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Commerce · Class 11 Commerce

Ch 29Elements of Contract — Class 11 Commerce, concept-first.

Business runs on promises kept — a supplier promises to deliver goods, a customer promises to pay for them. The law that decides which of these promises the courts will actually enforce, and which they will not, is the Indian Contract Act, 1872, the foundation of all commercial law in India.

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Key concepts

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Meaning and Essential Elements of a Contract

A contract is an agreement enforceable by law (Section 2(h)). It requires an agreement (offer + acceptance) plus enforceability, and becomes valid only when it also has intention to create legal relations, lawful conside…

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Chapter contents

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1

Meaning and Definition of Contract

Business runs on promises kept — a supplier promises to deliver goods, a customer promises to pay for them.

2

Essential Elements of a Valid Contract

For an agreement to become a legally valid contract, it must satisfy all of the following elements. Missing even one can make the agreement void, voidable, or unenforceable.

3

Offer (Proposal)

Section 2(a) of the Act defines a proposal (offer) 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…

4

Acceptance

Section 2(b) defines acceptance: "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."

5

Consideration

Section 2(d) defines consideration: 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 abstain…

6

Capacity to Contract

Section 11 states that every person is competent to contract who is (a) of the age of majority according to the law to which he is subject, (b) of sound mind, and (c) not disqualified from contracting…

7

Free Consent

Section 13 defines consent: two or more persons are said to consent when they agree upon the same thing in the same sense (called "consensus ad idem").

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Classification of Contracts

Contracts can be classified on three different bases.

Exercises

+Show 12 questions12 questions
  1. Q1Define 'Contract'. Distinguish between an agreement and a contract.Free
  2. Q2State the essential elements of a valid contract.Free
  3. Q3Define offer. State the legal rules governing a valid offer.Free
  4. Q4Distinguish between an Offer and an Invitation to Offer.Preview
  5. Q5Define acceptance. State the rules of a valid acceptance.Preview
  6. Q6What is consideration? State the exceptions to the rule 'No consideration, no contract.'Preview
  7. Q7Who is competent to contract? Explain the persons who are not competent to contract.Preview
  8. Q8A threatens to shoot B unless B signs an agreement to sell his house to A at a very low price. B signs the agreement out of fear. Which elem…Preview
  9. Q9Distinguish between Fraud and Misrepresentation.Preview
  10. Q10Classify contracts on the basis of validity, giving an example of each.Preview
  11. Q11What is a quasi-contract? Give two examples.Preview
  12. Q12A orally agrees to sell his bicycle to B for ₹3,000, and B pays the price and takes the bicycle. Is this a valid contract even though nothin…Preview

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 10 questions10 questions
  1. Q1Name the contract which is forbidden by law. (a) Valid contract (b) Void contract (c) Illegal contract (d) Voidable contractPreview
  2. Q2Every promise and every set of promises forming the consideration for each other, is an : (a) Agreement (b) Contract (c) Offer (d) Acceptanc…Preview
  3. Q3What do you mean by Agreement ?Preview
  4. Q4Void agreement signifies ________. (a) Agreement violating legal procedure (b) Agreement illegal in nature (c) Agreement against public poli…Preview
  5. Q5The Indian Contract Act was established in the year ________. (a) 1873 (b) 1871 (c) 1874 (d) 1872Preview
  6. Q6An agreement enforceable by Law is a ______. (a) Approved promise (b) Enforceable acceptance (c) Contract (d) Accepted offerPreview
  7. Q7'S' offers to sell his car for Rs. 5,00,000 to 'T'. 'T' agrees to buy it. Mention the type of contract and explain. (Compulsory)Preview
  8. Q8(a) What are the differences between Contract and Agreement ? OR (b) Explain the different key elements of Business Ethics.Preview
  9. Q9What do you mean by Contract ?Preview
  10. Q10A contract with or by a minor is a ......... (a) Valid contract (b) Void contract (c) Voidable contract (d) Voidable at the option of either…Preview