June 13, 2021

Agreements under Indian Contract Act, 1872

Contract law


 The definition of the agreement is defined in the section 2(e) of the Indian Contract Act 1872. Agreement is kind of the promise between the two parties, there is consideration also involve in it. The perfect example of the agreement is the rent agreement. In rent agreement, both party (the owner and the tenant) involve, the consideration is in the form of the money, rent etc.

 There is various important aspect that are necessary for the agreement and are as following –

  1. Parties- there is always minimum two parties involve in the agreement and, more than two parties also. It is totally depending upon the conditions or circumstance.
  2. Offer- there must be offer between two parties, one party have to made offer to another party and this offer is also mentioned in the agreement.
  3. Acceptance – one party made offer and another party have to accept the offer. Acceptance of the party is very important for the agreement and the acceptance should be according to the will of the party.
  4. Promises- both parties have to promise that they fulfil all the duties and obligation mentioned in the agreement.
  5. Consideration- the consideration means the money in any form or the price for the promise we can say.

It is not possible that all the agreements are valid agreements. Sometimes the agreements are void or considered null. It is important for all of us to understand that what are the certain conditions which are not valid in the eyes of law-

1. No consideration- first is that, if there is no consideration for the promise mentioned in the agreement which means that there is no price/ money involve between the two parties. For a valid agreement there should be consideration.

2. Agreement in restrain the trade- If one party mentioned that other party not to do any word or in simple words, one party restrain the other party to do any kind of trade or business or any work for the livelihood for rest of life. Then in this case the contract between the two parties is void and there is not legal agreement formed.

3. Agreement to restrain marriage- If one party restrain other person to not marry any other person and in return he/ she will gift   something but that person can’t marry for the rest of life. This agreement or contract is not valid.

4. Agreement to restrain of legal proceedings- It means that, if one party interfere other party to not involve in any kind of legal proceeding then that contract is considered as the null and void contract. This is not right in the eyes of law.

5. Impossible act- If one party mention the condition to an act which is impossible in nature then that agreement is considered to be null and void because it state that the condition is impossible to do by a party.

All these condition should be fulfilled for the valid agreement, if one of the condition is mentioned in the contract which is illegal in the eyes of the law, then it is void agreement under the Indian contract act.

Section 3 Of the Indian Contract Act 1872-  Communication of The Proposal

 As communication is very important to any person to maintain legal relationship or personal relationship. Communication of the proposal means that all the terms and condition should be communicated to the other party, so that there is clarity in the mind of the both party. Communication of two types implied or expressed. Expressed communication means that which is in the form of written or words. In other words, one party express their point of view or condition to the other party by writing it down or by speaking and implied communication means there is no expressed communication, one party understand the point or condition without saying a word. There is no exchange of words in the implied communication.

 The essential required for the valid agreement under this section are-

  1. The agreement should be communicated to both the party in implied or the expressed form. Without the communication of the proposal there is doubt created in the mind of the one party or sometimes, one party interpreted the agreement in different meaning and this will created confusion between the parties.
  2. The proposal must contain promise. There is no agreement if there is no promise and without promise agreement considered to be void and null.
  3. The proposal must be valid and certain that means there is a certain possibility to fulfil the condition which is mentioned in the contract or agreement.  Immaterial or impossible things should not be mentioned in the proposal.
  4. It is also important that proposal also contain the intention. It means that proposal should express the intention of the promiser and the promise, so there is no misunderstanding in regard of the proposal.
  5.  The proposal should also not contain any kind of the negative   statement. Sometimes it will show bad impression on the other party and negative statement create a negative difference between the two parties in the agreement.
  6.  The proposal should also contain the all the terms and conditions which he/ she wants to mention in the contract. And these terms and condition should be clearly understandable, should be in the simple language.
  7.  The proposal should not contain any kind of the false statement or any kind of fraud.

Section 4 Of the Indian Contract Act

 Section 4 of the Indian contract act state the communication should be completed when it is reach to that person for whom it is made. 

 The communication is accepted when that person in return accept the contract or proposal, then it is well said that, communication is accepted.

