Definitions under the Indian Contract Act, 1872

What do you mean by contact?

A contract is an agreement between two or more parties for doing an act or omission for consideration and which is enforced by law. Section 2(h) of the Indian Contract Act, 1872, defines the term contract as ‘An agreement which is enforceable by law is a contract.

Essential of valid contract:
  • Motive for formation of legal relationship.
  • Offer and Acceptance
  • Lawful consideration
  • Parties must have capacity for formation of contract.
  • There must be a free consent.
  • Object of contract must be legal.
  • Contract must be unconditional and it must not be void.

The aforesaid elements mentioned under section 10 of the Indian Contract Act, 1872. Section 10 of the Indian Contract Act defines that, “All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.” This means that all agreements are contracts if the fundamentals of a contract are met.

What do you mean by agreement?                

An agreement is a promise between two or more parties forming mutual obligation and responsibilities for doing an act or omission for consideration. Sec 2(e)of the Indian Contract Act defines an agreement as ‘Every promise and every set of promises, forming the consideration for each other, is an agreement’. The agreement includes two parts:

  •   Promise: “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.” This definition is mentioned in section 2(b). Section 9 of the Indian Contract Act defines that the promise may be in expressed or implied form. This section states that both proposal and acceptance may take place by spoken, written, sign and gestures.

Reciprocal promises: When one party do promise in the form of the consideration or part of the consideration for each other, are called reciprocal promises under section 2(f).

  • Consideration: Consideration can be defined as – ‘when at the willingness of the promisor, promises or any other person has done or abstained from doing, or does or abstains (to prevent from doing something) for doing, or promise to do or to abstain from doing something, such act and abstinence or promise is called a consideration for promise’ under section 2(d) of Indian Contract Act.

Consideration is one of the essential elements of a contract because it identifies why each party is getting into contact. If consideration is not present in contact the contract is void from the beginning.

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In short, the term consideration means ‘something in return’ i.e. ‘QUID PRO QUO’

Illustration

‘A’ promises ‘B’ to sell a computer, in return ‘B’ promises to pay 30,000 to ‘A’ upon the delivery of computer.  Here B’s promise to pay 30,000 is a consideration.

Definitions of promisor and promises under section 2(c)

Promisor: The person making the proposal is called the promisor.

Promisee: The person who accepting the proposal is called the promisee.

Illustration

‘A’ promised to deliver a car to ‘B’. Here ‘A’ is promisor and ‘B’ is promisee.

What do you mean by proposal?

According to Sec 2(a), When one party conveys to another party his willingness to do or to abstain from doing anything, with an objective to get the assent of that other to such act or abstinence, he is said to make a proposal.

A proposal is also known as an offer. The proposal is the initial step for the formation of a contract.

Illustration

‘A’ sent letter to ‘B’ for selling the computer at 10,000.  Here, ‘A’ sent proposal by letter to ‘B’.

When a contract is called a void contract?

An agreement not enforceable in eyes of law is called void contract under section 2(g). A void contract is invalid from the beginning i.e. Void ab initio. It is illegal.

A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable under section 2(f) of the Indian Contract Act.

Illustration

X made a contract with Y who is minor. Here, the contract is void as it is against the essentials of contract.

When a contract is called voidable contract?

When an agreement is enforceable by law at the option of one party or parties thereto, but not at the option of the other party or parties is called a voidable contract.

Illustration

‘X’ enters into contact with ‘Y’ by fraud. Here on the part of ‘Y’, the contract is voidable.

Reference:

[1] Indian Contract Act, 1872

[2] Mulla, Indian Contract Act, 15th Ed.

4 thoughts on “Definitions under the Indian Contract Act, 1872

  • Sep 6, 2020 at 10:27 pm
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    Great stuff, good presentation with understandable language.

    Reply
  • Sep 6, 2020 at 10:54 pm
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    Contents Regarding Indian Contract act is useful

    Reply

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