Contract -1 Notes

7/30/2019 Contract -1 Notes

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CONTRACT

1. INTRODUCTION

The law relating to contracts is to be found in the Indian Contract

Act, 1872.

The law of contracts differs from other branches of law in a very

important respect.

It does not lay down so many precise rights and duties which the law

will protect and enforce; it contains rather a number of limiting

principles, subject to which the parties may create rights and duties

for themselves and the law will uphold those rights and duties.

Thus, we can say that the parties to a contract, in a sense make thelaw for themselves.

So long as they do not transgress some legal prohibition, they can

frame any rules they like in regard to the subject matter of their

contract and the law will give effect to their contract.

MEANING: “A contract is an agreement made between two (or) more

parties which the law will enforce.”

DEFINITION: According to section 2(h) of the Indian contract act,

1872. “An agreement enforceable by Law is a contract.”

Contract is “An agreement creating and defining obligations between

the parties”

0101. CONTRACT

Section 1-2 of the Indian Contract

1. Introduction

a. Meaning

b. Definition

c. Agreement and Contract

d. Elements of Agreement & Contract

2. Essential Elements of Valid Contract

1. Offer and Acceptance

2. Intention to create legal relationship.

3. Free and genuine consent.

4. Lawful Object

5. Lawful consideration.

6.

Capacity of Parties (Competency)7. Agreements not declared void or illegal.

8. Certainty of meaning.

9. Possibility of performance.

10. Necessary Legal Formalities.

3. Classification

i. Validity

ii. Formation

iii. Performance

a. Contracts in English Law

4. History of Contract

5. Formation of Contract

6. Review of fundamentals

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AGREEMENT AND CONTRACT

While all Contacts are Agreements, All Agreements are not

Contracts.

An Agreement is a Promise or a commitment or set of reciprocal

promises or commitments.

DEFINITION: The word “ Agreement” is defined in section 2(e)

“Every promise and every set of promises, forming the

consideration for each other is an Agreement”

An Agreement involves an offer or proposal by one person and

acceptance of such offer or proposal by another person.

If the agreement is capable of being enforced by law then it‟s a

contract.

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.”

ELEMENTS OF AGREEMENT

The TWO Elements of an Agreement are:

(i ) Offer or a proposal; and

(ii ) An acceptance of that offer or proposal.

ELEMENTS OF CONTRACT

Contract consists of TWO elements:

(i ) An agreement; and

(ii ) Legal obligation, i.e., it should be enforceable at law.

2. ESSENTIAL ELEMENTS OF A VALID CONTRACT:

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 and with a lawful object and not here by

expressly declared to be void”

In order to become a contract an agreement must have the following

essential elements, they are follows:-

1. Offer and Acceptance

2. Intention to create legal relationship.

3. Free and genuine consent.

4. Lawful Object

5. Lawful consideration.

6. Capacity of Parties (Competency)

7. Agreements not declared void or illegal.

8. Certainty of meaning.

9. Possibility of performance.

10. Necessary Legal Formalities.

These essential elements are explained briefly.


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CONCLUSION:

Contract = Agreement + Enforceability by law.

Agreement = Offer + Acceptance+ consideration.

“ Thus, all agreements are contracts but all agreements are not

necessarily contracts.”



1. OFFER AND ACCEPTANCE.

To constitute a contract there must be an offer and an acceptance

of that offer.

The offer and acceptance should relate to same thing in the same

sense.

There must be two (or) more persons to an agreement because

one person cannot enter into an agreement with himself.

2. INTENTION TO CREATE LEGAL RELATIONSHIP.

The parties must have intention to create legal relationship among

them.

Generally, the agreements of social, domestic and political nature

are not a contract.

If there is no such intention to create a legal relationship amongthe parties, there is no contract between them

3. FREE AND GENUINE CONSENT.

The consent of the parties to the agreement must be free and

genuine.

Free consent is said to be absent, if the agreement is induced by

i. Coercion ii. Undue influence

iii. Fraud. iv. Mis-representationv. Mistake.

4. LAWFUL OBJECT.

The object of the agreement must be lawful. In other words, it

means the object must not be

a) Illegal, (b) immoral, (c) opposed to public policy.

If an agreement suffers from any legal flaw, it would not be

enforceable by law.

5. LAWFUL CONSIDERATION:

An agreement to be enforceable by law must be supported by

consideration.

