The Indian Contract Act, 1872 governs contracts in India and is a foundational legislation for business and personal transactions. It lays down the principles for making, performing, and enforcing agreements. Below are the key concepts:

1. Definition of a Contract (Section 2(h))

• Contract: A legally enforceable agreement.
• Agreement: Every promise or set of promises that form the basis of a contract (Section 2(e)).
• Essential Elements:
  • Offer and acceptance.
  • Intention to create legal obligations.
  • Lawful consideration.
  • Capacity to contract.
  • Free consent.
  • Lawful object.
  • Certainty and possibility of performance.
  • Not expressly declared void.

2. Essentials of a Valid Contract
3. Offer (Section 2(a))

1. Definition: A proposal made by one party to another to do or abstain from doing something.
2. Characteristics:
   • Must be clear, definite, and communicated.
   • Can be general (to the public) or specific (to an individual).
   • Must not include a condition of silence.
   • Offer can be revoked before acceptance.

1. Acceptance (Section 2(b))

1. Definition: Assent by the offeree to the terms of the offer.
2. Characteristics:
   • Must be absolute and unqualified.
   • Must be communicated to the offeror.
   • Can be expressed or implied.

1. Consideration (Section 2(d))

1. Definition: Something of value given by both parties to a contract to induce mutual promises.
2. Characteristics:
   • Must be lawful and real.
   • Need not be adequate.
   • Can be past, present, or future.

1. Capacity to Contract (Sections 11-12)

1. Competent Parties:
   • Major (above 18 years of age).
   • Of sound mind.
   • Not disqualified by law (e.g., insolvents, aliens).

1. Free Consent (Sections 13-14)

1. Consent: Agreement between parties on the same thing in the same sense.
2. Free Consent: Consent not induced by coercion, undue influence, fraud, misrepresentation, or mistake.

1. Lawful Object (Section 23)

1. The object of the agreement must not:
   • Be illegal.
   • Defeat provisions of law.
   • Involve fraud or immorality.

1. Certainty and Possibility of Performance (Section 29)

1. The terms of the contract must be clear and capable of being performed.

1. Not Expressly Declared Void

1. Certain agreements are declared void by the Act (e.g., wagering contracts).

3. Types of Contracts
4. Based on Formation

1. Express Contracts: Terms explicitly stated.
2. Implied Contracts: Terms inferred from conduct.
3. Quasi-Contracts: Created by law to prevent unjust enrichment.

1. Based on Performance

1. Executed Contracts: Fully performed by both parties.
2. Executory Contracts: Performance is pending.

1. Based on Validity

1. Valid Contracts: Fulfill all legal requirements.
2. Void Contracts: Not enforceable by law (e.g., illegal agreements).
3. Voidable Contracts: Enforceable at the option of one party (e.g., contracts made under coercion).
4. Illegal Contracts: Prohibited by law.
5. Unenforceable Contracts: Lacking formal requirements like written agreements.

4. Performance of a Contract (Sections 37-67)

1. Obligation of Parties: Parties must perform or offer to perform their promises.
2. Who Can Demand Performance:
   • Promisee or any person authorized by the promisee.
3. Time and Place of Performance:
   • Must be performed within the agreed time and place.

5. Breach of Contract
6. Types of Breach

1. Actual Breach:
   • Occurs when a party fails to perform their obligation on the due date.
2. Anticipatory Breach:
   • Occurs when one party declares their intention not to perform before the due date.

1. Remedies for Breach

1. Damages (Section 73):
   • Compensation for loss or injury.
   • Types:
     • Ordinary damages.
     • Special damages.
     • Exemplary damages.
2. Specific Performance (Section 10):
   • The court orders the performance of the contract.
3. Injunction:
   • The court restrains a party from performing a specific act.
4. Rescission (Section 39):
   • A non-defaulting party can cancel the contract.
5. Quantum Meruit:
   • Payment for the value of services performed when the contract is terminated.

6. Contracts Declared Void

1. Agreements Without Consideration (Section 25):
   • Exceptions include promises made out of natural love and affection or under a written and registered agreement.
2. Agreements in Restraint of Trade (Section 27):
   • Void unless reasonable (e.g., non-compete clauses).
3. Agreements in Restraint of Marriage (Section 26).
4. Uncertain Agreements (Section 29).
5. Wagering Agreements (Section 30):
   • Contracts involving bets or games of chance.

7. Special Types of Contracts
8. Contracts of Indemnity (Section 124)

• A contract to compensate for losses suffered by one party due to the act of another.

1. Contracts of Guarantee (Section 126)

• A contract where a third party ensures the performance of the principal debtor.

1. Bailment (Sections 148–171)

• Delivery of goods by one party (bailor) to another (bailee) for a specific purpose.
• Duties of Bailee:
  • Reasonable care of goods.
  • Return goods after the purpose is fulfilled.

1. Pledge (Sections 172–181)

• Bailment of goods as security for payment of a debt.

1. Agency (Sections 182–238)

• Relationship where one person (agent) acts on behalf of another (principal).
• Termination:
  • By the act of parties.
  • By operation of law.

8. Landmark Cases

1. Carlill v. Carbolic Smoke Ball Co. (1893):
   • Concept of offer and acceptance in advertisements.
2. Mohori Bibee v. Dharmodas Ghose (1903):
   • Minors’ agreements are void.
3. Hadley v. Baxendale (1854):
   • Rule of remoteness in awarding damages.
4. Balfour v. Balfour (1919):
   • No intention to create legal relations in domestic agreements.

9. Contemporary Issues

1. E-Contracts:
   • Contracts formed via electronic means, governed by the IT Act, 2000.
2. Smart Contracts:
   • Contracts executed through blockchain technology.