The law relating to contracts in India is contained in the Indian Contract Act, 1872. It extends to the whole of India except the State of Jammu and Kashmir from the first day of September, 1872. The Act deals with the general principles of the law of contract and some special contracts. The first six chapters of the Act deal with general principles of contracts.
Essentials of a Valid Contract
(All Contracts are Agreements but all Agreements are not Contracts). The word contract derived from the Latin term ‘contractum’ which means ‘drawn together’. Section 2(h) of the Indian Contract Act, I872, defined “A contract is an agreement enforceable by law”. “A contract is an agreement made between two or more persons who is intended to be enforceable at law, and is constituted by the acceptance by one party of an offer made to him by the other party to do or to abstain from doing some act.” Thus- 1) A contract is an agreement made between two or more persons. 2) The agreement should be one enforceable through court of law. Thus there are two elements in a contract-
1) an agreement, and
2) Enforceability by law.
A Contract = An Agreement + Enforceability by law.
Agreement = Offer + Acceptance.
Agreement: When a person communicates to another his willingness to do or to abstain from doing anything with a view to obtaining the assent (consent) of that other, he is said to have made an offer. The person making the offer is known as the offeror. The person to whom the offer is made is called offeree.
Acceptance is an expression by the offeree of his willingness to be bound by the terms of offer. When an offer or proposal is accepted it becomes an agreement. Enforceability by Law: If the agreement is enforceable through court of law, the agreement is a contract. Only an enforceable agreement becomes contract. Section 10 of the Indian Contract Act, 1872 prescribes, “All agreements are contracts if they are made by the free...