1. 1. CONTRACT ACT 1872
   Basics of Contract Act
   
2. 2. Law of Contracts : Introduction
   Lays down general principles of contract. It is like a boundary or limit within which parties can agree upon anything.
   
   • Lays down the circumstances in which it will be legally obligatory to perform a promise; provides remedies for breach
   Examples: minors contract is not binding on him. Social promises are not binding in law. Contracts without consideration, barring certain exceptions, are void.
   
   • Affects all of us since everyone enters into some kind of a contract every other day without being aware of it
3. • Eating out in a hotel, travelling by bus, taking property on lease, buying anything from movie tickets to buying a house, are all contracts: express(written or verbal)or implied (implied by conduct)
   • 3. Contracts create personal rights and obligations for the parties to the contract: particularly vital for business community:It means, specific persons who are parties to contract have rights and duties against each other
   • 4. There are other legal rights and obligations which are not created by contracts: a right not to be defamed, or a right notto be harmed, right to enjoy ones property, that are available against the whole world
4. CONTRACT
   Agreement in daily life
   An Agreement is defined in section 2 (e) of the Act is - a promise .
   Promise a proposal when accepted ,becomes a promise. ( Sec 2 b).
   Agreement = Offer + Acceptance
   
5. 5. Promise?
   Section 2(b)
   Promise = Proposal/Offer + Acceptance
   Proposal?
   Section 2(a)
   Expression of willingness to do something
   With a view to seek the assent of the other party.
   Thus, mere expression of willingness doesnt constitute offer/proposal.
   
6. 6. Acceptance
   Section 2(b)
   Giving of assent to the proposal.
   Enforceability by Law
   Agreements which are not enforceable
   Illegal/unlawful agreements, e.g., to smuggle/to kill
   Social Agreements (Balfour vs. Balfour)
   
7. 7. CONTRACT ACT
   Every Agreement is not a Contract.
   AGREEMENT ENFORCEABLE IN LAW IS CONTRACT.
   Contract : Agreement + enforceable by law. i.e. legal obligations to do or abstaining from doing anything. ( Social, illegal)
   All contracts are agreement but all agreements are not contracts
   Legal Contracts creates Rights in Personam not right in rem
   
8. 8. Essential of Contract
   Section 10 : states elements of Contract which are
   1)Agreement & Legal Obligation ;
   Agreement ( Offer+ Acceptance)
   Two parties ( Promisor & Promisee)
   2)Intention to create legal relationship
   3)Free Consent ( Sec 13,14)
   
9. 9. 4)Parties competent to Contracts
   5)Lawful consideration
   6)Lawful Object ( Not illegal/immoral)
   7)Agreements not declared void or illegal ( S 24-30)
   8)Certainty of Meaning (29)
   9)Possibility of performance
   10) Necessary Legal Formalities
   
10. 10. CONTRACT ACT
    Classification/Types of Contracts:
    Classification according to Enforceability :
    Valid, Void & Voidable, Illegal, Unenforceable
    Valid = section 10 elements
    Enforceable at the option of one or more parties = Voidable
    Section 23-30 = Void
    Classification according to Formation
    Express, Implied & Quasi Judicial
    Classification according to Performance :
    Executed, Executory, Unilateral, Bilateral
    
11. 11. OFFER & ACCEPTACE
    :
    Offer 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 to such act or abstinence, he is said to make a proposal
    Essential of Valid Offer :
    Must be made with a view to obtain consent
    Must be made with the intention of creating legal relation
    Terms of offer must be definite, unambiguous & certain of capable of being made certain
    
12. 12. CONTRACT ACT
    Elements of OFFER:
    It must be distinguished from mere declaration of intention or invitation of offer. ( A Tender is an offer)
    It must be communicated to offered.
    The offer must not be contain a term the non-compliance of which may be assume to amount to acceptance
    Special Terms
    Cross offers
    
13. 13. CONTRACT ACT
    ACCEPTACE :
    Meaning:
    When a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when a accepted, becomes a promise
    Elements of ACCEPTANCE :
    It must be absolute & Unqualified
    It must be communicated to the Offerer
    It must be according to the mode prescribed
    It must be given in specified time
    
14. 14. CONTRACT ACT
    ACCEPTACE :
    Meaning
    Acceptance how made and by whom
    Elements of ACCEPTANCE :
    It must be absolute & Unqualified
    It must be communicated to the Offeror
    It must be according to the mode prescribed
    It must be given in specified time
    
15. 15. CONTRACT ACT
    ACCEPTACE :
    Meaning
    Acceptance how made and by whom
    Elements of ACCEPTANCE :
    It must be absolute & Unqualified
    It must be communicated to the Offeror
    It must be according to the mode prescribed
    It must be given in specified time
    
16. 16. Every promise and every set of promises, forming the consideration for each other, is an agreement
    An agreement enforceable by law is a contract
    
17. 17. CONTRACT ACT
    Communication ofRevocation :
    The communication of revocation is complete :
    Against the person who makes it when it is put into a course of transmission so as to be out of power of the person who makes it.
    Against the person to whom it is made when it comes to his knowledge.
    
18. 18. CONTRACT ACT
    Communication ofRevocation :
    The communication of revocation is complete :
    Against the person who makes it when it is put into a course of transmission so as to be out of power of the person who makes it.
    Against the person to whom it is made when it comes to his knowledge.
    
19. 19. Consideration
    As per sec 25 a contract without consideration is void. A contract without consideration is called nudumpactum. Means bare promiss.
    Consideration means something in return to the promisor.
    
