top of page

Principles of Contract

Contracts are legally enforceable agreements built on key principles like free consent, consideration, capacity, and legality. These principles ensure fairness, clarity, and accountability in relationships and transactions.

Topic 1 : General Introduction – History and Nature of Contractual Obligations 


Topic 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 of offer - Indian Contract Act, 1872,  sections 2 – 10 

 

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

Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1; [1893] 1 QB 256


James vs. Royal Bank of Scotland (19.03.2015 - AUNS) : MANU/AUNS/1261/2015


  1. Pharmaceutical Society of Great Britain v. Boots Cash Chemist (Southern) Ltd.  (1952) 2 All ER  Rep. 456 8 

  2. Balfour  v. Balfour (1918-19) All ER  860 (CA) 11 

  3. Lalman Shukla v. Gauri Datt (1913) XL ALJR 489 (All.) 15 

  4. Bhagwandas Goverdhandas Kedia  v. M/s. Girdharilal Parshottamdas & Co., AIR 1966 SC 543  17 


The key issue in the case of Bhagwandas Goverdhandas Kedia vs. Girdharilal Parshottamdas and Co. was determining the jurisdiction for a breach of contract claim made via telephone, specifically whether the contract was formed where the acceptance was spoken or where it was heard. The appellants, Bhagwandas Goverdhandas Kedia, argued that the contract was made at Khamgaon where the acceptance was spoken, while the respondents, Girdharilal Parshottamdas and Co., contended it was made at Ahmedabad where the acceptance was heard. The Supreme Court, guided by English common law and the Indian Contract Act, held that in cases of instantaneous communication like telephone conversations, the contract is complete where the acceptance is received. Thus, the court ruled in favor of the respondents, affirming the jurisdiction of the Ahmedabad court, and dismissed the appeal with costs.


  1. Harvey v. Facey (1893) AC 552 28 

  2. Felthouse v.Bindley (1862) 11 CB 869 29                   


Topic 3 : Making of an Agreement – Special Situations Tenders and Auctions- Indian Contract Act, 1872, sections 2-10 


  1. Union of India v. Maddala Thathiah, AIR 1966 SC 1724 


The key issue in the case of Union of India vs. Maddala Thathiah was whether the clause allowing the railway administration to cancel a contract for the supply of jaggery without liability was valid. The parties involved were the Union of India, representing the Madras and Southern Mahratta Railway, and Maddala Thathiah, the supplier. The Supreme Court reasoned that the clause allowing cancellation applied only to supplies for which no formal order had been placed, and once an order was placed, it constituted a binding contract. The Court dismissed the appeal, upholding the High Court's decision that the cancellation clause was void, and remanded the case for determination of damages.


  1. Rajendra Kumar Verma  v. State of M.P., AIR 1972 MP 131

  2. Kanhaiya Lal Aggarwal v.  Union of India, AIR 2002 SC 2766 37 

  3. Haridwar Singh v. Bagun Sumbrui  (1973) 3 SCC 889 39 

  4. Indian Airlines Corporation v. Sm. Madhuri Chowdhuri,  AIR 1965 Cal. 252


Topic 4 : Consideration Meaning;   basis and the nature of consideration;  Doctrine of Privity of Contract and of consideration, its exceptions;  Exceptions of consideration – Indian Contract Act, 1872, sections 2(d), 2(f), 23 and 25 


  1. Kedarnath Bhattacharji v. Gorie Mahomed (1886) 7 I.D. 64 (Cal.) 54 

  2. Doraswami Iyer  v. Arunachala Ayyar (1935) 43 LW 259 (Mad.) 56 

  3. Abdul Aziz v. Masum Ali, AIR 1914 All. 22 58 

  4. Venkata Chinnaya Rau  v. Venkataramaya Garu  (1881) 1 ID 137 (Mad.)  60 

  5. Nawab Khwaja Muhammad Khan v. Nawab Husaini Begam   (1910) LR 37  I.A. 152 


Topic 5 : Capacity to Contract Legal disability to enter into contract - Minors, persons of unsound mind ; person under legal disability; lunatics, idiots;  Restitution in cases of minor’s agreement; Liability for necessaries supplied to the minor - Indian Contract Act, 1872, sections 10, 11, 12, 64, 65, 68; Specific Relief Act, 1963, section 33; Indian Majority Act, 1875  


