Contract & Agreement | Definition, Essentials & Kinds

Contract

An Agreement enforceable by law is a contract – 2 (h) Contract Act

A contract is an agreement creating and defining obligations between the parties – Salmon

Two Major Components of Contract

1. An Agreement
2. Enforceable by law

What is Agreement?

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

Section 2 (e) Contract Act

What is Promise?

When a person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise. Section 2 (b) Contract Act

Essentials of Contract

• Offer and Acceptance
• Legal Relationship. Must Create Legal relationship between parties
• Lawful Consideration
• Capacity of Parties
• Lawful Object
• Free Consent
• Certainty: Agreements the meaning of which is not certain are void.
• Possibility of Performance: An agreement to do an act impossible in itself is void.
• Must not be declared expressly void i.e. restriction of trade etc

Kinds of Contract

Kind as far as Enforceability

• Valid Contract
• Voidable Contract
• Void Contract

When Contract Become Void

• impossibility of performance
• subsequent become illegal
• voidable become void at option of party
• contingent contract when depending event become impossible
• Unenforceable Contract
• Illegal Contract: When its performance is forbidden by law.

Kinds as far Formation

• Express Contract
• Implied Contract
• Constructive or Quasi Contract i.e. finder of lost goods

Kinds as of Performance

• Executed Contract
• Executory Contract
• Unilateral Contract
• Bilateral Contract