Contract | Definitions and Explanation with Examples?

CONTRACT 

Definitions of Contract 

Some definitions of contract are as follows 

Pollack

"Any agreement or promise enforceable at law is a contract."

Salmond

"A contract is an agreement creating and defining obligations between the parties." 

Contract Act, 1872 (Sec. 2(h)) 

"An agreement enforceable by law is a contract."

The definitions shows that for a contract, there must be an agreement between the parties and the agreement must be enforceable by law 

1. Agreement 

Section 2(e) defines agreement as, "Every promise and every set of promises forming the consideration for each other is an agreement" 

It means that every promise is an agreement it forms a consideration for both parties. If a promise forms no consideration for both parties, it cannot become an agreement. 

a. Promise 

Section 2(b) defines promise as٫ "When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise."

It means that when one person makes a proposal (offer) to another person and when it is accepted by the other person, it becomes a promise. 

b. Proposal 

Section 2(a)  defines proposal as, "When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal." 

Its means that when one person shows his willingness to do or not to do anything in order to get the consent of other party about that act or abstinence, it is called a proposal. A proposal is also called an offer. 

Example 

C offer to sell his car to to B for Rs. 8 Lac. B accept the offer. It becomes a promise. 

2. Enforceable by law

An agreement is enforceable by law if it creates legal obligations between the parties. Thus, the term agreement is wider than a contract. All contracts are agreements but all agreements are not contracts. There are two types of agreements. 

a. Social Agreement 

A social agreement is not enforceable by law because it does not create legal obligations between the parties. In social agreement, the parties do not intend to create legal relations. 

b. Legal Agreement 

A legal agreement is enforceable by law because it creates legal obligations between the parties. In legal agreement, the parties want to create legal relations. All business agreements are contract as there is an intention to create legal obligations. 

Example

a. C invites B to a dinner. B accept the invitation but does not attend. C cannot sue B for damages. It is a social agreement. 

b. C promises to sell his car to B for Rs. 2 lac. It is a legal agreement because it creates legal obligations. This agreement is a contract.