PRELIMINARY

1. Short title.—This Act may be called the Indian Contract Act, 1872. Extent, Commencement.

Extent. —It extends to the whole of India, except the state of Jammu and Kashmir.

Commencement. — It shall come into force on the first day of September, 1872.

DEFINITIONS

(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;

(b) 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;

(c) The person making the proposal is called the “promisor”, and the person accepting the

proposal is called the “promisee”;

(d) 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;

(e) Every promise and every set of promises, forming the consideration for each other, is an

agreement;

(f) Promises which form the consideration or part of the consideration for each other are called

reciprocal promises;
(g) An agreement not enforceable by law is said to be void;

(h) An agreement enforceable by law is a contract;

(i) 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;

(j) A contract which ceases to be enforceable by law becomes void when it ceases to be

Enforceable.

Offer

The term “proposal” has been defined in Section 2(a) of the act, as “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”. For eg. A’s willingness to sell
his radio set to B for Rs. 500 with intention to consent of B. But if a statement is made without any
intention to obtain the assent of the other party thereto, that cannot be termed as proposal.

Elements of proposal
•Expression of willingness to do or abstain from doing something

•Made with the object of obtaining assent of the other

Thus the person making the proposal is called the ‘proposer’, or ‘offeror’ or ‘promisor’ and the
person to whom the proposal is made is called the ‘proposee’, or ‘offeree’, or ‘promisee’.

Offers must be communicated

Section 2(a) of the Act explains that a person is said to make a proposal
 “when he signifies to another person his willingness to do or to abstain from doing something”.
The emphasis, here, is upon the requirement that the willingness to make a proposal should be
“signified”. The terms signify means to or communicate to make known. It thus requires that
the offer must be communicated to the other person.

Express or Implied offer

Offer is either express or implied. When the offer is made by express communication then the offer
is said to be an express offer. The express offer can be either in words or in written format. Whereas
when the offer is not communicated expressly but communicated by conduct or by the
circumstances of the case, the offer is called an implied offer. For eg. A says to B that he will sell his
bike to B for Rs.30, 000, it is an express offer. For eg, a bid at an auction is an implied offer.

Completion of Communication

S. 4 The communication of a proposal is complete when it comes to the knowledge of the person to
whom it is made. An offer cannot be accepted unless and until it has been brought to the knowledge
of the person to whom it is made. For eg. A cannot be said to make an offer to B unless A brings the
offer to the knowledge of B. Thus, acting in ignorance of an offer does not amount to acceptance of
the offer.

CASE LAW

In Lalman Shukla v. Gauri Dutt, The plaintiff was in the defendant's service as a servant. The
defendant’s nephew absconded and the plaintiff went to find the missing boy. In the plaintiff’s
absence, the defendant issued handbills, offering a reward of Rs 501 to anyone who might find the
boy. The plaintiff traced him and claimed the reward. The plaintiff did not know of the handbills
when he found the boy. The court held that the plaintiff was not entitled to a reward. If the person
has the knowledge of the offer, his acting in accordance with the terms thereof amounts to the
acceptance of the same. In such a case, it is immaterial that at the time of accepting the offer, the
acceptor does not intend to claim the reward mentioned in the offer.
Intention to Contract

In order that an offer, after acceptance, can result in a valid contract, it is necessary that the
offer should be made with an intention to create a legal relationship. Promise in case of social
engagements is generally without an intention to create legal relationships. Such an agreement,
therefore, cannot be considered to be a contract. For eg. An agreement to go for movies, for a
walk, to play some game, cannot be enforced in a court of law. The test to know the intention
of the parties is objective and subjective, merely because the promisor contends that there was
no intention to create legal obligation would not exempt him from the liability.

