Spread the love

 Meaning, nature, and scope of the contract

Satyendra Pratap Singh, B.A.LL.B (Hons.), 5th Sem. , Shri Ramswaroop Memorial University, Lucknow, Uttar Pradesh


A contract is defined as one that is legally enforceable by Section 2(h) of the Indian Contract Act, 1872. Rights in personam, or private rights that solely impact two private people entering into a contract with each other, are normally the focus of contract law.

What is the meaning of the contract?

“The rights and obligations of two or more parties are established, made clear, and governed by a legally enforceable agreement known as a contract. Contracts frequently include the commitment to transmit goods, services, money, or any combination of those at a later date.”

There are several ways that a promise or a contract might form :

  1. By Agreement and Contract
  2. By Standard Form Contract
  3. By Promissory Estoppel.

How a Contract is formed?

  • Offer + acceptance = Promise
  • Promise + consideration = Agreement
  • Agreement + enforceable by law = Contract

The use of case laws can help people understand a number of crucial ideas in regard to contract law. Let’s briefly explore the requirements for a valid contract that are presented here before getting into the case laws:

  1. Offer
  2. Acceptance of the offer
  3. To enter into a contract, both parties must be competent
  4. A consideration that is legal in nature must exist
  5. Free consent of the parties
  6. Desire to establish a legal partnership
  7. The agreement must be unambiguous
  8. A contract cannot be explicitly ruled invalid / void

Anyone studying contract law will come across the case laws that have been presented here; they are all connected to the contract law jurisprudence.

Lalman Shukla v. Gauri Datt (1913)

The important decision in Lalman Shukla v. Gauri Datt by the Allahabad High Court emphasised the significance of information and communication in the creation of a contract (1913). The Honorable Court said that in order to turn a proposal into an enforceable agreement, there must be awareness of the plan and consent from all parties involved. Since the plaintiff was not aware of the specific conduct and no agreement was given, none of the conditions that have been established in this instance are being met. A common example of a general offer is a prize offered through an advertising for recovering a missing item. This is a key premise controlling general offers in contract law. The offer is only deemed accepted by the one who successfully completes the necessary duty.

Mohori Bibee v. DharmodasGhose (1903)

In the well-known case of Mohori Bibee v. DharmodasGhose, a panel of judges—Lord Mcnaughton, Lord Davey, Lord Lindley, Sir Ford North, Sir Andrew Scoble, and Sir Andrew Wilson—examined the scope of a minor’s agreement (1903). Any individual under the age of eighteen was specifically forbidden by the Privy Council from entering into a contract and making significant choices regarding it. As a result, the mortgage deed that the plaintiff and defendant had engaged into in the current instance was deemed invalid since it had been executed by a minor.

Rose and Frank Co v. Crompton and Brother Ltd (1925)

In the well-known case of Rose and Frank Co v. Crompton and Brother Ltd (1925), the House of Lords highlighted contracts that are legally binding. In this case, the court ruled that the orders and acceptances may still be considered legally enforceable contracts despite the fact that the agreement between the parties to the case did not amount to a formal contract. Therefore, the legal transactions are not prohibited by the lack of enforceability of a legal arrangement represented in an agency agreement.

Bhagwandas Kedia v. Girdharilal & Co (1959)

In making its decision in the matter of Bhagwandas Kedia v. Girdharilal & Co. (1959), the Supreme Court of India considered Sections 2, 3, and 4 of the Indian Contract Act, 1872.  The Court observed that making an offer at a place that has been accepted elsewhere does not ipso facto form part of the cause of action in a suit for damage, in scenarios for breach of contract. In general, a contract results from an offer being accepted and some sort of visible indication that the offer has been acknowledged by the law or that is adequate in the eyes of the law.

