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? We enter into contracts almost every day.
? Taking a seat in a bus amounts to entering into a
contract.
? You go to restaurant and take snacks, you have
entered into a Contract.
? However, in such situations, we do not realize that
we have entered into a Contract.
? The people who are engaged in trade, industry and
commerce, they carry on business by entering into
contracts.
? The law relating to Contracts is found in the Indian
Contract, 1872
 
 
 
? The law of contracts differs from the other branches
of law.
? It does not lays down so many precise rights and
duties which the law will protect and enforce.
? It only contains a number of limiting principles,
subject to which parties may create rights and
duties for themselves.
? The law will uphold those rights and duties.
  
 


? mection 2 (h) of the Indian Contract Act, 1872

defines a contract as ´an agreement enforceable by
lawµ.
? mection 2 (e) defines agreement as ´every promise
and every set of promises forming consideration for
each otherµ
? mection 2 (b) defines promise as ´when the person
to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted. A
proposal when accepted becomes a promiseµ
 
 

 

? The Contract Act is e law of those agreements which

create obligations, and in the case of breach of a
promise by one party to the agreement, the other
has a legal remedy.
? All legal obligations are not contractual in nature.
? A legal obligation having its source in an agreement
only will give rise to a contract.
? An obligation which does not have its origin in an
agreement does not give rise to a contract.
? mome of the obligations are: torts or civil wrong,
judgments of courts, Contracts of records etc
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(5) Parties Competent to Contract

(6 ) Lawful object
(7) Agreements not declared void or illegal
(8) Certainty of meaning
(9) Possibility of performance
(10) Necessary legal formalities
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(1) Agreement:
? To constitute a Contract, there must be an agreement.
? An agreement is composed of two elements:
(a) Offer
(b) An Acceptance
? The party making an offer is known as offeror, and the
party to whom the offer is made , is known as the
offeree.
? Thus there are essentially to be two parties to an
agreement..
? They both must be thinking of the same thing in the
same sense.
? In other words, there must be consensus-ad-idem.
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(2) Intention to create legal relationship:

? There should be an intention on the part of the
parties to create a legal relationship.
? An agreement of a purely social or domestic
nature is not a contract.
? However, even in the case of agreements of
purely social or domestic nature, there may be
an intention of the parties to create legal
obligations.
? In that case, the social agreement is intended to
have legal consequences.
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(3) Free and Genuine Consent:
? The consent of the parties to an agreement.
? The consent of the parties should not be
obtained by misrepresentation, fraud, undue
influence, coercion or mistake.
? If the consent is obtained by any of these
sources, then the contract is not valid.
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(4) Parties competent to contract:

? According to mection 11 of the Indian Contract
Act, every person is competent to contract if he or
she is:
(i) Of the age of maturity
(ii) Of sound mind
(iii) Not disqualified for contracting by any law to
which he or she is subject to
? Therefore, if a party to a contract is suffers from
any of these flaws, the contract is unenforceable
except in certain exceptional circumstances
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(5) Lawful Consideration:

? The agreement must be supported by
consideration from both sides.
? Each party to the agreement must give or
promise something and receive something or a
promise to return.
? Consideration is the price for which the promise
of the other party is sought.
? However, this price need not be in terms of
money, it can be in terms of kind.
? The consideration must be real and lawful.
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(6) Lawful Object:

? The object of the agreement must be lawful and
not one which the law disapproves.
(7) Agreement not declared illegal orVoid:
? There are certain agreements which have been
declared illegal or void by the law.
? In such cases, even if an agreement possesses all
the elements of a valid contract, the agreement
may not be enforceable by the law.
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(8 ) Certainty of Meaning:
? The meaning of the agreement must be certain or
capable of being made certain , otherwise the
agreement will not be enforceable by law.
? For example, A agrees to sell 10 metres of cloth. But
this does not show what type of cloth is intended
for sale.
? Therefore, the agreement may not be enforceable by
law.
? However, if the special description of the cloth is
expressly stated, say Terry cot (80:20), the agreement
would be enforceable by law as there is no
uncertainty about its meaning.
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(9) Possibility of Performance:

? The terms of the agreement should be capable of
performance.
? An agreement to do an act impossible in itself
cannot be enforced by law.
? For instance, A agrees with B to discover
treasure by magic.
? much types of agreements cannot be enforced.
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( ) Necessary legal Formalities:
? A contract may be oral or in writing.
? However, if a particular type of contract is
required by the law to be in writing , it must
comply with necessary formalities as to writing,
registration, attestation etc, if necessary.
? If such legal formalities are not carried out, then
the contract is not enforceable by the law.
   




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(1) Who can demand Performance:
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1) Rescission of the Contract:

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(2) muit for Damages:

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Different kinds of damages:

  
  
   
 
 
  
     
 
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(1) Ordinary Damages:

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(1) Claim for necessaries supplied to a person
incapable of contracting or on his
account(mection 68):
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(2) Reimbursement to person paying money due by
another, in payment of which he is interested (mect 69):
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(3)Obligation of a person enjoying benefit of non-
gratuitous Act (mection 70)
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(4) Responsibility of finder of Goods (mection: 71)
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(5) Liability of a person to whom money is paid, or
thing delivered by mistake or under coercion
(mection 72):
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