Offer may be general or specific

When the offer is made to a specific or ascertained person, it is known as specific offer. It
can be only accepted by the person to whom the offer is made or to the person duly
authorized by him. When the same is made to any particular person but to the public at
large, it is known as general offer. A general offer can be accepted by any person. Illustration
‘A’ advertises in the newspaper that whosoever finds his missing son would be rewarded with
2 lakh. ‘B’ reads it and after finding the boy, he calls ‘A’ to inform about his missing son. Now

‘A’ is entitled to pay 2 lakh to ‘B’ for his reward. In Carlill v. Carbolic Smoke ball Co., The
smoke ball company offered by advertisement a reward of $100 as reward to anyone who
contacted influenza after having used the Smoke Ball with the printed directions. [Link]
(plaintiff) relying on the advertisement purchased a smoke ball from a chemist, used the
 same in accordance with the directions of the defendants, but still caught influenza. She sued
the defendant to claim the reward of $100 advertised by them. There may be general offer

and acceptance of the general offer may not be communicated. By fulfilling the conditions of
such offer the offeree is said to accept the offer.

Offer and Invitation to offer

A proposal or an offer has to be distinguished from an invitation to offer. A person may not
offer to sell his goods, but makes some statement or gives some information with a view to
inviting others to make offers on that basis. For eg. Displaying goods or dresses or books in
the window of the shop. This is an invitation to offer. It is at the discretion of the
shopkeeper if he wants to sell his article or not.

An invitation to offer is not the final willingness but the interest of the party to invite the
public to offer him.

CASE LAW

In Harris v. Nickerson, The defendant advertised a sale by auction. The plaintiff travelled to
the advertised place of auction to find that the defendant had cancelled the auction sale. He
brought an action against the defendant to recover the expenses of his travel. It was held
that he was not entitled to the same as there was as yet no contract between the two parties,
which could make the defendant liable.
DEFINITION OF ‘ACCEPTANCE’

S. 2(b) When the person to whom the proposal is made signifies his assent thereto, the offer
is said to be accepted. Thus the proposal when accepted becomes a promise.” An offer can be
revoked before it is accepted. As specified in the definition, if the offer is accepted
unconditionally by the offeree to whom the request is made, it will amount to acceptance.

Acceptance may be express or implied

where acceptance is made with words spoken or written, it is an express acceptance, and if
acceptance is made otherwise than in words, it is implied. What is necessary is that there
should be some external manifestation of acceptance.

Who Can Accept?

Offers can either be made out to people in General or to a Specific counter-party If it is a

General Offer it can be accepted by anybody. Who performs according to general offers is
said to be accepted the offer and contract is created. If it is a Specific Offer it can ONLY be
accepted by that Specific Counter-party to whom the offer is made.

Effect of Acceptance

A contract is created only after an offer is accepted. Before the acceptance is made neither
party is bound thereby. At that stage offerror is free to revoke or withdraw his offer, and the
offeree is free not to accept the offer or to reject the same. After the offer has been accepted
it become a promise which, if other conditions of a valid contract are satisfied, bind both
the parties to promise. After acceptance, each party becomes legally bound by the promise
made by him through the medium of offer and acceptance of it.
Essential of valid acceptance

1. Acceptance should be communicated by the offeree to the offeror.

 2. Acceptance should be absolute and unqualified.

3. Acceptance should be made in some usual and reasonable manner, unless the
proposal prescribes the manner of acceptance.

4. Acceptance should be made while the offer is still subsisting.

Acceptance should be communicated

The offeree must communicate the acceptance. The communication may be express or
implied. Sometimes the conduct of a person might indicate his assent. For eg. when a
passenger boards a bus and travels thereby, he impliedly assents to pay the necessary fare. In
order to create a contract, acceptance of the offer and intimation of acceptance by some
external manifestation, which the law regards as sufficient, is necessary. For a valid contract
the acceptance must be communicated and moreover, such communication should be made
to the offeror.

1. Acceptance of the offer shall be communicated to the offeror himself.

2. communication to a stranger is no acceptance

3. Offeror cannot impose the burden of refusal.

Acceptance shall be communicated to the offeror himself.

• Powell v. Lee , Powell was one of the candidates for the post of headmaster of a school. The
Board of Managers passed a resolution selecting him for the post. No communication about
this decision was made to Powell by the Board. One of the member of the board who had
not been authorized to communicate this decision, acting in his individual capacity,
informed Powell about his selection for the post. The board of managers met again and
decided to cancel the appointment of Powell and appoint another candidate. Powell sued
for the breach of contract. It was held that communication of acceptance was not valid. It
was almost like overhearing. Communication shall be made by offeree/acceptor himself.

