INDIAN CONTRACT ACT 1872

GUNJAN KUMAR

CONTRACT
CONTRACT MAY BE DEFIND AS AN AGREEMENT WHICH CREATES RIGHTS AND OBLIGATIONS BETWEEN THE PARTIES. THESE RIGHTS AND OBLIGATIONS MUST BE OF SUCH A NATURE THAT THESE CAN BE CLAIMED IN THE COURT OF LAW.

THREE MAJOR COMPONENTS

1. AGREEMENT 2. OBLIGATION 3. ENFOCEABILITY

AGREEMENT
THE CONTRACT IS FORMED ONLY ON THE BASIS OF AGREEMENT. IT IS A COMBINED EFFECT OF OFFER AND ACCEPTANCE. AGREEMENT= OFFER+ACCEPTANCE ACCORDING TO SECTION 2(e) AGREEMNT IS A PROMISE OR A SET OF PROMISE FORMING CONSIDERATION FOR EACH OTHER

ESSENTIALS OF A VALID CONTRACT

1. AGREEMENT 2. CREATION OF LEGAL RELATIONSHIPLEGAL RELATIONSHIP CONSISTS OF RIGHTS AND OBLIGATIONS WHICH CAN BE CLAIMED BY THE PARTIES IN THE COURT OF LAW. THE PARTIES MAKE AN AGREEMENT WITH AN INTENTION TO CREATE LEGAL RELATIONSHIP. CASE LAW- BAL FOUR Vs. BAL FOUR(1919)

3. LAWFUL CONSIDERATION
AGREEMENT IS A MUTUAL EXCHANGE OF PROMISES BETWEEN PARTIES. EACH PARTY MAKING A PROMISE GETS SOMETHING IN RETURN OF HIS PROMISE. IT CONSTITUTES A CONSIDERATION FOR HIS PROMISE.

4. CONTRACTUAL CAPACITY
THE PERSON TO HAVE CONTRACTUAL CAPACITY MUST SATISFY THE FOLLOWING CONDITIONS1. HE MUST BE A MAJOR AGE AND NOT A MINOR 2. HE MUST BE OF SOUND MIND AND NOT LUNATIC 3. HE MUST NOT HAVE BEEN DECLARED DISQUALIFIED BY LAW.

5. FREE CONSENT OF THE PARTIES

THE CONSENT IS SAID TO BE FREE IF IT HAS NOT BEEN INDUCED BY ANY ONE OF THE FOLLOWING FACTORS-: 1. COERCION 2. UNDUE INFLUENCE 3. MISREPRESENTATION 4. FRAUD 5. MISTAKE

6. LAWFUL OBJECT OF AGREEMENT

THE OBJECT OF AN AGREEMENT MUST BE TO DO SOME ACT WHICH IS LEGAL. CONTRARY TO IT, AGREEMENTS MADE FOR DOING SOME THING ILLEGAL,IMMORAL OR AGINST PUBLIC POLICY, CANNOT BE ENFORCED IN THE COURT OF LAW.

7. AGREEMENTS NOT DECLARED EXPRESSLY VOID

THERE ARE CERTAIN AGREEMNTS WHICH HAVE BEEN EXPRESSLY DECLARED VOID BY THE LAW. THUS AN AGREEMENT MADE BY PARTIES SHOULD NOT FALL IN THIS CATEGORY.

8. CERTAINTY IN THE MEANING OF AGREEMENT

AGREEMENT MADE BY THE PARTIES MUST BE CERTAIN OR CAPABLE OF BEING MADE CERTAIN IN ITS MEANING. AGREEMENT WITH UNCERTAIN MEANING WILL BRING UNCERTAINTY IN THE RIGHTS AND OBLIGATIONS CREATED BY IT AND THESE RIGHTS AND OBLIGATIONS CANNOT BE ENFORCED IN THE COURT OF LAW.

9. OTHER LEGAL FORMALITIES

AGREEMENT TO BE ENFORCED, NEEDS TO SATISFY OTHER CONDITIONS OF BEING IN WRITING , REGISTERED AND DULY STAMPED.

CLASSIFICATION OF CONTRACTS

ON THE BASIS OF FORMATION

1. EXPRESS CONTRACTEXPRESS CONTRACTS RESULTS FROM EXPRESS AGREEMENTS AND EXPRESS AGREEMENT IS FORMED BY MAKING OFFER AND GIVING ACCEPTANCE IN THE WORDS SPOKEN OR WRITING.

2. IMPLIED CONTRACT
IN THIS TYPE OF CONTRACT ONE OF THE PARTY CONDUCT HIMSELF OR DOES SOME ACT WHICH IS BEING ACCEPTED BY OTHER PARTY EITHER BY HIS CONDUCT OR COURSE OF HIS DEALINGS OR CIRCUMASTANCES.

3. QUASI CONTRACTS
THESE CONTACTS ARE BASED ON THE PRINCIPLE OF JUSTICE AND EQUITY. IN SPITE OF NOT HAVING CONTRACT BETWEEN PARTIES , THE RIGHTS AND OBLIGATIONS ARE CREATED BY OPERATION OF LAW RATHER THAN OFFER AND ACCEPTANCE.

ON THE BASIS OF PERFORMANCE

1. EXECUTED CONTACTON THE COMPLETE DISCHARGE OF THE OBLIGATIONS BY THE PARTIES , THE CONTRACT IS SAID TO HAVE BEEN EXECUTED. 2. EXECUTORY CONTRACTTHE CONTRACT HAS NOT BEEN YET PERFORMED.

ON THE BASIS OF VALIDITY

1. VALID CONTRACT- CONTRACT IS SAID TO BE VALID IF IT SATISFIES ALL CONDITIONS REQUIRED FOR ITS ENFORCEABILITY. 2. VOID CONTRACT- A CONTACT WHICH CEASES TO BE ENFORCEABLE BY LAW BECOMES VOID 3. VOID AGREEMENT- AGREEMENT WHICH IS NOT ENFORCEABLE BY LAW IS VOID AGREEMENT.IN OTHER WORDS IF IT LACKS ANY ONE OF THE ESSENTIAL S OF VALID CONTRACT IT IS CALLED VOID.

4. VOIDABLE CONTRACT- AN AGREEMENT WHICH IS ENFORCEABLE BY LAW AT THE OPTION OF ONE OR MORE PARTIES , BUT NOT AT THE OPTION OF OTHER OR OTHERS IS A VOIDABLE CONTRACT. 5. ILLEGAL CONTRACT- IF THE OBJECT IS ILLEGAL THE CONTRACT IS SAID TO BE ILLEGAL. 6. UNENFORCEABLE CONTRACT- IF DUE TO SOME TECHNICAL REASONS THE CONTRACT MAY NOT BE ALLOWED TO BE ENFORCED IN THE COURT.IT IS UNENFORCEABLE CONTRACT.