A study on the Axiomatic questions in Law of

Contract
Submitted in partial fulfilment of the requirements for the award of the degree
B.Com. LL.B (Hons)

Submitted by:
Aaryan N
Reg.No.BC0160001
1st year B.Com. LL.B (Hons)

Submitted to:
Prof. Dr Hemalatha Bhat
Faculty of Sociology

Tamil Nadu National Law School

(A STATE UNIVERSITY ESTABLISHED BY ACT NO.9 OF 2012)
Navalurkuttapattu, Srirangam (TK), Tiruchirappali-620009, Tamil Nadu

1 CONTRACTS- I
 DECLARATION

I, Aaryan N do hereby declare that the project entitled “Study on the axiomatic
questions in Law of Contract” submitted to Tamil Nadu National law school in partial
fulfilment of requirement of award of degree in undergraduate in law is a record of original
work done by me under the supervision and guidance of Prof. Dr Hemalatha Bhat, Faculty
of Sociology, Tamil Nadu National law school and has not formed basis for award of any
degree or diploma or fellowship or any other title to any other candidate of any university.

Aaryan N

B.Com.LL.,B(Hons.)

BC0160001

2 CONTRACTS- I
 ACKNOWLEDGEMENT

At the outset, I convey my deepest regards to the Vice Chancellor Mrs Kamala Sankaran, and
the administrative staff of TNNLS who held the project in high esteem by providing reliable
information in the form of library infrastructure and database connections in times of need.

Firstly, I thank my Contracts professor K Govind Rajan for having allotted me such a
challenging and dynamic topic. Even repaying him through mere words is beyond the domain
of my lexicon that was the backbone during all hurdles that I confronted during the making of
this project. Hence, I am forever duly indebted to him as a student.

Also, I am grateful to the staff and administration of TNNLS who contributed useful
resources tremendously in the making of this project by providing library infrastructure and
Database connection.

This entire project wouldn’t have been possible without the involvement of precious inputs of
my parents and friends who sacrificed their valuable time to guide and advise me in all time
of need to make this project a successful one.

Lastly, I am grateful to the almighty for giving me the courage and strength to withstand all
hindrances during this project and make it successful since its inception.

3 CONTRACTS- I
 TABLE OF CONTENTS

CHAPTER 1

IMPORTANCE OF A CONTRACTUAL RELATIONSHIP

1.1 INTRODUCTION

1.2 RULES TO BE OBSERVED IN THE FORMATION OF A CONTRACT

1.3 EFFICACY OF RELATIONSHIPS

1.4 CONCLUSION

CHAPTER 2

APPLICATION OF AXIOMATIC QUESTIONS

2.1 INTRODUCTION TO AXIOMATIC QUESTIONS IN LAW OF CONTRACT

2.2 CHARACTERISTICS TO BE FULFILLED
2.3 ALL CONTRACTS ARE AGREEMENTS BUT ALL AGREEMENTS ARE NOT
CONTRACTS
2.4 LAW OF CONTRACT IS NOT THE WHOLE LAW OF OBLIGATIONS NEITHER IT IS
THE

WHOLE LAW OF AGREEMENT

2.5 CONSENSUS IS THE ROOT OF A CONTRACT
2.6 CONCLUSION

CHAPTER 3

CONCLUSION

4 CONTRACTS- I
 IMPORTANCE OF CONTRACTUAL RELATIONSHIP

1.1 INTRODUCTION
Contractual transactions are fundamental. They exist almost everywhere- ranging from a
small dry cleaning transaction to multibillion dollar ones. One can’t just deny the presence of
contracts and the relations arising out of them. Contracts provide a written document which
outlines the full understanding of the relationship and scope of work so that no one can claim
any misunderstandings down the road.
The principles of the English law of Contract are almost entirely the creation of English
Courts, and the legislature, has until recently played a relatively small part in their
development. The Contract law is the child of commerce, and has grown with the growth of
business transactions.
Section 1 of the American Law Institute’s Restatement Second of the Law of Contracts1,
“A contract is a promise or a set of promises for the breach of which the law gives a remedy,
or the performance of which the law in some way recognizes as a duty.”
Contracts help to establish the respective liabilities of the parties and the standards
performance to be expected from them.2
Contract is in effect the instrument by which the separate and conflicting interests of the
parties can be reconciled and brought to a common goal3
A contract consists of actionable promise or promises.4

