Infographics: Nature of Contracts

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Nature of Contracts
1
Ancient & Medieval Era
Hindu law sources (Vedas, 
Dharmashastras) governed 
contracts; no dedicated 
legislation.
2
Mauryan Period
Contracts viewed as bilateral 
transactions based on free 
consent and terms.
3
Mughal Era
Mohammedan Law: Aqd 
(contract), Ijab (proposal), 
Qabul (acceptance) requiring 
explicit consent.
4
British Period
English law applied in 
presidency towns; justice, 
equity, and good conscience 
elsewhere.
5
1872 Onwards
Indian Contract Act enacted 
on April 25, 1872, effective 
September 1, 1872.
Definition of Contract
Section 2(h) Definition
"An agreement enforceable by law"
A contract requires:
An agreement 1.
Enforceability by law 2.
Formula
Agreement = Offer + Acceptance + 
Consideration
Contract = Agreement + 
Enforceability
Essentials of a Valid Contract
Two Parties
At least two distinct 
parties: offeror and 
acceptor. Cannot 
contract with 
oneself.
Legal Intent
Parties must intend 
to create legal 
obligations; 
social/domestic 
agreements are not 
enforceable.
Formalities
Certain contracts 
require written form, 
witnesses, or 
registration.
1
Offer and Acceptance
Clear proposal and unequivocal 
acceptance forming "consensus 
ad idem."
2
Free Consent
Consent free from coercion, 
undue influence, fraud, 
misrepresentation, or mistake.
3
Capacity to Contract
Parties must be 18+, sound mind, 
and not legally disqualified.
4
Lawful Consideration
"Something in return" (quid pro 
quo) that is legal and valuable.
5
Lawful Object
Purpose must not be illegal, 
immoral, fraudulent, or against 
public policy.
6
Not Expressly Void
Agreement must not be declared 
void or illegal by law.
Types of Contracts: Validity Classification
Valid Contract
Binding and 
enforceable with all 
essential elements. 
Example: Sale of bike 
for ¹50,000.
Void Contract
Ceases to be 
enforceable by law. 
Example: Contract 
becomes void due to 
impossibility.
Voidable Contract
Enforceable at one 
party's option due to 
coercion, fraud, etc.
Illegal Contract
Prohibited by law and 
unenforceable. Example: Contracts 
against public policy.
Unenforceable Contract
Valid in substance but 
unenforceable due to technical 
defects (e.g., no writing, time 
limitation).
Types of Contracts: Formation Classification
Express Contract
Terms communicated verbally or in writing. Example: Phone call 
agreeing to sell house.
Implied Contract
Formed through conduct or actions. Example: Coolie picking up 
luggage implies payment.
Tacit Contract
Inferred from conduct without communication. Example: 
Withdrawing cash from ATM.
Quasi-Contract
Imposed by law without agreement. Example: Returning lost goods 
or mistaken payment.
E-Contract
Formed via electronic means (emails, EDI). Modern digital 
agreements.
Types of Contracts: Performance Classification
Executed Contract
Both parties have 
fulfilled obligations. 
Example: Cash sale at 
a grocery shop.
Executory Contract
Obligations to be 
fulfilled in the future. 
Example: Tuition 
starting next month.
Unilateral/Bilateral
Unilateral: One party 
performed, other 
pending. Bilateral: Both 
parties have pending 
obligations.
Proposal/Offer under Section 2(a)
"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."
Key Terminology
Promisor/Offeror
Person making the 
proposal
Offeree
Person to whom 
offer is made
Promisee/Acceptor
Person accepting 
the offer
Types of Offers
General Offer
Made to public; anyone 
can accept by 
performing the act. 
Case: Carlill v. Carbolic 
Smoke Ball Co.
Specific Offer
Directed to particular 
individual; only that 
person can accept.
Cross Offer
Identical offers made 
unknowingly; no 
contract as one isn't an 
acceptance.
Counter Offer
Acceptance with modifications, 
rejects original offer.
Standing/Open Offer
Remains available over time, common 
in tender processes.