Definition of Contract

May 12, 2019 | Author: anshika agarwal | Category: Consideration, Offer And Acceptance, Contract Law, Law Of Obligations, Legal Concepts
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DEFINITION OF CONTRACT:Under or according to secon 2(h) of the Indian Contract Act, contract contract is dened as “A Contract is an agreement enforceable by law” It means that the agreement between two or more !ares m"st create obligaon to do or not to do something #here m"st be a legal obligaon between the !ares All Agreements made with the following essenal elements will be treated as a $alid contract #he elements are%&

1. 2. 3. 4. 5. 6. !. $. %. 1&.

Offe Offer r and and acce accept ptan ance ce Legal Legal relatio relationsh nship ip Free Free Con Conse sent nt Compete Competency ncy of of parti parties es Mutu Mutual al conse consent nt Laful Laful cons conside iderat ration ion Laf La ful ul o" o"#e #ects cts Certainty and possi"ility of performance Legal formalities 'greement not e(pressly declared )oid

1. Offer and acceptan acceptance ce:In a contract there must be at least two parties one of them making the offer and the other accepting it. There must thus be an offer by one party and its acceptance by the other. The offer when accepted becomes agreement.

2.Legal relationship*+ Parties to a contract contract must intend to constitute legal legal relationship. It arises when the parties know that if any one of them fails to fulfil his part of the promise, he would be liable for the failure of the contract.If there is no intention to create legal relationship, there is no contract between parties. Agreements of a social or domestic nature which do not contemplate a legal relationship are not contracts. Example:- “there was an agreement between R& co. and & co. by means of which the former was appointed as the agent of the latter.!ne clause in the

agreement was" “this agreement was not entered into as a formal or legal agreement,and shall not be sub#ect to legal #urisdiction in the law courts$ %eld,there was no binding contract as there was no intention to create legal relationship.$

3. Free Consent*  Another essential of a alid contract is the consent of parties, which should be free. 'nder (ec. )*, “Two or more parties are said to consent, when they agree upon the same thing in the same sense.$ 'nder (ec. )+, the consent is said to be free, when it is not induced by any of the following" -i coercion, -ii misrepresentation, -iii fraud, -i undue influence, or - mistake. Example:- (uresh threatens to kill irat,if he does not sell his bat to him. /irat agrees to sell his bat to suresh. In this case /irat0s consent was obtained by “coercion$ -Physical 1orce.

4. Competency of parties*+ The parties to an agreement must be competent to contract. In other words, they must be capable of entering into a contract. eery person with the e2ception of the following is competent to enter into a contract"-i A minor,-ii A person of unsound mind, and-iii A person e2pressly declared dis3ualified to enter into a contract under any 4aw. Example:- Parthi, a minor borrowed a sum of Rs. )5555 from (achin, a 6a#or.%eld,(achin could not recoer the sum lent since it was not a alid contract as Parthi was incompetent to contract.

5.Mutual consent*+ The parties to an agreement must hae the mutual consent i.e. they must agree upon the same thing and in the same sense. This means that there must be consensus ad idem -i.e. meeting of minds.

Example:-  Amar, who owns two cars, 6aruthi 755 and 6aruti 8en, is selling maruti 755 to Akbar. Akbar thinks he is purchasing 6aruti 8en. There is no mutual consent of the parties.

6. Laful consideration*+ onsideration is known as 9something in return0. It is also essential for the alidity of a contract. A promise to do something or to gie something without anything in return would not be enforceable at law and, therefore, would not be alid. onsideration need not be in cash or in kind. A contract without consideration is a 9wagering contract0 or 9betting0. :esides, the consideration must also be lawful. Example:- Amar agrees to sell his house to Akbar for ;5555. Akbar0s promise to pay the sum is consideration for Amar0s promise to sell his house and ice ersa.

!. Laful o"#ects*+  According to (ec. )5, an agreement may become a alidcontract only, if it is for a lawful consideration and lawful ob#ect. According to (ec. .

9. Legal formalities:The agreement may be oral or in writing. ?hen the agreement is in writing it must comply with all legal formalities as to attestation, registration. If the agreement does not comply with the necessary legal formalities, it cannot be enforced by law. Example:-  An oral agreement for sale of immoable property is unenforceable because the law re3uires such agreements to be in writing and registered.

1&. 'greement not e(pressly declared )oid*+  An agreement to become a contract should not be an agreement which has been e2pressly declared oid by any law in the country, as it would not be enforceable at law.'nder different sections of the ontract Act, )[email protected]
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