1.2 RULES TO BE OBSERVED IN THE FORMATION OF A CONTRACT

A Contract is an agreement enforceable by law. An agreement consists of reciprocal
promises between two or more parties. A contract or a contractual obligation may arise in two
ways, (i) An Agreement5 and Contract and (ii) By Standard form of Contracts6.
1
The Restatement is not a binding legislative text, but has a very influential and acute interpretation of American
Case Law, Winfield (1929) 11 J Comp Leg 179,189 (on the first edition)
2
J Beatson, A Burrows, J Cartwright Anson’s Law of Contract. Oxford University Press, 29th Edition, p3
3
see Gurvitch, Sociology of Law (1947)
4
supra 2
5
The Most common way of making a contract.Includes elements of Offer, Acceptance, Capacity,Consideration
and Legal Bar. Dr.R Bhangia, Contract I, Formation of Contract, Allahabad Law Agency Law Publishers,
Reprint 2012, p1.
6
In Modern age people and institutions or establishments like railways, insurance companies, manufacturers,
banks etc enter into various contracts with huge number of people. The cannot possibly negotiate individually

5 CONTRACTS- I
 According to Section 2 (h) of the Indian Contract Act 1872, “An Agreement
enforceable by law is a Contract.” All agreements are not enforceable by law and therefore,
all agreements are not contracts. According to Section 2 (e)7 “Every promise and every set of
promises forming consideration for each other is an agreement.” A Promise is a result of an
offer8 by one person and its acceptance by other9. Section 2 (b) of the Act defines promise as
“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.
The essentials of a valid contract are as follows, an agreement which is a result of
1. General Ingredients
An offer by one party
Unconditional Acceptance by the other party
2. Statutory Ingredients
Agreement made by parties competent to contract
Consideration must be present
Free consent
Lawful Agreement

A. PROPOSAL OR OFFER
An offer is an intimation, by words or conduct, of a willingness to enter into a legally
binding contract, and which in its terms expressly or impliedly indicates that it is to become
binding on the offeror as soon as it has been accepted by an act, forbearance or return
promise in the part of the person to whom it is addressed.10
The term ‘Proposal’ has been defined in Section 2(a) of the Indian Contract Act as follows,
“When one person signifies to the other 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” A proposal is made with the view of obtaining assent of the other party11.

with every single person. Thus, Contracts are pre drafted and are generally prepared by one party, which the
other has to agree to.Dr. R K Bhangia, Contract I, Formation of Contract, Allahabad Law Agency Law
Publishers, Reprint 2012, p 1.
7
Section 2(e) of Indian Contract Act 1872.
8
Under English law of Contract, the term offer is used, and in the Indian Contract Act, 1872 the term proposal
is used. Both mean one and the same.
9
Agreement and Contract, Dr. R K Bhangia, Contract I, Formation of Contract, Allahabad Law Agency Law
Publishers, Reprint 2012, p2
10
Supra 2, p33
11
Proposal or Offer, Dr. RKBhangia, Contract I, Formation of Contract, Allahabad Law Agency Law
Publishers, Reprint 2012, p2

6 CONTRACTS- I
 Essentials of a valid offer
(i) The offer must be Certain
(ii) The offer must be made to an Ascertained person or to the world at large12
(iii) There must be communication of Offer13
(iv)Parties must intend to create legal relationships14
A statement merely made to supply information cannot be treated as an offer, and accepted,
so as to create a valid contract.15

B. ACCEPTANCE
If a contract is to be made, the offeree must accept the offer. Acceptance of an offer is
the expression by words or conduct,16 of assent to the terms of the offer in the manner
prescribed or indicated by the offeror.17A proposal when accepted results in an agreement. A
contract can arise only after acceptance. According to Section 2(b)18 “ 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” Sir William Anson explained acceptance as
“Acceptance is to offer what a lighted match is to a train of Gunpowder” Acceptance
produces something which cannot be recalled or undone.