Durga Prasad v. Baldeo (1880)

In the well-known case of Durga Prasad v. Baldeo, a two-judge Allahabad High Court panel composed of Justices Pearson and Oldfield rendered a judgement on the legality and validity of a contract (1880). The notion of rule of law, which is inextricably linked to Section 2(d) of the Indian Contract Act of 1872, was cited by the court in this case. The Act of 1872’s Section 2(d) read with Section 25 indicates that “any agreement without consideration is invalid.” Therefore, since the law itself outlines the requirements for a legitimate agreement, no situation may occur that violates the law.

What is the nature of contract?

The nature of contract is the area of law that establishes the conditions under which commitments made by contracting parties are enforceable against them, contract law is unique. It contains a number of limiting principles, pursuant to which the parties may construct rights and obligations for themselves that the law will upload, but it does not specify the duties and responsibilities that the law will enforce.

A contract Is a legal agreement between two or more parties whereby rights are gained on one side in exchange for acts or forbearances on the other. An offer and an acceptance are required for an agreement to become a contract, and the law imposes legal obligations on the promises that follow from the offer and acceptance.

What are the essential components of a valid contract?

A valid contract must have the following components :

  1. Two Parties: A minimum of two parties designated by the contract are required for a legal contract. The offer will be made by one of these parties, and the other will finally accept it. Both parties must be natural people or have a legal existence, such as corporations, educational institutions, organisations, etc.
  2. Agreement: When the party to whom the offer is given acknowledges his acceptance of it, a contract is first an agreement. A contract has a foundation that is an agreement.
  3. Free Consent: The parties must reach a consensus on the same issue at the same time and in the same manner. Without permission, a contract is not enforceable in court. When the parties agree on the same item in the same way, this is referred to as consent. In addition, for a contract to be considered legal, the parties’ assent must be devoid of coercion, fraud, undue influence, or error. The contract is null and invalid / void if it is not free.
  4. Intention of a Legal Relationship: Both parties must intend to enter into a formal partnership or otherwise commit themselves legally as a result of the arrangement. As a result, social or domestic agreements are not contracts since they are not intended to create a legal relationship between the parties.
  5. Contractual Capacity: The agreement’s parties must be able to form a legal contract. Everyone is permitted to engage into an agreement under the Act, if he or she: has reached majority age; is mentally sound; and is not prohibited by any law from entering into contracts.
  6. Consideration: An agreement made by a person who lacks competence is invalid. A contract must be backed by consideration in order to be legal. The expression signifies “something in exchange.” It may be monetary, in-kind, or physical. Past, present, or future are all possible. The concept must be true and sound.
  7. Nothing Illegal to Consider: The Act declares that consideration for an agreement is improper if: It is against the law; Its nature is such that, if permitted, it will violate all legal restrictions; It is dishonest.; it refers to or entails damage to another person’s or their property.; The judge views it as immoral.
  8. Legitimate Consideration: Consideration is receiving something in return. Every contract must provide consideration to justify the agreement. It must be true and legitimate.
  9. Suitable Object: The Indian Contract Act of 1872, Section 23, The consideration or aim of an agreement must be legal unless it is prohibited by law, of a character that, if granted, would violate any laws, fraudulent, involves or suggests harm to the person or property of another, the court deems it to be immoral, or it runs counter to public policy. The consideration or purpose of an agreement is said to be unlawful in each of these situations. Any agreement that has an illegal purpose or value is invalid.

What is the scope of Contract?

The contract’s scope outlines the whole document. Contracts can take in many various forms, and they can include little or big sums of money. While some contracts have lengthy deadlines, some have shorter ones. Contracts contain a variety of components depending on what they are used for. Commercial law has numerous facets, and it might be challenging to categorise them all. Human research is typically involved in commercial legal practise when it comes to, but is not limited to, contracts, sales of products, taxation, insurance, and renting.

A basic scope of the contract is provided at the identification phase. Some projects fall under several contract scopes because they have various development and management connections. This indicates that other parties are the recipients of the duties or services.

