Reviewed and Validated by: Aamna, Associate
1. What is a Contract?
- According to the Merriam Webster’s dictionary, “a Contract is a binding agreement between two or more persons or parties; especially: one legally enforceable.”
- For Example: A contract can be business agreement for the supply of goods or services at a fixed price or, a contract can be the act of marriage.
- William Markby, in his book entitled, ‘Elements of Law’ quoted Savigny’s definition of contract. According to Savigny, “a Contract is the concurrence of several persons in a declaration of intention whereby their legal relations are determined.”
- Section 2(h) of the Indian Contract Act, 1872 gives broader definition. It defines, “an agreement enforceable by law is a contract”. An agreement comprises of complementary promises between the two gatherings
1.1. Some Important Decisions Pertaining to Obligations
- In the case of Meritt v. Meritt, it was held that, it was clear that the parties intended to create legal relationship and, therefore, the husband was bound by the contract.
- On account of UOI v. Gopal Chandra,it was held that, a “prospective” renunciation is an offer to stop a post and the same can be pulled back before the offer is acknowledged by a skillful expert.
- The Punjab and Haryana high court in PC Wadhwa v. St. Of Punjab held that, the guideline of promissory estoppel did not make a difference.
2. Meaning of Valid and Invalid Contracts
To be enforceable by law, an agreement must have the fundamental components of a legitimate contract as contained in Section 10.
Section 10 of the Act, 1872 says “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 fundamentals required for a valid contract, in this manner, are as under;
- ‘An agreement’ between the two parties. As we know, Section 2(e) of the Act, 1872 defines agreement.
- Agreement ought to be between the ‘parties who are competent to contract’. Section 11 says the parties must be of the age of majority and of sound mind and must not be disqualified from contracting by any law to which they are subject.
- ‘There should be a lawful consideration and lawful object’. As the Section 23 of the Act says, the consideration or object is lawful when it is not illegal, or fraudulent, or involves injury to the person or property, or immoral, or opposed to public policy.
- There ought to be ‘free consent’. As Section 14 says, Consent is said to be free when it is not caused by coercion, or undue influence, or fraud, or misrepresentation, or mistake.
- The understanding must not be one, which has been explicitly pronounced to be void. Sections 24-30 give certain types of agreements which have been expressly declared to be void.
Read another article: Consent, free consent and their effect on Validity – Part 2
2.1. Comparison between Void and Voidable Contracts:
An invalid Contract may be of two sub-types, one being void and the other voidable.
It hence becomes important to note the comparison between the two.
- A contract which is void is not valid. Section 2 (g) of the act, 1872 says that, ‘an agreement not enforceable by law is said to be void’.
- Section 2 (i) of the act says that, it is one which could be avoided by one of the parties to the contract at his option.
- Thus, a void agreement is a nullity from its commencement and no rights collect to any gathering thereto,
Whereas,
- A voidable contract is an agreement which can be maintained a strategic distance from by one of the celebrated thereto. Such an agreement stays valid until the point when it has been kept away from.
Fact Checked & Updated by Corrida Legal Lawyers
Our Fact Checking Process
As qualified Indian lawyers, we understand that our articles are relied upon the thousands of our readers who read our articles daily. We accordingly ensure that all our articles go through a regular process of fact checking and updation by qualified lawyers of the Corrida Legal team. Here's how we maintain high standards:- Expert Review: All articles are reviewed in a periodical manner by Corrida Legal's qualified lawyers.
- Source Validation: We ensure that any resource being relied upon for the preparation of the article is of a credible Government authority. We do not as a thumb rule quote any law, circular, guideline or notification present on unreliable websites.
- Transparency: We ensure to clearly cite references and disclose potential conflicts wherever we deem it appropriate to do so. Our author lawyers ensure to highlight the concerns and caveats in their articles.
Curated and reviewed by qualified lawyers from Corrida Legal team.
Our Review Board
All our articles are curated and reviewed by our expert team of lawyers at Corrida Legal to ensure accuracy and relevance.- Unique legal perspective: Each article is assessed by our specialist lawyers to ensure that we add the unique legal perspective that readers are looking for.
- Up-to-date Insights: We incorporate the latest research, trends, and standards and all articles are reviewed in a periodical manner by Corrida Legal's qualified lawyers.
- Legal Accuracy: Every article is rigorously vetted by Corrida Legal lawyers against current statutes, judicial precedents, and regulatory notifications to provide reliable, actionable guidance that businesses can trust.