Mode of Communication

Mode of communication

S. 7. Acceptance must be absolute. In order to convert a proposal into a promise, the

acceptance must-

(1) be absolute and unqualified;

(2) be expressed in some usual and reasonable manner, unless the proposal prescribes the
manner in which it is to be accepted.

If the proposal prescribes a manner in which it is to be accepted, and the acceptance should
be made in such manner, otherwise it is not valid acceptance.
Completion of Communication

S.4 Communication when complete. –

The communication of an acceptance is complete, -

● As against the proposer, when it is put in a course of transmission to him, so as to be

out of the power of the acceptor;

● As against the acceptor, when it comes to the, knowledge, of the proposer. Eg. When
B accepts A’s proposal sent by post, acceptance is complete-

● As against A, when the letter is posted

● As against B, when the letter is received by A ( there is presumption that letter

reaches) Absolute and Unqualified Acceptance
Acceptance must be unconditional and absolute. There cannot be conditional acceptance
that would amount to a counteroffer which nullifies the original offer. For eg. A offers to
sell his cycle to B for 2000/-. B says he accepts if A will sell it for 1500/-. This does not
amount to the offer being accepted, it will count as a counteroffer. Also, it must be
expressed in a prescribed manner. If no such prescribed manner is described then it must be
expressed in the normal and reasonable manner, i.e. as it would be in the normal course of
business. Implied acceptance can also be given through some conduct, act, etc. However, the
law does not allow silence to be a form of acceptance. So the offeror cannot say if no answer
is received the offer will be deemed as accepted. In Hyde v. Wrench, There was an offer made
by A and B for the sale of a Farm for 1000 pounds. B rejected this offer and said that he will
pay only 950 pounds to which A did not agree. Thereupon B said that he was willing to pay
1,000 pounds to which also A did not agree. B sued A and contended that there was a
contract by which A was bound. It was held that B had once rejected A’s offer by his counter
offer to pay 950 pounds and this made the original offer to lapse, and therefore, no contract
had resulted in this case.

Acceptance should be expressed in usual/ prescribed manner

Usual or Reasonable manner

According to S.7 (2), the acceptance must be “expressed in some usual or reasonable manner,
unless the proposal prescribed the manner in which it is to be accepted.” It means that if the
manner of acceptance has been prescribed by the proposal, the acceptance has to be made in
that prescribed manner; otherwise the same may be made in some usual or reasonable
manner.

Usual or Reasonable manner of acceptance means the manner which is usually adopted in a
particular kind of transaction according to the usage or custom of trade. Acceptance by
post, telegram, telephone, or through personal messenger may be considered to be usual
manner of acceptance.
Prescribed manner

Acceptance should be made while the offer is still subsisting

If the proposal prescribes any particular manner of acceptance, the acceptance must be
made in that manner. The manner of acceptance may include the requirement of
fulfillment of certain conditions, such as the payment of an advance. A valid contract does
not arise if such conditions are not fulfilled.

Already it has been noted that the offeror is free to withdraw the offer, or the offer is
revoked under various circumstances mentioned in S.6. After the offer has been withdrawn
or has lapsed, there is nothing which can be accepted. It is, therefore, necessary that the
acceptance should be made while the offer is still alive and subsisting. Acceptance after the
lapse of the offer cannot give rise to a contract. Similarly, the offer is deemed to have ended
by rejection of the original offer or a counter offer.

Revocation of Offer and Acceptance Revocation of Offer

It is only after the acceptance of an offer that there arises a contract and then both the
parties become bound by their respective promises. Before the offer has been accepted, it
can be revoked.

After the offer has been accepted it ripens into a contract and then it cannot be revoked.
Modes of revocation of offer
S.6 mentions various modes of revocation of offer

1. Notice of Revocation
 2. Lapse of time,

3. Failure to accept condition precedent

4. Death or insanity of offeror

Revocation by Notice

It may be revoked at any time before it is accepted. The proposal may be revoked by the
communication of notice of revocation which has to be communicated by the proposer or
his agent and not by anybody else. In India, the notice of revocation has to be
communicated by the proposer only.

