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Contents INDIAN CONTRACT ACT, 1872 PAGE
PRELIMINARY 1. Short title
1
2. Interpretation clause
1 CHAPTER I
OF THE COMMUNICATION, ACCEPTANCE AND REVOCATION OF PROPOSALS 3. Communication, acceptance and revocation of proposals
3
4. Communication when complete
3
5. Revocation of proposals and acceptances
4
6. Revocation how made
4
7. Acceptance must be absolute
5
8. Acceptance by performing conditions, or receiving consideration
5
9. Promises, express or implied
5
CHAPTER II OF CONTRACTS, VOIDABLE CONTRACTS AND VOID AGREEMENTS 10. What agreements are contracts
5
11. Who are competent to contract
6
12. What is a sound mind for the purposes of contracting
6
13. “Consent” defined
7 I-5
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14. “Free consent” defined
8
15. “Coercion” defined
9
16. “Undue influence” defined
10
17. “Fraud” defined
11
18. “Misrepresentation” defined
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19. Voidability of agreements without free consent
14
19A. Power to set aside contract induced by undue influence
16
20. Agreement void where both parties are under mistake as to matter of fact
16
21. Effect of mistakes as to law
16
22. Contract caused by mistake of one party as to matter of fact
17
23. What considerations and objects are lawful and what not
17
VOID AGREEMENTS 24. Agreements void, if considerations and objects unlawful in part
19
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
19
26. Agreement in restraint of marriage, void
21
27. Agreement in restraint of trade, void
21
28. Agreements in restraint of legal proceedings, void
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29. Agreements void for uncertainty
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30. Agreements by way of wager, void
25
CHAPTER III OF CONTINGENT CONTRACTS 31. “Contingent contract” defined
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32. Enforcement of contracts contingent on an event happening
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33. Enforcement of contracts contingent on an event not happening
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34. When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person
26
35. When contracts become void, which are contingent on happening of specified event within fixed time
27
36. Agreements contingent on impossible events, void
27
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CHAPTER IV OF THE PERFORMANCE OF CONTRACTS CONTRACTS WHICH MUST BE PERFORMED 37. Obligations of parties to contracts
27
38. Effect of refusal to accept offer of performance
28
39. Effect of refusal of party to perform promise wholly
28
BY WHOM CONTRACTS MUST BE PERFORMED 40. Person by whom promise is to be performed
29
41. Effect of accepting performance from third person
29
42. Devolution of joint liabilities
29
43. Any one of joint promisors may be compelled to perform
29
44. Effect of release of one joint promisor
30
45. Devolution of joint rights
30
TIME AND PLACE FOR PERFORMANCE 46. Time for performance of promise, where no application is to be made and no time is specified
30
47. Time and place for performance of promise, where time is specified and no application to be made
30
48. Application for performance on certain day to be at proper time and place
30
49. Place for the performance of promise, where no application to be made and no place fixed for performance
31
50. Performance in manner or at time prescribed or sanctioned by promisee
31
PERFORMANCE OF RECIPROCAL PROMISES 51. Promisor not bound to perform, unless reciprocal promisee ready and willing to perform
31
52. Order of performance of reciprocal promises
32
53. Liability of party preventing event on which the contract is to take effect
32
54. Effect of default as to the promise which should be performed, in contract consisting of reciprocal promises
32
55. Effect of failure to perform at fixed time, in contract in which time is essential
33
56. Agreement to do impossible act
33
57. Reciprocal promise to do things legal and also other things illegal
34
58. Alternative promise, one branch being illegal
35
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APPROPRIATION OF PAYMENTS 59. Application of payment where debt to be discharged is indicated
35
60. Application of payment where debt to be discharged is not indicated
35
61. Application of payment where neither party appropriates
35
CONTRACTS WHICH NEED NOT BE PERFORMED 62. Effect of novation, rescission and alteration of contract
35
63. Promise may dispense with or remit performance of promisee
36
64. Consequences of rescission of a voidable contract
36
65. Obligation of person who has received advantage under void agreement, or contract that becomes void
37
66. Mode of communicating or revoking rescission of voidable contract
37
67. Effect of neglect of promisee to afford promisor reasonable facilities for performance
37
CHAPTER V OF CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACT 68. Claim for necessaries supplied to person incapable of contracting, or on his account
37
69. Reimbursement of person paying money due payment of which he is interested
38
by another, in
70. Obligation of person enjoying benefit of non-gratuitous act
38
71. Responsibility of finder of goods
39
72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion
39
CHAPTER VI OF THE CONSEQUENCES OF BREACH OF CONTRACT 73. Compensation of loss or damage caused by breach of contract
39
74. Compensation for breach of contract where penalty stipulated for
42
75. Party rightfully rescinding contract, entitled to compensation
43
CHAPTER VII SALE OF GOODS 76 [Omitted by the Sale of Goods Act, 1930] to 123.
