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S K Singh
shubhamx430@gmail.com
 Syllabus

1. Indian Contract Act

1872

2. Sale of goods act 1930

 UNIT - 1
Indian Contract Act 1872
(1). Process of building a contract :-
1. Proposal
Offer of a person to another
to perform an activity

2.
When proposal is accepted,
Promise it becomes a promise

3.
All those proposals, in which
Agreement any consideration included

All those agreement, which

4. Contract is enforceable by any low

1A. Proposal - When a person signifies his

willingness to do something or to obtain from doing
something, with the view to obtain the assent of
other, that is called as a proposal.
(there should be an intention to create leagal
obligation.)
Proposal

Positive Negative
( Proposal to do
( proposal for obtain from
something )
doing something )
( Two parties are involved in making a contract - (a).
Promisor - who gives proposal and (b). Promisee - who
accepts the proposal. SK
2d. Consideration -
Something of value that is given by one party to
another in exchange for a promise. That value may be
money, goods, services, or even a promise to perform
any specific activities.
To convert a promise into an agreement, it is
necessary to present any consideration in the promise.
If any consideration is not presented in the promise
then the promise is not considered as an agreement.

2e. Agreement -
All those promises are called as an agreement in
which any consideration are presented. An agreement
is a mutual understanding between two parties to
perform any activities. Agreement is not legally
enforceable according to the Indian Contract Act 1872.

2h. Contract -
All those agreements are considered as a contract,
which is enforceable by contract act or any other law.
Contract is a legally binded agreement between two or
more parties that outline the terms and conditions of
the agreement.
A contract should contain these element - leagal
capacity of the parties to enter into contract, mutual
assent, consideration and lawful purposes etc.

SK
(2). Classification of contract :-
Contracts can be classified based on various
criteria, including their nature, purpose,
enforceability etc.
A. Classification of contract based on
their nature :-
1. Expresed contract
When the terms and conditions of the contract,
expressed in any written or orall form.
2. Implied contract :-
When the proposal accepted on the basis of the
conduct or actions of the parties.
3. Quasi-contract or implied-in-law contract :-
This is not a real contract made by the parties, but
this contract is imposed by the court to prevent unfair
enrichment.
B. Classification of contract based on
their enforceability :-
1. Valid contract :-
A contract that meets all the essential elements
required by law and are legally enforceable.
2. Voidable contract :-
A contract that appears valid but can be avoided or
canceled by the law or by the one or both parties due
to certain legal reasons. A contract that becomes
voidable after formation, is a illegal contract. SK
3. Void contract :-
A contract that lacks essential legal element and
not enforceable by the law.
4. Unenforceable contract :-
A contract that is valid but not enforceable by law
at that time due to legal restriction.

C. Classification of contract based on

their purpose :-
1. Sales/service contract -
The contract made for sale of goods or provide any
service.
2. Lease contract -
Contract made for rental of properties or rental of
any other assets.
3. Employment contract -
Contract that contains terms and conditions
related to the employment.
4. Partnership contract -
Contract made between the parties of the business
enterprise to perform any business activities.

SK
 CHAPTER - I
Communication, acceptance and
Revocation of contract
(3). Acceptance of a contract :-
3. Communication , acceptance or revocation of any
proposal made by any act or omission of the party
proposing. (It is also important to complete the
communication before accepting a contract.

4. Communication of a contract is completed when it

comes to the knowledge of the person to whom it is
made.
5. A proposal may be revoked at any before the
communication of its acceptance is completed, but
not afterwards.
6. A proposal may be revoked by -
1. Communication of notice
2. Lapes of time (when time is not mentioned, then
the reasonable time accepted according to the
court)
3. Failure of conditions
4. Death or insanity
7. To make a contract, the acceptance must be
absolute and unqualified.
8. performance of the conditions or acceptance of any
consideration for a promise proposed, is an
acceptance of the proposal. SK
10. All agreements are contract if they are -
1. Competant to contract
2. Free consent
3. lawful consideration
4. lawful object
5. Not disqualified by law

(4). Capacities of a parties to contract

11. Who are competent to contract -
major ( according to Indian majority act 1875, 18
years)
Sound mind
Not disqualified fro contracting by any law.
12. Sound mind -
If a person is capable to understand the contract
and perform a rational desigion, is said to be a sound
mind. If a person is occasionally unsound mind, they
can make a contract, when he is sound mind.
13. Consent -
When two or more parties agree upon the same
thing in the same sense, called as a consent. Toake a
contract valid, the consent must be free.

