Section 2 is the dictionary of the whole Act. Almost everything else builds on these ten clauses.

• Proposal / offer — S.2(a): when one person signifies to another his willingness to do or abstain from doing something, to obtain the other's assent.
• Acceptance & Promise — S.2(b): when the person to whom the proposal is made signifies his assent, the proposal is accepted; an accepted proposal becomes a promise.
• Promisor & Promisee — S.2(c): the one making the proposal is the promisor; the one accepting is the promisee.
• Consideration — S.2(d): when, at the desire of the promisor, the promisee or any other person does, abstains from doing, or promises to do/abstain, that act/abstinence/promise is the consideration.
• Agreement — S.2(e): every promise and set of promises forming the consideration for each other.
• Reciprocal promises — S.2(f): promises that form the consideration for each other.
• Void agreement — S.2(g): an agreement not enforceable by law.
• Contract — S.2(h): an agreement enforceable by law.
• Voidable contract — S.2(i): enforceable at the option of one or more parties but not the other(s).
• Contract becoming void — S.2(j): a contract that ceases to be enforceable becomes void when it so ceases.

Exam takeaway: Learn 2(g), 2(h), 2(i), 2(j) word-perfect — they appear almost every year.

This chapter fixes the exact moment offers and acceptances take effect — crucial for postal/telegram problems.

• S.3: communication, acceptance and revocation are made by any act or omission intended to communicate, or which has that effect.
• S.4 — when complete: a proposal is complete when it comes to the knowledge of the offeree. An acceptance is complete against the proposer when posted (out of the acceptor's power), and against the acceptor when it reaches the proposer. A revocation is complete against the maker when dispatched, and against the receiver when it reaches him.
• S.5 — revocation timing: a proposal may be revoked any time before the acceptance is complete as against the proposer; an acceptance may be revoked any time before it is complete as against the acceptor.
• S.6 — how revoked: by notice, by lapse of prescribed/reasonable time, by failure to fulfil a condition precedent, or by death/insanity of the proposer (if known to the acceptor before acceptance).
• S.7 — acceptance must be absolute and unqualified, and expressed in a usual and reasonable manner.
• S.8: performance of the conditions of a proposal (or accepting consideration) is itself acceptance.
• S.9: a promise is express if made in words, implied if made otherwise than in words.

Exam takeaway: The S.4/S.5 timing rule is the most question-prone area. Remember: the proposer is bound first (on posting); the acceptor can still revoke before his acceptance reaches the proposer.

Section 10 is the master test. All agreements are contracts if they satisfy each ingredient below.

• Free consent of the parties (S.13–22).
• Competent parties (S.11–12).
• Lawful consideration (S.23–25).
• Lawful object (S.23).
• Not expressly declared void by the Act (S.24–30, 56).

S.10 also preserves any law requiring a contract to be in writing, attested, or registered.

Exam takeaway: If a question asks "essentials of a valid contract under the Act", answer from S.10's exact words: free consent, competency, lawful consideration, lawful object, not expressly void.

• S.11 — who is competent: a person who (a) is of the age of majority, (b) is of sound mind, and (c) is not disqualified by any law. All three must be satisfied.
• S.12 — sound mind: a person is of sound mind for contracting if, at the time of making it, he can understand it and form a rational judgment as to its effect on his interests. A usually-unsound person may contract during a lucid interval; a usually-sound person may not contract while temporarily unsound.

The three classes of incompetent persons are therefore: minors, persons of unsound mind, and persons disqualified by law.

Exam takeaway: Watch the three-part test of S.11 and the lucid-interval rule of S.12.

• S.13 — Consent: two or more persons consent when they agree upon the same thing in the same sense (consensus ad idem).
• S.14 — Free consent: consent not caused by coercion, undue influence, fraud, misrepresentation, or mistake.
• S.15 — Coercion: committing or threatening to commit any act forbidden by the IPC, or unlawfully detaining/threatening to detain property, to make a person enter an agreement.
• S.16 — Undue influence: where one party is in a position to dominate the will of the other and uses it to gain an unfair advantage. Domination is presumed in fiduciary/authority relations and where mental capacity is affected by age, illness, or distress. If the transaction is unconscionable, the dominant party must prove no undue influence.
• S.17 — Fraud: false suggestion of fact, active concealment, a promise made with no intention to perform, any other act fitted to deceive, or any act the law declares fraudulent — done with intent to deceive. Mere silence is not fraud unless there is a duty to speak or silence equals speech.
• S.18 — Misrepresentation: an innocent false statement, a breach of duty gaining an advantage by misleading, or innocently causing a mistake as to the substance of the subject.
• S.19 — Effect: consent caused by coercion, fraud or misrepresentation makes the contract voidable at the option of the aggrieved party. Exception: not voidable for misrepresentation/silence if the party had the means to discover the truth with ordinary diligence.
• S.19A — Undue influence: contract is voidable; the court may set it aside on just terms.
• Mistake — S.20: bilateral mistake of fact essential to the agreement → void. S.21: mistake as to Indian law does not avoid; mistake as to foreign law is treated as mistake of fact. S.22: unilateral mistake of fact does not by itself make a contract voidable.

