1. BEENA SUNIL

2.  THE
LAW RELATING TO CONTRACTS IN INDIA
ARE CONTAINED IN THE INDIAN CONTRACT
ACT, WHICH CAME INTO FORCE ON THE FIRST
DAY OF SEPTEMBER 1872.
 IT
PROVIDES A FRAMEWORK OF RULES AND
REGULATIONS WHICH GOVERN FORMATION
AND PERFORMANCE OF THE CONTRACT.

3.  THE
MAIN OBJECT 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 THE AGGRIEVED
PARTY AGAINST THE PARTY NOT HONOURING
HIS PART OF AGREEMENT.

4. 
THE INDIAN CONTRACT ACT MAY BE DIVIDED INTO
TWO PARTS;

1ST PART : SEC. 1-75 DEALS WITH GENERAL
PRINCIPLES OF CONTRACT

II PART : SEC. 124 TO 238 DEALS WITH SPECIAL
TYPES OF CONTRACTS SUCH AS
(i) Contract of Indemnity & Guarantee
(ii) Contract of Bailment and Pledge
(iii) Contract of Agency

5. 
SECTION 2(h) OF INDIAN CONTRACT ACT DEFINES
THE TERM CONTRACT AS FOLLOWS;
“AN AGREEMENT EFORCEABLE AT LAW IS A
CONTRACT”

THEREFORE, A CONTRACT ESSENTIALLY CONSISTS
OF TWO ELEMENTS; THEY ARE

(i) AN AGREEMENT (ii) ENFORCEABILITY AT LAW

6. 
IE, CONTRACT = AGREEMENT + ENFORCEABILITY

AGREEMENT = OFFER + ACCEPTANCE

THE DEFINITION UNDER SEC.2(h) APPEARS TO BE
BUILT UPON THE DEFINITION OF THE VARIOUS
ELEMENTS WHICH MAKE A CONTRACT; THEY ARE,

7. “ WHEN ONE SIGNIFIES TO ANOTHER HIS
WILLINGNESS TO DO OR TO ABSTAIN FROM
DOING SOMETHING WITH A VIEW TO
OBTAINING THE
ASSENT
OF THAT
OTHER TO SUCH ACT OR ABSTINENCE, HE
IS SAID TO MAKE A PROPOSAL”

8. “ A PROPOSAL WHEN ACCEPTED BECOME A
PROMISE „

9. “EVERY PROMISE AND EVERY SET OF PROMISES,
FORMING CONSIDERATION FOR EACH OTHER IS AN
AGREEMENT” SEC.2(e).
For example , A agrees to pay Rs.100 to B and B
agrees to give him a book which is priced at
Rs.100/-, this is a set of promises forming
consideration for each other.
 However, if A agrees to pay Rs.100 to B, But B
does not promise anything, it is not set of
promises forming consideration for each other.


10. “The person making the proposal is called
the promisor and and the person accepting
the proposal is called the promisee”
- Sec.2 (c)

11.  ESSENTIAL
ELEMENTS ARE CONTAINED IN THE
DEFINITION OF COTRACT GIVEN IN SEC.10 OF
THE INDIAN CONTRACT ACT. ACCORDING TO
SEC.10
“
ALL AGREEMENTS ARE CONTRACTS IF THEY
ARE MADE BY FREE CONSENT OF THE PARTIES
COMPETENT TO CONTRACT FOR A LAWFUL
CONSIDERATION AND WITH LAWFUL OBJECT
AND ARE NOT HEREBY EXPRESSLY DECLARED
TO BE VOID”

12. 1.
OFFER AND ACCEPTANCE (AGREEMENT)
THIS INVOLVES TWO PARTIES. ONE PARTY
MAKING THE OFFER AND OTHER PARTY
ACCEPTING IT
THE TERMS OF THE OFFER MUST BE
DEFINITE AND THE ACCEPTANCE OF THE
OTHER MUST BE ABSOLUTE AND
UNCONDITIONAL

