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1. INDIAN CONTRACT ACT ʹ 1872
2. SPECIFIC CONTRACTS
3. COMPANIES ACT, 1956 AND NEGOTIABLE
INSTRUMENTS ACT, 1881
4. SALES OF GOODS ACT, 1930
5. INTELLECTUAL PROPERTY RIGHTS AND
ENVIRONMENTAL LAWS
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ðUIZZES/TESTS 25 Marks

GROUP PRESENTATION 15 Marks

MID TERM 30 Marks

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Ú Introduction & General Principles
of Contract act. :1
Ú Review of sections 1 to 60 of the act :2&3
Ú ðuiz and Group Presentation (Case analysis) : 4
Ú Essentials of a valid contract, 61 to 75 :5
Ú Performance and Discharge of a contract
Breach of a contract and its remedies,
ðuasi Contract. :6&7
Ú ðuiz and Group Presentation (Case analysis) : 8
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‰Body of principles recognized and applied by

the state in the administration of justice.͟

Ú English Mercantile Law

Ú Judicial Decisions
Ú Indian Statute Law
Ú Customs And Trade Usage
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Ú Permeates every aspect of business.
Ú Regulates production standards.
Ú Deters unfair trade practices.
Ú Stipulates how finances should be raised.
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AGREEMENT CONTRACT

PROMISE Legal Binding

Consideration
ACCEPTANCE

OFFER
  
According to Section 2(h) of the act,
‰An agreement enforceable by law is a
contract.͟
Promise = Proposal + Acceptance
Agreement = Promise + Lawful Consideration
ESSENTIALS OF A VALID CONTRACT
Intention to
Offer & create legal Lawful
Acceptance relationship Consideration

Free Capacity of
Consent Parties
VALID
CONTRACT
Lawful Legal
Object Formalities

Certainty of Possibility of Not

Objective performance Declared To
Be Void
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& ! ' ! : Acc to sec 2(a), ‰when one person signifies '

his 



to do or to abstain from doing anything with a view

to 




of that other to such act or abstinence he is

said to make a proposal.

E.g. A offers B to sell his house for Rs. 700000.

Offer 


1. A mere statement of intention.
2. An invitation to offer.
3. A mere communication of information.
4. Casual Enquiry.
5. A Prospectus
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How made? To whom made?

Express Implied Specific General

offer offer Offer offer

Offer by abstinence
Counter offer
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Ú Capable of creating obligations.
Ú Must be certain, definite and not vague.
Ú Must be communicated to the offeree.
Ú Must be made with a view to obtaining assent.
Ú May be conditional.
Ú Should not contain a term the non compliance of
which would amount to acceptance.
Ú Lapse of an offer
Ú An invitation to offer is not an offer.
   
   
‰When a person to whom the proposal is made signifies his
assent thereto, it is an acceptance of the proposal͟
e.g. A offers to sell his old bike to B for 10000. B accept the offer
to purchase the bike for Rs 10000.
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Ú Must be absolute and unconditional.
Ú Must be communicated to the offeree.
Ú Must be made within a reasonable time.
Ú Must be according to the mode prescribed.
Ú Must be aware of the proposal at the time of the acceptance.
Ú Must be given before the offer lapses or revoked.
Ú Cannot be implied from silence.
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Ú Where the offeree having reasonable opportunity to reject

the offered goods and services $

%% , it
will amount to acceptance.

Ú Where  
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the offeree has given
the proposer reason to understand that the silence was
intended by the offeree as a manifestation of assent and the
offer or does so understand.
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It is complete as soon as it G
 
 
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It is complete
(a) as against the proposer when it is ΠG  

  
, so as to be out of the power of the
acceptor to withdraw the same.
(b) as against the acceptor when it G
 
 
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It can be revoked at anytime before the letter of acceptance is
posted.
   
Section 2(d) says, ͚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 some thing,  GG 
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is called a consideration for the
promise.͛
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Úmay move from the promisee or any other person.

Ú must move at the desire of the promisor.
Ú must have some value.
Ú must be defined as benefit or detriment.
Ú must be defined as past, present or future consideration.
Ú must be legal.
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Ú Made out of natural love and affection.
Ú Promise to compensate for past voluntary
services.
Ú Promise to pay time barred debt.
Ú Completed gift.
Ú Agency
Ú Guarantee
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ù Object or consideration is forbidden by law.
ù Object or consideration defeats the provisions of
law
ù Objects and Consideration are fraudulent
ù Object and Consideration are injurious to any
person
ù Object and Consideration are immoral
ù Objects and Consideration are against public
policy
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A person who is not a party to a contract, that is a third party,
can neither sue nor be sued on the contract.