Offer / Proposal

The Indian Contract Act of 1872 states in Section 2(a) that when one person indicates to another that he is prepared to do or refrain from doing anything with the intention of securing the other person’s consent to such act or refrainment, he is said to make a proposal.

The person who Is being proposed to is referred to as the Promisee / Offeree, while the person who is being proposed to is referred to as the Promisor / Offeror. The proposition turns into a promise when the person to whom it is being made accepts it.

A valid offer must have the following qualities:

  1. An offer needs to be made with the goal of establishing legal responsibilities : Section 10 of the Indian Contract Act, 1872 states that the desire to establish a legal relationship is not a need for a contract, although English law views this idea as a prerequisite for an offer. In the Balfour V. Balfour case, Mr. Balfour, a resident of Sri Lanka, and his wife travelled to England for a holiday during which Mrs. Balfour became extremely ill and was advised not to return to Sri Lanka. After giving his wife a monthly payment of 30 Euros, Mr. Balfour consented to let her stay in England while he went back to Sri Lanka. After some time, the relationship between the two became tense, and Mr. Balfour stopped giving his wife a monthly stipend. Mrs. Balfour sued her husband, but the judge dismissed the case, saying that social agreements are outside the purview of the courts and that Mr. Balfour made his pledge to his wife without intending to impose any legal responsibilities.
  2. A proposal may be explicit or inferred : According to Section 3 of the Indian Contract Act, an express offer is one that is made verbally, in writing, or orally, whereas an implicit offer is one that is made by the offeror’s actions or conduct, according to Section 9 of the Indian Contract Act. In the Uptron Rural District Council v. Powell case, the defendant summoned the Uptron Fire Brigade after a fire started on his property because he thought he was entitled to their free assistance. Because the defendant’s farm was outside of the brigade’s free service area, the brigade sought payment for extinguishing the fire. The defendant desired and requested Upton’s services, and in response, they were delivered, the court decided. As a result, it was decided that the services were provided with an implicit guarantee of payment.
  3. The offer’s conditions must be specific and not ambiguous : At the time of the contract, all of its conditions must be agreed upon. A future agreement to agree is not a contract since the details are hazy. The term “present style” is extremely ambiguous and can mean different things to different people, so an agreement to take a lease of a house for a set period of time at a set rate that includes a clause stating that the lease will only be fulfilled if repairs are made to the house and the drawing room is decorated in accordance with current trends is not a valid offer.
  4. Silence cannot be required as a form of acceptance by an offer : If the offeror states that the offer will be deemed accepted if acceptance is not expressed by a specific date, the offer is deemed void. In Felthouse V. Bindley, a person offered to buy his nephew’s horse, and they stipulated that the offer would be deemed accepted if it was not acknowledged by a specific date. The nephew declined the offer, but he did instruct his auctioneer not to sell that particular horse. When the auctioneer accidentally sold the horse, the uncle sued the auctioneer. The court ruled that the nephew and his uncle had no communication regarding the purchase of the horse.
  5. It is not necessary to expressly accept a generic offer : A universal offer is one that is extended to the entire globe; anybody may accept it, and the offeror need not be informed of the acceptance. In the Carlill V. Carbolic Smoke Ball Co. case, the defendants prepared several balls (a medicinal remedy against influenza) and advertised in a newspaper that they would provide a prize of 100 Euro to anyone who acquired the illness after using their product. The defendant made a 1000 euro goodwill deposit at a bank. After utilising a ball in the way instructed on it, the plaintiff, Mrs. Carlill, developed influenza and filed a lawsuit against the defendants seeking damages. Since it was a general offer and the defendants broke it as soon as Mrs. Carlill had the sick, they were held accountable.
  6. An invitation to offer is different from an offer : The Latin word “Invitatio ad offerendum” which expresses a desire to bargain, is where the English term “invitation to offer” originates. When offering an invitation to give, the maker does not intend to be obligated after the remark is accepted by the intended recipient. It is an activity that requests an offer from the other side. An offer, on the other hand, specifies the essential elements of the contract with the understanding that no further discussions will be held. Some of the different sorts of invitations to provide include advertisements, product exhibitions, product auctions, tenders, etc. A consumer chose a medicine from a self-service store shelf and brought it to the pay register in Pharmaceutical Society of Great Britain V. Boots Cash Chemists (Southern) Ltd. case. The issue arose as to whether the customer’s behaviour was an acceptance of the offer or an offer itself. According to the courts, it was an offer to purchase, and no deal would be finalised until the buyer’s bid was accepted at the amount stipulated.
  7. Offer must be made known : A crucial component of an offer’s validity is that it must be made known. The communication of a proposal is complete, in accordance with Section 4 of the Indian Contract Act, when it comes to the knowledge of the person to whom it is made. A person who is the subject of an offer cannot accept it unless they are aware of it. In the case of Lalman Shukla v. Gauri Dutt, the defendant’s nephew ran away, and the defendants ordered his employees in various directions to look for the youngster. When the defendant posted an advertisement offering a prize of Rs. 501 to anybody who discovers the youngster, the plaintiff, one of the defendant’s slaves, was dispatched to Haridwar. The youngster was located by the plaintiff, but he was unaware of the incentive and continued to work for the defendant until he was fired before filing a lawsuit to recover the award. The courts determined that because the plaintiff was unaware of the offer, he was not eligible for the award.

