The Indian Contract Act, 1872

This Act may be called the Indian Contract Act, 1872. Extent, Commencement.--It extends to the whole of India 1[2***]; and it shall come into force onthe first day of September, 1872. Saving--3*** Nothing herein contained shall affect the provisions of any Statute, Act or Regulationnot hereby expressly repealed, nor any usage or custom of trade, nor any incident of any contract, notinconsistent with the provisions of this Act.

In this Act the following words and expressions are used in the followingsenses, 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 aproposal; (b) When the person to whom the proposal is made signifies his assent thereto, the proposal issaid to be accepted. A proposal, when accepted, becomes a promise; (c) The person making the proposal is called the "promisor", and the person accepting theproposal is called the "promisee"; (d) When, at the desire of the promisor, the promisee or any other person has done or abstainedfrom 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 anagreement; (f) Promises which form the consideration or part of the consideration for each other are calledreciprocal 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 beenforceable.

The communication of proposalsthe acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed tobe made by any act or omission of the party proposing, accepting or revoking by which he intends tocommunicate such proposal, acceptance or revocation, or which has the effect of communicating it.

The communication of a proposal is complete when it comesto the knowledge of the person to whom it is made. The communication of an acceptance is complete, as against the proposer, when it is put in a course of transmission to him, so as to be out of thepower of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer. The communication of a revocation is complete, as against the person who makes it, when it is put into a course of transmission to the person towhom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge. Illustrations (a) A proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter. (b) B accepts As proposal by a letter sent by post. The communication of the acceptance is complete, as against A when the letter is posted; as against B, when the letter is received by A. (c) A revokes his proposal by telegram. The revocation is complete as against A when the telegram is despatched. It is complete as against B when B receives it. B revokes his acceptance by telegram. Bs revocation is complete as against B when the telegram is despatched, and asagainst A when it reaches him.

A proposal may be revoked at any time before thecommunication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is completeas against the acceptor, but not afterwards. Illustration A proposes, by a letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post. A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards. B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but notafterwards. STATE AMENDMENT Uttar Pradesh.-- Amendment of section 5 of Act (9 of 1872).--In section 5 of Indian contract Act, 1872, hereinafterin this Chapter referred to as the principal Act, at the end of the first paragraph, the following explanationshall inserted, namely:-- "Explanation--Where an invitation to a proposal contains a condition that any proposal made inresponse to such invitation shall be kept open for a specified time and a proposal is thereupon madeaccepting such condition, such proposal may not be revoked within such time." [Vide Uttar Pradesh Act, 57 of 1976, s. 2]