Contract Law Overview

Definition of Contract

• Defined under Indian Contract Act 1872, Section 2, Subsection H.
• A contract is an agreement enforceable by law.

Essential Elements of a Contract

1. Agreement
   • Defined under Section 2, Subsection E as every promise and set of promises forming consideration for each other.
2. Enforceability by Law
   • The agreement must be able to be executed or imposed by law.

Understanding Agreement and Promise

• Agreement: Includes an offer (proposal) and acceptance.
• Promise: When a proposal is accepted, it becomes a promise.
  • Consideration: Something of value exchanged in the agreement (money, services, etc.).

Enforceability by Law

• An agreement must create a legal obligation to be a contract.
• Example: Illegal agreements (e.g., hiring to commit a crime) are not enforceable.

Key Takeaways

• All contracts are agreements, but not all agreements are contracts.
• Domestic, social, and political agreements often lack legal enforceability.
  • Case Example: Balfour v. Balfour - Husband's promise to pay wife while abroad was not enforceable.
• In commercial agreements, parties are presumed to intend to create legal relations.

Types of Contracts Based on Formation

1. Express Contract: Terms are stated clearly (oral or written).
2. Implied Contract: Terms are inferred from actions (e.g., hiring a coolie at a railway station).
3. Quasi Contract: Imposed by law without intention to contract (e.g., finding lost goods).
4. E-Contract: Contracts made electronically (e.g., online shopping).

Types of Contracts Based on Enforceability

1. Valid Contract: Binding and enforceable, meets all legal requirements.
2. Void Contract: Cannot be enforced, often due to impossibility (e.g., death of a party).
3. Voidable Contract: Enforceable at the option of one party, due to issues like coercion.
4. Illegal Contract: Purpose is illegal (e.g., contracts for unlawful activities).
5. Unenforceable Contract: Valid but lacks necessary legal formalities.

Types of Contracts Based on Performance

1. Executed Contract: All terms performed (e.g., a completed sale).
2. Executory Contract: Some terms yet to be performed (e.g., future service agreements).

Types of Contracts Based on Obligation

1. Unilateral Contract: Only one party has an obligation (e.g., reward for finding a missing person).
2. Bilateral Contract: Both parties have obligations to fulfill (e.g., mutual sale agreement).

Conclusion

• Understanding the various types of contracts helps in identifying their enforceability and implications in law.