14. Free consent -

A consent is said as a free consent, when it is not
caused by -

1. Coercion
2. Undue influence
SK
 3. Fraud
4. Misrepresentation
5.Mistake
15. Coercion :-
Coercion refers to the act of using force, threats or
pressure to make a contract. The activities which are
fall in coercion is written in the Indian Penal Code 1860,
section 45.
threate to strike is a fundamental right, but threate
to suicide is a coercion.
16. Undue influence :-
16(1) - A contract may be induced by undue influence
where the relationship between the parties are such
that one party is in a position to dominate the will of
other and usese that position to obtain an unfair
advantage.
16(2) - A person is considered to be in a position to
dominate the will of other if -
a. When he holds a real authority over the other.
Eg- police over the accused, Income tax authority
over the tax payers etc.
or
where he stands in a trust relation to the other. Eg -
Lawer and client, doctor and patient etc.
b. When he makes a contract with a person whose
mental capacity is affected by the reason of - age ,
illness or mental or bodily distress.
SK
16(3.) - If a person in the position of dominate the
will of other, and he makes contract with them, then
the burden of proof that the contract was not
influenced by any undue influence shall lie upon the
person in a position to dominate the will of other.

17. Fraud :-
A contract is considered as made by fraud If a
party or his agent usese any of these following act to
contract with other -
a. A suggestion is delivered as a fact , to whom other
party believes that is not true.
b. Active concealment of an important fact.
c. A promise made without any intention to perform it.
d. Any other act or omission, declared to be fraudulent
by any law.

18. Misrepresentation :-
Misrepresentation includes -
a. Positive assertion - When other party is not sure
about an information but he uses them to make a
contract and the information turns out wrong.
b. Breach of duty - when a person fails to take his duty
without any intention to take advantage.
c. When a party innocently induces other to make a
mistake in the contract.

SK
19. Voidablity of a contract without free
consent :-
If the consent caused by coercion, undue influence,
fraud or misrepresentation then the contract is a
voidable contract at the option of that party whose
consent was obtained by them. (If he thinks fit then
they can hold the contract till the time to clear the
problems.)

5. Legality of object
23. Unlawful object & consideration :-
An agreement is void if it's object or consideration is -
1. Forbidden by law
2. Of such nature that would defeat provision of any law
3. fraudulent
4. Injury of another person or his property
5. The court reguards it as immoral or opposed to public
policy. SK
 CHAPTER - II
Voidable contracts and void
Agreements
6. Agreement declared Void :-
24. If only a part of object & consideration is unlawful,
then the agreement is void. If two or more agreements
are made in a contract and the agreements are
separated from each other then, if a part of an
agreement is unlawful then that unlawful agreement
will void, not all agreements will void.
25.
1. An agreement without consideration is void.
2. An agreement with inadequate consideration is lawful
when consideration is taken with a free consent
Exception -
An agreement in natural love or affection. Eg.- son
or daughter with mother or father
Promise to compensate for voluntary services.
Promise to pay a time-burred debts
Gift
Charities
Gratuitous bailment
contract of agency
26. 1. Agreement which restrict (or try to restrict) any
marriage is void. Exception - marriage of minors.
2. An agreement to remain unmarried is also a void
agreement
27. Every agreement by which any one is restricted to
excercise a lawful profession, trade or business is an void
agreement. SK
 Exception - Sale of good will in similar business.
eg.- A party who sell the goodwill of a business may
restrict the buyer (another party of agreement) from
carrying the similar business, within the specified local
limit.

28. If an agreement which restrict any legal proceedings

of any person or limit the time within which the person
may enforce his right, is a void agreement.
Exception -
Agreement of arbitration dispute that may arise or
that have already arisen
Guarantee agreement of a bank or a financial
institution.

29. An agreement which is not certain or capable to

made certain , is a void agreement.
Eg.- A agrees to sell to B “a hundred tons of oil”. There is
nothing whatever to show what kind of oil was intended.
The agreement is void for uncertainty.
30. Wagering agreements are void :-
No suit can be imposed to recover the wager amount,
which is made from any uncertain event or game, which
is beyond the control of either party.
Exception -
Horse-race agreement
Section 294A of the IPC not affect by this

SK
 CHAPTER - IV
Performance of contract

Meaning - perform all the promises & fulfill all the

obligation by all the parties, required by the contract.

37. The parties to a contract must either perform, or

offer to perform, their respective promises, unless
such performance is discharged or excused under the
provisions of this Act, or of any other law.
A contract can be discharged by :-
1. by actual performance of the contract or by the
tender for contract and,
2. if the performance of contract becomes impossible
due to illness, death or change in law.
(in case of death of promisor, the representative of the
promisor are bind for performance, unless the
personal skill of promisor is not required to perform.) S K
38. Where a promisor has made an offer of performance
to the promisee, and the offer has not been accepted by
the promisee,
then the promisor is not responsible for non-
performance, and he doesn't lose his rights under the
contract.
Every offer must fulfill these following conditions :-
1. It must be absolute or unconditional
2. It must be made at a proper time and place
3. if the offer is an offer to deliver anything to the
promisee, the promisee must have a reasonable
opportunity to check that the thing offered is the
thing which the promisor bound to deliver.
( Example )

