Summary with key sections, concepts, and illustrations from The Indian Contract Act, 1872—especially useful for judiciary and UPSC preparation

Summary with key sections, concepts, and illustrations from The Indian Contract Act, 1872—especially useful for judiciary and UPSC preparation:

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The Indian Contract Act, 1872 – Key Sections & Concepts (with Illustrations)

1. Basic Definitions (Section 2)

• Proposal: Offer by one to another for doing or abstaining from doing something.

• Promise: Accepted proposal.

• Agreement: Promise(s) forming consideration for each other.

• Contract: An agreement enforceable by law.

• Void Contract: Not enforceable by law.

• Voidable Contract: Enforceable at the option of one party.

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2. Communication & Revocation (Sections 3 to 9)

• Communication complete:

  • Proposal: When it comes to knowledge of offeree.

  • Acceptance: Against proposer—when posted; against acceptor—when received.

• Revocation:

  • Proposal can be revoked before acceptance is posted.

  • Acceptance can be revoked before it reaches the proposer.

Illustration:
A sends a proposal by letter; B accepts by post.

• Revocation by A valid only before B posts acceptance.

• Revocation by B valid only before A receives the letter.

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3. Validity of Contracts (Sections 10–30)

Essentials of Valid Contract (Section 10):

• Free consent

• Competency

• Lawful consideration & object

Free Consent (Sections 13–19A):

• Coercion (15): Threatening act under IPC.

• Undue Influence (16): Exploiting dominance (e.g., doctor/patient).

• Fraud (17): Intentional deception.

• Misrepresentation (18): False statement believed to be true.

• Mistake (20–22): Common mistake = Void; unilateral mistake ≠ Void.

Illustration (Fraud):
A sells a horse knowing it is unsound but doesn’t mention it = Not fraud.
But if B is his daughter = duty to disclose → becomes fraud.

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4. Lawful & Unlawful Agreements (Sections 23–30)

• Unlawful Object/Consideration: Forbidden by law, immoral, injurious, or against public policy.

• Void Agreements:

  • Restraint of marriage (26)

  • Restraint of trade (27)

  • Uncertain agreements (29)

  • Wagering contracts (30)

Illustration:
A agrees to let his daughter to B for concubinage = Void for immorality.

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5. Contingent Contracts (Sections 31–36)

• Contract dependent on future uncertain event.

• Enforceable only if the event happens (or doesn’t).

Illustration:
A agrees to pay B if B's house burns down = Valid contingent contract.

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6. Performance of Contracts (Sections 37–67)

• Must be performed by promisor or legal representative unless personal.

• Reciprocal promises: Must be performed in order.

Illustration:
A promises to paint B's portrait. Only A can perform (not a third party).

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7. Quasi-Contracts (Sections 68–72)

• Based on principles of equity, not consent.

• Examples:

  • Necessaries to incapable person (Sec 68)

  • Finder of goods (Sec 71)

  • Payment made by mistake (Sec 72)

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8. Breach & Compensation (Sections 73–75)

• Compensation for actual loss/damages.

• Liquidated damages/penalty covered under Sec 74.

Illustration:
A contracts to deliver goods. He delays = liable for market difference in price.

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9. Indemnity & Guarantee (Sections 124–147)

• Indemnity: One party protects the other from loss (Sec 124).

• Guarantee: Tripartite contract—Surety, Principal Debtor, Creditor.

Important Concepts:

• Continuing Guarantee (Sec 129)

• Revocation by Death (Sec 131)

• Co-sureties' contribution (Sec 146, 147)

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10. Bailment & Pledge (Sections 148–181)

• Bailment: Delivery of goods for a purpose (e.g., safe-keeping).

• Pledge: Bailment of goods as security.

Illustration:
A delivers his watch to B for repair. B is bailee; A is bailor.

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11. Agency (Sections 182–238)

• Agent: Represents principal in dealings with third parties.

• Types of Authority: Express, Implied.

• Termination: Death, Insanity, Revocation, Completion.

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