Essentials of a valid acceptance

(i) Communication of acceptance must be present and such communication must be
complete.19
(ii) Acceptance must be made by the person to whom the offer is made20
(iii) No Burden of refusal id to be cast on the offeree21

12
Carlil v. Carbolic Smoke Ball Company (1893) 1 QB 256, Powell v. Lee (1908) 99 LT 284, Harbajan Lal v.
Harcharan Lal AIR1925 ALL 539
13
Section 2 and 3 of the Indian Contract Act, 1872. Lalman v. Gauri Dutt 1911 11 All LJ 489, R v. Clarke 1927
40 CLR 27 and Williams v. Carwardine 1883 4 BAD 621
14
Balfour v. Balfour 1919 2 KB 517, Are. Merritt v. Merritt 1970 2 ALL ER 76, Coward v. Motor Insurance
Bureau 1962 1 ALL ER 53 and Rose and Frank v. V J R Crompton 1933, 2 KB 261.
15
Harvey v, Facey (1893) AC 552.
16
Jekins v. Tucker (1788) 1 Hy Bl 90.
17
supra 2 p 40
18
supra 3, Section 2(b)
19
Section 3 and 4, supra 3
20
Powell v. Lee 1908 99 LT 284
21
Felthouse v. Bindley 1863 LJ 835

7 CONTRACTS- I
(iv) Acceptance must be of the entirety of the offer22
(v) Acceptance must be made before the offer lapses or withdrawn23
The intention of the offeree to accept must be expressed without leaving room for
doubt as to the fact of acceptance, or as to the coincidence of the terms of the acceptance with
those of the offer. These requirements may be summed up in general rule, sometimes called
the ‘mirror image’ rule, that the acceptance must be absolute and must correspond with the
terms of the offer. In determining whether or not the offer is conclusive, an alleged
acceptance must be distinguished from counter offer, rejection, cross offer etc.

C. CAPACITY OF PARTIES
Capacity or competency to a contract is an essential qualification to enter into a contract. It is
a statutory ingredient as per Section 10 of the Indian Contracts Act, 1872.
“10. What agreements are contracts — All agreements are contracts if they are
made by free consent of parties competent to contract, for a lawful consideration and with a
lawful object, are not hereby expressly declared to be void. “
Section 11 deals in detail with the competency to contract. “ 11. Who are competent
to contract-Every person is competent to contract who is of the age of majority according
to the law to which he is subject, and who is of sound mind and is not disqualified from
contracting by any law to which he is subject. “
This section declares the following persons to be incompetent to contract.

(i) Minors

(ii) Persons of Unsound Mind

(iii) Persons Disqualified by Law to which they are Subject24

D. CONSIDERATION

Consideration is the universal requisite of contracts not made by deed. 25 A valuable

consideration in the eyes of law may consist in some right, interest, profit or benefit to one

22
Section 8, supra 3
23
Section 6, supra 3
24
Ashok Kumar J Pandya v. Suyog Coop Housing Society limited, AIR 2003 NOC 118 (Guj); 2002 AIHC 3401,
a housing society agreed to sell land before it became a legal person by registration, Held not enforceable.
25
supra 2, p 91.

8 CONTRACTS- I
party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by
the other.26 The concept of consideration is based on the latin maxim of, ‘Ex nudo facto nor
oritur actio’, out of a naked agreement no cause of action arises. This doctrine is studied in
relation to Section 2 (d), Section 24 and 25 of the Indian Contract Act. “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 abstains from doing something, such act or
abstinence or promise is called consideration for the promise”27. Thus, Consideration is the
price of a promise, a return or quid pro quo for a promise made.

Essentials of a valid consideration, Consideration must be

(i) Given at the desire of the promisor 28
(ii) Must be provided by promisee or any other person29
(iii) May be past, present or future30
(iv) May be by act or abstinence.
Though people are considered to be the best judges for the consideration, it need not be
adequate but must have some value in the eyes of law.

E. CONSENSUS AD IDEM

Section 13 of the Indian Contracts Act, 1872 defines consent as follows,“ Two or
more persons are said to consent when they agree upon the same thing in the same
sense”.Agreement by two persons are said to be in consensus when they agree upon the same
thing in the same sense. When both their consents meet at a point, they are said to be at idem.
No effective contract can come into existence unless the parties are at idem on all essential
terms to transactions. According to Section 14, Free consent is defined such,
“Consent is said to be free when it is not caused by ,
(i) Coercion as defined in Section 15, or
(ii) Undue influence as defined in Section 16, or
(iii) Fraud as defined Section 17, or
(iv) Misrepresentation as defined in Section 18, or

26
Ibid.
27
Section 2(d), supra 3
28
Consideration to be given on demand by promisor. Durga Prasad v. Baldeo and Others 1880 3 All 221, Kedar
Nath v. Gorie Mohammed 1886 ILR 14 Cal
29
Doctrines of Stranger to Contract and Stranger to Consideration.
30
Section 2(d) of Indian Contract Act 1872 recognises past, present and future considerations for a promise.