39.
When the promisor absolutely refuses to perform the
contract even before the due date of performance , it is
known as an anticipatory breach of contract.
In this situation, the promisee may put an end
to the contract. If the promisor want to continue that
contract after the anticipatory breach of contract then
he need to take the assent of promisee.
If the promisee give him the permission to continue
the contract, then he can't put an end to the contract
after that. The promisee is also entitled to demand
compensation for the damages of anticipatory breach
of contract even if they continue the contract.
( Example )
SK
 Contract which must be performed by whom

40. A contract must be performed by promisor himself,

if the personal skill is needed to perform the contract.
While personal skill is not required then the
performance of contract may be done by the promisor,
his representative or by any third party who is
employed by the promisor.

41.If the promisee accepts the performance of contract

from any third party ,
He can't afterward enforce it again the promisor.
The third person who agreed to perform the promise on
the behalf of promisor, is liable for the performance of
contract same as the promisor was.
42. Devolution or transfer of joint liabilities -
When two or more persons have made a joint
promise, then :-
All the joint promisors must perform the contract if
they are alive.
After the death of any of them, his representative
must perform jointly with survivors promisor.
After the death of last survivor, representatives of
the all promisors must perform the contract.

43. Any one of joint promisors may be compelled to

perform
When two or more persons have made a joint
promise, the promisee may compel any one or more
promisors to perform the whole of promises. SK
Each promisor may compel contribution
Each of two or more joint promisors may compel
every other joint promisor to contribute equally with
himself to the performance of the promise.

Sharing of loss by default in contribution

If any one or more promisors default in such
contribution, the remaining joint promisors must bear
the loss arising from such default in equal shares.

44. In case of joint promise, if the promisee release any

one of the promisor ,
then the responsibilities of that promisor can't
discharged. The remaining promisors are not liable to
perform the promise of that released promisor.

45. Devolution of joint right -

When one person has made a promise with two or
more persons jointly, then -
All promisee can claim the performance of
promises.
After the death of a promisee his
representative can claim the performance of
promise with remaining alive promisee.
After the death of all promisee, the
representative of all promisee can claim the
performance of promises.

SK
 Time and place for performance of contract :-
46. When no application is made and no time is
mentioned to perform the contract,
Then the promisor has undertaken to perform
without application by the promisee. And the promise
must be performed within reasonable time.

47. Time and place for performance of promise, where

time is specified but no application is to be made,
In this situation , the promisor has undertaken to
perform the contract without any application by the
promisee. The promisor may perform it at any time
during the usual business hours.

48. Time and place for performance of promise, Where

time is specified and application is to be made,
In this situation , it is the duty of promisee to apply
for performance. The promisor has not undertaken to
perform without application by the promisee.

49. Place for performance of promise, where no

application to be made and no place fixed for
performance,
it is the duty of the promisor to apply to the promisee
to appoint a reasonable place for the performance of the
promise, and to perform it at such place.

50. When Performance in manner or at time prescribed

or sanctioned by the promisee -
The promisor entitled to perform in that manner,
which is prescribed by the promisee.
SK
 Performance of reciprocal promise :-
Reciprocal promise is that promise which becomes
the consideration or a part of consideration for each
others. In the reciprocal promise, two party make
mutual promise to do something for each other.

51. When a contract consists reciprocal promise to be

simultaneously perform,
No promisor need to perform his promise unless the
promisee is ready and willing to perform his reciprocal
promise. Illustration -
If A and B contract that A shall deliver goods and B paid
to A at the time of delivery.
A need not to deliver goods, unless B is ready and
willing to pay for goods on delivery.
B need not pay for the goods, unless A is ready and
willing to deliver them on payment
52.Order of the performance of reciprocal promise -
The promise must be performed in the order,
expressly fixed by the contract. If the order is not
mentioned in the contract, then the promise shall be
performed according to the nature of transaction
required.
53. Liability of party, preventing event on which the
contract is to take effect -
When a contract contains reciprocal promises, and
one party to the contract prevents the other from
performing his promise, the contract becomes voidable
at the option of the party who prevented. SK
And he is also entitled to compensation from the other
party for any loss.
54. Effect of default as to that promise which should be
first performed -
When a contract consists the reciprocal promise and if
any of one party fails to perform his promise then , they
can not claim the performance of reciprocal promise,
and must make compansation for other party.
55. Effect of failure to perform at fixed time, in contract
in which time is essential
When a party to a contract promises to do a certain
thing at or before a specified time, but fails to do such
things or before the time, then the contract becomes
voidable at the option of promisee.
Effect of such failure when time is not essential -
When the time is not essential for the contract, the
contract does not become voidable by the failure to
do such thing at or before the specified time. But the
promisee is entitled to compensation from the
promisor for any loss occurred by such failure.
Effect of acceptance of performance at time other than
that agreed upon -
If, in case of a contract voidable on account of the
promisor's failure to perform his promise at the time
agreed, the promisee accepts performance of such
promise at any time other than that agreed, the
promisee cannot claim compensation for any loss
occasioned by the non-performance of the promise at
the time agreed. SK
56. Agreement to do impossible act — An agreement to
do an act impossible in itself is void.