By lapse of time

A proposal is revoked by the lapse of the time prescribed in such a proposal for its
acceptance, or, if no time is prescribed, by the lapse of a reasonable time. Sometimes the
party may expressly fix the time up to which the offer will remain open. An offeror, who has
mentioned that his offer is open until a particular time, is not debarred from revoking the
offer earlier than that time, if he so likes.

For eg. if A has made an offer to sell his property to B for certain price, also stating that the
offer is open till 12th June, 9:00 a.m. the offer would be revoked on 11th June if on that date
A disposes of the property to somebody else with notice to B. An attempt on part of B to
accept this offer on 12th June (before 9:00 a.m.) will be of no avail as the offer has already
been revoked. Similarly, expressly rejecting an offer even before the lapse of a fixed or
reasonable time makes the offer to lapse.
By failure to fulfill a condition precedent

When the offer is subject to some conditions precedent, such a condition has got to be
fulfilled by the acceptor before making the acceptance. If the acceptor fails to fulfill the
condition precedent to acceptance, the offer stands revoked. For example, if the offer
requires the deposit of some earnest money, or the execution of some document, etc, this
condition must be fulfilled.

CASE LAW

In the State of M.P. v. Goberdhan Nath, Tenders for the sale of certain goods were invited
subject to the condition that 25% amount was to be paid when the tender was accepted. A’s
tender was the highest and the same was accepted, but he failed to fulfill this condition. It
was

held that no contract had arisen merely because A’s tender was accepted. Therefore, if A
failed to take the goods and pay for them, he could not be made liable for the breach of
contract.

By death or insanity of the offeror

An offer is revoked by the death or insanity of the offeror, if the fact of his death or insanity
comes to the knowledge of the acceptor before acceptance. In India, the death or insanity of
the offeror does not automatically make the offer to lapse. The offer stands revoked if the
fact of death or insanity comes to the knowledge of the acceptor before acceptance. It means
if the fact of death or insanity has not come to the knowledge of the offeree while he accepts
the offer, it is valid acceptance giving rise to a contractual obligation.

Revocation of Acceptance

S.5 “An acceptance may be revoked at any time before the communication of the acceptance
is complete as against the acceptor, but not afterwards”. It has already been noted above that
when the contract is created through post, according to S.4, by the posting of the letter of
acceptance:

● the proposer becomes bound when the letter of acceptance is posted to him,

● but the acceptor becomes bound when the letter of acceptance reaches the proposer.

Since the acceptor does not become bound immediately on posting his letter of acceptance,
he is free to revoke the acceptance by adopting a speedier mode of communication, whereby
his communication of revocation of acceptance may reach earlier than his letter of
acceptance.

CONTINGENT CONTRACTS

The word contingent means when an event or situation is contingent, i.e. it depends on
some other event or fact. In simple words, contingent contracts are the ones where the
promisor performs his obligation only when certain conditions are met. The contracts of
insurance, indemnity, and guarantee are some examples of contingent contracts. A
contingent contract is a contract to do or not to do something if some event, collateral to
such contract, does or does not happen (Section 31). For example, A contracts to pay B Rs.
10,000 if B's house is burnt. This is a contingent contract.

Essential features of a contingent contract

1. The performance of a contingent contract is made dependent upon the happening or

non- happening of some events.

2. The event on which the performance is made to depend, is an event collateral to the
contract i.e., it does not form part of the reciprocal promises which constitute the
contract.

For example, where A agrees to deliver 100 bags of wheat and B agrees to pay the price only
afterwards, the contract is a conditional contract arid not contingent, because the event on
which B's obligation is made to depend is a part of the promise itself and not a collateral
event. Similarly, where A promises to pay B Rs. 10,000 if he marries C, it is not a contingent
contract.

3. The contingent event should not be dependent on the will of the promisor. For instance, if
A promises to pay B Rs. 1,000 if he so chooses, it is not a contingent contract. However,
where the event is within the promisor's will but not merely his will, it may be a contingent
contract.