43
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CHAPTER VIII OF INDEMNITY AND GUARANTEE “Contract of indemnity” defined Rights of indemnity-holder when sued “Contract of guarantee”, “surety”, “principal debtor” and “creditor” Consideration for guarantee Surety’s liability Continuing guarantee Revocation of continuing guarantee Revocation of continuing guarantee by surety’s death 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
44 44 44 45 45 45 45 46 46
134. Discharge of surety by release or discharge of principal debtor
47
135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor
47
136. Surety not discharged when agreement made with third person to give time to principal debtor
47
137. Creditor’s forbearance to sue does not discharge surety
47
138. Release of one co-surety does not discharge others
48
139. Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy
48
140. Rights of surety on payment or performance
48
141. Surety’s right to benefit of creditor’s securities
48
142. Guarantee obtained by misrepresentation invalid
49
143. Guarantee obtained by concealment invalid
49
144. Guarantee on contract that creditor shall not act on it until co-surety joins
49
145. Implied promise to indemnify surety
49
146. Co-sureties liable to contribute equally
50
147. Liability of co-sureties bound in different sums
50
124. 125. 126. 127. 128. 129. 130. 131. 132.
46
CHAPTER IX OF BAILMENT 148. “Bailment”, “bailor” and “bailee” defined
50
149. Delivery to bailee how made
51
150. Bailor’s duty to disclose faults in goods bailed
51
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151. Care to be taken by bailee
51
152. Bailee when not liable for loss, etc., of thing bailed
51
153. Termination of bailment by bailee’s act inconsistent with conditions
51
154. Liability of bailee making unauthorised use of goods bailed
52
155. Effect of mixture, with bailor’s consent, of his goods with bailee’s
52
156. Effect of mixture, without bailor’s consent, when the goods can be separated
52
157. Effect of mixture, without bailor’s consent, when the goods cannot be separated
52
158. Repayment, by bailor, of necessary expenses
52
159. Restoration of goods lent gratuitously
52
160. Return of goods bailed on expiration of time or accomplishment of purpose
53
161. Bailee’s responsibility when goods are not duly returned
53
162. Termination of gratuitous bailment by death
53
163. Bailer entitled to increase or profit from goods bailed
53
164. Bailor’s responsibility to bailee
53
165. Bailment by several joint owners
53
166. Bailee not responsible on re-delivery to bailor without title
53
167. Right of third person claiming goods bailed
53
168. Right of finder of goods, may sue for specified reward offered
53
169. When finder of thing commonly on sale may sell it
54
170. Bailee’s particular lien
54
171. General lien of bankers, factors, wharfingers, attorneys and policy brokers
54
BAILMENTS OF PLEDGES 172. “Pledge”, “pawnor”, and “pawnee” defined
55
173. Pawnee’s right of retainer
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174. Pawnee not to retain for debt or promise other than that for which goods pledged. Presumption in case of subsequent advances
55
175. Pawnee’s right as to extraordinary expenses incurred
55
176. Pawnee’s right where pawnor makes default
55
177. Defaulting pawnor’s right to redeem
56
178. Pledge by mercantile agent
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178A. Pledge by person in possession under voidable contract
56
179. Pledge where pawnor has only a limited interest
56
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SUITS BY BAILEES OR BAILORS AGAINST WRONG-DOERS 180. Suit by bailor or bailee against wrong-doer
57
181. Appointment of relief or compensation obtained by such suits
57
CHAPTER X AGENCY APPOINTMENT AND AUTHORITY OF AGENTS 182. “Agent” and “principal” defined
57
183. Who may employ agent
57
184. Who may be an agent
57
185. Consideration not necessary
57
186. Agent’s authority may be express or implied
57
187. Definitions of express and implied authority
58
188. Extent of agent’s authority
58
189. Agent’s authority in an emergency
58
SUB-AGENTS 190. When agent cannot delegate
58
191. “Sub-agent” defined
58
192. Representation of principal by sub-agent properly appointed
59
193. Agent’s responsibility for sub-agent appointed without authority
59
194. Relation between principal and person duly appointed by agent to act in business of agency
59
195. Agent’s duty in naming such person
59
RATIFICATION 196. Right of person as to acts done for him without his authority effect of ratification
60
197. Ratification may be expressed or implied
60
198. Knowledge requisite for valid ratification
60
199. Effect of ratifying unauthorised act forming part of a transaction
60
200. Ratification of unauthorised act cannot injure third person
