INDIAN CONTRACT ACT 1872 : MEANING OF CONTRACT
This article explains key concepts under the Indian contract act 1872. It covers the meaning of agreements, and the distinction between an agreement and a contract. It also discusses illustrative cases to help understand these concepts better. Further, it explains agreements to do impossible acts under section 56, and agreements that are void due to uncertainity under section 29.
1.MEANING OF CONTRACT (Sec. 2 & 10)
| Definition [Sec. 2 (h)] | An agreement enforceable by law is a contract |
| 2.DISTINCTION BETWEEN AN AGREEMENT AND A CONTRACT | ||
| Basic of difference | Agreement | Contract |
| Meaning | Agreement = offer + acceptance | Contract = agreement + enforceability |
| Create a legal obligation | An agreement does not create a legal obligation unless it satisfies the necessarily creates legal requirements of various provisons of law | A Contract necessarily create a legal obligations. |
| One in other | The term agreement & wider than contract. An unenforceable agreement is not a contract | Every contract is an agreement |
| 3.ILLUSTRATIVE CASES |
| Situation | Result |
| A agrees with B to discover treasure by magic | The agreement is void. |
| A and B contract to marry each other. Before the time fixed for the marriage. A becomes mad. | The contract has become void. |
| A contract to marry B. being already married to C. and being forbidden by the law to which he is subject to practice polygamy | The agreement is void. A must make |
| A contract to act at a theatre for 6 months in a consideration of sum paid in advance by B. On several occasions A is too ill to act. | The contract to act on such occasions, on which A is unable to act because he is ill, becomes void. |
| 4.AGREEMENT TO DO IMPOSSIBLE ACT (Sec 56) |
| Agreement to do an If impossible act | If – An agreement is made to do a particular act; – At the time of making of agreement, it is certain that such an act is impossible; Then – The agreement is void. |
| Agreement to do an act which subsequently becomes impossible | If – A contract is made to do a particular act – At the time of making of contract, such an act is not impossible – After the contract is made, such an act becomes impossible, Then -The contract has become void. |
| Essentials of a contract | An agreement enforceable by law is a contract Following are the two basic elements of a contract (a) There must be an agreement (b) The agreement must be enforceable by law. In other words, Contract agreement enforceability of agreement. |
| What agreements are contracts (Sec. 10) | • There must be an agreement between the parties • The parties must have a intention to create legal relations • The parties must freely consent to enter into the agreement • The parties must be competent contract • There must be consideration • The consideration mal be lawful • The object of the contract must be lawful • The agreement not expressly declared to be void. • The legal formalities for entering into such a contract are completed • It is possible to perform the agreement (Sec. 56) • The terms of the agreement are certain or are capable of being made certain (Sec 29) |
| 5. AGREEMENT VOID FOR UNCERTAINTY – ILLUSTRATIVE CASES (Sec.29) |
| A agrees to sell B ‘a hundred tons of oil’ | The agreement is void for uncertainty since the description of oil is not specified |
| A aggress to sell B 100 tons of oil of a specified description , Know as an article of commerce. | There is no uncertainty and therefore the agreement is nor void. |
| Mr. A who is a dealer in coconut oil only, agrees to sell to B’ 100 tones of oil’ | The nature of A’s trade implies that intends to sell 100 tons of coconut oil. So, there is no uncertainty. |
| A agrees to sell to B all the grain in his granary at Laxmi nagar | There is no uncertainty since it is possible to determine the quantity of grain lying at B’s granary at Laxmi nagar |
| A agrees to sell to B 1000Kgs. Of rice at a price to be fixed by C. | As the price is capable of being made certain, there is no uncertainty to make the agreement void. |
| A agrees to sell to B his white horse for Rs. 500 or Rs. 1000 | There is nothing to show which of the two prices was to be given. Therefore, the agreement is void. |
| 6. CLASSSIFICATION OF CONTRACT (SEC2 & 9) |
| On the basic of creation | Express contract | A contract made by words spoken or written. |
| Implied contract | A Contract inferred by – | |
| – The conduct of a person: or | ||
| – The circumstances of the case. | ||
| On the basic of execution | Executed contract | A Contract in which both the parties have fulfilled their obligations under the contract. |
| Executory contract | A Contract in which both the parties have still to fulfilled their obligations. | |
| Partly executed and partly executory | A Contract in which both the parties has fulfilled his obligation but the other party is yet to fulfill his obligation | |
| On the basic of enforceability | Valid contract | An agreement which satisfies all the requirements prescribed by law |
| Void contract | A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable | |
| Void agreement | An agreement not enforceable by law is said to be void. | |
Voidable contract | An agreement is a voidable contract if – | |
| – It is enforceable by law at the option of one or more of the parties thereto. | ||
| – It is not enforceable by law at the option of the other or others | ||
| Illegal agreement | An agreement the object of which is unlawful. | |
| Unenforceable contract | A contract which fulfils all requirements of a contract except some technical requirements. It becomes enforceable when the defect is subsequently removed. |
