1. By: Anuj Aggarwal

2.  The act is based on English Common Law made up of judicial
precedents. It extends to the whole of India except the state of
J&K.
 It is divided into two main groups:
1. General principles of the law of contract (Secs 1-75).
2. Specific types of contracts:
a) Contracts of Indemnity and Guarantee (Secs 124-147)
b) Contracts of Bailment and Pledge (Secs 148-181)
c) Contracts of Agency (Secs 182-238)

3.  Every promise and every set of promises, forming
the consideration for each other, is an agreement.
{Section 2(e)}
 A person makes a proposal (Offer). When it is
accepted by other, it becomes a promise
(Acceptance). Thus, Offer + Acceptance = Promise
 Only a mutual promise forming consideration for
each other is ‘agreement’. Thus, Promise +
Consideration = Agreement
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4.  “An agreement enforceable by law” is
Contract. - Section 2(h)
 There must be legal relationship.
◦ Agreements of social or domestic nature are not
contracts.
◦ Example: Invitation to a Birthday party
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5. 1. Proper offer and its acceptance
2. Intention to create legal relationship.
3. Lawful consideration
4. Capacity of parties to contract
5. Free Consent
6. Lawful Object
7. Certainty of meaning.
8. Possibility of performance.
9. Not expressly declared void
10. Legal formalities
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6.  In order to create a valid contract, there must
be a 'lawful offer' by one party and 'lawful
acceptance' of the same by the other party.
‘Lawful’ means it satisfies the requirements
of the Contract Act.
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7.  Agreements which create legal relations or are
capable of creating legal relations are contracts, for
example, an invitation to a dinner does not create any
legal relation and therefore is not a contract.
 Husband & Wife Agreements
The courts consider domestic arrangements between
husband and wife to be social agreements and not
legally enforceable. {Balfour v Balfour}

8.  When, at the desire of the promisor, the
promisee or any other person
 has done or abstained from doing (PAST), or
 does or abstains from doing (PRESENT), or
 promises to do or to abstain from doing,
something (FUTURE),
 such act or abstinence or promise is called a
consideration for the promise. -Section 2 (d)
 A promise without consideration is not
‘agreement’
 Gratuitous promise is unenforceable.
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9. CAPACITY OF PARTIES
 The parties to an agreement must be
competent to contract. If either of the parties
does not have the capacity to contract, the
contract is not valid. Following persons are
incompetent to contract.
(a) Minors,
(b) Persons of unsound mind, and
(c) Persons disqualified by law.
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10.  Two or more persons are said to consent when they
agree upon the same thing in the same sense. (Section
13)
 It is known as “Consensus Ad Idem”
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11.  Consent of both parties must be free.
Consent is said to be free when it is not caused by:
(1) coercion, as defined in section 15
(2) undue influence, as defined in section 16
(3) fraud, as defined in section 17
(4) misrepresentation, as defined in section 18
(5) mistake, subject to the provisions of sections
20, 21 and 22.
 If the agreement is vitiated by first four factors, then
contract would be voidable.
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12.  The object for which the contract has been
entered into must not be fraudulent or illegal
or immoral or opposed to public policy.
 For instance, a landlord knowingly lets a
house to be used for carrying out illegal
activity, he can’t recover rent in a court of
law.
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13.  If the act is impossible in itself, physically or
legally, if cannot be enforced at law. For
example, Mr. A agrees with B to discover
treasure by magic. Such Agreements are not
enforceable.
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14.  The terms of a contract should be clear. In
other words, the contract must not be
vague. Contracts which are vague cannot be
enforced.
 It must be possible to ascertain the
meaning of the agreement, otherwise, it
cannot be enforced.

15.  There are Certain agreements which have been
expressly declared void by the law. Thus an
agreement made by parties should not fall in this
category. For ex agreements in restraint of marriage,
trade or legal proceedings.
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16.  Oral contract is a valid contact. However the contract
must be in writing and registered, if so required by any
law, for example, gift, mortgage, sale, lease under the
Transfer of Property Act 1882, Memorandum and
Articles of Association of a Company under the Indian
Companies Act etc.
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17.  Valid Contract – when all the essential elements are present.
 Voidable Contract – According to Section 2(i), “an agreement
which is enforceable by law at the option of one or more of the
parties thereto, but not at the option of the other or others, is a
voidable contract.”
 Void Contract – It implies ‘not binding in law’{Section 2(j)}.
 Unenforceable Contract – a contract which has all the
elements of a contract, but neither party can sue the other.
 Illegal Contract - It implies ‘contrary to law’.

18.  Agreements in restraint of marriage (Sec. 26)
 Agreements in restraint of trade (Sec. 27)
 Agreements in restraint of legal proceedings
(Sec. 28)
 Agreements the meaning of which is uncertain
(Sec. 29)
 Agreements by way of Wager (Sec. 30)
 Agreements contingent on impossible events
(Sec. 36)
 Agreements to do impossible acts (Sec. 56)

19. THANKYOU