In one line
A contract is an agreement that the law will enforce, but every agreement does not become a contract.
After this note, you should be able to
- Build the sequence from proposal to contract without mixing up the statutory terms.
- Identify the requirements that make an agreement enforceable under Section 10.
- Explain why social or domestic promises normally remain outside contract law.
The statutory chain
Section 2 gives a sequence. Learn the sequence first, because most formation questions are built on it.
- Proposal
- One person shows willingness to do or abstain from doing something to obtain the assent of another person.
- Acceptance
- The person receiving the proposal signifies assent to it. A proposal, when accepted, becomes a promise.
- Agreement
- Promises that form consideration for each other constitute an agreement.
- Contract
- An agreement enforceable by law is a contract.
What Section 10 adds
Agreement is only the starting point. Section 10 asks whether the agreement has the legal qualities needed for enforcement.
- Free consent
- The parties must agree upon the same thing in the same sense, and their consent must not be caused by coercion, undue influence, fraud, misrepresentation or a relevant mistake.
- Competent parties
- The parties must have contractual capacity under Sections 11 and 12.
- Lawful consideration and object
- What is exchanged and what the parties seek to achieve must be lawful.
- Not expressly void
- The agreement must not fall within a statutory category that the Act declares void.
Nature of contractual obligation
Contract law protects obligations voluntarily assumed by parties, subject to rules of fairness, legality and public policy.
The law does not enforce every promise made in daily life. A promise to meet a friend for dinner may create a moral expectation, but it normally lacks an intention to create legal relations. A business promise, by contrast, is usually made in a setting where legal consequences are expected.
A contract may be express or implied. Its terms may be written, spoken, inferred from conduct, or formed electronically. The medium changes, but the core questions remain the same: Was there a clear agreement, was consent real, were the parties competent, and is the bargain lawful?
Scope of the Indian Contract Act
The Act lays down general rules of contract and also regulates named relationships such as indemnity, guarantee, bailment, pledge and agency.
The general principles in Sections 1 to 75 apply across commercial, employment, service and many digital transactions unless a special statute modifies the position.
The Act is not a complete code for every possible bargain. Rules in special laws, trade usage and principles developed through judgments may also affect the parties.
Work through the facts
Illustration
Facts
A agrees to sell a laptop to B for Rs 35,000. B accepts. Both are adults, consent is free, the laptop belongs to A, and the object is lawful.
Likely result
There is an agreement supported by consideration, made by competent parties for a lawful object. It is capable of becoming an enforceable contract under Section 10.
What to learn
Do not stop after finding offer and acceptance. Check every Section 10 requirement before concluding that a contract exists.
Cases with a purpose
Landmark judgments
Learn the rule and where to use it. A case name without its legal function adds very little to an answer.
Balfour v. Balfour
Core case(1919) 2 KB 571
Principle: A domestic arrangement between spouses was not treated as a contract because the circumstances did not show an intention to create legal relations.
Use in an answer: Use it to explain why agreement and contract are not identical concepts.
Carlill v. Carbolic Smoke Ball Co.
Core case(1893) 1 QB 256
Principle: A sufficiently definite public promise, backed by conduct showing seriousness, can create legal obligations when its stated conditions are performed.
Use in an answer: Use it to show that a contract can arise from a general offer accepted through performance.
For a 10-mark answer
Answer structure
- Start with Section 2(h): a contract is an agreement enforceable by law.
- Show the chain: proposal, acceptance, promise, agreement and contract.
- Apply the elements of Section 10 in a separate paragraph.
- Distinguish legal obligations from social or domestic promises with Balfour v. Balfour.
- Conclude by applying every requirement to the facts given in the question.
Common mistakes
- Writing that every promise is a contract.
- Using agreement and contract as if they mean the same thing.
- Forgetting competence, free consent, lawful object and agreements expressly declared void.
- Listing sections without applying them to the problem facts.
Before you close the tab
Quick revision
- Proposal plus acceptance equals promise.
- Promises forming consideration for each other equal agreement.
- Agreement plus legal enforceability equals contract.
- Section 10 is the main enforceability checklist.
- The intention to create legal relations helps separate legal bargains from social arrangements.
Test yourself
- Can a moral promise be an agreement but not a contract? Give a reason.
- What are the four most important checks under Section 10?
- Can a contract be formed only in writing?
Short answers
Frequently asked questions
Is every agreement a contract?
No. An agreement becomes a contract only when the law treats it as enforceable and the requirements of Section 10 are satisfied.
Must every contract be written?
No. Unless a specific law requires writing, a contract may be oral, written, implied from conduct or formed electronically.
Primary sources
This is an educational study note. Always read the bare provision and the full judgment before relying on a proposition in research or practice.