Section 2 of The Indian Contract Act, 1872
In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:—
- (a)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;
- (b)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;
- (c)The person making the proposal is called the "promisor", and the person accepting the proposal is called the "promisee";
- (d)When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;
- (e)Every promise and every set of promises, forming the consideration for each other, is an agreement;
- (f)Promises which form the consideration or part of the consideration for each other are called reciprocal promises;
- (g)An agreement not enforceable by law is said to be void;
- (h)An agreement enforceable by law is a contract;
- (i)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 or others, is a voidable contract;
- (j)A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.
Summary
- It defines a proposal as signifying willingness to do or abstain from doing something to gain another's assent.
- It states that an accepted proposal becomes a promise, with the parties termed the promisor and the promisee.
- It defines consideration as any act, abstinence, or promise performed at the desire of the promisor.
- It defines an agreement as promises forming mutual consideration, and reciprocal promises as those forming mutual consideration.
- It separates void agreements (not legally enforceable) from contracts (legally enforceable agreements).
- It defines voidable contracts as enforceable at the option of some parties only, and void contracts as those that cease to be enforceable.
Practical examples
FAQ
1. What is the difference between an agreement and a contract under Section 2 of The Indian Contract Act, 1872?
Under Section 2(e), an agreement is a promise or set of promises forming consideration for each other, whereas Section 2(h) defines a contract as an agreement that is specifically enforceable by law.
2. How does Section 2 of The Indian Contract Act, 1872 define a proposal?
Under Section 2(a), a proposal occurs when one person expresses their willingness to do or not do something to obtain another person's agreement to that act or abstinence.
3. What is a voidable contract according to Section 2 of The Indian Contract Act, 1872?
Under Section 2(i), a voidable contract is an agreement that can be legally enforced at the option of one or more parties, but not at the option of the other party or parties.
4. What is the definition of consideration under Section 2 of The Indian Contract Act, 1872?
Under Section 2(d), consideration is any act, abstinence, or promise that the promisee or any other person does or promises to do at the desire of the promisor.
5. When does a contract become void under Section 2 of The Indian Contract Act, 1872?
Under Section 2(j), a contract becomes void when it ceases to be enforceable by law.
Test yourself
Q1.Under Section 2 of The Indian Contract Act, 1872, what does a proposal become once it is accepted by the person to whom it was made?
Q2.Under Section 2 of The Indian Contract Act, 1872, what is the legal status of an agreement that cannot be enforced by law?
Q3.Under Section 2 of The Indian Contract Act, 1872, what is a contract that is enforceable by law at the option of only one party, but not the other?
Q4.Under Section 2 of The Indian Contract Act, 1872, what are promises that form the consideration or part of the consideration for each other called?
Q5.How does the saving clause in Section 1 of The Indian Contract Act, 1872 affect what is considered an agreement enforceable by law under Section 2(h) of the same Act?