THE INDIAN
CONTRACT ACT (ICA),
1872
What is a contract?
Contract-Section 2(h)
“An agreement enforceable by law is a
contract”.
Agreement-Section 2(e)
“Every Promise and every set of promises
forming consideration for each other”
 Promise – Section 2(b): “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”
 Contract consists of two elements:
 A) An agreement
 B) Legal Obligation
 All Contracts are agreements, but all
agreements are not contracts
Valid Contract
Section 10
To be a valid contract, it must satisfy the following:
1. Agreement - Offer and Acceptance
2. Consensus-ad-idem (Meeting of minds) i.e.,
persons must agree to the same thing in the same
sense and at the same time.
3. Intention to create legal relationship as against
social relationship or illegal/unlawful
relationship.(Balfour Vs.Balfour)
Parker Vs.Clark
4. Free and Genuine Consent, i.e., free from
coercion
 undue influence
 fraud
 misrepresentation
 mistake
5. Parties competent to contract Sec.11- is
of the age of majority, is of sound mind, is
not disqualified from Contracting.
6. Lawful consideration and object, i.e.,
something in return and that must be lawful.
7. No Consideration – No Contract (Nudum
Pactum)

Valid Contract
7. Agreement not declared void.
8. Certainty of Meaning: e.g. sale and
purchase of 100 tonnes of oil. But
which oil? Thus, agreement being
uncertain – not valid.
But, if the seller deals only in one kind
of oil and one variety, then it shall be
valid since it is capable of being made
certain.
Valid Contract
9. Possibility of performance:
Impossibility whether known to the
parties or not, renders a contract
invalid.
10. Necessary legal formalities: e.g.
sale-deed of immovable property.
Classification of Contracts
 From the Point of view of Enforcement
a) Valid Contracts
b) Void Contracts
c) Voidable Contracts
d) Illegal Agreements
e) Unenforceable Agreements
Classification of Contracts

a)
b)
c)
According to Mode of Formation:
Express Contracts
Implied Contracts
Quasi Contracts
According to Performance:
a) Executed Contract
b) Executory Contract
c) Unilateral Contract
d) Bilateral Contract
Offer
a) Offer by an Act-By Words (Express
b)
c)
d)
e)
f)
Offer)
Offer by Omission
Offer by Conduct (Implied Offer)
Specific Offer
General Offer (Carlill Vs.Carbolic
Smoke Ball Co.,)
Counter Offer
Essentials of a Valid Acceptance
1.Acceptance must be absolute and unqualified
2.Acceptance must be communicated to the Offeror
3.Acceptance must be according to the mode
prescribed.
4.Acceptance must be given within the time specified.
5.Acceptance must be in response to the offer
6.Acceptance must be made before the offer lapses.
7.Acceptance must be given by the person to whom the
offer is made
 Communication of Special Terms:
Parker Vs.South Eastern Rly.Co.,
 Mental Acceptance is no Acceptance
Brogden Vs.Metropolitan Rly.Co.,
 Communication of Acceptance
 It
has two aspects, viz.,
 As against the proposer
 As against the acceptor
Agreements Declared Void
1.With or by a person incompetent of
Contracting (S.11) – Void ab initio
2.Affected by mutual mistake of fact between
the parties (S.20)
3.The object of consideration is unlawful.
4.Agreement without Consideration (S.25)
5.Agreements in restraint of Trade (S.27)
6.Agreements in restraint of Marriage (S.26)
7.Agreements in restraint of Legal Proceedings
(S.28)
8. Uncertain Agreements (S.29)
9. Wagering Agreements (S.30)
10.Impossible Agreements (S.56)
11.Agreement to enter into an Agreement in
Future.
Consent (S.130)
 Two or more persons said to consent when
they agree upon the same thing in the same
sense.
 Free Consent.(S.14) When it is not caused by
a. Coercion
b. Undue Influence
c. Fraud
d. Misrepresentation
e. Mistake.
Free Consent
Coercion (S.15):Committing or threatening
to commit any act forbidden by law.
Ranganayakkamma Vs.Alwar Setti
Effects of Coercion:Contract voidable at
the option of the aggrieved party. (S.19)
Undue Influence (S.16)
 One party is in a position to dominate
the will of the other.
 Effect – Voidable.
Fraud (S.17)
 No truth, active conealment of fact. An act
to deceive
 Effects of Fraud: a) Rescind the Contract;
 b) Sue for Damages
 C) Can insist on Performance
However, relief available only if party
actually defrauded.
 A fraud that does not defraud is no fraud.
Misrepresentation (S.18)
 Innocence, no desire to deceive,
may be false or inaccurate.
 Effects: a) Rescind the Contract
 b) Insist on Performance
Mistake (S.22): Mistake of Law and
Mistake of Fact.
Consequence of Mistake : Void
Consideration (S.2d)


Quid Pro Quo: Something in Return
The price which the Promisor demands for his
Promise.
Legal Rules as to Valid Consideration:
1.Consideration must move at the desire of the
Promisor (Durga Prasad Vs.Baldeo)
2. Consideration may move from the promisee
or any other person (Chinnayya
Vs.Ramayya)
3. Consideration may be past, present or future
4. Consideration must be of some value
5. Consideration must be legal.
Quasi Contracts:
 1. Claim for necessities supplied to a person




incapable of contracting on his account.
2. Reimbursement of a person paying money due by
another in payment of which he is interested.
3. Obligation of a person enjoying benefits of a nongratuitous act.
4. Responsibility of Finder of lost goods
5. Liability of a person to whom money is paid or
thing delivered by mistake.
Insurance = Contingent Contract.
Discharge of Contracts:
1. By Performance
2. By tender of Performance
3. By mutual consent: Novation/Rescission
4. By subsequent impossibility
5. By Breach: Actual or Anticipatory
Remedies for Breach of Contract
Remedies
 Right of Rescission of the Contract
 Suit for damages: Ordinary/Special
 Suit for specific Performance
 Suit for Injunction
 Suit for “Quantum Meruit” (as much as
earned)