The Indian Contract Act, 1872 - Unit 1: Nature of Contracts Flashcards

Vocabulary flashcards covering the definitions, terms, section numbers, and case laws from Unit 1 of The Indian Contract Act, 1872.

Indian Contract Act, 1872

The law governing contracts in India, formed on April 25, 1872, and coming into force on September 01, 1872.

Aqd, Ijab, and Qabul

Terms under Mohammedan Law of Contract during Mughal rule in India, where 'Aqd' means conjunction (contract), 'Ijab' means proposal, and 'Qabul' means acceptance.

Narada Smriti Age Thresholds

Under ancient Hindu law, a person up to 8 years is considered an infant, 8 to 16 years is boyhood, and after 16 years a person is competent to enter into a contract.

Charter of 1726

A charter issued by King George to the East India Company applying English Law in the Presidency Towns of Madras, Bombay, and Calcutta prior to the Indian Contract Act.

Contract [Section 2(h)]

An agreement enforceable by law.

Agreement [Section 2(e)]

Every promise and every set of promises, forming the consideration for each other.

Promise [Section 2(b)]

When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. Proposal when accepted, becomes a promise.

Proposal / Offer [Section 2(a)]

When one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence.

Promisor and Promisee [Section 2(c)]

When a proposal is accepted, the person making the proposal is called the 'promisor' and the person accepting the proposal is called the 'promisee'.

Consideration [Section 2(d)]

Referred to as 'quid pro quo' (something in return); when at the desire of the promisor, the promisee or any other person has done/abstained from doing, does/abstains from doing, or promises to do/abstain from doing something.

Consensus ad idem

Identity of minds where two or more persons agree upon the same thing in the same sense.

Essentials of a Valid Contract [Section 10]

All agreements made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and not expressly declared to be void.

Void Contract [Section 2(j)]

A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

Voidable Contract [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 Agreement [Section 2(g)]

An agreement not enforceable by law, which is void ab initio (from the very beginning).

Illegal Contract

A contract forbidden by law, which is void ab initio and renders all connected or collateral agreements void as well.

Unenforceable Contract

A contract that is good in substance but cannot be sued upon by one or both parties due to some technical defect, such as absence in writing or being barred by limitation.

Express Contract

A contract in which the terms are expressed by words spoken or in writing [Section 9].

Implied Contract

A contract that comes into existence by implication, action, conduct of parties, or course of dealings [Section 9].

Tacit Contract

A form of implied contract inferred through the conduct of parties without any words spoken or written, such as withdrawing cash from an ATM or sales at an auction by the fall of a hammer.

Quasi-Contract

A obligation created and enforced by law resembling a contract, where no real contract or intention to contract exists between the parties.

Executed Contract

A contract in which both parties have performed their respective obligations required under the contract.

Executory Contract

A contract in which the consideration consists of reciprocal promises to be performed in the future.

Unilateral Contract

A one-sided executory contract in which one party has performed their duty or obligation and the other party's obligation remains outstanding.

Bilateral Contract

An executory contract where the obligation or promise is outstanding on the part of both parties.

General Offer

An offer made to the public at large which can be accepted by anyone who performs the desired act.

Specific Offer

An offer made to a specific or ascertained person, which can only be accepted by that specified person.

Cross Offer

Offers created when two parties exchange identical offers in ignorance of each other's offer at the time; it does not constitute a binding contract.

Counter Offer

A conditional acceptance where the offeree offers to accept subject to modifications or variations of the original offer, amounting to a rejection of the original offer.

Standing / Continuing / Open Offer

An offer that is allowed to remain open for acceptance over a period of time, such as tenders invited for the supply of goods.

Invitation to Offer

An act precedent to making an offer, where a party invites others to make offers on proposed terms without expressing a final willingness to be bound.

Communication of Offer [Section 4]

The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

Communication of Acceptance [Section 4]

Complete as against the proposer when put into course of transmission to him so as to be out of the acceptor's power to withdraw; complete as against the acceptor when it comes to the knowledge of the proposer.

Carlill Vs. Carbolic Smoke Ball Co. (1893)

Landmark case establishing that a general offer made to the public at large can be accepted by performing its conditions without prior communication of acceptance.

Lalman Shukla v. GauriDutt

Case establishing that acceptance of an offer in ignorance of the offer does not constitute valid acceptance and confers no right to a reward.

Harvey vs. Facie [1893]

Privy Council case highlighting the distinction between an offer and a mere quote/statement of lowest price (an invitation to offer).

Felthouse vs. Bindley (1862)

Case establishing that mental acceptance or mere silence of the offeree does not amount to a valid acceptance.