Indian Contract Act and Types of Agreements

Indian Contract Act and Types of Agreements

INDIAN CONTRACT ACT

Definitions
Proposal:
When one person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the assent thereto such as or abstinence, he is said to make a proposal.

Promise:
When the person to whom the proposal is made signifies his assent there to, the proposal is said to be accepted. A proposal when accepted becomes a promise

Promissor and Promisee:
The person making the proposal is called the promisor, and the person accepting the proposal is called promise.

Consideration:
When, at the desire of the promisor, the promise or any other person has done or abstained form doing, or does, or abstains from doing, or promises to do or abstain from doing, something, such act or abstinence of promise is called consideration for the promise.

Agreement:
Every promise and every set of promises, forming the consideration for each other is an agreement.

Void Agreement:
An agreement not enforceable by law is said to be void.

Contract:
An agreement enforceable by law is a contract.

Voidable Contract:
An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other is a voidable contract.

Void Contract:
A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

Various Kinds of Agreements:

Valid Agreement:
An agreement is one which is enforceable by law.

Void Agreement:
An agreement not enforceable by law is said to be void. It has no legal existence at all and is devoid of any legal effect.

Enforceable Agreement:
An agreement enforceable by law is a contract.

Voidable Agreement:
A voidable agreement is one which is enforceable by law at the option of one or more of the parties thereto but not at the option of the other or others.

Unenforceable Agreement:
An unenforceable agreement is valid in law but is incapable of proof because of some technical defect.

Contract:
Contract is a combination of agreement and enforce-ability. The test to distinguish between an agreement and a contract is whether it is enforceable by law or not. If it is enforceable by law, it is a contract.

Free Consent:
Parties to a contract must give their free consent. The parties must be a ad idem, i.e. both the parties must agree upon the same thing in the same sense.

An Agreement becomes a contract:

Parties to the contract must be competent.

Parties to the contract must exercise free consent.

Agreement must be for lawful consideration with a lawful object.

Agreement must not be expressly declared to be void.
 
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