PRESENTED BY- NITEEN. PPRESENTED BY- NITEEN. P KUSHAL. MKUSHAL. M

LAXMI. BLAXMI. B VINAYAK . VVINAYAK . V

PRESENTATION ONPRESENTATION ON

CONTRACT CONTRACT ACT,1847ACT,1847UNDER THE GUIDANCE- PROF. SARITA PATIL

CONTENTCONTENT

Business law is a rule which helps us to regulate and manage Business law is a rule which helps us to regulate and manage

our business transactions and activities system. It has direct relation our business transactions and activities system. It has direct relation

with trade, industry and commerce. e.g. insurance act, contract act, with trade, industry and commerce. e.g. insurance act, contract act,

tax act, sale of goods act, agency act etc.tax act, sale of goods act, agency act etc.

Business LawBusiness Law

The Indian Contract Act consists of the following two parts:The Indian Contract Act consists of the following two parts:

Enacted byEnacted by Parliament of IndiaParliament of India

Date enactedDate enacted 25 April 187225 April 1872

Date commencedDate commenced 1 September 18721 September 1872

Total sectionsTotal sections 238238

Extent Extent All States of India except All States of India except

the State of Jammu & Kashmirthe State of Jammu & Kashmir

INDIAN CONTRACT ACT, 1872 INDIAN CONTRACT ACT, 1872

What is a Contract? What is a Contract?

An agreement which is legally enforceable alone is a contract. An agreement which is legally enforceable alone is a contract.

Agreements which are not legally enforceable are not contracts but Agreements which are not legally enforceable are not contracts but

remain as void agreements which are not enforceable at all or as remain as void agreements which are not enforceable at all or as

voidable agreements which are enforceable by only one of the parties voidable agreements which are enforceable by only one of the parties

to the agreementto the agreement.

““All contracts are agreements, But all agreements are not contracts.”All contracts are agreements, But all agreements are not contracts.”

OFFER/PROPOSALOFFER/PROPOSAL ACCEPTANCEACCEPTANCE PROMISEPROMISE

Offer/Proposal sec 2(a) Offer/Proposal sec 2(a) - When one person signifies to another his - When one person signifies to another his

willingness to do or to abstain from doing anything, with a view to willingness to do or to abstain from doing anything, with a view to

obtaining the assent of that other person either to such act or abstinence, obtaining the assent of that other person either to such act or abstinence,

he is said to make a proposal. he is said to make a proposal.

Acceptance sec 2(b) Acceptance sec 2(b) - When the person to whom the proposal is made, - When the person to whom the proposal is made,

signifies his assent there to , the proposal is said to be accepted. signifies his assent there to , the proposal is said to be accepted.

Promise sec 2(b) Promise sec 2(b) - A Proposal when accepted becomes a promise. In - A Proposal when accepted becomes a promise. In

simple words, when an offer is accepted it becomes promise. simple words, when an offer is accepted it becomes promise.

Promisor and promise sec 2(c) Promisor and promise sec 2(c) - When the proposal is accepted, the - When the proposal is accepted, the

person making the proposal is called as promisor and the person person making the proposal is called as promisor and the person

accepting the proposal is called as promisee. accepting the proposal is called as promisee.

PROMISEPROMISE

CONSIDERATIONCONSIDERATION

AGREEMENTAGREEMENT

Consideration sec 2(d) Consideration sec 2(d) - When at the desire of the promisor, the - When at the desire of the promisor, the

promisee or any other person has done or abstained from doing promisee or any other person has done or abstained from doing

something or does or abstains from doing something or promises to do something or does or abstains from doing something or promises to do

or abstain from doing something, such act or abstinence or promise is or abstain from doing something, such act or abstinence or promise is

called a consideration for the promise. called a consideration for the promise.

Price paid by the one party for the promise of the other Technical word Price paid by the one party for the promise of the other Technical word

meaning meaning QUID-PRO-QUOQUID-PRO-QUO i.e. something in return. i.e. something in return.

