The Indian Contract Act, 1872

What the Act governs

The Indian Contract Act, 1872 sets out the legal framework for forming, performing and ending contracts. The supplied document is an arrangement of sections rather than the complete wording of every provision.

Its listed subjects include:

• Communication, acceptance and revocation of proposals.
• The requirements for agreements to become contracts.
• Capacity to contract and soundness of mind.
• Consent, free consent, coercion, undue influence, fraud and misrepresentation.
• Lawful consideration and lawful objects.
• Void, voidable and contingent agreements.
• Performance of promises, including joint and reciprocal promises.
• Time, place and manner of performance.
• Appropriation of payments, novation, rescission and alteration.
• Compensation for breach of contract.

Who may be affected

The Indian Contract Act, 1872 may affect a property buyer, seller or owner who enters an agreement involving promises, payment, performance or an agent. It may also affect lenders, guarantors, sureties, principals, agents and people holding or pledging goods.

Property professionals may need to consider whether parties are competent to contract, whether consent was freely given, whether the agreement has a lawful object and what happens if a party does not perform. The listed provisions also address contracts made through agents and the extent to which a principal is bound by an agent's actions.

Key legal effects listed

The Indian Contract Act, 1872 includes provisions indicating that:

• Acceptance must be absolute, and promises may be express or implied.
• Agreements affected by lack of free consent may be voidable.
• Agreements with unlawful consideration or objects may be void.
• Agreements without consideration are generally void, subject to listed exceptions.
• Agreements involving impossible events or acts may be void.
• A party rightfully rescinding a contract may be entitled to compensation.
• Compensation may be available for loss or damage caused by breach.
• Guarantees obtained by misrepresentation or concealment are invalid.
• Sureties have specified liabilities, rights and grounds for discharge.
• Agents may have express or implied authority, and principals may be bound by authorised contracts.

Repealed material

Former Chapter VII of the Indian Contract Act, 1872, concerning sale of goods, is expressly marked repealed in the supplied text. Numerous related entries between sections 76 and 123 are also shown as repealed, so those entries should not be treated as operative provisions based on this document.