Communication of offer

The communication of a proposition is complete, in accordance with Section 4 of the Indian Contract Act of 1872, when it comes to the knowledge of the person to whom it is made. While the communication of an acceptance of a proposal as against the acceptor is complete when it comes to the proposer’s knowledge, the communication of an acceptance of a proposal as against the acceptor is complete when it is put in a course of transmission to him so that it is outside the control of the acceptor.

In the case of Household Fire Insurance Co. V. Grant, the court determined that when an offer is legitimately accepted via letter or another acceptable form of communication, the acceptance is complete and a binding contract is created as soon as the letter is mailed, even if the offeror never receives the letter because it is lost in the mail.

In the case of Entorse Ltd. V. Miles Far East Corporation, the plaintiff was a London-based business that sent the defendant, an American business, a telex offer to sell a certain amount of meat, and the defendant’s business accepted the offer. The question that emerged was when the contract was in effect and which court would have jurisdiction over the subject if there were any legal difficulties. Since a contract is considered to be made in the location where the acceptance is received, or at the location of the offeror, it was concluded that the deal was completed in London.

Revocation of offer

A proposal may be withdrawn at any time until the transmission of acceptance is complete as against the proposer but not later, according to Section 5 of the Indian Contract Act of 1872. This suggests that the transmission of an offer revocation can only be successful if it reaches the offeree before he posts his acceptance and renders it powerless. In the case of Henthorn v. Fraser, the appellant was contacted in the Liverpool office of a building society to negotiate purchasing specific homes from the society. The society offered him the chance to buy for a period of 14 days for 750 Euros. The group withdrew the offer in a letter that was posted the next day between 12 and 1 pm. While the letter of acceptance was posted at roughly 4 p.m. on the same day, the letter of withdrawal did not reach the appellant until after 5 p.m. Since the letter of acceptance arrived after the office had closed for the day, it was opened by the secretary at the society office the next day. Since the appellant had no control over the acceptance at 4 PM and had not yet received the notice of cancellation, it was determined that the contract was legitimate.

A proposal may be withdrawn in the following circumstances:

  • A proposal may be withdrawn by giving the proposee notice of withdrawal in writing.
  • If the time term specified in the proposal has passed, it may be withdrawn; otherwise, if no time period is specified, the proposal will expire after a reasonable amount of time.
  • When the proposer passes away or goes mad, and if the acceptor learns of his passing or sanity before to acceptance.
  • If the acceptor doesn’t satisfy a requirement before accepting the proposal, it might be revoked.