Consideration means “an advantage or benefit” moving from one

party to other. In other words “something in return”.

The agreement is enforceable only when both the parties give

something and get something in return.

The consideration must be real and lawful.

6. CAPACITY OF PARTIES: (COMPETENCY).

The parties to a contract should be capable of entering into a valid

contract.

Every person is competent to contract if

i. He is the age of majority.

ii. He is of sound mind and

iii. He is not dis-qualified from contracting by any law.

The flaw in capacity to contract may arise from minority, lunacy,

idiocy, drunkenness, etc..,

7. AGREEMENT NOT TO BE DECLARED VOID.

The agreements must not have been expressly declared to be void

u/s 24 to 30 of the act.

EXAMPLE: Agreements in restraint of trade, marriages, legal

proceedings, etc..,


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8. CERTAINTY:

The meaning of the agreement must be certain and not be vague

(or) indefinite.

If it is vague (or) indefinite it is not possible to ascertain its

meaning.

EXAMPLE:

„ A‟ agrees to sell to „B‟ a hundred tons of oil.

There is nothing whatever to show what kind of an oil intended;

the agreement is void for uncertainty.

9. POSSIBILITY OF PERFORMANCE:

The terms of an agreement should be capable of performance.

The agreement to do an act impossible in itself is void and cannot

be enforceable.

EXAMPLE:

„A‟ agrees with „B‟, to put life into B‟s dead wife, the agreement is

void it is impossible of performance.

10. NECESSARY LEGAL FORMALITIES:

According to Indian contract Act, oral (or) written are perfectly

valid.

There is no provision for contracting being written, registered andstamped.

But if is required by law, that it should comply with legal

formalities and then it should be complied with all legal (or)

necessary formalities for its enforceability.

THE ABOVE DISCUSSION CAN BE DIAGRAMMATICALLY REPRESENTED AS

PROPOSAL

PROMISE

CONSIDERATION

AGREEMENT

LEGALLY ENFORCEABLE LEGALLY NOT ENFORCEABLE

CONTRACT VOIDABLE AGREEMENT VOID AGREEMENT

3. CLASSIFICATIONS OF CONTRACTS

Contracts is classified according to as follows

TYPES OF CONTRACT ON THE BASIS OF

VALIDITY FORMATION PERFORMANCE

VALID CONTRACT EXPRESS EXCUTED

VOID CONTRACT IMPLIED EXECUTORY

VALIDABLE CONTRACT QUASI UNILATERAL

ILLEGAL AGREEMENT BILATERAL

UNENFORCEABLE


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3.1. ON THE BASIS OF VALIDITY:

1. VALID CONTRACT

An agreement which has all the essential elements of a contract is

called a valid contract.

A valid contract can be enforced by law.

2. VOID CONTRACT [SECTION 2(J)].

“A Contract which ceases to be enforceable by law becomes void

when it ceases to be enforceable”

Thus a void contract one which cannot be enforced by a court of

law.

3. VOIDABLE CONTRACT [SECTION 2(I)].

An agreement which is enforceable by law at the option of one or

more of the parties thereto, but not at the option of other or

others, is a voidable contract.

If the essential element of free consent is missing in a contract,

the law confers right on the aggrieved party either to reject the

contract or to accept it.

However, the contract continues to be good and enforceable

unless it is repudiated by the aggrieved party.

4. ILLEGAL CONTRACT:

An illegal agreement is one the consideration or object of which (1)

is forbidden by law; or (2) defeats the provisions of any law; or (3)

is fraudulent; or (4) involves or implies injury to the person or

property of another; or (5) the court regards it as immoral, or

opposed to public policy.

These agreements are punishable by law. These are void-ab-initio.

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

5. UNENFORCEABLE CONTRACT:

Where a contract is good in substance but because of some

technical defect cannot be enforced by law is called unenforceable

contract.

These contracts are neither void nor voidable.

3.2 ON THE BASIS OF FORMATION:

1. EXPRESS CONTRACT:

Where the terms of the contract are expressly agreed upon in

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

said to be express contract.

Section 9 of the Act provides that if a proposal or acceptance of

any promise is made in words the promise is said to be express.

2. IMPLIED CONTRACT:

An implied contract is one which is inferred from the acts or

conduct of the parties or from the circumstances of the cases.


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Where a proposal or acceptance is made otherwise than in words,

promise is said to be implied.

