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The Indian Contract Act, 1872 (Act no. 9 of 1872)

Title
The Indian Contract Act, 1872 (Act no. 9 of 1872)
Table of Contents
Indian Contract Act 1872Chapter I Of the communication, acceptance and revocation of proposals 3. Communication, acceptance and revocation of proposals4. Communication when complete  5. Revocation of Proposals and acceptance  6. Revocation how made Chapter II Of contracts, violable contracts and void agreements  10. What agreements are contracts  11. Who are competent to contract 19. Voidability of agreements without free consent   20. Agreement void where both parties are under mistake as to matter of fact  Chapter IV Of the performance of contracts Contracts which must be performed  39. Effect of refusal of party to perform promise wholly  42. Devolution of joint liabilities 43. Any one of joint promisors may be compelled to perform 44. Effect of release of one joint promisor  45. Devolution of joint rights  46. Time for performance of promise, where no application is to be made and no time is specified 47. Time and place for performance of promise, where time is specified and no application to be made  49. Place for the performance of promise, where no application to be made and no place fixed for performance  51. Promisor not bound to perform, unless reciprocal promisee ready and willing to perform 52. Order of performance of reciprocal promises  55. Effect of failure to perform a fixed time, in contract in which time is essential  65. Obligation of person who has received advantage under void agreement, or contract that becomes void Chapter VI Of the consequences of breach of contract 73. Compensation of loss or damage caused by breach of contract  74. Compensation of breach of contract where penalty stipulated for Chapter X Agency, Appointment and authority of agents 182. "Agent" and "principal" defined - 188. Extent of agent's authority -189. Agent's authority in an emergency - 227. Principal how far bound, when agent exceeds authority -   228. Principal not bound when excess of agent's authority is not separable -  
Content

Indian Contract Act 1872



Chapter I Of the communication, acceptance and revocation of proposals


 


3. Communication, acceptance and revocation of proposals



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

4. Communication when complete  


 
The communication of a proposal is complete when it becomes to the knowledge of the person to whom it is made.

The communication of an acceptance is complete -as against the proposer, when it is put in a course of transmission to him so at to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer.

The communication of a revocation is complete -as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it;as against the person to whom it is made, when it comes to his knowledge.

5. Revocation of Proposals and acceptance  


 
A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but no afterwards.  

6. Revocation how made 


 
A proposal is revoked -

(1)  by the communication of notice of revocation by the proposer to the other party;

(2)  by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;

(3)  by the failure of the acceptor to fulfil a condition precedent to acceptance; or

(4) by the death or insanity of the proposer, if the fact of the death or insanity comes to the knowledge of theacceptor before acceptance.

[...]

Chapter II Of contracts, violable contracts and void agreements 



 

10. What agreements are contracts  


 
All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.

11. Who are competent to contract 



Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is sound mind and is not disqualified from contracting by any law to which he is subject.

[...]

19. Voidability of agreements without free consent  


 
When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to contract, whose consent was caused by fraud or mispresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the position in which he would have been if the representations made had been true.

Exception : If such consent was caused by misrepreentation or by silence, fraudulent within the meaning of section 17, the contract, neverthless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

Explanation : A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.  

[...]

 

20. Agreement void where both parties are under mistake as to matter of fact  


 
Explanation : An erroneous opinion as to the value of the things which forms the subject-matter of the agreement,is not be deemed a mistake as to a matter of fact.

[...]

Chapter IV Of the performance of contracts Contracts which must be performed 



 

39. Effect of refusal of party to perform promise wholly 


 
When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract,unless he has signified, by words or conduct, his acquiescence in its continuance.

[...]

 

42. Devolution of joint liabilities 


 
When two or more person have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives, and, after the death of any of them, his representative jointly with the survivor or survivors, and, after the death of the last survivor the representatives of all jointly, must fulfil the promise.

43. Any one of joint promisors may be compelled to perform 


 
When two or more persons make a joint promise, the promise may, in the absence of express agreements to the contrary, compel any one or more of such joint promisors to perform the whole promise.

Each promisor may compel contribution : Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.

Sharing of loss by default in contribution : If any one of two or more joint promisors make default in such contribution, the remaining joint promisors mus bear the loss arising from such default in equal shares.

