INDIAN CONTRACT ACT 1872
MEANING AND DEFINITION OF CONTRACT UNDER THE INDIAN CONTRACT ACT 1872-
The definition of Contract is given under S.2(h) of the Indian Contract Act, which provides ‘a contract is an agreement enforceable by law’. Thus a contract is an agreement made between two or more parties which the law will enforce.
From the above definition it could be seen that the definition of contract consists two elements-
- An agreement and, 2. Its enforceability by law.
An agreement is defined u/s 2 (e) as ‘ every promise and every set of promises, forming consideration for each other. When a proposal is accepted it becomes a promise. Thus an agreement is an accepted proposal. Therefore, in order to form an agreement there must be a proposal or an offer by one party and its acceptance by other party. In short Agreement-Proposal + Acceptance.
The second part of the definition deals with enforceability by law. An agreement is enforceable u/s 10 if it is made by competent parties, out of their free consent and for lawful object and consideration. Therefore, a Contract = Agreement + Enforceability. Thus all contracts are agreements but all agreements are not necessarily contracts.