Indian Contract Act 1872 Overview
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Questions and Answers

What does it mean for parties to have legal competency in a contract?

It means the parties must have the legal capacity to enter into a contract, without any incapacity due to status, such as being a minor or mentally incompetent.

What is meant by 'free and genuine consent' in contract law?

It means the parties must mutually agree on the contract terms without any coercion, undue influence, fraud, or misrepresentation.

What constitutes a lawful object in a contract?

A lawful object means the contract's subject matter must not be illegal, immoral, or against public policy.

Why is certainty and possibility of performance important in contracts?

<p>Certainty ensures that the contract terms are clear and definite, while possibility means that the obligations must be feasible to perform.</p> Signup and view all the answers

What happens if an agreement is declared void by law?

<p>If an agreement is expressly declared void by law, it cannot be enforced and is treated as if it never existed.</p> Signup and view all the answers

What are legal formalities required for a contract?

<p>Legal formalities can include whether the agreement must be in writing and whether it requires registration, attestation, or stamping.</p> Signup and view all the answers

Can a minor enter into a valid contract?

<p>No, a minor generally cannot enter into a valid contract due to lack of legal competency.</p> Signup and view all the answers

Explain what is meant by the term 'consensus ad idem'.

<p>Consensus ad idem refers to the mutual agreement and shared understanding between the parties on the terms of the contract.</p> Signup and view all the answers

What does discharge by agreement or consent in a contract entail?

<p>It means that a contractual obligation can be terminated by mutual agreement of the parties involved.</p> Signup and view all the answers

What is novation in the context of contract discharge?

<p>Novation occurs when a new contract replaces an existing one between the same parties or introduces a third party.</p> Signup and view all the answers

How does rescission affect a contract?

<p>Rescission cancels all or some terms of the contract, either by mutual consent or when one party fails to perform.</p> Signup and view all the answers

What does alteration refer to in contract law?

<p>Alteration refers to the modification of one or more terms of a contract with mutual consent between the parties.</p> Signup and view all the answers

What is remission regarding contractual obligations?

<p>Remission is the acceptance of a lesser fulfillment of a promise made, accepting a partial payment as full satisfaction.</p> Signup and view all the answers

What does waiver mean in the context of contracts?

<p>Waiver occurs when parties mutually agree to no longer be bound by the contract terms.</p> Signup and view all the answers

Can a contract be discharged by implied agreement?

<p>Yes, a contract can be discharged by implied agreement as long as the parties consent.</p> Signup and view all the answers

What role does mutual consent play in contract discharge?

<p>Mutual consent is crucial as it enables parties to agree on discharging or modifying contract obligations.</p> Signup and view all the answers

What type of consideration is not valid under English law?

<p>Past consideration.</p> Signup and view all the answers

How is a promise to pay a time-barred debt enforceable?

<p>It must be made in writing and signed by the debtor or their authorized agent.</p> Signup and view all the answers

What is the legal status of a completed gift regarding consideration?

<p>The rule 'No consideration, no contract' does not apply to completed gifts.</p> Signup and view all the answers

Is consideration necessary to create an agency?

<p>No, consideration is not necessary to create an agency.</p> Signup and view all the answers

What age defines a minor under the Indian Majority Act, 1875?

<p>A minor is a person who has not completed 18 years of age.</p> Signup and view all the answers

What happens to agreements made by minors?

<p>They are generally void and inoperative.</p> Signup and view all the answers

What is required for a charitable subscription to hold legal weight?

<p>The promisee must make commitments that change their position to their detriment.</p> Signup and view all the answers

What must a person have to enter into a valid contract?

<p>They must be of age of majority, of sound mind, and not disqualified by law.</p> Signup and view all the answers

What happens to a contract if one party fails to fulfill their promise within the specified period?

<p>The contract becomes voidable at the option of the promise.</p> Signup and view all the answers

Describe what makes an agreement illegal or unlawful.

<p>An agreement is illegal if its object or consideration is prohibited by law or against public policy.</p> Signup and view all the answers

What is meant by an unenforceable contract?

<p>An unenforceable contract cannot be enforced in court due to technical defects like absence of writing or lapse of time.</p> Signup and view all the answers

How is an express contract formed?

<p>An express contract is formed when the terms are expressly agreed upon, either in spoken or written form.</p> Signup and view all the answers

What characterizes an implied contract?

<p>An implied contract is inferred from the conduct of the parties, not explicitly stated in words.</p> Signup and view all the answers

Define what a quasi contract is.

<p>A quasi contract resembles a contract but lacks all the essentials for a valid contract; it is created by law.</p> Signup and view all the answers

What is an E-Commerce contract?

<p>An E-Commerce contract is an agreement entered into between parties via the internet.</p> Signup and view all the answers

Give an example of a situation that constitutes a quasi contract.

