What is a contract??

 It is an agreement enforceable by law

 An agreement is a promise or set of
promises:
 Between two or more persons
 To do or refrain from doing a particular thing
 For consideration
Contract may be oral or written
NOTE: Special Contracts need to be in writing
 ESSENTIALS OF A VALID
CONTRACT
 Offer/Proposal
 Acceptance
 Intention to create Legal relationship
 Consideration
 Consensus ad idem
 Free & genuine Consent
 ESSENTIALS OF A VALID
CONTRACT
 Legal Capacity to contract
 Lawful Consideration/Object
 Agreement should not be void or voidable
 Discharge of the Contract
 OFFER/PROPOSAL
 Can be oral, written or through conduct
 Offer and Invitation to offer/treat
 Must be communicated to the offeree
 Counter Offer
 Offer to the whole world
 OFFER/PROPOSAL
 Offer gets terminated by:
 Rejection
 Lapse of time
 Specified Event
 Death
 Retraction/Withdrawal of Offer
 ACCEPTANCE
 Can be oral, written or through conduct
 Must be communicated to the offeror
 Must be absolute and unqualified
 Must be expressed in some usual and
reasonable manner, unless the proposal
prescribes the manner in which it is to be
accepted.
 Acceptance by performing conditions of an offer
 Carlill vs. Carbolic Smoke Ball Co.
 LEGAL RELATIONSHIP
 Intention to enter into a legal relationship
 Social engagement are not binding, for
example;
 Anagreement to have lunch at a friend’s
place.
 CONSIDERATION
 An act, abstinence or promise
 Must be at the desire of the promisor
 May be from the promisee or any other person
 Can be past, present or future
 Must be something of value (in the eyes of law)
 It may be adequate or not
 CONSIDERATION
 Examples:
 Money
 Property
 Actionable Claim
 Anything of Value
 Performance of a legal duty is no
consideration
 FREE CONSENT
 Consent is said to be free when it is not
caused by:
 Coercion
 Undue Influence
 Fraud
 Misrepresentation
 Mistake
 CONSENSUS AD IDEM
 Both the parties to a contract must agree
to same thing at the same time.
 The contract may become void if it turns
out that the parties were of a different
understanding.
 COMPETENCY TO CONTRACT
 Every person is competent to contract who is of:
 Ageof majority
 Sound mind
 Someone not disqualified under Indian laws
Examples:
 Alien enemy
 Foreign sovereigns and ambassadors
 Both individual and companies having legal
competency have the capacity to contract.
LAWFUL CONSIDERATION/OBJECT
 The consideration or object of an agreement is lawful,
unless -
 It is forbidden by law; or
 is of such nature that, if permitted it would defeat the provision of
any law or is fraudulent; or
 involves or implies, injury to the person or property of another; or
 the Court regards it as immoral, or opposed to public policy.
 In each of these cases, the consideration or object of an
agreement is said to be unlawful.
 Every agreement of which the object or consideration is
unlawful is void.
 VOID AGREEMENT
 Agreement to do an impossible act
 Agreement without consideration; except for gifts, debt
etc.
 If, consideration and object is unlawful
 When both the parties to an agreement are under a
mistake as to a matter of fact essential to the agreement
 Agreement in restraint of marriage
 Agreement in restraint of trade
 Agreement in restraint of legal proceedings
 VOID AGREEMENT
 Uncertain Agreement
 Wagering Agreement, except for Horse-racing
 Agreement contingent on impossible event
 When a party to a contract with reciprocal promises is
prevented from performing his obligation, the party
prevented can void the contract
 In a contract where time is of the essence and a party
fails to adhere to the timing schedule, the other party can
void the contract.
 VOIDABLE AGREEMENT
 An agreement is voidable at the option of
the party giving consent;
 When consent is caused by Coercion
 When consent is caused by Undue Influence
 When consent is caused by Fraud
 When consent is caused by Misrepresentation
 Quasi Contracts
 Claim for necessaries supplied to a person
incompetent to contract
 Reimbursement of money paid due by another
 Obligation of person enjoying benefit of non-
gratuitous act
 Enjoyment of benefit by the defendant is
necessary:
 Finder of Lost goods
DISCHARGE OF THE CONTRACT

 Performance of contract
 Breach of Contract
PERFORMANCE OF CONTRACT
 The final step in contract formation is its performance.
 Certainty and possibility of performance
 Every such offer must fulfill the following conditions:-
 it must be unconditional
 it must be made at a proper time and place
 under such circumstances that the person to whom it is made
may have a reasonable opportunity for inspection
 An offer to one of several joint promisees has the same legal
consequences as an offer to all of them
BREACH OF THE CONTRACT
 Anticipatory breach
 Actual Breach
 Liability of loss only due to CAUSATION
 Remoteness of damages
 Mitigation of loss
BREACH OF THE CONTRACT
 Remedies
 Injunction
 Temporary (interim)
 Permanent
 Damages
 Nominal
 Compensatory
 Punitive/Exemplary
 Account of Profits
 Specific performance (where subject matter is unique and money will
not adequately compensate.)
 Declaration
 Rectification
 Recission/Substitution/Novation