Summary INDIAN CONTRACT ACT, 1872

BCOC- 133 BUSINESS LAW

INDIAN CONTRACT ACT, 1872
CONTRACT

EVERY AGREEMENT AND PROMISE ENFORCEABLE BY LAW IS A
CONTRACT. [SEC 2(H)]

CONTRACT = AGREEMENT + LEGAL ENFORCEABILITY

AGREEMENT = OFFER + ACCEPTANCE

“ALL CONTRACT ARE AGREEMENTS BUT ALL AGREEMENTS ARE
NOT CONTRACT”

CONTRACT REQUIRES –

 TWO PARTIES

 AGREEMENT

 LEGAL OBLIGATION

ESSENTIAL ELEMENTS OF A VALID CONTRACT

 AGREEMENT SHOULD BE CLEAR AND CERTAIN AND MUST BE
CAPABLE OF PERFORMANCE.

 INTENTION TO CREATE LEGAL RELATIONSHIP. SOCIAL OR
DOMESTIC AGREEMENTS ARE NOT VALID CONTRACTS.

 AGREEMENT SHOULD BE OF FREE CONSENT MEANS TWO OR
MORE PERSON AGREED UPON SAME THING IN THE SAME
SENSE.

,  AGREEMENT SHOULD NOT EXPRESSELY DECLARED VOID.

 AGREEMENT SHOULD NOT BE SUFFERING FROM EITHER
FUNDAMENTAL MISTAKE OR IMPOSSIBLITY OF PERFORMANCE.

 PARTIES TO THE CONTRACT MUST BE OF MAJORITY AGE,
SOUND MIND AND NOT DISQUALIFIED BY LAW.

 THERE SHOULD BE LAWFUL CONSIDERATION AS WELL AS
OBJECT.

KINDS OF CONTACT

1. VOID CONTRACT- AN AGREEMENT MAY BE ENFORCEABLE AT
THE TIME WHEN IT WAS ENTERED INTO BUT LATER BECOMES
VOID DUE TO CERTAIN REASONS.

2. VOIDABLE CONTRACT- IT IS VALID WHEN IT IS MADE AND
REMAINS VALID TILL IT IS REPUDIATED BY AGGRIEVED PARTY.

3. UNENFORCEABLE CONTRACT- CERTAIN CONTRACTS BECOME
VOID BECAUSE THEY CANNOT BE ENFORCED DUE TO CERTAIN
TECHNICAL DEFECTS.

4. VALID CONTRACT- CONTRACTS WHICH SATISFY AT THE
ESSENTIALS OF A VALID CONTRACTS IN A COURT OF LAW.

5. ILLEGAL CONTRACT- IT IS A CONTRACT WHICH THE LAW
FORBIDS TO BE MADE. SUCH CONTRACTS ARE NOT
ENFORCEABLE. ALL ILLEGAL AGREEMENTS ARE VOID BUT ALL
VOID AGRREMENTS ARE NOT ILLEGAL.

ON THE BASIS OF EXTENT OF EXECUTION CONTRACTS-

1. EXECUTED CONTRACTS: WHEN BOTH THE PARTIES TO THE