[Polity] Indian Contract Act 1872
Significance– specifies all major areas of law required for doing business
divided into 75 sections
Law of contract can be defined amended and enacted
Section 2(H)– agreement is enforceable by law
Necessities of contract—
1. Agreement 2. Agreement enforceable by law
Contract can be defined as
1. an agreement enforceable by law between at least two parties
2. one acquires rights and obligations are made on part of another person.
Proposal or offer—–by 1 party to another—–for any action/doing something——obtaining consent of 2nd party to do that act.
Section 2 says Proposal is made when a person signifies assent or willingness to other to do or not to do something.
Section 10 of the law says
An agreement can be contract if
- Parties are equal or competent
- Making contract on their free will without any force
- Issue considered is lawful and not void
When can a contract be taken into courts or sued
- Non fulfillment of promise stated direct or obvious in agreement
- Refusal to pay money
- Only if there is a valid contract/agreement enforceable by law
Privity of contract—Parties which are part of contract are only eligible to leverage the rights mentioned in contract.In simple language if a contract is made between A & B, C D or E has no right to claim/interfere/demand/sue for anything.Means contract is private to its holders.
Classification of contract on basis of
1. Validity or enforcement
2.Performance of contract
3.Way of formation
What makes a contract valid?
- Valid agreement with a proposal and acceptance
- Intention to make a legal relation
- Valid motive or purpose
- Lawful object
- Not declared void expressly by law
- compliance with section 10
What are void agreement?
Agreement which is not enforceable by law.There will be no legal obligations on it and no legal consequences.
Offers can be —
- Expressed offer
- Implied offer
- Offer by abstinence
- Specific and general offer
Offer Vs Invitation to offer
Offer –Pre decided, proposed by seller
Invitation to offer-seeking from buyer ,asking them to quote
When proposal is accepted it becomes Promise.
Offer is made when—
- It is expressed in written or oral or implied
- It intends to develop a legal relation
- It has a meaning-not vague
- Its specific or general
- Its communicated
- distinct from invitation to offer
- Parties are not forced to accept
When do we say an offer is accepted?
- When acceptance is given to proper person, who made offer
- Communicated and that to on proper time
- when it is expressed or implied
Offer is followed by acceptance and an offer once rejected cannot be accepted.
Cross Offers -Sometimes two parties make similar offers to each other without knowing the offer made by the other.
Counter Offers-If any offer is unaccepted , just to make it more appealing it is revised , initial offer is changed.
Who is eligible to Contract?
A person who is major, sound mind and is not disqualified by law to enter in the particular contract can make a contract.
Does it mean minor is not competent of making contract?
No, Law says a minor can enter into contract,but is not bound by a contract but can enforce legal obligation and bound other party.
Who all are incompetent to enter into a contract?
- Minor (beneficiary only)
- Person of Unsound mind
- An insolvent
- A convict undergoing imprisonment
- Alien Enemy
- Foreign Diplomats
- People serving on constitution positions
A consent is made when two parties agree on same thing, same interpretation in a same way and sense.If consent is not free, contract can be dissolved , made void if party which faced injustice wishes.
A consent is free if it is free from—coercion, undue influence, fraud, misrepresentation or mistake.
Consideration is explained in sub section 2d, section 23-25 and 185
Consideration is something in return of Promise(money, recognition, benefit etc)
Rules Regarding Consideration
- Desire of the promisor should be there
- Consideration may move either from the promisee or any other person
- adequacy of consideration is not necessary
- It must be real and competent
- It must be legal
- It can be in/ from present, past or future
From section 2d ,10 and 25 we can conclude=====> No Consideration= No contract
It means there should be some incentive always in return.
At times the consideration and the object mentioned in an agreement are unlawful, therefore unenforceable
Section 23 defines an illegal agreement as one the consideration or object of which
- is prohibited by law
- defeats or challenge provision of any other law
- is fraud
- involves or implies injury to the person or property of another
- the court regards it as immoral or opposed to public policy