Law of Contract (1872)
Law of Contract
1.1 Nature of contract
The Law of 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
Section 2(h) of the Indian Contract Act,1872 states that ‘ an agreement enforceable by law is contract’.
Section 2(e) of the act defines it as: Every promise and every sort of promises forming the consideration for each other is an agreement.
As per Section 2(b) of the Contract Act, a proposal when accepted becomes a promise.
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.
A person 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.
A person 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(c) 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. A proposal, 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).