INDIAN CONTRACT ACT,
1872
DIMPLE SHARMA
AMAN MUKHIJA
SANYAM SINGLA
Indian Contract Act of 1872
This was the 1st business law framed and introduced in
India by British Govt., since import & export business
was increasing. This means, whatever promise one
person makes to other, must be fulfilled and is also
applied in our day to day life.
The promise has to be clear and complete in writing,
which becomes a contract and is enforceable by law.
A contract, which is in writing, creates some legal
obligation on both parties and any breach of the same
is punishable under law.
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Objective of the Act
The objective of the CONTRACT ACT is to
ensure that the rights and obligations arising out
of a contract are honoured and that legal
remedies are made available to an aggrieved
party against the party failing to honour his part
of agreement. The Indain Contract Act makes it
obligatory tha this is done and compels the
defaulters to honour their commitments
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Contract
Proposal - When one person signifies to another his
willingness to do or abstain from doing anything with a
view to obtain his assent on such act or abstience.
Acceptance When one person signifies his assent his
thereto on the proposal made.
Promise When a person to whom proposal is made
signifies his assent thereto, the proposal is said to be
accepted
Consideration Something in return. Untill and unless
there is no consideration there cannot be an agreement.
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CONT
Agreement When the proposal is accepted it becomes
promise and the promise, when accompanied with
consideration it becomes ageement.
Enforceability An agreement is said to be enforceable
by law it creates legal obligation.
Proposal + Acceptance = Promise
Promise + Consideration = Agreement
Agreement + Enforceability = CONTRACT
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Difference Between an
Agreement and a Contract
Agreement Contract
Offer and its acceptance Agreement and its
constitute an agreement enforceability constitute a
contract
An agreement may or may A contract necessarily create
create a legal obligation a legal obligation
Every agreement need not All contracts are necessarily
necessarily be a contract agreement
Agreement is not Contract is concluded and
concluded or binding binding on the concerned
contract parties
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Essential Elements of
contract
One person makes an offer, which is clear and complete
and other person accepts it unconditionally.
There is an intention on both sides to create legal
obligation.
In any contract, there is some consideration i.e. payment
of money.
Both the parties must be competent to enter into a
contract i.e. only Adults in sound health and also in full
sense.
The acceptance of offer must be without any pressure
and must be with free consent.
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Cont
The contract must be as per established laws i.e. not to
harm some-one.
Some contracts must be registered with authorities,
such as property, will & marriages etc.
There must be a certainty for the fulfillment of
contract i.e. promise to give a gift if you pass, is not
contract.
The contract, which cannot be performed successfully
is not a valid contract i.e. some act of daring.
Any contract, which has been declared void earlier i.e.
importing banned items.
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Types of contract
Valid Contract - A valid contract is a written or
expressed agreement between two parties to provide a
product or service.
Legal consequences - rights & obligations
Capacity of the contracting parties
Consideration
Agreement - Offer & acceptance
Legal object
Free consent
Certainty
Possibility of performance
Writing & registration
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CONT
Invalid or Void Contract - A void contract is a formal
agreement that is illegitimate and unenforceable from the
moment it is created. A void contract could be
considered void for a number of reasons.
Voidable - A voidable contract is a formal agreement
between two parties that may be rendered
unenforceable for a number of legal reasons. Reasons
that can make a contract voidable include failure by one
or both parties to disclose a material fact; a
mistake, misrepresentation or fraud
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CONT
Un-enforceable contract - An unenforceable contract or
transaction is one that is valid but one the court will not
enforce. Unenforceable is usually used in
contradistinction to void and voidable. If the parties
perform the agreement, it will be valid, but the court will
not compel them if they do not.
Un-lawful contract - An illegal agreement, under the
common law of contract, is one that the courts will not
enforce because the purpose of the agreement is to
achieve an illegal end. The illegal end must result from
performance of the contract itself. The classic example
of such an agreement is a contract for murder.
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