Contract 2 h : An agreement enforceable by Law is a contract. Therefore, there must be an agreement and it should be enforceable by law. Void agreement 2 g : An agreement not enforceable by law is void. Voidable contract 2 i : An agreement is a voidable contract if it is enforceable by Law at the option of one or more of the parties there to i. Void contract 2 j : A contract becomes void when it ceases to be enforceable by law.
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The Act was passed by British India and is based on the principles of English common law. It determines the circumstance in which promise 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, the Indian Contract Act , being of skeletal nature, deals with the enforcement of these rights and duties on the parties in India.
History of Indian Contract Act It was enacted mainly with a view to ensure reasonable fulfillment of expectation created by the promises of the parties and also enforcement of obligations prescribed by an agreement between the parties.
Lowe, J. Macleod, Sir W. Erle Succeeded by Sir, W. James and justice Wills succeeded by J. Henderson , had presented the report on contract law for India as Draft Contract law Act of settlement required the Supreme court of India that questions of inheritance and succession and all matters of contract and dealing between party and party should be determined in case of Hindu as per Hindu law and in case of Muslim as per Muslim law and when parties to a suit belonged to different persuasions, then the law of the defendant was to apply.
In outside Presidency Towns matters with regard to the contract was mainly dealt with through English Contract Laws: the principle of justice, equity and good conscience was followed. Nature of Contract What is Contract? Thus for the formation of a contract, there must be — An agreement, and The agreement should be enforceable by law.
All agreements are not enforceable by law and therefore, all agreements are not contracts. Some agreement not enforceable by law. Illustration — if the agreement between the farmer and the tractor owner is given force under the law, then it becomes a contract. For example, A promises to deliver his watch to B and in return B promises to pay a sum of Rs.
A promise is a result of an offer proposal by one person and its acceptance by the other. For example — when A makes a proposal to sell his watch to B for Rs. Illustration — Such a promise between the tractor owner and the farmer which involves a consideration of an Rs.
The promise in the Indian Contract Act According to section 2 b defines promise as, 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 promise from the two parties to one another is known as an agreement.
The person who makes the proposal is called the promisor. The person who accepts such a promise is called the promise. Illustration — if in the given example, the farmer accepts the proposal of the tractor owner to transport his produce from the farms to the market, the proposal then becomes a promise.
In business agreements the presumption is usually that the parties intend to create legal relation for e. An agreement to buy certain specific goods at an agreed price e. The various agreements may be classified into two categories : Agreement not enforceable by law Any essential of a valid contract is not available An agreement enforceable by law All essentials of a valid contract are available Conclusion Thus we see that an agreement may be or may not be enforceable by law, and so all agreement does not contract.
Only those agreements are contracts, which are enforceable by law, In short. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents. Intention to create legal relation There must be intention among the parties that the agreement should be attached by legal consequences and create legal obligations.
Agreements of social or domestic nature do not contemplate legal relations, and as such, they do not give rise to a contract. An agreement between husband and wife also lack the intention to create a legal relationship and thus do not result in a contract. Suraj promises his wife Megha to get her jewelry if she will make a special dish. Megha made a dish but Suraj did not bring the jewelry for her. Megha cannot bring an action in a court to enforce the agreement as it lacked the intention to create legal relation.
He and his wife were enjoying leave in England. When the defendant was due to return to Ceylon, his wife could not accompany him because if her health. The defendant agreed to send her Rs. She sued for breach of this agreement. Her action was dismissed on the ground that no legal relation had been contemplated and therefore, there was no contract. Lawful consideration The third essential element of a valid contract is the presence of consideration.
According to Section 23, the consideration is unlawful if: Law forbids it; It is fraudulent; Involves or implies injury to the person or property of another; It is of such a nature that, if permitted it would defeat the provision of any law; Is immoral or is opposed to public policy.
Capacity of parties The parties to an agreement must be competent to contract; otherwise, it cannot be enforced by a court of law. In order to be competent to contract according to section 11 the parties must be : Of the age of majority; Of sound mind: Must not be disqualified from contracting by any law to which they are subject. Thus, if any of the parties to the agreement suffers from minority, lunacy, idiocy, drunkenness, etc.
Free consent of all the parties to an agreement is another essential element of a valid contract. If the agreement is induced by any of the following factors: Coercion.
The Fact Factor
Indian Contract Act, 1872
Indian Contract Act, 1872