Explanation : Nothing in this section shall prevent a surety from recovering, from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payments made by the principal.  

44. Effect of release of one joint promisor 



Where two or more persons have made a joint promise, a release of one of such joint promisors by the promisee does not discharge the other joint promisor,neither does it free the joint promisor so released from responsibility to the other joint promisor or joint promisors.

 

45. Devolution of joint rights 


 
When a person has made a promise to two or more persons jointly, then unless contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any one of them, with the representative of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all jointly.  

 

46. Time for performance of promise, where no application is to be made and no time is specified 



Where, by the contract, a promisor is to perform his promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time.

Explanation : The question "what is a reasonable time" is, in each particular case, a question of fact.

47. Time and place for performance of promise, where time is specified and no application to be made 


 
When a promise is to be performed on a certain day, and the promisor has undertaken to perform it without the application by the promisee, the promisor may perform it at any time during the usual hours of business on such day and at the place at which the promise ought to be performed.

[...]

 

49. Place for the performance of promise, where no application to be made and no place fixed for performance 


 
When a promise is to be performed without application by the promisee, and not place is fixed for the performance of it, it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise, and to perform it at such a place.

[...]

 

51. Promisor not bound to perform, unless reciprocal promisee ready and willing to perform 


 
When a contract consists of reciprocal promises to be simultaneously performed, no promisor need perform his promise unless the promisee is ready and willing to perform his reciprocal promise.

52. Order of performance of reciprocal promises 


 
Where the order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order, and where the orders is not expressly fixed by the contract, they shall be performed in that order which the nature of transaction requires.

[...]

 

55. Effect of failure to perform a fixed time, in contract in which time is essential 


 
When a party to a contract promises to do a certain thing at or before a specified time, or certain thins at or before a specified time and fails to do such thing at or before a specified time, and fails to do such thing at or before a specified time, the contract or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of essence of the contract.

Effect of such failure when time is not essential: If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.

Effect of acceptance of performance at time other than agreed upon: If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than agree, the promisee cannot claim compensation of any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of acceptance, he give notice to the promisor of his intention to do so.

[...]

 

65. Obligation of person who has received advantage under void agreement, or contract that becomes void 


 
When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore, it, or to make compensation for it, to the person from whom he received it.

[...]

Chapter VI Of the consequences of breach of contract 



73. Compensation of loss or damage caused by breach of contract 


 
When a contract has been broken, the party who suffers by such breach is entitled to receive, form the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

Such compensation is not to be given for any remote and indirect loss of damage sustained by reason of the breach.

Compensation for failure to discharge obligation resembling those created by contract : When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.

Explanation : In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by non-performance of the contract must be taken into account.

 

74. Compensation of breach of contract where penalty stipulated for 


 
When a contract has been broken, if a sum is named in the contract as the amount be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss or proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.

Explanation : A stipulation for increased interest from the date of default may be a stipulation by way of penalty.

Explanation : When any person enters into any bail bond, recognisance or other instrument of the same nature or, under the provisions of any law, or under the orders of the Central Government or of any State Government, gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of the condition of any such instrument, to pay the whole sum mentioned therein.

[...]

Chapter X Agency, Appointment and authority of agents



 

182. "Agent" and "principal" defined -


 
An "agent" is a person employed to do any act for another, or to represent another in dealing with third persons. The person for whom such act is done, or who is so represented, is called the "principal".

[...]

 

188. Extent of agent's authority -


 
An agent, having an authority to do an act, has authority do every lawful thing which is necessary in order to do so such act.An agent having an authority to carry on a business, has authority to do every lawful thing necessary for the purpose, or usually done in the course, of conducting such business.  

189. Agent's authority in an emergency -


 
An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss and would be done by a person or ordinary prudence, in his own case, under similar circumstances.  

[...]

 

227. Principal how far bound, when agent exceeds authority -  



When an agent does more than he is authorised to do, and when the part of what he does, which is within his authority, can be separated from the part which is beyond his authority, so much only of what he does as is within his authority is binding as between him and his principal.

 

228. Principal not bound when excess of agent's authority is not separable -  



Where an agent does more than he is authorised to do, and what he does beyond the scope of his authority cannot be separated from what is within it, the principal is not bound to recognise the transaction.
Referring Principles
A project of CENTRAL, University of Cologne.