2. History of Contract Law
Contract
law
develope
d with the
traders
over the
centuries
The
traders
took their
disputes
to the
courts
The
judges
decided
the
disputes
on the
basis of
the usage
and
customs
of the
communi
ty and
prevailing
notions of
reasons
and
justice.
They also
relied on
prior
judgemen
ts for
deciding
cases.
The
courts,
followed
these
principles
as the law
and a
body of
principles
followed
The
common
law was
establishe
d.
Contract
law was a
general
law
dealing
with all
business
transactio
ns.
British
India got
its
comprehe
nsive law
on
Contracts
: The
Indian
Contract
s Act,
1872
3. Law of Contracts
Law of
Contract
deals with
with
matters
A contract
is made
when an
agreement
becomes
enforceabl
e by law.
There is no
legal
obligation
as long as it
it is mere
agreement.
Once, the
agreement
becomes a
contract,
there is a
legal
obligatio
n by the
parties
involved.
4. Example
• There is an agreement between X and Y that X will
construct a house for Y, and Y will pay Rs. 10 Lakhs
to X.
• The agreement between A and B is a contract
because it is enforceable by law.
5. What is Indian Contract Act 1872?
The Indian Contract Act is a law enacted by the Indian Parliament in 1872 that
governs the law of contracts in India.
The Act lays down the legal rules and regulations that govern the formation and
enforcement of contracts in India.
It defines the basic concepts of offer, acceptance, consideration, and intention to
create legal relations, and outlines the legal consequences of breach of contract.
The Indian Contract Act, 1872 is applicable to all contracts entered into in India,
including contracts entered into by individuals, companies, and the government.
It is a comprehensive law that covers all aspects of contract law and provides a
framework for resolving disputes arising from contractual relationships.
The Act has been amended several times to keep pace with changing commercial
practices and legal developments.
6. Definitions
• Section 2(H) of the Indian Contract Act, 1872 defines the term
Contract:
“ An agreement which is enforceable by law is a contract.”
{So, by the definition we can say that an agreement is between two or
more parties to do or abstain from doing something.}
• According to Anson:
“The law of contract is that branch which determines the
circumstances in which a promise shall be legally binding on the
person making it.”
7. Definitions
• Section 2(E) of the Indian Contract Act, 1872 defines the term
Agreement:
“an agreement is a set of promises that are made for each other.”
• Section 2(D) of the Indian Contract Act, 1872 defines the term
Consideration:
“consideration refers to the act, abstinence or promise of one party in
exchange for the other party’s promise.”
Section 2(B) of the Indian Contract Act, 1872 defines the term Promise:
“a promise is formed when a proposal is accepted.”
8. Example
• Two important things for the formation of an agreement.
(Agreement= Promise + Consideration)
• Important Case- Balfour Vs Balfour
In this case, Mr. and Mrs. Balfour, who used to live together as a
married couple in Sri Lanka, went for a vacation to England. During
this time, Mrs. Balfour developed rheumatic arthritis. The doctor
advised Mrs. Balfour to stay back in England as, according to him, Sri
Lankan climate would worsen her health. Before Mr. Balfour returned
to Sri Lanka, he promised to send £30 to her per month. During their
stay away, the parties drifted apart and separated. It was held in this
case that Mr. Balfour’s promise to pay a monthly sum of £30 did not
amount to a contract, as there was no intention to create a legal
relationship on part of either of the parties.
9. Classification of Agreements{according to
enforceability}
Valid Agreements– These agreements are enforceable by law.
Voidable Agreements– It is an agreement which is enforceable by law at the option of one of
the parties.
Void Agreements– This agreement is not enforceable by law at all.
Illegal Agreements– these agreements are also not enforceable by law because they are
against the law.
Unenforceable Agreements– An unenforceable agreement is one which cannot be enforced
in the court of law on account of some technical defects like want of a written form or stamp.
10. The essential conditions of a Valid Agreement
include:
The
agreement
shall have a
a valid
considerati
The parties
shall be
competent to
contract as
per Section
11 and
Section 12 of
the Act.
The consent
of the parties
parties is free
free and
uninfluence
d.
The object
of the
agreement
is lawful.
11. Voidable Agreement
• A voidable agreement may be defined as an agreement that
may be revoked by either of the parties to the agreement due
to various legal reasons. Such an agreement, when
enforceable by law, shall be termed as a contract voidable at
the option of a party.
• Section 19 of the Act provides that where the consent of a
party has been procured by either coercion,
misrepresentation or fraud, such party shall have an option
to retaliate from the agreement as and when it deems fit.
12. Void agreement {Section 24 to 30}
• A void agreement has been defined under Section 2(g) of
the Act. It states that “An agreement not enforceable by law
is said to be void”.
• In addition to the definition, the provisions of the Act
declare certain agreements to be void, as the objects of such
agreements are unlawful.
• In Madhub Chander v. Raj Coomer (1874), the facts
included two rival shopkeepers from a locality. The
defendant, in this case, agreed to pay a sum of money to the
plaintiff if the latter did not operate his shop in the same
locality, to which he agreed. The defendant later refused to
pay the sum of money, and hence was sued by the plaintiff.
The Court held that the agreement was a void agreement, as
it contained a provision for restraint of trade or business.
13. Difference between Void and Voidable
agreements
Void Agreement
• Considered invalid from
the start.
• Invalid at face value.
• No performance is
possible.
• It is non-existent and
cannot be upheld by any
law.
