A contract is defined as an agreement enforceable by law under section 2(h) of the Indian Contract Act,1872. Section 2(e) defines an agreement as every promise and every set of promises forming the consideration for each other. Section 2(b) further explains that a proposal, when accepted becomes a contract.
Section 10 states that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Thus, for an agreement to become a contract, it is required that there is some consideration for it, the parties are competent to contract, the consent is free and the object is lawful.
The essentials of a valid contract are thus:
(1) proposal and acceptance
Section 2(a) defines proposal as, when one person signifies to another his willingness to do ir to abstain from doing anything, with a view to obtaining the assent of the other to such act or abstinence, he is said to make a proposal.
The general rule defined under Weeks v Tybald is that offer must be made to a definitive person. An exception us general offers. In Carlill v Carbolic Smoke Ball Co, it was observed that an offer can be made to the world at large but the contract is made only with the person who comes forwards and performs the conditions of the offer.
Section 2(b) defines acceptance as, 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.
Section 7 provides that acceptance must be absolute and unqualified and expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted.
(2) consideration
Section 2(d) states that 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 doung, something, such act or abstinence or promuse is called a consideration for the promise.
Section 25 provides that an agreement with consideration is void.
(3) capacity
Section 11 states that every person is competent to contact who is of the age of majority according to the law to which he is subjwct, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject.
(A) minor- a minor's agreement is void. There is no estoppel against him or liabity for any breach or tort arisung out if the contract against him. He cannot ratify an agreement upon reaching age if majority. However, his estate shall be liable for the supply of necessities to him (section 68)
(B) lunatic- section 12 defines that a person is said to be sound mind if at the time of making an agreement, he is capable of understanding it and making a rational decision and provides that a person who is normally of unsound mind can make a contract when he is of sound mind and one who is normally of sound mind may not make a contract when he is of unsound mind.
(4) free consent
Section 14 provides that consent is said to be free if it is not caused by coercion (section 15), undue influence (section 16), fraud (section 17), misrepresentation (section 18), or mistake (sections 20,21,22).
An agreement where the consent is not free is voidable at the option if the party whose consent was so obtained.
(5) legality of object
Section 23 provides that the consideration or object of an agreement is lawful, unless it is forbidden by law, or is of such a nature that if permitted would defeat the purpose of law, is fraudulent, or involves or implies injury to the person or property of another, or the court regards it to be immoral or opposed to public policy.
Void agreements
Agreements expressly declared to be void are:
(1) those which are unlawful in part (section 24)
(2) those without consideration (section 25)
(3) those in restraint of marriage (section 26)
(4) those in restraint if trade (section 27)
(5) those in restraint of legal proceedings (section 28)
(6) those whose meaning is uncertain (section 29)
(7) wagering agreements (section 30)
An illegal agreement is also void but a void agreement may not be illegal.
Section 10 states that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Thus, for an agreement to become a contract, it is required that there is some consideration for it, the parties are competent to contract, the consent is free and the object is lawful.
The essentials of a valid contract are thus:
(1) proposal and acceptance
Section 2(a) defines proposal as, when one person signifies to another his willingness to do ir to abstain from doing anything, with a view to obtaining the assent of the other to such act or abstinence, he is said to make a proposal.
The general rule defined under Weeks v Tybald is that offer must be made to a definitive person. An exception us general offers. In Carlill v Carbolic Smoke Ball Co, it was observed that an offer can be made to the world at large but the contract is made only with the person who comes forwards and performs the conditions of the offer.
Section 2(b) defines acceptance as, 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.
Section 7 provides that acceptance must be absolute and unqualified and expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted.
(2) consideration
Section 2(d) states that 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 doung, something, such act or abstinence or promuse is called a consideration for the promise.
Section 25 provides that an agreement with consideration is void.
(3) capacity
Section 11 states that every person is competent to contact who is of the age of majority according to the law to which he is subjwct, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject.
(A) minor- a minor's agreement is void. There is no estoppel against him or liabity for any breach or tort arisung out if the contract against him. He cannot ratify an agreement upon reaching age if majority. However, his estate shall be liable for the supply of necessities to him (section 68)
(B) lunatic- section 12 defines that a person is said to be sound mind if at the time of making an agreement, he is capable of understanding it and making a rational decision and provides that a person who is normally of unsound mind can make a contract when he is of sound mind and one who is normally of sound mind may not make a contract when he is of unsound mind.
(4) free consent
Section 14 provides that consent is said to be free if it is not caused by coercion (section 15), undue influence (section 16), fraud (section 17), misrepresentation (section 18), or mistake (sections 20,21,22).
An agreement where the consent is not free is voidable at the option if the party whose consent was so obtained.
(5) legality of object
Section 23 provides that the consideration or object of an agreement is lawful, unless it is forbidden by law, or is of such a nature that if permitted would defeat the purpose of law, is fraudulent, or involves or implies injury to the person or property of another, or the court regards it to be immoral or opposed to public policy.
Void agreements
Agreements expressly declared to be void are:
(1) those which are unlawful in part (section 24)
(2) those without consideration (section 25)
(3) those in restraint of marriage (section 26)
(4) those in restraint if trade (section 27)
(5) those in restraint of legal proceedings (section 28)
(6) those whose meaning is uncertain (section 29)
(7) wagering agreements (section 30)
An illegal agreement is also void but a void agreement may not be illegal.
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