INDIAN CONTRACT ACT, 1872 / Introduction /Proposal /Acceptance /Agreement/Void Agreement/Contract/Voidable contract /Essentials of a valid contract

 Introduction

The law relating to contracts in India is contained in INDIAN CONTRACT ACT, 1872. The Act was passed 

by British India and is based on the principles of English Common Law. It extends to the whole of 

India. It determines the circumstances in which promises made by the parties to a contract shall be 

legally binding on them. All of us enter into a number of contracts everyday knowingly or 

unknowingly. Each contract creates some rights and duties on the contracting parties. Hence this 

legislation, Indian Contract Act of 1872, being of skeletal nature, deals with the enforcement of 

these rights and duties on the parties in India.


Commencement of Act

The Act came into effect from 1st September, 1872 and applies to all contracts in India.



Proposal  

According to Section 2(a) of Act, when one person signifies to another his willingness to do or to abstain 

from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is 

said to make a proposal.



Acceptance 

As per Section 2(b), 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.

Section 2(c) defines that the person making the proposal is called the “promisor”, and the person 

accepting the proposal is called the “promisee”.



Agreement 


According to Section 2(e), every promise and every set of promises, forming the consideration for each 

other, is an agreement.

As per Section 2(f) ,promises which form the consideration or part of the consideration for each other 

are called reciprocal promises.



Void Agreement 


According to Section 2(g) , an agreement not enforceable by law is said to be void.



Contract 


Section 2(h) defines the term ‘contract ‘ as an agreement enforceable by law.

As per Section 2(j), a contract which ceases to be enforceable by law becomes void when it ceases 

to be enforceable. 



Voidable Contract


Section 2(i) defines a voidable contract as 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.



Essentials of a valid contract

Section 10 provides 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 

otherwise expressly declared to be void.

The following are the requirements for a valid contract-

• There shall be an offer or proposal by one party and acceptance of the proposal by the other party

which results in an agreement;

• There shall be an intention to create legal relations or an intent to legal consequences;

• The agreement shall be supported by lawful consideration;

• The parties to the contract shall be competent to contract;

• There shall be free consent between the parties to the contract;

• The object and consideration of the contract shall be legal and the same shall not be opposed to

public policy;

• The terms of the consent shall be certain;

• The agreement is capable of being performed i.e., it is not impossible of being performed.















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