60
REVOCATION OF AUTHORITY 201. Termination of agency
60
202. Termination of agency, where agent has an interest in subject-matter
61
203. When principal may revoke agent’s authority
61
204. Revocation where authority has been partly exercised
61
205. Compensation for revocation by principal, or renunciation by agent
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206. Notice of revocation or renunciation
61
207. Revocation and renunciation may be expressed or implied
61
208. When termination of agent’s authority takes effect as to agent and as to third persons
62
209. Agent’s duty on termination of agency by principal’s death or insanity
62
210. Termination of sub-agent’s authority
62
AGENT’S DUTY TO PRINCIPAL 211. Agent’s duty in conducting principal’s business
62
212. Skill and diligence required from agent
63
213. Agent’s accounts
63
214. Agent’s duty to communicate with principal
63
215. Right of principal when agent deals, on his own account, in business of agency without principal’s consent
63
216. Principal’s right to benefit gained by agent dealing on his own account in business of agency
64
217. Agent’s right of retainer out of sums received on principal’s account
64
218. Agent’s duty to pay sums received for principal
64
219. When agent’s remuneration becomes due
64
220. Agent not entitled to remuneration for business misconducted
64
221. Agent’s lien on principal’s property
65
PRINCIPAL’S DUTY TO AGENT 222. Agent to be indemnified against consequences of lawful acts
65
223. Agent to be indemnified against consequences of acts done in good faith
65
224. Non-liability of employer of agent to do a criminal act
65
225. Compensation to agent for injury caused by principal’s neglect
66
EFFECT OF AGENCY ON CONTRACTS WITH THIRD PERSONS 226. Enforcement and consequences of agent’s contracts
66
227. Principal how far bound, when agent exceeds authority
66
228. Principal not bound when excess of agent’s authority is not separable
66
229. Consequences of notice given to agent
66
230. Agent cannot personally enforce, nor be bound by, contracts on behalf of principal
67
231. Rights of parties to a contract made by agent not disclosed
67
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232. Performance of contract with agent supposed to be principal
67
233. Right of person dealing with agent personally liable
68
234. Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable
68
235. Liability of pretended agent
68
236. Person falsely contracting as agent not entitled to performance
68
237. Liability of principal inducing belief that agent’s unauthorised acts were authorised
68
238. Effect, on agreement, of misrepresentation or fraud by agent
68
CHAPTER XI OF PARTNERSHIP 239. [Omitted by the Indian Partnership Act, 1932] to 266.
69
SCHEDULE [Omitted by the Repealing and Amending Act, 1914]
69
SUBJECT INDEX
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Indian Contract Act, 1872 [9 OF 1872*] Preamble Whereas it is expedient to define and amend certain parts of the law relating to contracts; It is hereby enacted as follows:— PRELIMINARY Short title. 1. This Act may be called the Indian Contract Act, 1872. Extent, Commencement.—It extends to the whole of India 1[***]; and it shall come into force on the first day of September, 1872. Saving.— 2[***] Nothing herein contained shall affect the provisions of any Statute, Act or Regulation not hereby expressly repealed, nor any usage or custom of trade, nor any incident of any contract, not inconsistent with the provisions of this Act. Interpretation clause. 2. In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:— (a) 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 to such act or abstinence, he is said to make a proposal; (b) 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; *Dated 25-4-1872. This Act has been extended to Berar by the Berar Laws Act, 1941, w.e.f. 1-8-1941, to Dadra and Nagar Haveli by the Dadra and Nagar Haveli (Laws) Regulation, 1963, w.e.f. 1-7-1965 to Goa, Daman and Diu by the Goa, Daman and Diu (Laws) No. 2 Regulation, 1963, w.e.f. 19-12-1963 to Laccadive, Minicoy and Amindivi Islands by the Laccadive, Minicoy and Amindivi Islands (Laws) Regulation, 1965, w.e.f. 1-10-1965, to Pondicherry by the Pondicherry (Extension of Laws) Act, 1968, w.e.f. 24-5-1968 and State of Sikkim vide S.O. 641(E), dated 24-8-1984, w.e.f. 1-9-1984. 1. Words “except the State of Jammu and Kashmir” omitted by the Jammu and Kashmir Reorganisation Act, 2019, w.e.f. 31-10-2019. Earlier, said quoted words were substituted for “except Part B States” by the Part B States (Laws) Act, 1951, w.e.f. 1-4-1951. 2. Words "The enactments mentioned in the Schedule hereto are repealed to the extent specified in the third column thereof, but" omitted by the Repealing and Amending Act, 1914.
