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Meaning of Contract, Nature and Scope of Contract

1. A contract refers to an agreement between two private parties that creates mutual legal obligations. It can be oral or written, though written is less risky. 2. There are five types of contracts based on enforcement: valid, voidable, void, unenforceable, and illegal. There are also two types based on creation: express and implied. 3. The scope of contract law governs basic contractual obligations and rights that arise from agreements between two or more persons, creating an obligor with a legal duty and an obligee who benefits. This distinguishes it from criminal law obligations.

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797 views12 pages

Meaning of Contract, Nature and Scope of Contract

1. A contract refers to an agreement between two private parties that creates mutual legal obligations. It can be oral or written, though written is less risky. 2. There are five types of contracts based on enforcement: valid, voidable, void, unenforceable, and illegal. There are also two types based on creation: express and implied. 3. The scope of contract law governs basic contractual obligations and rights that arise from agreements between two or more persons, creating an obligor with a legal duty and an obligee who benefits. This distinguishes it from criminal law obligations.

Uploaded by

Tripti Sharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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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.

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