Meaning of Contract, Nature
and Scope of Contract
INTRODUCTION
The term contract is not a modern term rather it is an age-old
which has its origins in Ancient Civilization. The history of the
contract is highly influenced by the Roman thought wherein Plato
has been one of the theorists who has actually given less attention
to the forms of agreement and has devoted much more time to the
basic categories of cancelling of the agreements which even exists
in today’s time.
MEANING OF CONTRACT
A contract refers to an agreement between the two private parties
which creates mutual legal obligations for both of them.
A contract can be either oral or written. The oral contracts are
usually riskier and challenging and hence they should be avoided if
possible.
According to the Indian Contract Act, 1972, the definition
according to Section 2(h) stipulates that a contract is nothing but an
agreement which is enforceable by law.
The agreement is defined in the same Section under clause (e) as
every promise or set of promises which are backed by consideration
are called agreements and the term offer and acceptance are also
defined in Section 2.
The offer is the proposal which is made by one party to another
party which is mentioned in Section 2(a) and acceptance is defined
in section 2 (b) as the when the offer is accepted, it becomes a
promise.
It is important to note that there is a difference between an
agreement and a contract. Section 10 is the major section which
describes that 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
NATURE OF THE CONTRACT
Contracts are the one which is not only applicable to the business
but they are seen in day to day life as well. A contract forms the very
basis of each and every transaction that is being made in day to day
lives.
The very formation of a contract is actually based upon the rights
and obligations which are assumed freely than being imposed and
the liability which exists in a particular contract is actually based
upon the voluntary undertakings of the obligation which are done
by the individual.
The parties are completely free to make and enter into a particular
contract in any way they wish based upon the concept of equality
and freedom.
In the leading case of Mohori Bibee v. Dharmodas Ghosh, while
bargaining, the parties tend to enjoy the equal position with that
respect.
The obligations which are being imposed under a specific
contract are not imposed by someone else rather they are self-
imposed which are being entered freely by the parties per se and the
contract law is concerned only with the actual fulfillment of specific
conditions by the parties in contract in order to mate the transaction
recognized as a legally binding agreement and is thus made
enforceable.
TYPES OF CONTRACTS
ON THE BASIS OF ENFORCEMENT ON THE BASIS OF CREATION
1. Valid Contract-
2. Voidable Contract 1. Express Contracts
3. Void Contract 2. Implied Contracts
4. Unenforceable Contract
5. Illegal/unlawful Contract
ON THE BASIS OF ENFORCEMENT
There are five types of contracts on the basis on the enforcement.
Valid Contract- An agreement which is enforceable by the law is a
contract according to Section 2(h) and it is also termed as a valid
contract. However, the appropriate definition of the same have been
provided in Section 10 wherein the essentials are being provided in
order to enforce the contract
Voidable Contract– Section 2(i) of the Act defines a contract which
is voidable. An agreement which is enforceable by law at the option
of one or more of the parties thereto, but not at the option of the
other, is a voidable contract. The term free consent has been defined
in Section 14 of the Act as an essential ingredient of a valid contract.
Void Contract- A void agreement is an agreement which is not even
enforceable at the option of either party and is void ab ignition.
Section 2(g) of the Act defines the meaning of a void agreement.
Unenforceable Contract- This contract is the one which cannot be
enforced due to some technical issues and it was valid earlier. It is
could be because of the absence of writing, registration, time-barred
by the law of limitation or some other issues.
Illegal/unlawful Contract- TheSection 23 of the Act provides some
conditions where an agreement can be enforced but it is unlawful or
it is illegal. A difference is needed to be made between void
contracts and illegal contracts.
ON THE BASIS OF CREATION
According to the creation of the contracts, there are mainly two
types of contracts as below:-
Express Contracts- The first part of Section 9 of the Indian
Contract deals with promises which are expressly made. Contracts
arising from expressly made promises are called express contracts.
Thus contracts entered by the parties through words, spoken or
written, are known to be the express contracts.
Implied Contracts– The second part of Section 9 of the Act
provides the definition of the implied contracts. Thus contracts
which are entered by the parties by virtue of their conduct are simply
called as implied contracts.
SCOPE OF CONTRACT
The scope of law of contract changes from one particular country
to another.
The non- contractual obligations are the ones in which an
individual is required to undertake a particular obligation which is
not correct for another individual.
The contract law governs the basic contractual obligations and the
rights which are raised from the agreements which are made
between two or more persons and deems the promissory under
certain obligation in order to perform his or her duties according to
the said procedure.
An obligation pertaining to the contract requires the very
existence of an ‘obligor’ who is the person who is actually legally
bound under the obligation and the obligee who is the person for
whose benefit the obligation exists.
This feature of the contract is the major feature which makes
contract law different from criminal law obligations.