9 CONTRACTS- I
(v) Mistake subject to the provisions of Section 20, 21 and 22.”
Where consent to an agreement is caused by any of the vitiating factors, the agreement is
voidable at the at the option of the party whose consent was so caused.31

F. LEGALITY OF OBJECT
The fourth and the last requirement is the lawful object. One of the essentials of a
valid contract is that the consideration and object must be lawful.32 Every agreement of which
the object or consideration is unlawful, is void.33
This statutory ingredient traces its foundation from two latin maxims,
‘Ex turpi cosa non oritur actio’ Out of a turpitude no cause of action arises and ‘Ex dolo
malo non oritur actio’ Out of a wicked act no cause of action arises.
The essentials of this ingredient can be classified as follows,

An Act is unlawful if it is,

(i) forbidden by law
(v) defeats the existing provisions of law
(vi) is fraudulent
(vii) involves injury to person or property
(viii) court regards it immoral
(ix) opposed to public policy
An agreement the object of which is opposed to the law of the land is either unlawful, or
simply void depending the provision of law to which it is opposed.

EFFICACY OF RELATIONSHIPS
Legal relationships between contracting parties arise out of the rules which are
followed to establish a contract. A contractual relationship is a legal relationship between two
or more parties evidenced by a contract.

1.4 CONCLUSION

31
Section 19 and 19A of the Indian Contract Act, 1872.
32
Reference to Section 10 of the Indian Contract Act, 1872.
33
Reference to Section 23 of the Indian Contract Act, 1872.

10 CONTRACTS- I
 Thus, a Contract is valid only when the above said essentials are fulfilled. There must
be an offer; that offer has to be accepted; the parties must be qualified as per Section 10 of
the Indian Contract Act, 1872

11 CONTRACTS- I
 APPLICATION ON CONTRACTUAL RELATIONSHIP

2.1 INTRODUCTION TO AXIOMATIC QUESTIONS IN LAW OF CONTRACT

Axiomatic questions are those questions/statements which are capable of acceptance without
any proof.

2.2 CHARACTERISTICS TO BE FULFILLED

Three characteristics of Axiomatic questions:

(1) Commands universal acceptance

(2) Requires no test in a Laboratory
(3) No demonstration is required

2.3 ALL CONTRACTS ARE AGREEMENTS BUT ALL AGREEMENTS ARE NOT

CONTRACTS

Section 2 (h)34 defines ‘Contract’ as an agreement enforceable by law.

A contract therefore, is an agreement which creates a legal obligation i.e., a duty enforceable
by law.

From the above definition, we find that a contract essentially consists of two elements:

(1) An agreement
(2) Legal obligation i.e., a duty enforceable by law.

Section 2 (e)35 defines ‘Agreement’ as “every promise and set of promises forming
consideration for each other.”

For a contract to be enforceable by law there must be an agreement which should be

enforceable by law. To be enforceable, the agreement must be coupled with obligation.

Obligation is a legal duty to do or abstain from doing what one promised to do or abstain
from doing.

All contracts are agreements but for agreement to be a contract it has to be legally
enforceable. Section10 of the Act provide “All agreements are contracts if they are made by

34
Section 2(h) , The Indian Contract Act, 1872
35
Section 2(e), The Indian Contract Act, 1872

12 CONTRACTS- I
the free consent of the parties competent to contract for lawful object & are not hereby
expressly declared void.”

All Contracts are agreements

For a Contract to be there an agreement is essential; without an agreement, there can be no

contract.

