Contract

Section 2(h) of the Indian Contract Act, 1872 defines a contract as an agreement enforceable by law. An agreement, under Section 2(e), is every promise and every set of promises forming the consideration for each other. A contract is therefore an agreement plus enforceability, which is why every contract is an agreement but not every agreement is a contract.

Section 10 states the essentials. 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 expressly declared to be void by the Act. Competence is dealt with in Section 11, free consent in Sections 13 to 22, and lawful consideration and object in Section 23. Section 10 adds that it does not affect any law requiring a contract to be in writing, witnessed or registered, so formalities come from other statutes.

The definition sets up the related categories in Section 2. An agreement not enforceable by law is void under Section 2(g). An agreement enforceable at the option of one or more parties but not of the others is a voidable contract under Section 2(i), as where consent is caused by coercion, undue influence, fraud or misrepresentation. A contract which ceases to be enforceable becomes void when it ceases to be enforceable, under Section 2(j), as where performance becomes impossible.

Examiners test the chain from proposal to promise to agreement to contract in Section 2, the conditions in Section 10, and the distinctions among void agreements, voidable contracts and contracts that later become void.