Contract Act 1872 Practice Flashcards

Vocabulary practice flashcards covering terms, legal sections, and foundational definitions from the Contract Act 1872.

Contract

An agreement or promise enforceable by law that creates and defines obligations between parties.

Agreement

Under Section 2(e) of the Contract Act 1872, every promise and every set of promises forming the consideration for each other.

Proposal (Offer)

Under Section 2(a), when one person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the assent of that other.

Promise

Under Section 2(b), a proposal when accepted by the person to whom it is made signifying his assent thereto.

Promisor and Promisee

Under Section 2(c), the person making the proposal is called the 'promisor', and the person accepting the proposal is called the 'promisee'.

Consideration

Under Section 2(d), when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing something, such act or abstinence or promise.

Voidable Contract

Under Section 2(i), an agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others.

Void Contract

Under Section 2(j), a contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

Void Agreement

Under Section 2(g), an agreement not enforceable by law, having no legal effect from the beginning (void ab initio).

Unenforceable Agreement

An agreement that fulfills all basic requirements of a valid contract under the Contract Act 1872, but cannot be enforced in a court of law due to failure to satisfy specific legal formalities required by other laws (e.g., writing or registration).

Illegal Agreement

An agreement expressly forbidden by law that is not only void but also punishable under criminal penalties.

Invitation to Treat

An invitation for others to make an offer (such as advertisements, price lists, or shop window displays) which cannot be accepted directly to form a binding contract.

Postal Acceptance Rule

A legal rule stating that acceptance by post is complete against the offeror the moment the offeree posts the letter of acceptance, even if the letter is delayed or lost in transit.

Counteroffer

A response by the offeree proposing different or modified terms, which automatically cancels and terminates the original offer.

Executory Consideration

Consideration that takes the form of a promise to be performed in the future.

Executed Consideration

Consideration that takes place simultaneously with the promise, where the act constituting the consideration is wholly performed at the time.

Past Consideration

A past act or forbearance that took place and was completed before the promise was made.

Privity of Contract

The doctrine stating that only persons who are actual parties to a contract can sue or be sued upon it.

Stranger to Consideration

A person who is a party to the contract but did not personally provide the consideration, yet can still enforce the contract because consideration may move from any person under Section 2(d).

Competency to Contract

Under Section 11, the qualification of a person to enter into a valid contract, requiring majority age, sound mind, and freedom from legal disqualifications.

Sound Mind

Under Section 12, the capacity of a person at the time of making a contract to understand its terms and form a rational judgment as to its effect upon their interests.

Consensus Ad Idem

Under Section 13, the meeting of minds where two or more persons agree upon the same thing in the same sense.

Coercion

Under Section 15, committing or threatening to commit any act forbidden by the Pakistan Penal Code, or unlawfully detaining or threatening to detain property, with the intention of compelling a person to enter into an agreement.

Undue Influence

Under Section 16, a situation where one party who is in a position to dominate the will of another uses that position to obtain an unfair advantage over the other.

Fraud

Under Section 17, intentional deception committed by a party to a contract through false statements, active concealment, or empty promises to induce another party to enter into the agreement.

Misrepresentation

Under Section 18, an innocent false statement of fact made by a person who honestly believes it to be true, without any intention to deceive.

Bilateral Mistake

Under Section 20, a situation where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, rendering the contract void.

Unilateral Mistake

Under Section 22, a situation where only one party is under a mistake as to a matter of fact, which generally does not render the contract void or voidable.

Restitution

Under Section 65, the legal principle requiring any person who has received any advantage under an agreement that is discovered to be void to restore it or make compensation for it.

Agreement in Restraint of Trade

Under Section 27, an agreement by which any person is restrained from exercising a lawful profession, trade, or business, which is void except in specified cases such as the sale of goodwill.

Agreement in Restraint of Marriage

Under Section 26, an agreement restraining the marriage of any person other than a minor, which is completely void.

Agreement in Restraint of Legal Proceedings

Under Section 28, an agreement by which any party is restricted absolutely from enforcing their contractual rights in ordinary courts, or which limits the time to do so, which is void.

Uncertain Agreement

Under Section 29, an agreement the meaning of which is not certain, or capable of being made certain, which is void.

Wagering Agreement

Under Section 30, a void agreement in which two parties holding opposite views on an uncertain future event agree that one will win and the other lose money based purely on that outcome.

