Business law: INDIAN CONTRACT ACT

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Essay
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9 pages
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2824 words
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Business Law
INDIAN CONTRACT ACT
British mercantile law, Indian culture and society. Leading cases Indian
decision in supreme court.
Contract Act 1972
Sec. 10 of Indian contract act defines the essential characteristics of a
contract. They are:
i) Offer and acceptance - The offer should be a legal one. only
then there will be acceptance.
ii) Consideration - Both parties should give something and get
something in return.
iii) Capacity of parties - Minor doesn't have the power to enter a
contract, A person of unsound mind, a person under the
influence of alcohol drugs, Convicts
iv) Free consent - Willingness to perform is consent. There
should be no coercion. There should be no undue influence or
physical pressure.
v) Legality of objects - Object means purpose. The purpose for
getting into the contract should be a legal one.
vi) Possibility of performance - The offer in the agreement should
have the possibility of being performed.
vii) Intention to create legal relationship - The parties. should be
willing to create a legal and not a social relationship among
them.
viii) Legal formalities - The law says that a contract can be oral or
written. For the benefit of the parties, it is better for the
agreement to be written and registered.
Offer and Acceptance
Offer See 2 (a) - When a person signifies to another, his willingness to
do or not to do something with the intention of obtaining the other
party’s assent to it, it means he is making an offer. Person who makes
the offer in the offerer and the person to whom the offer is made is
the offeree Offer can be specific or general.
Types of Offer.
Express offer - Written or spoken
Implied offer - It is to be understood by the conduct of the other party
that an offer is being made.
Rules regarding offer
i) offer should be clear definite & free from ambiguity
ii) offer must be communicated to party for whom it is intended
(Lalman Vs Gauri Dutt)
iii) A declaration of intention doesn't amount to offer (Executive
Engineer Sundargad vs. Mohan Prasad Sahoo).
iv) offer should not contain any such terms, the non-fulfilment of
which will be taken as acceptance.
v) Any terms regarding the offer should be communicated to
offeree when the offer is made
vi) An invitation to offer is not an offer. (Harvey vs Facey)
Sec 2(b) Acceptance - When the offeree gives his assent to the offer
made to him, it means he has accepted the offer. If the offer is
accepted offerer becomes promiser and offeree becomes Promisee.
Types of acceptance.
Express - When acceptance is written or spoken it is express.
Implied offer - When it is to be understood by the conduct of the party
it is an implied acceptance.
Rules regarding acceptance.
i) See 7(1) Acceptance must be absolute A unqualified.
ii) Sec 7(2) Acceptance must be according to the prescribed
mode.
iii) Acceptance must be communicated (Bhagian Das Kedigo vs
Girdhari Lal)
iv) Silence doesn't amount to acceptance
v) Acceptance must be made within a reasonable time.
vi) Acceptance must be made by the party to whom the offer is
made
vii) Acceptance must be done before the offer is withdrawn or
cancelled.
*(Sec 4) - Communication of offer is completed when party for
whom it is intended comes to know of it.
-> Communication of letter of acceptance is complete against the
offerer when the letter of acceptance is sent by the acceptor
-> Communication of letter of acceptance is complete against the
acceptor when the letter of acceptance reaches the offerer.
Revocation of cancellation of offer (Sec 6).
i) The offerer by giving a notice to the offeree can withdraw the
offer but before the offer is accepted.
ii) The offer must be accepted within time limit given in the
offer. On the expiry of time limit offer lapses.
iii) On the death or insanity of offerer the offer comes to an end
but the news of death or insanity must be known to the
offeree before acceptance.

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