J.K.SHAH CLASSES CAFC-REVISION
CHAPTER 1 - INDIAN CONTRACT ACT, 1872
UNIT 1: NATURE OF CONTRACT
INTRODUCTION
It received its assent on 25th April, 1872 and was introduced on 1st September, 1872.
It is applicable to whole of India except Jammu and Kashmir
Contract = Agreement + Enforceable by law
Agreement:
“Every promise and every set of promises forming the consideration for each other, is an
agreement.”
All Contracts are agreements but all agreements are not contracts.
OFFER
DEFINITION CHARACTERISTICS: TYPES: LAPSE OF OFFER:
When one 1. Offer must be capable of 1. General offer 1. By rejection of offer
person signifies creating legal Case law: Carlill by offeree
relationship
to another his v/s Carbolic & 2. By revocation of offer
Case law: Balfour v.
willingness to Balfour 2. Smoke Balls Co by Offeror
do or abstain 2. The terms of the offer 3. Specific/Special 3. By Counter Offer
from doing must be definite and offer 4. By lapse of time
anything, with a certain 4. Counter offer Cross 5. By failure to accept
3. Offer must be different
view to obtain offer condition in
from invitation to offer
the assent of 4. Offer should be 5. Standing/open/ conditional offer
another, such communicated. continuing offer 6. By Death or insanity
an act or Case law: Lalman of the offeror/offeree
abstinence, is Shukla vs GauriDutt
5. Offer can be express or
known as
implied.
offer. 6. Offer can be conditional.
7. Offer should not contain a
term non-compliance of
which would directly lead
to acceptance.
,J.K.SHAH CLASSES CAFC-REVISION
ACCEPTANCE
DEFINITION CHARACTERISTICS
When the person to whom 1. Must be communicated
the proposal is made signifies 2. Must be unconditional
his assent thereto, the 3. By specific person
proposal is said to be 4. Must be within a specific/reasonable
accepted time.
5. Can be express or implied
6. Should be via prescribed mode of
communication.
COMMUNICATION OF OFFER & ACCEPTANCE AND REVOCATION OF
OFFER & ACCEPTANCE
1. Communication of offer is complete when it comes to the knowledge of offeree.
2. Communication of acceptance is complete
As against Offeror As against Offeree
When offeree puts the When the acceptance
acceptance in a course of comes to the
transmission and it is beyond knowledge of offeror
his reach to stop it
3. Revocation of offer is valid before offeree puts the acceptance in course of
transmission and it is out of his reach to stop it.
4. Revocation of acceptance is valid before acceptance comes to the knowledge of
offeror.
TYPES OF CONTRACTS
TYPES OF CONTRACTS AS TYPES OF CONTRACT S AS
PER INDIAN LAW PER ENGLISH LAW
1. Valid contract
2. Void Contract English Law classifies the
Void Agreement contract into:
