Law of Contract – Bird Eye View

 

LAW OF CONTRACT

The term ‘Contract’ is of common parlance meaning ‘to make bargain’. In law, it has a specific definition – An agreement enforceable by law is a Contract.

Agreement again means, in common parlance, as something agreed upon. In law, Every promise and every set of promises forming consideration of each other is an agreement. This definition employs two terms – Promise and Consideration.

Promise is an accepted proposal. Proposal means to make an offer. Legally speaking, when one person signifies to another his willingness to do or to abstain from doing something with a view to obtain the assent of that other, he is said to make a proposal. Acceptance means signifying assent or agreeing to the proposal brought forth.

Consideration is price of the promise. It is in nature of quid pro quo, that is, something for something. It is the price for which the promise of other is brought and what make the promise enforceable. In law, When at the desire of the promisor (person making the proposal), the promisee (person accepting the proposal)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.

Thus, we mathematically represent these relations as –

Promise = Proposal + Acceptance

Agreement = Promise + Consideration

Contract = Agreement + Legal Enforceability

As far as enforceability of an agreement is concerned, 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. Thus, Legal Enforceability of Agreement requires following prerequisites –

• Intention to Contract

• Competent Parties

• Free Consent

• Lawful Object

• Lawful Consideration

• Not expressly declared void