Definition of Contract According to Indian Contract Act.
According to Section 2(h) of the Indian Contract Act, An agreement enforceable by law is a contract. A contract, therefore, is an agreement the object of which is to create a legal obligation i.e. a duty enforceable by law. The essentials of valid contracts are
Agreement As per Section 2(e): Every Promise and every set of promises, forming the consideration for each other, is an agreement. Thus it is clear from this definition that ‘a Promise’ is an agreement.
Legal obligation: As stated above, an agreement to become a contract must give rise to a legal obligation e. a duly enforceable by law. If an agreement is incapable of creating a duly enforceable by law, it is not a contract. Thus an agreement is a wider term than a contract. All contracts are agreements but all agreements are not contracts.
Agreements of moral, religious or social nature e.g. a promise to lunch together at a friend’s house or to take a walk together are not contracts because they are not likely to create a duty enforceable by law for the simple reason that the parties never intended that they should be attended by legal consequences.
According to Section 10, of Indian Contract Act, 1872. All agreement are contracts if they are made by the free consent of the parties, competent to contract, for a lawful consideration, with a lawful object, are not expressly declared by the Act to be void and where necessary, satisfy the requirements of any law as to writing or attestation or registration. The essential elements of a valid contract are as ahead
- Offer and acceptance
- Intention to create legal relations
- Lawful consideration
- Capacity of parties
- Free consent
- Lawful object
- Writing and registration
- Certainty in Meaning
- Possibility of performance
- Not expressly declared void.