FORMATION OF CONTRACT [INTRODUCTION TO
LAW OF CONTACT]
How a Contract is Formed
In this article, we will discuss the process of how a contract is formed. A contract
is defined under section 2h of Indian Contract Act 1872 as an agreement
enforceable by law. To understand the formation of a contract, we need to
understand the concepts of proposal, acceptance, promise, consideration, and
agreement.
Proposal
Proposal is the starting point in the process of formation of a contract. Section
2a defines proposal as when one person signifies to another his willingness to do
or to abstain from doing something with a view to obtain his assent. For
example, if person A says to person B that he wants to sell his car for 2 lakh
rupees, he is making a proposal.
Acceptance
Acceptance is when the person to whom the proposal is made signifies his
assent. According to section 2b, when the person to whom the proposal is made
signifies his assent, the proposal is said to be accepted. In the above example, if
person B shows his willingness to purchase the car for 2 lakh rupees, it will be
deemed as acceptance.
Promise
A proposal, when accepted, becomes a promise. According to section 2b, a
proposal when accepted becomes a promise. In the above example, after B
accepts A's proposal, it becomes a promise.
Consideration
Consideration is when, at the desire of the promisor, the promisee or any other
person has done or abstained from doing or promises to do or abstains from
LAW OF CONTACT]
How a Contract is Formed
In this article, we will discuss the process of how a contract is formed. A contract
is defined under section 2h of Indian Contract Act 1872 as an agreement
enforceable by law. To understand the formation of a contract, we need to
understand the concepts of proposal, acceptance, promise, consideration, and
agreement.
Proposal
Proposal is the starting point in the process of formation of a contract. Section
2a defines proposal as when one person signifies to another his willingness to do
or to abstain from doing something with a view to obtain his assent. For
example, if person A says to person B that he wants to sell his car for 2 lakh
rupees, he is making a proposal.
Acceptance
Acceptance is when the person to whom the proposal is made signifies his
assent. According to section 2b, when the person to whom the proposal is made
signifies his assent, the proposal is said to be accepted. In the above example, if
person B shows his willingness to purchase the car for 2 lakh rupees, it will be
deemed as acceptance.
Promise
A proposal, when accepted, becomes a promise. According to section 2b, a
proposal when accepted becomes a promise. In the above example, after B
accepts A's proposal, it becomes a promise.
Consideration
Consideration is when, at the desire of the promisor, the promisee or any other
person has done or abstained from doing or promises to do or abstains from
