Indian Contract Act 1872 in Business Law

Notes related to Indian contract Act

1. Business Law-Indian Contract Act 1872 Jayashree R Sri Ramakrishna College of Arts & Science

2. Indian Contract Act 1872 Introduction considered as one of the oldest laws related to business in the country Indian Contract Act 1872 was enacted on 1st September of that year. law applied to almost all the states of India except Jammu & Kashmir. The Indian contract law is the main law that regulates any contracts signed in India. There are 266 sections in the law.

3. The  Law of Contract  constitutes the most important branch of Mercantile or Commercial Law. Indian contract act is divisible into 2 parts First Part-deals with general principles of law of contract Second Part-deals with Indemnity and Gaurantee,Bailment,Pledge and agency

4. Meaning The Indian Contract Act, 1872, defines the legal principles governing contracts in India. It specifies the circumstances under which promises made by parties to a contract are legally binding and enforceable. The Act covers the essentials of a valid contract, the rights and duties of parties involved, and remedies available in case of breach of contract.

5. Definition The Act defines a contract as an agreement enforceable by law. An agreement becomes a contract when it is made with the intention to create legal obligations, is made by parties who are competent to contract, and is made with lawful consideration and a lawful object.

6. Introduction The Indian contract act defines all the important laws related to the contract. It is an accepted agreement or proposal; that is legally defined, understood, and enforceable by law. It defines the special rights of the party and all the obligations and rules introduced, defined, discussed, and agreed upon by all the signers of the contract.

7. Contract An agreement which is enforceable by law Agreement + Enforceable by law=Contract to form a valid contract there must be ( i )  an agreement  (ii) based on the  genuine consent of the parties , (iii) supported by a  lawful consideration , (iv) made for a  lawful object , and (v) between the  competent parties .

8. Essential Elements of a Valid contract There must be two parties Must be legal relationship b/w parties Both parties are freely concern Both parties must be competent There must be consideration Consideration must be awful

9. Offer and Acceptance Firstly, there must be an offer and its acceptance. Such offer and acceptance should  create legal obligations between parties . This should result in a moral duty on the person who promises or offers to do something. Similarly, this should also  give a right to the promise to claim its fulfilment . Such duties and rights should be legal and not merely moral.

10. Consent Consent  means ‘ knowledge and approval ’ of the parties concerned. A contract is made when one person makes an offer while another person accepts the offer. This acceptance of the offer should be made  without any force or threat . It means that a consent given should be free and genuine.

11. Capacity of the parties The third  essential element of a valid contract  is the capacity of the parties  to make a valid contrac t. Capacity or incapacity of a person could be decided only after calculating various factors. law prohibits Minors Persons of unsound mind Person who is otherwise disqualified  like an alien enemy, insolvents, convicts etc from entering into any contract.

12. Consideration ‘ Consideration ’ would generally mean ‘ compensation’ for doing or omitting to do an act or deed . It is also referred to as ‘quid pro quo’ viz ‘ something in return for another thing ’. Such a consideration should be a lawful consideration.

13. Not expressly declared to be void The last  essential elements of a valid contract  to clinch a contract are that the agreement entered into for this purpose  must not be which the law declares to be either illegal or void .

14. Types of contract Based on validity, Valid contracts, agreements or void contracts, voidable contracts, illegal contracts, and enforceable contracts. On the basis of formation, Express contracts, quasi-contract, implied contracts, and E-contract. Based on performance, Executed contracts, unilateral contracts, executory contracts, and bilateral contracts.

15. Valid contract If the contract entered into by the parties and satisfies all the elements of a valid contract as per the act, it is said to be a  valid contract . Void contract Section 2 (j)  states as follows: “A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”. Thus a void contract is one which cannot be enforced by a court of law.

16. Voidable contract Section 2( i )  defines that an agreement which is enforceable by law at the option of one or more parties but not at the option of the other or others is a  voidable contract . It means where one of the parties to the agreement is in a position or is legally entitled or authorized to avoid performing his part, then the agreement is treated and becomes voidable. Illegal contract Illegal contract  are those that are forbidden by law. All illegal contracts are hence void also. Because of the illegality of their nature they cannot be enforced by any court of law.

17. Unenforceable contract A  type of contract  which satisfies all the requirements of the contract but has technical defects is called an  unenforceable contract . A contract is said to have a technical defect when it does not fulfil the legal formalities required by some other act. When such legal formalities are compiled are complied with, later on, the act becomes enforceable.

18. Express Contracts A contract made by word spoken or written. Section 9  of the  Indian Contract Act 1872  provides that if a proposal or acceptance of any promise is made in words the promise is said to be express.

19. Implied Contract A contract inferred by • The conduct of person • The circumstances of the case. By implies contract means implied by law (i.e.) the law  implied a contract  through parties never intended.

20. Quasi-contract In such a  types of contract , the rights and obligations arise not by an agreement but by  operation of law . E-contract An  e-contract  is a contract made through the digital mode. Executed contract In an  executed contract  both the parties have performed their promises under a contract. Executory contract In a  Executory contract  both the parties are yet to perform their promises.