3. QUASI CONTRACT:

A quasi contract is created by law.

Thus, quasi 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 who is required to

perform it.

A quasi contract is based on the principle that a person shall not be

allowed to enrich himself at the expense of another.

Contract which are created neither by word spoken, nor written,

Nor by the conduct of the parties but these are created by the Law.

3.3 ON THE BASIS OF PERFORMANCE:

1. EXECUTED CONTRACT:

An executed contract is one in which both the parties have

performed their respective obligation.

2. EXECUTORY CONTRACT:

An executory contract is one where one or both the parties to the

contract have still to perform their obligations in future.

Thus, a contract which is partially performed or wholly

unperformed is termed as executory contract.

An executory contract is one which is wholly unperformed, or in

which there remains something further to be done.

3. UNILATERAL CONTRACT.

A unilateral contract is one sided contract in which only one party

as to perform his duty or obligation.

4. BILATERAL CONTRACT

A bilateral contract is one in which the obligation on both the

parties to the contract is outstanding at the time of the formation

of the contract.

Bilateral contracts are also known as contracts with executory

consideration.

CLASSIFICATION OF CONTRACTS IN THE ENGLISH LAW

In English Law, contracts are classified into TWO Types

a. Formal Contracts b. Simple Contracts.

A. FORMAL CONTRACTS

Formal contracts are those whose validity or legal force is based

upon form alone.

Formal Contracts again classified in to TWO Types

i. Contracts of Record ii Contracts Under seal


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E CONTRACT: An e – contract is one, which is entered into

between two parties via the internet.



4. HISTORY OF CONTRACT

Indian contract Act 1872 is the main source of law regulating

contracts in Indian law.

Citation : Act No. 9 of 1872

Enacted by : Parliament of India

Date Enacted : 25th April 1872

Date Commenced : 1st September 1872

The law relating to contracts in India is contained in Indian

Contract Act, 1872.

The Act was passed by British India and is based on the principles

of English Common Law.

It is applicable to the All the States of India except the State

of Jammu & Kashmir.

It determines the circumstances in which promise made by the

parties to a contract shall be legally binding on them.

All of us enter into a number of contracts everyday knowingly or

unknowingly.

Each contract creates some right and duties upon the contracting

parties.

Indian contract deals with the enforcement of these rights and

duties upon the parties in India.

The Third Law commission of British India formed in 1861 under

the stewardship of Chairman Sir John Romilly, with initial

members as Sir Edward Ryan, R. Lowe, J.M. Macleod, Sir W. Erle

(succeeded by Sir. W.M. James) and Justice Wills (succeeded by J.

Henderson), had presented the report on contract law for India as

Draft Contract Law (1866).

The Draft Law was enacted as The Act 9 of 1872 on 25th April

1872 and the Indian Contract Act, 1872 came into force with effect

from September 1, 1872.

Before the enactment of the Indian Contract Act, 1872, there was

no codified law for contract in India.

In the Presidency Towns of Madras, Bombay and Calcutta law

relating to contract was dealt with the Charter granted in 1726

by King George I to the East India Company.

Thereafter in 1781, in the Presidency Towns, Act of Settlement

passed by the British Government came into force.

Act of Settlement required the Supreme Court of India that

questions of inheritance and succession and all matters of


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http://en.wikipedia.org/wiki/British_India

http://en.wikipedia.org/wiki/English_Common_Law

http://en.wikipedia.org/wiki/Jammu_%26_Kashmir

http://en.wikipedia.org/wiki/Law_Commission_of_India


http://en.wikipedia.org/wiki/John_Romilly

http://en.wikipedia.org/wiki/Sir_Edward_Ryan

http://en.wikipedia.org/wiki/Richard_Thomas_Lowe

http://en.wikipedia.org/wiki/Presidency_town

http://en.wikipedia.org/wiki/Chennai

http://en.wikipedia.org/wiki/Bombay

http://en.wikipedia.org/wiki/Kolkata

http://en.wikipedia.org/wiki/George_I_of_Great_Britain

http://en.wikipedia.org/wiki/Supreme_Court_of_India

http://en.wikipedia.org/wiki/Supreme_Court_of_India

http://en.wikipedia.org/wiki/George_I_of_Great_Britain

http://en.wikipedia.org/wiki/Kolkata

http://en.wikipedia.org/wiki/Bombay

http://en.wikipedia.org/wiki/Chennai

http://en.wikipedia.org/wiki/Presidency_town

http://en.wikipedia.org/wiki/Richard_Thomas_Lowe

http://en.wikipedia.org/wiki/Sir_Edward_Ryan

http://en.wikipedia.org/wiki/John_Romilly


http://en.wikipedia.org/wiki/Law_Commission_of_India

http://en.wikipedia.org/wiki/Jammu_%26_Kashmir

http://en.wikipedia.org/wiki/English_Common_Law




contract and dealing between party and party should be

determined in case of Hindu as per Hindu law and in case of

Muslim as per Muslim law and when parties to a suit belonged to

different persuasions, then the law of the defendant was to apply.