Exam takeaway: Remember the outcome of each vitiating factor and the S.19 "means of discovering the truth" exception.

• S.23 — unlawful when it is forbidden by law; defeats the provisions of any law; is fraudulent; involves injury to person or property; or the court regards it as immoral or opposed to public policy. Such an agreement is void.
• S.24: if any part of a single consideration/object is unlawful, the whole agreement is void.
• S.25 — no consideration, no contract, with three exceptions: (1) written, registered, made on account of natural love and affection between near relations; (2) a promise to compensate someone who has already voluntarily done something for the promisor; (3) a written, signed promise to pay a time-barred debt. Also: a completed gift is valid (Expl.1) and inadequacy of consideration does not by itself make a contract void (Expl.2).

Exam takeaway: The three S.25 exceptions are a perennial favourite — memorise all three.

• S.26 — restraint of marriage: every agreement in restraint of the marriage of any person (other than a minor) is void.
• S.27 — restraint of trade: every agreement restraining a lawful profession, trade or business is void to that extent. Exception: a seller of goodwill may agree not to carry on a similar business within reasonable local limits.
• S.28 — restraint of legal proceedings: agreements that absolutely restrict enforcement of rights, or limit the time to enforce, or extinguish rights on expiry of a period, are void. Exceptions: arbitration agreements, and certain bank/financial-institution guarantee clauses.
• S.29 — uncertainty: agreements whose meaning is not certain or capable of being made certain are void.
• S.30 — wager: agreements by way of wager are void; no suit lies to recover anything won. Exception: certain horse-racing prizes of Rs. 500 or more.

Exam takeaway: Pair each section with its one-line subject: 26-marriage, 27-trade, 28-legal proceedings, 29-uncertainty, 30-wager.

• S.31 — definition: a contract to do or not do something if some event, collateral to the contract, does or does not happen.
• S.32: contingent on an event happening — enforceable only when that event happens; void if the event becomes impossible.
• S.33: contingent on an event not happening — enforceable when the happening becomes impossible.
• S.34: where the event is the future conduct of a living person, it is deemed impossible when that person does something making it impossible to so act.
• S.35: event within a fixed time — becomes void if the time expires without the event (or it becomes impossible earlier).
• S.36: agreements contingent on an impossible event are void, whether or not the parties knew of the impossibility.

Exam takeaway: Keep the contingent-vs-wager distinction ready — it is a classic MCQ.

• S.37: parties must perform or offer to perform; promises bind the representatives on death unless a contrary intention appears.
• S.38: a valid tender (offer of performance) that is refused excuses the promisor — it must be unconditional, at proper time/place, with a reasonable chance to inspect.
• S.39: if a party refuses to perform wholly or disables himself, the promisee may put an end to the contract unless he has acquiesced.
• S.40–41: who performs — personally where intended (e.g. painting a picture), else a competent person may be employed; accepting performance from a third person discharges the promisor.
• Joint promisors — S.42–45: joint liability devolves on survivors and representatives (42); the promisee may compel any one or more (43); release of one does not discharge the others (44); joint rights vest in all jointly (45).
• Time & place — S.46–50: reasonable time where none specified (46); rules for specified time/place and for applications (47–50).
• Reciprocal promises — S.51–54: a promisor need not perform unless the other is ready and willing (51); order of performance as fixed or as the nature requires (52); a party preventing performance makes it voidable at the other's option (53); default in the first-to-be-performed promise bars claiming the reciprocal (54).
• S.55 — time as essence: failure to perform on time makes the contract voidable if time was essential; otherwise only compensation.
• S.56 — impossibility / frustration: an agreement to do an impossible act is void; a contract that later becomes impossible or unlawful becomes void.
• Appropriation of payments — S.59–61: apply as the debtor indicates (59); else as the creditor chooses (60); else to debts in order of time (61).
• S.62–67 — need not be performed: novation, rescission or alteration (62); remission/waiver by promisee (63); consequences of rescinding a voidable contract (64); restoration of advantage under a void agreement (65); etc.

Exam takeaway: Focus on S.37, 39, 51, 55, 56, 59–61, and 62. These carry most performance-chapter questions.

• S.68 — necessaries: one who supplies necessaries (suited to his condition in life) to a person incapable of contracting, or to those he is bound to support, may be reimbursed from that incapable person's property.
• S.69 — payment by interested person: a person interested in a payment which another is bound by law to make, and who pays it, is entitled to be reimbursed.
• S.70 — non-gratuitous act: where one lawfully does/delivers something not intending it gratuitously, and the other enjoys the benefit, the latter must compensate or restore.
• S.71 — finder of goods: a finder who takes goods into custody has the same responsibility as a bailee.
• S.72 — money paid by mistake or coercion: a person to whom money is paid or a thing delivered by mistake or under coercion must repay or return it.

Exam takeaway: Five sections, five fact-patterns. Match each illustration to its section.