The types of offers

  1. General offer : A generic offer is one that is given to the whole public and does not have any limits on who can take it. The Harbhajan Lal v. Harcharan Lal case, in which the defendant sent out a notice promising a prize of Rs. 500 to anybody who could help him find his missing son after the boy had escaped from his house, is an example of a broad offer. At a train station, the plaintiff discovered the missing son and told the defendant. Due to the fact that the defendant’s announcement was a generic offer that anyone might accept, the plaintiff had already received the award.
  2. Specific offer : A particular offer is one that is given to a certain group of individuals and establishes limitations on the kinds of persons who are permitted to accept it. For instance, X offers to pay Rs. 13 lakh to purchase a car from Y. This is a specific offer that has been made to a particular person, Y, and only Y is eligible to accept it. In the Boulton v. Jones case, the defendant used to do business with Brockle Hurst and sent Hurst an order to buy certain items, but by the time Hurst received the offer, he had already sold his company to Boulton. Without letting Jones know that the company had changed ownership, Boulton took the order and sent the goods to him. When Jones learned that the company had changed ownership, he refused to pay Boulton for the goods because he claimed that Hurst was the person with whom he intended to enter into a contract, not Boulton. Therefore, it was decided that Jones won’t be required to pay Boulton since he made a particular offer to Hurst.
  3. Counter offer : When the offeree rejects the first contract but is prepared to accept the offer after making certain modifications, such as additions or deletions from the original contract, it is said that a counter offer has been made. In this case, the initial offer is declined and cannot be reconsidered later. In such circumstances, both the offeror and the offeree change roles and become the new parties. Only the person that made the first offer has the authority to accept or reject a counteroffer, and a contract is only created if that party does. In the case of Hyde v. Wrench, the defendant offered to the plaintiff to sell the farm he owned for £1,200, but Mr. Hyde rejected the offer. The defendant then made him a second offer to buy the farm for £1,000 while announcing that it would be his last bid for the property. Mr. Wrench rejected Mr. Hyde’s offer of £950 for the property in his letter in response. Following that, Mr. Hyde consented to buy the farm for £1,000, which was the original price. As soon as Mr. Hyde rejected the offer, he made a counter offer, which the defendant did not accept, rendering the initial offer void. As a result, Mr. Wrench refused to sell his property.
  4. Cross offer : When two parties make the exact same offer to each other at the exact same moment, it is said that a cross offer has occurred. Since such an offer is entirely dependent on chance, it seldom occurs in the actual world. There won’t be a contract in this case since it cannot be said that one party’s offer has been accepted by the other. The Hon’ble Supreme Court noted in Bhagwandas Goverdhandas Kedia v. M/S Girdharilal Parshottamdas & Co. and Others (1966 AIR 543) that “the acceptance and such an intimation of acceptance of the offer are both essential to establish a binding contract.” This instance so demonstrates the significance of an offer and acceptance as fundamental components of a contract. Cross offers are thus void as a result. They are never to be thought of as contracts.
  5. Standing offer : If an offer is intended to be valid for a specific period of time and may be accepted at any moment prior to the deadline, it is referred to as a standing offer. It is also known as an ongoing or open offer. In the case of Ramsgate Victoria Hotel Company v. Montefeire, M volunteered to purchase shares in company R on June 8th, and on November 23rd, he got his letter of allotment. M declined to accept the shares because M was allowed to decline the offer since it was not a standing offer and the 5-month timeframe was not a fair one.

Invitation to treat

An invitation to treat is a concept in contract law. It alludes to a request for a party to submit a proposal in order to begin contract discussions. As long as there is no established procedure for determining who may accept, invitations to treat can be anything that is shown to a sizable audience.

