A Contract is an exchange of promises with specific legal remedies for breach. It is a legally binding agreement between two or more parties which, if it contains the elements of a valid legal agreement, is enforceable by law or by binding arbitration. In simple words, a contract is an agreement between two or more parties to do or not do something.
A Contract can be oral, written, formal, informal. Some contracts are required to be in written so that it can be enforced. Examples of Contracts include a lease, a rental agreement or a promissory note.
In the words of Sir John William Salmond, a legal scholar, a contract is "an agreement creating and defining the obligations between two or more parties".
Sir Frederick Pollock
"The Law of Contracts represents the constant endeavor of the public authority viz. the State, to establish a positive sanction for the expectation of good faith which has grown up in the mutual dealings of men."
Sir William Anson Pithily'
"The Law of Contract is intended to ensure that what a man has led to expect, shall come to pass; that what has been promised to him shall be performed"
"the Law of Contract as that branch of the Law which determines the circumstances in which a promise shall be legally binding on the person making it."
Requirements of a Contract
A contract must satisfy eight important requirements.
- Agreement - Offer and Acceptance
- Capacity to contract
- Legal purpose
- Legality of form
- Intention to create legal relations
- Consent to contract
- Vitiating factors: Mistakes, undue influence, misrepresentation, duress
- According to Arbitration, an Arbitration Clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by an Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
- Manchester Brewery v Coombes, (1901) 2 Ch: The rule of "An agreement for a lease is not enforceable against a purchaser for value without notice." applies only where there is a contract to transfer a legal title, and an act has to be justified or an action maintained by force of the legal title to which such contract relates.
- Section 7 of Arbitration and Conciliation Act, 1996: Arbitration agreement.
- Section 14 of Specific Relief Act, 1963: A Contract for marriage cannot be specifically be enforced.
- History of Contract Law
- Terms of Contract
- Remedies for Breach of Contract
- Essential Elements of a Contract in Indian Contract Act, 1872
- Offer - Indian Contract Act, 1872
- Acceptance - Indian Contract Act, 1872
- Minors and Indian Contract Act, 1872
- Damages under Indian Contract Act, 1872
- Contracts of Indemnity
- Contract of Guarantee
- Balfour vs. Balfour (1919)
- Tort vs Contract