Agreement sec 2(e) Agreement sec 2(e) - Every promise and set of promises forming the - Every promise and set of promises forming the

consideration for each other. consideration for each other.

Contract sec 2(h) Contract sec 2(h) - An agreement enforceable by Law is a contract. - An agreement enforceable by Law is a contract.

AGREEMENTAGREEMENT ENFORCEABLE BY LAWENFORCEABLE BY LAW CONTRACTCONTRACT

As per Section 10 “All agreements are contracts, if they are As per Section 10 “All agreements are contracts, if they are

made – by free consent of the parties, competent to contract, made – by free consent of the parties, competent to contract,

for a lawful consideration and with a lawful object, and not for a lawful consideration and with a lawful object, and not

hereby expressly declared to be void .”hereby expressly declared to be void .”

ESSENTIALS OF A VALID CONTRACT ESSENTIALS OF A VALID CONTRACT

ESSENTIAL ELEMENTS OF A VALID CONTRACTESSENTIAL ELEMENTS OF A VALID CONTRACT

• • Offer and acceptance Offer and acceptance

• • Legal relationship Legal relationship

• • Consensus - ad-idem Consensus - ad-idem

• • Free consent. Free consent.

• • Capacity or competency of partiesCapacity or competency of parties

• • Lawful objectLawful object

• • Lawful consideration Lawful consideration

• • Certainty and possibility of performance Certainty and possibility of performance

• • Agreements not declared to be void Agreements not declared to be void

• • Legal formalities Legal formalities

Offer and AcceptanceOffer and Acceptance: In order to create a valid contract, there must : In order to create a valid contract, there must

be an agreement between two parties. An agreement involves a be an agreement between two parties. An agreement involves a

valid offer by one party and valid acceptance of the same by the valid offer by one party and valid acceptance of the same by the

other party. other party. CASE: BOULTON (vs) JONES.CASE: BOULTON (vs) JONES.CASE: HARVEY (vs) FACEY.CASE: HARVEY (vs) FACEY.

Legal relationshipLegal relationship: The parties must intend their agreement to result in : The parties must intend their agreement to result in

legal relations. This means that the parties must intend that if one of legal relations. This means that the parties must intend that if one of

them falls to perform his promise, he shall be answerable for that failure them falls to perform his promise, he shall be answerable for that failure

in law. Duties and rights should be legal and not merely moral. [an in law. Duties and rights should be legal and not merely moral. [an

agreement of a purely domestic or social nature is not a contract ] agreement of a purely domestic or social nature is not a contract ] CASE: WEEKS (vs) TYBALD - 1905CASE: WEEKS (vs) TYBALD - 1905CASE: BALFOUR (vs) BALFOUR - 1919CASE: BALFOUR (vs) BALFOUR - 1919

Consensus-ad-idemConsensus-ad-idem: The minds of both the parties must be ad-idem. In : The minds of both the parties must be ad-idem. In

other words, the tow parties must have agreed about the subject other words, the tow parties must have agreed about the subject

matter of the contract at the same time and in the same sense.matter of the contract at the same time and in the same sense.

Free consent (Permission or Willingness): Free consent (Permission or Willingness): An agreement must have An agreement must have

been made by free consent of the parties. consent is said to be free been made by free consent of the parties. consent is said to be free

when it is not caused by coercion, undue influence, fraud, when it is not caused by coercion, undue influence, fraud,

misrepresentation or mistake.misrepresentation or mistake.CASE: RANGANAYAKAMA (vs) ALWAR SETHICASE: RANGANAYAKAMA (vs) ALWAR SETHI

Capacity : Capacity : The parties to a contract must have capacity (legal ability) to The parties to a contract must have capacity (legal ability) to

make valid contract. make valid contract. Section 11:- of the Indian contract Act specify that every person is Section 11:- of the Indian contract Act specify that every person is competent to contract provided. competent to contract provided. Is of the age of majority according to the Law which he is subjectIs of the age of majority according to the Law which he is subject Who is of sound mind and Who is of sound mind and Is not disqualified from contracting by any law to which he is subject. Is not disqualified from contracting by any law to which he is subject.

