Acknowledgement

We would like to thank our professors to give us such a great project.I am thankful from bottom of my heart to

prof.komal shivnani

to give us such a great professional

project we have learned a lot through this project and we are also thank full to our friend who helped us in our queries

Indian Contract Act, 1872 [Act No. 9 of Year 1872, dated25th. April, 1872]

Act Name- Indian Contract Act 1872

Project Submitted to Prof Komal Shivnani

Name:-PurswaniSonamKaramchand Roll No: - 85 Class: - F.Y.BMS Div: - B

Date of Submission:8th August, 2012

Contents

1. Contract 2. Essentials of Valid Contract 3. Classifications of Contract 4. Offer and Acceptance 5. Essential Requirements of a valid offer 6. Termination or Lapse of offer 7. Acceptance 8. Essentials of Valid Acceptance 9. Communication of Offer acceptance and revocation 10. Capacity of Contract 11.Consideration 12.Free Consent 13.Bibiliography

05-07 08 09-12 13-15 16-17 18 19 20 21-23 24 25 26-27 28

What is a Contract?

2(h) An agreement enforceable by law is a contract 2(e) Every promise and every set of promises, forming the consideration for each other, is an agreement;

2(b) When a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, whena accepted, becomes a promise;

2(c) The person making the proposal is called the "promisor", and theperson accepting the proposal is called "promisee",

2(a) When one person signifies to another his willingness to do or toabstain 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;

2(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains fromdoing, or promises to do or to abstain from doing, something, suchact or abstinence or promise is called a consideration for the promise

What are elements of a Contract?

Elements of an agreement

Agreement = offer or proposal + an acceptance of that offer or proposal

Elements of a contract

Contract = Agreement + legal obligation, i.e. it should beenforceable by law

The law of Contracts is not the whole law of agreementsnor is it the whole law of obligations. It is the law of thoseagreements which create obligations, and thoseobligations which have, their source in agreements.Salmond

What agreements are contracts?

All agreements are contracts if they are made bythe free consent of parties competent tocontract, for a lawful consideration and with alawful object, and are not hereby expresslydeclared to be void. Nothing herein containedshall affect any law in force in India, and nothereby expressly repealed, by which anycontract is required to be made in writing or inthe presence of witnesses, or any law relating tothe registration of documents.

ESSENTIAL ELEMENTS OF A VALIDCONTRACT

Agreement Intention to create legal relationship Free and genuine consent Parties competent to contract Lawful consideration Lawful object Agreement not declared void or illegal Certainty of meaning Possibility of performance

Necessary legal formalities

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Classification of Contracts
Contracts may be classified in terms of their: Validity or enforceability Mode of formation Performance Classification according to validity or enforceability Valid Voidable Void Illegal Unenforceable
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Classification of Contracts
Classification according to validity or enforceability Valid

Have all essential elements discussed earlier Voidable

An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others.

[Deficiency of free consent =M, F, UI, C,M] Void

agreement not enforceable by law is said to be void

A contract which ceases to be enforceable by law becomes void when itceases to be enforceable (subsequent impossibility or subsequent illegality)
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Classification of Contracts
Illegal One the consideration or object of which (1) is forbidden by law; or (2)defeats the provision of any law; or (3) is fraudulent; or (4) involves or implies injury to person or property of another; or (5) the court regards itimmoral or opposed to the public policy.

Also taints collateral transactions with illegality Unenforceable

Is neither void nor voidable, but cannot be enforced because it lacks someitem of evidence such as writing, registration or stamping.

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Mode of formation

Express terms stated in words (written or spoken)

Implied-terms inferred from the conduct of the parties or circumstances. Performance extent to which performed

Executed (wholly performed) and executory (partiallyperformed) or

Unilateral(at the time of formation obligation to perform on the part of one party only) and Bilateral.

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Offer and Acceptance

OFFER / PROPOSAL

A proposal is defined as when one person signifiesto another his willingness to do or to abstain fromdoing anything, with a view to obtaining the assentof that other to such act or abstinence, he is said tomake a proposal. [Section 2(a)]

The person making the proposal is called the "promisor", and the person accepting the proposal is called "p ro misee.[ Section 2(c)]

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How an offer is made?

Communication, acceptance and revocation of proposals:
The communication of proposals, the acceptance of proposals,and the revocation of proposals and acceptance, respectively,are deemed to be made byany actor omissionof the partyproposing, accepting or revoking, by which he intends tocommunicate such proposal, acceptance or revocation, or whichhas the effect of communicating it. [Section 3] Thus an offer can be made:.

by an act i.e. by words (written or verbal), by conduct (silence)or by omission (to do something) Implied offer

Offer implied from the conduct of the parties or from the circumstances of the case is known as implied offer .

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Offer and Acceptance

Specific and General Offer: an offer can be made either: To a definite person or a group of persons, or To the public at large Carlill v. Carbolic Smoke Ball Co.

