THE INDIAN CONTRACT

ACT, 1872MODULE : 1
• CONTRACT - According to sec.2(h), an agreement enforceable by law.

• AGREEMENT - According to sec.2(e), every promise and every set of

promises forming consideration for each other.

Agreement = Offer + Acceptance

• PROMISE - According to sec.2(b), a proposal when accepted becomes a

promise.
 Valid Offer &
acceptance
Writing & Intention to
registration create legal
relationship

Possibility of Lawful
performance Consideration

Agreement not
Capacity to
declared void
contract

Lawful Object Free consent

Valid contract – If all the condition are fulfilled it is called as a valid contract.
Void Agreement – an agreement not enforceable by law. [sec. 2(g)]
Void Contract – A contract which ceases to be enforceable by law becomes void when it
ceases to be enforceable. [sec. 2(j)]
Voidable Contract – 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. [sec. 2(i)]
Illegal agreement - An agreement forbidden by law. It involves the commission of crime or
violate public policy.
Unenforceable contract - It is valid but due to some technical defect the contract becomes
void. In case defects are removed the contract is enforceable.(lack of registration, lack of
signature etc.)
Executed contract - In a contract where both the parties have performed their
obligation, there remains nothing to perform.

Executory contract - In a contract where both the parties are yet to perform their
obligation.

Unilateral contract - In a contract one party has performed his obligation and other
person is yet to perform his obligation.

Bilateral contract - In a contract where both the parties have yet to perform their
obligation. Bilateral & Executory are same and inter - changeable.
Express contract - When contracts are either in writing or in oral i.e. expressed
by words spoken or written.

Implied contract - When contracts are neither in writing nor in oral but inferred
from the acts or circumstances of a particular case i.e. inferred from the conduct of
the parties.

Quasi Contract: Strictly speaking it is not a contract. It is not actually entered into
by the parties but is something imposed on a party by law. It is created by law.
(Finder of lost goods)
• According to Sec.2(a), when a person signifies to another his willingness to do or
to abstain from doing something with a view to obtaining the assent of that other to
such an act or abstinence, he is said to make a proposal.
TYPES OF OFFER
• Express offer
• Implied offer
• Specific offer
• General offer
• Cross offer
• Counter offer
• Standing offer
• Express offer - When offer is given to another person either in writing or in oral.

• Implied offer - When offer is given to another person neither in writing nor in oral.

• Specific offer - When offer is given to a specific person.

• General offer - When offer is given to entire world at a large.(Carlill Vs. Carbolic smoke ball
Co.,)

• Cross offer - When both the persons are making identical offers to each other in ignorance
of other’s offer.

• Counter offer – When a person to whom the offer is made, instead of accepting the terms
of the offeror desires modification of the same.

• Standing offer - An offer which remains continuously enforceable for a certain period of
time.
 Carlill Vs. Carbolic smoke ball Co.
• That the advertisement was not a unilateral offer to all the world but an offer
restricted to those who acted upon the terms contained in the advertisement

• That satisfying conditions for using the smoke ball constituted acceptance of the
offer

• That purchasing or merely using the smoke ball constituted good consideration and
more people buying smoke balls by relying on the advertisement was a clear
benefit to Carbolic

• That the company's claim that £1000 was deposited at the Alliance Bank showed
the serious intention to be legally bound.
 LEGAL RULES FOR OFFER
• Offer must be such as is capable of being accepted and giving rise to legal relationship.
(Balfour Vs. Balfour)

• Offer must be definite, unambiguous and certain and not vague.(Taylor Vs. Portington)

• Must be distinguished from an invitation to offer and declaration of intention.

• Offer must be communicated. (Lalman Shukal Vs. Gauri Dutt).

• Should not contain a term the non compliance of which may be assumed to amount to
acceptance.

• Mere statement of price is not an offer. (Harvey Vs. Facey)

 Harvey Vs. Facey

First telegram from Harvey to Facey-"Will you sell us Bumper Hall Pen?

Telegraph lowest cash price".

Facey replied on the same day: "Lowest price for Bumper Hall Pen £900.

" Harvey then replied in the following words. "We agree to buy Bumper Hall
Pen for the sum of nine hundred pounds asked by you. Please send us your
title deed in order that we may get early possession."
 Acceptance is to an offer what a lighted match is to a train of gun powder.