In outside Presidency Towns matters with regard to contract was

mainly dealt with English Contract Laws; the principle of justice,

equity and good conscience was followed.

NOTE

The Act as enacted originally had 266 Sections, it had wide scope

and included.

General Principles of Law of Contract : 1 to 75

Contract relating to Sale of Goods : 76 to 129

Special kinds of Contracts

(Includes indemnity, guarantee : 125 to 238

Bailment & pledge

Contracts relating to Partnership : 239 to 266

Indian Contract Act embodied the simple and elementary rules

relating to Sale of goods and partnership.

The developments of modern business world found the provisions

contained in the Indian Contract Act inadequate to deal with the

new regulations or give effect to the new principles.

Subsequently the provisions relating to the sale of goods and

partnership contained in the Indian Contract Act were repealed

respectively in the year 1930 and 1932 and new enactments

namely Sale of Goods and Movables Act 1930 and Indian

Partnership act 1932 were re-enacted.

At present the Indian Contract Act includes.

General Principles of Law of Contract : 1 to 75

Special kinds of Contracts

(Includes indemnity, guarantee,

bailment & pledge) : 125 to 238

5. FORMATION OF CONTRACT

In addition to the elements of a contract:

A party must have capacity to contract;

The purpose of the contract must be lawful;

The form of the contract must be legal;

The parties must intend to create a legal relationship; and

The parties must consent.

As a result, there are a variety of affirmative defenses that a party may

assert to avoid his obligation.

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http://en.wikipedia.org/wiki/Defendant

http://en.wikipedia.org/wiki/Equity_(law)


http://www.vakilno1.com/bareacts/saleofgoods/s1.htm

http://www.vakilno1.com/bareacts/partnershipact/partnershipact.htm




http://www.vakilno1.com/bareacts/saleofgoods/s1.htm



http://en.wikipedia.org/wiki/Defendant



OFFER AND ACCEPTANCE

1. INTRODUCTION

OFFER

DEFINITION: According to section 2(a) of Indian contract act, 1872,

defines offer as “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”.

ACCEPTANCE

DEFINITION: According to section 2(b) of the Indian contract Act,

1872, defines an acceptance is “when the person to whom theproposal is made signifies is assent thereto, the proposal is said to

be accepted becomes a promise”.

On the acceptance of the proposal, the proposer is called the

promised/offer or and the acceptor is called the promise/offered.

2. COMMUNICATION

COMMUNICATION OF OFFER:

An offer its acceptance and their revocation (withdrawal) to be

complete when it must be communicated.

When the contracting parties are face to face and negotiate in person,

a contract comes into existence the movement the offere gives his

absolute and unqualified acceptance to the proposal made by the

offeror.

02

02. Offer and acceptance

Section 3 – 9 of the Indian contract

2. Introduction

a. Offer

b. Acceptance

3. Communication

a. Offer

b. Acceptance

4. Revocation

a. Communication of revocation

5. Classification of offer

6. Invitation to offer

7. Essential elements

a. Offer

b. Acceptance

8. Tenders




RULES REGARDING COMMUNICATION OF OFFER:

i. The communication of an offer is complete when it comes to the

knowledge of the person to whom it is made.

ii. An offer may be communicated either by words spoken (or)

written (or) it may be inferred from the conduct of the parties.

iii. When an offer/proposal is made by post, its communication will

be complete when the letter containing the proposal reaches the

person to whom it is made.

COMMUNICATION OF ACCEPTANCE.

An offer, its acceptance and their revocation (withdrawal) to be


When the contracting parties are face to face and negotiate in

person, a contract comes into existence the movement the offeree

gives his absolute and unqualified acceptance to the proposal

made by the offeror.

