Law of Contract (1872):Nature of contract; Classification; Offer and acceptance; Capacity of parties to contract; Free consent; Consideration; Legality of object; Agreement declared void

3. On the basis of Validity or Enforceability

  •  Valid contract: If the contract entreed into by the parties and satisfies all the elements of a valid contract as per the act, it is said to be a valid contract.
  • Void contract: A contract which ceases to be enforceably by law is known as a void contract.A void contract is not enforceable by the court.Generally,a valid contract ceases to be enforceable on the change in circumstances or on the change of provisions of an act.
  • Voidable contract: When the contract is entered into without the free consent of party,it is considered as a voidable contract.The definition of the act states that a voidable contract is enforceably by law at the option at the option of one or more parties but not at option of the other parties.
  • Illegal Agreement: An illegal agreement is one which is forbidden by law.It cannot be enforced by any court.Not only that any associated or collateral transaction to an illegal agreement is also void.No action is allowed on an illegal agreement.No action can be taken for the recovery of the money paid under illegal agreement or for the breach of the illegal agreement.
  • Unenforceable contract: A contract which satisfies all the requirements of the contract but has technical defects is called an unenforceable contract.A contract is said to have a technical defect when it does not fulfil the legal formalities required by some other act.When such legal formalities are compiled with later on,the act becomes enforceable.

 
 
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1.4 Law of Contract – Offer and Acceptance

i. Proposal or Offer

According to Section 2(e) of the Indian Contract Act,”When one person signifies to another his willingness to do job,or to abstain from doing,anything with a view to obtaining the assent of the other to such act or abstinence,he is said to make a proposal.”

 1.4.1 Elements/Main features of a Proposal

  1. Existence of two parties

For a valid offer,there must be two parties.A person cannot make an offer to himself.

2. Communication

The offer must be communicated to the offence.If it is never communicated to the offence,it cannot be accepted and no valid contract comes into existence.

3. Willingness

The offer must show willingness of the offeror. Mere telling or sharing a plan is not an offer.

4. Intention of Obtaining Assent

The offer must be made with a view to obtain the assent of the offeree. The offer made out of a prank or as a joke is not valid offer,and therefore if accepted,it can never make the valid contract.

5. May be positive or Negative

The offer may involve doing something or not doing something-Section 2(o).The offer to do something is a positive offer or not to do something is a negative offer.

1.4.2 Legal Rules as to Offer

1. Offer Must be definite,Unambiguous and certain

They must be vague or indefinite. If the terms are vague, it is not capable of being accepted as the vagueness would not create any contractual relationship.

2. Offer should not bind the other party to reply

The offer should not bind the other party to reply.In the same way,if the offer should not contain terms,non- compliance of which may be assumed as acceptance.

3. Offer must be made to create legal relationship

While making the offer,the aim of the offerer should be to primarily create a legal obligation.An offer that creates only social or moral obligations does not constitute a valid agreement or contract.

4. The offer may be general or specific

An offer is called specific when it is made to an individual or a group of individuals.In case of a specific offer,only the person or group of persons to whom the offer is made can accept or reject the offer.

5. The offer may be express or implied.

An offer does not necessarily need to be express.it can also be implied.According to Section 9,a specific offer can be made in words-written or oral.

6. The offer should be a request and not an order.

The person making the offer has the right to set conditions to the acceptance of the offer,but he does not have any right to set conditions to the non-acceptance of the offer.

7. The offer must be for a possible act

Man can do only what is possible,and the laws accepts that.An offer or a proposal to do impossible is devoid of practicality or meaning.To make an offer which is humanly impossible is not recognized by law and as such there can be no compliance.

8. The offer must be communicated

An offer,to be complete,must be communicated to the person to whom it is made so that he can accept or not accept the offer.Unless the offer is communicated by the offerer (or by his agent) to the offeree,there can be no acceptance of the offer and as such,no agreement can be reached.

Law of Contract (1872): Nature, Classification, Offer & acceptance, Capacity of parties to contract, Free consent, Consideration, Legality of object

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1. Express Offer

The offer made by using words spoken or written is known as an express offer.

2. Implied Offer

The offer which could be understood by a conduct of parties or circumstances of case is called the implied offer.

3. Specific Offer

The offer made to a specific person or a particular person or two or more than two specific persons.The specific offer is made to an ascertained person.

4. General Offer

It is not necessary that the offer should be made to a specific person.The offer can bemade to the world at large.If the offer is made to the world at large,it is known as the general or public offer.

5. Cross Offer

When two parties exchange identical offers in ignorance at the time of each other’s offer, the offers are called cross offers. There is not binding contract in such a case, as one’s offer cannot be construed as acceptance by the other.

6. Continuous Offer

It is the offer which is open for a continuous period of time,it is also known as the open offer or the standing offer.

7. Counter Offer

When the offeree offers to qualified acceptance of the offer subject to modifications and variations in the terms of original offer, he is said to have made a counter offer. Counter-offer amounts to rejection of the original offer.

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