- A CONTRACT
According to Section 2(h) of Indian Contract Act 1872 "An agreement enforceable by law is a contract". It means a contract has two basic characteristics:
1. An Agreement: According to Section 2(e) of Indian Contract Act 1872 "Every promise or set of promises forming consideration for each other is an agreement".
An Agreement = Offer + Acceptance
2. Enforceability by law: an agreement which carries certain characteristics of a contract is enforceable by the law.
There are three rules in this regard:
Rule 1: Any agreement which is enforceable by the law is a contract.
Rule 2: If any agreement does not have certain legal characteristics to become a contract, it would simply remain as an agreement.
Rule 3: The basic and primary requirement of a contract is an agreement.
That is why it is said "All contracts are agreement
but all agreements are not contract".
Characteristics and essentials of a contract are:
1.An Agreement:According to Section 2(e) of Indian Contact Act 1872 "Every promise or set of promises forming consideration for each other is an agreement".
1.An Agreement:According to Section 2(e) of Indian Contact Act 1872 "Every promise or set of promises forming consideration for each other is an agreement".
An Agreement = Offer + Acceptance
Example: A offers to sell his car to B in Rs. 500000/-. Here, A is a offerer and B is accepter.
2. Intention to create legal relationship: There must be some intention to create legal relationship.
Example: X invite his friend B on dinner, B does not reach. Here, X cannot go to the court against B to recover his loss because such agreement doesn't create any legal relationship between them.
3. Capacity to contract: All parties entering into the contract should have ability to contract, such as:
a. They should not minor.
b. They should not be of unsound mind.
c. They should not be disqualified by law to enter into contract.
4. Free consent : All parties should give their consent freely and if any party gave consent by coercion, undue influence, fraud, misrepresentation, mistake then it will not be free consent and contract will not valid.
5. Lawful objective:
a. The object of a contract must be lawful in the eyes of law.
b. There should be some value.
c. It must be real.
Example: A offers to give Rs. 50000/- to B to kill C. It is not valid contract because it has unlawful objective.
6. Certainty of meaning: There should be certainty in meaning of an agreement.
Example: X offer to sell his house to B in Rs. 5000000/- or Rs. 6000000/- here, the meaning of agreement is uncertain so it is unenforceable by law.
7. Possibility of performance: There should be possibility of performing the obligation of the contract.
Example: A agrees with B to discover a treasure by magic on the payment of Rs. 100000/- by B to A. This is a case of impossibility of performance, hence, unenforceable by the law.
8. Agreement should not be declared as void:
a. Agreement in restraint of marriage, b. Agreement in restraint of trade agreement,
c. Agreement in restraint of legal proceedings,
d. wagery agreements.
All these agreements are void and unenforceable by the law.
9. Fulfilment of necessary legal formalities: To be a valid contract all the required legal formalities must be fulfilled.
10. Contract may be in oral or written form: Contract may be in oral or written form but in certain cases agreement must be in written form eg. insurance contract, negotiable contract, agreement to pay time bard payment.
For an agreement to be enforceable by the law it must carry all of these characteristics of a valid contract.
Example: A offers to sell his car to B in Rs. 500000/-. Here, A is a offerer and B is accepter.
2. Intention to create legal relationship: There must be some intention to create legal relationship.
Example: X invite his friend B on dinner, B does not reach. Here, X cannot go to the court against B to recover his loss because such agreement doesn't create any legal relationship between them.
3. Capacity to contract: All parties entering into the contract should have ability to contract, such as:
a. They should not minor.
b. They should not be of unsound mind.
c. They should not be disqualified by law to enter into contract.
4. Free consent : All parties should give their consent freely and if any party gave consent by coercion, undue influence, fraud, misrepresentation, mistake then it will not be free consent and contract will not valid.
5. Lawful objective:
a. The object of a contract must be lawful in the eyes of law.
b. There should be some value.
c. It must be real.
Example: A offers to give Rs. 50000/- to B to kill C. It is not valid contract because it has unlawful objective.
6. Certainty of meaning: There should be certainty in meaning of an agreement.
Example: X offer to sell his house to B in Rs. 5000000/- or Rs. 6000000/- here, the meaning of agreement is uncertain so it is unenforceable by law.
7. Possibility of performance: There should be possibility of performing the obligation of the contract.
Example: A agrees with B to discover a treasure by magic on the payment of Rs. 100000/- by B to A. This is a case of impossibility of performance, hence, unenforceable by the law.
8. Agreement should not be declared as void:
a. Agreement in restraint of marriage, b. Agreement in restraint of trade agreement,
c. Agreement in restraint of legal proceedings,
d. wagery agreements.
All these agreements are void and unenforceable by the law.
9. Fulfilment of necessary legal formalities: To be a valid contract all the required legal formalities must be fulfilled.
10. Contract may be in oral or written form: Contract may be in oral or written form but in certain cases agreement must be in written form eg. insurance contract, negotiable contract, agreement to pay time bard payment.
For an agreement to be enforceable by the law it must carry all of these characteristics of a valid contract.
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