The Indian Contract Act, 1872

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 to such act or abstinence, he is said to make a proposal.

When the 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.

The person making the proposal is called the ‘promisor’, and the person accepting the proposal is called the ‘promisee’.

When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise.

Every promise and every set of promises, forming the consideration for each other, is an agreement.

Promises which form the consideration or part of the consideration for each other, are called reciprocal promises.

An agreement not enforceable by law is said to be void.

An agreement enforceable by law is a contract.

An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract.

A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

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

Communication of proposal is complete when it comes to the knowledge of the person to whom it is made. Communication of acceptance is complete—as against the proposer, when it is put into a course of transmission out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer. Communication of revocation is complete—as against the person who makes it, when put into a course of transmission out of his power; as against the person to whom it is made, when it comes to his knowledge.

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 not afterwards.

A proposal is revoked—(1) by notice of revocation; (2) by lapse of prescribed/reasonable time; (3) by failure of acceptor to fulfil a condition precedent; (4) by death or insanity of proposer, if known to acceptor before acceptance.

Acceptance must—(1) be absolute and unqualified; (2) be expressed in a usual/reasonable manner, unless the proposal prescribes a manner.

Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.

Promises made in words are express; promises made otherwise than in words are implied.

Agreements are contracts if made—by free consent of parties competent to contract, for lawful consideration, with a lawful object, and not expressly declared void.

Consideration or object of an agreement is unlawful if it—is forbidden by law; defeats the provisions of any law; is fraudulent; involves injury to person/property; or is regarded as immoral or opposed to public policy.

An agreement made without consideration is void, unless—(1) written and registered, made on account of natural love and affection between near relatives; (2) a promise to compensate a person who has voluntarily done something for the promisor; (3) a promise, in writing and signed, to pay a time-barred debt.

No consideration is necessary to create an agency.