Formation of Contract

It gives information about how contracts are formed. What are the offers, agreements, promise, enforceability according to Indian Contract act 1872.

1. Legal Aspects Of Business Formation of Contract By- Pinak Deshpande Section C

2. How Contracts Are Formed? To understand the Formation of Contracts we have to understand the following things: Offer Acceptance Promise Agreement Enforceability

3. What is an Offer? Making an offer is the first step in the formation of contract. Offer can be accepted or rejected. Counter offer According to Section 2(a) in The Indian Contract Act, 1872 “ When one person signifies to another his willingness to do or to abstain (constrain or avoid) from doing anything, with a view to obtaining the assent (approval) of that other to such act or abstinence, he is said to make a proposal”

4. Acceptance and Promise Acceptance occurs when the party who was made an offer accepts it without qualification . Acceptance can be orally or verbally . The  Indian Contract Act 1872  defines acceptance in  Section 2  ( b ) as “When the person to whom the proposal has been made signifies his assent there to , the offer is said to be accepted. Thus the proposal when accepted becomes a promise.” 

5. Agreement An agreement occurs when two parties meet upon a common purpose, i.e. they mean the same thing in the same sense at the same time. The meeting is called consensus-ad-idem, i.e. consent to the matter. In its  section 2  ( e ), the  Act  defines the term agreement as “every promise and every set of promises, forming the consideration for each other”. Agreement= Offer + Acceptance

6. Enforceability Enforceability means creation of some legal obligations. An agreement is said to be enforceable only after it follows all the requirements under section 10 of Indian Contract Act. All agreements are not Contracts but all contracts are agreement

7. Formation of Contract Section 2(h) in The Indian Contract Act, 1872 “ An agreement enforceable by law is a contract” Section 10  of the  Indian Contract Act  says, “all agreements are contracts if they are made by the free consent of the parties competent to  contract , for a lawful consideration and with a lawful object and are not expressly declared to be void ”. Contract= Agreement + Enforceability