RULES REGARDING COMMUNICATION OF ACCEPTANCE:-

i. Communication of an acceptance is complete:-

a. As against the proposer/offeror when it is put into the certain

course of transmission to him, so as to be out of the power of the

acceptor.

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

proposer.

ii. When a proposal is accepted by a letter sent by the post the

communication of acceptance will be complete:-

a. As against the proposer when the letter of acceptance is posted.

b. As against the acceptor when the letter reach the proposer.

3. REVOCATION

REVOCATION OF OFFER:

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not

afterwards.

REVOCATION OF ACCEPTANCE

An acceptance may be revoked at any time before the communication

of the acceptance is complete as against the acceptor, but not

afterwards.

Section 16, of the Indian contract act, 1872 deals with various modes

of revocation of offer

A PROPOSAL IS REVOKED -

According to it, an offer is revoked/lapses (or) comes to an end

under following circumstances.

1. BY COMMUNICATION OF NOTICE: An offeror may revoke his offer at

any time before the acceptance by giving a simple notice of

revocation, which can be either oral (or) written.

2. BY LAPSE OF REASONABLE TIME: An offer will revoke if it is not

accepted within the prescribed/reasonable time.

If however, no time is prescribed it lapses by the expiry of a

reasonable time.

vekanand. . onal (M.Tech) 2 - 02

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3. BY NON-FULFILLMENT OF SOME CONDITIONS: When offeror has

prescribed some conditions to be fulfilled and offeree/ acceptor fails

to fulfill the conditions required to acceptance. In such a case offer

will be revoked.

4. BY DEATH (OR) INSANITY OF THE OFFEROR: The death of the offeror

does not automatically revoke the offer.

When the death (or) insanity of the offeror provided the offeree

comes to know before its acceptance it will be revoked.

Otherwise if he accepts an offer in ignorance of the death (or)

insanity of the offeror, the acceptance is valid.

5. BY A COUNTER OFFER: “counter offer” means when the

offeree/acceptor offers to qualified acceptance of the offer subject to

modifications and variations in the terms of original offer.

Therefore counter offer amounts to rejection of the original offer.

6. BY CHANGE IN LAW: An offer comes to an end if the law is changed so

as to make the contract contemplated by the offer illegal (or)

incapable of performance.

7. AN OFFER IS NOT ACCEPTED ACCORDING TO THE PRESCRIBED (OR)

USUAL MODE: If the offer is not accepted according to the prescribed

(or) usual mode, provides offeror gives notice to the offeree within a

reasonable time that the offer is not accepted according to the

prescribed/usual mode.

If the offeror keeps quite, he is deemed to have accepted the offer.

8. By death (or) insanity of the offeree/acceptor.

9. By destruction of the subject matter.

COMMUNICATION OF REVOCATION.

An offer, its acceptance and their revocation (withdrawal) to be


When the contracting parties are face to face and negotiate in person,

a contract comes into existence the movement the offeree gives his

absolute and unqualified acceptance to the proposal made by the

offeror.

RULES REGARDING COMMUNICATION OF REVOCATION:

1. As against the person who makes it, when it put into a course of transmission.

2. As against the person to whom it is made, when its comes to his

knowledge.

4. CLASSIFICATION OF OFFER.

Classification of Offer is as follows

1. General Offer: Which is made to public in general.

2. Special Offer: Which is made to a definite person.

3. Cross Offer: Exchange of identical offer in ignorance of each other.

4. Counter Offer: Modification and Variation of Original offer.

5. Standing, Open or Continuing Offer: Which is open for a specific

period of time



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1. GENERAL OFFER.

The general offer may be accepted by any one by complying with

the terms of the offer.

An offer can be made a public is called General Offer.

2. SPECIAL OFFER OR SPECIFIC OFFER

An offer can be made a definite person or a group of persons, is

called Special Offer.

3. CROSS OFFER.

When two (or) more identical offers exchanged between the parties

in ignorance at the time of each other‟s offer, the offer are called

as cross offers.

In such a case, the courts construe one offer as the offer and the

other as the acceptance. Thus a cross offers will not create any

contract.

4. COUNTER OFFER.

When the offeree offers to qualified acceptance of the offer subject

to modifications and variations in the terms of the original offer,

he is said to have made a counter offer.

Counter offer amounts to rejection of the original offer. In such a

case an offer may be revoked.

The offer must be distinguished from an invitation to offer.