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Essential Requirements of a valid offer

Must be made with a view to obtain acceptance [Section2a]. Must be made with a intention of creating legal relationship. [ Balfour v. Balfour] Terms must be definite, unambiguous and certain or capable of being made certain [Section 29]. Offer must be distinguished from mere declaration of intention or aninvitation to offer. This Statements made without an intention to create a binding legalobligation amount to a mere declaration of intent and not to a proposal. An offer is distinct from an invitation to offer. College prospectus for admission, invitation of offers by auctioneer at the time of auction,display of goods etc. (final expression of willingness). It must be communicated to the offeree before it can be accepted. [LaxmanShukla V. Gauri]
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Essential Requirements of a valid offer

The offer must not contain a term the non-compliance of which may be assumed to amount to acceptance. A tender is an offer as it is in response to a invitation to offer. Specific or Definite Standing The special terms, forming the part of the offer, must be dully brought to the notice of the oferee at the time the offer is made. By drawing his attention to them specifically By inferring that a man of ordinary prudence could find them by exercising ordinary intelligence To identical cross offers do not make a offer. Where two parties make identical offers to each other, in ignorance of each others offer,the offers are known as crossoffers and neither of the two can be called an acceptance of the other and, therefore there is no contract.

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Termination or Lapse of Offer

An offer lapses after stipulated or reasonable time. by death or insanity of the offeror or the offeree

beforeacceptance.

An offer terminates when rejected by the offeree. when revoked by the offeror before acceptance By not being accepted in the mode prescribed, or if no mode isprescribed, in some usual and reasonable manner. When the condition is not accepted in case of a conditional offer. By counter offer by offeree (acceptance of offer but subject tocertain condition or qualification).

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Acceptance
When a person to whom the proposal is made,signifies his assent thereto, the proposal is saidto be accepted. A proposal, when a accepted,becomes a promise. [Section 2b].

Acceptance how made? May be express or implied. It is express when signified either in writing, or by wordof mouth, or by performance of some required act. Implied when it is to be gathered from surroundingcircumstances or the conduct of the parties.

Who can accept? Must be absolute and unqualified. Must be communicated.

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Essentials of a valid acceptance

Must be according to the mode prescribed. Must be given within the time specified or within a reasonable time. Must be in response to an offer. Must be made before the offer lapses. Must be given by the person to whom the offer is made.

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Communication of offer acceptance and revocation

Communication when complete [Sec. 4] The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him so at to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer. The communication of a revocation is complete as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to hisknowledge.

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Communication of offer acceptance and revocation

Revocation of Proposals and acceptance [Sec 5] A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but no afterwards.

Revocation how made [Sec 6] A proposal is revoked

(1) by the communication of notice of revocation by the proposer to the other party; (2) by the lapse of the time prescribed in such proposal for its

acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;

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(3) by the failure of the acceptor to fulfill a condition precedent to acceptance; or (4) by the death or insanity of the proposer, if the fact of the death or insanity comes to the knowledge of the acceptor before acceptance.

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Capacity of Contract
Who are competent to contract[Sec 11] o Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who issound mind and is not disqualified from contracting by any law towhich he is subject. Minority o According to section 3 of Indian Majority Act, 1875, a minor is aperson who has not completed 18 years of age. However, infollowing cases, a minor attains majority after 21 years of age: o Where a guardian of minors person or property has been appointedunder The Guardians andWards Act, 1860, or o Where the superintendence of minors property is assumed by aCourt of Wards.

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Consideration
What the promisor demand as the price of his promise.

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

In Currie V.Misa C was termed as a valuable C in the sense of the law may consist either some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.

When, at the desire of the promisor, the promisee or any other person has done 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 [Sec 2(D)] Thus the term consideration is used in the sense of quid-pro-quo which means something in return. This something may be some benefit, right,interest or profit or it may also be some forbearance, detriment, loss or responsibility upon the other party.

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Free Consent
A consent is said to be free when it not caused by coercion or undue influence or fraud or misrepresentation or mistake. Elements Vitiating free Consent 1. Coercion (Section 15): "Coercion" is the committing, or threatening to commit, any act forbidden by the Indian Penal Code under(45,1860), or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. 2. Undue influence (Section 16): "Where a person who is in a position to dominate the will of another enters into a contract with him and the transaction appears on the face of it, or on the evidence, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in the position to dominate the will of the other." 3. Fraud (Section 17): "Fraud" means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent todeceive another party thereto of his agent, or to induce him to enter into the contract.

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4. Misrepresentation (Section 18): " causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement". 5. Mistake of fact (Section 20): "Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void".

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Bibliography
http://en.wikipedia.org/wiki/Indian_Contract_Act_1872

http://www.scribd.com/doc/48209008/Indian-Contract-Act-1872

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THANK YOU

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