The Indian Contract act 1872 falls under the ambit of mercantile laws (Business Laws). It came enforced on 1 September 1872. It is private law. Its basis is English common law, but it was passed in the Indian Parliament, which is Calcutta Parliament.

It contains XI Chapters, but Chapter VII – Sale of Goods and Chapter XI – Partnership was repealed, the Sale of goods was repealed in 1930, and the partnership was in 1932. It became an independent act after repealing it from its parent act, that is Indian Contract Act 1872. It becomes imperative to study the Contract act, as today in the market sector all the dealings are made through contract.

It covers various aspects in a much broader sense such as it describes what is an offer, acceptance, essentials of contract, valid consideration, voidable agreements, quasi-contracts, damages under Indian contract act 1872. Apart from it covers Contract of Indemnity, Guarantee, bailment, pledge and Agency.

What is a contract?

Under the Indian Contract Act 1872, the term contract is defined under Section 2(H), which states that an agreement that is enforceable by the law is known as a Contract. In contract, there must be an intent to create legal relationships not social, moral, or religious.

Essentials of a Valid Contract:

1. Agreement
2. Enforceable by law

What is an Agreement, well agreement is nothing but a set of promises, which form the consideration for each other. It is defined under Section 2(e) of the Indian Contract Act 1872. To simplify it,

Agreement = valid Offer/proposal + valid acceptance + lawful consideration

Section 2(a) defines offer, Section 2(b) defines acceptance, Section 2(d) defines Consideration

Now, what does the term enforceable signifies here, it means if there is any breach of contract by any one party, then the aggrieved party can approach Court and can get it legally enforced or we can say that court issues the direction to the party who breached the contract to perform it or compensate the suffering party in form of damages.

Consensus Ad Idem

One of the main elements of a contract is Consensus Ad Idem, which means meeting of minds.

Let us understand this with an illustration:

A and B are two parties, A owns 4 cars and wants to sell one of his cars, B wants to purchase a black car. But at the time of sale B came to know that A is selling his white car.

Hence there is no consensus Ad Idem

Essential of Consensus As idem

1. Meeting of Minds
2. On Same subject matter
3. In same manner

Section 10 of ICA 1872

The elements which are necessary for a valid contract, described under Section 10 of ICA1872, which are as follows

1. There must be a valid offer and acceptance
2. There must be an intention to create a legal relationship.
3. Lawful object and Consideration
4. They must be competent to contract, means they must be major, not minor, should be of sound mind.
5. Free consent should be there
6. More important should not be expressly declared as void.

Conclusion
Indian Contract Act 1872 covers all the aspects related to the contract in depth. It discussed, in brief, the contract, what is a contract, and certain other topics. One of the main essential is that there must be a legal relationship to create contract, there is a famous case named Balfour v. Balfour. It is very vital to study contract law, as all the dealings today made are through contracts only, which outlines certain legal obligations on both the parties to perform the contract.

Award Winning Article Is Written By: Mr.Deepak Kumar Chaurasia

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