13.  THE
ACCEPTANCE MUST ALSO BE ACCORDING
TO THE MODE PRESCRIBED AND MUST BE
COMMUNICATED TO THE OFFERER
2.
INTENTION TO CREATE LEGAL
RELATIONSHIP
WHEN TWO PARTIES ENTER INTO AN
AGREEMENT THEIR INTENTION MUST BE TO
CREATE LEGAL RELATIONSHIP BETWEEN
THEM

14. 3.
FREE CONSENT
IT IS ESSENTIAL TO THE CREATION OF EVERY
CONTRACT THAT THERE MUST BE FREE AND
GENUINE CONSENT OF THE PARTIES TO THE
AGREEMENT.
THE CONSENT OF THE PARTIES IS SAID TO BE
FREE WHEN THEY AGREE UPON THE SAME
THING IN SAME SENSE (SEC. 13)

15.  CONSENT
IS SAID TO BE FREE WHEN IT IS NOT
CAUSED BY COERCION, UNDUE INFLUENCE,
FRAUD, MISREPRESENTATION OR MISTAKE.
4.
CAPACITY TO CONTRACT
THE PARTIES TO THE AGREEMENT MUST BE
CAPABLE OF ENTERING INTO A VALID
CONTRACT. EVERY PERSON IS COMPETENT
TO CONTRACT, IF HE

16. (a) IS OF THE AGE OF MAJORITY
(b) IS OF SOUND MIND
(c) IS NOT DISQUALIFIED FROM CONTRACTING
BY ANY LAW TO WHICH HE IS A SUBJECT.
FLAW IN CAPACITY TO CONTRACT MAY ARISE
FROM MINORITY, LUNACY, IDIOCY,
DRUNKENNESS ETC. AND STATUS.

17. 5.
LAWFUL CONSIDERATION
ACCORDING TO SECTION 25 OF INDIAN
CONTRACT ACT, AN AGREEMENT WITHOUT
CONSIDERATION IS VOID (NUDAM PACTUM)
AN AGREEMENT TO BE ENFORCEABLE BY
LAW MUST BE SUPPORTED BY
CONSIDERATION

18.  ACCORDING
TO SECTION 2(d) OF INDIAN
CONTRACT ACT, CONSIDERATION IS DEFINE AS
 “WHEN
AT THE DESIRE OF THE PROMISOR,
THE PROMISEE OR ANY OTHER PERSON HAS
DONE OR ABSTAINED FROM DORING, OR DOES
OR ABSTAINS FROM DOING OR PROMISES TO
DO OR ABSTAIN FROM DOING SOMETHING,
SUCH ACTS, ABSTINENCE OR PROMISE IS
CALLED A CONSIDERATION FOR THE PROMISE.

19. A CONSIDERATION CAN BE PAST, PRESENT OR
FUTURE.
6
EG: A PEPPER CORN IS SUFFICIENT
CONSIDERATION FOR A VAN FULL OF GUN
POWDER.
LAWFUL OBJECT
THE OBJECT OF THE AGREEMENT MUST BE
LAWFUL. IT MUST BE

20. IN OTHERWORDS, IT MUST NOT BE,
(a) ILLEAGAL
(b) IMMORAL OR
(c) OPPOSED TO PUBLIC POLICY
IF AN AGREEMENT SUFFERS FROM ANY LEGAL
LAW, IT MUST NOT BE ENFORCEABLE BY LAW

22. The parties to the Contract must agree upon the
subject matter of the contract in the same
manner and in the same sense. In other words,
there must be identity of minds among the
parties regarding the subject matter of the
contract (sec. 13).
Eg : A has two houses, one at TVPM and another at
Kochi. A expresses his willingness to sell one of
his houses to B. A had in his mind the house at
Kochi for sale at the time of placing his proposal.
B accepted the proposal and while accepting the
proposal the house at TVPM was in his mind. So
there is no consensus ad idem. The contract
thus formed is not valid.