PART B
WRITTEN CONTRACT: A DESIRABLE CONTRACT
A contract is a legally binding bilateral or multilateral agreement having all essentials like offer,
acceptance, lawful consideration, lawful object and intention to form a legally binding
agreement. Both oral and written contracts are legally enforceable but the later expressly mention
the requisite provisions like rights, liabilities and duties of the patties, compensation and expiry
clauses and others. Contracts play a very vital role in any kind of transaction to ensure that the
parties perform their parts and to enable them to have recourse in case of breach of the promise.
A written contract is always recommended as it gives more security to the parties than an oral
contract. It is a tangible proof of all agreed terms, prevents any misunderstanding in future, sets
solution to any dispute that might arise in future.
Talking in context of India a valid oral agreement is of value and can be enforced in the court of
law. Validity of oral agreements has been upheld in various judgments of Indian Courts. The
legality, of an oral agreement, cannot be questioned, if it falls under the ambit of the
requirements stated in section 10 of the Indian Contract Act, 1872.However in case of a dispute,
it is always difficult to prove the existence or the exact terms of the agreement. Therefore it is
highly recommended that one should reduce the agreements or contracts to a composition of
text.
In an oral agreement there is always a chance that parties have different views on agreed terms
later and therefore dispute which could be ironed out in an easy and simple way now has to go
through a long process and the courts usually have to rely on circumstantial evidences and past
transactions to come to the conclusion. Hence, it can rightly be said that due to written contracts
being precise and clear on its terms, save a lot of time and ambiguity while solving the dispute.
In the Indian Evidence Act, 18721 preference is given to a written contract over an oral contract.
Similarly in P. Veerasamy v. Soundararajan2 it was held that when a transaction has been
reduced to writing either due to requirement of law or when agreed by the parties the writing
itself becomes the evidence and there is no need of any external evidence to be produced to
support or contradict the terms of the contract.
1
The Indian Evidence Act, 1872, § 92.
2
P. Veerasamy v. Soundararajan, 2014 SCC OnLine Mad 12729.
In Kotamreddy Seetamma v. Vannelakanti Krishnaswamy Rao,3 preference of a written contract
over an oral contract is observed. It was held that when a contract is having all essentials to
become a legally valid contract and is reduced to a document duly signed by the parties then
there is a strong presumption that there exists only one and final contract which is in written
form instead of two contracts (one the oral one and the other the written one).
Though both the agreements are legally enforceable in courts it is highly suggestive that one
should prefer written contract over an oral contract because the former gives parties primarily
tangible proof of the agreed terms, peace of mind, removes potential risks of misunderstanding
at later stage.
3
Kotamreddy Seetamma v. Vannelakanti Krishnaswamy Rao , AIR 1917 Mad 718.