LEGAL RULES FOR ACCEPTANCE

• Acceptance must be absolute and unqualified. Sec 7(1)
• Acceptance must be communicated to the offeror. Felthouse vs. Bindley
• Acceptance must be given as per the mode prescribed or usual & reasonable mode.
• Acceptance must be given within the time specified or within reasonable time. Ramsgate
Victoria Hotel vs. Montefiore
• Acceptance cannot precede an offer
• Acceptance may be given by the party to whom an offer has been made.
• Acceptance must be given by the person to whom the offer is made or by an authorised
person. Powel vs. Lee
• Mental acceptance is no acceptance - Acceptance cannot be implied from silence. Harvey
vs. Facey
 Communication of Offer and Acceptance
Section 4, Communication when complete

The communication of a proposal is complete when it comes to 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 the
power of the acceptor;

as against the acceptor, when it comes to the knowledge of the proposer.

• A proposal may be revoked at any time before the communication of acceptance is
complete as against the proposer but not afterwards.

• An acceptance may be revoked at any time before the communication of acceptance is

complete as against the acceptor but not afterwards.

• M, by a letter posted on 1st June, offers to sell his car to N for 5 lakhs. The letter
reaches N on 3rd of June. N accepts the offers by a letter posted on 5th. The letter
reaches M on 7th.
Communication of offer -3rd June.
Communication of acceptance- as against the proposer- 5th June
As against the acceptor- 7th June
Proposal can be revoked – before 5th June
 Acceptance can be revoked – before 7th June
 Non-
fulfillment of
Notice of a condition If the law is
Counter
Revocation precedent to changed
Offer
Sec 6(1) acceptance by
the offeree
Sec 6(3)

Death or Acceptance
Lapse of time Insanity of not as per the
Sec 6(2) offeror prescribed
Sec 6(4) mode
B offered to sell his house to A for Rs.50,000. A accepted the offer by post. On the
next day, A sent a telegram revoking the acceptance which reached B before the
letter of acceptance. Is the revocation of acceptance valid? What would be the
effect if both the letter of acceptance and the telegram of revocation of acceptance
reach B at the same time?

• Yes. The revocation of acceptance is valid because the acceptor may revoke his
acceptance at any time before the letter of acceptance reaches the offeror.

• If both letter and telegram reach B at the same time, the formation of contract will
depend on the fact – which of the two is opened first by B. If B reads the telegram
first, revocation is valid, but if the letter is read first, revocation is not possible.
• According to sec 2(d) consideration is defined as “when at the desire of the promisor , or
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 an act or absinence or
promise is called a consideration for the promise.”
• A party to an agreement who promises to do something must gain something in return. This
something in return is called consideration
LEGAL RULES AS TO CONSIDERATION
• Consideration must always be provided at the desire of the promisor. Durga Prasad v.
Baldeo
• It may be provided by the promisee or any other person. Chinnaya v. Ramayya
• It may be past, present or future .
• It need not be adequate . It must be of some value in the eyes of law.
• It must be real , certain and possible. Harvey Vs Gibbons / Stilk Vs Myrick
• It must not be illegal , immoral or opposed to public policy .
 Compensation Promise to pay
Natural Love for voluntary a time – Completed gift Agency Charitable
& affection service barred debt (Explanation 1) Sec 185 subscription
Sec 25(1) Sec 25(2) Sec 25(3)

writing & registered Writing & signed

R Suresh Chandra & Abdul Aziz vs. Masum Ali
Nearness of relationship
Rajlukhy Dubee vs. Bhootnath Co. vs. Vadnese
Chemical works Kedar Nath vs. Gauri
Mookerjee Mohammed
Nearness of relationship does not
necessarily import natural love and
affection.
 Dunlop Pneumatic Tyre Co. Ltd. vs Selfridge and Co Ltd.
EXCEPTIONS
• A trust or a charge (Khwaja Mohd. Khan vs. Hussani Begum)
• Marriage settlement, partition or other family arrangements. (Shuppu Ammal Vs Subramaniyam)
• Estoppel / Acknowledgement
• Assignment of contract (Krishan Lal Sadhu vs. Promila Bala)
• Contract entered into with an agent
• Covenants running with land (Tulk vs. Maxhay)
Important cases
 Tweddle vs. Atkinson
 M C Chacko vs. State Bank of Travancore
 Jamna Das vs. Ram Avtar
 Klaus Mittelbachert vs. East India Hotels Limited
 M. V, Shankar Bhat vs. Claude Pinto
 Not disqualified by
Major Sound mind
any other law

