Contents:

1. Introduction
2. History
3. Essentials of contract
4. Form of contracts
5. Damages
6. Conclusion
7. Bibliography

Contract:

A contract is a voluntary arrangement between two or more parties that is enforceable by

law as a binding legal agreement. Contract is a branch of the law of obligations in jurisdictions of
the civil law tradition. Contract law concerns the rights and duties that arise from agreements. A
contract arises when the parties agree that there is an agreement. Formation of a contract
generally requires an offer, acceptance, consideration, and a mutual intent to be bound. Each
party to a contract must have capacity to enter the agreement. Minors, intoxicated persons, and
those under a mental affliction may have insufficient capacity to enter a contract. Some types of
contracts may require formalities, such as in writing. At common law, the elements of a contract
are offer, acceptance, intention to create legal relations, and consideration. Not all agreements
are necessarily contractual, as the parties generally must be deemed to have an intention to be
legally bound. A so-called gentlemen's agreement is one which is not intended to be legally
enforceable, and which is "binding in honor only".

History of Indian Contract Act, 1872:

Prior to the enactment of the Indian Contract Act, 1872, the English Law is applied into
the Presidency towns of Madras, Bombay and Calcutta by the Charter granted in 1726 by King
George I to the East India Company. In 1781, the Act of Settlement was passed by the British
government which says that in the matters of inheritance and succession, contracts dealing with
parties in the case of Mohammedans and Hindus, their respective laws were considered. In cases
where only one of the parties is a Mohammedan or Hindu, the laws and usages of the defendant
is considered. This rule was applied in the Presidency Towns. In places outside the presidency
towns, judgment was decided according to the justice, equity and good conscience. The Indian
Contract Act, 1872 initially also dealt with Sale of Goods, Indemnity and Guarantee, Law of
Bailment, Agency and Partnership. However, in 1930, a separate Act on the Sale of Goods was
passed. The Indian Partnership Act was passed in 1932.

According to Indian Contract Act, 1872, the definition of contract is in section 2(h). “An
agreement enforceable by law is a contract.” This act deals about essentials, competency, and
agreements.

Essentials:

The essential elements of a Contract are defined in Section 10 of the Indian Contract Act, 1872.

“All agreements are contracts if they are made by the free consent of parties competent to
contract, for a lawful consideration and with a lawful object, and are not hereby expressly
declared to be void. —All agreements are contracts if they are made by the free consent of
parties competent to contract, for a lawful consideration and with a lawful object, and are not
hereby expressly declared to be void." Nothing herein contained shall affect any law in force in
[India], and not hereby expressly repealed, by which any contract is required to be made in
writing or in the presence of witnesses, or any law relating to the registration of documents.”

To be precise these are elements of contracts:

 Agreement - Offer and Acceptance

 Legal purpose
 Lawful Consideration
 Capacity to contract
 Consent to contract
 Lawful object
 Certainty
  Possibility of Performance
 Not expressly declared void
 Legal formalities like Writing, Registration etc.

Essentials of each sub heading are required

Agreement - Offer and Acceptance:

The parties to the contract should have a mutual understand regarding the subject-matter of the
contract. There must be a "lawful offer" and "lawful acceptance" thus resulting in an agreement.
The parties must have agreed to the subject-matter in the same sense.

Legal purpose:

There must be an intention among the parties that the agreement should be attended to by legal
consequences and create legal obligation. Agreements of social or domestic nature do not
contemplate legal relations.

Lawful Consideration:

Consideration means 'something in return'. In every legal contract, there must be something in
return. An agreement is legally capable to be enforced only when each of the parties to it gives
something and gets something. The consideration should not be unlawful, illegal, immoral or
opposed to public policy.

Capacity to contract:

Every person who enters into a contract must be competent. In other words, the person should be
of the age of majority, should have a sound mind, and must not be disqualified from any law to
which they subject. Minors, lunatics, unsound and intoxicated persons are incompetent to enter
into a contract. However, there are exceptions as defined in Section 68. In case of an exception
the minor or lunatic is not personally liable.

Consent to contract:
All the parties must have agreed upon the subject matter of the agreement in the same sense.
Section 14 says that if the agreement is induced by coercion, fraud misinterpretation or mistake,
it is said to be "no free consent" and such a contract is voidable and cannot be enforceable by
law.