Lawful object :Lawful object :The object of agreement should be lawful and legal. The object of agreement should be lawful and legal.

Consideration or object of an agreement is unlawful if it Consideration or object of an agreement is unlawful if it is forbidden by law; or is forbidden by law; or is of such nature that, if permitted, would defeat the provisions of any law; or is of such nature that, if permitted, would defeat the provisions of any law; or is fraudulent; or is fraudulent; or Involves or implies, injury to person or property of another; or Involves or implies, injury to person or property of another; or Court regards it as immoral, or opposed to public policyCourt regards it as immoral, or opposed to public policy . .

Lawful consideration : Lawful consideration : All contracts must be supported by consideration. All contracts must be supported by consideration.

Consideration means “something in return” (quid pro quo). It can be cash, Consideration means “something in return” (quid pro quo). It can be cash,

kind, an act or abstinence. It can be past, present or future. However, kind, an act or abstinence. It can be past, present or future. However,

consideration should be real and lawful.consideration should be real and lawful.

A consideration must not be unlawful, immoral or opposed to the public A consideration must not be unlawful, immoral or opposed to the public

policypolicy.

Not expressly declared to be voidNot expressly declared to be void

Possibility of performancePossibility of performance

Necessary legal formalities Necessary legal formalities •A contract may be oral or in writingA contract may be oral or in writing

ELEMENTS OF A VALID CONTRACTELEMENTS OF A VALID CONTRACT

CONSIDERATIONCONSIDERATION

AGREEMENTAGREEMENTREALITY OF REALITY OF CONSENTCONSENT

CAPACITYCAPACITY

LEGALITYLEGALITY

BARGAINED BARGAINED FORFOR

ACCEPTANCEACCEPTANCE

LEGAL LEGAL DETRIMENT/DETRIMENT/

LAWFULLAWFUL

OFFEROFFER SUBJECT SUBJECT MATTERMATTER

OBJECTIVEOBJECTIVE

not validnot valid• FRAUDFRAUD

• MISREPRESENTATIONMISREPRESENTATION• DURESSDURESS• UNDUE INFLUENCEUNDUE INFLUENCE• MUTUAL MISTAKEMUTUAL MISTAKE

not validnot valid•INFANTSINFANTS•MENTALMENTAL•DRUNKARDSDRUNKARDS•CORPORATIONSCORPORATIONS

WRITINGWRITING

ReviewReview

Legal relationshipLegal relationship

Two partiesTwo parties

TYPES OF CONTRACT TYPES OF CONTRACT

ON THE BASIS OF CREATIONON THE BASIS OF CREATION

Express Contracts: Express Contracts: Where the terms of the contract are expressly agreed Where the terms of the contract are expressly agreed

upon in words (written or spoken) at the time of formation, the contract upon in words (written or spoken) at the time of formation, the contract

is said to be express contract.is said to be express contract.

Implied Contracts: Implied Contracts: Implied contracts in contrast come into existence by Implied contracts in contrast come into existence by

implication. implication.

Most often the implication is by law and or by action. Most often the implication is by law and or by action.

Tacit ContractsTacit Contracts: : Tacit contracts are those that are inferred through the Tacit contracts are those that are inferred through the

conduct of parties. conduct of parties.

Quasi Contracts: Quasi Contracts: A quasi contract is created by law. Thus, quasi A quasi contract is created by law. Thus, quasi

contracts are strictly not contracts as there is no intention of parties to contracts are strictly not contracts as there is no intention of parties to

enter into a contract. It is legal obligation which is imposed on a party enter into a contract. It is legal obligation which is imposed on a party

who is required to perform itwho is required to perform it

ON THE BASIS OF VALIDITYON THE BASIS OF VALIDITY

Valid contract : Valid contract : An agreement which has all the essential elements of a An agreement which has all the essential elements of a

contract is called a valid contract. A valid contract can be enforced by law.contract is called a valid contract. A valid contract can be enforced by law.

