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Unit 1: Law of Contract

An implied contract may be implied in fact or implied in law. Contracts implied in fact Notes
and contracts implied in law are not really contracts at all. They are remedies devised by
the courts. Courts apply them when the legal requirements of Indian Contract Act, 1872
for contract formation do not exist, but it would be grossly unjust to permit one party to

benefit – without paying – from what he received from the other.
A contract implied at law, also called a quasi-contract, is an obligation imposed by a
court to do justice between the parties even though they never exchanged, or intended
to exchange, promises. In this instance, a court implies a contract to prevent one party’s
unjust enrichment at the other’s expense.
The contract act does not insist that the agreement must be in writing, it could be oral. But,
in some cases the laws strictly insist that the agreement must be in writing like agreement
to sell immovable property must be in writing and should be registered under the Transfer
of Property Act, 1882. These agreement are valid only when they fulfill the formalities like

writing, registration, signing by the both the parties are completed. If these legal formalities
are not completed, it cannot be treated as a valid contract.
These elements should be present in a contract to make it a valid contract. If any one of
them is missing we cannot treat that agreement as a valid contract.

1.8 Keywords

Contract: It is an agreement, enforceable by law, made between at least two parties by which
rights are acquired by one and obligations are created on the part of another.
Express contract: The terms of a contract may be stated in words (written or spoken).
Formal contract: It is one to which the law gives special effect because of the formalities or the
special language used in creating it.

Illegal agreement: It is one that the courts will not enforce because the purpose is to achieve an
illegal end.
Implied contract: May be implied in fact or implied in law. Contracts implied in fact and contracts
implied in law are not really contracts at all.
Legality: A void agreement is without any legal effect and hence cannot be enforced by either
party.
Standard form Contract: It is a document which is generally printed, containing terms
and conditions, with certain blanks to be filled in. It is prepared by the business people.

1.9 Self Assessment

Fill in the blanks:
1. An .......................... may be implied in fact or implied in law. Contracts implied in fact and
contracts implied in law are not really contracts at all.
2. A .......................... is one which may be repudiated (i.e., avoided) at the will of one or more
of the parties, but not by others.
3. An agreement which is not ....................... by either of the parties to it is void-ab-initio such
an agreement is without any legal effect.

4. An ............................. is one that the courts will not enforce because the purpose is to achieve
an illegal end.

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