Some examples of an Invitation to treat :

  1. Advertisements : Because they lack the crucial details that would transform them into offers, advertisements are often viewed as invitations to treat. When a customer approaches a seller with a purchase proposal, an offer is made. The definition of ads as invitations enables merchants to decline to deal in goods at incorrectly indicated pricing. Because the advertiser is representing (or providing information to) possible consumers and urging them to submit bids to buy the items, an advertising is essentially an invitation to treat. Example : Consider taking a $10 product that is being touted as an invitation to treat up to the counter and preparing to make an offer. If the store staff claims that it is truly $20, you cannot insist that it be sold for $10 because invitations to treat are not legally enforceable.
  2. Auction : Standard auctions may sometimes double as invites to a party. When an object is placed up for auction, the auctioneer is not making a firm offer to sell it to the highest bidder; rather, they are seeking bids from the gathered bidders. The auctioneer has the option of accepting or rejecting a bid made by a bidder.
  3. Displays of goods : Advertisements, catalogues, and things on displays, such as those in store windows, are all frequent instances of invitations to treat. The items that are on display in a store are invitations to treat; the shopkeeper is not making the buyer an offer, only urging them to do so. The shopkeeper either accepts or rejects the customer’s offer to purchase the products.
  4. Tenders : A tender request will be regarded as an invitation to treat if you get one. A request for proposals is often an invitation to treat, and the tender that is presented is the proposal. The request for tenders could, in some circumstances, be considered to be an offer. If the investor says they’ll take the best offer, they have to, and the best offerer and the investor will enter into a contract.


Acceptance is described in Section 2(b) of the Indian Contract Act of 1872 as occurring “when the person to whom the proposition has been made shows his consent thereto. As a result, when accepted, the proposition becomes a promise. According to the definition, acceptance occurs when the offeree accepts the proposition without conditions from the giver. An offer like this becomes a promise if it is accepted. Example: B accepts A’s offer to buy his automobile from him for three lac rupees. This has now been made into a promise.

The suggestion also becomes irrevocable once it is accepted and becomes a proposal. An offer does not constitute a promise, but if it is accepted, a promise is made. A promise is also unrevocable since it binds parties to legal responsibilities. An offer may be withdrawn prior to acceptance. However, once acceptance has been made known, it cannot be changed or retracted.

Who can Accept?

Only the individual to whom an offer is made may accept it in the event of a specific offer. According to the law, C cannot replace B in a contract that A wishes to enter into without A’s permission. Case Law :

Boulton v. Jones

The following were the case’s relevant facts: B, who worked with X as a manager, bought his company. J made an order with X for the provision of specific products because J was owed money by X. Despite the fact that B was not the recipient of the order, he provided the products. J declined to pay B for the products because he wanted to put off his debt against X by getting into a contract with him.

Held: X received the offer, and B did not have the authority to accept it. A generic offer is one that can be accepted by anybody who complies with its conditions.

Legal Requirements for Acceptance / Communication of Acceptance

  1. The acceptance must be acknowledged: In order for an acceptance to be considered genuine, the offeree must not only express their acceptance, but also let the offeror know about it. The acceptance must be communicated explicitly or implicitly. Just accepting something mentally is not acceptance.
  2. Acceptance must be unqualified and unconditional : For an acceptance to be considered genuine, it must be unambiguous, unequivocal, and in line with the offer’s precise conditions. A modest adjustment in an acceptance is not an acceptance and may only be considered a counteroffer (i.e.., original may or may not accept).
  3. Method of approval : According to general guidelines, it must be done in the way that the offeror specifies. If there isn’t a specific way it must be accepted, then it must be in a customary and acceptable way. The acceptance must be communicated explicitly or implicitly. Just accepting something mentally is not acceptance.
  4. It is necessary to express (or) imply acceptance : An acceptance might be communicated verbally or nonverbally. Acceptance that is verbally articulated (spoken or written) is referred to as expressed acceptance. Implied or tacit acceptance is one that is inferred from a person’s behaviour or from the facts of the situation.
  5. Limitation on acceptance : If the offer has a deadline, it must be accepted within that window of time. If the offer does not include a deadline, it must be accepted in a timely manner.

