Section 2 The Indian Contract Act, 1872
⚖️ Section 2 – Definitions
The Indian Contract Act, 1872
Section 2 of the Indian Contract Act, 1872 provides definitions of the essential terms used throughout the Act. These definitions lay the foundation for understanding what constitutes a valid contract.
📘 Text and Explanation of Key Clauses in Section 2:
Section 2: In this Act, the following words and expressions are used in the following senses, unless a contrary intention appears from the context:
🟢 (a) Proposal
"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."
📌 A proposal is the first step toward forming a contract – an offer.
🟢 (b) Promise
"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 an offer is accepted, it becomes a promise.
🟢 (c) Promisor and Promisee
"When the proposal is accepted, the person making the proposal is called the 'promisor', and the person accepting the proposal is called the 'promisee'."
🟢 (d) Consideration
"When, at the desire of the promisor, the promisee or any other person has done or abstained from doing... such act or abstinence or promise is called a consideration for the promise."
📌 This is what each party gives or does in return – something of value.
🟢 (e) Agreement
"Every promise and every set of promises, forming the consideration for each other, is an agreement."
📌 Agreement = Offer + Acceptance + Consideration
🟢 (f) Contract
"An agreement enforceable by law is a contract."
📌 All contracts are agreements, but not all agreements are contracts.
🟢 (g) Void Agreement
"An agreement not enforceable by law is said to be void."
📌 No legal effect.
🟢 (h) Contract which is voidable
"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(s), is a voidable contract."
📌 Example: A contract formed by coercion or misrepresentation.
🟢 (i) Void contract
"A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable."
📌 A valid contract may become void due to impossibility, illegality, etc.
🧠 Summary:
| Term | Meaning |
|---|---|
| Proposal | Offer to do or not do something |
| Promise | Accepted proposal |
| Promisor | One who makes the promise |
| Promisee | One who accepts the promise |
| Consideration | The value exchanged in a contract |
| Agreement | Promise + Consideration |
| Contract | Legally enforceable agreement |
| Void Agreement | Not enforceable from the beginning |
| Voidable | Enforceable at the option of one party |
| Void Contract | Initially valid, but later becomes unenforceable |
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