Rules Regarding Enforcement of Contingent Contracts

The rules regarding contingent contracts are summarized hereunder (Sections 32 to 36)

1. Contracts contingent upon the happening of a future uncertain event cannot be

enforced by law unless and until that event has happened. And if the event becomes
impossible, such a contract becomes void (Section 32). Illustration A makes a
contract with B to buy B's horse if A survives C. This contract cannot be enforced by
law unless and until C dies in A's life-
time.

2. Contracts contingent upon the non-happening of a certain future event can be

enforced when
the happening of that event becomes impossible, and not before (Section 33).

Illustration A agrees to pay B a sum of money if a certain ship does not return. The ship is

sunk. The contract can be enforced when the ship sinks.

3. If a contract is contingent upon as to how a person will act at an unspecified time,

the event
shall be considered to become impossible when such person does anything, which
renders it impossible that he should so act within any definite time, or otherwise
 than under further contingencies. (Section 34). For example, A agrees to pay B a sum
of money if B marries C. But C marries D. The marriage of B to C must now be
considered impossible, although it is possible that D may die and that C may
afterwards marry B.

4. Contracts contingent upon the happening of an uncertain specified event within a

fixed time become void if, at the expiration of the rime fixed, such event has not
happened or if, before the time fixed, such event becomes impossible (Section 35).
For example, A promises to pay B a sum of money if a certain ship returns within a
year. The contract may be enforced if the ship returns within the year, and becomes
void if the ship is burnt within the year.

5. Contracts contingent upon the non-happening of a specified event within a fixed

time may be enforced by law when the time fixed has expired and such event has not
happened, or before the time fixed expired, if it becomes certain that such event will
not happen (Section 35). For example, A promises to pay B a sum of money if a
certain ship doesn’t return within a year. The contract may be enforced if the ship
does not return-within the year, or is burnt within the year.

6. Contingent agreement to do or not to do anything, if an impossible event happens,

is void, whether the impossibility of the event is known or not to the parties to the
agreement at the time when it is made. Illustration A agrees to pay B Rs.'1,000 if two
parallel straight lines should enclose a space. The agreement is void.

Difference between a Contingent Contract and a Wagering Agreement

1. A wagering agreement consists of reciprocal promises while a contingent contract

may not consist of reciprocal promises.

2. A wagering agreement is of a contingent nature while a contingent contract may not

be of a wagering nature.
 3. A wagering agreement is void while a contingent contract is valid.

4. In a wagering agreement parties have no other interest in the subject matter except
for winning or losing of wagering amount while it is not so in contingent contracts.

5. In a wagering agreement the future event is the sole determining factor while in a
contingent contract future event is only collateral.

QUASI CONTRACTS

What Is a Quasi Contract?

Quasi contract is another name for a contract implied in law, which acts as a remedy for a
dispute between two parties that don't have a contract. A quasi contract is a legal
obligation—not a traditional contract—which is decided by a judge for one party to
compensate the other. Thus, a quasi contract is a retroactive judgment to correct a
circumstance in which one party acquires something at the expense of the other.

These arrangements may be imposed when goods or services are accepted by a party even
though they might not have been requested. The acceptance then creates an expectation of
payment for the providing party.

KEY TAKEAWAYS

● A quasi contract is a retroactive remedy between two parties who have no contract
with one another.

● It is created by a judge to correct a circumstance in which one party acquires

something at the expense of the other.

● The plaintiff must have furnished an asset, item, benefit, or service to another party
such that the defendant should have known to pay for it.
 ● The defendant must have accepted, or acknowledged receipt of, the item but made
no effort or offer to pay for it even when they know they should.

Understanding Quasi Contracts

Under common-law jurisdictions, quasi contracts originated in the Middle Ages under a
form of action known in Latin as indebitatus assumpsit, which translates to being indebted or
to have undertaken a debt.1

This legal principle was the courts' way of making one party pay the other as if a contract or
agreement already existed between them. So the defendant’s obligation to be bound by an
exchange is viewed to be implied by law. From its earliest uses, the quasi contract was
typically imposed to enforce restitution obligations.

It would be handed down ordering the defendant to pay restitution to the plaintiff. The
restitution, known in Latin as quantum meruit, or the amount deserved, is calculated
according to the amount or extent to which the defendant was unjustly enriched. This
remedy is also referred to as a constructive contract as it is constructed by a judge when
there is no existing contract between two parties.

