General Principles of the Indian Contract Act, 1872
Scope
This domain tests the general law of contract: formation, free consent, consideration, capacity, void and voidable agreements, discharge and remedies. Questions often turn on classifying an agreement and matching it to the correct section.
Formation and validity
A contract is an agreement enforceable by law (s 2(h)). Section 10 requires offer, acceptance, lawful consideration, capacity, free consent and lawful object. Acceptance must be absolute and communicated; a counter-offer destroys the original offer. Consideration may move from a third party, but a stranger to contract cannot generally sue. Agreements without consideration are void unless they fall within s 25, such as natural love and affection between near relatives on writing and registration, past voluntary services, or a time-barred debt. Free consent is absent where consent is caused by coercion (s 15), undue influence (s 16), fraud (s 17), misrepresentation (s 18) or bilateral mistake (ss 20-22).
Discharge and remedies
Performance, agreement, impossibility (s 56), operation of law and breach discharge a contract. Under s 73 the injured party recovers losses naturally arising from the breach; s 74 governs a sum named as penalty or liquidated damages and allows reasonable compensation not exceeding the named sum.
Worked example
A agrees to sell B a machine for 5,00,000; B pays 50,000 advance. A refuses. B buys an equivalent machine for 5,50,000. B may recover the 50,000 advance and 50,000 price difference under s 73, because the extra cost naturally arose from the breach. If the contract named 2,00,000 as a penalty, B still must prove loss and cannot automatically recover that sum.
Traps
Do not confuse an invitation to offer with an offer. Past consideration may be valid in India if it was given at the promisor's desire; do not apply the English rule blindly. A void agreement is not the same as a voidable contract. Wagering agreements are void, but collateral transactions may be enforceable. Expect exact section matching.