AN OVERVIEW OF INDIAN CONTRACT ACT, 1872
The Indian Contract Act, 1872 endorses the law identifying with contracts in India and is the key regulating Indian contract law. The Act based on the standards of English Common Law. It is applicable to all the states of India. It decides the conditions where guarantees made by the party’s to an agreement will be legally binding.
The Indian Contract Act involves the main spot in the Commercial Law. Without contract Act, it would have been hard to continue exchange or some other business movement and in work law. It isn’t just the business network which is worried about the Contract Act, however it influences everybody. The target of the Contract Act is to guarantee that the rights and obligations emerging out of an contract are regarded and that legitimate remedies are made accessible to the individuals who are influenced. Segment 2(h) of the Indian Contract Act, 1872, defines the term contract as ‘An understanding which is enforceable by law is an agreement’. So we can say that an contract is an agreement between at least two party’s to do or abstain from accomplishing something.
So if we look at the meaning of contract, at that point we can see the two significant things for the formation of an contract. First thing is an agreement and the subsequent thing is enforceability of that agreement.
Contract = Agreement + Enforceability
Division of the Indian Contract Act
Before Indian Contract Act had a wide extension and included from Section 1 to 75 the General Principles of contract, Section 76-123 incorporates Sale of Goods Act, Sections 124 – 147 is about Contracts of Indemnity and Guarantee, Section 148-181 is about contract of Bailment and Pledge, Section 182-238 is of Agency, Section 239-266 is of Partnership Act.
According to the Indian Contract Act,1872, a “contract” is an agreement enforceable by law. The agreements which are not enforceable by law are not contracts. An “agreement” signifies ‘a guarantee or a bunch of guarantees’ shaping thought for one another. Furthermore, a guarantee emerges when a proposition is acknowledged or accepted. By suggestion, an agreement is an acknowledged proposition. All in all, an agreement comprises of an ‘offer’ and its ‘acknowledgment/acceptance’.
An “offer” is the beginning stage during the time spent in making an agreement. Each agreement starts with one party making a proposal to sell something or to offer an assistance, and so forth. At the point when one individual who wants to make a lawful commitment, imparts to another his ability to do or not to do a thing, with the end goal of getting the consent of that other individual towards such a act or abstinence, the individual is supposed to make a proposition or offer.
An agreement rises up out of the acknowledgment/acceptance of the offer. “Acceptance” is hence, the second phase of finishing an agreement. An acceptance is the act of indication by the offeree with his consent to the particulars of the offer. It implies the offeree’s readiness to be limited by the conditions of the proposition imparted to him. To be legitimate an acceptance should compare precisely with the details of the offer, it should be unqualified and outright and it should be imparted to the offeror.
An “agreement” is an agreement in the event that ‘it is made by the free consent of party’s competent to contract, for a legitimate thought and with a legal article, and isn’t explicitly declared to be void’. The contract should be unequivocal and its purpose should be to make a lawful relationship. The party’s to an agreement should have the lawful ability to make it. As indicated by the Contract Act, “Each individual is competent to contract who is of the age of majority as per the law to which he is subject, and who is of a sound psyche, and isn’t precluded from shrinking by any law to which he is subject”. In this manner, minors; people of shaky brain and Persons precluded from shrinking by any law are incompetent to contract.
Agreement = Promise + Consideration
Consent is significant piece of the contract. The agreements become Void if misrepresentation, mistake or anything like this the fraud will be comitted .Incase of a breach of a contract explicit execution is conceded yet it has different special cases for it, contingent upon the circumstance. In the event that the overall essential ingredients of a contract are satisfied, a legitimate lawful contract is framed and it is affective from date it is agreed upon.
Mutual and legitimate consideration for agreement, it should be enforceable by law. Consequently, intention should be to make legitimate relationship. Agreements of social or homegrown nature are not contracts, Parties should be compitent to contract, and contract ought not have been declared as void under Contract Act or some other law is likewise significant elements of a legitimate contract. The contract gets Void if any of these elements are not satisfied.
Section 2(d) of the Act define the term consideration as follows-
When at the desire of the promisor, the promisee or any other person
- Has done, or abstained from doing something; or
- Does or abstains from doing something; or
- Promises to do, or to abstain from doing something;
Then such act, abstinence or promise is called a consideration for the promise.In short, the term consideration means ‘something in return’ i.e. ‘QUID PRO QUO’.
In Currie v. Misa , Lush J. define the term consideration as follows-
“A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to the party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by other”.
Contracts plays a significant part in the everyday existence of each individual. More often than not individuals go into contracts without acknowledging it. For the development of an contract, there are numerous basics that must be followed. After the development of an contract, the following stage is reached specifically, the fulfillment of the object the parties had in mind.. When the object is satisfied the obligation of either party reaches a conclusion.
They are different types of contracts, for example, contract of indemnity, contract of guarantee, agency etc. The contract act outlines elements that should be satisfied for a legitimate contract alongside exemption and after wards it manages the areas that shows the solutions for both the parties in the event that the contract has been breached or has been viewed as void if there should arise an occurrence of any of the elements not being satisfied. It is significant for a typical everyday exchanging and ordinary managing to have a substantial and powerful contract and it should be made affective under the Contract act.
Author: Ritesh Panigrahi,
KIIT School Of Law, 2nd year