<p>An example would be the obligation of a finder of lost goods to return them to the true owner.</p> Signup and view all the answers

What is meant by recession in contract law?

<p>Recession refers to the cancellation of a contract by one party due to the other party's breach, allowing the injured party to refuse further performance.</p> Signup and view all the answers

How can damages be classified in the case of a breach of contract?

<p>Damages can be classified into ordinary damages, special damages, vindictive damages, and nominal damages.</p> Signup and view all the answers

What type of damages are awarded for losses that arise naturally from a breach of contract?

<p>These are known as ordinary damages or damages arising naturally.</p> Signup and view all the answers

What is an example of special damages in a breach of contract?

<p>An example is when a seller provides poisonous feed, leading to losses incurred by a buyer who sold it to farmers.</p> Signup and view all the answers

Why are vindictive or exemplary damages generally not awarded in contract law?

<p>They are considered punitive and are not aimed at compensating the injured party for losses.</p> Signup and view all the answers

What are nominal damages in the context of a contract breach?

<p>Nominal damages are a small amount awarded when the injured party hasn't suffered any actual loss.</p> Signup and view all the answers

What happens to a party's obligations when a contract is rescinded due to breach?

<p>The non-breaching party is absolved of all obligations under the contract.</p> Signup and view all the answers

In a contract to sell wheat, how can a seller's refusal to fulfill the contract impact damage claims?

<p>The buyer can claim damages reflecting the price difference due to market changes, such as Rs. 23 per quintal.</p> Signup and view all the answers

What is the basis for a right when the original contract is void?

<p>The right is based on an implied promise by the other party to pay for what has been done.</p> Signup and view all the answers

What does specific performance involve in the context of contract breaches?

<p>Specific performance involves directing the party in breach to fulfill their promise according to the contract's terms.</p> Signup and view all the answers

How does an injunction function in relation to negative terms of a contract?

<p>An injunction restrains a party from doing something they promised not to do.</p> Signup and view all the answers

What is a contingent contract?

<p>A contingent contract is one where the promisor's performance depends on the fulfillment of certain conditions.</p> Signup and view all the answers

Give an example of a scenario that constitutes a contingent contract.

<p>A promises to pay B Rs. 20,000 if B's house is damaged by fire.</p> Signup and view all the answers

What are the key essentials of a contingent contract?

<p>There must be an existence of a contingency, it must be uncertain, and the event must be collateral to the contract.</p> Signup and view all the answers

What is the significance of a contingency being uncertain in a contingent contract?

<p>The contingency must be uncertain; if it is certain, the contract does not qualify as contingent.</p> Signup and view all the answers

In the example of the actor W, what action did the court take against his breach of contract?

<p>The court issued an injunction to restrain W from performing for Z.</p> Signup and view all the answers

Flashcards

Valid Contract Elements

A contract must meet specific legal requirements to be enforceable.

Legal Capacity

Parties must be legally able to enter a contract (e.g., not a minor).

Genuine Consent

Parties must agree willingly, without coercion, fraud, undue influence, or mistake.

Lawful Object

The purpose of the contract must be legal and not against public policy.

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Certainty and Possibility

Contract terms must be clear and the agreement possible to fulfill.

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Void Agreement

An agreement that's considered invalid by law.

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Legal Formalities

Some contracts require specific documentation (e.g., written, stamped, registered).

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Classification of Contracts

Different types of contracts exist based on various criteria (e.g., types of agreements or obligations).

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Voidable Contract

A contract that can be cancelled by one party due to a breach by another party.

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Illegal Agreement

A contract that is against the law or public policy.

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Unenforceable Contract

A contract that cannot be enforced by a court due to technical flaws.

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Express Contract

A contract where terms are clearly stated in words (spoken or written).

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Implied Contract

A contract that is inferred from the actions of the parties, not explicitly stated.

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Quasi Contract

A contract created by law, resembling a contract, where no agreement exists.

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E-Commerce Contract

A contract formed electronically(internet), between parties.

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Void Ab Initio

A contract that is completely invalid from its inception.

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Discharge by Agreement

A contract ends due to the mutual consent of the parties.

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Novation

Replacing an existing contract with a new one involving the same parties or new parties.

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Rescission

Canceling all or part of a contract by mutual agreement or one party's failure to perform.

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Alteration

Changing terms of a contract with mutual consent, ending the original contract.

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Remission

Accepting a partial fulfillment of a promise in satisfaction of the whole.

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Waiver

Parties agree to no longer be bound by a contract; no new consideration needed.

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Express agreement

Contract termination, clearly stated in words.

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Implied agreement

Contract termination, understood from actions or circumstances.

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Void Contract (Minor)

An agreement with a minor is legally invalid and cannot be enforced.

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Indian Majority Act 1875

A law stating that a person who is under 18 years of age in India is considered a minor.

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Past Consideration

Something already done cannot be used as a reason for a contract.