• S.73 — compensation: the party who suffers a breach may recover compensation for loss/damage that naturally arose in the usual course, or which the parties knew at the time of contracting to be likely. No compensation for remote or indirect loss. The same applies to obligations resembling contract.
• S.74 — penalty / liquidated damages: where a sum is named, or a penalty stipulated, the aggrieved party is entitled to reasonable compensation not exceeding the amount named — whether or not actual loss is proved.
• S.75 — rightful rescission: a person who rightfully rescinds is entitled to compensation for damage sustained through non-fulfilment.

Although the words "actual breach", "anticipatory breach" and "quantum meruit" are commonly used, the bare Act states the remedies through S.73–75; quantum meruit is reflected in restitution provisions like S.65 and S.70.

Exam takeaway: S.73 (natural + known loss; no remote loss) and S.74 (reasonable compensation, ceiling = named sum) are heavily tested.

• S.124 — indemnity: a contract where one party promises to save the other from loss caused by the promisor's conduct or by any other person's conduct.
• S.125 — rights of the indemnity-holder: recover all damages, costs and sums paid under any compromise, when acting within authority.
• S.126 — guarantee: a contract to perform the promise or discharge the liability of a third person on default. Parties: surety, principal debtor, creditor. May be oral or written.
• S.127: anything done, or any promise made, for the benefit of the principal debtor is sufficient consideration for the surety.
• S.128 — surety's liability: co-extensive with that of the principal debtor unless otherwise provided.
• S.129–131 — continuing guarantee: extends to a series of transactions (129); revocable as to future transactions by notice (130) or by the surety's death (131).
• Discharge of surety — S.133–139: variance without consent (133), release/discharge of principal debtor (134), creditor giving time/composition/agreeing not to sue (135), and creditor's act impairing the surety's remedy (139). Mere forbearance does not discharge (137).
• Rights of surety — S.140–141: on payment the surety steps into the creditor's rights (140 — subrogation) and is entitled to the creditor's securities (141).
• S.142–143: guarantee obtained by misrepresentation or concealment by the creditor is invalid.
• Co-sureties — S.146–147: liable to contribute equally (146); if bound in different sums, equally up to their limits (147).

Exam takeaway: Master S.124, 126, 128, 130/131, and the discharge sections 133–135 & 139.

• S.148 — bailment: delivery of goods by one person (bailor) to another (bailee) for a purpose, on a contract that they be returned or disposed of as directed when the purpose is done.
• S.150 — bailor's duty: disclose known faults; for goods bailed for hire, liable whether or not he knew of the fault.
• S.151–152 — bailee's care: take as much care as a person of ordinary prudence would of his own goods; if he does, he is not liable for loss (152).
• S.160–161 — return: return goods on expiry/accomplishment without demand; if not returned in time, the bailee is liable for any loss thereafter.
• S.168–169 — finder of goods: may retain goods until compensation, may sue for a specific reward offered, and may sell in limited circumstances.
• S.170–171 — lien: a particular lien for the bailee who added labour/skill (170); a general lien for bankers, factors, wharfingers, attorneys and policy-brokers (171).
• Pledge — S.172: bailment of goods as security for a debt or performance; bailor is the pawnor, bailee the pawnee.
• S.173–176 — pawnee's rights: retain for the debt, interest and necessary expenses (173); recover extraordinary expenses (175); on default, sue and retain, or sell after reasonable notice (176).
• S.177 — pawnor's right to redeem any time before the actual sale.

Exam takeaway: Definitions (148, 172), care standard (151), and pawnee's remedies (176) are the must-knows.

• S.182 — agent & principal: an agent is employed to do an act for another, or to represent another in dealings with third persons; the person represented is the principal.
• S.183–184 — who may: a principal must be of the age of majority and sound mind; any person may be an agent as between principal and third parties, but a minor/unsound agent is not responsible to his principal.
• S.185 — no consideration is necessary to create an agency.
• S.186–189 — authority: express or implied (186–187); extends to everything necessary (188); and in an emergency, to acts a prudent person would do (189).
• Sub-agents — S.190–195: generally an agent cannot delegate (190); a properly appointed sub-agent binds the principal (192); a substituted agent under S.194 is the principal's own agent, not a sub-agent.
• Ratification — S.196–200: the principal may ratify acts done without authority (196); ratification may be express or implied (197), needs full knowledge (198), is of the whole transaction (199), and cannot injure a third person (200).
• Termination — S.201–210: by revocation, renunciation, completion, death/insanity, or insolvency (201); agency coupled with interest cannot be terminated to the agent's prejudice (202); termination takes effect against the agent/third persons only when known to them (208).
• Agent's duties — S.211–221: follow directions (211), use skill and diligence (212), render accounts (213), communicate (214), not make secret profit (215–216).
• Principal's duties — S.222–225: indemnify against lawful acts (222) and good-faith acts (223); no indemnity for criminal acts (224).
• Third persons — S.226–238: agent's contracts bind the principal as if made by him (226); rules where authority is exceeded (227–228), undisclosed principal (231–232), and effect of the agent's fraud/misrepresentation (238).

Exam takeaway: Definitions (182), "no consideration" (185), emergency authority (189), ratification rules (196–200), and modes of termination (201) are the high-frequency items.