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INDIAN CONTRACT ACT,
         1872
Nehal Godhasara
Divyesh Chauhan
Kelvin Bhalodiya
Jaydeep Bhalani
Prashant Jivani
What is a Law ?
Law is a system of rules and guidelines, usually
enforced through a set of institutions. Contract
law regulates everything from buying a bus ticket
to trading on derivatives markets.

Property law defines rights and obligations
related to the transfer and title of personal and
real property. If the harm is criminalised in
legislation or case law, criminal law offers means
by which the state can prosecute the perpetrator.
Introduction

The English Connection:
Common law: precedents & customs.
Equity: natural justice.
Pacta sunt servanda: agreements
 must be honored.
Stare decisis: settled law should not
 be disturbed.
Definitions.
• Proposal - When one person signifies to another
  his willingness to do or to abstain from doing
  anything, with a view to obtaining the assent of
  that other to such act or abstinence, he is said to
  make a proposal.
• Promise - When the person to whom the
  proposal is made signifies his assent thereto, the
  proposal is said to be accepted. A proposal, when
  accepted, becomes a promise.
Continued…
• The person making the proposal is called the
  "promiser and the person accepting the
  proposal is called the It promise":
• Consideration - When, at the desire of the
  promiser, the promisee or any other person
  has clone or abstained from doing, or does or
  abstains from doing, or promises to do or to
  abstain from doing, something, such Act or
  abstinence or promise is called a consideration
  for the promise.
Continued…

• Agreement - Every promise and every set of
  promises, forming the consideration for each
  other, is an agreement.
• Contract - An agreement enforceable by law is
  a contract.
• An agreement not enforceable by law is said to
  be void.
Contracts
Contracts –
• Contract - An agreement enforceable by law
  is a contract.

• All agreements are contracts if they are made
  by the free consent of parties competent to
  contract, for a lawful consideration and with a
  lawful object, and are not hereby expressly
  declared to be void.
What is a contract?
           Examples
• I promise to bring chocolates to the whole
  class. Is there a contract?
• I promise to give you 100 Rs. if ride your bike
  to Tiananmen Square and back to ICB in less
  than 2 hours. Is there a contract?
• I give you 2 Rs. for your Coca-Cola. Is there a
  contract?
• I promise to give you a new bicycle if you
  agree not to eat Chinese food for one year. Is
  there a contract?
Definition of a contract

• A legally binding agreement
• that means there must be some kind of
  agreement between two parties
• However, not all agreements are contracts
  because not all agreements are legally
  enforceable
• legally enforceable means that a court will say
  that an agreement is a contract
Definition of a contract (cont.)


• To decide if an agreement is legally enforceable as
  a contract, a court will apply the rules and
  principles of the law of contract
• Therefore, knowing a little about these rules can
  help businesspeople to create valid contracts
Essential elements of a valid
     contract: (Sec. 10)
Agreement - Offer & acceptance
Legal consequences - rights & obligations
Capacity of the contracting parties
Consideration
Legal object
Free consent
Certainty
Possibility of performance
Writing & registration
Not expressly declared to be void.
Offer: Sec.2(a)


An Offer Can be Defined as follows:
An expression of willingness to contract on
certain terms, made with the intention that it
shall become binding as soon as it is accepted
by the person to whom it is addressed.
Essentials of offer

It must be an expression of the willingness to
 do or abstain from doing something.

Such expression must be to another person.

Such expression must be made with the
 intention to obtain the assent of the other
 person to such an act or abstinence.
Communication of Offer.

• The communication of a proposal is complete
  when it comes to the knowledge of the person
  to whom it is made.
• E.g. - A proposes, by letter, to sell a house to B
  at a certain price. The communication of the
  proposal is complete when B receives the
  letter.
Acceptance: Sec 2(b)
Acceptance is the second ‘half’ of a contract. If
Bill offers Ben a bag of sweets for 20p, and Ben
says ‘I accept’, clearly a contract has been made.
The law explains that there must be evidence
from both sides of genuine agreement between
parties – the old idea of consensus ad idem, or
meeting of minds.
Acceptance can be defined as:
Agreement to all terms of an offer by words or
conduct.
Essentials of Acceptance
Acceptance must be given only by the person
 to whom the offer is made.
Must be absolute & unqualified.
Must be in prescribed mode or reasonable
 manner.
Must be communicated.
Within reasonable time.
Acceptance must succeed an offer.
Rejected offers can be accepted only if
 renewed.
Communication of an
         acceptance
The communication of an acceptance is complete,
  -
 as against the proposer, when it is put in a course
  of transmission to him, so as to be out of the
  power of the acceptor; as against the acceptor,
  when it comes to the, knowledge, of the
  proposer.
E.g. : B accepts A's proposal by a letter sent by
  post. The communication of the acceptance is
  complete, as against A when the letter is posted
  as against B, when the letter is received by A.
Void Contracts

• In fact, these are not contracts at all
• They have no legal effect
• As we will see in later classes, there are a
  number of things which can make a contract
  void
   – e.g. mistake, illegality
• The important thing to remember is that you
  cannot enforce a void contract
Void Agreements:
• Agreements in restraint of marriage [Sec. 26]
• Agreements in restraint of trade [Sec. 27]
• Agreements in restraint of legal proceedings
  [Sec. 28]
• Agreements the meaning of which is uncertain
  [Sec. 29]
• Agreements by way of wager [Sec. 30]
• Agreements contingent on impossible events
  [Sec. 36]
• Agreements to do impossible acts [Sec. 56]
Void Contracts - Example


• Daniel gives his students so much homework
  that they decide to kill him
• 
• They pay a Russian hit man 5000 RMB to kill
  Daniel
Void Contracts – Example
            (cont.)

