1The Contract Act, 1872

( ACT NO. IX OF 1872 )

Whereas it is expedient to define and amend certain parts of the law relating to contracts; It is enacted as follows:-



1. Short title

Extent Commencement

Enactments repealed

2. Interpretation-clause

3. Communication, acceptance and revocation of proposals

4. Communication when complete

5. Revocation of proposals and acceptances

6. Revocation how made

7. Acceptance must be absolute

8. Acceptance by performing, conditions, or receiving consideration

9. Promises, express and implied

10. What agreements are contracts

11. Who are competent to contract

12. What is a sound mind for the purposes of contracting

13. "Consent” defined

14. "Free consent" defined

15. "Coercion" defined

16. "Undue influence" defined

17. "Fraud" defined

18. "Misrepresentation" defined

19. Void ability of agreements without free consent

19A. Power to set aside contract induced by undue influence

20. Agreement void where both parties are under mistake as to matter of fact

21. Effect of mistakes as to law

22. Contract caused by mistake of one party as to matter of fact

23. What considerations and objects are lawful and what not

Void Agreements

24. Agreements void, if considerations and objects unlawful in part

25. Agreement without consideration void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law

26. Agreement in restraint of marriage void

27. Agreement in restraint of trade void Saving of agreement not to carry on business of which good- will is sold

28. Agreements in restraint of legal proceedings void Saving of contract to refer to arbitration dispute that may arise Suits barred by such contracts Saving of contract to refer questions that have already arisen

29. Agreements void for uncertainty

30. Agreements by way of wager void Exceptions in favour of certain prizes for horse-racing. Section 294A of the Penal Code not affected

30A. Agreements collateral to wagering agreements void

30B. No suit for recovery of money, commission etc., in respect of void agreements

30C. Payment by guardian, executor, etc., in respect of void agreements not to be allowed credit

31. "Contingent contract" defined

32. Enforcement of contracts contingent on an event happening

33. Enforcement of contracts contingent on an event not happening

34. When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person

35. When contracts become void which are contingent on happening of specified event within fixed time

When contracts may be enforced which are contingent on specified event not happening within fixed time

36. Agreement contingent on impossible events void

Contracts which must be performed

37. Obligation of parties to contracts

38. Effect of refusal to accept offer of performance

39. Effect of refusal of party to perform promise wholly

By whom Contracts must be performed

40. Person by whom promise is to be performed

41. Effect of accepting performance from third person

42. Devolution of joint liabilities

43. Any one of joint promisors may be compelled to perform Each promisor may compel contribution Sharing of loss by default in contribution

44. Effect of release of one joint promisor

45. Devolution of joint rights

Time and Place for Performance

46. Time for performance of promise where no application is to be made and no time is specified

47. Time and place for performance of promise where time is specified and no application to be made

48. Application for performance on certain day to be at proper time and place

49. Place for performance of promise were no application to be made and no place fixed for performance

50. Performance in manner or at time prescribed or sanctioned by promisee

Performance of Reciprocal Promises

51. Promisor not bound to perform, unless reciprocal promisee ready and willing to perform

52. Order of performance of reciprocal promises

53. Liability of party preventing event on which the contract is to take effect

54. Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises

55. Effect of failure to perform at fixed time, in contract in which time is essential

Effect of such failure when time is not essential

Effect of acceptance of performance at time other than that agreed upon

56. Agreement to do impossible act

Contract to do act afterwards becoming impossible or unlawful

Compensation for loss through non-performance of act known to be impossible or unlawful

57. Reciprocal promise to do things legal, and also other things illegal

58. Alternative promise, one branch being illegal

Appropriation of Payments

59. Application of payment, where debt to be discharged is indicated

60. Application of payment, where debt to be discharged is not indicated

61. Application of payment where neither party appropriates

Contracts Which Need Not be Performed

62. Effect of novation, rescission and alteration of contract

63. Promisee may dispense with or remit performance of promise

64. Consequences of rescission of voidable contract

65. Obligation of person who has received advantage under void agreement or contract that becomes void

66. Mode of communicating or revoking rescission of voidable contract

67. Effect of neglect of promisee to afford promisor reasonable facilities for performance

68. Claim for necessaries supplied to person incapable of contracting or on his account

69. Reimbursement of person paying money due by another in payment of which he is interested

70. Obligation of person enjoying benefit of non- gratuitous act

71. Responsibility of finder of goods

72. Liability of person to whom money is paid or thing delivered by mistake or under coercion

73. Compensation for loss or damage caused by breach of contract

Compensation for failure to discharge obligation resembling those created by contract

74. Compensation for breach of contract where penalty stipulated for

75. Party rightfully rescinding contract entitled to compensation

76-123. [Repealed]

124. "Contract of indemnity" defined

125. Rights of indemnity- holder when sued

126. "Contract of guarantee", "surety", "principal debtor" and "creditor"

127. Consideration for guarantee

128. Surety's liability

129. "Continuing guarantee"

130. Revocation of continuing guarantee

131. Revocation of continuing guarantee by surety's death

132. Liability of two persons primarily liable, not affected by arrangement between them that one shall be surety on other’s default

