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Contract Laws : Read All The Important Details About Contract Laws in India

Indian Contract Act, 1872

Contract Laws : Law of contracts in India defines Contract as an agreement enforceable by law which offers personal rights, and imposes personal obligations, which the law protects and enforces against the parties to the agreement.


In the simplest definition, a promise enforceable by law. The making of a contract requires the mutual assent of two or more persons, one of them ordinarily making an offer and another accepting.

Section 2(h) defines a contract as “An agreement enforceable by law”. The word ‘agreement’ has been defined in Section 2(e) of the Act as ‘every promise and every set of promises, forming consideration for each other’ .

The law considers such questions as whether a contract exists, what the meaning of it is, whether it has been broken, and what compensation is due the injured party. The Indian Contract Act, 1872 prescribes the law relating to contracts in India and is the key act regulating Indian law.

It provides assurance that the parties will perform the roles and responsibilities as intended, and provides some protection in the event that things do go wrong.

Essential Elements of A Contract

1 ) Offer : Under section 2(a) An offer refers to a promise that is dependent on a certain act, promise, or forbearance given in exchange for the initial promise. The offer must be clear and definite, and it must be communicated to the other party.

The offeree must then accept the terms of the offer, which can be done explicitly or implicitly. An offer is a definite statement of the terms of an agreement that the offeror is willing to be bound by. It must be unambiguous and made to create a legally binding contract.

The offeror can make the offer to the offeree directly or indirectly. An offer made indirectly, such as an advertisement, is known as an “invitation to treat” .

2 ) Acceptance : Under section 2(b) When the person to whom the proposal is made, signifies his assent there to, the proposal is said to be accepted. Acceptance is the agreement to the specific conditions of an offer. It must be unequivocal and must correspond with the terms of the offer . An acceptance can be expressed or implied. An express acceptance is an affirmative statement by the offeree that they accept the terms of the offer. Words or actions can be used to accept an offer .

3 ) Consideration : Under section 2 (d) When at the desire of the promisor, the promisee or any other person has done or abstained from doing or does or abstains from doing or promises to do or to abstain from doing something such act or abstinence or promise is called a consideration for the promise.

Consideration is what each party to gives up, or promises to do, to form the contract. It can be something of value, such as money, goods, services, or property. For instance, consider an employment contract between an employer and employee . Consideration does not have to be a financial investment. In most cases, the courts will not assess the adequacy of the consideration. The parties are free to enter into a bad bargain . An exception is sometimes made, however, in the case of employee non-compete agreements, where the courts may consider the adequacy of the consideration.

4 ) Agreement : Under section 2 (e) Every promise and every set of promises forming the consideration for each other. In simple words, an agreement happens when an offer is made by one person and accepted by another person . It consists of two or more parties. It becomes an agreement only if the essential ingredients are fulfilled. There must be a consideration.

agreement=promise + consideration

5 ) Void agreement : Under section 2 (g) An agreement not enforceable by law is void . A agreement is said to be void when a agreement is void from the beginning when it was made, and which cannot be enforceable by law. It lacks enforceability.

6 ) Voidable contract : Under section 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 and it is not enforceable by Law at the option of the other or others. It can be affirmed or rejected by the parties. It starts as valid but later there will be an option for the parties to move forward with it or deny it. It can be declared invalid at the request of any party because of any defect.

7 ) Promise : Under section 2(b) A proposal when accepted becomes a promise. In simple words, when an offer is accepted it becomes promise. A proposal is not synonymous to a promise but becomes one only after its acceptance .


Breach of Contract occurs when one of the parties fails to abide by the terms and conditions accepted . The breach could be anything from a late payment to a more serious violation, such as the failure to deliver a promised asset. It can happen in both a written contract and an oral contracts. There are different types of breaches, including a minor or material breach and an actual or anticipatory breach . The breach of Contract can be resolved among the parties and if it is still not resolved then they can approach the court.

Conditions :

  • If the party does not meet the terms
  • If the party fails to perform.
  • If party fail to deliver certain conditions in a certain duration of time


What is Section 23 of Indian Contract Act?

Section 23 provides that a consideration or object is unlawful if it is, inter alia, “forbidden by law” or would “defeat the provisions of any law”

What is Section 11 Indian contract act ?

Every person is competent to contract who is of the age of majority according to the law to which he is subject1 , and who is of sound mind and is not disqualified from contracting by any law to which he is subject.

What are the 3 basics of a contract?

There are three essential components : the offer, the acceptance, and the consideration.


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