Indian Contract Act, 1872 - Section 2 - Definitions

Section 2 - Interpretation clause   

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;

1. Thus there are three essentials of a proposal or offer:

• It should be communicated to other party as per Section 3.
• There must be two persons.
• The expression must be made in view of obtaining assent from other party.

(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;

• When proposal is made it leads to assent from other party i.e. assent from promisee.
•  After a proposal is accepted, it becomes a promise.

(c) The person making the proposal is called the "promisor", and the person accepting the proposal is called the "promisee";

• Promisor has synonyms as offeror or proposor. The synonyms of promisee are offeree or acceptor.

(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;

1. An agreement made without consideration is void unless as per Section 25: -

• It is made out of natural love and affection between the parties standing in near relationship. 
• Compensation for past voluntary services
• Promise to pay time barred debt

(e) Every promise and every set of promises, forming the consideration for each other, is an agreement;

1. Thus it is clear from this definition that a 'promise' is an agreement.

• When proposal is made it leads to assent from other party i.e. assent from promisee.
•  After a proposal is accepted, it becomes a promise.
• And also there should be at least two persons. There must be two or more persons to make an agreement because one person cannot inter into an agreement with himself.
• Consensus-ad-idem. Both the parties to an agreement must agree about the subject matter of the agreement in the same sense and at the same time.

(f) Promises which form the consideration or part of the consideration for each other are called reciprocal promises;

• In a contract, the promisor and the promisee both undertake certain obligations towards each other. These obligations can also be in the form of a reciprocal promise or a promise in exchange of a promise. The Indian Contract Act, 1872, provides for the law on reciprocal promises in Sections 51-58. We will look at the provisions of each of these sections in detail.

(g) An agreement not enforceable by law is said to be void;

• For instance, an agreement by a minor has been held to be void.  Section 24 to 30 of the Indian Contract Act 1872, make a specific mention of agreement which are void. 

(h) An agreement enforceable by law is a contract;

• Indian Contract Act, Section 2(h): - it says that contract is agreement enforceable by law. If an agreement is enforceable by law then it is CONTRACT, otherwise merely an agreement.

(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;

• Thus, a voidable contract is one that is enforceable by law at the option of one of the parties. Until it is avoided it is a valid contract.

(j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

• Void contracts: The word ‘void’ means ‘not binding in law’. Accordingly, the term ‘void contract’ implies a useless contract that has no legal effect at all. A contract which ceases to be enforceable by law because void, when of, ceased to be enforceable.

Note: In this blog the highlighted part is original bare act part while rest is explanation.

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Index of Indian Contract Act, 1872. 

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