Law of Contract (1872):Nature of contract; Classification; Offer and acceptance; Capacity of parties to contract; Free consent; Consideration; Legality of object; Agreement declared void

Law of Contract (1872): Nature, Classification, Offer & acceptance, Capacity of parties to contract, Free consent, Consideration, Legality of object.

Law of Contract (1872): Nature, Classification, Offer & acceptance, Capacity of parties to contract, Free consent, Consideration, Legality of object.

1.1 Law of Contract – Nature of contract (Nature)

The Contract came into force on 1 September 1872.

  1. The Indian Contract Act was passed and implemented to control various kinds of commercial and business contracts.
  2. This act is not complete code of contracts.It deals with general principles of The Law of Contract and special Contract.
  3. The act is applicable to the whole India except for the state of Jammu and Kashmir.
  4. The Contract Act only provides rules and regulations for the purpose of contract. It does not list any rights and liabilities between parties to the contract.
  5. Rights and liabilities and their manner of performance are decided by the parties themselves under the contract but it is within the purview of the act.

1.2  Some Fundamental definitions (Law of Contract (1872): Nature, Classification, Offer & acceptance, Capacity of parties to contract, Free consent, Consideration, Legality of object)

1.2.1 Contract

Section 2(h) of the Indian Contract Act,1872 states that ‘ an agreement enforceable by law is contract’.

1.2.2 Agreement

Section 2(e) of the act defines it as: Every promise and every set of promises forming the consideration for each other is an agreement.

1.2.3 Promise

As per Section 2(b) of the Contract Act,a proposal when accepted becomes a promise.

1.2.4 Proposal

Section 2(a) states that when one person signifies another person his willingness to do or abstain from doing anything with a view to obtaining the assent of that other to such an act or abstinence,he is said to make a proposal’.A proposal is also known as an offer.

1.2.5  Defendent

A peson against whom a suit has been filed in court and who has to defend himself against the charges of breach of contract is called the defendant.

1.2.6 Palintiff

A prson who files a suit in a court of law against another for breach of contract is called the plaintiff.

1.2.7 Promiser and Promisee

According to Section 2© of the Act,the person making the proposal is called the ‘promisor’ and the person accepting the proposal is called the ‘promisee’.

1.2.8 Acceptance and Promise

According to Section 2(b) of the Indian Contract Act: When the person to whom the proposal is made signifies his assent thereto,the proposal is said to be accepted.Aproposal,when accepted,becomes a promise.

1.2.9 Void Agreement

Section 2(g) of the Act defines a void agreement as “an agreement not enforceable by law’.

1.2.10 Voidable Contract

An agreement which is enforceable by law at the option of one or more of the parties thereto,but not at the option of others,is a voidable contract-Section 2(i).

1.3 Law of Contract – Classification of Contract/Types of contract 

  1. On the basis of the mode of formation
  • Express contract
  • Implied contract
  • Quasi-contract
  1. On the basis of performance
  • Executed contract
  • Executory contract
  • Partly executed and partly executory
  • Unilateral contract
  • Bilateral contract
  1. On the basis of Validity or Enforceability
  • Valid contract
  • Void contract
  • Voidable contract
  • Illegal agreement
  • Unenforceable contract


1. On the basis of the Mode of Formation

  • Express Contracts : A contract would be an express contract if the terms are expressed by words or in writing. Section 9 of the Act provides that if a proposal or acceptance of any promise is made in words the promise is said to be express.
  • Implied Contract: An implied contract is a contract which is made otherwise than by the words spoken or written. It came into existence on account of an act or conduct of the parties.
  • Quasi contract:Even in the absence of a contract, certain social relationships give rise to certain specific obligations to be performed by certain persons. These are known as quasi contracts as they create same obligations as in the case of regular contract. Quasi contracts are based on principles of equity, justice and good conscience.

 2. On the basis of performance

  • Executed contract:The consideration in a given contract could be an act or forbearance. When the act is done or executed or the forbearance is brought on record, then the contract is an executed contract.
  • Executory contract: In an executory contract the consideration is reciprocal promise or obligation. Such consideration is to be performed in future only and therefore these contracts are described as executory contracts.
  • Partly executed and partly executory: In a partly executed and partly executory contract,one party has already performed his promise and the other party has yet to execute his promise.
  • Unilateral contract: Unilateral contract is a one sided contract in which only one party has to perform his duty or obligation.
  • Bilateral contract: A Bilateral contract is one where the obligation or promise is outstanding on the part of both the parties.
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