Section Provision

- • According to the Indian Contract act, 1872

Nature of contract • Law of Contract deals with only such legal obligations which has resulted from
agreements.
• Such obligation must be contractual in nature.
• However, some obligations are outside the purview of the law of contract.
• An obligation to maintain wife and children, an order of the court of law etc..
• These are status obligations and so out of the scope of the Contract Act.

Section 10 • According to Section-10 of the Indian Contract act, 1872

TWO PARTIES • One cannot contract with himself.
• A contract involves at least two parties one party making the offer and the other
party accepting it.
• A contract may be made by natural persons and by other persons having legal
existence e.g. companies, universities etc.
• It is necessary to remember that identity of the parties be ascertainable.
• Case law- State of Gujarat vs. Ramanlal S & Co.
Section 10 • According to Section-10 of the Indian Contract act, 1872
Parties must intend to • There must be an intention on the part of the parties to create legal relationship
create legal obligations between them.
• Social or domestic type of agreements are not enforceable in court of law and
hence they do not result into contracts.
• Case law- Balfour v. Balfour
- • According to the Indian Contract act, 1872
Free Consent • Two or more persons are said to consent when they agree upon the
same thing in the same sense.
• This can also be understood as identity of minds in understanding the terms viz
consensus ad idem.
• Further such consent must be free.
• Consent would be considered as free consent if it is not caused by coercion, undue
influence, fraud, misrepresentation or mistake
- • According to the Indian Contract act, 1872
Valid Contract • An agreement which is binding and enforceable is a valid contract.
• It contains all the essential elements of a valid contract.

Section 2 (j) • According to Section-2(j) of the Indian Contract act, 1872

Void Contract • “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.

Section 2(i) • According to Section-2(i) of the Indian Contract act, 1872

Voidable Contract • “an agreement which is enforceable by law at the option of one or more
parties thereto, but not at the option of the other or others is a voidable
contract”
 Following are the situations where a contract is voidable:
I. When the consent of party is not free is caused by coercion, undue
influence, misrepresentation or fraud.
II. When a person promises to do something for another person, but
the other person prevents him from performing his promise, the
1.
contract becomes voidable at the option of first person.
III. When a party to a contract promise to perform a work within a
specified time, could not perform with in that time, the contract is
voidable at the option of promisee.
Section 2(g) • According to Section-2(g) of the Indian Contract act, 1872
Illegal Contract • “an agreement not enforceable by law is void”.
• It is a contract which the law forbids to be made.
• The court will not enforce such a contract but also the connected contracts.
• All illegal agreements are void but all void agreements are not necessarily illegal.
• Despite this, there is similarity between them is that in both cases they are void ab
initio and cannot be enforced by law.

- • According to the Indian Contract act, 1872

Collateral Agreement • It’s not necessary that agreements collateral to void agreements may also be void.
• It may be valid also.
• Agreements collateral to illegal agreements are always void.

- • According to the Indian Contract act, 1872

• The person making the proposal or offer is called the ‘promisor’ or ‘offeror’.
• The person to whom the offer is made is called the ‘offeree’
• the person accepting the offer is called the ‘promisee’ or ‘acceptor’.

Section 8 • According to the Indian Contract act, 1872

General offer • anyone performing the conditions of the offer can be considered to have accepted
the offer.
• Until the general offer is retracted or withdrawn, it can be accepted by anyone at
any time as it is a continuing offer.
• Case Law-Carlill Vs. Carbolic Smoke Ball Co.
- • According to the Indian Contract act, 1872
It must be capable of • Offer must be such as in law is capable of being accepted and giving rise to legal
creating legal relations relationship.
• If the offer does not intend to give rise to legal consequences and creating legal
relations, it is not considered as a valid offer in the eye of law.
• A social invitation, even if it is accepted, does not create legal relations because it is
not so intended.
• Type of case study can be Asked-A invited B on his birthday party. B accepted the
proposal but when B reached the venue, he (B) found that A was not there. He filed
the suit against A for recovery of travelling expenses incurred by him to join the
 birthday party. Held, such an invitation did not create a legal relationship. It is a
social activity. Hence, B could not succeed

- • According to the Indian Contract act, 1872

It must be • An offer, to be complete, must be communicated to the person to whom it is made,
communicated to the otherwise there can be no acceptance of it.
offeree • Unless an offer is communicated, there can be no acceptance by it.
• An acceptance of an offer, in ignorance of the offer, is not acceptance and does not
confer any right on the acceptor
• Case law- Lalman Shukla v. GauriDutt
- • a mere statement of intention
Offer is Different from • an invitation to offer
• a mere communication of information
• A prospectus and Advertisement
- • In case of “an invitation to make an offer”, the person making the
An invitation to make an invitation does not make an offer rather invites the other party to
offer or do business
make an offer.
•

Provision notes