Department Of Management Studies
MBA – 3rd Semester
Subject: Corporate Legal framework
A Presentation
On
Topic: Indian Contract Act 1872
Guided By:- Submitted By:-
Dr. Sanjay Pandey
Ananya
Bais
Akanksha Singh
Alok Pandey
Amit Kerketta
Table of Content
1. Contract
2. types of contract
3. Proposal and offer
4. Acceptance
5. Consideration
6. Capacity to contract
7. Lawful consideration and lawful object
8. Contingent Contract
9. Quasi Contract
10. Performance of Reciprocal Promise
11. Discharge of a Contract
12. Conclusion
CONTRACT - According to sec.2(h),
a contract is defined as an agreement
enforceable before the law.
AGREEMENT - According to
sec.2(e), every promise or set of
promises forming consideration for each
other.
PROMISE - According to sec.2(b),
when a person made a proposal to
another to whom proposal is made, if
proposal is assented there to.
OFFER - According to Sec.2(a), when a
person made a proposal, when he signifies
to another his willingness to do or to abstain
from doing something.
AGREEMENT = OFFER +
ACCEPTANCE
Agreement Legal Obligation
Contract
“All contracts are agreements but all
agreements are not
contracts.”
CONTRACT = AGREEMENT +
ENFORCIBILITY BEFORE LAW
TYPES OF CONTRACTS
1. On the basis of formation
Express contract
Implied contract
Quasi contract
[Link] the basis of validity
Valid contract
Void contract
Voidable contract
TYPES OF CONTRACTS
[Link] the basis of performance
Executed contract
Executory contract
Unilateral contract
Bilateral contract
[Link] the basis of Formality
Formal Contract
Simple Contract
ESSENTIAL ELEMENTS OF A
VALID CONTRACT (Sec.10)
[Link] & acceptance.
[Link] to create legal relationship.
[Link] Consideration
[Link] to contract.
[Link] consent.
[Link] object.
[Link] expressly declared void
[Link] of performance.
[Link] Formalities
[Link] or OFFER
According to Sec.2(a), when a person made a
proposal, when he signifies to another his
willingness to do or to abstain from doing
something.
• The person making the offer/proposal is known
as the “promisor” or the “offeror”. And the
person who may accept such an offer will be the
“promisee” or the “acceptor”.
TYPES OF OFFER
General offer - When offer is given to
entire world at a large.(Carlill Vs. Carbolic
smoke ball Co.,)
Specific offer - When offer is given to a
specific person.
Cross offer - When both the persons
are making identical offers to each
other in ignorance of other’s offer.
Counter offer - When both the persons
are making offers to each other which
are not identical in ignorance of other’s
offer.
Standing offer - An offer which
remains continuously enforceable for a
certain period of time.
Essentials of a Valid OFFER
Offer must create legal relations
Offer must be clear , not Vague
Offer must be communicated to the offeree
Offer may be conditional
Offer cannot contain a negative condition
Offer can be specific or general
Offer may be expressed or Implied
2. ACCEPTANCE
According to sec.2(b), when a person made a
proposal to another to whom proposal is made, if
proposal is assented there to, it is called acceptance.
So as the definition states, when the offeree to whom
the proposal is made, unconditionally accepts the
offer it will amount to acceptance. After such an offer
is accepted the offer becomes a promise.
LEGAL RULES FOR ACCEPTANCE
• Acceptancecan only be given to
whom the offer was made
•It has to be absolute and unqualified
•Acceptance must be communicated
•It must be in the prescribed mode
•Implied Acceptance
[Link]
According to sec 2(d) consideration is defined as
“when at the desire of the promisor , or 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 an act or absinence or promise
is called a consideration for the promise .
When a party to an agreement promises to
do something he must get “something” in
return. This “something” is defined as
consideration.
LEGAL RULES AS TO CONSIDERATION
1)It must move at the desire of the promisor.
[Durga Prasad v. Baldeo ]
2)It may move by the promisee .
[Chinnaya v. Ramayya ]
3)It must be past, present or future .