All contracts are agreements but for an agreement following essential element are required –

i. Offer & Acceptance: There must be two parties to an agreement i.e., one making the
offer & other party accepting it. Acceptance must be unconditional & absolute. A part
of an offer cannot be accepted. The terms of an offer must be definite. The acceptance
must be in the mode as prescribed & must be communicated. The acceptor of an offer
must accept it in the same way & same sense & at the same time as offered by the
offeror i.e., there must be consensus ad idem.

ii. Intention to create legal relationship: When two parties enter into a contract their
intention must be to create legal relationship. If there is no such intention between the
parties there is no contract between them. Agreements of a social or domestic nature
to do, not constitute contracts.
Case: Balfour v. Balfour

iii. Lawful consideration

An agreement to be enforceable by law must be supported by consideration. The

agreement is legally enforceable only when both parties give something or get
something in return. It may be an act to do something or abstaining from doing
something in return. Consideration may be past, present or future.

iv. Capacity to Contract – Competency

The parties competent to contract must be capable of contracting i.e they must be of
the age of majority, they must be of sound mind & they must not be disqualified from
contracting by any law to which they are subject to. An agreement with minors,
lunatics, drunkards, etc. are not contract & does not get a legal title.

v. Free & genuine agreement

13 CONTRACTS- I
 It is necessary between the contracting parties to have a free & genuine consent to an
agreement. The consent of parties is said to be free when the contracting parties are of
the same mind on the materials of a contract. They must mean the same thing at the
same time the parties must not enter into a contract under undue influence, coercion,
misrepresentation etc. If these flaws are present in an agreement it does not become a
contract.

vi. Lawful object

The object of an agreement must be lawful. It should not be illegal, immoral or it

should not oppose public policy. If an agreement suffers from a legal flaw with
respect to object it is not enforceable by law & so it is not a contract.

vii. Agreement not declared void

For an agreement to be a contract it is necessary for the agreement must not be

expressly declared void by any law in force in the country.

viii. Possibility & certainty of performance

The terms of an agreement must not be vague or indefinite. It should be certain. The
agreement must be to do a thing which is possible.

Thus, agreement is the genus of which contract is the specie.

An agreement becomes a contract when the following conditions are satisfied:36

1. There is some consideration for it. [Ss. 2(d) and 25]

2. The parties are competent to contract. [Ss. 11 and 12]
3. Their consent is free. [Ss. 13-22]
4. Their object is lawful. [Ss. 23-30]

All agreements are not contracts37

An agreement is termed a contract only when it is enforceable by law. All agreements are not
necessarily legally enforceable. It can rightly be said that an agreement has a much wider
scope than a contract. An agreement does not necessarily imply a legal obligation on the

36
11 AVTAR SINGH, CONTRACT AND SPECIFIC RELIEF ACT, 4, (Ed 11, 2013)
37
http://www.preservearticles.com/2012012621479/brief-notes-on-all-contracts-are-
agreements-but-all-agreements-are-not-contracts.html

14 CONTRACTS- I
parties to the agreement. An agreement need not necessarily be within the framework of law
and be legally enforceable. If it is, then it is a contract.

 In a nut shell, an agreement is the basis of a contract and contract is the structure constructed
on these basis. An agreement starts from an offer and ends on consideration while a contract
has to achieve another milestone that is enforceability. Due to this, breach of an agreement
does not give rise to any legal remedy to the aggrieved party while breach of contract
provides legal remedy to the aggrieved party against the guilty party. Thus we can say that all
contracts are agreements but all agreements are not contracts.38

2.4 Law of Contract is not the whole law of obligations neither it is the
Whole law of agreement

Any obligation, which arises independently of an agreement, cannot be the basis of a valid
contract, A domestic arrangement with no intention to create legally binding relations will not
constitute a contract, such as a promise by a father to pay pocket money to his son. In the
words of Lord Atkin, “The most usual form of agreements, which do not constitute a
contract, are the agreements made between husband and wife”. They are not contracts
because the parties do not intend that they should be attended by legal consequences.

Leading Case- Balfour v, Balfour (1919)

Mr. Balfour left his wife in England on medical grounds and left for Ceylon, the place of his
appointment. He had promised to pay £30 P.M. to his wife until she returns. Subsequently, he
stopped sending money to her and decided to live apart. The wife sued the husband for the
recovery of the amount promised for, on the ground that her consent to the agreement was
enough to constitute valid consideration for the contract. The court did not agree with the
views of the wife and dismissed her claim. It was held that it was only a domestic
arrangement and not a legal contract because domestic arrangements are outside the realm of
contract altogether.39

However, parties standing in domestic or social relationship may enter into an enforceable
contract if they intend their agreements to have legal consequences. Merrit V. Merrit (1970).