5. INVITATION TO OFFER

If a person makes an invitation to make an offer/proposal, the

other person makes an offer/proposal in response. The

offer/proposal may or may not be accepted.

"An invitation to offer" is only a circulation of an invitation to make

an offer, it is an attempt to induce offers and precedes a definite

offer.

Acceptance of an invitation to an offer does not result in formation

of a contract and only an offer emerges in the process of

negotiation.

A statement made by a person who does not intend to bound by it

but, intends to further act, is an invitation to offer.

6. TENDERS

EXAMPLE: Tender notice is an invitation to make a proposal/offer.

Then the response to a tender notice is an offer and can be in two

ways:

A DEFINITE OFFER:

When tenders are invited for the supply of specified goods or

services,

Each tender submitted is an offer.

The party inviting tender may accept any tender he chooses

Thereby bringing about a contractual relationship with the person

(tender) so chosen.






A STANDING OFFER

Where goods or services are required continuously over a certain

period, a trader may invite tenders as a standing offer which is a

continuing offer.

The effect is that as and when goods or services are required, an

order is placed with the person whose tender has been accepted.

However, at each such time a distinct contract is made.

7. ESSENTIAL ELEMENTS

LEGAL RULES OF A VALID OFFER / PROPOSAL:-

1. OFFER MUST BE CAPABLE OF CREATING LEGAL RELATIONS: A social

invitation, even if it is accepted does not create legal relationship

because it is not so intended to create legal relationship.

Therefore, an offer must be such as would result in a valid contract

when it is accepted.

2. OFFER MUST BE CERTAIN, DEFINITE AND NOT VAGUE: If the terms of the

offer are vague, indefinite, and uncertain, it does not amount to a

lawful offer and its acceptance cannot create any contractual

relationship.

3. OFFER MUST BE COMMUNICATED: An offer is effective only when it is

communicated to the person whom it is made unless an offer is

communicated; there is no acceptance and no contract.

An acceptance of an offer, in ignorance of the offer can never treat as

acceptance and does not create any right on the acceptor.

4. OFFER MUST BE DISTINGUISHED FROM AN INVITATION TO OFFER: A

proposer/offer must be distinguished from an invitation to offer.

In the case of invitation to offer, the person sending out the

invitation does not make any offer, but only invites the party to

make an offer.

Such invitations for offers are not offers in the eyes of law and do

not become agreement by the acceptance of such offers.

5. OFFER MAY BE EXPRESSED (OR) IMPLIED: An offer may be made either

by words (or) by conduct.

An offer which is expressed by words (i.e.., spoken or written) is

called an ‘EXPRESS OFFER’ and offer which is inferred from the

conduct of a person (or) the circumstances of the case is called an

‘IMPLIED OFFER’.

6. OFFER MUST BE MADE BETWEEN THE TWO PARTIES: There must be two

(or) more parties to create a valid offer because one person cannot

make a proposal/offer to himself.

7. OFFER MAY BE SPECIFIC (OR) GENERAL: An offer is said to be specific

when it is made to a definite person, such an offer is accepted only

by the person to whom it is made.

On the other hand general offer is one which is made to a public at

large and maybe accepted by anyone who fulfills the requisite

conditions.






8. OFFER MUST BE MADE WITH A VIEW TO OBTAINING THE ASSENT: A offer to

do (or) not to do something must be made with a view to obtaining

the assent of the other party addressed and it should not made

merely with a view to disclosing the intention of making an offer.

9. OFFER MUST NOT BE STATEMENT OF PRICE: A mere statement of

price is not treated as an offer to sell. Therefore, an offer must not

be a statement of price.

10. Offer should not contain a term “the non-compliance” of which may

be assumed to amount to acceptance.

LEGAL RULES AS TO ACCEPTANCE:

A valid acceptance must satisfy the following rules:-

1. ACCEPTANCE MUST BE ABSOLUTE AND UNQUALIFIED:

An acceptance to be valid it must be absolute and unqualified and

in accordance with the exact terms of the offer.

An acceptance with a variation, slight, is no acceptance, and may

amount to a mere counter offer (i.e.., original may or may not

accept.

2. ACCEPTANCE MUST BE COMMUNICATED TO THE OFFEROR:

For a valid acceptance, acceptance must not only be made by the

offeree but it must also be communicated by the offeree to the

offeror.

Communication of the acceptance must be expressed or implied.

A mere mental acceptance is no acceptance.