Voidable Agreement
• Declared invalid by the
parties later on due to
certain reasons.
• Valid at face value.
• Performance is possible
until declared invalid.
• It is an existing
agreement and is
binding to one party
14. Illegal Agreements
• Any agreements against the provisions of the law in force in India
shall be considered an illegal agreement.
• Either of the two conditions, illegal object or illegal consideration,
shall render the agreement illegal.
• Even if the content of an agreement compels the parties to perform an
illegal act, it shall be an illegal agreement.
• The difference between illegal and void agreements is that the void
agreement is not necessarily against the provisions of the law in force,
while illegal is explicitly against the provisions of the law.
• In other words, every illegal agreement is a void agreement, while
every void agreement is not an illegal agreement.
15. Promise and Consideration
• According to section 2(B) of the act, when the
offer is accepted, then it becomes a promise.
When a person to whom the offer is made,
signifies his assent then we can say that the offer
is accepted.
• There are mainly four kinds of Promises-
• When at the desire of the promisor,
promisee does something then it is a
valid consideration under section 2(d) of
the ICA.
• Kedarnath Bhattacharji Vs Gorie
Mahomed(1887)
• Case notes and facts given in the
classroom for discussion.
16. Types of Contracts
• Valid Contract
• Voidable
• Void
• Illegal
• Unenforceable
According To
Enforceability/Legality
• Express Contract
• Implied Contract
• Quasi Contract
According to Mode of
Formation
• Executed Contract
• Executory Contract
• Bilateral Contract
• Unilateral Contract
According to Extent of
Execution
17. E- Contracts
• A contract that is entered into through e-commerce, often
without the parties meeting in person, is referred to as an E-
Contract. It is designed to assist persons in developing and
implementing commercial contract policies in e-businesses.
• Subject Matter of E-Contracts:
a. Tangible products, in which things are bought on an online
platform, payment is done over the internet, and delivery is
made. Amazon or Flipkart are examples of platforms
providing such services.
b. Digital items, such as software and other, of notable assets.
c. Services such as electronic banking, financial counselling,
and so on are also covered.
18. Nature of E-Contract
The parties do not physically encounter each other, and there are no
no physical limits established.
There is no requirement for a handwritten signature. {Digital
Signature is considered valid}
The risk element in such contracts is quite large due to the absence
of complete security.
Jurisdictional concerns are a significant detriment to e-contracts in
in the case of breach.
When a matter is brought to court, digital signatures and electronic
electronic records are utilized as evidence.
19. Parties to an E-Contract
Originator
Addressee
Kinds of E-Contract
Click-Wrap
Agreements
Shrink-Wrap
Agreements
Browse-
Wrap/Web-wrap
Contracts
20. Validity of E- Contracts
Information
Technology Act, 2000
2000 (IT Act, 2000),
Section 10-A
Trimex International
FZE Ltd. v. Vedanta
Aluminum Ltd
The Indian Contract
Act, 1872
LIC India v. Consumer
Consumer Education
and Research Centre
Case
The Indian Evidence
Act (Section 65B of
the Act)
21. • Breach of contract means the failure of a party to perform
his/her obligations under a contract. Section 73-75 under the
Indian Contract Act 1872 details the consequences of a breach of
contract. Breach of contract may be actual or anticipatory.
• Breach of contract is of the following types:
Anticipatory
breach of
contract. Actual breach of
contract.
22. Remedies for Breach of Contract
Suit for
damages
Suit for
specific
performa
nce
Eliminate
the
contract
Stop the
other
party from
doing
somethin
g
Suit upon
quantum
meruit
(compens
ation for
work
done)
23. Contract of Agency
"Agency is a relationship which exists where one individual (the
principal) approves another (the agent) to act for his sake, and the
agent consents to do as such.“
Agency is an understanding by which a connection dependent on an
expressed implied. There is one individual the agent, who is approved to
act heavily influenced by and for another, principal in arranging and
making contract with third individual.[1]
As indicated by Indian Contract Act, 1872:
Contract of agency is a contract by which an individual utilizes
someone else to do any act for himself or to address him managing
third individual.
24. Characteristics of the Agency
Lawful Binding: The essence of the contract of agency is that the principal is
legitimately limited by the acts performed by the agent.
Thought isn't compulsory: There is no lawful prerequisite of thought, to help the
connection between the principal and agent.
Limit of Principal: One who is lawfully skilled to contract is qualified to utilize an
agent, for example he ought to have accomplished the age of 18 years and of sound
sound brain.
Position to contract: Authority to contract is the essential prerequisite to turn into
an agent. So a minor can likewise act as an agent, however he isn't having the limit,
limit, notwithstanding, he can have the power to act as agent.
25. Methods of Creating Agency
There are different ways or modes by which the relationship of principal
and agent might emerge.
By Express
Agreement
By Implied
Agreement
Agency by
Estoppel
Spouse as an
agent
Agency by
Holding Out
Agency by
Necessity
26. Rights and Duties of Agent
Right to get
compensation
Right of Lien
Right to get
reimbursement
Right of retainer
Right to be
Indemnified
27. Duties of Agent
Duty to adhere to guidelines/bearings
Duty to correspondence
Not to assign his position
Duty not to create secret gain from agency
Duty to follow customs
Duty to keep and deliver independent and right records
Duty to do the work with sensible consideration, expertise and determination
Not unveil classified data
28. Termination of Agency
When the relationship between principal and his agent is
ended. It is called termination of Agency.
