General Principles of Law of Contract: Sections 01 to 75
Contracts are an integral part of our lives, as we enter into various agreements every day, ranging from buying groceries at a supermarket to signing complex business deals. The Law of Contract regulates these relationships between parties, ensuring that both parties fulfill their obligations and rights. In this article, we will discuss the general principles of the Law of Contract as outlined in Sections 01 to 75 of the Indian Contract Act, 1872.
1. Definition of Contract (Section 2)
A contract is an agreement between two or more parties, enforceable by law.
2. Essential Elements of a Contract (Section 10)
To constitute a valid contract, the following essential elements must be present:
• Offer and Acceptance: There must be a definite offer by one party and an unequivocal acceptance of that offer by the other.
• Lawful Consideration: Something of value must be exchanged between the parties.
• Capacity to Contract: The parties must be of a legal age and competent to enter into a contract.
• Free Consent: The parties must agree to the terms of the contract without coercion or undue influence.
• Lawful Object: The object of the contract must not be illegal or against public policy.
3. Communication, Acceptance and Revocation of Proposals (Sections 3-5)
To make a valid offer, it must be communicated to the other party. The acceptance must be communicated similarly. A proposal may be revoked at any time before acceptance unless it is a standing offer.
4. Contracts with Minors, Persons of Unsound Mind, and Drunken Persons (Sections 10-12)
A contract with a minor, person of unsound mind or drunken person is voidable.
5. Contracts by a Person in a Fiduciary Capacity (Section 13)
A person in a fiduciary capacity such as an agent, trustee or guardian cannot enter into a contract that is adverse to their principal or beneficiary.
6. Consent Obtained by Coercion, Undue Influence, Fraud or Misrepresentation (Sections 15-20)
If consent to a contract is obtained by coercion, undue influence, fraud, or misrepresentation, the contract is voidable at the option of the aggrieved party.
7. Void Agreements (Section 2(g))
A void agreement is one that is not enforceable by law, and it cannot create any legal rights or obligations between the parties.
8. Voidable Agreements (Section 2(i))
A voidable agreement is one that can be set aside at the option of the aggrieved party due to lack of free consent or any other reason.
9. Performance of Contract (Section 37)
Each party to the contract must fulfill their obligations as per the terms of the contract.
10. Breach of Contract (Section 73)
If one party fails to fulfill their obligations under the contract, the other party can sue for damages.
In conclusion, the general principles of the Law of Contract as outlined in Sections 01 to 75 of the Indian Contract Act, 1872, are essential for anyone who enters into contracts. These principles ensure that parties are aware of their rights and obligations, and contracts are enforced in a fair and just manner. Understanding these principles can help avoid disputes and conflicts in any contractual relationship.