Contract in Contract Act, 1872:
Basically, a Contract is an exchange of promises by two or more persons resulting in an obligation to do or refrain from doing a particular act, which obligation is recognized and enforced by law.
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Meaning of Contract:
According to Black’s Law Dictionary:
Contract means an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law.
According to Merriam-Webster Dictionary:
A contract in law is a binding agreement between two parties that is legally enforceable.
Sections 2(h), 10, 11, 14, 17, and 23 of the Contract Act,1872.
According to Pollock:
“Every agreement and promise enforceable at law is a contract.
Salmond defines contract as “A contract is an agreement creating and defining obligations between the parties”.
Under Section 2(h) of the Contract Act:
“An agreement enforceable by law is a contract”.
‘A’ agrees to sell his bicycle for Rs.3000($15) to ‘B’. It is a contract because the agreement between ‘A’ and ‘B’ is enforceable by law and the law treats their agreement to sell or buy the bicycle as valid.
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Essentials of Valid Contract:
In order to know the essentials of a valid contract, we have to look at Section 10 of the Contract Act, of 1872. It says, “All agreements are contracted IF they’re made by the free consent of the parties competent to contract, for a lawful consideration and with a lawful object and are not hereby expressly declared void”.
Thus, keeping in view, the language of Section 10, we discuss its ingredients.
Offer/Proposal is the first basic element of the Contract. It is defined as “when a person shows his intention or willingness to do or abstain to do certain things”. There must be the intention of the offeror.
Acceptance is the second element of the Contract. It is defined as “when a person to whom an offer/proposal is made and he gives his assent to thereto”.
Consideration is the essential element of the Contract. It may be in the past, present, or future which need not be in cash or kind. Usually, a promise to give or to do something for nothing in return is not enforceable by law. For a valid contract, the consideration must be lawful.
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4). Free consent:
For a valid contract, It is necessary that the consent of the parties to the contract must be free. According to Section 14 of the contract act, 1872 “consent is said to be free when it is not caused by;
- Coercion under Section 15 of the Contract Act, 1872.
- Undue influence under Section 15 and 19(A) of the Contract Act, 1872.
- Fraud under Section 17 of the Contract Act, 1872.
- Misrepresentation under Section 18 of the Contract Act, 1872.
- Mistake under Sections 20 and 22 of the Contract Act, 1872.
5). The Capacity of Parties:
It is essential that the parties to an agreement must be competent to contract; otherwise, the contract is not enforceable by law.
This concept of competency of parties has been defined under Section 11 of the Contract Act, of 1872. It says, “Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is not disqualified from contracting by any law to which he is subject.”
6). Lawful Object:
By lawful object, we mean that subject matter upon which the contract is to be correct and lawful. And the object must be lawful.
7). The Certainty of Terms:
The Certainty of Terms is another essential element that the terms and conditions must be clear, complete, certain, and must be understood not ambiguous. And it shall signify the true intention of the parties in the contract.
8). Not Expressly Declared Void:
in order to make a valid contract, it is necessary that an agreement must not have been declared void by any law in force in the country.
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It is concluded that a contract is an agreement that is enforceable by law. All contracts are agreements, but all agreements are not contracts. For an agreement to be a valid contract all the ingredients mentioned in Section 10 of the Contract Act,1872 must be there i.e. it must be entered into with free consent, lawful consideration, object, and not declared to be void under any law.
Frequently Asked Questions (FAQs):
The four types of contracts can generally be categorized as unilateral, bilateral, express, and implied.
A contract is an agreement between two people or groups that states what each will do for the other. It’s like making a promise with someone else, but it’s written down. For example, two people might make a contract when they buy a house from each other. The buyer agrees to pay the seller a certain amount of money and the seller agrees to give them the keys to the house. Both sides have to keep their part of the deal in order for it to be valid.