2. As per Sec 2(h) “an agreement enforceable by law is a
Contract essentially consist of two elements:
3. A proposal, when accepted, becomes a promise. Sec 2(b)
defines promise as “when the person to whom the proposal
is made signifies his assent thereto, the proposal is said to
be accepted. An agreement is a sum total of “offer &
4. Plurality of persons: There must be two or more
Consensus-ad-idem: Both the parties must agree about
the subject-matter of the agreement in the same sense
and at the same time.
5. An agreement to become a contract must give rise to
legal obligation i.e., a duty enforceable by law.
Thus an agreement is wider term than a contract
“All contracts are agreements but all agreements
are not contracts.”
6. Agreements of moral, religious or social
nature e.g., a promise to lunch together at a
friend’s house or take a walk together are not
contracts because they are not likely to create
a duty enforceable by law.
7. A contract has been defined in Sec 2(h) as “an
agreement enforceable by law.”
To be enforceable by law, an agreement must possess
the essential elements of a valid contract as contained
in Sections 10, 29 & 56.
8. There must be a ‘lawful offer’ & a ‘lawful
acceptance’ of the offer thus resulting in an
agreement. It must satisfy the requirement of
Contract Act in relation thereto.
9. Agreements of social or domestic nature do not
contemplate legal relations, & as such they do
not give rise to a contract. Eg. An agreement to
dine at friends house, agreements between
husband & wife, etc.
Case: Balfour vs Balfour
(The defendant was a civil servant stationed in Ceylon.
He & his wife were enjoying leave in England. When the
defendant was due to return to Ceylon, his wife could
not accompany him because of her health. The
defendant agreed to send her 30 a month as
maintenance expenses . She sued for breach of this
agreement. Her action was dismissed on the ground
that no legal relations had been contemplated and
therefore there was no contract.)
10. Consideration has been defined as the price paid
by one party for the promise of the other.
It may be an act (doing something) or abstinence
(not doing something) or a promise to do or not
to do something. But only those considerations
are valid which are ‘lawful’.
The consideration is lawful, unless it is forbidden
by law, or is fraudulent or involves or implies
injury to the person or property of another, or is
immoral, or is opposed to public policy. (Sec 23)
11. The parties to an agreement must be
competent to contract, otherwise it cannot be
enforced by a court of law. The parties must
be of the age of majority & of sound mind &
must not be disqualified by any law (Sec 11).
If any of the parties to the agreement suffers
from minority, lunacy, drunkenness, etc., the
agreement is not enforceable at law except in
some special cases e.g., necessaries supplied
to a minor or lunatic, the supplier is entitled
to be reimbursed from their estate.
12. Consent means that the parties must have
agreed upon the same thing in the same
sense (Sec 13). There is absence of ‘free
consent’ if the agreement is induced by
coercion, undue influence, fraud,
misrepresentation, or mistake.
If the agreement is vitiated by any of the first
four factors, the contract would be voidable,
in case of mistake, it could be void.
13. The object for which the agreement has been
entered into must not be fraudulent or illegal
or immoral or opposed to public policy or
must not imply injury to the person or
property of another (Sec 23).
If the object is unlawful the agreement is void.
14. According to the Indian Contract Act, a
contract may be oral or in writing. But in
certain special cases it lays down that the
agreement, to be valid, must be in writing
For e.g., it requires that an agreement to pay
a time barred debt must be in writing & an
agreement to make a gift for natural love &
affection must be in writing & registered (Sec
15. As per Sec 29 of the Contract Act
“Agreements, the meaning of which is not
certain or capable of being made certain, are
void.” The terms of the contract must not be
vague or uncertain.
For e.g., A, agrees to sell B “a hundred tons of
oil.” There is nothing to show what kind of oil
was intended. The agreement is void for
16. Sec 56 lays down that “An agreement to do
an act impossible in itself is void”.
If the act is impossible in itself, physically or
legally, the agreement cannot be enforced at
For e.g., A agrees with B to discover treasure
17. Sec 24-30 specify certain types of
agreements which have been expressly
declared to be void.
For e.g., agreement in restraint of marriage,
an agreement in restraint of trade, and an
agreement by way of wager have been
expressly declared void under Sections 26, 27
& 30 respectively.