 Section 5 Of the Indian Contract Act- Revocation Of The Proposal And Acceptance

The proposal may be revoke the agreement before the communication process is not accepted by the promises. For example x person wants to sell his watch to Y person, x may revoke the agreement before the acceptance of the agreement by Y person. The proposal may be revoking at any time before the acceptance of the person.

Section 6 Of the Indian Contract Act – Revocation How Made

6.1. The proposal may be revoked through communication of notice of revocation by the proposer to the other party;

6.2. By lapse of time, in this if the other party does not accept the offer in the prescribed time, then the proposer will get chance to revoke or if the time is not prescribed then the reasonable time will be there by seeing the circumstances;

6.3. By the failure of fulfilling the condition of the acceptor; it means that if the contact is failed to fulfil the condition which the other party wanted in the contract.

 6.4. By the death of the proposer if this comes to the knowledge of the acceptor before the acceptance. If the proper died before the acceptance of the agreement then, the agreement can be revoke before acceptance.

Section 7 Of The Indian Contract Act – Acceptance Must Be Absolute

For the conversion of the proposal into a promise the acceptance –

  1. Should be absolute and unqualified.  As acceptance is important for every agreement or the contract.
  2. Acceptance should be expressed in a reasonable manner so that the other party will know that you have accepted the offer and if the proposal is prescribed in a manner and the acceptance is not accepted in such manner then the proposer may within the reasonable time communicate to him, insist that the proposal shall be accepted in the prescribed manner but if he fails to do so, he accepts the acceptance.

Section 8 Of The Indian Contract Act – Acceptance By Performing, Conditions, Or Receiving Consideration

If there is a condition in the offer and the acceptor accept the conditions, then it is said to be the acceptance of the offer by the acceptor; if there is the acceptance of the consideration then it is said to be the acceptance of the proposal, the person cannot return the goods.

Section 9 Of The Indian Contract Act –  Promises, Express And Implied

It talks about the implied and expressed promises, in this if the proposal and the acceptance is done in words or writing then it is said to be expressed promises while such promise done other than words said to be implied promises.

E.g., if x parks his car and z come and start cleaning the care it is said to be the implied offer as it is done by z with his own wish.

Case Study- Manglam Express Cargo Pvt. Ltd.  v. Union Of India & ors.

Manmohan who are the petitioner filled a writ petition. The matter is that he filed a writ petitioner presently against the order which is passed by the divisional railway manager on date, 28 October, 2015. In this order , the licensing contract  of the petitioner was terminated and also profit which is earned were forfeited and the petitioner are also banned from taking any part under the railway department for the two years.  The important fact of this case is that the petitioner received the acceptances from other party (the respondent). The learned counsel also stated that the act of the railway department is not good in the eyes of the law. The argument goes on the matter. The court order that, the railway department that means the respondent may refund the money to the petitioner within the period of six weeks from the passing of the order (judgement). In this case the section 6 (2) of the Indian contract act, 1987.  The section 6(2) state that ‘’ By lapse of time, in this if the other party does not accept the offer in the prescribed time, then the proposer will get chance to revoke or if the time is not prescribed then the reasonable time will be there by seeing the circumstances’’ and there is no enforcement of the contract under the eyes of law.

Case Study: Rajlucky Dabee v. Bhootnath Mookerjee

The Facts of the Case

  • There were quarrels and disagreements between husband and her wife.
  • Husband promised to pay some amount to his wife for the maintenance, to get rid of her.
  • This was registered and later the husband denied paying the amount and his wife sued him for recovery of the money.

Contention Of The Parties

There was a written and registered contract between then in a near relation so there must be an intention to sue so she should get the money.

Decision Of The Court

As there was no love and affection but there was near relation, written and registered agreement in this situation there is a requirement of consideration so this contract without consideration was not valid but if same was done to make a valid contract out of natural love and affection there will be no requirement of consideration and it is said to be a valid agreement.

Hence wife cannot enforce the contract.

For more articles on Law of Contracts, Click Here.

For law notes, Click Here.

Author Details: Dharmika (Amity University, Noida)

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