Chapter 1 – Indian Contract Act, 1872
Nature and Types of Contracts
Introduction
The Indian Contract Act, 1872 is the base of business transactions in India. It defines the
legal framework regarding contracts — their formation, execution, performance, and
enforceability.
Definition of Contract
According to Section 2(h) of the Indian Contract Act,
"A contract is an agreement enforceable by law."
So, for something to be a contract:
It must be an agreement
That agreement must be legally enforceable
Agreement
Agreement = Offer + Acceptance
Section 2(e) says,
"Every promise and every set of promises forming consideration for each other is an
agreement."
Essentials of a Valid Contract (Section 10)
1. Offer and Acceptance – Must be lawful and clear
2. Intention to create legal relationship – Not social agreements
3. Lawful consideration – Something of value in the eyes of law
4. Capacity to contract – Must be major, of sound mind, not disqualified
5. Free Consent – No coercion, undue influence, fraud, misrepresentation, or mistake
6. Lawful object – Object must not be illegal or immoral
Nature and Types of Contracts
Introduction
The Indian Contract Act, 1872 is the base of business transactions in India. It defines the
legal framework regarding contracts — their formation, execution, performance, and
enforceability.
Definition of Contract
According to Section 2(h) of the Indian Contract Act,
"A contract is an agreement enforceable by law."
So, for something to be a contract:
It must be an agreement
That agreement must be legally enforceable
Agreement
Agreement = Offer + Acceptance
Section 2(e) says,
"Every promise and every set of promises forming consideration for each other is an
agreement."
Essentials of a Valid Contract (Section 10)
1. Offer and Acceptance – Must be lawful and clear
2. Intention to create legal relationship – Not social agreements
3. Lawful consideration – Something of value in the eyes of law
4. Capacity to contract – Must be major, of sound mind, not disqualified
5. Free Consent – No coercion, undue influence, fraud, misrepresentation, or mistake
6. Lawful object – Object must not be illegal or immoral