20. 20. The term consideration is defined as 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
    
21. 21. Elements of consideration
    1) Consideration may move from promisee or any other persons
    2) Consideration must be at the desire of the promisee
    3) Consideration may be past preset or future
    4) Consideration need not be adequate.
    5) Consideration must be real not illusionary
    
22. 22. Privity of contract and cosideration
    Under Indian contract third person in the contract can sue. Privity of consideration is allowed.
    Privirty of contract is third person in the contract he is not the party of contract. There is no offer and acceptance between third party. Privityof contract is not allowed.
    
23. 23. Exception to privity of contract cannot sue.
    1)When a trust is created
    2) Contract through an agent
    3) When a charge is created ona specific immovable property
    4) In case of family arrangement of HUF
    5) When promisee by his act created privity of contract.
    
24. 24. Exception to rule no consideration no contract
    1)Agreement based on love and affection
    2) Agreement to pay past voluntary services
    3) Agreement to pay time bared debt
    4) Gift agreement
    5) Agency
    
25. 25. Capacity to contract
    Capacity means legal ability of a person to enter in to contract. As per sec 10 every person who are competent to enter in to contract if
    He is of the age of majority
    He is of sound minded
    He is not disqualified by law from contracting
    
26. 26. Minor and legal rules
    A person who is not attained the age of majority is a minor.
    Law regarding minors agreements
    Agreement by or with minor is void
    Minor is not bound to return the benefit received(leslieVssheil)
    Minor cannot rectify his act
    Restitution of property in case of fraud
    Minor is liable of necessaries supplied
    Minor as a beneficiaries
    Minoras agent
    Minoras a partner
    Minor as an insolvent
    
27. 27. Persons of unsound mind
    A person is said to be sound minded for the purposeof making contract if at the time of making the contract he is capable of underrating and forming a rational judgment on the contract.
    Following are the persons of unsound mind
    Idiot
    Lunatic
    Drunken
    
28. 28. Person disqualified from contracting
    Foreign ambassadors
    Alien enemies
    Companies
    Professionals
    Felons
    Insolvent
    
29. 29. Free consent
    According to sec 14 the consent is said to e free when it is not caused by
    Coercion
    Undue influence
    Fraud
    Misrepresentations
    Mistake
    
30. 30. When aperson obtainthe consent of the other party by force or under the fear caused by threat of bodily violence and imprisonment he is said to make coercion.
    When the relationship between the parties of a contract is such that one of the party can dominate the will of the other and uses the position to claim an unfair advantages over the others, the contract is caused by undue influences
    
31. 31. Fraud is will full representations made by a party to a contract with the intention of cheating others.
    The representation refers toa statement or assertion made by one party to another either before or at the time of making contract regarding some matters related to the contract.When it is wrongly made it is called misrepresentations
    Mistake is errora) mistake of fact b) mistake of law
    
32. 32. Legality of Object and Considerations
    Under following circumstances object and consideration may be unlawful
    It is forbidden by law
    When it is defeating any provision of law
    When it is fraudulent
    When it cause to injury to a person or property of a person
    When it is opposed public policy or immoral
    
33. 33. Agreement opposed to public policy
    1)Trading withenemy
    2) Champerty and maintenance contract
    3) Agreement for trifling prosecution
    4) Marriage brokerage agreement
    5) Agreement for sale of public office
    6)Agreement to create monopoly
    7)Waiver of illegality
    8) Agreement in restraint of marriage
    9) Agreement in restraint of trade
    10) Agreement between pleader and client
    11) Agreement in restraint of legal proceedings
    12) Agreementfor not to bid
    
34. 34. Wager and contingent contract
    Wager means promise to give money or monies worth up on the determination of an uncertain event in which both parties have no material interest and with mutual chance for gain or loss. Wager means betting
    A contract is said to be contingent when the performancedepends on happening or non happening of certain events. The performance will become due only after happening of certain event
    
35. 35. Discharge of contract
    Discharge of contract means terminating the contractual relationship between the parties to a contract. When the contract is discharged all the right and liability of contracting parties are extinguished and their relationship comes to an end Contract can be discharged by
    By Performance
    By agreement
    By laps of time
    By operation of law
    By impossibility of performance
    By committing breach of contract
    
36. 36. Discharge by performance
    Actual performance
    Attempted performance ( tender)
    Discharge by agreement
    By novation
    By altration
    By recession
    Remission
    By waiver
    Merger
    
37. 37. Discharge by operation of law
    By death
    By insolvency
    Discharge by impossibility of performance
    Impossibility at the time of contract
    Impossibility subsequent to the formation of contract( supervening impossibility)
    Destruction of subject matter
    Death of personal or incapacity of personal
    Contractbecoming
    
38. 38. Remedies for Breach of Contract
    Recession of contract
    Restitution of contract
    Suit for specific performance
    Suit for injunction
    Suit for quantum merit
    suit for damages
    a) general damages
    b)Special damages
    c)Exeplarydamages
    d) Nominal damages
    
39. 39. Quasi contract
    This are relationship created by parties between two person. There is no contractual relationship between two parties.
    Types:
    Necessaries supplied to a person incapable of contracting
    Payment by an interested person(Damodarmudaliar Vs secretary of the state )
    Liability by non gratuitous act
    obligation of finder of goods
    Payment by mistake or coercion (sales tax officer , benares Vs kanhyalal)