Indian Contract Act: Debts and Privity

Questions and Answers

What is a quasi-contract?

A contract with offer and acceptance

A contract imposed by law where no real contract exists (correct)

A legally binding agreement between two parties

A contract that is enforced by an agreement between parties

A void contract can be enforced by a court of law.

False

What distinguishes an offer from an invitation to offer?

An offer is a final expression of willingness, while an invitation to offer proposes terms for negotiation.

A contract enforced by law without a real contract existing is called a __________.

quasi-contract Signup and view all the answers

Match the following definitions with the correct terms:

Quasi-contract = Imposed legal obligations arising without a formal contract Void contract = A contract that cannot be enforced in law Offer = Final willingness to enter into a contract Invitation to offer = Proposal of terms for negotiation Signup and view all the answers

Under which section of the Indian Contract Act, 1872, is a void contract defined?

Section 2 (j) Signup and view all the answers

In a self-service system, the shopper's selection constitutes a legally binding contract once items are placed in a basket.

False Signup and view all the answers

Can Shambhu Dayal be compelled to sell the articles selected by Smt. Prakash?

No, he cannot be compelled because it is an invitation to offer, not a binding contract. Signup and view all the answers

A __________ contract is one that is not enforceable by law.

void Signup and view all the answers

What is one of the characteristics of a quasi-contract?

It exists only during certain conditions imposed by law Signup and view all the answers

Study Notes

Time-Barred Debts

Section 25(3) of the Indian Contract Act, 1872 states an agreement to pay a time-barred debt is valid if in writing and signed by the debtor or agent, regardless of consideration.
In the case of Mr.G, who agreed to repay a time-barred loan to Mr.Y, the contract is valid if the legal stipulations are met.

Privity of Contract

Under the Indian Contract Act, only parties to a contract can initiate a lawsuit based on that contract; this is known as the “doctrine of privity of contract.”
Exceptions exist that allow a stranger to a contract to enforce a claim, such as:
- Trusts: beneficiaries can enforce their rights even if they are not parties to the original contract.

Characteristics of Contracts

"All contracts are agreements, but all agreements are not contracts”: a contract is a legally enforceable agreement.
An agreement becomes a contract only if it creates a legal obligation enforceable by law; agreements without intention to create legal relations are non-binding.

Quasi-Contracts

Quasi-contracts arise not from actual agreements but from legal obligations imposed by law under certain circumstances.
An example includes the obligation of a finder of lost goods to return them to the true owner.

Void Contracts

A void contract is one that cannot be enforced by law, as defined in Section 2(j) of the Indian Contract Act. It becomes void when it ceases to be enforceable.

Invitation to Offer

An offer represents a final willingness to enter into a contract, while an invitation to offer is merely a proposal inviting others to make offers.
In self-service scenarios, taking items does not constitute a contract until payment is accepted, highlighting the distinction between an offer and an invitation to offer.

Description

Explore key concepts from the Indian Contract Act, 1872, focusing on time-barred debts and the doctrine of privity of contract. Understand the conditions under which agreements regarding time-barred debts are valid and the implications for parties involved in a contract. Test your knowledge with this engaging quiz.