Revocation of Acceptance

Revocation of Acceptance is a word used in law to describe the following :

  1. One offers a proposal.
  2. The same is accepted by the acceptor, who informs the proposer of this.
  3. Before the transmission reaches the proposer, the acceptor withdraws or cancels this acceptance.

Only before the transmission of acceptance is complete as against the acceptor, and not later, is the revocation of acceptance complete. Acceptance can also be revoked verbally or in writing. Before the acceptance reaches the offerer, it must be legally rescinded. Whether it is a revocation of an offer or an acceptance, we must take into account two factors : Timeframe and Completion of Communication.

Different types of agreements

  1. Valid agreement : An agreement that, if it were to be legally enforced, would transform into a contract and bind the parties to its terms is said to be legitimate. Section 2(e) of the Indian Contract Act of 1872 defines an agreement (the Act). Every promise and every collection of promises that serve as reciprocal consideration constitute an agreement, according to this statement. As a result, a legitimate agreement turns into a contract rather frequently. The following are the prerequisites for a legal agreement:  • The agreement must include a legitimate consideration. • According to Sections 11 and 12 of the Act, the parties must be competent to enter into a contract. • The parties’ consent is unrestricted and uninfluenced. • The agreement’s goal is legitimate.
  2. Void agreement : A void agreement has been defined under Section 2(g) of the Indian Contract Act 1872,It states that “An agreement not enforceable by law is considered to be invalid / Void.” A formal contract that is effectively invalid and unenforceable from the moment it is established is known as a void contract. A void contract is different from a voidable contract because voidable contracts have the potential to become legally enforceable if underlying contractual flaws are fixed, but void contracts were never legally legitimate to begin with and will never be enforced in the future. Contracts that are invalid and contracts that are voidable can both be annulled for related grounds.
  3. Voidable agreement : An agreement that can be terminated by any party for a variety of legal grounds is referred to as being voidable. When a law makes such a deal enforceable, it will be referred to as a contract that any side may choose to nullify. According to Section 19 of the Act, a party has the right to terminate the agreement as and when it sees proper if its consent was obtained by fraud, misrepresentation, or coercion. Similar to this, under Section 19A, a party that consented to a contract under duress has the right to cancel the agreement and the right to have the deal totally annulled. According to Section 53 of the Act, “when a contract contains] reciprocal promises, and one party thereto prevents the other from performing his promise, the contract becomes voidable at the option of the party so prevented; and he is entitled to compensation from the other party for any loss which he may sustain in consequence of the non-performance of the contract.” In addition to the aforementioned scenarios, the agreement may be voidable at the promisee’s discretion if the promisor fails to fulfil his obligation under the terms of the agreement, whereby time is a necessary prerequisite.
  4. Illegal / Unlawful agreements : Any agreements that violate the terms of the applicable Indian law are deemed to be unlawful. The agreement shall be void if any of the two circumstances—illegal object or unlawful consideration—occurs. Even if an agreement’s provisions force the parties to commit a crime, they are nonetheless unlawful.

 The distinction between unlawful and invalid agreements is that the former are clearly against the law’s provisions, but the latter are not necessarily against the laws now in effect. To put it another way, every void agreement is also unlawful, but not all void agreements are.

Standard form of Contract

The Standard Form Contracts are standardised contracts that have a lot of small print terms and conditions that limit and frequently remove responsibility. This presents a singular chance for the large corporation to take advantage of the individual’s vulnerability by imposing terms on him that frequently resemble a kind of private law and may even go so far as to release the business from any obligation under the contract. The courts are now in charge of fighting abuse. The courts have had an extremely tough time helping the less powerful party.

A standard form contract is an agreement between two parties that forbids discussion and is either accepted or rejected. A boilerplate contract or adhesion contract may also be used to describe it. It is frequently an agreement reached between parties with different negotiating power. A legally binding agreement between two parties to accomplish something is a sort of contract in which one party has all the negotiating power and utilises it to craft the agreement exclusively in favour of themselves.