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INDIAN CONTRACT ACT, 1872
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(c) The person making the proposal is called the “promisor”, and the person accepting the proposal is called “promisee”; (d) 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 to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise; (e) Every promise and every set of promises, forming the consideration for each other, is an agreement; (f) Promises which form the consideration or part of the consideration for each other are called reciprocal promises; (g) An agreement not enforceable by law is said to be void; (h) An agreement enforceable by law is a contract; (i) An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract; (j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. COMMENTS SECTION NOTES
2.1 Contract [Section 2(h)]
An agreement enforceable by law is a contract. [See also Section 10]
For definition of “agreement”, [see Section 2(e) and Section 2(a) to 2(d)]
2.2 Void agreement [Section 2(g)]
An agreement not enforceable by law is said to be void.
For definition of “agreement”, [see Section 2(e) and Section 2(a) to 2(d)]
See also Sections 24 to 30, Section 36 and Section 56 of this Act
See also Section 65 of this Act
2.3 Voidable contract [Section 2(i)]
A voidable contract is an agreement enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others [See Sections 19 to 22 of this Act; See also Sections 64 & 66 of this Act]
2.4 Void contract [Section 2(j)]
A contract becomes void when it ceases to be enforceable by law.
See also section 65 of this Act
2.5 Agreement [Section 2(e)]
Every promise [See Section 2(c)] and every set of promises, forming the consideration [See Section 2(d)] for each other, is an agreement.
See also section 13
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2.6 Promise [Section 2(b)]
A proposal, when accepted, becomes a promise; [See Section 9]
2.6.1 Proposal [Section 2(a)] A person is said to make a proposal when:
He signifies to another his willingness to do or to abstain from doing anything, and
He does so with a view to obtaining the assent of that other to such act or abstinence.
2.6.2 Acceptance/Accepted [Section 2(b)]
When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. [See also Sections 7, 8 and 9]
2.6.3 Promisor [Section 2(c)]
The person making the proposal is called the “promisor”.
2.6.4 Promisee [Section 2(c)]
the person accepting the proposal is called “promisee”;
2.7 Consideration [Section 2(d)]
Section 25 of this Act lays down the rule “no consideration, no contract” by providing that an agreement without consideration is void. Section 10, dealing with what agreements are contracts, provides that consideration is one of the essentials of a contract
In terms of Section 2(d), the following are the essentials of “consideration”:
The promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something.
Such act or abstinence or promise by the promisee or other person is at the desire of the promisor.
Such act or abstinence or promise is called a consideration for the promise (made by the promisor).
2.8 Reciprocal promises [Section 2(f)]
Promises which form the consideration or part of the consideration for each other, are called reciprocal promises.
CHAPTER I OF THE COMMUNICATION, ACCEPTANCE AND REVOCATION OF PROPOSALS Communication, acceptance and revocation of proposals. 3. The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it. See also section 5 Communication when complete. 4. The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.
INDIAN CONTRACT ACT 1872 – BARE ACT WITH SECTION NOTES AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO NO. OF PAGES BINDING TYPE
: : : : : : :
TAXMANN’S EDITORIAL BOARD TAXMANN DECEMBER 2025 2026 EDITION 9789371266314 92 PAPERBACK
Rs. 145
DESCRIPTION Indian Contract Act 1872 [Bare Act with Section Notes] by Taxmann offers an updated and comprehensive text of the Act, accompanied by concise section-wise notes. These notes clarify legal concepts, highlight key judgments, and provide interpretative guidance, making it easier for readers to grasp the law’s letter and spirit. This book is intended for the following audience: • Law Students & Educators • Legal Practitioners • Judicial Aspirants • Corporate & Compliance Professionals • Business Owners & Entrepreneurs The Present Publication is the 2026 Edition, covering the amended and updated text of the Indian Contract Act [Act No. 9 of 1872], with the following noteworthy features: • [Section-by-Section Clarity] Each section is followed by notes that explain its scope, elements, and implications • [Updated Amendments] Incorporates all legal modifications up to date • [Pre-amendment Provisions] Includes footnotes detailing the text of provisions as they existed before amendments • [Easy Reference] Features a comprehensive subject index for quick navigation • [Practical Insights] Notes feature key case laws and doctrinal clarifications, illustrating judicial interpretations • [User-friendly Format] A clear layout allows for easy comparison between statutory language and commentary
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