All agreements are not contracts but all contracts are

agreements.

Essential elements to make an agreements

• Two or more parties
• Offer and acceptance
• Consideration (something in return)
• Consent
All agreements are not contracts but all contracts are agreements.
section 10 of Indian Contract Act, 1872
Essential elements of a contract
• Offer and Acceptance
• Intention to create legal relationship
• Lawful Consideration
• Capacity of parties- competency
• Free and Genuine Consent
• Lawful Object
• Agreements not declared Void
• Certainty and possibility of performance
• Legal formalities
Classification of Contracts
Contract may be classified according to their
• Validity
• Formation
• Performance
1) Classification according to Validity
• Voidable contracts section 2(i) sec 13 to 19
• Void agreements sec 2 g
• Void contract section 2 (g)
• Illegal Agreements
• Unenforceable contracts
A contract becomes voidable in the following two cases
1) When a person promises to do something for another person for a consideration, but the other person prevents
him from performing his promise, the contract becomes voidable at the option of party who wants to perform
2) When a party to a contract promises to perform an obligation within a specied time, any failure on his part
to perform his obligation within the fixed time makes the contract voidable at the option of the promise. Sec 55
2)Classification according to Formation
• Express Contract sec 9
• Implied contract sec 9
• Quasi contract sec 68 to 72
• E-Contract

3)Classification according to Performance

• Executed contract
• Executory contract
• Unilateral or one sided Contract
• Bilateral contract
2. Interpretation-clause
In this Act the following words and expressions are used in the following senses,
unless contrary intention appears from the context:
(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 either to such act or abstinence, he is said to make a proposal;
(b) When the person to whom the proposal is made, signifies his assent thereto,
the proposal is said to be accepted. A proposal, when accepted, becomes a promise;
(c) The person making the proposal is called the "promisor", and the person accepting
the proposal is called "promisee",
(d) 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;
(e) Every promise and every set of promises, forming the consideration for each other, is an agreement;
(f) Promises which form the consideration or part of the consideration for each other, are called reciprocal promises;
(g) An agreement not enforceable by law is said to be void;
(h) An agreement enforceable by law is a contract;
(i) An agreement which is enforceable by law at the option of one or more of the parties thereto,
but not at the option of the other or others, is a voidable contract;
(j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.
Work sheet 1
1)Law of contract is ----
a)not the whole law of agreements nor is it the whole law of obligations b) the whole law of obligations
c) The whole law of agreements d)none
2)A contract creates
a)Right in personem, b) right in rem C)only rights and no obligations d) only obligations and no rights
3)An agreement is a voidable contract when it is
a)Enforceable if certain conditions are fulfilled b)enforceable by law at the option of aggrieved party
c)Enforceable by both the parties d)not enforceable at all
4)An agreement not enforceable by law is said to be
a)Void b)voidable c)valid d) unenforceable
5)A contract----
a)May be void as originally as originally entered into b)may become void subsequent to its formation
c) cannot become void under any circumstances d) may become void at the will of the party
6)A contract is
a) A legal obligation b) an agreement plus legal obligation
b) c) consensus ad idem d)an agreement plus a legal object
7)Flaw in capacity to contract may arise from a) lack of free consent b) lack of consideration
c) minority d)absence of legal formalities
True or false
1)There can be a contract even without consensus ad idem
2)The law of contract is the law of those agreements which create obligations, and those
obligations which
have their sources in agreements
3)An agreement which is enforceable at the option of the either party is a voidable contract
4)A void contract is one which is void ab initio
5)A void agreement does not create any legal obligations
6)An illegal agreement is not only void as between the immediate parties but even the collateral
transactions to it become tainted with illegality
7)All agreements between parties are enforceable in a court of law
8)In an executed contract both the parties yet to fulfill their obligations
(a)Offer and acceptance

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 either to such act or abstinence, he is said to make a proposal
Proposer or promisor or Offeror
The person to whom the proposal is made is called as the propose, promise or
offeree

How an offer is made

Offer must be made by express words, spoken or written and also be implied
from the conduct of the parties or the circumstances of the case.
Essentials of a valid offer
1)Offer must be of creating legal relations
Offer Must not be a casual statement. certain forms of agreements do not reach the
status of a contract
Family or domestic relations
In term of general rules of family or domestic relations, there is no presumption to
be legally binding. Otherwise, in term of exception the presumption is rebuttable.

