Law of Contract – I

Course outline

The law of contract is such an important subject which applies in almost every once life where
people are willing to create legal obligation. This branch of law deals with law relating to promises, their
formation, performance and enforceability. It is scattered over several legislations. The main object of
this course is to build the transactional capability in the students.

This paper will include a study of general principles of contracts mentioned in sections1-75 of
the Indian Contract Act, 1872. The remaining provisions of this Act will be covered separately in next
paper of III Semester – Law of Contract – II (Specific Contracts, partnership Act and Sale of Goods Act,).
The statutoryprovisions would be supplemented with judicial pronouncements.

Prescribed Legislations:

(a) The Indian Contract Act, 1872

(b) The Specific Relief Act, 1963

Prescribed Books:

1. NilimaBhadbhade, Pollock &Mulla, Indian Contract & Specific Relief Acts

2. JogaRao S. V. Cases and materials on contract LexusNexis, ButterWorths Publication.
3. Athiya, P. S. Essays on Contract ,OxfordUniversity Press London.
4. Friedman Law in the changing society Univeristy Book House Delhi.
5. H.K. Saharay, Dutt on Contract – The Indian Contract Act, 1872
6. Avtar Singh, Law of Contract and Specific Relief, Eastern Book Company
Reference Books:

1. M.P.Furmston, Cheshire, Fifoot and Furmston’sLaw of Contract (16th ed., 2008)

2. J. Beatson, Anson’s Law of Contract (28th ed., 2002), English Language Book Society & Oxford
University Press, London.
3. Cheshire ad Fiefoot Cases and Materials on Contract, ButerWorths London,
4. Moitra’sCommentries on Law of Contract, Estern Book publications 2008.
5. Macneil Economic analysis of contractual relations 13 stainford L. R.
Law Commission Report

1. 13th report of Law Commission of India on law of Contract.

2. 9th Report of Law Commission of India, on Specific relief Act
3. 147th Report of law Commission of India on Specific relief Act 1963.

Course Contents for Law of Contract - I

Unit 1 : Genesis of contract

Contract: meaning of contract, how to make, Types of Contract

Unit 2 : Formation of an Agreement

Intention to create legal relationship; offer and invitation to treat; kinds of offer,communication,
acceptance and revocation of offer and acceptance; modes of revocation ofoffer - Indian Contract Act,
1872, sections 2 – 10, Standard form of Contract.

Related case laws

1. Carlillv. Carbolic Smoke Ball Co. (1891-4) All ER Rep.127

2. Pharmaceutical Society of Great Britainv. Boots Cash Chemist
(Southern) Ltd. (1952) 2 All ER Rep. 456
3. Balfour v. Balfour (1918-19) All ER 860 (CA)
4. LalmanShuklav. GauriDatt(1913) XL ALJR 489 (All.)
5. BhagwandasGoverdhandasKediav. M/s. Girdharilal
Parshottamdas& Co., AIR 1966 SC 543
6. M/s. J.K. Enterprises v. State of M.P., AIR 1997 MP 68
7. M/s. Progressive Constructions Ltd. v. Bharat Hydro Power
Corporation Ltd., AIR 1996 Del. 92
U nit 3 : Consideration

Meaning; basis and the nature of consideration; Doctrine of Privity of Contract and ofconsideration, its
exceptions; Exceptions of consideration – Indian Contract Act, 1872,sections 2(d), 2(f), 23 and 25

Related case laws

08. KedarnathBhattacharjiv. GorieMahomed(1886) 7 I.D. 64 (Cal.)
09. DoraswamiIyerv. ArunachalaAyyar(1935) 43 LW 259 (Mad.)
10. Abdul Aziz v. Masum Ali, AIR 1914 All. 22
11. Venkata Chinnaya Rau v. Venkataramaya Garu
(1881) 1 ID 137 (Mad.)
12. NawabKhwaja Muhammad Khan v. NawabHusainiBegam
(1910) LR 37 I.A. 152

Unit 4 : Capacity to Contract

Legal disability to enter into contract - Minors, persons of unsound mind ; person under legaldisability;
lunatics, idiots; Restitution in cases of minor’s agreement; Liability for necessariessupplied to the minor -
Indian Contract Act, 1872, sections 10, 11, 12, 64, 65, 68; SpecificRelief Act, 1963, section 33; Indian
Majority Act, 1875

