INDIAN CONTRACT ACT 1872 || STUDY NOTES || NATURE OF CONTRACT || CMA INTERMEDIATE

Nature of Contract

Defination of Contract

As Per section 2(h) " An Agreement which is enforceable by law". 

Defination of Agreement

As Per Section 2(e) "An agreement means 'every promise or every set of promises, forming consideration for each other'.

Essential Elements of a valid Contract

• Agreement
• Intention to create legal relationship
• Lawful consideration
• Capacity of Contract
• Consensus-ad-idem
• Free consent
• Lawful object
• Agreement not declared void or illegal
• Certainty and possibility of performance
• Legal formalities

Types Of Contracts

• On the basis of validity

1. Valid Contract
2. Void Contract
3. Voidable Contract
4. Void Agreement
5. Illegal Agreement
6. Unenforceable Contract

• On the basis of formation

1. Express Contract
2. Implied Contract
3. Tacit Contract
4. Quasi Contract

• On the basis of performance

1. Executed Contract
2. Executory Contract
3. Unilateral Contract
4. Bilateral Contract

• On the basis of English Law

1. Formal contract
2. Simple contract

Valid Contract

An agreement which has all the essential elements of a contract is known as valid contract. An valid contract can be enforceable by law.

Void Contract

An Void contract is a contract which is ceases to be enforceable by law. a contract when originally entered into may be valid and binding on the parties.

Voidable Contract

A contract which is enforceable by law at the option of one or more of the parties but not at the option of other or others it is called a voidable contract

Void Agreement

An agreement which is not enforceable by law is called void agreement. Such agreement does not confer any right to any of the parties to it.

Illegal Agreement

An agreement is illegal if it is forbidden by law or is of such nature that if permitted, would defeat the provisions of any law or is fraudulent.

These agreement are void-ab-initio.

Unenforceable Contract

Where a contract is good in substance but because of some technical defect cannot be enforceable by law is known as unenforceable by law.

Express Contract

When the terms of the contract are expressly agreed upon in words at the same time of formation, the said contract is called express contract.

Implied Contract

Where the proposal or a acceptance is made otherwise than in words, promise is said to be implied.