Introduction

When, at the desire of the promisor, the promisee or any other

person has done or abstained from doing, or does or abstains from
doing, or promises to do or to abstain from doing, something, such
Act or abstinence or promise is called a consideration for the
promise.
Every promise and every set of promises, forming the consideration
for each other, is an agreement
What is a Contract?
An agreement enforceable by law is a contract.
Function of Contract Law
Designed to provide stability and predictability, as
well as certainty, for both, buyers and sellers in the
marketplace.

Necessary to ensure compliance with a promise or to

entitle the innocent party to some form of relief.
MEANING OF CONTRACT
A contract is an agreement creating and defining
obligations between the parties.

Hence a contract creates rights and oligation between

the parties entering into a contract. Refusal by any one
party to honor the contracted obligation gives rights of
action to the other party.
 AGREEMENT & CONTRACTS
We see that though all contracts are agreements not
all agreements are contracts.

Hence,
AGREEMENTS= OFFER + ACCEPTANCE
Whereas,
CONTRACTS= AGREEMENTS + ENFORCEABILITY
 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. [SEC 10]

 The parties should be competent to contract.

 The contracts are made by the free consent of the
parties.
 The contract must be for a lawful consideration and
with a lawful object.
 The contract must not be expressly declared to be
void.
 NATURE OF CONTRACT

The important prerequisite of a contract are:

Two Parties:

An Agreement:

Legal Obligation:
ESSENTIAL ELEMENTS OF VALID
CONTRACTS
Proposal and acceptance

Consideration – lawful consideration with a lawful

object.

Capacities of the parties to contract- Competent Parties.

There must be free consent of the parties to the

agreement.
Agreement not expressly declared void by law.

Writing and Registration, if so required by law.

Legal relationship

Certainty.

Certainty and possibility of performance.

Enforceable by law
 Mode of Contract
Voidable contract: An agreement which is enforceable by law at the option of one or more of the parties- thereto, but
not at the option of the other or others, is a voidable contract

Void Contract (Agreement): A contract which ceases to be enforceable by law becomes void. A void contract is a
nullity from its inception. No rights accrue thereunder.

9
Unforceable Contract: A valid contract in law, but is
incapable of proof, and therefore cannot be enforced in
a Court of law.

Executed Contract: A contract that has been fully

performed on both sides. Even if one side performs
their obligation the contract stands as executed.

Executory Contract: A contract that has not been fully

performed on either side.
 Express Contract: Words (oral or written).

Implied Contract: Conduct creates and

defines the terms of the contract.

Quasi Contracts - Implied in law.

Fictional contracts created by courts.
Imposed on parties for the interest of fairness and
justice.
Equitable remedies.
Quantum Meruit.
Contingent Contract: The contract shall be
performed only on the happening of some future
uncertain event, i.e. the promise is conditional.
Wagering Agreement: an agreement betn 2
person under money for happening or non
happening of future uncertain event.
Contracts of Record: It is taken from the records
of the court.
Speciality Contracts: A contract which is in
writing. Signed, sealed and delivered by the
parties.
Simple Contracts: All contracts which are not under
seal, are simple contracts. They may be written or
spoken words.

Statutory Contracts: When all or some of the terms

and conditions of a contracts are statutory, then the
entire contract is considered to be statutory.