INCOMPETENT TO CONTRACT

Minor Unsound person Disqualified by law

• An agreement with minor is void ab initio Mohiri Bibi vs. Dharmadas Ghase
• Minor can be a beneficiary Abdul Gaffar vs Prem Piare Lal
• Minor cannot ratify his agreement on attaining the age of majority Smith vs King
• No estoppel against minor - Can always plea minority Khan Gul vs. Lakha Singh
• No restitution – exception under Specific Relief Act
• No specific performance of an agreement entered into by him
• Minor cannot act as a partner
• Minor can act as an agent
• A Minor is liable in tort but not in a tort arising out of a contract Burnard vs. Haggis &
Jennings vs. Rundall
• He can enter into contract for necessary goods & services
Soundness of mind depends upon two facts –
His capacity to understand the contents
His ability to form a rational judgment as to its effects upon his interest.

Persons of unsound mind :

• Lunatic - suffers from intermittent conditions of sanity and insanity.

• Idiots - does not possess understanding power at all

• Drunken or intoxicated persons - losses his capacity to form a rational judgment during
that time.
 Foreign
Alien Enemies Convicts Insolvents
Sovereigns
 No consent No contract
Sec 13 defines “consent” as “Two or more persons are said to consent when they
agree upon the same thing in the same sense”.
According to Sec 14, consent is said to be free when it is not caused by :

Undue influence
Coercion (15) Fraud (17)
(16)

Misrepresentation Mistake
(18) (20, 21, 22)

Where the consent is caused by coercion, undue influence, misrepresentation or

fraud the contract is voidable at the option of the party whose consent was so caused.
According to Sec 15 ‘Coercion’ is the
committing, or threatening to commit, any act forbidden by the Indian Penal Code (45
of 1860) (Ranganayakamma vs. Alwar Setty) or
the unlawful detaining, or threatening to detain, any property, to the prejudice of any
person whatever, (Muthia vs. Muthu Karuppa)
with the intention of causing any person to enter into an agreement.
Explanation — It is immaterial whether the Indian Penal Code (45 of 1860) is or is not in force
in the place where the coercion is employed.
The threat amounting to coercion need not necessarily be from a party to contract, it may also
proceed from a stranger to the contract.
Likewise it may be directed against anybody, not necessarily the other contracting party.
Coercion includes fear, physical compulsion and menace to goods.
The burden of proof lies on the person whose consent has been obtained by coercion.
Ranganayakamma vs. Alwar Setty
A young girl of 13 years was forced to adopt a boy to her husband who has just died, by the
relatives of her husband, who prevented the removal of his body for cremation until she
consented. Held that there was coercion.

Muthia vs. Muthu Karuppa: An agent refused to hand over the account books of a business
to the new agent unless the principal released him from all liabilities. The principal had to give
a release deed. Held the deed was given under coercion and was voidable at the option of the
principal.

Chikhamm Ammiraju vs. Seshamma: In this case a person threatened his wife and son that
he would commit suicide if they did not execute a release of her property in his brother’s
favour. The wife and son executed the release deed under the threat. Held the threat of suicide
amounted to coercion within Sec 15 and the release deed was therefore voidable.
Sometimes a party is compelled to enter into a contract against his will as a result of unfair
persuasion by the other party. This happens when a special kind of relationship exists
between the parties such that one party is in a position to exercise undue influence of the
other.
Section 16 - A contract is said to be induced by “undue influence” where the relations
subsisting between the parties are such that one of the parties is in a position to dominate the
will of the other and uses that position to obtain an unfair advantage over the other.
A person is deemed to be in a position to dominate the will of another –
When he holds a real or apparent authority over the other – master & servant, doctor &
patient or police & accused.
When he stands in a fiduciary relation to another - father & son, advocate & client
When he makes a contract with a person whose mental capacity is temporarily or
permanently affected by reason of age, illness or mental or bodily distress. Medical
attendant & patient. Rani Annapurni vs. Swaminatha
In all cases where there is active trust and confidence between the parties or the parties are not
on equal footing , it can be said that one party is able to dominate the will of another.