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Time-barred Debt

Debt that is no longer legally recoverable because the time limit to sue for it has passed.

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Completed Gift

A gift that has already been given doesn't require consideration for it to be a valid contract.

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Contractual Capacity

Ability of a party to enter into valid contracts.

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Consideration (English Law)

Something of value exchanged between parties to create a contract.

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Agency (No Consideration Needed)

Creating an agency (relationship) doesn't need any exchange of value (consideration).

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Damages (Contract Law)

Money paid to a person who has been harmed by a broken contract. It compensates for the loss suffered due to the breach.

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Natural Damages

Damages that are directly and logically caused by the breach of contract. They are the normal, expected consequences.

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Special Damages

Damages that are beyond the usual and expected consequences of a breach. They can be claimed if both parties knew about the potential for these specific damages.

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Exemplary Damages (Punitive)

Damages awarded as punishment for a bad-faith contract breach. Unlike regular damages, these aim to deter future wrongdoing.

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Nominal Damages

Very small damages awarded when a breach occurred but there's no actual financial loss. It acknowledges the plaintiff's right to sue, but there's minimal harm.

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Specific Performance

A court order forcing a party to fulfill their contractual promise when monetary damages aren't sufficient.

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Injunction

A court order preventing someone from doing something they promised not to do in a contract.

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Contingent Contract

A contract where a party's obligation to perform depends on the occurrence or non-occurrence of a specific event.

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What is a key characteristic of contingent contracts?

The event that triggers the obligation must be uncertain.

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Example of a Contingent Contract

A promises to pay B Rs. 20,000 if A's house is damaged by fire.

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What must the event in a contingent contract be?

The event must be collateral to the contract, not the performance itself or consideration for a promise.

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Is a contract where payment is due if a certain date arrives contingent?

No, because the date is not uncertain. It's a fixed event, not collateral to the agreement.

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Study Notes

Indian Contract Act 1872

  • The Indian Contract Act 1872 outlines the law of contracts in India, primarily based on English common law.
  • It applies nationwide, except Jammu and Kashmir.
  • Effective September 1, 1872.
  • The Act doesn't cover all aspects of contract law; other laws address specific areas, like negotiable instruments and partnerships.

General Principles of Contract

  • A contract is an agreement legally enforceable.
  • Two essential components:
    • An agreement between two parties.
    • Enforceability under law.

Essential Elements of a Valid Contract

  • Offer and acceptance
  • Intention to create legal relationships
  • Lawful consideration— something of value exchanged
  • Capacity of parties (e.g., not minors)
  • Free and genuine consent (not coerced, fraudulent, etc.)
  • Lawful object (not illegal or immoral)
  • Certainty and possibility of performance (clear terms)
  • Legal formalities (e.g., written agreement)

Void Contracts and Void Agreements

  • Void contracts have no legal effect from the outset.
  • Void agreements are initially valid but later become void due to certain conditions.

Classification of Contracts

  • Based on validity:
    • Valid contracts
    • Void contracts
    • Voidable contracts
    • Illegal agreements
    • Unenforceable contracts
  • Based on Formation:
    • Express contracts
    • Implied contracts
    • Quasi contracts
    • E-commerce contracts
  • Based on Performance:
    • Executed contracts
    • Executory contracts
    • Unilateral contracts
    • Bilateral contracts
  • Consent is not free if influenced by:
    • Coercion
    • Undue influence
    • Fraud
    • Misrepresentation
    • Mistake

Lawful Object

  • The purpose of the contract must be lawful.
  • Illegality, immorality, and public policy violations render the agreement void.

Consideration

  • Something of value exchanged by both parties in a contract.
  • It is necessary for a legally binding contract and is what is needed for the consideration to be valid.

Contingent Contracts

  • A contingent contract's performance is conditional on an uncertain event.
  • Its execution depends on the occurrence or non-occurrence of an event.

Quasi Contracts

  • A contract is implied by law.
  • Prevents a party from unjustly benefiting from a transaction.

Discharge of Contract

  • A valid contract's termination due to:
    • Performance
    • Agreement
    • Impossibility
    • Breach
    • Lapse of Time
    • Operation of law (e.g., bankruptcy)

Remedies for Breach of Contract

  • Means available to the injured party when the other party breaches an agreement.
    • Recession
    • Damages (monetary compensation for loss suffered)
    • Specific performance (court order to fulfill contractual obligations)
    • Injunction (court order to stop a certain activity)

Incapacity of Parties

  • Parties incapable of entering into valid contracts include:

    • Minors
    • Persons of unsound mind

  • Specific rules apply for minors and persons of unsound mind.

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Description

Explore the key features and principles of the Indian Contract Act 1872. This quiz covers essential elements of a valid contract, distinguishes between void contracts and agreements, and highlights the enforceable agreements between parties within the legal framework of India. Test your understanding of contract law!

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