Some Basic Information about Indian Contract Act 1872
Indian Contract Act 1872
Introduction
Thinking of entering into a contract to seal a deal, make sure you know some of the facts about the act through which your agreements are going to be governed.
This law affects everyone more so, trade, commerce and industry as it’s the foundation of every business deal.
The Indian Contract Act is distinguishable into two parts:
- The initial segment (Section 1–75) manages the overall standards of the law of agreement and accordingly applies to all agreements independent of their temperament.
- The subsequent part (Sections 124–238) manages certain uncommon sorts of agreements, to be specific agreements of Indemnity and Guarantee, Bailment, Pledge, and Agency.
The goal of the Contract Act is to guarantee that the rights and commitments emerging out of an agreement are regarded and that lawful cures are made accessible to the individuals who are influenced.
According to the Indian Contract Act, 1872, a “‘contract’ is an agreement enforceable by law”. The agreements that are not enforceable by law are not counted as contracts.
Essentials for valid contract
A valid agreement is enforceable by law and if an agreement isn’t legitimate it might prompt impediment of organizations and unlawful and dishonest dealings.
Even if you form a contract but don’t comply with the legal validity and requirements of a contract it’s not going to be considered valid and may not help you with future references and legal disputes surrounding it. Section 10 of the act identifies certain focuses that are fundamental for valid agreements. These essentials are:
- Presence of at least two parties
For a contract to be deemed valid it’s important that at least two parties be involved. One cannot get in contract with oneself.
- Free consent of the parties
Forcing parties to enter into a contract will eliminate the chances of the contract standing legal in the court; it will become a voidable contract.
- Capacity of the parties
It’s important to note that competency or validity of parties entering into a contract also decides its validity. Minor party(under the age of 18), insolvent party, lunatic party, party of unsound mind, or a drunkard in a drunk state cannot enter into a contract and if they do it won’t be considered valid.
- Lawful Consideration
Quid Pro Quo means ‘something in return’ which implies that the parties should build as some benefit, rights, interest, and so on or appear to have some type of significant “consideration”.
In Section 23 of the Act, the unlawful considerations are defined as: Forbidden by law, the court deemed it against public policy or immoral, doesn’t serve the purpose of the law of contract, causes or intends to cause injury to another person, or is fraudulent.
- Lawful object
The object or the purpose for which the contract is being entered into should be legal. Any contract made for illegal or unlawful purposes cannot stand in the court of law and won’t be enforceable by law.
- Full Consent of the parties
The parties concerned must be aware of all the terms of the contract and should be consented without being okay with all of them. Any misunderstanding or miscommunication within the parties may hamper the chances of the contract being legal.
- Terms of the contract must be specific and certain
Any confusing or contradictory terms and conditions may term the contract illegal or invalid.
- Possibility of completion of contract
Any contract made for a purpose that is not possible to be completed cannot be considered. Like one cannot make a contract for buying or selling a property on Venus, at least for now.
These are not absolute to the point terms but some basics you may need to know or should know. The Indian contract law is vast and deep with various sections and subsections and exceptions to specific cases that need thorough details reading. If you make a contract, before getting into it you should consult a lawyer and go through all the legal details to be on a safer side.
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