It is not necessary that the person in a position to dominate the will of the other party must
himself be benefited. Chinnamma v. Devengha Sangha

16(3) - Where a person who is in a position to dominate the will of another,

enters into a contract with him, and
the transaction appears, on the face of it or on the evidence adduced,
to be unconscionable,
the burden of proving that such contract was not induced by undue influence shall be upon the
person in a position to dominate the will of the other.

In an action to avoid a contract on the ground of undue influence the plaintiff has to establish
that –
1. The other party was in a position to dominate his will.
2. The other party actually used his influence to obtain the plaintiff’s consent to the contract.
3. The transaction is unconscionable
 In certain cases presumption of undue influence is raised – once it is shown that the defendant
was in a position to dominate the will of the plaintiff, it will be presumed that he must have
used his position to obtain an unfair advantage.
Relations which raise a presumption of Undue Influence -
Doctor Spiritual Pardanashin
Parent Trustee & Solicitor
& child and advisor and woman
beneficiary & Client
patient disciple

Among the following

landlord
relations there is no undue influence :
wife and debtor and
and creditor
husband
tenant
An unconscionable bargain is one as no sane man would make, and no honest man would take
advantage of.
 Something as shows no regard for conscience and which is irreconcilable with what is right or
reasonable.
 It means a transaction which is so much to the advantage of one and disadvantage to the other that it
shocks the conscience.
 Fraud and Misrepresentation
A statement of a fact which one party makes in the course of negotiations with a view to inducing the
other party to enter into a contract is known as a representation.

It must relate to same fact material to the contract.

May be expressed by words spoken or written or implied from the conduct.

Representation

Misrepresentation Fraud

Representation wrongly made - Representation wrongly made -

innocently intentionally
 FRAUD
According to Sec 17 fraud means and includes any of those acts committed by a party
to contract or with his connivance or by his agent with an intent to deceive or induce a
person to enter a contract.

The suggestion that a fact is true when it is not true and the person making it does not
believe in it to be true
The active concealment of a fact by a person having knowledge or belief of the fact.
 A promise made without any intention of performing it
 Any other act fitted to deceive
 Any such act or omission as the law specially declares to be fraudulent

Explanation — Mere silence as to facts likely to affect the willingness of a person to enter into a
contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it
is the duty of the person keeping silence to speak, or unless his silence, is, in itself, equivalent to
speech.
 ESSENTIALS OF FRAUD
The essentials of fraud are:
• There must be a representation or assertion and it must be false.
• The representation must relate to a material fact.
• The representation must have been made before the conclusion of the contract.
• The representation must have been made with the intention of inducing the other party to act upon
it.
• The representation must have been made with a knowledge of its falsity.
• The other party must have relied upon the representation and must have been deceived.
• The other party must have subsequently suffered some loss
WHAT CAN THE AFFECTED PARTY DO ?
• He can rescind the contract and he has to exercise the right of recession within a reasonable time.
• He can insist on the performance of the contract upon the condition that he is put in the position in
which he would have been had the representation be true.
• He can claim damages.
 MISREPRESENTATION
According to Sec 18 there is misrepresentation:
• When a person positively asserts a fact is true when his information does not
warrant it to be so, though he believes it to be true.
• When there is any Breach of duty by a person which brings an advantage to the
person committing it by misleading another to his prejudice
• When a party causes however innocently the other party to the agreement to make
a mistake as to the substance of the thing which is the subject of the agreement
• Misrepresentation is a false representation of fact made by a party to an agreement
with out any intention to deceive the other party.
Derry v. Peek
Essentials of Misrepresentation :
• There must be a representation or assertion of a material fact and it must be false and his
intention is not to deceive the other party.
• It must be made before the conclusion of the contract.
• The other party must have acted upon it.
• The representation must have been made with the intention of inducing the other party to
act upon it.
• The person making it should honestly believe it to be true.

WHAT CAN AFFECTED PARTY DO ?

• He can rescind the contract.

• He can insist on the performance of the contract upon the condition that he is put in the
position in which he would have been had the representation be true.
 RIGHT OF RESCISSION IS NOT AVAILABLE IN CASE OF FRAUD /
MISREPRESENTATION
• Where the affected party had the means of discovering the truth by ordinary diligence.

