INDIAN CONTRACT ACT,1872

The law of contract regulates all commercial activities by sorting out the promise that are enforceable, and how they can be enforced Based on English Common Law- 1st september,1872- All states except J&K. Defined as an agreement that legally binds the parties i.e. Contract=Agreement + Legal obligation. Agreement( Sec 2c): Every promise and set of promises forming the consideration for each other-Mutuality-Identity of mind- they must mean the same thing- common purposeconsent- consensus- ad idem. Promise: Proposal/offer when accepted.

Offer-Acceptance-Promise-AgreementContract. A contract is enforceable by law- all contracts are agreements-all agreements may not turn into contracts. Agreements of domestic,moral or religious in nature-not intended for legal bindingout of contracts. Torts,or civil wrong,judicial decissions of the decree of a court or husband and wife relation are beyond the law of contract.

ELEMENTS OF VALID CONTRACT

Agreement- offer must be definite, meaningful and duly communicated. Acceptance be absolute and unconditional. Intention-Presence of consideration leads to an intention to create legal relationdomestic nature- hsbd and wife does not. Legitimate consideration- written deed enforceable- consideration some economic value-lawful (Sec23)-not forbidden by law-not fraudulent not viewed immoral by law-does not defeat provisions of lawnot injurious to life and property.

Capacity of parties (Sec11)competent to contract-major, sound mind, not disqualified by domestic laws. Genuine consent-Parties mean same thing, in same sense, voluntarily agree, free consensus, ad idem. Not free, if 1.coercion 2.undue influence 3.misrepresentation 4.fraud 5.mistakes. Purpose of agreement must be

Form- Indian contract act does not insist upon written contract. Formalities like registration etc. be observed. Writing helps as evidence compells parties to focus on promises. Cases where writing necessary- 1. Pay a time barred debt 2.An assignment of copyright 3.Transfer of shares,cheques,bills of exchanges,promisory notes 4.Hire purchase agreements. Certainty( Sec 29)-Agreements meaning of which is not certain or capable of being made certain-void. Must be clear,certain and unambiguous.

TYPES OF CONRACTS

Possibility of performance( Sec 56)- An agreement to do an act impossible-not performable-void. Agreements not expressly declared voidsec 26,28.30- declared void to restraint of trade,marriage and by way of wager. contract types, broadly,1. valid contracts 2.void contracts and voidable contracts 3.unenforceable and illegal contracts 4.executed contracts and executory contracts 5.express and implied contracts 6.unilateral and bilateral contracts 7.quasi contracts.

VOID CONTRACTS AND VOID AGREEMENTS

Void contracts (Sec 2j)- contracts ceases to be enforceable by law. Valid contract may be void due to impossibility,changes in law,repudiation of voidable contracts.ex.1. Agreement to buy and sale but one expires 2.Rice agreed to be exported, govt bans. Void agreements- 1 .Parties under mistake of facts (Sec 20) 2.When object or consideration is illegal (Sec 23) 3.Agreement without consideration (Sec 25) 4.Agreement of restraint of marriage (Sec 26) 5.Agreement of restraint of trade (Sec 27) 6.Agreement relates to restraint of legal proceedings (Sec 28)7.Agreement by way of wager(Sec 30) 8.Agreement with a minor(Sec 11)

Voidable Contracts

Agreement which is enforceable by law at the option of one or more of the parties there to but not at the option of other or others is a voidable contract-at the instance or behest of the aggrieved party(Sec 19 or 19A). Agreements under coercion,fraud,undue influence,or misrepresentation-voidable. Voidable transaction is valid till not avoided. When contract contains reciprocal promises and one party prevents the other from performing his promise-voidable at the option of the latter(Sec 53). When party to the contract promises to perform an obligation within a specified time but fails, voidable at the option of promisee(Sec 55). Ex- 1.A to sale horse to B by force 2.A threatens to shoot B if not purchases his car for one lakh.3.Labours returned at the gate.4.A agrees to supply 500 tins of m.oil within a fortnight but fails.

CONSEQUENCES

On whose option ( repudiates) became voidable- shall restore such benefit if taken(Sec 64)-promiser failure. When by promisee-the former is due for compensation(Sec 53). Not in time-compensation for loss(Sec 55).

UNENFORCEABLE CONTRACTS

Good in substance but fails to satisfy technical requirements like registration,attestation,payment of stamp fees etc.

UNLAWFUL/ILLEGAL CONTRACTS

Arises out of illegal agreements. Colateral transactions are also affected

EXECUTED & EXECUTORY CONTRACTS

Executed- All obligations fullfilledcash sale. Executory-In process/on going.

EXPRESS &IMPLIED CONTRACTS

Express- Lucidly convey the purpose of the agreement. Implied- Non-verbal,demonstrates by roles and actions- doctor/patient relation in clinic.

QUASI CONTRACTS

Not a contract but created by obligation. An act of person,permitted by law, by which he/she obligates himself/herself towards another or by which another binds himself/her self to him/her without any agreement.

UNILATERAL & BILATERAL CONTRACTS

Unilateral- One of the parties performs its promises at the time of contract and the other promises to perform in future. Bilateral- Both parties perform their respective promises or obligations at some future time but not necessarily at the time of contract. Ex.A tells B,I will sale my car to u if u pay me Rs 50000, B agrees to pay on Tuesday.