The Indian
Contract Act, 1872
GENERAL
PREAMBLE-To define and amend the law
relating to contracts.
Applicability- The Act applies to the whole of
India except the State of J & K.
DEFINITIONS
Proposal- Section 2(a)
Promise
–A Proposal when accepted becomes a
promise- Section 2(b )
Promisor & Promisee -Section 2(c)
Consideration-Something in return [quid
pro quo]- Section 2(d)
Agreement-Every promise is an agreement-
Section 2(e)
DEFINITIONS[contd.]
Void Agreement-Not enforceable by law-
Section 2(g)
Contract- An agreement enforceable by law-
Section 2(h)
Voidable Contract-An agreement enforceable
at the option of one party to the contract-
Section 2(i)
COMMUNICATION,ACCEPTANCE
& REVOCATION OF PROPOSALS
Communication, acceptance, and revocation of
proposals can be made in any manner, oral or
written-Section 3
Communication when complete-Section 4
Revocation of proposals and acceptance-Sec.5
Revocation how made-Section 6
Acceptance to be absolute-Section 7
Acceptance by performing conditions-Sec. 8
Promises can be either express or implied-
Section 9
Five Essentials of a
Contract [Section 10]
(i) free consent ; and,
(ii) capacity to contract ; and,
(iii) lawful consideration ; and,
(iv) lawful object ; and,
(v) not declared void by the Act
Capacity to Contract;ie
who are competent[eligible]
to contract [Section 11]
Every person is competent to contract if he is-
(i) a major ; and
(ii) of sound mind ; and
(iii) not disqualified by any law [ for instance, a
person declared insolvent is incompetent to
contract]
TERMS DEFINED
Sound mind for the purpose of contracting-
Section 12
Consent-Section 13
Free consent -Section 14– An essential of a
valid contract.
Free consent [ Section 14 ]
Consent is said to be free, when it is NOT
caused by; ie, when it is free from-
(i) coercion ;ie, threat; or
(ii) undue influence ; or
(iii) fraud ; or
(iv) misrepresentation ; or
(v) mistake
OTHER TERMS DEFINED
Coercion-Section 15
Undue Influence-Section 16
Fraud- Section 17-there is an intention to
deceive
Misrepresentation-Section 18-the person is
under a mistaken belief, and there is no
intention to deceive
EFFECT ON CONTRACT WHEN
CONSENT IS NOT FREE
When consent is caused by coercion, fraud ,or
misrepresentation, the contract is voidable at
the option of the party whose consent was
not free -Section 19
When consent is caused by undue influence,
the contract is voidable. Further, the court
has power to set aside; ie, dissolve the
contract-Section 19A
EFFECT ON CONTRACT WHEN
CONSENT IS NOT FREE [contd.]
Effect of Mistake-Mistake can be either of Fact, or
of Law
Where both parties are under a mistake of fact ,
the agreement is void -Section 20
A contract is valid, even if the parties are under
a mistake of law -Section 21
A contract is valid if only one party is under a
mistake of fact -Section 22
Lawful Consideration and
Lawful Object [Section 23]
• As per Section10, lawful consideration and
lawful object are two of the requirements for
a valid contract.
• As per Section 23, the consideration or
object of an agreement is lawful, unless
• (i) it is forbidden by law; or
• (ii) it defeats the provision of any law; or
Lawful consideration and
Lawful object [contd.]
• (iii) is fraudulent; or
• (iv) it injures the person or property of another;
or
• (v) is immoral or opposed to public policy
• An agreement is void if consideration or object is
unlawful in whole [Section 23 ], or in part-Section
24
An agreement without
consideration is void-Sec.25
Exceptions-
An agreement without consideration is valid,
if it is-
1 (a) expressed in writing; and
(b) registered under the law; and
(c) made for love and affection between
parties in near relationship
No consideration, No contract
[Section 25] [contd.]
2 it is a promise to compensate for an act already done
3 it is a promise to pay a debt barred by limitation
Explanation 1- A gift is valid between a donor and a
donee
Explanation 2- Inadequacy of consideration doesn’t
make the agreement void
Void Agreements
When both parties are under a mistake regarding a
fact-Section 20
When consideration or object of agreement is unlawful-
Section 23
When consideration or object is unlawful in part –
Section-24
Agreements without consideration-Section 25
Agreements in restraint of marriage-Section 26
Void Agreements [contd.]
Agreements in restraint of trade-Section 27
Exception to Section 27- Sale of goodwill, and
agreeing not to carry on business is valid
Agreements in restraint of legal proceedings-
Section 28
Agreements having uncertain meaning-
Section 29
Void Agreements [contd.]
Wagering agreements –Section 30
Exemption from Section 30-Horse-racing is exempt
from the application of this section
Agreements contingent on impossible events-
Section 36
Agreements to do impossible acts-Section 56
Performance of Contracts
Principle of Privity to Contract-Performance
to be demanded only by the party to the
contract
Contracts to be performed by-
1-By the promisor himself- Contracts of a
Personal Nature
2-By the promisor or his agent
3-By the legal representatives
Performance of Contracts(contd)
Performance of joint promises-All promisors
must jointly fulfil the promises(Section-42)
Any one or more of the joint promisors may
be compelled to perform(Section-43)
Contribution by joint promisors(Section-43)
Sharing of loss for default in
contribution(Section-43)
Reciprocal promises to be performed as per
Contract(Sections-51,52)
Discharge of Contract
A Contract may be discharged by :
1 Performance
2 Mutual Consent
3 Impossibility or Illegality
4 Operation of Law
5 Breach
Breach of Contract
and its Remedies
Breach-Non -fulfilment of contract.
Remedies for Breach
1. Rescission
2. Suit for Damages
3. Suit for Quantum Meruit
4. Suit for Specific Performance
5. Suit for Injunction
Quasi Contracts [Sections 68-72]
Quasi Contract – A relationship resembling
that created by a contract
Types of Quasi Contracts:-
1 Claim for necessaries supplied to a person
incapable of contracting, or on his account.
2 Reimbursement of person paying money
due by another, in payment of which he is
interested
Quasi-Contracts [Sections 68-72]
[contd.]
3 Obligation of a person enjoying benefit of
non-gratuitous act.
4 Responsibility of finder of goods.
5 Liability of person to whom money is paid,
or thing delivered , by mistake or under
coercion
