Introduction:
Section 2 of the Indian Contract Act,1872, defines the basic and fundamental provisions for forming contracts. We know that contracts are the heart of every business also create a legal relationship between the contracting parties. In this article, we discuss and explore Section 2 of the Indian Contract Act,1872, with related examples. So, please, stay tuned and read below:
Key definition of section 2 of the Indian Contract Act, 1872
Section 2 of the Indian Contract Act is an interpretation clause. It defines the deep meaning of proposal, promise, promisor, promisee, consideration, contract, agreement, etc.
Let’s understand with examples:
Proposal – Offer (Section 2(a))
The proposal is also known as an offer according to section 2(a) of the ICA. When one person makes an offer to another for their willingness to do or not do something. Let’s understand with an example: When Mr X offers to Mr Y to sell his flat for Rs. 2,00,000, it is called a proposal. Every contractual relationship begins with a proposal; it must be clear and communicate with another.
Promise – (Section 2(b))
Promise is defined under section 2(b) of the Indian Contract Act,1872. According to that, when one person who made a proposal is made to someone who accepts it, then the proposal becomes a promise.
Let’s understand with an example:
Mr A offers to sell his house to Mr B for Rs. 2,00,000/-, and Mr B accepts this offer; it becomes a promise.
Promisor and Promisee (Section 2(c))
A person who makes a proposal is called a promisor, and a person who accepts the offer is called a promisee.
Consideration (Section 2(d))
The consideration is the heart of an agreement. In simple terms, we can explain that consideration means each party gives something and, in return, receives something. It is an exchange of value. It can be a term of monetary, services, promise or future promises, depending upon the offer and acceptance.
Agreement (Section 2(e))
An agreement is a written document that is made between the promisor and promisee. They set the terms and conditions related to the products or services, and exchange the value or consideration in written form.
Void agreement (Section 2(g))
Void agreement refers to a type of document that cannot be enforced by law.
Let’s understand with an example:
Mr A enter into an agreement with Mr B to bring water from the Moon, and he is willing to pay Rs. 1,00,000/- for this. It is an impossible and unenforceable agreement; hence, it is void in toto.
Contract (Section 2(h))
An agreement that is enforceable by law is a contract. If there is no value of such an agreement that cannot be enforced by law, it is just a promise.
Voidable contract (Section 2(I))
An agreement is enforceable by one party, but the choice for another party, either to accept or not, is a voidable agreement.
Let’s understand with an example:
A contract signed without free consent, it can be voidable by the injured party.
Void Contract (Section 2(j))
A contract that is valid in the primary stage, but in the latter stage it becomes unenforceable, is void.
Let’s understand with an example:
Mr A enters into a contract to export goods; it becomes void if the government bans the export of such goods.
A contract is not just a legal document; it includes trust, action, and mutual consent of the parties involved. It also relay in professional and personal promises.
