The Indian Contract Act, 1872, lays down the legal framework governing contracts in India. The Act defines a contract as an agreement enforceable by law. But what exactly is an agreement under the Indian Contract Act? In this article, we will explore the meaning and essential elements of an agreement under the Act.
Definition of Agreement
The term agreement is defined under Section 2(e) of the Indian Contract Act, 1872, as “Every promise and every set of promises, forming the consideration for each other, is an agreement.” In simple terms, an agreement is a promise or set of promises made between two or more parties to do or abstain from doing something that is legally enforceable.
Essential Elements of an Agreement
To be legally binding, an agreement must meet certain essential elements. These are:
1. Offer and Acceptance: An agreement begins with an offer made by one party to another, which is followed by the acceptance of that offer by the other party. For instance, A offers to sell his car to B for Rs. 10 lakh. B accepts the offer. Thus, an agreement is formed.
2. Intention to Create Legal Relations: The parties to an agreement must intend to create a legally binding relationship. If not, the agreement will be considered a social or moral agreement, which is not enforceable by law.
3. Lawful Object and Consideration: The object of the agreement must be lawful, and there must be a consideration for both parties. Consideration is the value or benefit that both parties receive from the agreement. It can be in the form of money, goods, services, or a promise of future action.
4. Capacity of Parties: The parties entering into the agreement must have the capacity to do so. This means that they must be of legal age, of sound mind, and not disqualified from contracting by any law.
Any agreement that lacks any of the above essential elements will not be legally enforceable under the Indian Contract Act.
Types of Agreements
Under the Indian Contract Act, agreements are broadly classified into two types:
1. Express Agreement: An express agreement is one where the terms and conditions are explicitly stated and agreed upon by the parties involved. For example, a written agreement for the sale of a property.
2. Implied Agreement: An implied agreement is one where the terms and conditions are not explicitly stated but are inferred from the actions or conduct of the parties involved. For instance, a person who sits in a barber`s chair implies an agreement to pay for the haircut.
In conclusion, an agreement is a promise or set of promises made between two or more parties that are legally enforceable. To be legally binding, an agreement must meet certain essential elements such as offer and acceptance, intention to create legal relations, lawful object, and consideration, and capacity of parties. The Indian Contract Act lays down the legal framework for agreements in India and provides remedies for breach of contract.