Indian Contract Act, 1872
The Indian Contract Act, 1872 governs the formation, execution, and enforcement of contracts in India. It defines the rights, duties, and obligations of parties entering into a contract.
1. What is a Contract?
A contract is a legally enforceable agreement between two or more parties.
📜 As per Section 2(h) of the Act:
“A contract is an agreement enforceable by law.”
Essential Elements of a Contract (Section 10):
✔️ Offer & Acceptance – One party makes an offer, and the other accepts.
✔️ Lawful Consideration – Something of value is exchanged.
✔️ Free Consent – No coercion, fraud, misrepresentation, or undue influence.
✔️ Competent Parties – Both parties must be legally capable (above 18 years, sound mind).
✔️ Lawful Object – The purpose of the contract must be legal.
✔️ Not Expressly Declared Void – The contract should not violate any laws.
2. Types of Contracts Under the Act
1. Based on Formation
- Express Contract – Terms are clearly stated (written or spoken).
- Implied Contract – Terms are understood through actions.
- Quasi-Contract – Imposed by law to prevent unjust enrichment.
2. Based on Execution
- Executed Contract – Fully performed by both parties.
- Executory Contract – Still needs to be performed.
3. Based on Validity
- Valid Contract – Meets all legal requirements.
- Void Contract – Not enforceable by law.
- Voidable Contract – Can be canceled by one party due to coercion, fraud, or misrepresentation.
- Illegal Contract – Based on unlawful activities.
3. Key Sections of the Indian Contract Act
📌 Section 2(h): Defines a contract.
📌 Section 10: Lists the essential elements of a valid contract.
📌 Section 14: Defines “Free Consent.”
📌 Section 15-19: Covers coercion, fraud, misrepresentation, undue influence, and mistake.
📌 Section 73: Covers damages for breach of contract.
4. Breach of Contract & Remedies (Section 73-75)
If a party fails to perform their obligations, the aggrieved party can seek legal remedies:
✔️ Compensatory Damages – Money paid for losses suffered.
✔️ Specific Performance – Court orders the party to fulfill the contract.
✔️ Injunction – Court stops a party from doing something.
✔️ Rescission – Contract is canceled due to breach.
📌 Example: If a company agrees to deliver 100 laptops but fails, the buyer can claim compensation or demand delivery.
5. Importance of the Indian Contract Act
✅ Ensures business and trade stability
✅ Protects parties from fraud and unfair dealings
✅ Provides legal remedies for contract breaches
✅ Governs both domestic and international agreements
6. Conclusion
The Indian Contract Act, 1872 forms the backbone of commercial transactions in India. It ensures fairness, trust, and legal protection in agreements.