Void contract (2(j) : Void contract (2(j) : "A contract which ceases to be enforceable by law "A contract which ceases to be enforceable by law

becomes void when it ceases to be enforceable". Thus a void contract is becomes void when it ceases to be enforceable". Thus a void contract is

one which cannot be enforced by a court of law. one which cannot be enforced by a court of law.

Under a mistake of facts [20] Under a mistake of facts [20]

Consideration or object of an agreement is unlawful [23] Consideration or object of an agreement is unlawful [23]

Agreement made without consideration [25] Agreement made without consideration [25]

Agreement in restrain of marriage [26] Agreement in restrain of marriage [26]

Restraint of trade [27] Restraint of trade [27]

Restrain legal proceeding [28]. Restrain legal proceeding [28].

Agreement by wage of wager [30] Agreement by wage of wager [30]

Voidable contract Section 2[i] Voidable contract Section 2[i] : Defines that an agreement which is : Defines that an agreement which is

enforceable by law at the option of one or more parties but not at the enforceable by law at the option of one or more parties but not at the

option of the other or others is a voidable contract. option of the other or others is a voidable contract.

Result of coercion, undue influence, fraud and misrepresentation. Result of coercion, undue influence, fraud and misrepresentation.

Unenforceable contract : Unenforceable contract : Where a contract is good in substance but Where a contract is good in substance but

because of some technical defect cannot be enforced by law is called because of some technical defect cannot be enforced by law is called

unenforceable contract. These contracts are neither void nor voidable.unenforceable contract. These contracts are neither void nor voidable.

Example: Writing registration or stamping. Example: Writing registration or stamping.

Illegal contract : CIllegal contract : Contracts those which are forbidden by law. All illegal ontracts those which are forbidden by law. All illegal

contracts are hence void also, because of the illegality of their nature contracts are hence void also, because of the illegality of their nature

they cannot be enforced by any court of law. In fact even associated they cannot be enforced by any court of law. In fact even associated

contracts cannot be enforced. Contracts which are opposed to public contracts cannot be enforced. Contracts which are opposed to public

policy or immoral are also illegal.policy or immoral are also illegal.

““All illegal agreements are void agreements but all void agreements are not All illegal agreements are void agreements but all void agreements are not illegal.”illegal.”

ON THE BASIS OF EXECUTIONON THE BASIS OF EXECUTION

.

Executed contract : Executed contract : An executed contract is one in which both the An executed contract is one in which both the

parties have performed their respective obligation.parties have performed their respective obligation.

Executory contract : Executory contract : An executory contract is one where one or both An executory contract is one where one or both

the parties to the contract have still to perform their obligations in the parties to the contract have still to perform their obligations in

future. Thus, a contract which is partially performed or wholly future. Thus, a contract which is partially performed or wholly

unperformed is termed as executory contract.unperformed is termed as executory contract.

ON THE BASIS OF LIABILITYON THE BASIS OF LIABILITY

Unilateral contract : Unilateral contract : A unilateral contract is one in which only one A unilateral contract is one in which only one

party has to perform his obligation at the time of the formation of the party has to perform his obligation at the time of the formation of the

contract, the other party having fulfilled his obligation at the time of contract, the other party having fulfilled his obligation at the time of

the contract or before the contract comes into existence.the contract or before the contract comes into existence.

Bilateral contract : Bilateral contract : A bilateral contract is one in which the obligation A bilateral contract is one in which the obligation

on both the parties to the contract is outstanding at the time of the on both the parties to the contract is outstanding at the time of the

formation of the contract. Bilateral contracts are also known as formation of the contract. Bilateral contracts are also known as

contracts with executory consideration.contracts with executory consideration.

THANK YOUTHANK YOU HAVE A FABULOUS DAY HAVE A FABULOUS DAY