Unit 1: Indian Contract Act

Section 2(h): a contract is an agreement enforceable by law. Section 2(e): every promise and every set of promises forming consideration for each other is an agreement. Hence Contract = Agreement + Enforceability; "all contracts are agreements but all agreements are not contracts" (social, domestic and moral agreements are not).

Quasi-contracts

• Supply of necessaries to a person incapable of contracting (Section 68).
• Payment by an interested person (Section 69).
• Obligation to pay for non-gratuitous act (Section 70).
• Finder of goods (Section 71).
• Money paid or goods delivered by mistake or coercion (Section 72).

• Offer (Section 2(a)): signification of willingness to do or abstain from doing something with a view to obtaining the assent of the other.
• Types: express or implied; specific or general offer (Carlill v. Carbolic Smoke Ball Co., 1893); cross offers; counter offer; standing offer.
• Invitation to offer (price tags, catalogues, tenders, auctions) is not an offer — Pharmaceutical Society v. Boots (1953).
• Rules of acceptance: absolute and unconditional, communicated to the offeror, in the prescribed or usual manner, within reasonable time, by the offeree, before the offer lapses; silence is not acceptance (Felthouse v. Bindley, 1862).

Section 11: every person is competent who is of the age of majority (18), of sound mind (Section 12) and not disqualified by law.

• Minor: agreement is void ab initio (Mohori Bibee v. Dharmodas Ghose, 1903); no ratification on attaining majority; no estoppel; minor can be a beneficiary/promisee; liable for necessaries out of their property (Section 68); can be admitted to the benefits of partnership.
• Unsound mind: contracts during unsoundness void; lucid intervals allowed.
• Disqualified persons: alien enemies, foreign sovereigns, convicts, insolvents.

Consent (Section 13): agreeing upon the same thing in the same sense (consensus ad idem). Free consent (Section 14): not caused by:

Consideration

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

• Must move at the desire of the promisor; may move from the promisee or any other person (Chinnaya v. Ramayya, 1882); may be past, present or future; need not be adequate; must be real and lawful.
• "No consideration, no contract" (Section 25) — exceptions: natural love and affection (written and registered), compensation for past voluntary service, promise to pay a time-barred debt (written and signed), agency (Section 185), gifts actually made.

Legality of object (Sections 23–30)

The object or consideration is unlawful if it is forbidden by law, defeats any law, is fraudulent, injures person or property, or is immoral or opposed to public policy.

• Expressly void agreements: in restraint of marriage (Section 26), restraint of trade (Section 27 — except sale of goodwill), restraint of legal proceedings (Section 28), uncertain agreements (Section 29), wagering agreements (Section 30), agreements to do impossible acts (Section 56).

• Performance: actual performance or tender (offer to perform); by promisor, agent or legal representatives; joint promises — joint and several liability.

Remedies for breach

• Rescission: aggrieved party may cancel the contract (Section 39).
• Damages (Section 73): ordinary (naturally arising), special (if contemplated by both — Hadley v. Baxendale, 1854), exemplary (breach of promise to marry, dishonour of cheque), nominal; remote damages not recoverable; duty to mitigate loss.
• Liquidated damages and penalty (Section 74): reasonable compensation not exceeding the stipulated amount.
• Quantum meruit: payment for work done.
• Specific performance and injunction (Specific Relief Act, 1963).