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Basics of Indian Contract Act, 1872

Indian Contract Act 1872 defines contract as "An agreement enforceable by law"

According to Section 10 of the Contract Act "All agreements are contract if they are made by free consent of the parties competent to contract,  for a lawful consideration and with a lawful object, and are not hereby expressly declared as void"

Hence the important elements of a valid contract are :

  • Free consent : which means consent should not be obtained by coercion, undue influence, fraud or misrepresentation.
  • Competent parties : i.e a person of unsound mind or a minor cannot be a party in the contract.
  • Lawful consideration : example if a person enters into a contract to sell smuggled goods then the contract is void.
  • Lawful object : example a and b enters into a contract for the division of gains acquired or to be acquired by fraud.
  • The agreement should not be expressly declared as void example agreement in restraint of marriage.

Important Sections

Section 2(i)
An agreement which is enforceable by law at the option of one or more parties thereto, but not at the option of other or others, is a voidable contract. Example; a contract done by coercion is voidable at the option of the coerced party.


Section 2(j)
A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.


Section 15
Coercion is defined as committing or threatening to commit, any act Forbidden by the Indian Penal Code or the unlawful detaining or threatening to detain any property to the prejudice of any person, with the intent of causing any person to enter into an agreement

Note : it is a material whether Indian Penal Code is or is not in force at the place where coercion is employed.

Threat to commit suicide also amounts to coercion.


Section 16
A contract is said to be induced by 'undue influence' where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.

The burden of proving that such contract was not induced undue influence shall be upon the person who is in a position to dominate the will of the other.


Section 17
Fraud means and includes any of the following acts committed by a party to a contract, or by his agent with the intent to deceive other party thereto or his agent, or to induce him to enter into the contract. 

I hope I have clearly explained the basics of Contract Act if you have any queries, write down in the comment section below.


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