Business Law - the Indian Contract Act 1872

The Indian contract Act 1872

* Business Law developed with the changing practices of trade and commerce.

* The Indian Contract Act, 1872 is the foundation on which all business relations rest.

* It is the branch of law which determines the circumstances in which promises made b the parties to a contract shall be legally binding.

* It also defines the remedies that are available against a person who fails to perform his contract, and prescribes conditions under the which the remedies are available.

* The Act originally had XI chapters and 238 sections.

* Chapter VII on Sale of goods Sections 73 to 123 has been repealed and new enactment Sale of goods Act came into existence.

* Chapter XI on Partnership (Sections 239 to 266) also was repealed.

What are Contracts ?

* An Agreement enforceable by Law is a Contract. - S.2(h)

* Every promise and every set of promises, forming the consideration for each other, is an Agreement . - S.2(e)

* When a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted.

A proposal, when accepted, becomes a Promise - S.2(b)

* When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a Proposal. - S.2(a)

* A person making the Proposal is called the "Promisor" and the person accepting the proposal is called the "Promisee". - S. 2(a)

Formation of a contract

refer to slides

Offer or Proposal

* An offer is an expression by one party

- of his assent to certain definitive terms,

- which looks forward to acceptance by the other

- to the exact same terms.

* Offeror/ Promisor: the one making the offer.

* Offeree/: the one to whom the offer is made.

* Acceptor of the offer is called the promisee or acceptor.

An Advertisement(refer to slides)

* Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

* Mrs. Elizabeth Carlill used the ball exactly according to instructions from Nov. to Jan., but she caught the flu. She sued for £100. The defence argued that:

1. The advertisement was not correctly stated;

2. She had not acted in reliance on the Ad.;

3. She had not used the device as directed;

4. She had not contracted influenza;

5. The Co. had no notice of her purchase;

6. There was no valid contract;

7. It was a gaming contract and not enforceable;

8. The advertisement was not a contractual offer or,

9. if it was, it was not accepted; and,

10. .If a contract, it was against public policy - void

* Reward doubled

* Communication, Acceptance and Revocation

* The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it.

- S.3

* Section 3 of Indian contact Act

The communication of

proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively,

are deemed to be made by any act or omission of the party

proposing, accepting or revoking,

by which he intends to communicate

such proposal, acceptance or revocation,

or which has the effect of communicating it.

* Section 3 rearranged

The communication of

proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively,

are deemed to be made by any act or omission of the party

proposing, accepting or revoking,

by which he intends to communicate

such proposal, acceptance or revocation,

or which has the effect of communicating it.

* Section 3 rearranged

The communication of

proposals,

the acceptance of proposals, and the revocation of proposals and acceptances, respectively,

are deemed to be made by any act or omission of the party

proposing,

accepting or revoking,

by which he intends to communicate

such proposal,

acceptance or revocation,

or which has the effect of communicating it.

* Section 3 rearranged

The communication of

proposals,

the acceptance of proposals,

and the revocation of proposals and acceptances, respectively,

are deemed to be made by any act or omission of the party

proposing,