Therefore, Quasi contracts are awarded as a remedy to a giver to keep them from being
taken advantage of and keep others from being unjustly enriched.

Legality

Because the agreement is constructed in a court of law, it is legally enforceable, so neither

party has to agree to it. The purpose of the quasi contract is to render a fair outcome in a
situation where one party has an advantage over another. The defendant—the party who
acquired the property—must pay restitution to the plaintiff—the wronged party—to cover
the value of the item.

Requirements
Certain aspects must be in place for a judge to issue a quasi contract:

● One party, the plaintiff, must have experienced a loss as a result of a transfer.

● The defendant must have or acknowledged receipt of and retained the item of value,
but made no effort or offer to pay for it.

● The plaintiff must then demonstrate through burden of proof why the defendant
received an unjust enrichment.

● The item or service cannot have been given as a gift.

● The defendant must have been given a choice to accept or deny the benefit.

TYPES OF QUASI CONTRACTS

The types of quasi contract are outlined in sections 68 thru 72 of the Contract Act of 1872,
as follows:

● Section 68: A person who is incapable of making contracts is provided with the
supplies by a third party on behalf of the incapable person or anyone he is legally
obligated to support. Third parties can recover the price of the supplier from the
property of the unable person.

● Section 69: A person who makes a payment on behalf of another party is obligated
to pay the money according to law. Therefore, the person who made the payment is
entitled to reimbursement from the other party.

● Section 70: When a person does something lawfully for another person, or delivers
something without intending to do the same gratuitously, the receiving party is
obliged to compensate the former party.

● Section 71: A person who finds goods that belong to another party and takes
ownership of them has the same responsibility as a bailee.
 ● Section 72: Someone who has been paid or delivered under coercion or mistakenly
must repay or return the money.

STANDARD FORM CONTRACTS

Standard form contract is a pre-written contract where the terms and conditions are
non-negotiable and are usually drafted by one party and presented to the other party for
signature. Standard form contracts are also known as adhesion contracts or boilerplate
contracts.

In India, standard form contracts are recognised under the Indian Contract Act, 1872.

The Indian Contract Act, 1872 does not provide a specific definition of standard form
contracts, but it does recognise their existence. Section 23 of the Act states that any contract
that involves a certain degree of unfairness or unconscionability, or which is against public
policy, is void. This provision applies to standard form contracts as well, and any clause in
such a contract that is found to be unconscionable or against public policy can be held to be
void.

Use of standard form contracts

The purpose of standard form contracts is to streamline the contracting process by

providing a pre-written set of terms and conditions that can be used for a large number of
transactions. These contracts are often used in situations where one party has significantly
more bargaining power than the other, such as in consumer contracts or employment
contracts.
Standard form contracts can save time and resources by avoiding the need for negotiations
and individualized drafting of contracts for each transaction. However, they can also be used
to take advantage of consumers or other parties who may not fully understand the terms
and conditions of the contract.

Standard form contracts are commonly used in various sectors such as insurance, banking,
and telecommunications, among others. These contracts often contain a large amount of
legal jargon, and the terms and conditions can be difficult for the average consumer to
understand.

Why do people accept standard form contracts?

1. Convenience: Standard form contracts offer pre-drafted terms that can be easily
accepted or rejected without the need for time-consuming negotiations or
customizations. This can save parties time and resources, particularly in cases where
the transaction is routine or standardized.

2. Familiarity: These contracts are widely used and accepted in a particular industry or
market. Parties may feel more comfortable using a standard form contract that they
are familiar with, rather than negotiating new terms or using an unfamiliar
document.

3. Perceived lack of bargaining power: In some cases, parties may believe that the other
party is in a stronger position and that they have little leverage to negotiate more
favourable terms. In these cases, accepting a standard form contract may be seen as
the only viable option, even if the terms are not entirely satisfactory.

4. Lack of legal expertise: Some parties may lack the legal expertise to effectively
negotiate or draft a contract, and may prefer to use a standard form contract as a
way to ensure that the basic terms and provisions are covered.
 5. Cost: Negotiating or drafting a custom contract can be expensive, particularly for
small businesses or individuals. In these cases, using a standard form contract may be
a more cost-effective option.

