I Year B.A./B.B.A., LL.

B – Semester - I (2021-22)

1st -Internal Assessment

SUBJECT: Law of Contracts

TOPIC: Critical Analysis of Article 2 (h)

NAME: Chaitanya Jain

DIVISION: B

PRN: 21010126147

COURSE: BBA LL.B. (H)

BATCH: 2021-2026

Analysis of Section 2(h)

Section 2(h) of the Indian Contract Act 1872 states that, an agreement which is enforceable
by law is a contract.

Hence, a contract must have the following 2 essential ingredients:

 An Agreement
 Enforceable by Law

Agreement

Section 2(e) of Indian Contract Act 1872 provides the definition of a valid agreement which
is as follows “ An agreement is a promise setup from which forming the consideration for
each other.”

Therefore a proposal when accepted becomes promise, every promise or set of promises
forming a consideration for each other becomes an agreement. An agreement not enforceable
by law is considered void, whereas an agreement enforceable by law is contract.

Enforceability by law

Not all agreements are contracts but all contracts are agreements. According to section 10 of
Indian Contract Act 1872, an agreement becomes a valid contract when they meet up certain
conditions expressed in Section 10

“All agreements are contracts if they are made with the free consent of parties competent to
contract, for a lawful consideration, and with a lawful consideration, and are not expressly
declared void.”

Nothing in this agreement affects any legislation in force in India and not expressly repealed
herein that requires any contract to be executed in writing or in the presence of witnesses, or
any law relating to document registration.

Section 10 of Indian Contract Act 1872 provides a clear distinction between Agreements and
Contracts. The main difference between them is enforcement in a court of law
The conditions for an agreement to be a contract according to section 10 is as follows :

1. There must be a valid offer

2. There must be an acceptance
3. The parties to the agreement must be competent to contract
4. The consent to the parties must be free
5. There must be an object and a consideration which is lawful
6. The agreement is not expressly declared to be void.

Offer or Proposal

The first step to any contract is proposal or offer. According to section 28 of Indian Conract
Act 1872, a proposal is:

Section 2(a)- When one person signifies to another his willingness to do so or to abstain from
doing anything with a view to obtaining the assent of that other to such act or abstinence
means he is said to make a proposal.

Section 2(c)- provides that the person making the proposal is called the promiser and the
person accepting the proposal is called the promisee.

Essential elements of a contract

Section 10 of the Indian Contract Act, 1872 lays down conditions which make a contract
valid. The following are the essentials ingredients of a valid enforceable contract:

1- an offer is an expression of the offeror’s willingness to do or to abstain from doing

something.

2- it should be made with a view to obtaining the assent of the offeree to the proposed act or
abstinence.

Invitation to Offer

There is a distinction between making an offer and inviting others to make an offer. An
invitation for others to make an offer is not an offer under the Contract Act's definition of
"offer."
A person may not make an offer to sell his goods, but instead makes a statement or behaves
in such a way that other people are compelled to make an offer to him. This is a request for
assistance.

Advertisements, tenders, products on show, Expressions of Interest (EoIs), and auctions are
examples of such scenarios. When the auctioneer starts the bidding by quoting a price, it is
essentially for others to make him an offer that is greater than the minimum price that the
auctioneer has set.

When a corporation issues a tender for the construction of a building, it is essentially asking
others (builders) to make them a bid by quoting the construction price.

Because there is no offer to sell, an offer is an offer to buy

Fisher V. Bell is one such case which clearly expresses what is meant by invitation to offer.
In this case the defendant shopkeeper displayed a flick knife accompanied by a price ticket
displayed just behind it in his shop’s window. He was charged with offering for sale a flick
knife contrary to Section 1(1) of Restriction of Offensive Weapons Act 1959. According to
the court, the presentation of the knife was not an offer of sale, but rather an invitation to
treat, based on basic contract law standards. The presentation of an item in a shop window is
well established in contract law as an invitation to potential customers to treat. As a result, the
defendant was found not guilty of the crime for which he had been charged.

The motive with which such a statement is made comes before the test to discern between an
offer and an invitation to offer.

Acceptance

Section 2(b) of Indian Contract Act 1872 states that when a person to whom a offer has been
made expresses his or her assent to it,

The parties are obligated by their respective promises once the offer is accepted and such
acceptance is notified to the offeror. An acceptance, like an offer, can be cancelled before the
acceptance communication reaches the offeror.

The most significant feature of acceptance is that accepting an offer while unaware of it is not
an acceptance. As a result, an act that amounts to acceptance but occurs while the acceptor is
oblivious of the offer is not a legal acceptance.
As in the case of Lalman Shula V. Gaurai Dutt, The defendant's nephew went missing, so his
servant, the plaintiff was dispatched to look for him. In the interim, the defendant issued a
missing poster, promising to give a reward to anyone who could locate the boy. Unaware of
such an offer, the servant was able to locate the boy and brought him back. When he found
out about the offer, he asked for it to be considered, but he was turned down. The court found
in favour of the Defendant, saying that the Plaintiff was unaware of the offer and that
consequently the promise's fulfilment did not constitute acceptance.

Cross Sectional Analysis of Section 2(h)

As discussed above Section 2(h) of the Indian Contract Act 1872 defines a contract as an
agreement enforceable by law. Also, an agreement is said to be a contract if the objective of it
is to create a legal obligation i.e., a duty enforceable by law

Contract = Agreement + Enforceability by Law

Section 2(h) does not address when a contract becomes legally binding. We navigate to sec
10, which reveals when the agreement becomes legally binding, in order to detect this. A
contract is defined as an agreement that is enforceable by law, according to section 2(h).
Under contrast, in section 10, it opens with the phrase "all agreements are contracts." Instead
of being read in solidarity, section 10 should be read with section 2 to have a better and
clearer idea of what a contract is.

Section 10 of the ICA gives a clear indication to which agreements can be termed as
contracts. All agreements are contracts if they are made by the free consent of the parties
competent to contract, for a lawful object, and are not hereby expressly declared to be void to
which it is a subject.

Agreements is a wider term than contract. All agreements that meet the requirements of
Section 10 of the Indian Contract Act, 1872, are considered contracts.

Thus Section 10 and 2(h) discuss the essential ingredients of a valid contract.

Section 11 discusses who is qualified to contract. The following are ineligible to contract,
according to section 11:

- Minors
- People who are of unsound mind

- People who are barred by law

Taking the case of Mohori bibee v. Dharmodas Ghose, where Dharmodas Ghose, who was a
minor at the time, mortgaged his land in favour of the defendant Brahmo Dutt, a money
lender, in order to secure a loan. The money lender was aware that the plaintiff was a minor
at the time of the transaction. The minor's agreement was found to be void, and it was
determined that the minor could not be forced to repay the debt he had accepted.

Observation

Conclusion