.   : A person who is not a party to a contract can sue

upon it in the following cases.
Ú Trust or charge
Ú Marriage settlements
Ú Family settlements
Ú Agency
Ú Acknowledgement of liability
    

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As per section 13, ‰Two or more persons are
said to consent when they  Π


͟ Also termed as
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"à" '
        
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Undue
Coercion Fraud Misrepresentation Mistake
Influence

VOIDABLE VOID

Bilateral Mistake Unilateral Mistake

As to subject Possibility of Nature of As to identity of

matter Performance contract person
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Definition : ‰Every person is competent to contract who
is % % !according to the law to
which he is subject, and who is %

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"and is

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!to
which he is subject͟
Persons incompetent to contract
Ú Minor
Ú Person of unsound mind
Ú Person disqualified by any law to which they are
subject
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Definition
‰ A minor is one who has not completed his or her 18
years of age.͟
Rules regarding minor͛s agreement
ù Agreement void ab initio.
ù No ratification
ù Can be a promisee or beneficiary
ù No estoppel
ù No specific performance
ù Liability of torts
ù No insolvency
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ù Joint contract by minor & adult
ù Surety for a minor
ù Minor as a shareholder
ù Liability for necessaries
ù Partnership
ù Can be a agent
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‰A person is said to be of sound mind for the
purpose of entering into a contract if, at the time
when he makes it he is GŒ
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and of 
 
 
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Unsoundness may arise from
ù Idiocy
ù Lunacy or insanity
ù Drunkenness
ù Hypnotism
ù Mental Decay
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ù Alien enemies
ù Foreign sovereigns and ambassadors
ù Insolvents
ù Convict
ù Corporations
Exception : Property liable for necessaries
provided
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Method of Extent of Obligations

Enforceability
formation performance to perform

Valid
Formal Executed
Unilateral
Void

Voidable Simple Executory Bilateral

Unenforceable

Illegal
Express Implied ðuasi Standard Contingent
Form
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‰Performance of contract means that both the
promisor and the promisee 



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 , which the contract
placed upon them.͟

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ù Attempted
ù Y

ù  

ù Actual
 
  
Modes in which a contract may be discharged
ù Discharge by agreement
ù Discharge by operation of law
ù Discharge by breach
ù Discharge by performance
ù Discharge by impossibility
ù Discharge by lapse of time
 

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ù Novation
ù Alteration
ù Rescission
ù Remission
ù Waiver
DISCHARGE BY OPERATION OF LAW
ù Insolvency
ù Merger
ù Unauthorized material alteration
ù Death
DISCHARGE BY BREACH
ù Anticipatory Breach
ù Actual Breach
ù - when performance is actually due
ù - when actually performing the contract
 DISCHARGE BY IMPOSSIBILITY
ù Destruction of the subject matter
ù Death or personal incapacity
ù Change of law
ù Declaration of war

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ù Difficulty of performance
ù Commercial impossibility
ù Impossibility due to failure of third person
ù Strikes, lockouts and civil disturbances
 DISCHARGE BY LAPSE OF TIME
ù A when contract needs to be performed within
specified period (Limitation act, 1963)

   
‰A breach of a contract is  
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impossibility of performance, refusal to perform,
defective performance, or even late performance by
the other party.͟
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Cancellation ðuantum Specific

Restitution Damages Injunction
or Rescission Meruit Performance

General or
ordinary

Special

Vindictive or
exemplary

Nominal
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‰Under certain circumstances, a person may
receive a benefit in which the law regards
another person as better entitled, or for which
the law considers he should pay to the other
person, even though there is no contract
between the parties. Such relationships are
termed as ðuasi contracts.͟
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ù Claims for necessaries supplied
ù Payment by an interested person
- The payment made should be bona fide for the
protection of one͛s interest
- The payment should not be a voluntary one.
- The payment must be such as the other party
was bound by law to pay.
ù ðuantum Meruit (As much as is earned)
Continues͙..
ù Obligation of a person enjoying benefit of non-
gratuitous act
- The thing must have done lawfully.
- The person doing the act should not have
intended to do it gratuitously.
- The person for whom the act is done must have
enjoyed the benefit of the act.
ù Money paid by mistake or under coercion
Continues͙..
ù Responsibility of finder of goods
  
 
‰A contingent contract implies a contract, the
performance of which depends on the
happening or non happening of an uncertain
event, incidental to such contract.͟
Essentials
ù Performance depends upon happening or non happening
of some future event.
ù The event must be uncertain.
ù The event must be collateral. i.e., incidental to the
contract.
 


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A wager is an agreement between two parties by which
one promises to pay money or money͛s worth on the
happening of some uncertain event in consideration of
the other party͛s promise to pay if the event does not
happen.
Essentials
ù Promise to pay money or money͛s worth
ù Uncertain event
ù Each party must stand to win or lose
ù No control over the event
ù No other interest in the event
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