The standard form contracts are considered to be legally binding agreements, assuming that
the parties have freely and voluntarily agreed to the terms in India.

Important rules related to standard form contracts

To address the unequal bargaining power between parties, several rules have been developed
to protect the weaker party. Some of these rules include:

Doctrine of unconscionability

Under this doctrine, a court may refuse to enforce a contract if it is found to be

unconscionable or oppressive to the weaker party. This means that if the terms of a contract
are overly harsh or one-sided, a court may declare the contract void or modify the terms to
make them more equitable.

Statutory protections

Certain statutes have been enacted to provide protections to consumers, employees, and
other weaker parties in standard form contracts. For example, the Consumer Protection
Act, 2019 provides consumers with the right to file complaints against unfair trade practices
and seeks to promote fair competition.

Implied terms

In some cases, courts may imply certain terms into a contract to protect the interests of the
weaker party. For example, in a contract of employment, courts may imply a duty of good
faith and fair dealing on the part of the employer towards the employee.
Duty to disclose

The party with greater bargaining power has a duty to disclose any relevant information
that may affect the weaker party’s decision to enter into the contract. Failure to disclose
such information may result in the contract being held void.

Right to rescind

The weaker party may have the right to rescind the contract if they were induced to enter
into it by misrepresentation, fraud, or undue influence.

Landmark cases on standard form contracts

Road Transport Corporation v. Kirloskar Brothers

The court held that the contractual terms must be properly brought to the knowledge of the
party who is sort to be bound thereby. If the consignment note is not signed at the time of
delivery of goods for carriage the terms of the consignment note exclude the jurisdiction of
certain courts and are not binding on the consignor or consignee. Hence, the court in this
case held that there should be a reasonable notice of contractual terms.

E-CONTRACTS

The Indian Contract Act, 1872, The Information Technology Act, 2000 and The Indian
Evidence Act, 1872 are the crucial legislations which determine the validity of an e-contract.
E contracts are formed by way of exchange of Emails and through on line agreements viz.
browse wrap, shrink wrap and click wrap agreements. All the said forms are valid under
Indian law as if they comply with the prerequisites of a valid contract.

Types of Electronic Contracts

 Broadly, e-contracts may be classified into following three types. While the shrinkwrap
transaction has been around for some time and actually exists in a paper environment, the
other two types of transactions (click-wrap and browse-wrap) are suitable to electronic
commerce:
• Click-wrap Agreements

• Shrink-wrap Agreements
• Browse-wrap/Web-wrap Contracts

Click-Wrap Agreements

In click-wrap agreements, a party after going through the terms and conditions provided in
the website or programme has to, normally, indicate his assent to the same, by way of
clicking on an ‘I Agree’ icon or decline the same by clicking ‘I Disagree’. This type of
acceptance is usually done before receiving the merchandise. These sorts of contracts are
extensively used on the internet, whether it be granting of a permission to access a site or
downloading of any software or selling something via a website. This may be called the
creation of contracts by conduct.
By clicking on any of these choices, he accepts or declines the terms. If he does not agree, the
process is terminated. Click-wrap agreements can further be of the following kinds:

Type and Click

Icon Clicking

In this case, the user must type ‘I accept’ or other specified words in an on-screen box and
then click a ‘Submit’ or similar button. This demonstrates acceptance of the terms of the
 contract. A user cannot proceed to download or view the target information without
observing these steps.

In this case, the user must click on an icon of ‘I agree’ button on a dialog box or pop-up
window. A user may signify rejection by clicking ‘Cancel’ or closing the window.

Shrink-Wrap Agreements

The sale of software in stores, by mail and over the internet has resulted in quite a few
specialized forms of licensing agreements. For instance, software sold in stores is
commonly packaged in a box or other container and then wrapped in clear plastic wrap.
Through the clear plastic wrap on the box, the purchaser can see the warning that states
the use of the software is subject to the terms of a license agreement contained inside, an
agreement that cannot be read before purchase of the software. The license agreement
generally explains that if the buyer does not wish to enter into a contract by purchasing
the software, he must return the product prior to opening the sealed package containing
the CD on which the software resides. If the software is returned with the sealed package
unopened, a refund will be obtained.

