All about Indian Contract Act, 1872

(a)Intention to create legal relationship

(b) Fulfilment of legal formalities

(c) Certainty of meaning

(d) Possibility of Performance

On the Basis of Formation

On the Basis of Performance

2. For a valid offer, the party making it must express his willingness ‘to do’ or ‘not to do’ something.

3. The willingness must be expressed with a view to obtain the assent of the other party to whom the offer is made.

4. An offer can be positive as well as negative:

2. It must be certain, definite and not vague.

3. It must be communicated to the offeree. [Lalman Shukla v. GauriDutt]

4. It must be made with a view to obtaining the assent of the other party.

5. It may be conditional.

6. Offer should not contain a term the non-compliance of which would amount to acceptance.

7. The offer may be either specific or general.

8. The offer may be express or implied.

9. Offer is Different from a mere statement of intention, an invitation to offer, a mere communication of information, a prospectus and Advertisement

10. A statement of price is not an offer [Harvey Vs. facie]

2. Acceptance must be absolute and unqualified.

3. The acceptance must be communicated. [Brogden vs. Metropolitan Railway Co]

4. Acceptance must be in the prescribed mode.

5. Acceptance must be given within the specified time

6. Mere silence is not acceptance [Felthouse vs. Bindley]

7. Acceptance by conduct/Implied Acceptance

When a proposal is made by post, its communication will be complete when the letter containing the proposal reaches the person to whom it is made.

1. As against the proposer, when it is put in the course of transmission to him so as to be out of the power of the acceptor to withdraw the same;

2. As against the acceptor, when it comes to the knowledge of the proposer.

An acceptance may be revoked at any time before the communication of acceptance is complete as against the acceptor.

2. By lapse of time

3. By non-fulfilment of condition precedent

4. By death or insanity

5. By Counter Offer

6. By the non-acceptance of the offer according to the prescribed or usual mode

7. By subsequent illegality

2. Consideration may move from promisee or any other person [Chinnayya vs. Ramayya]

3. Executed and executory consideration

4. Consideration may be past present or future

5. Consideration need not be adequate

6. Performance what one is legally bound to perform- Consideration must not be performance of existing duty

7. Consideration must be real and not illusory

8. Consideration must not be unlawful immoral or opposed to public policy

Exceptions-

1. In The case of trust.

2. In the case of family settlement

3. In the case of certain marriage contract/arrangements

4. In the case of assignment

5. Acknowledgement or estoppel

6. Contract entered by an agent

7. In the case of covenant running with the land

2. Person who is usually of sound mind but occasionally of unsound mind- may not a make a contract when he is of unsound mind.

3. Rule of necessaries supplied- same as a minor.

Diplomatic person or ambassador- can make valid contract but in case of Breach of contract legal suit/case can be filed with approval of government.

Corporation- can make valid contract according to the power of memorandum (MOA).

o Coercion (Section 15)

o Undue Influence (Section 16)

o Fraud (Section 17)

o Misrepresentation (Section 18)

2. The un lawful detaining or threatening to detain any property to the prejudice (against interest ) of any person.

1. Contract- Voidable

2. If contract rescinded-all benefits received to be restored

3. Any person who has received any money-must return it.

1. Relation b/w parties

2. Position to dominate the will- Real and apparent authority, Fiduciary relationship, Mental distress, Unconscionable bargain

3. The object must be to take undue advantage.

4.Burden of proof- on dominant person

2. the active concealment of a fact

3. a promise made without any intention of performing it.

4. any other act fitted to deceive;

5. any such act or omission as the law specially declares to be fraudulent.

1. Fiduciary Relationship

2. Contract of Insurance

3. Contract of Marriage

4. Contract of Family Settlement

5. Share Allotment Contract

1. Rescind the contract within reasonable time

2. Sue for damages.

3. Insist on performance of contract or the condition that he shall be put in the position in which he would have been had if the representation was made true

2. Breach of duty by a person without any intention to deceive.

3. Where a party innocently causes the other party to the agreement make a mistake as to subject matter.

Mistake of Law:

Mistake of Indian law- doesn’t render the contract void

Mistake of Foreign Law- treated as mistake of fact

Mistake of Fact:

If both the parties are at mistake-agreement is void.