Contract to do an act afterwards becoming impossible

or unlawful -
When an act of any contract becomes impossible or
unlawful after the contract is made, then the contract
becomes void.
Compensation for loss through non-performance of act
known to be impossible or unlawful,
Where one person has promised to do something
which he knew, and which the promisee did not
know, to be impossible or unlawful, such promisor
must make compensation to such promisee for any
loss.
57. When a part of Reciprocal promise is legal, and also
other part is illegal,
Then the legal part of promise considered as a legal
contract and the illigal part of reciprocal promise
becomes a void agreement.
58. When one branch being illegal of alternative
promise,
In the case of an alternative promise, one branch of
alternative promise is legal and the other illegal, the
legal branch alone can be enforced.

SK
 Appropriation of payment
( Or, application or use of payments )

59. Application of payment where debt to be discharged

is indicated,
Where a debtor owing several debts from one person,
and he makes a payment. If the debtor indicates that
the payment made for discharge a specific debt and
the creditor accepts the request of creditor, then the
creditor shall bound to discharge that specific debt.
60. Application of payment where debt to be
discharged is not indicated,
Where a debtor owing several debts from one person,
and he makes a payment, but he doesn't indicate for
which debt the payment is to be applied. Then the
creditor may apply the payment at his own sense to
that debt which is due.
61.Application of payment where neither party
appropriates,
Where neither party makes any decision for
appropriation of a payment, then -
The payment shall be applied in discharge of debt
in order of the time of debt.
If the time of two or more debts are same , then the
payment shall applied in discharge of each
proportionally.

SK
 Contracts which need not to perform

38. When the promisee rejects the tender of

performance.

56. When performance becomes impossible.

62. Effect of renewal, cancellation and alteration of

contract
If the parties to a contract agree to substitute a
new contract for it, or to cancel or alter it, then the
original contract, need not be performed.
63. Promise may dispense or remit the performance of
promise
The promisee may dispense with wholly or a part of
promise, and the promisee also may extend the time
for such performance. In this situation the promisor
will not be liable for non - performance of promise.
64. Consequences of rescission (cancellation) of
voidable contract,
When a person at whose option a contract is voidable
rescinds it, the other party need not perform any
promise. if he have received any benefit from another
party to such contract, restore such benefit to the
person from whom it was received.
65. Obligation of person who has received advantage
under void agreement, or contract that becomes void,
The person is bound to restore it, or to make
compensation for it to the person from whom he
received it.
SK
66. Mode of communicating or revoking rescission of
voidable contract,
The rescission of a voidable contract may be
communicated or revoked by the same rules, as
apply to the communication or revocation of a
proposal.

67. Effect of neglect of promisee to give reasonable

facilities for performance to the promisor,
In this case the promisor need not to perform and
also the promisor excused by such neglect to any
non-performance of the promise.

Discharge of contract

By actual performance By frastation of contract

of contract

By frastation of contract - It means, if the contract

becomes impossible or illegal because of an
incident, which is beyond the control of both
parties.
Eg.- Contract becomes impossible or illegal
because change in law,

SK
 CHAPTER - VI
Consequences of breach of contract
Remedies for breach of contract

73. Compensation for loss or damage caused by breach

of contract,
When a contract has been broken, the party who
suffers by such breach is entitled to receive the
compansation, from the party who has broken the
contract, for any loss or damage caused to him.

sec.73, para 1
The party who suffered a loss by breach of
contract, can claim the natural or ordinary loss.
special damages, if the parties had knowledge - the
party is entitled to claim special damages, which
the parties knew, when the contract made.
sec.73, para 2
No compensation is allowed for any remote and
indirect loss or damage sustained by reason of the
breach of contract
sec.73, para 3
non-performance of obligations of quasi contract,
is also a breach of contract. The compansation for
breach of quasi contract shall be same as other
contract.

SK
74.Compensation for breach of contract where penalty
prescribed,
The party is entitled to receive the reasonable
compansation, which must not exceeding the
prescribed penalty.

75.Party rightfully rescinding the contract, entitled to

compensation,
Person who rightfully rescinds (canceling) a
contract is entitled to compensation for any damage
which he has sustained through the non-fulfilment of
the contract.

Sec. 76 to 123
( has been Repealed and made )

Sale of goods act,

1930

SK