The Indian Contract Act, 1872: formula sheet

Key formulas

Free consent (section 14)

Consent is free if NOT caused by coercion, undue influence, fraud, misrepresentation or mistake

Consent is 'caused' when it would not have been given but for the factor. If the factor did not cause consent, the contract is not voidable (Explanation to section 19).

Effect of coercion, fraud, misrepresentation (section 19)

Contract is voidable at the option of the party whose consent was so caused

For fraud or misrepresentation, the party may instead insist on performance and be put in the position as if the representation had been true.

Effect of undue influence (section 19A)

Voidable; court may set aside absolutely or on just terms if a benefit was received

Section 16 defines undue influence. If the transaction appears unconscionable, the burden of proof is on the dominant party (section 16(3)).

Coercion (section 15)

Act forbidden by law, or unlawful detention of property, or threat of either, with intent to obtain consent

The act need not be an offence where the contract is made, and the person threatened need not be a party to the contract.

Fraud (section 17)

Any of five acts, with intent to deceive or induce the contract

The five are: (1) false statement as fact by one who does not believe it; (2) active concealment; (3) promise made without intention to perform; (4) any other act fitted to deceive; (5) act or omission the law declares fraudulent. Mere silence is not fraud unless there is a duty to speak or the silence is equal to speech.

Misrepresentation (section 18)

False statement or misleading conduct made without intent to deceive

The speaker honestly believes it, or gains an advantage by breach of duty, or causes a mistake about the subject matter innocently.

Means of discovering truth (exception to section 19)

Misrepresentation or fraudulent silence: not voidable if party had means of discovering truth with ordinary diligence

As the section's wording states, the exception applies to consent caused by misrepresentation, or by silence that is fraudulent under section 17.

Mistake (sections 20, 21, 22)

Both parties, fact essential: void. Law in force in India: not voidable. One party, fact: not voidable

A mistake about a law not in force in India is treated like a mistake of fact. An erroneous opinion on value is not a mistake of fact.

Agent's fraud or misrepresentation (section 238)

Within agent's authority and in course of business: same effect as the principal's act

Outside the agent's authority, the principal is not affected.

Recovery of money paid (section 72)

Money paid or goods delivered by mistake or under coercion must be repaid or returned

Useful as the remedy line in coercion and mistake answers.

Valid contract test (section 10)

Free consent + competent parties + lawful consideration + lawful object + not expressly void = contract

Unlawful consideration or object takes the agreement out of this test.

Unlawful heads (section 23)

Forbidden by law | defeats a law | fraudulent | injury to person or property | immoral or opposed to public policy

Any one head is enough. The agreement is void. Memory aid: F-D-F-I-I/P.

Partly unlawful agreement (section 24)

Any part of a single consideration for one or more objects unlawful, or any one or any part of any one of several considerations for a single object unlawful → whole agreement void

Both limbs make the whole agreement void. Contrast with section 57, where separate legal and illegal sets of promises are split.

Legal and illegal promises (section 57)

First set legal → contract; second set illegal → void agreement

Applies where the promises are reciprocal and clearly in two sets.

Restraint of marriage (section 26)

Agreement in restraint of marriage of any person other than a minor → void

Minors are outside this section, so do not call every marriage restraint void.

Restraint of trade (section 27)

Restraint on lawful profession, trade or business → void to that extent

Exception 1: seller of goodwill may agree not to carry on a similar business within specified local limits, so long as the buyer carries on a like business there, if the Court finds the limits reasonable.

Restraint of legal proceedings (section 28)

Absolute restriction on enforcing rights by usual legal proceedings, or limit on time to enforce, or extinguishing rights on expiry of a period → void to the extent

Exceptions: arbitration of future disputes (only the awarded amount recoverable), arbitration of existing disputes (contract in writing), and certain bank or financial institution guarantee terms (specified period not less than one year).

Uncertainty (section 29)

Meaning not certain or capable of being made certain → void

Example: 'a hundred tons of oil' with nothing to show the kind of oil.

Impossibility (sections 36 and 56)

Agreement to do an act impossible in itself → void. Contingent on an impossible event → void.

A contract that later becomes impossible or unlawful becomes void when it does. A promisor who knew or could have known of the impossibility must compensate the promisee who did not know.

Contingent contract (s. 31)

Promise to do / not do something IF a collateral event does / does not happen

The event must be collateral to the contract, not the promise itself. Example: pay ₹10,000 if B's house is burnt.

Event happening (s. 32)

Enforceable only after the event happens; void if the event becomes impossible

This section is not in the supplied official text, so confirm the exact wording in your study material. Section 35 covers events happening or not happening within a fixed time.

Event not happening (s. 33)

Enforceable when the happening of the event becomes impossible, and not before

Illustration: A pays B if a ship does not return. The ship sinks. Enforceable when the ship sinks.

Necessaries to incapable person (s. 68)

Supplier is reimbursed from the property of the incapable person

Applies to the incapable person or anyone he is legally bound to support. The supplies must be suited to his condition in life. Only his property is liable, not the person.

Finder of goods (s. 71)

Finder who takes goods into custody has the same responsibility as a bailee

He must take reasonable care and cannot use the goods for himself.

Finder's right (s. 168)

No suit for compensation for trouble and expense; may retain goods until paid; may sue for a specific reward offered

The right to retain goods covers the compensation. If a specific reward is offered, the finder can sue for it and retain the goods until he receives it.