19. 1. Valid Contract
An agreement becomes enforceable by law
when all the essential elements of a valid
contract are present.
20. According to Sec 2(i), an agreement which is
enforceable by law at the option of one or more
of the parties thereto. Until it is avoided or
rescinded by the party entitled to do so by
exercising his option in that behalf, it is a valid
When the consent of one of the parties is
obtained by coercion, undue influence,
misrepresentation or fraud, such a contract is
voidable at the option of the aggrieved party.
The aggrieved party must exercise his option of
rejecting (i) within a reasonable time, and (ii)
before the rights of third parties intervene.
a) A threatens to shoot B if he does not sell his
new Activa to A for Rs. 2,000. B agrees. The
contract has been brought about by coercion
and is voidable at the option of B.
b) When one party prevents the other from
performing his promise.
c) When a party promises to do a certain thing
within a specified time, but fails to do it.
22. Void means ‘not binding in law’. Such a
contact is nullity, as for there has been no
contract at all. “A contract which ceases to be
enforceable by law becomes void, when it
ceases to be enforceable.”
Void contract is not void from its inception &
that it is valid & binding on the parties when
originally entered but subsequent to its
formation it becomes invalid.
23. Supervening impossibility (Sec. 56) : A contract becomes void
by impossibility of performance after the formation. For e.g., A
and B contract to marry each other. Before the time fixed for
the marriage, A goes mad. The contract to marry becomes
Subsequent illegality (Sec. 56): A agrees to sell B 100 bags of
wheat at Rs. 1650 per bag. Before delivery, the Government
bans private trading of wheat. The contract becomes void.
Repudiation of a voidable contract: A voidable contract
becomes void, when the party, whose consent is not free,
repudiates the contract.
In case of a contract contingent on happening of an uncertain
future event, if that event becomes impossible (Sec 32)
24. An agreement not enforceable by law is said
to be void. Thus, a void agreement is void
ab-initio (from its very inception). There is
absence of one or more essential elements of
a valid contract. Thus an agreement with a
minor is void ab-initio.
A void contract is valid when it is entered
into, but subsequent to its formation
something happens which makes it
unenforceable by law. A contract cannot be
25. An unenforceable contract is one which is
valid in itself, but is not capable of being
enforced in a court of law because of some
technical defect such as absence of writing,
registration requisite stamp, etc., or a time
barred by law of limitation.
For e.g., a bill of exchange or promissory
note, though valid in itself becomes
unenforceable after three years from the date
of the bill or note falls due.
26. An agreement is illegal and void if its object
or consideration is forbidden by law, or it
would defeat the provisions of any law, or is
fraudulent, or involves injury to person or
property of another or the court regards it as
immoral, or opposed to public policy.
For e.g., an agreement to commit murder or
robbery would be illegal and void ab-initio.
27. Illegal agreement is narrower in scope than a
void agreement. All illegal agreements are
void but all void agreements are not
necessarily illegal. For e.g., an agreement
with a minor is void but not illegal.
Illegal agreement is wider in relation to
collateral transactions than void agreement.
When an agreement is illegal, other
agreements which are incidental to it are also
tainted with illegality, hence void.
28. Express: An express contract is a legally binding
agreement, the terms of which are all clearly stated
either orally or in writing or combination of both.
Implied: An implied contract is an agreement
created by actions of the parties involved, but it is
not written or spoken.
Constructive or quasi: A quasi contract is an
agreement between two parties without previous
obligations to one another that has been created
and legally recognized by the court system.
29. Executed: A contract in which the promises
are made and completed immediately, like in
the purchase of a product or service.
Executory: A contract in which the promises
of the contract are not fully performed
immediately. An example of an executory
contract would be an apartment lease.
30. Arbitration v. Mediation: Methods of
Resolving Business Disputes
Eg. M promises his wife N to get her a saree if she will sing a song. N sang song but M did not bring the saree for her. N cannot bring an action in a Court to enforce the agreement as it lacked the intention to create legal relations.
b) A contract with B that A shall whitewash B’s house for Rs. 100. A is ready buy B prevents him from doing so. The contract becomes voidable at the option of A.
C) X agrees to sell and deliver 10 bags of wheat to Y for Rs. 2,500 whithin one week. But X does not supply within the specified time, contract is voidable at the option of Y. Pg. 14