Proposal (Offer) - When One Person Signifies To Another His

Proposal(offer)- 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 person, he is said to have
make a ‘proposal’
Promise- 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’.
Person making the proposal is called the ‘promisor’ and the

person accepting the proposal is called the ‘promisee’.
Agreement- Every promise and every set of promises,

forming the considerations for each other is an ‘agreement’. An
agreement enforceable by law is a ‘contract’.
Nature of Agreement-
- Enforceable agreements- An agreement enforceable by

law is a contract. All agreements which are enforceable by
law are contracts.
- Agreements which cannot be enforced by law- Such

agreements remain agreement and cannot become valid
contract.
Contract- An agreement between two or more parties under

which legal rights and obligations are created and which is
enforceable by law.
Classification of Contracts
Based on Based on Based of

enforceability formation performance
Valid contract Express Contract Executed
Void Contract Implied Contract Contracts
Executory
Voidable Contract Quasi contract Contracts
- Unilateral
Unenforceable - Bilateral
contracts
Illegal agreements
Void agreements
Social agreements
What agreements are contract
All agreements are contract if they are made by the (i) free
consent of the parties, competent to contract (ii) for a lawful
consideration and (iii) with a lawful object.
What is free consent? - Consent is said to be free if it is not

caused by
(i) Coercion (ii) undue influence (iii) fraud (iv) mistake and (v)
misinterpretation
Coercion- when a party is compelled to enter into a contract by

use of force by the other party or under threat. Example- P
threatens to shoot R if he does not let his house to him. R
agrees under threat.
Undue influence- A contract is said to be induced by undue

influence where (i) One of the party is in a position to dominate
the will of the and other(ii) One of the party is in a position to
obtain an unfair advantage over the other.
Fraud- Act of one party with the intent to deceive the other
party
Mistake- A agreed to sell to B a specific cargo from which was

on its way to Bombay port. However, the ship sunk and the
cargo was lost. Both A and B were unware of it at the time of
agreement.
Who are competent to contract? -Every person is

competent to contract who is (i) of the age of majority
according to the law to which he is a subject (ii) sound mind
and (iii) not disqualified from contracting by any law to which
he is a subject.
Unsound mind- lunatic, idiot, drunken at the time of contract,

mentally weak,
What considerations and object are lawful?
The considerations and object of an agreement is lawful unless

it is forbidden by law or of such nature that if permitted it
would defeat the provisions of law or it involves injury to the
person or property or it is fraudulent or is opposed to public
policy or Court regards it immoral.
Example- A promises to pay B Rs 5.00 Lakh if B secures an

employment for A. The agreement is void as the consideration
is a bribe which is unlawful.
A promises to pay B Rs 5000/ if he beats C. The agreement is

void as the object is unlawful.
Essential elements of a valid contract
1. Offer and acceptance

2. Intention to create legal relationship
3. Lawful consideration and object
4. Free consent
5. Capacity of the parties
6. Certainty of the meaning
7. Possibility of performance
8. Compliance of legal formalities
Distinction between
1. VOID CONTRACT-contract comes to existence but ceases to be
enforceable subsequently.
2. VIOABLE CONTRACT-A, a person of weak intelligence gifts his entire
property to B, his uncle under threat. The contract is voidable at the
option of A.
3. UNFORCEABLE CONTRACT-impossible to perform, also-technical
defects, stamp duty, registration etc.
4. ILLEGAL AGREEMENT- A borrows Rs 100000 from B to buy smuggled
goods. A however does not return the money.
5. VOID AGREEMENT – A invites B to a dinner party at a hotel, B
accepts but fails to attend. A has to pay to the hotel for B also.
7.EXPRESS CONTRACT
8.IMPLIED CONTRACT
9. QUASI CONTRACT-P, by mistakes, leaves some goods at Q’s
residence. Q starts using the goods. Q is bound to pay P for the same.
11.EXECUTED CONTRACTS
12. EXECUTORY CONTRACTS-
- Unilateral- Ajit hires a labour Moti daily wages basis. At the end of
each work day its Ajit’s obligation to pay Moti his wages.
- Bi-lateral-where both the parties are yet to perform their duties,
Examples-
1. A was badly in need of money. He offered to sell his

motor cycle worth Rs 50000/- to B for Rs 35000/-.B
refused and gave a counter offer of Rs 20000/- which A
agreed. Meanwhile A received another offer from C for the
purchase of the motor cycle at Rs 25000/-. A sold the
motor cycle to C and refused to deliver the bike to B
arguing that price was inadequate.
2. When A was out of station on holiday, a storm damaged

the roof of his house. B, his neighbour and a close friend,
carried out the necessary repairs of the roof for which B
incurred an expense of Rs 15000/- and A promised to pay
on return. Can B sue A in case he does not pay?
3. A gives Rs 5000/- to B to be given to C. B informs C that

he is holding the money for him. But later B refuses to pay
to C. C sues B.
4. X, a minor borrowed Rs 20000/- from Y and Z stood

guarantor for the repayment. Subsequently X refused to
pay. Can Y hold Z liable for the repayment?
5. M, a minor under a contract deliver goods to N, the buyer.

N later refused to pay arguing that M being minor cannot
sue him. Is N right in his argument?

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Proposal(offer)- When one person signifies to another his

willingness to do or to abstain from doing anything, with a view

Promise- When a person to whom the proposal is made,

Person making the proposal is called the ‘promisor’ and the

Agreement- Every promise and every set of promises,

- Enforceable agreements- An agreement enforceable by

- Agreements which cannot be enforced by law- Such

Contract- An agreement between two or more parties under

Based on Based on Based of

What agreements are contract

What is free consent? - Consent is said to be free if it is not

Coercion- when a party is compelled to enter into a contract by

Undue influence- A contract is said to be induced by undue

Mistake- A agreed to sell to B a specific cargo from which was

Who are competent to contract? -Every person is

Unsound mind- lunatic, idiot, drunken at the time of contract,

What considerations and object are lawful?

The considerations and object of an agreement is lawful unless

Example- A promises to pay B Rs 5.00 Lakh if B secures an

A promises to pay B Rs 5000/ if he beats C. The agreement is

1. Offer and acceptance

1. A was badly in need of money. He offered to sell his

2. When A was out of station on holiday, a storm damaged

3. A gives Rs 5000/- to B to be given to C. B informs C that

4. X, a minor borrowed Rs 20000/- from Y and Z stood

5. M, a minor under a contract deliver goods to N, the buyer.

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