Indian Contract Act

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THE INDIAN CONTRACT ACT, 1872

The Law of Contract Constitutes the most important branch of mercantile or commercial law. It affects everybody, more so, trade, commerce anq industry. It may be said that the contract is the foundation of the civilized world.

The law relating to contract is governed by the Indian Contract Act, 1872 (Act No. IX of 1872). The preamble to the Act says that it is an Act "to define and amend certain parts of the law relating to contract". It extends to the whole of India except the State of Jammu and Kashmir.

The Act mostly deals with the general principles and rules governing contracts. The Act is divisible into two parts. The first part (Section 1-75) deals with the general principles of the law of contract, and therefore applies to all contracts irrespective of their nature. The second part (Sections 124-238) deals with certain special kinds of contracts, e.g., Indemnity and guarantee, bailment, pledge, and agency. The term contract has been defined by various authors In the following manner:

"A contract is an agreement creating and defining obligations between the parties". -Salmond "A contract is an agreement enforceable at law, made between two or more persons, by which rights are acquired by one or more to acts or forbearances on the part of the other or others". -Anson

"Every agreement and promise enforceable at law is a contract". -Sir Fredrick Pollock The Indian Contract Act has defined contract in Section 2(h) as "an agreement enforceable by law".

These definitions resolve themselves into two distinct parts. First, there must be an agreement. Secondly, such an agreement must be enforceable by law. To be enforceable, an agreement must be coupled with an obligation.

A contract therefore, is a combination of the two elements: (1) an agreement and…...

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