Finder's right to sell (s. 169)

Thing commonly on sale + owner not found or refuses lawful charges + (danger of perishing or losing greater part of value, OR charges reach two-thirds of value)

All conditions must be met before the finder may sell.

Duty to perform (Section 37)

Parties must perform or offer to perform, unless excused by the Act or another law

Representatives of a dead promisor are bound unless a contrary intention appears. Personal-skill contracts end with death.

Valid tender (Section 38)

Unconditional + proper time and place + reasonable opportunity to check ability and goods

If refused, the promisor is not liable for non-performance and keeps contractual rights.

Time of performance (Section 47)

Performance without application: any time during usual business hours on the day, at the proper place

Goods brought after closing hours are not performance (illustration to Section 47).

Application for performance (Section 48)

Promisee must apply at a proper place within usual business hours

What is a proper time and place is a question of fact.

No place fixed (Section 49)

Promisor applies to the promisee to appoint a reasonable place, then performs there

Applies when no application by the promisee is needed and no place is fixed.

Order of reciprocal promises (Section 52)

Express order first; otherwise the order the nature of the transaction requires

Builder builds before owner pays.

Default in the first promise (Section 54)

Defaulting party cannot claim the reciprocal promise and must compensate the other for loss

Use when one promise must be performed first.

Impossibility (Section 56)

Impossible in itself: void from the start. Later impossible or unlawful (event the promisor could not prevent): void when it happens

If promisor knew or with reasonable diligence could have known, and promisee did not know, promisor compensates promisee.

Restitution (Section 65)

Advantage received under a void agreement or contract that becomes void must be restored or compensated

Advance paid is refunded, but lost profits are not payable (illustration (d)).

Quick revision

• A valid contract needs offer and acceptance, intention to create legal relations, lawful consideration, capacity, free consent, lawful object and certainty.
• A void agreement is not enforceable by law; a voidable contract can be cancelled by the party whose consent was not free.
• A proposal becomes a promise on acceptance; acceptance must be absolute and match the offer.
• An invitation to offer is not an offer.
• Consideration can be past, present or future, but must be lawful and need not be adequate.
• A minor's agreement is void ab initio. A minor is not personally liable, but a person who supplied necessaries to the minor can be reimbursed from the minor's property (Section 68).
• Coercion, undue influence, fraud and misrepresentation make the contract voidable at the option of the affected party. Mistake (Sections 20-22) is different: a bilateral mistake as to a matter of fact essential to the agreement makes the agreement void, while a unilateral mistake generally does not affect validity.
• Agreements in restraint of marriage, trade or legal proceedings and wagering agreements are generally void, subject to exceptions.
• A contingent contract depends on an uncertain future event collateral to the contract.
• A quasi contract is an obligation the law imposes without any agreement.
• Discharge happens by modes such as performance, agreement, impossibility, lapse of time, operation of law or breach.
• Remedies include damages, specific performance, injunction and quantum meruit.

Common mistakes

• Saying a contract caused by coercion, fraud or undue influence is void. Fix: Write 'voidable at the option of the party whose consent was so caused'. Within free consent, only a mutual mistake of essential fact makes the agreement void.
• Treating mere silence as fraud. Fix: Quote the Explanation to section 17. Silence is fraud only if there is a duty to speak or the silence is equal to speech. Illustration: a trader need not disclose private price information.
• Writing that a restraint of trade agreement is always completely void. Fix: Quote section 27 fully and test the goodwill exception: a seller of goodwill, within specified local limits, so long as the buyer carries on a like business, and the limits are reasonable to the Court.
• Calling every restraint of marriage void without the minor carve-out. Fix: Section 26 voids agreements in restraint of the marriage of any person 'other than a minor'. Mention this wording when facts involve a minor.
• Treating every 'if' promise as a contingent contract. Fix: Check that the event is collateral and that the parties are not just betting. A mutual bet on an uncertain event is a wager and is void.
• Saying a quasi contract needs an agreement or consent. Fix: Write that a quasi contract is created by law, not by agreement. Its purpose is to prevent unjust enrichment.
• Treating every unexpected difficulty as frustration under Section 56. Fix: Section 56 needs the act to become impossible or unlawful, not merely harder or costlier. Check that the event was beyond the promisor's control.
• Forgetting Section 65 after a contract becomes void. Fix: Add that any advantage received, such as an advance, must be restored or compensated.

Exam tips

• Write the section number for each factor (14 plus the defining section), then the effect (19, 19A or 20). This earns the provision marks.
• Always end with the effect: voidable or void. Examiners look for the correct word.
• For fraud versus misrepresentation questions, make the intent to deceive your key difference line. Then add the remedy point: under section 19 the party in both cases may avoid the contract or insist on performance. If you mention damages for fraud, say they come from general law, not from sections 14 to 19A.
• In case studies, quote one or two facts that match each element. Do not restate the whole case.
• In mistake questions, make a three-part check visible: one or both parties, fact or law, essential or only value.
• Quote the section number and its key words, such as 'to that extent'. Do this only for the sections you are sure of: 10, 23, 24, 26, 27, 28, 29, 36, 56 and 57.
• Always check for an exception before writing 'void'. Goodwill, arbitration, minor and the legal set of promises under section 57 are the usual exam traps.
• In case-style questions, use a three-line structure: provision, facts applied, conclusion. Keep each part to one or two lines.