Leb Assignment Manishankar Ray 086

LEB ASSIGNMENT
CONTRACT - 1872
Guided By: Dr. Raghvendra Kumar Sharma

Submitted By :
Name: Manishankar Ray
Sec: A MBA II
Er.No: 19BSPDD01C086
Q) Define Contract ?
 The Indian Contract Act, 1872 explains the term "Contract" under its section 2 (h) as
"An agreement enforceable by law". That implies that, we can say that a contract is
anything that is an agreement and enforceable by the law of the land.
 This definition has two major elements in it viz- "agreement" and "enforceable by
law". So, in order to understand a contract in the light of The Indian Contract Act,
1872 we need to define and explain these two pivots in the definition of a contract.
 The Contracts or agreements between various parties are framed and validated by
the Indian Contract Act - Contract Act is one of the most central laws that regulates
and oversees all the business wherever a deal or an agreement is to be reached at.
ESSENTIALS OF A VALID CONTRACT
A contract that is not a valid contract will have many problems for the parties involved.
For this reason, we must be fully aware of the various elements of a valid contract. in
other words, here we shall ponder on all the ramifications of the definition of the
contract as provided by The Indian Contract Act, 1872.
The Indian Contract Act, 1872 itself defines and lists the Essentials of a Contract either
directly or through interpretation through interpretation through various judgements of
the Indian judiciary. Section 10 of the contract enumerates certain points that are
essential for valid contracts like Free consent, Competency Of the parties. Lawful
consideration, etc.
Other than these there are some we can interpret from the context of the contract which
is also essential. Let us see.
1) TWO PARTIES : A Valid Contract must involve at least two parties identified by the
contract. One of these parties will make the proposal and the other is the party
that shall eventually accept it. Both the parties must have either what is known as
a legal existence e.g. companies, schools, organisations etc or must be natural
persons.
2) INTENT OF LEGAL OBLIGATIONS : The parties that are subject to a contract must
have clear intentions of creating a legal relationship between them. What this
means is those agreements that are not enforceable by the law e.g. social or
domestic agreements between relatives or neighbours are not enforceable in a
court of law and thus any such agreement can't become a valid contract.
3) CASE SPECIFIC CONTRACTS : Some contracts have special conditions that if not
observed would render them invalid or void. For example, the Contract of
Insurance is not a valid contract unless it is in the written form.
Similarly, in the case of contracts like contracts for immovable properties,
registration of contract is necessary under the law for these to be valid.
4) CERTAINTY OF MEANING : Consider this statement "I agree to pay Mr. X a desirable
amount for his house at so and so location". Is this a valid contract even if all the
parties agree to this term? Of course, it can't be as "desirable amount" is not well
defined and has no certainty of meaning. Thus we say that a valid contract must
have certainty of Meaning.
5) POSSIBILITY OF PERFORMANCE OF AN AGREEMENT : Suppose two people decide
to get into an agreement where a person A agrees to bring back the person B's
dead relative back to life. Even when all the parties agree and all other conditions
of a contract are satisfied, this is not valid because bringing someone back from
the dead is an impossible task. Thus, the agreement is not possible to be enforced
and the contract is not valid.
6) FREE CONSENT : Consent is crucial for an agreement and thus for a valid contract.
If two people reach a similar agreement in the same sense, they are said to
consent to the promise. However, for a valid contract, we must have free consent
which means that the two parties must have reached consent without either of
them being influenced, coerced, misrepresented or tricked into it. In other words,
we say that if the consent of either of the parties is vitiated knowingly or by
mistake, the contract between the parties is no longer valid.
7) COMPETENCY OF THE PARTIES : Section 11 of the Indian Contract Act, 1872 is :
"Who are competent to contract --- Every person is competent to contract who is
of the age of majority according to the law to which he is subject, and who is of
sound mind and is not disqualified from contracting by any law to which he is
subject".
Let us view these qualifications in detail :
i) refers to the fact that the person must be atleast 18 years old or more.
ii) means that the party or the person should be able to fully understand the terms
or promises of the contract at the time of the formulation of the contract.
8) CONSIDERATION : Quid Pro Quo means "something in return" which means that
the parties must accrue in the form of some profit, rights, interest, etc, or seem to
have some form of valuable "consideration".
TYPES OF CONTRACTS
 On the basis of validity

 Valid Contract: An agreement which is enforceable by law, is a valid contract.
 Void Contract: The contract which is no longer enforceable in the court of law is a
void one.
 Voidable Contract: A contract in which one of the parties to the contract has a
choice to avoid performing his/her part, then it is termed as a voidable contract.
When the consent of the party is not free, the contract becomes voidable, at the
option of the aggrieved party.
 Illegal Contract: A contract which is forbidden by law is termed as an illegal
contract.
 Unenforceable Contract: The contract whose substance is good, but due to some
issues, it is not enforceable, is called an unenforceable contract.
 On the basis of formation
 Express Contract: When the terms of the contract are expressed orally or in writing,
it is known as an express contract.
 Implied Contract: The contract which is constituted by implication of law or action,
is an implied one.
 Quasi-Contract: These are not a real contract, but are identical to a contract, which
is formed out of some circumstances.
 On the basis of Performance
 Executed Contract: When the contract is performed, it is known as an executed
contract.
 Executory Contract: When the obligation in a contract, is to be performed in future,
it is described as an executory contract.
 Unilateral Contract
 Bilateral Contract

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LEB ASSIGNMENT

Guided By: Dr. Raghvendra Kumar Sharma

 On the basis of validity

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