The Indian Contract Act 1872 is a comprehensive guide that governs contracts and agreements in India. The act was passed to provide a legal framework for contract law and has been amended several times over the years to keep up with changing economic conditions.
The Indian Contract Act of 1872, which is based on the principles of English Common Law, governs the provisions concerning contracts in India (except the state of Jammu and Kashmir). The regulation deals with the framing and validation of contracts or agreements and is the central legislation that regulates and oversees the businesses pursued through such arrangements.
The act was enacted in 1872 by the British regime, and its primary objective is to govern contracts throughout India. It extends over all territories within Indian jurisdiction except for the state of Jammu & Kashmir (which is an autonomous region). The act has been amended several times since then. The latest amendment took place in 2018 when Section 65A was added to make it easier for parties who are not located near each other physically but can still communicate through electronic means such as email or text messages – this new provision ensures that they have equal legal rights!
What Is The Meaning Of The Indian Contract Act 1872?
The Indian Contract Act of 1872 is a comprehensive legal framework that controls all commercial relationships in India. The act lays down the rules and regulations that need to be followed while entering into a contract and also provides remedies for breach of contract. It is one of the oldest acts in India and has been amended several times over the years to keep up with changing economic conditions
What Are The Key Provisions Of The Indian Contract Act 1872?
- The offer and acceptance rule: This rule states that an agreement can only be formed when there is an offer from one party and acceptance from the other party.
- Intention to create legal connections: According to this rule, the people signing the contract must follow the law.
- Free consent: The act lays down the rules for determining whether or not there is free consent between two parties.
- The capacity of parties: This provision states that every party who enters into a contract must be competent enough to understand its implications and consequences, and must agree to abide by them.
Consideration
Consideration refers to something which is offered in return for another thing. For example, you may offer your services as payment for goods purchased from a store owner or vice versa.
Contracts voidable at the option of one party:-
- a) A contract can be cancelled if it was entered into under undue influence (e.g., force).
- b) A contract can be cancelled if it was entered into under coercion (e.g., threatening to kill someone).
- c) A contract can be cancelled if one party is mistaken about the other party’s identity or vice versa.
- d) A contract can only be made voidable at the option of one party if both parties are not aware of its contents before signing it. For example, you might buy a house without knowing that there is asbestos in its walls and floors. In such cases, you may cancel your purchase agreement because you were unaware that this could cause serious health issues for your family members later on time – but only after making necessary enquiries with an expert first!
Contracts voidable due to fraud:- A contract can be cancelled if it is found that one of the parties has deceived the other party into agreeing.
Proposal
A contract is initiated by making a proposal or offer to another party. The person making such an offer/proposal is the promisor or offeror, and the one who accepts the same is the promisor or acceptor.
Acceptance
Section 2(b) of the Indian Contract Act suggests that a proposal is accepted when the person to whom it is made signifies his/her assent. A proposal so accepted becomes a promise. Acceptance must be in line with the following specifications:
- It has been communicated.
- It is absolute and unqualified.
- It is only communicated to the offeror.
- It is issued in the prescribed manner.
- It is issued before the specified lapse of time (if any) or within a reasonable time.
- It isn’t made before an offer is communicated.
- Mere silence doesn’t constitute acceptance.
A proposal can be revoked prior to the communication of its acceptance; a proposal once accepted cannot be revoked.
FAQs
What Are The Remedies Available In Case Of Breach Of Contract?
- a) Rescission: This remedy allows you to cancel the contract and get back any money or goods that you have already given to the other party.
- b) Damages: This remedy allows you to claim damages from the other party for any losses that you have suffered as a result of the breach.
- c) Specific performance: If damages are not an adequate remedy, you may ask the court to order the breaching party to perform its obligations under the contract.
- d) Injunction: This remedy allows you to ask the court to order the other party not to do something that it is prohibited from doing under the contract.
- e) Arbitration: If the parties are unable to resolve a dispute through negotiations, they can take the matter to arbitration, where an arbitrator will listen to both sides and make a decision accordingly.
What Are Lawful Consideration?
Consideration refers to an act where an acceptor obliges to the desire of the proposer or promises to do so. An agreement must be supported by a lawful consideration, the essentials of which include the following:
- It must be processed in accordance with the desire of the promisor.
- It may be fulfilled by the acceptor or any other person (the Indian law allows the performance of consideration from the acceptor or any other person).
- It must be an act, abstinence, forbearance or a returned income.
- It may be in the past, present or future. Past consideration finds its place in the Indian law but is absent in the English law.
- It must be real, competent and legally valuable.
- It must be something which the promisor isn’t bound to do.
- It need not be adequate.
A consideration would be lawful, except under the following circumstances:
- It is forbidden by law.
- It is potentially injurious to a person or property of another.
- The court considers it to be immoral.
- Its nature would defeat the provisions of law.
- It is fraudulent in nature.
- It is opposed to public policy.
- It involves trafficking in public offices and titles. On this note, it is clarified that agreements for sale or transfer of public offices or procurement of any for public recognition for monetary consideration are not within the permitted legal rights.
No agreements shall form a consideration if it:
- Restrains legal proceedings.
- Isn’t conducive to personal liberty.
- Is a marriage brokerage contract.
- Deals with marital duties.