4)It need not be adequate .
5)It must be real .
6)It must not be illegal , immoral or opposed to public policy .
[Link] to contract
Following are the condition for a person
to enter into contract-
He must be major
He must be sound mind
He must not be disqualified by any other
law.
Disqualified persons to enter into
a contract
a) Minor
b) unsound person
c)others
i.e alien enemy,
insolvent,
convict,
company/corporation against MOA
/AOA .
Minor
According to Indian majority act
sec(3) minor is defined as any person
under the age of 18 years . In the
following cases a person is said to be
minor if he does not complete the age of
21 years
a) any person under the guardian & wards
act ,1890
b)any person which comes under
superintendence of law/legal representative
Unsound person
According to sec(12) a person generally sound ,
occasionally unsound can enter into a contract
when he of sound mind
A person generally unsound occasionally sound
can enter onto contract when he is sound mind
1)Lunatic ,
2)Idiots ,
3)Drunken or intoxicated persons.
5. lawful consideration and/or lawful
object
Section 23 of the Indian Contract Act
clearly states that the consideration
and/or object of a contract are
considered lawful consideration and/or
object unless they are:-
lawful consideration and/or
lawful object
1)Forbidden by Law
2)Consideration or Object Defeats the
Provision of the Law
3) Fraudulent Consideration or Object
4) Defeats any Rules in Effect
5) When Consideration is Immoral
[Link] Contract
An absolute contract is one where the promisor performs the contract without
any condition. Contingent contracts, on the other hand, are the ones where
the promisor performs his obligation only when certain conditions are met.
Essentials of Contingent contract
1)Forbidden by Law
2)Consideration or Object Defeats the Provision of the
Law
3) Fraudulent Consideration or Object
4) Defeats any Rules in Effect
5) When Consideration is Immoral
7. Quasi Contract
The word ‘Quasi’ means pseudo.
Quasi contract is a pseudo-contract.
The law presumes the existence of a contract
even if no agreement was made between the
parties.
These agreements are presumed on the
ground of justice and equity.
The law does not allow a person to enrich
himself unjustly at the expense of the other
Types of quasi contract :
1. Section 68 – Necessaries Supplied to Persons Incapable of
Contracting
2. Section 69 – Payment by an Interested Person
3. Section 70 – Obligation of Person enjoying the benefits of a Non-
Gratuitous Act
4. Section 71 – Responsibility of Finder of Goods
5. Section 72 – Money paid by Mistake or Under Coercion
8. Performance of
Reciprocal Promise
Reciprocal promises are conditional and
dependent when the performance of one
party's promise depends on the other party's
prior performance.
For example, if Ashok promises to supply
coats to Navya, and Navya promises to sell
the coats on the black market for a profit, this
is a reciprocal promise.
1. Simultaneous Performance of a Reciprocal Promise
(Section 51)
2. A Sequence of Performance of a Reciprocal Promise
(Section 52)
3. One party preventing the other from the
Performance of the Promise (Section 53)
4. Reciprocal and Dependent Promises (Section 54)
5. Failure to perform within the stipulated time in a
time-sensitive contract (Section 55)
6. Impossible or Unlawful Act (Section 56)
7. Initial Impossibility
9. Discharge of a
Contract
A contract creates certain obligations on
one or all parties involved. The discharge of a
contract happens when these obligations
come to an end. There are many ways in
which a contract is discharged.
Discharge of a Contract
1. Discharge by Performance
2. Discharge by Mutual Agreement
3. Discharge by the Impossibility of
Performance
4. Discharge of a Contract by Lapse of Time
Discharge of a Contract
5. Discharge of a Contract by Operation of Law
6. Discharge by Breach of Contract
7. Discharge of a Contract by Remission
8. Discharge of a Contract due to the Merger of
Rights
[Link]
The Indian Contract Act 1872 was enacted to
ensure that contracts are entered into freely
and fairly and with full knowledge of the rights
and obligations of all parties involved. It also
aims to protect the interests of both parties in a
contract, by spelling out the consequences of
breaking it.
Thank You