3. Voidable Contract
(i) Formal contract
4. Illegal Agreement
5. Unenforceable contract (a) Contract of record
6. Express contract and
7. Implied contract (b) Contract under
8. Tacit contract Seal, and
9. Executed contract (ii) Simple contracts.
10. Executory contract
11. Unilateral contract
12. Bilateral contract
ESSENTIAL ELEMENTS OF A VALID CONTRACT
1. There must be an offer and its acceptance and intention to create a legal relationship.
2. There must be capacity of parties.
3. There must be free consent and consensus-ad-idem.
4. There must be lawful object and lawful consideration.
5. The performance must not be impossible.
6. The performance must not be uncertainThe agreement must not be declared to be void
,J.K.SHAH CLASSES CAFC-REVISION
UNIT 2: CONSIDERATION
DEFINITION CHARACTERISTICS DOCTRINE OF NO
PRIVITY OF CONSIDERATION
When at the 1. The consideration must CONTRACT. NO CONTRACT
desire of the move at the desire of
promisor, the the promisor. RULE: Stranger to Exceptions:
promisee or 2. It may move from the Contract cannot sue. 1. Out of Natural
any other promisee or any other But a stranger to a Love and
person did or person consideration can sue. Affection
abstained from Case law: In Exceptions to the rule “A 2. Compensation
doing, or does Chinnayya v/s stranger to a contract paid for past
or abstains Ramayya cannot sue” voluntary services
from doing, or 3. Consideration can be i. Beneficiaries in the 3. Promise to pay
promises to do past, present or future case of trust Time Barred
or abstain from 4. Consideration can be ii. Written family Debts in writing
doing negative or positive. settlements 4. No consideration
something, 5. Consideration need not iii. Partition of Hindu is necessary to
such an act or be adequate. Undivided Family create an agency
abstinence is 6. It must be real and not iv. In Assignment of 5. In case of
called a illusory contract, assignee completed gifts,
consideration 7. It must not be illegal, has a right to sue no consideration
for the immoral, or opposed to v. Acknowledgement of is necessary
promise. public policy. Debts 6. Bailment
8. Consideration can be vi. Covenants with land 7. Charity
executed or executory. vii. If contracts made by
9. Consideration for an act the agent, principal
which a person a legally can enforce the
bound to perform is not contract.
a valid consideration.
, J.K.SHAH CLASSES CAFC-REVISION
UNIT 3: OTHER ESSENTIAL ELEMENTS OF A VALID CONTRACT
CAPACITY OF PARTIES
An agreement will be valid and enforceable only if the parties to it are legally
competent to enter into contract.
Following persons are not competent to contract :
1. Minor
A minor is a person who is below the age of eighteen years.
An agreement with a minor is void ab initio
The minor’s contracts do not impose any liability on his parents or guardians.
Parents/Guardians can enter into a contract on behalf of minor for his
benefits.
Parents/Guardian cannot bind a minor in a contract to purchase immovable
properties
If minor falsely represents his age, still the contract is void-ab-initio as he
can always plead minority.
Minor cannot ratify the agreement after attaining majority
If any necessaries of life (food, clothing, shelter, education, health) are
supplied to a minor, he is not personally liable but only his property is liable.
A minor can be appointed as an agent but he is not liable for his acts as an
agent
Case law: In Mohiri Bibee vs. Dharmodas Ghose
2. Person of unsound mind:
Unsound mindedness is
or
Permanent Temporary
Idiot Usually sound but occasionally unsound
If contract is entered during
or
Lucid Intervals Lunatic intervals
Valid Void
CHAPTER 1 - INDIAN CONTRACT ACT, 1872
UNIT 1: NATURE OF CONTRACT
INTRODUCTION
It received its assent on 25th April, 1872 and was introduced on 1st September, 1872.
It is applicable to whole of India except Jammu and Kashmir
Contract = Agreement + Enforceable by law
Agreement:
“Every promise and every set of promises forming the consideration for each other, is an
agreement.”
All Contracts are agreements but all agreements are not contracts.
OFFER
DEFINITION CHARACTERISTICS: TYPES: LAPSE OF OFFER:
When one 1. Offer must be capable of 1. General offer 1. By rejection of offer
person signifies creating legal Case law: Carlill by offeree
relationship
to another his v/s Carbolic & 2. By revocation of offer
Case law: Balfour v.
willingness to Balfour 2. Smoke Balls Co by Offeror
do or abstain 2. The terms of the offer 3. Specific/Special 3. By Counter Offer
from doing must be definite and offer 4. By lapse of time
anything, with a certain 4. Counter offer Cross 5. By failure to accept
3. Offer must be different
view to obtain offer condition in
from invitation to offer
the assent of 4. Offer should be 5. Standing/open/ conditional offer
another, such communicated. continuing offer 6. By Death or insanity
an act or Case law: Lalman of the offeror/offeree
abstinence, is Shukla vs GauriDutt
5. Offer can be express or
known as
implied.
offer. 6. Offer can be conditional.
7. Offer should not contain a
term non-compliance of
which would directly lead
to acceptance.
,J.K.SHAH CLASSES CAFC-REVISION
ACCEPTANCE
DEFINITION CHARACTERISTICS
When the person to whom 1. Must be communicated
the proposal is made signifies 2. Must be unconditional
his assent thereto, the 3. By specific person
proposal is said to be 4. Must be within a specific/reasonable
accepted time.
5. Can be express or implied
6. Should be via prescribed mode of
communication.