Lawful object:

If the object in the agreement is unlawful, the agreement is void.

Eg: The landlord cannot recover rent through court of law when he knowingly lets his house to
carry on prostitution.

Certainty:

Every agreement of the contract must be certain. If the agreement is not certain or incapable of
being made certain, it is void.

Possibility of Performance:

Every contract must be capable of performance. Otherwise, the agreement is void. An agreement
to do an impossible act whether physically or legally, is void.

Not expressly declared void:

The agreement must not have been expressly declared to be void under the Act. Examples of
such agreements are restrainment of trade, marriage, legal proceedings and wagering agreements.
Such agreements are not enforceable by law.

Legal formalities like Writing, Registration etc.:

A contract may be oral or in writing according to the Indian Contract Act. In certain special cases
the agreement must be in written. In some cases like contracts by companies, selling or buying of
shares etc., the contract must be registered.
All the above ingredients must be satisfied in every valid contract. It can be noted that all
contracts are agreements, but not all agreements are contracts.

Forms of contract:

Law of contracts in India defines Contract as an agreement enforceable by law which offers
personal rights, and imposes personal obligations, which the law protects and enforces against
the parties to the agreement. The general law of contract is based on the conception, which the
parties have, by an agreement, created legal rights and obligations, which are purely personal in
their nature and are only enforceable by action against the party in default.

Section 2(h) of the Indian Contract Act, 1872[2] defines a contract as "An agreement enforceable
by law". The word 'agreement' has been defined in Section 2(e) of the Act as ‘every promise and
every set of promises, forming consideration for each other’

 Law of Contract and Contribution of Lord Denning:

Lord Denning was perhaps the greatest law-making judge of the century and the most
controversial. His achievement was to shape the common law according to his own highly
individual vision of society. Lord Denning was one of the most celebrated judges of his time. He
is popular as a dissenting judge.

Lord Alfred Thompson Denning (1899-1999) was a Populist English judge whose career
spanned 37 years. He was known as a fighter for the underdog and a protector of the little man's
rights against big business. He served for 20 years as the head of the Court of Appeals, one of the
most influential positions in the English legal system. Denning was a controversial judge who
was often the dissenting voice on the bench. His decisions were based more on his religious and
moral beliefs than the letter of the law and he was often criticized for his subjectivity. Denning
retired from the bench in 1982 under a cloud of controversy regarding some racially insensitive
views that he published. Denning continued to publish books during his retirement and died at
the age of 100....

 Validity & formation of a Contract:

According to legal scholar Sir John William Salmond, a contract is "an agreement creating and
defining the obligations between two or more parties" For the formation of a contract the process
of proposal or offer by one party and the acceptance thereof by the other is necessary. This
generally involves the process of negotiation where the parties apply their minds make offer and
acceptance and create a contract.

 Standard Form Contracts:

The law of contract has in recent time to face a problem, which is assuming new dimensions.
The problem has arisen out of the modern large scale and widespread practice of concluding
contracts in standardized form. People upon whom such exemption clauses or standard form
contracts are imposed hardly have any choice or alternative but to adhere. This gives a unique
opportunity to the giant company to exploit the weakness of the individual by imposing upon
him terms, which may go to the extent of exempting the company from all liability under
contract. It is necessary and proper that their interests should be protected. The courts have
therefore devised some rules to protect the interest of such persons

Post-Termination non-compete clauses in employment contracts:

Indian courts have consistently refused to enforce post-termination non-compete clauses in

employment contracts, viewing them as “restraint of trade” impermissible under Section 27 of
the Indian Contract Act, 1872 (the Act), and as void and against public policy because of their
potential to deprive an individual of his or her fundamental right to earn a livelihood

Contract- II: Bailment:

Contracts of Bailment are a special class of contract. These are dealt within Chap. IX from S.148
to 181 of the Indian Contract Act, 1872. Bailment implies a sort of one person temporarily goes
into the possession of another. The circumstance in which this happens are numerous. Delivering
a cycle, watch or any other article for repair, delivering gold to a goldsmith for making
ornaments, delivering garments to a drycleaner, delivering goods for carriage, etc. are all familiar
situations which create the relationship of ‘Bailment’.
E-Contracts:

It’s an undisputed fact that E-Commerce has become a part of our daily life. One such
justification for the popularization of E-Commerce would be immoderate technological
advancement. E-Commerce, as the name suggests, is the practice of buying and selling goods
and services through online consumer services on the internet. The ‘e’ used before the word
‘commerce’ is a shortened form of ‘electronic’. The effectiveness of E-Commerce is based on
electronically made contracts known as E-Contracts. Although E-Contracts are legalized by
Information Technology Act but still majority feels insecure while dealing online. The reason
being lack of transparency in the terms & conditions attached to the contract and the jurisdiction
in case of a dispute that may arise during the pendency of a transaction with an offshore site

Specific performance of Contracts:

Specific performance is equitable relief, given by the court to enforce against a defendant, the
duty of doing what he agreed by contract to do. Thus, the remedy of specific performance is in
contrast with the remedy by way of damages for breach of contract, which gives pecuniary
compensation for failure to carry out the terms of the contract. Damages and specific
performance are both, remedies available upon breach of obligations by a party to the contract;
the former is a ‘substitutional’ remedy, and the latter a ‘specific’ remedy. The remedy of specific
performance is granted by way of exception.

Standard Form Contract:

The Law of Standard Form Contracts rests on intuitions of the common mass. This research
paper explores these intuitions and examines intended consumer behavior on common
contracting contexts. Firstly, the research paper focuses on the need of Standard Form Contracts
and its justification. After the clear explanation of the term and its use in the practical world, the
focus shifts to the legal issue, as to what are the problems with the issuance of Standard Form
Contracts on a large scale, and how it can prove to be of exploitative nature. Further, the paper
discusses the basic tendency of the consumers towards the acceptance of the Standard Form
Contracts, the reasons for such acceptance and how the party issuing the Standard Form Contract
can take advantage of the consumer’s ignorant behaviour

Section 65 of the Indian Contract Act, 1872 with special reference to Discharge of a Contract by
Frustration: The effects of frustration with special reference to the restitution of advantages or
benefits received by a party, not entitled to such advantage or benefit. On account of an
agreement being deemed void, subsequent to certain obligations being fulfilled by either party,
there would continue to subsist, rights to make good the loss caused. Section 65 of the Indian
Contract Act, 1872, states

Contract Ratification:

Ratification is in law equivalent to previous authority it may be expressed or it may be affected

impliedly by conduct. Section 196 and 197 of the act show that an act done by person who is not
authorized to do it, but who purports to act as an agent for another person, can retrospectively
ratified by such other person. From this it follows logically, that such an act on the part of the
person purporting to act as agent is not void but voidable. If it is not ratified it becomes void but
if it is ratified it will be validated.

Relevance of Quasi-Contracts:

There are certain situations wherein certain persons are required to perform an obligation despite
the fact that he hasn’t broken any contract nor committed any tort. For instance, a person is
obligated to restore the goods left at his home, by mistake, and keep it in good condition. Such
obligations are called quasi-contracts

Choice of law by the parties to the contract:

In this era of globalization where a contract contains one or more foreign elements, the difficult
and complicated question in proceeding that arises is that of ascertaining its applicable law. Such
difficulty stems from the multiplicity and diversity of connecting factors and each of them may
arise in a different jurisdiction for instance the place where the contract was made; the place of
performance; the place of business of the parties; the place of payment; the currency of payment;
domicile or nationality o the parties and so on. So to avoid this situation parties are granted with
the freedom to select the law to govern their contract under the provisions of Rome convention.
The inclusion of a choice of law clause is such an everyday matter in international contracts that
its absence would be to ignore commercial realities.

E-contracts & issues involved in its formation:

With the advancements in computer technology, telecommunication and information technology

the use of computer networks has gained considerable popularity in the recent past, computer
networks serve as channels between for electronic trading across the globe. By electronic trading
we don’t just mean the use of computer networks to enter into transaction between two human
trading partners by facilitating a communication but electronic trading or electronic commerce
also means those contracts which are entered between two legal persons along with the aid of a
computer program which acts as an agent even when it has no conscious of its own but also by
initiating it

Doctrine of Frustration & Force-Majeure Clause:

The requirements of Force-Majeure are:

(a) It must proceed from a cause not brought about by the defaulting party’s default.

(b) The cause must be inevitable and unforeseeable.

(c) The cause must make execution of the contract wholly impossible.

