An Introduction to the Law of

Contracts
CONTRACT????
• American Law Institute – Restatement

– A Contract is a promise or set of promises for

the breach of which the law gives a remedy; or
the performance of which the law in some way
recognises as a duty.
• Halsbury’s Law of England Vol.VIII
– A contract is an agreement made between two
or more persons which is intended to be
enforceable at law, and is constituted by the
acceptance by one party of an offer made to
him by the other party to do or abstain from
doing some act.
• Latin word Contractum
– Drawn together.
• India Indian Contract Act, 1872 deals with
contracts in general.
• Can be broadly divided into two parts:-
– General Principles Ss. 1 – 75
– Specific Contracts Ss. 124 – 238
• Indemnity and Guarantee
• Bailment
• Agency
 S. 2 (h) Contract
• An agreement enforceable by law is a
contract.
– Agreement
– Enforceable by Law
 Agreement
• Built upon a series of definitions.
– Agreement
– Promise
– Proposal
– Promisor, Promisee
– Consideration
 Agreement S. 2 (e)
• Every promise and every set of promises,
forming the consideration for each other, is
an agreement.
– Promise
– Every set of promises forming the
consideration for each other
 Promise S. 2 (b)
• When the person to whom the proposal is
made signifies his assent thereto, the
proposal is said to be accepted. A proposal
when accepted becomes a promise
– Proposal – accepted - promise
 Proposal S. 2 ( a)
• When one person signifies to another his
willingness to do or abstain from doing
anything, with a view to obtaining the
assent of the other to such act or abstinence,
he is said to make a proposal.
 S. 2 (c)
• The person making the proposal is called
the “Promsor”, and the person accepting the
proposal is called the “promisee”
 Enforceable by Law S.10
• What agreements are contracts:
• All agreements are contracts if they are
made by the free consent of parties
competent to contract, for a lawful
consideration and with a lawful object, and
are not hereby expressly declared to be
void. 
• Nothing herein contained shall affect any
law in force in India and not hereby
expressly repealed, by which any contract
is required to be made in writing or in the
presence of witnesses, or any law relating
to the registration of documents.
• Two Paragraphs
– Requirements of Substantial or essential
validity
– Formalities
 Conditions of Essential Validity
• Competent Parties Ss. 11 & 12
• Existence of Consent of Parties S. 13
• Consent being free Ss. 14 – 22
• Existence of Consideration S.2(d) & S.25.
• Consideration and object being lawful S.23
• The agreement not being expressly declared
to be void. Ss. 23 – 30.
 Formation of Contract
• Promisor 2(c ) – Proposal 2 (a) – Promisee
2 ( c ) – accepts 2(b) – Promise 2(b) –
Agreement 2(e) – Enforceable by Law 10 –
Contract 2(h)
 Proposal / Offer
• One person to another One distinct person
to another
• Signifies communicates with clarity and
certainty
• His willingness to do or abstain from doing
anything
• With a view to obtain the assent of that
other to such act/abstinence
One Person to Another