1. It is forbidden by law (e.g. Dowry)

2. Is of such a nature that, if permitted, it would defeat the provisions of any law (e.g. giving son in adoption in lieu of annual allowance)

3. Is fraudulent

4. Involves injury to the person or property of another

5. The court regards it as immoral

6. Opposed to public policy.

2. Stifling Prosecution

3. Maintenance and Champerty- generally valid-unless-(a) Unreasonable or unjust (b)Malicious motive

4. Trafficking relating to Public Offices and titles

5. Agreements tending to create monopolies

6. Marriage brokerage agreements

7. Interference with the course of justice

8. Interest against obligation

9. Consideration Unlawful in Part

2. Agreement in restraint of trade (Section 27) [Exceptions-Sale of Goodwill, Agreement by Outgoing Partner, Agreement between Partners, Agreement with Employer]

3. Agreement in restraint of legal proceedings (Section 28)

4. Agreement – the meaning of which is uncertain (Section 29)

5. Wagering agreement (Section 30)[Lottery transactions, Crossword Puzzles and Competitions, Speculative transactions, Horse Race Transactions]

2. made at a proper time and place

3. If offer is to deliver anything then the promisee must have a reasonable opportunity of seeing that the thing offered is the thing which was promised under the contract.

(i) Terminate the contract or,

(ii) Indicate by words or by conduct that he is interested in its continuance

2.Agent [Where personal consideration is not involved]

3. Legal Representatives [LR of deceased promisor will be bound to perform if personal skills not involved-But their liability under a contract is limited to the value of the property they inherit]

4. Third persons [When a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor.]

5. Joint promisors [All joint promisors liable, if any one of JP/or all JP die LR of JP(s) shall be liable to perform]

2. If one of the joint promisors is made to perform the whole contract, he can call for a contribution from others.

2. Time and place for performance where time is specified and no application to be made- Performance to be made during usual business hours on the day/date specified.

3. Place for the performance where no application to be made and no place fixed for performance- duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise, and to perform it at such a place.

5. Performance to be made in manner or at time prescribed or sanctioned by promise

2. Order of performance of reciprocal promises- If fixed perform as per that order, If not fixed- as per the nature of transaction

3. Liability of party preventing event on which the contract is to take effect- Contract voidable at the option of aggrieved party

4. Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises-such person liable for compensation

5. Effects of Failure to Perform at a Time Fixed in a Contract in which time is essential [(a) If time is essential-contract voidable (b) If time is not essential-contract not voidable, only compensation can be claimed, (c) If performance accepted other than agreed time-compensation can be claimed only if notice of such intention given at the time of acceptance of performance]

6. Agreement to do impossible act [In next section]

7. Reciprocal promise to do certain things that are legal, and also some other things that are illegal [Legal part-valid contract, illegal part-void agreement]

8. ‘Alternative promise’ one branch being illegal [Only legal branch can be enforced]

(i) If known to the parties- Void-ab-initio

(ii) If unknown to the parties- Void

(iii) If known to the promisor only- promisee is entitled to claim compensation

2. Where debt to be discharged is not indicated- creditor may apply it at his discretion to any lawful debt including time barred debt.

3. Application of payment where neither party appropriates- applied in discharge of the debts in order of time including time barred debt.

(i) Novation- substitution of a new contract for the old.

(ii) Rescission- Cancellation of the contract

(iii) Alteration- Alteration in certain terms of the contract

2. Promisee may waive or remit performance of promise (Section 63)- discharge of contract by remission

3. Restoration of Benefit under a Voidable Contract (Section 64)- Where aggrieved party rescinds voidable contract, it must return any benefit received.

4. Obligations of Person who has Received Advantage under Void Agreement or contract that becomes void (Section 65)-all benefits received under void agreement to be returned

5. Communication of rescission (Section 66)- communication of recession of voidable contract to be made.

2. Recission of Contract

3. Suit for Specific Performance [Where damages are not adequate remeady]

4. Suit for Quantum Meruit

5. Suit for Injuction [To restrain the party from doing what he promised not to do]

(1) It is only available if the original contract has been discharged.

(2) The claim must be brought by a party not in default

Cases where claim for quantum meruit arises-

1. When a contract becomes void.

2. When something is done without any intention to do so gratuitously.

3. Where there is an express or implied contract to render services but there is no agreement as to remuneration.

4. When one party abandons or refuses to perform the contract.

5. Where a contract is divisible and the party not in default has enjoyed the benefit of part performance.

6. When an indivisible contract for a lump sum is completely performed but badly the person who has performed the contract can claim the lump sum, but the other party can make a deduction for bad work.

2. The event referred to is collateral to the contract.

3. The contingent event should not be a mere ‘will’ of the promisor.

4. The event must be uncertain.

2. Payment by an interested person [Such interested person is entitled to be reimbursed]

3. Obligation of person enjoying benefits of non-gratuitous act

4. Responsibility of finder of goods

5. Money paid by mistake or under coercion (Section 72)

1. The act was done or thing was delivered lawfully;

2. The act was not done gratuitously; and

3. The other person enjoyed the benefit.

1. to take proper care of the property as man of ordinary prudence would take

2. no right to appropriate the goods and

3. to restore the goods if the owner is found.