
1.It must be precise ; capable of being
understood and communicated.
2.It must not contain a clause that does
away with acceptance
3.Special terms must be brought to the
notice of the offeree
4.It need not be in writing though in
immoveable property contracts it must be
in writing.
5. Offer … continued
5.Distinguish between an offer and an invitation to
an offer.
6.Under certain circumstances an advertisement
can become an offer.
7. An offer can be revoked before it is accepted
though in some countries it is not so.
8. In a digital contract the offer has been
communicated once it has entered the computer
of the offeree.
6. ACCEPTANCE
1. An acceptance must be in response to
an offer.
2. It must be in the mode prescribed
3. It must be made by the person to whom
the offer has been made.
4. It must be unqualified and unconditional.
(Though in some countries minor
modifications are permissible.)
7. Acceptance ..contd.
5. Acceptance must be made within the tme
provided or reasonable time.
6. Acceptance can be revoked before it
reaches the offeree.
7. In the case of cyber contracts acceptance
has reached when it enters the system of
the offeree.
8. 3 C’s of a Contract
CAPACITY
CONSIDERATION
CONSENT
9. CAPACITY
• A minor and an unsound person and an
insolvent person cannot enter into
contracts . It is void ab – initio.
• Reason : The contract creates legally
binding obligations on the parties and
hence only those who have the capability
(capacity) to do so should be allowed
otherwise they(minor/unsound/insolvent)
may harm themselves.
10. MORE ON MINORS
1.Agreement with minor is void – ab – initio.
2. Even if a minor declares himself to be a
major he can plead that he is a minor
3. An agreement with a minor cannot be
ratified on his becoming a major.
4. Guardians of a minor are not liable on
contracts with a minor
11. Minor….
5. A minor if provided with necessaries of life
then it can be reimburse from the minor’s
estate.
6. A minor can be a beneficiary.
7. A minor can become a partner though he
would not be liable.
12. C - Consideration
1.Consideration is the price of a contract.
2. A contract without consideration is void.
3. Consideration must be decided by the
parties themselves. Consideration can
be fulfilled by third parties.
4. Consideration must have some legal
value in the eyes of law.
5. Strangers to a contract have no claims.
13. C- Consent
1. Consent must be free and genuine.
2. A consent is not free and genuine when it
is induced by =
- coercion
- undue influence
- fraud
- misrepresentation
- mistake
