1) Introduction :-
a) The law of contract is the most important branch of Mercantile Law. Without such a law it would be difficult, if not impossible, to carry on any trade or business in a smooth manner. The law of contract is applicable not only to business but also to all day-to-day personal dealings.
b) Indian Contract Act 1872 Branch of Private Law law is
differenet from other other Branches of law.
c) Contract Act is one of the most important central laws
that regulates and oversees all the business whereever a deal or an agreement
is to be reached at without Contract Act, it would have been difficult to carry
on trade or any other Business Activity.
d) In case, a particular matter is not covered by any section
of the Contract Act or by anyother law in f orce in India, the courts may
follow the principles of English Common Law, provided they are not inconsistent
with Indian conditions and circumstances.
e) Indian Contract Act 1872 helped to human Create own legal obligation.
f) Indian Contract Act 1872 Contain total 266 Section. Act
Consists of Two Parts :-
Part 1:- Sec. 1 to Sec. 75
- General Principle of the Law Of Contract
Part 2:- Sec. 124 to
Sec. 238 - Special Kinds Of Contract
a) Sec. 124 -
Sec. 147 - Indemnity, Guarantee
b) Sec. 148 -
Sec. 181 - Bailment , Pledge
c) Sec. 182 -
Sec.238 - Agency
Note :- 1) Sec. 76 to Sec.123
Total 48 Section Repealed by Sales of Goods Act 1930.
2) Sec. 239 to
Sec. 266 Total 28 Section Repealed by Indian Partnership Act 1932.
2) Meaning Of Contract :-
As a result of increasing complexities of business
enviornment , innumeraable contracts are entered into by the parties in the usual
course of carrying on their business.
Contract is the most usual method of definining the give and
take rights and duties in a business transaction.
The word contract is derived from the Latin word “contractum”
which means “drawn together”. It denotes a drawing together the minds of two or
more persons to form a common intention giving rise to an agreement. A Contract
is an agreement enforceable by Law , which offers personal rights and imposes
personal obligations , which the law protects and enforces against the parties
to the agreement.
3) Definitions Of Contract
:-
a) According to Sir John Salmond, a contact means “An
agreement creating and defining obligations between parties”.
b) Sir William Anson defines a contract as “A Legal binding
agreement between two or more persons by which rights are acquired by one or
more acts or forbearance on the part of the other or others”.
c) According to Pollock, an “Every agreement and promise enforceable at law is contract”.
d) The Indian Contact Act 1872, Sec 2(h) defines a contract
as follows “An agreement enforceable by law is a contract”.
4) History Of Indian Contract Act 1872 :-
In the year 1861,the third law commission of British India under the chairmanship of Sir John Romily presented the report on contract law f or India. The law commission submitted a draft on 28th July 1866.The draft contract law after several amendments was enacted as The Act 9 of 1872 on 25th April 1872 and the INDIAN CONTRACT ACT 1872 came into force w.e.f 1st September 1872.The Indian Contract Act, 1872 is one of the oldest in the Indian law regime, passed by the legislature of pre-independence India; it received its assent on 25th April 1872. The statute contains essential principles for formation of contract along with law relating to indemnity, guarantee, bailment, pledge and agency.
Applicability & Scope :-
a) Effective from - 1st September 1872
b) Applies - Whole of India ( Note 2)
c) Nothing Herein Contained Shall affect :-
- Provisions of any
Statute Act or Regulation not hereby expressly Repealed.
- Any Usage or
Custom Of Trade
- Any incident of
any Contract not inconsistent with the provision of this Act.
Note 2:- Words except the state of Jammu and Kashmir Omitted
By Act 34 of 2019. Section 95 and the Fifth Schedule w.e.f. 31-10-2019
- Jammu and
Kashmir Reorganization Act 2019 ( 9th August 2019 )
Contractual Rights And
Obligations
The law of contract consists of a number of limiting f actors subject to which the parties may create rights and duties f or themselves which the law will enforce.
It deals with two rights:
(1) Jus in Personam ( Means Rights against a Specified Per
Son )
(2) Jus in Rem ( Meants Rights against a Thing )
Jus IN PERSONAM :-
Example: If ‘X’ has a right to get back a sum of Rs.10000 from ‘Y’ that right can be exercised only by ‘X’ but not by others because the right ‘X’ has against ‘Y’ is a right in personam. ‘X’ cannot enforce that right against anyone else except ‘Y’.
RIGHTS IN REM :-
If ‘Salman’ owns a plot of land and ‘Amir’ is the adjacent owner, the right of ‘Salman’ to have uninterrupted possession and employment of that land is available not only against ‘Amir’ but against every member of the public. Similarly everyone except ‘Salman’ is under an obligation not to interfere with ‘Salman’s possession or enjoyment, because the rights of ‘Salman’ in respect of that land are Rights in rem. The rights to property are all “Rights in Rem”.
7) Important Definition under Indian Contract Act 1872 :-
1) Proposal (Offer) :- Section 2 (a) of the Indian Contract Act " When one person signifies to to another his willingness to do or to abstain from doing anything , with a view to obtaining the assent of that offer to such Act or Abstinence , he is said to make a proposal.
2) Promise :- Section 2 (b) of the indian Contract Act, " A Proposal , when accepted ,becomes a Promise."
3)Promisor & Promisee :- Section 2 (c) of Indian Contract Act , The Person making the proposal is called the " promisor " and the person accepting the Proposal is Called the " Promisee ".
4) Consideration :- Section 2 (d) of Indian Contract Act,
" When at the desire of the Promisor , the Promisee or any other Person -
a) has done or
abstained from doing or (Means in Past)
b) Does or abstains
from doing or ( Means in Present)
c) Promises to do or
to abstain from doing something ( Means in Future )
Such act or abstinence or Promise is called a consideration for the Promise."
In Simple Words, Consideration means something in return. It is also def ined as the price paid by one party to buy the promise of the other.
5) Agreement :- Section 2 (e) of Indian Contract Act, "
Every Promise and Every Set of Promises forming the Consideration for Each
other, is an Agreement."
Example :- d. For example, Ramesh offers to sell his , for Rs. 8,000 to Shyam. Shyam accepts this offer. It becomes a promise and lrcdted as an agreement between Ramesh and Shyarn. in other words, an agreement consists of an offer by one party and its acceptance by the other.
Thus,
Agreement = Offer + Acceptance.
6) Reciprocal Promise :- Section 2 (f) of Indian Contract Act, "Promises Which from the Consideration or Part of the Consideration for Each other are called Reciprocal Promises.
7) Void Agreement :- Section 2 (g) of Indian Contract Act, "An agreement not Enforceable by law is said to be void."
8) Contract :- Section 2 (h) of Indian Contract Act, "
An Agreement Enforceable by Law is a Contract."
Combination of an agreement and the enforceability of the
Agreement.
Contract = Agreement + Enforceable by Law
Example :- A agrees to with C to sell Bike for Rs. 1 lacs to C. Here A is under an obligation to give Bike to C and C has the Right to Receive the Bike on payment of Rs. 1 lacs and also C is under an obligation to pay Rs. 1 lacs to A and A has a right to Receive 1 lacs.
9) Voidable Contract :- Section 2 (i) of Indian Contract Act, " Am agreement which is enforceable by Law at the option of one or more of the parties thereto, but not at the option of their or others is a Voidable Contract."
10) Void Contract :- Section 2 (j) of Indian Contract Act,
" A Contract which ceases to be enforceable by law becomes void when it
ceases to be enforceable."
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