The Indian Contract Act 1872

THE INDIAN CONTRACT
ACT, 1872.
Submitted by : Meera Thakur

Meaning
The term Contract has been defined under Section 2 (h) of the Indian Contract Act ,1872. It defines a
Contract as an Agreement enforceable by law. An agreement cannot turn into a contract unless it can
be enforceable by law. So, in order to be enforceable, a contract must contain all the essential elements
of a valid contract as defined in section 10 of the Indian contract act 1872.
Essential elements of contract
THE ESSENTIAL ELEMENTS OF A CONTRACT AS DEFINED UNDER
SECTION 10 OF THE INDIAN CONTRACT ACT 1872 ARE-
AGREEMENT (OFFER & ACCEPTANCE)

LEGAL PURPOSE
LAWFUL CONSIDERATION
CAPACITY TO CONTRACT
CONSENT TO CONTRACT
LAWFUL OBJECT
CERTAINTY
POSSIBILITY OF PERFORMANCE
NOT EXPRESSLY DECLARED VOID
LEGAL FORMALITIES SUCH AS WRITING
Kinds of contract on the basis of validity
1. VALID CONTRACT
2. VOID CONTRACT
3. VOIDABLE CONTRACT
4. UNENFORCEABLE CONTRACT
5. ILLEGAL CONTRACT
Classification of Contracts according to formation
According to the mode of formation of contracts, contracts may be classified

into three namely
EXPRESS CONTRACT,
IMPLIED CONTRACT, AND
QUASI – CONTRACT
Classification of Contracts according to performance
According to the extent of performance of contracts, contracts may be

classified as:
UNILATERAL CONTRACT, AND
BILATERAL CONTRACT.
Offer And Acceptance
Offer
Section 2(a) defines an offer as, “a proposal made by one person to another to do
an act or abstain from doing it.” The person who makes the offer is known as the
promisor or offer or and the person to whom an offer is made is known as the
promisee or the offeree.
Offer must be distinguished from:
(i) Mere invitation to an offer
(ii) Mere statement of intention
Acceptance
A contract comes into being from the acceptance of an offer. When the person to
whom the offer is made signifies his assent thereto, the proposal is said to be
accepted (Sec. 2(b). Thus, acceptance of the offer must be absolute and
unqualified. It cannot be conditional.
Consideration
Section 2(d) of the Indian Contact Act defines consideration as “when at the desire of the promisor,
promisee or any other person has done or abstained from doing or does or abstains from doing or
promises to do or to abstain from doing something, such act or abstinence, or promise is called a
consideration for the promise.”
 Consideration must proceed at the desire of the Promisor
 Consideration may move from the promisee or any other person:
 Privity of Contract
 Consideration may be a promise to do something or abstain from doing something
 Consideration may be past, present or future
 There must be independent consideration to support each independent promise
 Consideration must have some value in the eyes of Law though it need not be adequate
 Consideration must be real and not illusory, impossible uncertain, ambiguous, fraudulent,
immoral or opposed to public policy.
Competency To Contract
 Minority
 Unsound Mind
 Disqualified by Law
Free Consent
The parties to the contract must mean the some thing in the same sense and not
only that but they should mutually agree voluntarily. If their minds do not meet at
the same thing in the same sense voluntarily, then their consent shall not be called
Free or Voluntary.
Consent is said to be free when it is not caused by:-
1. Coersion
2. Undue Influence
3. Fraud
4. Misrepresentation
5. Mistake
Void Agreements
Section 2(g) defines Void Agreement as ‘an agreement not
enforceable by law is said to be void.’ A void agreement does not
give rise to any legal consequences and is void ab initio.
Discharge of Contracts
A contracts is discharged when the obligations created by it come to

an end. a contract may be discharged in any of the following ways:
1. By agreement.
2. By performance of the contract.
3. By lapses of time.
4. By operation of law.
5. By material alteration.
6. By subsequent impossibility of the performance.
7. By breach.
Quasi Contract
Court's determination of an obligation of one party to another where
no actual contract exists. It is based on the parties' conduct, mutual
relationship, and/or on the possibility that one would be unjustly
enriched at the expense of the other. In strict legal terms a quasi
contract does not constitute a formal contract, but is a legal remedy
that allows a plaintiff to recover an award or benefit conferred on
the defendant.
Special Contracts
1. Contract of Indemnity and Guarantee

A contract of indemnity is a contingent contract. It is a contract by which one party
promises to save the other from loss caused to him by the conduct of the promisor himself
or by the conduct of any other person or by accident. The person who undertakes to indemnify
or make good the loss is called the "indemnifier“ and whose loss is made good is called the
“indemnified” or “indemnity holder”.
A contract of guarantee is a contract to perform the promise or discharge the liability of
a third person in case of his default. The person who gives the guarantee is called the ‘surety’
or ‘guarantor’, the person for whom the guarantee is given is called the “principal debtor”,
and persons to whom the guarantee is called the “creditor”.
2. Contract of Bailment and Pledge
Bailment is the delivery of goods by one person called the bailor to another, called the bailee,
for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise
disposed of according to the direction of the person delivering them (i.e., the bailor).To constitute a bailment :
 (1) goods are delivered by one person to another;
 (2) the goods are delivered for some purpose;
 (3) the goods are to be returned to the bailor or disposed of according to his direction when the purpose
is accomplished.
Pledge is the bailment of goods as security for payment of a debt or performance of promise. Bailor in this case is
called the ‘pawnor’ and the bailee is called the ‘pawnee’
3. Contract of Agency
When a person employs another person to do any act for himself or to represent him in dealing
with third persons, it is called a ‘Contract of Agency’.
The person who is so represented is called the ‘principal’ and the representative so employed is
called the ‘agent (Sec. 182). The duty of the agent is to enter into legal relations on behalf of the
principal with third parties. But, by doing so he himself does not become a party to the contract to
the contract not does he incur any liability under that contract. Principal shall be responsible for all
the acts of his agent provided they are not outside the scope of his authority.

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THE INDIAN CONTRACT

Submitted by : Meera Thakur

AGREEMENT (OFFER & ACCEPTANCE)

According to the mode of formation of contracts, contracts may be classified

IMPLIED CONTRACT, AND

According to the extent of performance of contracts, contracts may be

UNILATERAL CONTRACT, AND

A contracts is discharged when the obligations created by it come to

1. Contract of Indemnity and Guarantee

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