Browse-wrap/ Web-wrap Contracts

In browse-wrap contracts, the internet users will find the terms or conditions hyperlink
somewhere on web pages that proposes to sell goods and services. According to these terms
and conditions, using the site for buying the goods or services offered itself constitutes
acceptance of the conditions contained therein.

An agreement is considered as a browse wrap agreement which is intended to be binding

upon the contracting party by the use of the website. These include the use of the website.
These include the User Policies and terms of service of web sites and are in the form of
“terms of use” or “terms of service”, which can be used as the links at the corner or bottom
of a website.

Laws Governing E-Contracts in India Indian Contract Act, 1872

The Indian Contract Act, 1872 governs the manner in which contracts are made and
performed in India, so every contract made should necessarily comply with the provisions
of the Act to make it legally enforceable. The provisions of the Indian Contract Act are
wide enough to cover such transactions. In the context of contract formation unless
otherwise agreed with by the parties an offer and acceptance of an offer or either of them,
may be expressed by means of data messages or electronic record. Where electronic record
is used in the formation of a contract , that contract shall not be denied validity or
enforceability on the sole ground that data messages were used for that purpose. As
between the originator and the addressee of the electronic record, a declaration of will or
other statements should be valid, effective or enforceable even though it is in the form of
a database.

Information Technology Act, 2000

The electronic contracts would be considered absolutely valid under the Information
Technology Act, 2000. As per Section 4 of the Information Technology Act, 2000 legal
recognition of electronic records, where any Information is in writing, typewritten or
printed form is made available to a user in the electronic form for subsequent reference
shall be deemed to have satisfied the requirement of law. In a layman’s language, this
means that any document which is in the written or printed version would be treated the
same and will have the same validity in the electronic form also. As per the newly
introduced Section 10A 15 of the Information Technology Amendment Act, 2008” clearly
states that the “Validity of contracts through electronic means, that “Where in a contract
formation, the communication of proposals, the acceptance of proposals, the revocation
of proposals and acceptances, as the case may be, are expressed in electronic form or by
means of an electronic record, such contract shall not be deemed to be unenforceable
solely on the ground that such electronic form or means was used for that purpose.”The
Act also lays down the instruments to which the Information Technology Act, 2000 does
not apply, it includes negotiable instruments, power of attorney, a trust deed, a will, and
contracts for sale or transfer of Immovable Property.

Indian Evidence Act, 1872

It is pertinent to contextualize at this juncture that evidence recorded or stored by

availing the electronic gadgets is given the evidentiary status. For instance: the voice
recorded with the help of a tape recorder. Now-a-days, the digital voice recorder, digital
cameras, digital video cameras, and video conferencing are adding a new dimension to the
evidentiary regime. The emergence of information and communication witnessed a sea
change by elevating the status of the evidence recorded, generated or stored electronically
from the secondary to primary evidential status. The evidentiary value of e-contracts can
be well understood in the light of the various sections of Indian Evidence Act. Sections
85A, 85B, 88A, 90A and 85C deal with the presumptions as to electronic records,
whereas, Section 65B relates to the admissibility of the electronic record.

​SIGNATURE AUTHENTICATION

Indian Contract Act of 1872 recognizes both oral and written contracts; therefore, it is
not mandatory under this law for the valid contract to be signed by the parties. The
signature in traditional contracts signifies the intention of the party to constitute the
contract and has more legal value in the eyes of law. However, certain statute provides for
the contract to be signed by both parties such as in case of Indian Copyright Act, 1957,
etc.

E-contract being generated through electronic means cannot be signed traditionally by

the parties, so, it is required to be signed electronically through E-signature or digital
signature.

But, the major drawback of it is that not e signature is not valid on every document.
Documents like:
a) Negotiable instrument except the cheque

b) Powers of attorney
c) Trust Deed
d) Real Estate Documents
These are the documents which are required to be physically signed by the parties and

Information Technology Act 2000 has no applicability over it.