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Chapter 1-
Unit-1 Formation of Contract
Salmond Law is the body of principles recognized and applied by the state in the
administration of justice
Blackstone Law is a rule of civil conduct, prescribed by the supreme power of a state,
commanding what is a right and prohibiting what is wrong
Thus, the law has been defined in different terms by different jurists . As a matter of fact,
it is not possible to give a single and comprehensive definition of law. Law is not static. It
keeps changing to fit the changing requirements of the society.
Introduction - The Law of contract deals with the law relating to the general principles
of contract. It is the most important part of mercantile law. It affects every person in one
way or the other as all of us enter into some kind of contract every day. Contracts create
certain legal rights and obligations. Without the law of contract, it would have been
difficult to determine and enforce the rights and obligations of the persons. The law of
contract determines the circumstances under which a promise or an agreement shall be
legally binding on the person making it. It also provides the remedies which are available
in a court of Law against a person who fails to fulfill his contracts and other conditions,
under which the remedies are available.
Implementation of Act The Indian Contract Act, 1872. Came into force on the 1st
Sept. 1872 and it applies to the whole of India except the state of Jammu and Kashmir.
Under article 370 of the Constitution of India, the J & K enjoys a special status
Indian Contract Act, 1872
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DEFINITION OF THE CONTRACT
2(c) Promisor When the proposal is accepted, the person making the
and proposal is called as promisor and the person accepting the
proposal is called as promisee.
promisee
2(d) Consideration When at the desire of the promisor, the promisee or any other
person has done or abstained from doing something or does
or abstains from doing something or promises to do or
abstain from doing something, such act or abstinence or
promise is called a consideration for the promise.
2(e) Agreement Every promise and set of promises forming the consideration
for each other, is an agreement.
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Offer + acceptance = Promise
+
Consideration
=
AGREEMENT
+
Enforceability by Law CONTRACT
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
The analysis of this definition shows that an agreement becomes a contract only if
the following conditions are satisfied :-
All the above mentioned conditions must be fulfilled in each and every contract for creating
rights and obligations.
Essentials of contract
In order to become a contract, an agreement must have the following essential
elements:-
1. Two and more parties - In an agreement there must be at least two parties, one of
them making offer and the other accepting it. Person who making an offer is known as
offeror and person who accepting an offer is known as offeree.
2. Offer & acceptance In an agreement there must be at least two parties, one of them
making offer and the other accepting it. There must be an offer by one party and its
acceptance by the other. The offer when accepted becomes agreement.
3.
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