• However, the Russian simply spends all the
  money in bars in Sanlitun and then goes home
• He does not kill Daniel
• 
• The students cannot claim their money back
  because it is illegal to hire a hit man to kill
  someone
Indian contract act, 1872

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Indian contract act, 1872

  • 2. Nehal Godhasara Divyesh Chauhan Kelvin Bhalodiya Jaydeep Bhalani Prashant Jivani
  • 3. What is a Law ? Law is a system of rules and guidelines, usually enforced through a set of institutions. Contract law regulates everything from buying a bus ticket to trading on derivatives markets. Property law defines rights and obligations related to the transfer and title of personal and real property. If the harm is criminalised in legislation or case law, criminal law offers means by which the state can prosecute the perpetrator.
  • 4. Introduction The English Connection: Common law: precedents & customs. Equity: natural justice. Pacta sunt servanda: agreements must be honored. Stare decisis: settled law should not be disturbed.
  • 5. Definitions. • Proposal - When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. • Promise - When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.
  • 6. Continued… • The person making the proposal is called the "promiser and the person accepting the proposal is called the It promise": • Consideration - When, at the desire of the promiser, the promisee or any other person has clone or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such Act or abstinence or promise is called a consideration for the promise.
  • 7. Continued… • Agreement - Every promise and every set of promises, forming the consideration for each other, is an agreement. • Contract - An agreement enforceable by law is a contract. • An agreement not enforceable by law is said to be void.
  • 8. Contracts Contracts – • Contract - An agreement enforceable by law is a contract. • All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
  • 9. What is a contract? Examples • I promise to bring chocolates to the whole class. Is there a contract? • I promise to give you 100 Rs. if ride your bike to Tiananmen Square and back to ICB in less than 2 hours. Is there a contract? • I give you 2 Rs. for your Coca-Cola. Is there a contract? • I promise to give you a new bicycle if you agree not to eat Chinese food for one year. Is there a contract?
  • 10. Definition of a contract • A legally binding agreement • that means there must be some kind of agreement between two parties • However, not all agreements are contracts because not all agreements are legally enforceable • legally enforceable means that a court will say that an agreement is a contract
  • 11. Definition of a contract (cont.) • To decide if an agreement is legally enforceable as a contract, a court will apply the rules and principles of the law of contract • Therefore, knowing a little about these rules can help businesspeople to create valid contracts
  • 12. Essential elements of a valid contract: (Sec. 10) Agreement - Offer & acceptance Legal consequences - rights & obligations Capacity of the contracting parties Consideration Legal object Free consent Certainty Possibility of performance Writing & registration Not expressly declared to be void.
  • 13. Offer: Sec.2(a) An Offer Can be Defined as follows: An expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.
  • 14. Essentials of offer It must be an expression of the willingness to do or abstain from doing something. Such expression must be to another person. Such expression must be made with the intention to obtain the assent of the other person to such an act or abstinence.
  • 15. Communication of Offer. • The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. • E.g. - A proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter.
  • 16. Acceptance: Sec 2(b) Acceptance is the second ‘half’ of a contract. If Bill offers Ben a bag of sweets for 20p, and Ben says ‘I accept’, clearly a contract has been made. The law explains that there must be evidence from both sides of genuine agreement between parties – the old idea of consensus ad idem, or meeting of minds. Acceptance can be defined as: Agreement to all terms of an offer by words or conduct.
  • 17. Essentials of Acceptance Acceptance must be given only by the person to whom the offer is made. Must be absolute & unqualified. Must be in prescribed mode or reasonable manner. Must be communicated. Within reasonable time. Acceptance must succeed an offer. Rejected offers can be accepted only if renewed.
  • 18. Communication of an acceptance The communication of an acceptance is complete, - as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; as against the acceptor, when it comes to the, knowledge, of the proposer. E.g. : B accepts A's proposal by a letter sent by post. The communication of the acceptance is complete, as against A when the letter is posted as against B, when the letter is received by A.
  • 19. Void Contracts • In fact, these are not contracts at all • They have no legal effect • As we will see in later classes, there are a number of things which can make a contract void – e.g. mistake, illegality • The important thing to remember is that you cannot enforce a void contract
  • 20. Void Agreements: • Agreements in restraint of marriage [Sec. 26] • Agreements in restraint of trade [Sec. 27] • Agreements in restraint of legal proceedings [Sec. 28] • Agreements the meaning of which is uncertain [Sec. 29] • Agreements by way of wager [Sec. 30] • Agreements contingent on impossible events [Sec. 36] • Agreements to do impossible acts [Sec. 56]
  • 21. Void Contracts - Example • Daniel gives his students so much homework that they decide to kill him •  • They pay a Russian hit man 5000 RMB to kill Daniel
  • 22. Void Contracts – Example (cont.) • However, the Russian simply spends all the money in bars in Sanlitun and then goes home • He does not kill Daniel •  • The students cannot claim their money back because it is illegal to hire a hit man to kill someone