The Indian Contract Act, 1872 Unit 1

Unit 1

section 2(h)

an agreement enforceable by law is a contract.

section 2(e)

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

section 2(b)

when the person to whom| the proposal is made| signifies his assent there to| the proposal is said to be accepted.| a proposal when accepted becomes a promise.

section 2(a)

when one person signifies to another| his willingness to do or to abstain from doing anything| with a view of obtaining the assent of that another| to such act or abstinence| he is said to make a proposal.

offer/proposal + acceptance

promise

(offer + acceptance) promise + consideration

agreement

agreement + enforceability

contract

offer must be capable of creating a legal relationship

Balfour v. Balfour

essentials of an offer

1. legal relationship (must)

2. definite and certain (must)

3. invitation to offer (must)

4. communicated (must)

5. express or implied (can)

6. conditional (can)

7. non-compliance of term leads to acceptance (must not)

offer must be different from invitation to offer

1. Harvey v. Facie (bumper hall pen)

2. Mac Pherson v. Appanna (not less than 6000 E)

offer should be communicated

Lalman Shukla v. Gauri Dutt (nephew)

types of offer

1. general offer (public)

2. specific offer (Boulton v Jones)

3. cross offer (identical)

4. counter offer (conditional acceptance)

5. standing/ continuing/ open offer

section 8

anyone performing conditions of the offer can be considered to have accepted the offer (general offer)

general offer

Carlill v. Carbolic Smoke Co.

section 6

lapse/revocation of offer

lapse/ revocation of offer

1. notice - offeror

2. lapse of time

3. non-acceptance of condition

4. death/insanity - offeror/offeree

5. counter offer - offeree

6. rejection - offeree

7. subsequent illegality

relationship between acceptance and offer

Sir William Anson
Acceptance is to an offer what a matchstick is to a train of gunpowder

acceptance and offer

1. acceptance triggers what cannot be recalled or undone however, an offer can be revoked before acceptance

2. offer alone cannot become a promise

3. offer itself cannot create a legal relationship

4. offer + acceptance = promise

legal rules of acceptance

1. acceptance must be communicated

2. acceptance must be communicated by a person having authority to accept

3. acceptance must be absolute and unqualified

4. acceptance must be within a specific/ reasonable time

5. acceptance can be express or implied

6. Mere silence does not amount to acceptance

7. acceptance by conduct/implied acceptance

8. acceptance should be via prescribed modes of communication

acceptance must be communicated

Brodgen v. Metropolitan Railway Co. (put accepted letter in drawer)

acceptance must be communicated by a person having authority to accept

Boulton v. Jones

acceptance must be absolute and unqualified

1. Neale v. Merret (gave 80$, later 4×50$ monthly)

2. Union of India v. Bahulal (made one offer, got counter offer, rejected, later gave same original order)

acceptance can be express or implied

Lilly White v. Mannuswamy (sari)

mere silence doesn’t amount to acceptance

Felthouse v. Bindley (uncle-nephew-horse)

communication of offer and acceptance

1. communication of an offer is complete when it comes to the knowledge of offeree

2. communication of acceptance is complete: a) offeror b) offeree

   ○ modes of acceptance

   a. communication by act (to do)

   b. communication acceptance by omission to do something (to not do)

   c. communication of special conditions

section 4

communication of offer

section 3

modes of acceptance

communication by act

Central Bandk Yeotmal v. Vyankatesh (मन ही मन acceptance)

communication of special conditions

Mukul Dutta v. Indian Airlines (ticket had terms and conditions in fine print)

Revocation of offer and acceptance

1. revocation of offer is valid before offeree puts the acceptance in course of transmission and it is out of his reach to stop it

2. revocation of acceptance is valid before acceptance comes to the knowledge of the offeror

   a) contract through post

   b) contract over telephone

types of contracts

I. on the basis of validity
1. valid
2. void
3. voidable
4. illegal
5. unenforceable

II. on the basis of formation
1. express
2. implied (a) tacit (b) quasi
3. e-contracts

III. on the basis of performance
1. executed
2. executory (a) unilateral (b) bilateral

section 2(j)

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

section 2(i)

an agreement which is enforceable by law at the option of one or more the parties but not at the option of the other or others is a voidable contract

section 9

if a proposal or acceptance of any promise is made in words the promise is said to be express

section 10

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

other essential elements

1. two parties

2. parties must intend to create a legal relationship

3. other formalities

4. certainty of meaning

5. possibility of performance