Related case laws

13. MohoriBibeev. DhurmodasGhose(1903) 30 I.A. 114
14. Khan Gulv. Lakha Singh, AIR 1928 Lah. 609
15. Ajudhia Prasad v. ChandanLal, AIR 1937 All. 610
16. R. Lingarajv. Parvathi, AIR 1975 Mad. 285
17. RajinderKaurv. Mangal Singh (1987) 91 PLR 444
Unit 5 : Free Consent

Free consent ; Definition – Coercion, Undue influence, Fraud, Misrepresentation andMistake; Effect on
contracts influenced by any factor vitiating free consent - Indian ContractAct, 1872, sections 13 – 22

Related case laws

18. Raghunath Prasad v. Sarju Prasad (1923) 51 I.A. 101
19. Subhas Chandra Das Mushibv. Ganga Prasad Das Mushib,
AIR 1967 SC 878
20. Lakshmi Amma v. T. Narayana Bhatta, 1970 (3) SCC 159
21. Tarsem Singh v. Sukhminder Singh (1998) 3 SCC 471
Topic 6 : Limitations on Freedom of Contract

Circumstances in which agreements become void or voidable, Distinction between void andvoidable
agreements; Unlawful Agreements; Public policy; Agreements with unlawfulconsideration in part and
objects; Agreements without consideration; Agreements in restraintof marriage; Agreements in
restraint of trade; Agreements in restraint of legal proceedings;Ambiguous and uncertain agreements &
Wagering agreements -Indian Contract Act, 1872,sections 23 – 30, Contingent contract , Sec.31-36.

Related case laws

22. GherulalParakhv. MahadeodasMaiya, AIR 1959 SC 781
23. Niranjan Shankar Golikariv. Century Spinning & ManufacturingCo. Ltd., AIR 1967 SC 1098
24. Central Inland Water Transport Corpn. Ltd. v. BrojoNathGanguly(1986) 3 SCC 156(Also see D.T.C.
v. D.T.C. Mazdoor Congress, AIR 1991 SC 101;Bank of India v. O.P. Swarankar, AIR 2003 SC 858)
25. Dhurandhar Prasad Singh v. JaiPrakashUniversity,AIR 2001 SC 2552
Topic 7 : Discharge of a Contract

Modes -Discharge by performance; Frustration; Supervening impossibility of performance;Grounds of

Frustration and its effect; Discharge by Agreement and Novation – IndianContract Act, 1872, sections 37
– 67

Related case laws

26. SatyabrataGhosev. MugneeramBangur& Co., AIR 1954 SC 44
27. M/s. AlopiParshad& Sons Ltd. v. Union of India,AIR 1960 SC 588
28. Punj Sons Pvt. Ltd. v. Union of India, AIR 1986 Del. 158
29. Easun Engineering Co. Ltd. v. The Fertilizers & ChemicalsTravancore Ltd., AIR 1991 Mad. 158

Topic 8 : Quasi – Contracts

Obligations resembling those created by Contract (Quasi – Contracts) : Concept and
classification - Indian Contract Act, 1872, sections 68 – 72

Related case laws

38. State of West Bengalv. S.K. Mondal& Sons, AIR 1962 SC 779
Topic 9 : Remedies for Breach of Contract

(a) Damages; Types of Damages ; Basis of Assessment of Damages; Remoteness ofDamages and
Measures of Damages; Mitigation of Damages; Penalty & Liquidated Damages– Indian Contract Act,
1872, sections 73 – 74

Related case laws

30. Hadley v. Baxendale(1843-60) All ER Rep. 461
31. AKAS Jamal v. MoollaDawood, Sons & Co. (1915) XX C.W.N. 105
32. Karsandas H. Thacker v. M/s. The Saran Engineering Co. Ltd.,AIR 1965 SC 1981
33. M/s. MurlidharChiranjilalv. M/s. HarishchandraDwarkadas,AIR 1962 SC 366
34. MaulaBuxv. Union of India, AIR 1970 SC 1955
35. Shri Hanuman Cotton Mills v. Tata Air Craft Ltd., 1969 (3) SCC 522
36. Ghaziabad Development Authority v. Union of India,
AIR 2000 SC 2003
37. Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd.(2003) 4 SCALE 92
Topic 10 : The Specific Relief Act, 1963

Recovering possession of property (Sec.- 5 to 8), Specific performance of contract (Sec.- 9 to 25) ,
Declaratory Decrees (Sec.- 34 to 35), Preventive Relief (Sec.- 36 to 43)