  1.  Mohori Bibee  v. Dhurmodas Ghose  (1903) 30 I.A. 114

  2.  Khan Gul v. Lakha Singh, AIR 1928 Lah. 609 

  3. Ajudhia Prasad v. Chandan Lal, AIR 1937 All. 610


Topic 6 : Free Consent; Definition – Coercion,  65 69 78  7 classes Undue influence, Fraud,  Misrepresentation and Mistake; Effect on contracts influenced by any factor vitiating free consent - Indian Contract Act, 1872, sections 13 – 22 


  1. Raghunath Prasad v. Sarju Prasad  (1923) 51 I.A. 101

  2.  Subhas Chandra Das Mushib  v. Ganga Prasad Das Mushib, AIR 1967 SC 878

  3. Lakshmi Amma v. T. Narayana Bhatta, 1970 (3) SCC 159

  4. Tarsem Singh v.  Sukhminder Singh  (1998) 3 SCC 471


Topic 7 : Limitations on Freedom of Contract Circumstances in which agreements become void or voidable, Distinction between void and voidable agreements; Unlawful Agreements; Public policy; Agreements with unlawful consideration in part and objects; Agreements without consideration; Agreements in restraint of 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 


  1. Gherulal Parakh  v. Mahadeodas Maiya, AIR 1959 SC 781  

  2. Niranjan Shankar Golikari  v. Century Spinning & Manufacturing  Co. Ltd., AIR 1967 SC 1098

  3. Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly (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)

  4. Dhurandhar Prasad Singh v. Jai Prakash University,   AIR 2001 SC 2552


Topic 8 : Discharge of a Contract Modes-Discharge by performance; Frustration; Supervening  impossibility of performance; Grounds of Frustration and its effect;Discharge by Agreement and Novation - Indian Contract Act, 1872, sections  37 –  67 


  1. Satyabrata Ghose v. Mugneeram Bangur & Co., AIR 1954 SC 44 

  2. M/s. Alopi Parshad & Sons Ltd.  v. Union of India, AIR 1960 SC 588 

  3. Punj Sons Pvt. Ltd. v. Union of India, AIR 1986 Del. 158 

  4. Easun Engineering Co. Ltd. v. The Fertilizers & Chemicals   Travancore Ltd., AIR 1991 Mad. 158 



Topic  9 : Remedies for Breach of Contract (a) Damages; Types of Damages; Basis of Assessment of Damages; Remoteness of Damages and (b) Measures of Damages; Mitigation of Damages; Penalty & Liquidated Damages – Indian Contract Act, 1872, sections 73 – 74   


  1. Hadley v. Baxendale (1843-60) All ER Rep. 461 

  2. AKAS Jamal v. Moolla Dawood, Sons & Co.  (1915) XX C.W.N. 105 

  3. Karsandas H. Thacker v. M/s. The Saran Engineering Co. Ltd., AIR 1965 SC 1981 

  4. Maula Bux v. Union of India, AIR 1970  SC 1955 

  5. Shri Hanuman Cotton Mills v. Tata Air Craft Ltd., 1969 (3) SCC 522 

  6. Ghaziabad Development Authority v. Union of India,  AIR 2000 SC 2003 

  7. Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd.  (2003) 4 SCALE 92


Topic 10 : Quasi – Contracts Obligations resembling those created by Contract (Quasi – Contracts): Concept and classification - Indian Contract Act, 1872, sections 68 – 72


  1. State of West Bengal v. B.K. Mondal & Sons,  AIR 1962 SC 779


Topic 11 : E- Contracts Nature and scope; Formation of E-contracts; Legislative Framework; Judicial Approach – The Information Technology Act, 2000, sections 3--5, 10--17. 


  1. P R Transport Agency  v. Union of India,  AIR 2006 ALL 23  

  2. Timex International Fze Ltd Dubai  v. Vedanta Aluminium Ltd. (2010)  3 SCC 1 

bottom of page