This article is written by Abhay Kumar Pandey, student, K.S.Saket.P.G, Ayodhya

Introduction

Section 2(h) of the Indian Contract Act, 1872, defines the term contract as ‘An agreement which is enforceable by law is a contract’. So we can say that a contract is an agreement between two or more parties to do or abstain from doing something.

According to Anson, “ the law of contract is that branch of law which determine the circumstances in which a promise shall be legally binding on the person making it”.

So if we examine the definition of contract, then we can see the two important things for the formation of a contract. First thing is an agreement and the second thing is enforceability of that agreement.

                                  Contract = Agreement + Enforceability

Illustration:- There is an agreement between A and B that  A will construct a house for B, and B will pay Rs. 10 lakhs to A.The agreement between A and B is a contract because it is enforceable by law.  

Agreement

Section 2(e) of the Act, defines the term agreement as ‘Every promise and every set of promises, forming the consideration for each other, is an agreement’. After examining the definition of agreement, we can see two important terms that are essential for the formation of an agreement. First is a promise and the second is the consideration.

                             Agreement = Promise + Consideration

Case laws

Balfour v. Balfour– In this case, it was held that if an agreement is domestic in nature then that agreement is not enforceable by law.

Jones v. Padvattan– In this case, it was held that domestic agreements are presumed not to be legally binding unless there is a clear intention.

Classification of agreements

1. Valid Agreements– These agreements are enforceable by law.
2. Voidable Agreements– It is an agreement which is enforceable by law at the option of one of the parties.
3. Void Agreements– This agreement is not enforceable by law at all.
4. Illegal Agreements– these agreements are also not enforceable by law because they are against the law.
5. Unenforceable Agreements– An unenforceable agreement is one which cannot be enforced in the court of law on account of some technical defects like want of a written form or stamp.

Promise

According to section 2(b) of the act, when the offer is accepted, then it becomes a promise. When a person to whom the offer is made, signifies his assent then we can say that the offer is accepted.

There are mainly four kinds of Promises-

1. Express Promise (S.9)– When the promise of any offer or acceptance is made in words, then the promise is said to be express.
2. Implied Promise (S.9)– When the promise of any offer or acceptance is made otherwise than in words, then the promise is said to be implied.
3. Reciprocal Promise (S.2f)– Promises which form the consideration for each other, are called reciprocal promises.
4. Alternative Promise (S.58)– An alternative promise is one which offers the choice of one of two things.

Consideration

Section 2(d) of the Act define the term consideration as follows-

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

• Has done, or abstained from doing something;

                      Or

• Does or abstains from doing something;

                      Or

• Promises to do, or to abstain from doing something;

Then such act, abstinence or promise is called a consideration for the promise.

In short, the term consideration means ‘something in return’ i.e. ‘QUID PRO QUO’.

Pollock- “the price for which the promise of the other is bought, and the promise thus given for value is enforceable”.

In Currie v. Misa, Lush J. define the term consideration as follows-

“A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to the party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by other”.

Illustration- A agrees to sell his car to B for Rs. 50,000. Here, B’s promise to pay the sum of Rs. 50,000 is the consideration for A’s promise to sell the car, and A’s promise to sell the car is the consideration for B’s promise to pay the Rs. 50,000.

Meaning of the term enforceability-

In Merriam Webster dictionary, the term enforceability defines as “to make (a law, rule, etc.) active or effective”. In simple words, enforceability is an action which can be made effective by the court of law.

For example, an agreement between persons in which either of the parties can legally compel the performance of the other is called an enforceable agreement.  

Conclusion

Contracts play a very important role in the day-to-day life of every person. Most of the time people enter into contracts without even realizing it. For the formation of a contract, there are many essentials that have to be followed. After the formation of a contract, the next stage is reached, namely, the fulfillment of the object the parties had in mind. Once the object is fulfilled the liability of either party comes to an end.