Search Lawnotes.

in

Join our Law Notes WhatsApp Group and stay updated with Legal and Judicial Updates

Indian Contract Act, 1872

Home Home Indian Indian Acts Indian Contract Act, 1872
Administrative Law Law
The Indian Contract Act, 1872 is the law relating to Contracts in India. It came into force on
Alternative Dispute
Resolution September 1, 1872 and is extended to the whole of India except to the state of Jammu and Kashmir.
Banking Law
The Act has 238 sections altogether. Sections 1 to 75 came into force on September 1, 1872.
Company Law
Constitutional Law
Contents [hide]
Contract Law
Criminology 1 Interpretation of The Indian Contract Act, 1872
Criminal Law 2 Contract
Civil Procedure 2.1 Essential Elements of a Contract
Environmental Law 2.2 Offer
Family Law 2.3 Acceptance
Human Rights 2.4 Consideration
Industrial Law 2.5 Capacity to Contract
Insurance Law 2.5.1 Disqualifications
IPL
2.6 Quasi-Contracts
International Law
3 Discharge of Contract
Investment Law
3.1 See Also
Jurisprudence
Juvenile Justice 4 Remedies for Breach of Contract
Land Law 5 Damages
Law of Evidence 6 Related Topics
Penology 7 Related Acts
Tax Law
Torts
Definitions of Law Interpretation of The Indian Contract Act, 1872
Legal Quotes
Legal Maxims 1. When one person signifies to another his willingness to do or to abstain 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;
Other information
2. When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.
For Book Publishers
Contact Us A proposal, when accepted, becomes a promise;
3. The person making the proposal is called the "promisor", and the person accepting the proposal is called the
"promisee";
4. 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;
5. Every promise and every set of promises, forming the consideration for each other, is an agreement;
6. Promises, which form the consideration or part, of the consideration for each other are called reciprocal
promises;
7. An agreement not enforceable by law is said to be void;
8. An agreement enforceable by law is a contract;
9. 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, is a voidable contract;
10. A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

Contract
The term 'Contract' has been defined in Section 2(h) of the Indian Contract Act, 1872. It defines the Contract as an
agreement enforceable by law.
An agreement cannot become a contract unless it can be enforceable by law. To be enforceable by law, a contract
must contain all the essential elements of a valid contract as defined in Section 10.

According to Section 10, "All agreements are contracts, if they are made by the free consent of the parties, competent
to contract, for a lawful consideration, with a lawful object and are not expressly declared by the Act to be void.

Essential Elements of a Contract

Main Article: Essential Elements of a Contract
Essential Elements of a Contract as defined in Section 10 of the Indian Contract Act 1872

1. Agreement - Offer and Acceptance

2. Legal purpose
3. Lawful Consideration
4. Capacity to contract
5. Consent to contract
6. Lawful object
7. Certainity
8. Possibility of Performance
9. Not expressly declared void
10. Legal formalities like Writing, Registration etc.

All the above ingredients must be satisfied in every valid contract. It can be noted that all contracts are agreements, but
not all agreements are contracts.

Offer
Main Article : Offer - Indian Contract Act, 1872

Section 2(a) of the Indian Contract Act, 1872 defines the term "Proposal" as when one person signifies to another his
willingness to do or to abstain from doing something with a view to obtaining the assent of the other to such an act or
abstinence, he is said to make a proposal. The person making the 'proposal' or 'offer' is called the 'promisor' or
'offeror', the person to whom the offer is made is called the 'offeree'.

Acceptance
Main Article - Acceptance - Indian Contract Act, 1872

Acceptance means the expression of assent to whom the proposal is made in a Contract. Acceptance may be
expressed either by conduct or by implied circumstances. However, silence cannot be prescribed as a mode of
acceptance.

Consideration
Main Article : Consideration

Section 10 of the Indian Contract Act states Consideration as one of the essential elements to constitute a contract.

Consideration means 'something in return'. According to section 2(d) of the Indian Contract Act, "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 abstain from doing something, such act or abstinence is called a consideration for the promisee."

Capacity to Contract
Section 11 of the Indian Contract Act provides the requirements for competancy of the parties to the contract.
It says, "Every person is competent to contract, who is of the age of majority, according to law, which he is subject to
also who is of sound mind and who is not disqualified from contracting by any law to which he is the subject"

Disqualifications
1. An incorporated company cannot be part of contract.
2. A minor is also incompetent to enter into a contract subject to certain exceptions
3. Mental in capacity. Section 12 says "A person is said to be of sound mind for the purpose of making a contract,
if at the time when he makes it, he is capable of understanding it and of forming a rational judgement to its effect
upon his interests"
1. A person who suffers from insanity at intervals can enter into a contract, when he is of sound mind.
2. A person who suffers from insanity occasionally cannot enter into a contract, when he is of unsound
mind.

Quasi-Contracts
Under special circumstances, obligations resembling those created by a contract are imposed by law although there is
no contract between the parties. Such contracts are called Quasi-Contracts.

Sections 68 to 72 deal with Quasi-Contractual Obligations.

1. Claim for Necessaries supplied to a person incapable of contracting or on his account

2. Reimbursement of person paying money due by another, in payment of which he is interested
3. Obligation of person enjoying benefit of non-gratuitous act
4. Responsibility of finder of goods
5. Liability of person to whom money is paid, or thing delivered by mistake or under coercion.
Discharge of Contract
A Contract may be discharged in any of the following ways

1. Discharge by Performance.
2. Discharge by Mutual Consent or Agreement
1. Novation - When a new contract is substituted for an existing contract
2. Alteration
3. Rescission
4. Remission - Accepting the lesser sum of amount than what was contracted for

3. Discharge by subsequent illegality or impossibility

1. Destruction of Subject-matter
2. Failure of ultimate purpose
3. Death or personal incapacity of Promisor
4. Change of Law

4. Discharge by lapse of time

5. Discharge by operation of law
6. Discharge by breach of contract
1. Anticipatory breach
2. Actual breach

See Also
Section 133: Discharge of surety by variance in terms of contract

Remedies for Breach of Contract

Main Article: Remedies for Breach of Contract

Chapter VI of Contract Act with Sections 73 to 75 deals with the consequences of breach of a contract.

When a contract is breached, the injured party is entitled to one or more of the following remedies.

1. Rescission of the contract

2. Suit for damages
3. Suit upon quantum merit
4. Suit for specific performance of the contract
5. Suit for injunction

Damages
Main Article: Damages under Indian Contract Act, 1872

1. Ordinary or General damages

2. Special damages
3. Exemplary or Punitive damages
4. Nominal damages

Related Topics
Contract
History of Contract Law
Terms of Contract
Remedies for Breach of Contract
Agency
Essential Elements of a Contract in Indian Contract Act, 1872
Offer - Indian Contract Act, 1872
Acceptance - Indian Contract Act, 1872
Minors and Indian Contract Act, 1872
Damages under Indian Contract Act, 1872
Contracts of Indemnity
Contract of Guarantee
Balfour vs. Balfour (1919)
Tort vs Contract
 Doctrine of Frustration

Related Acts
India: Indian Contract Act, 1872 (Sections)
India: Partnership Act, 1932
India: Limited Liability Partnership Act, 2008
India: Companies Act, 1956
India: Special Relief Act, 1963
South Sudan: Contract Act, 2008
Malaysia: Malaysian Contracts Act, 1950

Categories: Indian Acts Contracts Indian Contract Act, 1872

Privacy policy