The law of contract is that branch of law which determines the circumstances 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 right and duties upon the contracting parties.
CONTRACT – According to Sec 2(h), a contract is defined as an agreement enforceable before the law. AGREEMENT – According to Sec 2(e), every promise or set of promises forming consideration for each other. PROMISE – According to Sec 2(b), when a person made a proposal to another to whom proposal is made, if proposal is assented thereto.
In this Act, the following words and expressions are used in the following senses, unless a contrary intention appears from the context:
- When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal;
- 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;
- The person making the proposal is called the “promisor and the person accepting the proposal is called the promisee”;
- When, at the desire of the promisor, the promise or any other person has clone 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.
Essential Elements of a Valid Contract (Sec 10)
- Offer & acceptance
- Intention to create legal relationship
- Consensus – ad – idem
- Consideration
- Capacity to contract
- Free consent
- Legality of object
- Possibility of performance
- Writing & registration