Contingent Contract

Under Section 31, a contract to do or not to do something if an event collateral to such contract occurs or does not occur.

Quasi Contract

A constructive legal obligation imposed by law (Sections 68–72) without a formal contract to prevent one person from being unjustly enriched at the expense of another.

Attempted Performance (Tender of Performance)

Under Section 38, an offer of performance made by the promisor according to the terms of the contract that is refused by the promisee.

Novation

Under Section 62, the substitution of a new contract for an existing one, discharging the original contract between the same or different parties.

Reciprocal Promises

Promises where each party's promise forms the consideration or part of the consideration for the other party's promise.

Doctrine of Frustration

The rule under Section 56 stating that a contract becomes void if its performance becomes physically or legally impossible after its formation due to events beyond the control of the parties.

Rescission

The cancellation or setting aside of a contract by mutual agreement or by an injured party upon breach or lack of free consent.

Remission

Under Section 63, the acceptance of less performance or a lesser sum than what was originally promised under a contract without requiring additional consideration.

Waiver

The intentional and voluntary relinquishment or giving up of a contractual right by a promisee.

Merger

The extinguishment of an inferior contractual right when it absorbs or merges into a superior right held by the same person in the same subject matter.

Anticipatory Breach

A breach occurring before the due date of performance when one party explicitly or implicitly demonstrates a clear refusal or inability to perform contractual obligations.

Quantum Meruit

A legal remedy meaning 'as much as earned', allowing a party to claim reasonable remuneration for work or services actually performed.

Specific Performance

An equitable court order compelling a defaulting party to carry out and fulfill their actual obligations under the contract.

Injunction

A discretionary court order restraining a party from committing or continuing a breach of contract.

Liquidated Damages

A genuine pre-estimate of probable loss agreed upon by the parties at the time of contract formation as payable in case of breach.

Penalty Clause

An unenforceable contract provision setting an excessively high sum intended to punish or deter breach rather than compensate actual loss.

Contract of Indemnity

Under Section 124, a contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person.

Contract of Guarantee

Under Section 126, a contract to perform the promise, or discharge the liability, of a third person in case of his default.

Surety

The person who gives the guarantee in a contract of guarantee.

Principal Debtor

The person in respect of whose default the guarantee is given in a contract of guarantee, who holds primary liability.

Creditor

The person to whom the guarantee is given in a contract of guarantee.

Specific Guarantee

A guarantee given for a single debt or specific transaction that terminates once the obligation is performed.

Continuing Guarantee

Under Section 129, a guarantee that extends to a series of distinct and separable transactions.

Right of Subrogation

The right of a surety who pays off the principal debtor's debt to step into the creditor's shoes and assume all legal rights and securities held by the creditor.

Bailment

Under Section 148, the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them.

Bailor and Bailee

Under Section 148, the person delivering the goods is called the 'bailor', and the person to whom they are delivered is called the 'bailee'.

Particular Lien

Under Section 170, a bailee's right to retain specific goods on which skill or labor has been expended until payment for services regarding those specific goods is received.

General Lien

Under Section 171, the right of specified professionals (like bankers, attorneys, or factors) to retain any goods of the bailor in their possession as security for a general balance of account.

Pledge (Pawn)

Under Section 172, the bailment of goods as security for payment of a debt or performance of a promise.

Pawnor and Pawnee

Under Section 172, the bailor in a pledge is called the 'pawnor', and the bailee is called the 'pawnee'.

Agency

A consensual legal relationship under Section 182 where an agent is employed to represent a principal in dealings with third persons.

Principal and Agent

Under Section 182, an 'agent' is a person employed to act for or represent another in dealings with third persons, and the 'principal' is the person so represented.

Agency by Estoppel

An agency created when a principal, by words or conduct, leads third parties to believe that a person is acting as their agent, preventing the principal from denying the agency later.

Agency by Necessity

An agency created during an emergency where a person must act in good faith to protect another's property or interests without prior authorization.

Sub-agent

Under Section 191, a person employed by and acting under the control of the original agent in the business of the agency.

Substituted Agent

Under Section 194, a person named or appointed directly by the original agent under the express or implied authority of the principal to act for the principal in part of the business.

Agency Coupled with an Interest

An agency relationship where the agent holds a personal financial interest in the subject matter of the agency, making it irrevocable by the principal under Section 202.