Farina v Fickus, 1900(just an expression of an intention but not a firm offer capable
of acceptance)
Balfour v Balfour, 1919
Rose Frank & Co. v Crompton Brothers Ltd, 1923
Jones v Padavatton 1969
Merritt v Merritt, 1970
Gould v Gould
2)The terms of an offer must be certain or capable of being made certain
According to section 29the agreements meaning of which is not certain or capable
of being made certain are void.
Taylor v Portington, 1855
Gunthing v Lynn, 1831
3) OFFER must be communicated to the offeree
Section 4 of ICA “ the communication of a proposal is complete when it comes to the
knowledge of the person”
Lalman Shukla v Gauri Datt, 1913
Offer may be of Specific or General
An offer need not be made to an ascertained person, but no contract can arise until it
has been accepted by an ascertained person----Anson
Weeks v Tybald, 1605
Carlill v Carbolic Smoke Ball Company, 1893 (proposals acceptable by conduct)
Lalman shukla’s case
Section 8 Acceptance by performing conditions, or receiving consideration
Har Bhajan Lal V Har Charan Lal, 1925
Where a General offer is of continuing nature, as it was, it will be open for acceptance to
any number of persons until it is retracted. But where an offer requires some information
as to a missing thing, it is closed as soon as the first information comes in.

Invitation to treat latin word invitation ad offerendum

• Pre contractual representations
• request for information
• Statements of intention
An offer is distinct from statement short of being an offer made during
negotiations, an expression of intention, and an invitation to treat.
Harvey v Facie, 1893

Mere statement of price would not amount to an offer

Harvey :Invitation to offer may be an enquiry, request for information
Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid".
Facey replied on the same day: "Lowest price for Bumper Hall Pen £900."
Harvey then replied in the following words.
"We agree to buy Bumper Hall Pen for the sum of nine hundred pounds
asked by you. Please send us your title deed in order that we may get early
possession."
McPherson v Appanna, 1951
Pharmaceutical Society of Great Britain v Boots Cash
Chemists Southern Ltd, 1952
Adikanda Biswal v Bhubaneshwar Authority, AIR 2006
BOI v OP Swarnarkar, 2003

Voluntary retirement scheme offered by an employer

Is not a proposal, but an invitation to offer
What are invitation to offer
Catalogue and display of goods
Railway time table
Announcements to hold Auction
Hotel menu card
Price tags
A price list of goods for sale
Prospectus issued by company
An advertisement inviting tenders
Loudspeaker announcements
Quotation of lowest price
Banker’s catalogue of charges
Harris v Nickerson, 1873
Offer may be conditional
Henderson v Stevenson, 1853
Kinds of offer
Express offer and Implied offer
Positive offer and negative offer
General offer and specific offer
Cross offer and counter offer

Cross offer
Tinn v Hoffman (1873) 29 LT 271
Counter offer
Hyde v Wrench (1840)
Promise express and implied section 9
Upton-on-Severn RDC v Powell, 1942
Acceptance
Section 2(b)
When the person to whom the proposal is made, signifies his assent thereto, the proposal
is said to be accepted. A proposal, when accepted, becomes a promise;
Acceptance must be absolute and unconditional sec 7
Neale v Merret, 1930
Hyde v Wrench,1840

Communication by acceptor himself or acceptance can be given by the offeree and no one
else
Boulton Jones , 1857
Powel v Lee, 1908
Acceptance must be given before the offer is revoked of offer lapses
When communication not necessary
Carlill v Carbolic Smoke ball company
Communication to offeror himself
Felthouse v Bindley, 1863
Offeror cannot impose the Burden of Refusal
Cotton Corporation of India Ltd v Bombay Dieing & Mfg Co Ltd, 2006
Acceptance by external manifestation or overt act
Brogden v Metropolitan Railway Co, 1877

Provisional acceptance no acceptance

Union of India v S.Narayan Singh, 1953
Section 3 in The Indian Contract Act, 1872
3. Communication, acceptance and revocation of proposals.—The communication of proposals, the acceptance of
proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or
omission of the party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance
or revocation, or which has the effect of communicating it. —The communication of proposals, the acceptance of
proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or
omission of the party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance
or revocation, or which has the effect of communicating it."

Communication section4
Communication of offer and acceptance when complete
Lalman Shukla v gauri datt
R v Clarke, 1927
William v Carwardine, 1833
Modes of Communication
Eliason v Henshaw, 1819
Acceptance must be made in a prescribed manner
When no manner prescribed usual and reasonable manner
Postal communication
Adams v Lindsell, 1818
Household Fire & Accident Insurance co v grant, 1879
Communication when complete
4. Communication when complete.—The communication of a proposal is complete when it comes to the knowledge
of the person to whom it is made. —The communication of a proposal is complete when it comes to the knowledge
of the person to whom it is made." The communication of an acceptance is complete,— as against the proposer,
when it is put in a course of transmission to him so as to be out of the power of the acceptor; as against the acceptor,
when it comes to the knowledge of the proposer. The communication of a revocation is complete,— as against the
person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out
of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge.
When parties in direct communication
Entores Ltd v Miles Far East corporation, 1955
Bhagavandas Goverdhandas Kedia v Giridharilal Parshottamdas &co, 1966