38
https://raselbbaeducationhelpcentre.wordpress.com/2013/07/04/all-contracts-are-
agreements-but-all-agreements-are-not-contracts/
39
https://sol.du.ac.in/mod/book/view.php?id=644&chapterid=360

15 CONTRACTS- I
Therefore, to sum up, a contract results from a combination of agreement and obligation
between the parties to the agreements. An agreement may exist without any legal obligation
but a contract cannot. Agreements giving rise to social obligations will not constitute binding
contracts. Obligations arising from a trust or a decree or from statutes do not fall within the
scope of the Contract Act. Thus, an agreement is the genus of which contract is the species,
and therefore, all contracts are agreements but all agreements are not contracts40. Hence, “the
law of contract is not the whole law of agreements nor is the whole law of obligations. It is
law of those agreements which create obligations, and those obligations which have their
sources in agreements.41” -Sir John Salmond.

2.5 CONSENSUS IS THE ROOT OF A CONTRACT

Meeting of the minds also referred to as mutual agreement, mutual assent or consensus ad
idem is a phrase in contract law used to describe the intentions of the parties forming the
contract. In particular it refers to the situation where there is a common understanding in the
formation of the contract. Formation of a contract is initiated with a proposal or
offer. This condition or element is often considered a requirement to the formation of
a contract.42

The Latin term of an ‘agreement’ means a state of meeting of the minds between the parties
where they have understood and have accepted the contractual commitments made by each
other, respectively.43 
For a contract to be useful the parties must be in agreement about its provisions. In the event
of a possible breach of contract, the party alleged to be in breach may wish to claim that the
contract did not exist at all, as there was no certainty about the subject of the contract.
However, many contracts are not very precise, to allow flexibility in business dealings, and a
court may have to examine other dealings between the contracting parties to determine what
their true intentions were.44 
It is not desirable, on the whole, to insist that all contracts are perfectly precise; this would
make it difficult to do business. However, as a general rule, if a contract leaves something to

40
Ibid
41
Edwin Peel, the law of contract 13th edition, Sweet and Maxwell
42
43
44

16 CONTRACTS- I
be determined in the future, the determination itself must not require the agreement of the
parties. 
When people develop a contract, an offer is extended and accepted, and the terms of the offer
are worked out. This is the stage where the consensus comes in, as the parties to the contract
discuss the specifics and the details, and focus on developing a contract all are satisfied with.
The contract must include adequate consideration, something of value exchanged by all
parties, and the capacity for consent must be demonstrated. The final qualification needed for
legality is legality of the contract itself; the other conditions may be satisfied, but if the
contract is for something illegal, it cannot stand up in court.45

An agreement between parties in which each party is aware of the commitments that is being
made by each individual. Meeting of the minds, or consensus ad idem or consensus, is
associated with contract law and is fundamental for the existence of a contract. If both parties
to a contract make a mistake in the contract's creation, and may thus be agreeing to perform
actions other than what both expected, there would not be a meeting of the minds.46

For example, a business needing to resupply its inventory of toys and speaks with a local
supplier. The businessman indicates that he is looking to buy the supplier's stock, which he
takes to be the supply of toys that the supplier has. The supplier, however, thinks that the
businessman is looking to buy out his business, hence his "stock" of shares. Because both
parties are not agreeing to the same material exchange there is no meeting of the minds, and
thus no agreement.

Thus Consensus is in the root of every contract. A contract which lacks consensus between
the parties can be held voidable under the Indian Contract Act, 1872. Indian law regarding
consensus has remained fundamentally unchanged and in contracts are held valid only when
all essentials are fulfilled as per the requirements in section 10 of the Indian Contract Act,
1872.47

45
46
47

17 CONTRACTS- I
Conclusion

A Contract is valid only when the above said essentials are fulfilled. There must be an offer;
that offer has to be accepted; the parties must be qualified as per Section 10 of the Indian
Contract Act, 1872; there must be a lawful consideration; the objects of the contract must be
lawful; the contract must not defy any provision of the existing laws of India; all these must
have the free consent of the parties. Contracts are widely used in commercial law, and form
the legal foundation for transactions across the world. Common examples include contracts
for the sale of services and goods (both wholesale and retail), construction contracts,
contracts of carriage, software licenses, employment contracts, insurance policies, sale or
lease of land, and various other uses. These are contracts of importance and thus only persons
competent to enter must follow all guidelines before entering into a contract.

18 CONTRACTS- I
19 CONTRACTS- I