133. Discharge of surety by variance in terms of contract

134. Discharge of surety by release or discharge of principal debtor

135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor

136. Surety not discharged when agreement made with third person to give time to principal debtor

137. Creditor's forbearance to sue does not discharge surety

138. Release of one co-surety does not discharge others

139. Discharge of surety by creditor's act or omission impairing surety's eventual remedy

140. Rights of surety on payment or performance

141. Surety's right to benefit of creditor's securities

142. Guarantee obtained by misrepresentation invalid

143. Guarantee obtained by concealment invalid

144. Guarantee on contract that creditor shall not act on it until co-surety joins

145. Implied promise to indemnify surety

146. Co-sureties liable to contribute equally

147. Liability of co-sureties bound in different sums

148. "Bailment", "bailor", and "bailee" defined

149. Delivery to bailee how made

150. Bailor’s duty to disclose faults in goods bailed

151. Care to be taken by bailee

152. Bailee when not liable for loss, etc., of thing bailed

153. Termination of bailment by bailee's act inconsistent with conditions

154. Liability of bailee making unauthorised use of goods bailed

155. Effect of mixture, with bailor's consent, of his goods with bailee's

156. Effect of mixture, without bailor's consent, when the goods can be separated

157. Effect of mixture, without bailor's consent, when the goods cannot be separated

158. Repayment by bailor of necessary expenses

159. Restoration of goods lent gratuitously

160. Return of goods bailed on expiration of time or accomplishment of purpose

161. Bailee's responsibility when goods are not duly returned

162. Termination of gratuitous bailment by death

163. Bailor entitled to increase or profit from goods bailed

164. Bailor's responsibility to bailee

165. Bailment by several joint owners

166. Bailee not responsible on re-delivery to bailor without title

167. Right of third person claiming goods bailed

168. Right of finder of goods; may sue for specific reward offered

169. When finder of thing commonly on sale may sell it

170. Bailee's particular lien

171. General lien of bankers, factors, wharfingers, attorneys and policy- brokers

Bailments Of Pledges

172. "Pledge", "Pawnor" and "Pawnee" defined

173. Pawnee's right of retainer

174. Pawnee not to retain for debt or promise other than that for which goods pledged Presumption in case of subsequent advances

175. Pawnee's right as to extraordinary expenses incurred

176. Pawnee’s right where pawnor makes default

177. Defaulting pawnor's right to redeem

Bailments Of Pledges

178. Pledge by mercantile agent

Bailments Of Pledges

178A. Pledge by person in possession under voidable contract

179. Pledge where pawnor has only a limited interest

Suits by Bailees or Bailors against Wrong-doers

180. Suit by bailor or bailee against wrong-doer

181. Apportionment of relief or compensation obtained by such suits

Appointment and Authority of Agents

182. "Agent" and "principal" defined

183. Who may employ agent

184. Who may be an agent

185. Consideration not necessary

186. Agent's authority may be expressed or implied

187. Definitions of express and implied authority

188. Extent of agent's authority

189. Agent's authority in an emergency


190. When agent cannot delegate

191. "Sub-agent" defined

192. Representation of principal by sub-agent properly appointed

Agent's responsibility for sub-agent

Sub-agent's responsibility

193. Agent's responsibility for sub-agent appointed without authority

194. Relation between principal and person duly appointed by agent to act in business of agency

195. Agent's duty in naming such person


196. Right of person as to acts done for him without his authority. Effect of ratification

197. Ratification may be expressed or implied

198. Knowledge requisite for valid ratification

199. Effect of ratifying unauthorized act forming part of a transaction

200. Ratification of unauthorized act cannot injure third person

Revocation of Authority

201. Termination of agency

202. Termination of agency where agent has an interest in subject-matter

203. When principal may revoke agent's authority

204. Revocation where authority has been partly exercised

205. Compensation for revocation by principal or renunciation by agent

206. Notice of revocation or renunciation

207. Revocation and renunciation may be expressed or implied

208. When termination of agent's authority takes effect as to agent, and as to third persons

209. Agent's duty on termination of agency by principal's death or insanity

210. Termination of sub-agent's authority

Agent's Duty to Principal

211. Agent's duty in conducting principal's business

212. Skill and diligence required from agent

213. Agent's accounts

214. Agent's duty to communicate with principal

215. Right of principal when agent deals, on his own account, in business of agency without principal's consent

216. Principal's right to benefit gained by agent dealing on his own account in business of agency

217. Agent's right of retainer out of sums received on principal's account

218. Agent's duty to pay sums received for principal

219. When agent's remuneration becomes due

220. Agent not entitled to remuneration for business mis-conducted

221. Agent's lien on principal's property

Principal’s Duty to Agent

222. Agent to be indemnified against consequences of lawful acts

223. Agent to be indemnified against consequences of acts done in good faith

224. Non-liability of employer of agent to do a criminal act

225. Compensation to agent for injury caused by principal's neglect

Effect of agency on contract with third persons

226. Enforcement and consequences of agent's contracts

227. Principal how far bound, when agent exceeds authority

228. Principal not bound when excess of agent's authority is not separable

229. Consequences of notice given to agent

230. Agent cannot personally enforce, nor be bound by, contracts on behalf of principal

Presumption of contract to contrary

231. Rights of parties to a contract made by agent not disclosed

232. Performance of contract with agent supposed to be principal

233. Right of person dealing with agent personally liable

234. Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable

235. Liability of pretended agent

236. Person falsely contracting as agent not entitled to performance

237. Liability of principal inducing belief that agent's unauthorized acts were authorized

238. Effect, on agreement, of misrepresentation or fraud by agent

239-266. [Repealed]