IPCC Notes: Business Laws, Ethics & Communication
THE INDIAN CONTRACT ACT, 1872
IMPORTANT TERMS u/s 2
|Promise 2(b)||When a person
-to whom proposal is made
-signifies his assent thereto
-proposal is said to be accepted.
Proposal when accepted becomes a promise.
|Agreement 2(e)||Every promise and every set of promises
forming consideration for each other.
|Contract 2(h)||An agreement enforceable by law.|
|Void Contract 2(j)||A contract-which ceases to be enforceable by law-becomes void when ceases to be enforceable.|
|Voidable Contract 2(i)||A voidable agreement-which is 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.
|Proposal 2(a)||A person is said to make a proposal when-he signifies to another his willingness-to do or to abstain from doing-anything with a view to-obtain the assent of that other
-to such act or abstinence.
Since we are now familiar with important terms of this act, I will now proceed to rehash the entire act bit by bit.
Essentials of a valid contract u/s 10
In order to create a valid contract, following are the essentials:
|Intention to create legal obligation||-There must be an offer-Offer must be accepted-Offer and its acceptance should create legal obligations between parties-Promisee should be able to claim fulfillment.|
|Free consent of the parties||-Consent must be freely given-It should not be given under force, coercion, etc-If consent is not free, contract is voidable at the option of aggrieved party.|
|Capacity of parties to enter into contract (sec 11)||The law prohibits a person from entering into contract who-has not attained majority-is of unsound mind and-is disqualified from entering into contract by law.|
|Lawful consideration||Consideration means-compensation for doing or omitting-an act or deed.-Also defined as ‘quid pro quo’, i.e., something in return for another.|
|Lawful object||The purpose of contract must not be what law declares to be-illegal or void.|
Types of Contract
|Void Contract||A contract-which ceases to be enforceable by law-becomes void when it ceases to be enforceable.|
|Voidable Contract||A voidable agreement-which is 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.
|Illegal Contract||A contract which is-forbidden by law-opposed to public policy-immoral.|
|Express Contracts||A contract-whose terms are-expressed in words or in writing-is an express contract.As per section 9
-if a proposal or acceptance
-of any promise
-is made in words
-the promise is express.
|Implied Contracts||A contract-which comes into existence-by implication where-such implication-is by law or by action.
As per section 9
-a proposal or acceptance
-made otherwise than in words
-the promise is implied.
|Tacit Contracts||A contract-which is inferred-through the conduct of parties.|
|Executed Contracts||A contract in which-consideration could be an act or forbearance-when such consideration is executed-then such a contract is known as-executed contract.|
|Executory Contract||A contract in which-consideration is a reciprocal promise or obligation-which is to be performed in future only.|
|Unilateral Contract||A one sided contract where-only one party has to perform-his duty or obligation.|
|Bilateral Contract||A contract where-both the parties have to perform-their duty or obligation.|
Contract according to
- Formation: Express, Implied, Tacit.
- Performance: Executed, Executory, Unilateral, And Bilateral.
Further Classification of Contracts under English Law
|Formal Contracts||Contract of Record||A contract-which derives its binding force-from the authority of court.Authority of court-is through judgment of the court or
-by way of recognizance.
Judgment is binding
-on persons who are litigants.
-a written acknowledgement
-of a debt due to state
-due to criminal proceedings.
|Contract under Seal||A contract-which derives its binding force-from its form alone.It is in writing,-duly signed and sealed and delivered to parties.
Also referred as
-deed or specialty contract.
|Simple Contract||A contract-which does not contain-any formalities-referred in formal contracts.|
Stay Tuned for more notes….