Indian Contract Act, 1872: Important Terms and Meanings | Law of Contracts in India

The Indian Contract Act, 1872, is a crucial piece of legislation that governs the law of contracts in India. Here is a list of 50 important terms from the Act along with their meanings:

1. Contract: An agreement that creates legal obligations between two or more parties.
2. Offer: A proposal made by one party to another, expressing the willingness to enter into a contract.
3. Acceptance: The expression of assent by the offeree to the terms of the offer.
4. Consideration: Something of value given by each party to the contract, which forms the basis for the agreement.
5. Free Consent: Both parties must enter the contract willingly and without any coercion, undue influence, fraud, or misrepresentation.
6. Void Contract: A contract that has no legal effect from the beginning and is not enforceable by law.
7. Voidable Contract: A contract that is valid but can be voided at the option of one or more parties due to certain legal defects.
8. Contingent Contract: A contract based on the occurrence of a specific future event.
9. Express Contract: A contract where the terms are explicitly stated, either orally or in writing.
10. Implied Contract: A contract where the terms are inferred from the conduct or actions of the parties.
11. Quasi Contract: An obligation imposed by law to prevent unjust enrichment even when no actual contract exists.
12. Unilateral Contract: A contract where only one party makes a promise to perform an act, and the other party accepts by performance.
13. Bilateral Contract: A contract where both parties exchange mutual promises to perform specific acts.
14. Executed Contract: A contract in which both parties have fulfilled their respective obligations.
15. Executory Contract: A contract in which one or both parties are yet to perform their obligations.
16. Counteroffer: A new offer made by the offeree in response to the original offer, thereby rejecting the original offer.
17. Invitation to Treat: A preliminary communication inviting offers without creating a legal obligation.
18. Revocation: The withdrawal of an offer before it is accepted.
19. Consideration is Necessary: Every contract must have consideration for it to be valid.
20. Lawful Object: The purpose of the contract must not be illegal, immoral, or against public policy.
21. Capacity to Contract: Parties entering into a contract must be of sound mind and not disqualified by law.
22. Minor: A person who has not attained the age of majority and is incompetent to contract.
23. Coercion: The use of force or threat to make someone enter into a contract against their will.
24. Undue Influence: Unfair persuasion exerted by one party over the other, exploiting the relationship between them.
25. Fraud: Intentional misrepresentation or concealment of facts to deceive the other party.
26. Mistake: An erroneous belief held by one or both parties at the time of contract formation.
27. Unlawful Consideration: Consideration that involves illegal activities or is against public policy.
28. Restraint of Trade: A contractual clause that restricts a person’s freedom to carry on a lawful profession, trade, or business.
29. Time is of the Essence: A clause indicating that time limits in the contract are crucial and must be strictly adhered to.
30. Frustration of Contract: When an unforeseen event occurs, rendering the contract impossible to perform.
31. Novation: The substitution of an existing contract with a new one, with different terms or parties.
32. Bailment: Transfer of goods from one person (bailor) to another (bailee) for a specific purpose and duration.
33. Pledge: A bailment of goods as security for repayment of a debt or performance of a promise.
34. Indemnity: A promise to compensate for any loss or damage suffered by the promisee.
35. Quantum Meruit: A reasonable sum payable for services or goods even if there is no fixed contract price.
36. Lien: A right to retain possession of another person’s property until a debt or claim is satisfied.
37. Guarantee: A contract where one person agrees to be liable for the debts or obligations of another person.
38. Warranty: A promise given by the seller about the quality and performance of goods being sold.
39. Anticipatory Breach: A situation where one party indicates their intention not to perform their obligations before the performance is due.
40. Liquidated Damages: A pre-estimated amount of compensation agreed upon by the parties in case of a breach.
41. Specific Performance: A court order requiring a party to fulfill their contractual obligations.
42. Reciprocal Promises: Mutual promises made by the parties, forming the basis of a contract.
43. Agreement Expressly Declared Void: Certain agreements, specified in the Act, which are considered void.
44. Past Consideration: Consideration for a promise based on a prior act or service done before the promise was made.
45. Section 10: Section of the Indian Contract Act that deals with the elements of a valid contract.
46. Section 23: Section of the Act that specifies which considerations and objects are unlawful.
47. Section 56: Section of the Act that deals with the doctrine of frustration.
48. Section 73: Section of the Act that deals with the measure of damages in case of a breach of contract.
49. Section 74: Section of the Act that allows the courts to grant compensation in case of a breach of contract.
50. Section 126: Section of the Act that deals with the rights and liabilities of a surety.

CA Rakesh Agarwalla

Founder, Agarwal Coaching Centre

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