INDIAN CONTRACT ACT, 1872, ACT IX OF 1872
The notion of
contract is part of men’s common stock even outside the field of legal science, and to men of law, so familiar and necessary in its various applications, that we might expect a settled and just apprehension of it to prevail everywhere. Nevertheless, we are yet far short of this.
Indian contract Act is the
Act which regulates the entire arena of business world which does its business on the basis of
contract.
Contract Act contains 238 sections.
Contract Act covers a wide range of area like: Formation of
contracts, contingent contracts, performance of the
contract, and consequences of breach of
contract, sale of goods, indemnity and guarantee, bailment, agency and so on. Under Section 1 of
contract Act says that the Act is applicable to the whole of India, except the state of Jammu and Kashmir.
In the following chapter, some of the important parts of the
Contract Act were discussed.
A
contract means an agreement which is enforceable by law .An agreement consists of reciprocal between the two parties .In case of
contract each party is legally bound by the promise made by him. A
contract or an obligation to perform a promise could arise in the following way:
1. By
Agreement and
Contract
2. By Standard Form
Contract and
3. By Promissory Estoppel
AGREEMENT AND CONTRACT
The most common way of making contract is through an agreement. The two parties may agree to something through mutual negotiations. When one party makes an offer and the other accepts the same, there arises an agreement ,which may be enforceable by law.
STANDARD FORM CONTRACT
In the modern age some persons , institutions or establishments’ such as the Railway, Insurance Companies, Bank, Manufacturers of various goods, etc., may have to enter into a very large number of
contracts with thousands of persons. They cannot possibly negotiate individually with the persons with whom the
contracts are to be made.
Contract with pre-drafted matters are generally prepared by one party, which the other has to agree to. As a general rule, such standard Form
Contract are as much valid as those entered into through due negotiation.
PROMISSORY ESTOPPEL
Sometimes there may be no agreement and
contract in strict sense of the term, but a person making a promise may become bound because of the application of the equitable doctrine of Estoppel.
CONTRACT
According to section 2(h) of the
Indian Contract Act, 1872 “ An agreement enforceable by law is a contract.” All agreements are not enforceable by law and, therefore, all agreements’ are not contracts.
Some agreements may be enforceable by law and others not. For example, an agreement to sell a radio set may be a
Contract, but an agreement to see a movie may be a mere agreement not enforceable by law. Thus all agreements are not
contracts. Only those which satisfy the essentials mention in Section 10 becomes contracts. However, all contracts are agreements.
AGREEMENT
According to Section 2(e);”Every promise and every set of promises forming the consideration for each other is an
agreement.”
In an agreement there is a promise from both sides, For example ,A promises to deliver his watch to B and in return B promises to pay a sum of Rs.2000 to A, there is said to be an
agreement between A and B.
Thus, when there is a proposal from one side and the acceptance of that proposal by the other side, it result s in a promise .This promise from the two parties to one another is known as an
agreement.
THE ESSENTIALS OF A VALID CONTRACT
1. An
agreement between the two parties .An
agreement is the result of a proposal or an offer by one party followed by its acceptance by the other.
2.
Agreement should be between the parties who are competent to
contract.
3. There should be a lawful consideration and lawful object in respect of that
agreement.
4. There should be free consent of the parties, when they enter into the
agreement.
5. The
agreement must not be one, which has been expressly declared to be void.
From the point of view of the legality, there are different types of
agreements.
1. CONTRACT
According to Section 2(h),
Contract is an agreement which is enforceable by law. It has been noted above that in order that an
agreement becomes a
contract , it has to satisfy all the essentials of a valid
contract as mentioned in Section 10.
CLASSIFICATION OF CONTRACTS
The
contracts can be classified on the basis of formation and enforceability.
On the basis of formation the
contracts can be classified as:
*Express or Formal Contracts.
* Implied Contracts.
Express
Contracts are those
Contracts which are made by words spoken or written implied
contracts are those, which are inferred from the conduct of parties or of circumstances. Classification on the basis of enforceability.
On this basis the
contracts are classified as:
•
Valid Contracts.
•
Void Contracts.
•
Voidable Contract.
Valid Contracts are those which satisfy all conditions prescribed by Law. Either the party can go to the court for remedy.
2. VOID AGREEMENTS
According to Section 2(g), an agreement not enforceable by law is said to be void. For instance, an
agreement by a minor has held to be void. Sections 24 to 30 make a specific mention about
agreements which are void. Those agreements’ include an
agreement include an
agreement without consideration. An
agreement in restraint of marriage and
agreement in restraint of trade.
3. VOIDABLE CONTRACTS
According to Section 2(I), an
agreement which is enforceable by law at the option of one or more of the parties there to, but not at the option of the other ,is a voidable
contract .Thus, a
voidable contract is one which could be avoided by one of the parties to the
contract at his option. Even if one of the parties does not avoid the
contract ,the
contract still becomes void .For instance, when the consent of a party to a contract has been obtained by coercion, under influence ,fraud or misrepresentation, the contract is voidable at the option of the party whose consent has been so obtained.