• Where the party enters into a contract in ignorance of the fraud or misrepresentation

• Where the party after becoming aware of misrepresentation or fraud takes benefit under the
contract.

• Where before the contract is rescinded by affected party, a third party acquires interest in the
subject matter .

• Where the parties cannot be restored to their original position.

 MISTAKE
Mistake can be defined as “ an erroneous belief about something.”

Mistake

Mistake of Mistake of
Law Fact

Mistake of law of Mistake of law of

Bilateral Unilateral
the foreign country the country

Mistake of Fact Ignorance of law is no excuse

Section 21 - Effect of mistakes as to law
A contract is not voidable because it was caused by a mistake as to any law in force in India;
but a mistake as to a law not in force in India has the same effect as a mistake of fact.

Section 20. Agreement void where both parties are under mistake as to matter of
fact
Where both the parties to an agreement are under a mistake as to a matter of fact essential to
the agreement, the agreement is void.
Explanation—An erroneous opinion as to the value of the thing which forms the subject-
matter of the agreement, is not to be deemed a mistake as to a matter of fact.
A agrees to sell to B a specific cargo of goods supposed to be on its way from England to
Bombay. It turns out that, before the day of the bargain, the ship conveying the cargo had been
cast away and the goods lost. Neither party was aware of the these facts. The agreement is
void.
Bilateral Mistake –
(i) Must be mutual (ii) Mistake must relate to a matter of fact essential to
the agreement
 Bilateral Mistake

As to the possibility of
As to the subject matter
performing the contract

as to the existence Physical Impossibility

as to the identity Legal Impossibility

as to the quality

as to the quantity

as to the title

as to the price
Section 22 - Contract caused by mistake of one party as to matter of fact

A contract is not voidable merely because it was caused by one of the parties to it being under
a mistake as to a matter of fact.

A unilateral mistake is not allowed as a defence in avoiding a contract unless the mistake is brought
about by the other party's fraud or misrepresentation.

Exceptions

mistake as to the identity of mistake as to the nature of

the person contracted with the contract

Cundy v. Lindsay
Foster v. Mackinnon
Boulton v. Jones
Phillips v. Brooks Ltd
 Lawful Consideration and Object
Every agreement of which the object or consideration is unlawful is void – Sec 23

Consideration or Object
unlawful

involves or
Court regards it
defeat the implies, injury to
as immoral, or
forbidden by law provisions of any is fraudulent the person or
opposed to
law property of
public policy
another
Section 26 - Agreement in restraint of marriage, void.
Every agreement in restraint of the marriage of any person, other than a minor, is void.

Marriage is the right of every one.

The restraint may be absolute or partial.

A party may be restrained from

- marrying at all or
- from marrying for a fixed period or
- from marrying a particular person or class of persons or
- not to marry outside a group of families
in all such cases the agreement is void.

A promise to marry a particular person does not imply any restraint of marriage.
 Section 27 - Agreement in restraint of trade, void
Every agreement by which any one is restrained from exercising a lawful profession, trade or
business of any kind, is to that extent void."

Exception — Saving of agreement not to carry on business of which goodwill is sold.

One who sells the goodwill of a business may agree with the buyer to refrain from carrying on
a similar business, within specified local limits, so long as the buyer, or any person deriving
title to the goodwill from him, carries on a like business therein, provided that such limits
appear to the Court reasonable, regard being had to the nature of the business.
 Public policy requires that every man should be at liberty to work for himself.

 Where an agreement is challenged on the ground of its being in restraint of trade the onus is upon
the party supporting the contract to show that the restraint is reasonably necessary to protect his
interests. Once this onus is discharged, the onus of showing that the restraint is nevertheless
injurious to the public is upon the party attacking the contract. Niranjan Shankar v. Century Shipping
& Mfg Co. ltd.
Madhav v. Raj Coomar
Under English law all restraints of trade are void except when such restraint is reasonable and
in the interest of the contracting parties and public. Nordenfelt v. Maxim Nordenfelt Gun Co.

In India, it is valid if it falls under the exceptions.

