INDIAN
CONTRACT ACT
According
to Section 2(h) of the Act, the term contract is defined as “an agreement
enforceable by law”.
There
are various essential elements of a contract:
1. Proper
offer and Proper acceptance with the intension to create a legal relationship.
2. Lawful
consideration and lawful object
3. Capacity
to contract
4. Free
consent
5. Agreements are not declared void or illegal
6. Certainty
of meaning.
7. Possibility
of performance of an agreement.
8. Necessary
legal formalities.
TYPES OF CONTRACT:
1. ON
THE BASIS OF VALIDITY:
a. Valid
contract: An agreement which is binding and enforceable is a valid contract.
b. Void
contract: It is a contract without any legal effect and cannot be enforced in a
court of law. It is define in Section2 (j) of the Indian Contract Act.
c. Voidable
contract: As per Section 2(I) “An agreement which is enforceable by law at the
option of one or more the parties but not at the option of other or others is a
voidable contract.” For example, an agreement caused by coercion, undue
influence or fraud would be voidable.
2. ON
THE BASIS OF THE FORMATION OF CONTRACT:
a. Express
contracts: A contract which is made by words either spoken or written is said
to be an express contract.
b. Implied
contract: By implied contract means implied by law i.e. the law implies a contract
though parties never intended.
c. Quasi
contract: A quasi-contract is not an actual contract but it resembles to a
contract.
3. ON
THE BASIS OF PERFORMANCE OF THE CONTRACT:
a. Executed
contract: If the consideration for the promise in a contract is given or
executed, such type of contract is called the contract with executed consideration.
b. Executory
contract: It is so-called because the reciprocal promises or obligation which
serves as consideration is to be performed.
For example, where G agrees to take tuition of H, a pre-engineering
student, from the next month and H in consideration, promises to pay G RS. 1000
per month, the contract is an executory contract because it is yet to be carried
out.
c. Unilateral
contract: A unilateral contract is a one-sided contract in which only one
party has to perform his promise or obligation to do or forbear.
d. Bilateral
contract: Where the obligation or promise in a contract is outstanding on the
part of both the parties, it is known as a bilateral contract.
PROPOSAL OFFER: The person making the proposal or
offer is called the ‘promisor’ or ‘offer or’, the person to whom the offer is
made is called the ‘offeree’ and the person accepting the offer is called the
‘promisee’ or ‘acceptor’.
1. General
offer: It is an offer made to the public in general and hence anyone can accept
and do the desired act.
2. Special
offer: When offer is made to a definite person, it is known as specific offer
and such offer can be accepted only by that specific person.
3. Cross
offer: When two parties exchange identical offers in ignorance at the time of
each other’s offer, the offers are called cross offers.
4. Counter
offers: When the offeree offers to qualified acceptance of the offer subject to
modifications and variations in terms of original offer, he is said to have
made a counter offer.
ACCEPTANCE: A proposal or offer is said to have been
accepted when the person to whom the proposal is made signifies his assent to
the proposal to do or not to do something.
The rules regarding acceptance are:
1. Acceptance
must be absolute and unqualified.
2. Communicated
to Offeror.
3. Acceptance
must be in the mode prescribed.
4. Time
5. Mere
silence is not acceptance.
6. Acceptance
by conduct.
CONSIDERATION: Section 2(d) defines consideration as
follows: “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 an act or abstinence or promise is
called consideration for the promise.”
COERCION (SECTION 15): “Coercion” is the committing,
or threatening to commit, any act forbidden by the Indian Penal Court or the
unlawful detaining or threatening to with the intension of causing any person
to enter into an agreement.
The threat of suicide amounts to coercion within
Section15.
UNDUE INFLUENCE (SECTION 16): A contract is said to
be induced by “undue influence” where the relations subsisting between the
parties are such that one of the parties is in a position to dominate the will
of the other and uses that position to obtain an unfair advantage of the other.
Example: A father, by reason of his authority over
the son can dominate the will of the son.
FRAUD (SECTION 17): As per the Act “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 to deceive another party thereto or
his agent, or to induce him enter into the contract:
1. The
active concealment of a fact by one having knowledge or belief of the fact;
2. A
promise made without any intension of performing it;;
3. Any
other act fitted to deceive;