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CHAPTER 02

INDIAN CONTRACT ACT

1872

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OFFER

BUYERSELLER

ACCEPTANCE

CONSIDERATION

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CONTRACT

[(OFFER + ACCEPTANCE) +ENFORCEABILITY]

yan agreement

ybetween two or more persons

ycan be enforced by a court of law

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ESSENTIALS OF A `CONTRACT`

1. Agreement2. Intention to create legal relationship

3. Free and genuine consent

4. Parties competent to contract

5. Lawful consideration6. Lawful object

7. Agreement not declared void and illegal

8. Certainty of meaning

9. Possibility of performance

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CLASSIFICATION OF CONTRACT

Enforceability Formation Performance

1. Valid 1. Express 1. Executed

2. Voidable 2. Implied 2. Executory

3. Void

4. Illegal

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COMMUNICATION

OFFER, ACCEPTANCE AND REVOCATION

Communication when complete

offer

Puts in course of transmissionWhen receives

acceptance

Revocation when completeBefore communication is complete against other party

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OFFERER OFFEREE

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CAPACITY TO CONTRACT

Who may not contract

Living persono Minor

o Mental incompetencyo Insolvent

o Incompetency thru status

Corporateo Under liquidation

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VOID AGREEMENTS

1) Not competent to contract2) Mutual mistake of material fact

3) Unlawful consideration

4) Without consideration (Exception Gift to a

near relative)5) Restraint of marriage/trade/legal proceedings

6) Uncertainty

7) Wager

8) Against public policy

9) To do impossible act

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VOIDABLE CONTACTyCoercion

yUndue influence

yFraudyMisrepresentation

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CONSIDERATIONCONSIDERATIONy Consideration is what promisor demands

as the price for his promise

Rules

y Must move at the desire of Promisor

y May move from Promisee or any otherperson

y Need not be adequate

y Must be real and legal

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QUASI CONTRACT

y Based on `Natural Justice- curb UNDUEENRICHMENT`

y It has character of a contract but no contractentered into

y

Considered as a contract in `eye of law`When created

y Necessities of life supplied to person incapable

to contact

y Reimbursement of expenses (non-gratuitousact)

y Finder of goods

y Money paid/goods delivered under mistake 12

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DISCHARGE OF CONTRACT by performance

by mutual consent

o novation (substitution)o recession (cancellation)

o alteration

by subsequent impossibility

by operation of law by breach

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REMEDIES AGAINST BREACH

1. Recession

2. Damages

3. Specific performance

4. Injunction

5. quantum meruit

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CONTRACT OF AGENCYHow created

y Express agency[Ex.POA]

yImplied Agency[Ex.Company Secretary]

y Agency by Estoppel/Holding out

y Agency by Necessity

y Agency by Ratification (by taking over the

excess)

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