COMMUNICATION OF OFFER & ACCEPTANCE AND REVOCATION OF
OFFER & ACCEPTANCE
1. Communication of offer is complete when it comes to the knowledge of offeree.
2. Communication of acceptance is complete
As against Offeror As against Offeree
When offeree puts the When the acceptance
acceptance in a course of comes to the
transmission and it is beyond knowledge of offeror
his reach to stop it
3. Revocation of offer is valid before offeree puts the acceptance in course of
transmission and it is out of his reach to stop it.
4. Revocation of acceptance is valid before acceptance comes to the knowledge of
offeror.
TYPES OF CONTRACTS
TYPES OF CONTRACTS AS TYPES OF CONTRACT S AS
PER INDIAN LAW PER ENGLISH LAW
1. Valid contract
2. Void Contract English Law classifies the
Void Agreement contract into:
3. Voidable Contract
(i) Formal contract
4. Illegal Agreement
5. Unenforceable contract (a) Contract of record
6. Express contract and
7. Implied contract (b) Contract under
8. Tacit contract Seal, and
9. Executed contract (ii) Simple contracts.
10. Executory contract
11. Unilateral contract
12. Bilateral contract
ESSENTIAL ELEMENTS OF A VALID CONTRACT
1. There must be an offer and its acceptance and intention to create a legal relationship.
2. There must be capacity of parties.
3. There must be free consent and consensus-ad-idem.
4. There must be lawful object and lawful consideration.
5. The performance must not be impossible.
6. The performance must not be uncertainThe agreement must not be declared to be void
,J.K.SHAH CLASSES CAFC-REVISION
UNIT 2: CONSIDERATION
DEFINITION CHARACTERISTICS DOCTRINE OF NO
PRIVITY OF CONSIDERATION
When at the 1. The consideration must CONTRACT. NO CONTRACT
desire of the move at the desire of
promisor, the the promisor. RULE: Stranger to Exceptions:
promisee or 2. It may move from the Contract cannot sue. 1. Out of Natural
any other promisee or any other But a stranger to a Love and
person did or person consideration can sue. Affection
abstained from Case law: In Exceptions to the rule “A 2. Compensation
doing, or does Chinnayya v/s stranger to a contract paid for past
or abstains Ramayya cannot sue” voluntary services
from doing, or 3. Consideration can be i. Beneficiaries in the 3. Promise to pay
promises to do past, present or future case of trust Time Barred
or abstain from 4. Consideration can be ii. Written family Debts in writing
doing negative or positive. settlements 4. No consideration
something, 5. Consideration need not iii. Partition of Hindu is necessary to
such an act or be adequate. Undivided Family create an agency
abstinence is 6. It must be real and not iv. In Assignment of 5. In case of
called a illusory contract, assignee completed gifts,
consideration 7. It must not be illegal, has a right to sue no consideration
for the immoral, or opposed to v. Acknowledgement of is necessary
promise. public policy. Debts 6. Bailment
8. Consideration can be vi. Covenants with land 7. Charity
executed or executory. vii. If contracts made by
9. Consideration for an act the agent, principal
which a person a legally can enforce the
bound to perform is not contract.
a valid consideration.
, J.K.SHAH CLASSES CAFC-REVISION
UNIT 3: OTHER ESSENTIAL ELEMENTS OF A VALID CONTRACT
CAPACITY OF PARTIES
An agreement will be valid and enforceable only if the parties to it are legally
competent to enter into contract.
Following persons are not competent to contract :
1. Minor
A minor is a person who is below the age of eighteen years.
An agreement with a minor is void ab initio
The minor’s contracts do not impose any liability on his parents or guardians.
Parents/Guardians can enter into a contract on behalf of minor for his
benefits.
Parents/Guardian cannot bind a minor in a contract to purchase immovable
properties
If minor falsely represents his age, still the contract is void-ab-initio as he
can always plead minority.
Minor cannot ratify the agreement after attaining majority
If any necessaries of life (food, clothing, shelter, education, health) are
supplied to a minor, he is not personally liable but only his property is liable.
A minor can be appointed as an agent but he is not liable for his acts as an
agent
Case law: In Mohiri Bibee vs. Dharmodas Ghose
2. Person of unsound mind:
Unsound mindedness is
or
Permanent Temporary
Idiot Usually sound but occasionally unsound
If contract is entered during
or
Lucid Intervals Lunatic intervals
Valid Void