3. ACCEPTANCE MUST BE ACCORDING TO THE MODE PRESCRIBED (OR)

USUAL AND REASONABLE MANNER:

If the offeror prescribed a mode of acceptance, acceptance must

give according to the mode prescribed.

If the offeror prescribed no mode of acceptance, acceptance must

give according to some usual and reasonable mode.

If an offer is not accepted according to the prescribed (or) usual

mode.

The proposer may within a reasonable time give notice to the

offeree that the acceptance is not according to the mode

prescribed.

If the offeror keeps quite he is deemed to have accepted the

acceptance.

4. ACCEPTANCE MUST BE GIVEN WITH IN A REASONABLE TIME:

If any time limit is specified, the acceptance must be given within

that time.

If no time limit is specified, the acceptance must be given within

a reasonable time.

5. IT CANNOT PRECEDE AN OFFER:

If the acceptance precedes an offer, it is not a valid acceptance

and does not result in a contract.

In other words “acceptance subject to contract” is no acceptance.

vekanand. . onal (M.Tech) 2 -06





6. ACCEPTANCE MUST BE GIVEN BY THE PARTIES (OR) PARTY TO WHOM IT

IS MADE:

An offer can be accepted only by the person (or) persons to whom

it is made.

It cannot be accepted by another person without the consent of

the offeror.

7. IT CANNOT BE IMPLIED FROM SILENCE:

Silence does not amount to acceptance.

If the offeree does not respond to offer (or) keeps quite, the offer

will lapse after reasonable time.

The offeror cannot compel the offeree to respond offer (or) to

suggest that silence will be equivalent to acceptance.

8. ACCEPTANCE MUST BE EXPRESSED (OR) IMPLIED:

An acceptance may be given either by words (or) by conduct.

An acceptance which is expressed by words (i.e.., spoken or

written) is called „ EXPRESSED ACCEPTANCE’.

An acceptance which is inferred by conduct of the person (or) by

circumstances of the case is called an ‘IMPLIED OR TACIT

ACCEPTANCE’.

9. Acceptance may be given by performing some condition (or) by

accepting some consideration.

10. Acceptance must be made before the offer lapses (or) before the

offer is withdrawn.

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ontract- 1 finitions



DEFINITIONS (SEC 2)

1. OFFER OR POPOSAL) [SECTION 2(A)]

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 person either to such act or abstinence, he is said tomake a proposal.

2. ACCEPTANCE 2(B)

When the person to whom the proposal is made, signifies his assent

there to, the proposal is said to be accepted.

3. PROMISE 2(B)

A Proposal when accepted becomes a promise. In simple words,

when an offer is accepted it becomes promise.

4. PROMISOR AND PROMISE 2(C)

When the proposal is accepted, the person making the proposal is

called as promisor and the person accepting the proposal is called

as promisee.

5. CONSIDERATION 2(D)

When at the desire of the promisor, the promisee or any other

person has done or abstained from doing something or does or

abstains from doing something or promises to do or abstain

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

a consideration for the promise.

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

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

6. AGREEMENT 2(E)

Every promise and set of promises forming the consideration for

each other. In short, agreement = offer + acceptance.

7. CONTRACT 2(H)

An agreement enforceable by Law is a contract.

8. VOID AGREEMENT 2(G)

An agreement not enforceable by law is void.

9. VOIDABLE CONTRACT 2(I)

An agreement is a voidable contract if it is enforceable by Law at

the option of one or more of the parties there to (i.e. the aggrieved

party), and it is not enforceable by Law at the option of the other

or others.

10. VOID CONTRACT

A contract which ceases to be enforceable by Law becomes void

when it ceases to be enforceable.

vekanand. . onal (M.Tech) 0 – 0



CONTRACT AGREEMENT

1 Section. 2(h) Sec. 2(e)

2A contract is an agreementenforceable by law.

Every promise or every set of promises forming considerationfor each other is an agreements.

3Every contract isenforceable Every promise is not enforceable.

4A contract includes anagreement.

An agreement does not include acontract.

5 The scope of a contract islimited, as it includes only commercial agreements.

Its scope is relatively wider, as itincludes both social agreementand commercial agreements.

6Only legal agreements arecalled contracts.

An agreement may be both legaland illegal.

7 Every contract contains alegal obligation.

It is not necessary for every agreement to have legalobligation

Documents

Contract -1 Notes