The Calculation of Damages in EPC Contracts in India:

The engineering & construction industry, especially that in India, is dynamic and highly volatile,
making it susceptible to tremendous amounts of litigation and other forms of alternative dispute
resolution. The rapid and substantial growth in the magnitude of this industry has resulted in the
increased need for information about the rights and obligations of the various players involved in
the execution of a particular work of construction. It has become essential that proper attention is
given to assert one’s rights and discharge one’s obligations as laid down by the law and also by a
correct understanding of the meaning and interpretation of the terms of the contract governing
such relationships, as otherwise the basis of estimates and calculations made will become
infructuous.

DAMAGES:

Liquidated Damages:

The Indian Contract Act, 1872, provides a basic structure of the law of contract in India, its
enforcement, various provisions regarding non-performance and the breach of contract. This
report is aimed to highlight provisions regarding liquidated damages in case of the breach of the
contract and to bring about a comparative study between India and England regarding it. Thus,
before knowing what exactly liquidated damages are, it is important to understand the
consequences of breach of contract and the damages awarded in case of breach. A party who is
injured by the breach of a contract may bring an action for damages and Damages means
compensation in terms of money for the loss suffered by the injured party. Thus, in contract
when these damages are awarded it is known as liquidated damages
Express contract:

An exchange of promises in which the terms by which the parties agree to be bound are declared
either orally or in writing, or a combination of both, at the time it is made. Whether oral or
written, the contract must manifest a mutual intent to be bound expressed in a manner capable of
being understood, and include a definite offer, unconditional acceptance and consideration.
Express contracts consist of agreements in which the terms are stated by the parties. The terms
may be stated orally or in writing. But the contract as a whole must reflect the intention of the
parties. As a general rule, if an express contract between the parties is established, a contract
embracing the identical subject cannot be implied in fact, as the law will not normally imply a
substitute promise or contract for an express contract of the parties.

Implied contract:

An implied contract is an agreement created by actions of the parties involved, but it is not
written or spoken. An implied contract is a legal substitute for a contract that is assumed to have
been drawn. In this case, there is no written record nor any actual verbal agreement. Contracts
implied in fact are inferred from the facts and circumstances of the case or the conduct of the
parties. However, such contracts are not formally or explicitly stated in words. The law makes no
distinction between contracts created by words and those created by conduct. Thus, a contract
implied in fact is just as binding as an express contracts that arises from the parties’ declared
intentions, with the only difference being that for contracts implied in fact courts will infer the
parties’ intentions from their business relations and course of dealings.

An express contract is differs from a contract implied in fact only in the mode of manifesting
assent and the mode of proof required; the distinction involves no difference in legal effect.
Both forms of contract require mutual assent and a meeting of the minds, but an express contract
is proved by an actual agreement where a contract impled in fact is proved by circumstances and
the conduct of the parties.
Executed Contract:

An executed contract is a legal document that has been signed off by the people necessary for it
to become effective. The contract is often made between two or more people, but it can also be
between a person and an entity, or two or more entities. Contracts often specify that one party
will provide a service or goods to the other, and are not fully effective until all parties involved
have signed. Some contracts even require the signatures be witnessed. Executed Contract means
a contract that has been fully performed by both parties. In other words, a contract whose terms
have been completely fulfilled. It could also mean a signed contract. Once all parties sign the
contract and the transaction is closed, the contract is considered an executed contract.

Executory Contract:

An executory contract is a contract that has not yet been fully performed or fully executed. It is a
contract in which both sides still have important performance remaining. However, an obligation
to pay money, even if such obligation is material, does not usually make a contract executory.
An obligation is material if a breach of contract would result from the failure to satisfy the
obligation. A contract that has been fully performed by one party but not by the other party is an
executory contract. An executory contract is a contract made by two parties in which the terms
are set to be fulfilled at a later date. The contract stipulates that both sides still have duties to
perform before it becomes fully executed. The contract is often in place between a debtor or
borrower and another party. To explore this concept, consider the following executory contract
definition.

Bilateral:

An agreement formed by an exchange of a promise in which the promise of one party is

consideration supporting the promise of the other party. A bilateral contract is distinguishable
from a unilateral contract, a promise made by one party in exchange for the performance of some
act by the other party. The party to a unilateral contract whose performance is sought is not
obligated to act, but if he or she does, the party that made the promise is bound to comply with
the terms of the agreement. In a bilateral contract both parties are bound by their exchange of
promises.