Contracts And Agreements

What is contract law?

Contracts are basically agreements that have the power of legal enforceability and protection. As per Section 2(e) of the Indian Contract Act 1872 (hereinafter mentioned as the ICA), agreements ask ‘every promise and each set of promises, forming consideration for every other’. As per Section 2(h) of the ICA, a contract is “an agreement enforceable by law”.

The basic gist of what contract is that the following:

Proposal + Acceptance = Promise

Promise + Consideration = Agreemen

Agreement + Enforceability = Contract

Therefore, Contract = Promise + Consideration + Enforceability.

*ICA is applicable to whole of India barring the state of Jammu and Kashmir.

Essentials of a contract:

Offer –

When one person signifies to another his willingness to try to to or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he’s said to form a proposal. an offer is the penultimate act resulting in an agreement. Once an offer is accepted, both parties are bound by the agreement. an offer must be clear, definite, and unambiguous.


Acceptance –

When the person to whom the proposal is formed signifies his assent thereto, the proposal is claimed to be accepted. A proposal, when accepted, becomes a promise. Acceptance can happen through speech, writing, conduct/performance, etc. Acceptance must be unqualified, absolute, clear and definite.


Consideration are often defined because the price of the promise made. Both parties must be giving and receiving consideration so as for the agreement to be supported by consideration. Consideration needn’t be adequate, it just must be valid within the eyes of law.

Capacity to Contract-

Minors, people of unsound mind, and/or people that are disqualified from contracting by some law to which they’re subjected to, are considered incompetent to contract. The Indian Contract Act doesn’t explicitly state whether a contract with a minor is void or voidable. However, within the case of ‘Mohri Bibee v. Dharmodardas Ghose’ observed that contracts with a minor are void initially , which no restitution of advantages are often claimed by the parties. However, a celebration getting into a contract with a minor can seek reimbursement for supplying ‘necessities’ to the minor.


For a contract to be legal, parties must have exercised their consent freely without unlawful manipulation. Consent isn’t considered to be free consent when there’s presence of Coercion, Undue Influence, Fraud, Mistake, Misrepresentation(for eg. Active concealment of relevant facts). In absence of ‘consensus ad idem’ or meeting of minds, contract stands void.

Lawful motive and object-

An agreement albeit it satisfies all the above conditions wouldn’t be a contract if it’s for an unlawful motive like selling prohibited narcotics or has an unlawful consideration just like the promise of murdering someone in exchange of a specific amount of cash .


Miscellaneous facts about Contract Laws:


Wagering contracts are illegal in India, however some states allow restrictive betting, for instance casino is allowed on certain conditions in Goa and Sikkim. racing also enjoys legality as there are several factors thereto just like the quite training given, nutrition provided etc. which don’t make it a game of luck or chance. Case of ‘Dr. K.R. Lakshmanan v. State of Tamil Nadu’ observed that racing may be a game of skill and can’t be deemed to be a game of pure chance, hence it’s legal to back racing .

Balfour v. Balfour – An agreement can’t be enforced if the parties didn’t intend on creating a binding agreement.

Carlill v. Carbolic Smoke Ball Co. – a person can accept a general offer that was made to the general public at large, and therefore the execution of the conditions for the offer are going to be considered as acceptance.

Mohori Bibee v. Dharmodas Ghose – Contract with a minor is void ab intio (void from the beginning)

Kedar Nath v. Gorie Mohammad – An agreement in absence of consideration are often binding provided the promise took certain steps in furtherance of the thing on the idea of the promise made by the promisor. (Rule of Promissory Estoppel)