In layman’s words, a standard kind of contract is one that is “take it or leave it.” In this sort of contract, the other party is not in a position to negotiate with the terms and conditions set out in it; instead, they only have the choice to enter into the contract or forget about it. Thus, this form of agreement has an impact on the fundamental right to bargain. These contracts are frequently referred to as adhesion contracts or boilerplate contracts. The most typical types of standard contracts include those with insurance companies, those for buying a washing machine, those for setting up your e-mail, those with social networking sites, etc.

Legal Status of Standard form of Contract : The Standard form of contract is a type of contract that is governed by the provisions established for general contracts in the Indian Contract Act 1872, hence there is no explicit distinction between Standard form of contract and general contracts in the Indian contract system. These types of contracts have grown frequent and are carried out in great numbers these days as a result of significant industrial growth. This prompted calls for the creation of comprehensive standards on standard form of contract in order to safeguard the interests of the less powerful party. However, the judiciary is empowered in many nations to uphold the natural justice concept and provide fair justice to the weaker side, much as it is in Israel, where some rules are subject to judicial review. A few legislatures, in addition to courts, have passed legislation governing this type of contract. There are certain laws that appear to be illogical, such as section 3 of the Unfair Contract Terms Act of 1977 in the United Kingdom, which restricts the capacity of drafters to provide standard contract forms to consumers.

Online Contract

A legal contract that has been developed, agreed upon, and signed online with browser-based software is known as an online contract. Online contracts are a practical alternative for growing organisations since they can be completed using a number of devices and signed electronically, unlike traditional contracts that need paper and a wet ink signature.

Online contracts have become more significant as a result of the development of the internet and electronic commerce, particularly in terms of their scope and variety. A contract that is created, signed, and executed electronically, typically through the internet, is known as an online contract or an electronic contract. An online contract is theoretically very similar to a typical paper-based contract and is written in a similar way. In the event of an online contract, the seller who want to sell their goods will inform the potential customers about their goods, pricing, and terms for purchasing them. To indicate their approval of the conditions offered by the seller, purchasers who are interested in purchasing the items can either think about, click on the “I Agree” or “Click to Agree” option, or they can sign electronically. Electronic signatures can be completed in a variety of methods, such as by typing the signer’s name in the designated signature box, copying and pasting the scanned version of the signature, or selecting an appropriate choice. The transaction can be finished after the terms have been agreed upon and the payment has been made. In essence, servers facilitate communication between two computers. The purpose of the online contract is to aid individuals in developing and putting into practise commercial contract policies for businesses that are conducted online. For the sale, procurement, and delivery of goods and services to clients as well as business partners, Online Contract is modelled.

Online contracts may be broadly divided into three types: clickwrap contracts, shrink wrap contracts, and browse contracts. Employment contracts, contractor agreements, consultant agreements, sale re-sale and distributor agreements, non-disclosure agreements, software development and licence agreements, and source code escrow agreements are among the other types of online contracts. Although we frequently encounter these online contracts, most of us are unaware of the legal complexity associated with them; using an online contract involves several technological and legal problems.


One way to determine if a two-party agreement exists in contract law is to examine the offer and acceptance. An offer is a declaration by one party to another that they are ready to settle on certain conditions. A contract will be created if there is either an express or inferred agreement. When the offeree informs the offeror that their offer has been accepted, a contract is said to have been formed.

When the person to whom the offer is made becomes aware of it, the communication of the offer is complete. Likewise, the communication of the acceptance is complete when it is put in motion to be transmitted to the offeror. As a result, an offer and an acceptance are necessary components of a contract, and in both cases, they should be made of one’s own free will and with the goal of reaching a binding agreement.


Indian Contract Act, 1872 | Bare Act

Avtar Singh’s, Contract and Specific Relief

Institute of Chartered Accountants of India


ICAI – The Institute of Chartered …



Leave a Reply

Avatar placeholder

Your email address will not be published. Required fields are marked *