Exceptions –
1. Sale of Goodwill – A seller of goodwill may be restrained from carrying on
(a) Similar Business
(b) within specified local limits Hukmi Chand v. Jaipur Ice & Oil Mills Co.
(c) so long as the buyer or any person deriving title from him carries on a like
business
Provided that such limits appear to the court to be reasonable regard being had to the nature
of business.

2. Partner’s Agreements
Trade Combinations
Traders normally form associations to regulate business or to fix prices, opening and closing of
markets, licensing of traders etc. – Not Unlawful

SB Fraser & Co v. Bombay Ice Mgf. Co.

Agreement among traders not to sell ice below a stated price is not void.

But a combination which tends to create a monopoly and which is against the public interest
is void.
Service Contracts
The terms of Service agreements prevent an employee from accepting
(a) any other engagement during his employment, and / or - Valid
(b) a similar engagement after the termination of his services – Void
The second case will be void if the object is to merely restrain competition by an employee.

If a restraint is intended to protect an employer against an employee making use of Trade secrets
learned by him in the course of his employment it will be a valid restraint.
 WAGER (SEC. 30)
A wager is an agreement between two parties by which one promises to pay money or money’s worth
on the happening of some uncertain event in consideration of other person’s promise to pay if the
event does not happen.
The event may be uncertain either because it is to happen in future or if it has already happened,
the parties are uncertain and express opposite views.
Section 30 - Agreements by way of wager are void; and no suit shall be brought for recovering
anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or
other uncertain event on which any wager is made.
Exception in favour of certain prizes for horse-racing.—This section shall not be deemed to render
unlawful a subscription or contribution, or agreement to subscribe or contribute, made or entered into
for or toward any plate, prize or sum of money, of the value or amount of five hundred rupees or
upwards, to be rewarded to the winner or winners of any horse-race.
Section 294A of the Indian Penal Code not affected.—Nothing in this section shall be deemed to
legalize any transaction connected with horse-racing, to which the provisions of section 294A of the
Indian Penal Code (45 of 1860) apply.
ESSENTIAL ELEMENTS OF WAGERING

1. Promise to pay money or money’s worth

2. Uncertain event
3. Each party must stand to win or lose
4. No control over the events
5. No other interest in the event.

In a wrestling bout, A tells B that wrestler no.1 will win. B challenges the statement of A. They
bet with each other over the result of the bout. This is a wagering agreement.

Exceptions
1. Crossword puzzle
2. Games of skill
3. Horse race
4. Contract of Insurance
 CONTINGENT CONTRACT (SEC. 31)
Contract

Absolute Contingent

Without any With some

conditions conditions

Contingent means which is dependent on something

A contingent contract is a contract
to do or not to do something,
if some event, collateral to such contract,
does or does not happen.
It is also called a conditional contract.
 ESSENTIAL ELEMENTS OF A CONTINGENT CONTRACT

 Its performance depends upon the happening or non happening in future of some event.

 The event must be uncertain

 The event must be collateral i.e. incidental to the contract. Ranchhodas v. Nathmal
Hirachand & Co.
 RULES REGARDING CONTINGENT CONTRACT
• Contingent contracts dependent on happening of an uncertain future event cannot be
enforced until the event has happened.( Sec 32 )
• Where a contingent contracts is to be performed if a particular event does not happen, its
performance can be enforced when the happening of that event becomes impossible.( Sec
33 )
• If a contract is contingent upon how a person will act at an unspecified time, the event shall
be considered to become impossible when such person does anything which renders it
impossible that he should so act within any definite time, or otherwise than under further
contingencies.( Sec 34)
• Contingent contracts to do or not to do anything, if a specified uncertain event does not
happen within a fixed time, may be enforced if the event does not happen or its happening
becomes impossible before the expiry of that time.( Sec 35 )
• Contingent agreements to do or not to do anything, if an impossible event happens, are void,
whether or not the fact is known to the parties. (Sec 36)
DIFFERENCE BETWEEN A WAGERING AGREEMENT
AND CONTINGENT AGREEMENT

WAGER AGREEMENT CONTINGENT AGREEMENT

 There is no reciprocal promise.
There is a reciprocal promise.
It is a void contract.  It is a valid contract.
Others are not interested in
the contract.  Others are interested in the
It is contingent in nature. contract.

 It may not be wagering in nature.