Indian Contract Act 1872: Agreement, Contract, Offer and Acceptance

 What is an Agreement?

When a person to whom proposal is made signifies his assent thereto, the proposal is set to be accepted. An agreement comes into the existence when one party makes the proposal or offer to the other party and the other party signifies his assent thereto.

Agreements which are not contracts

1.  Agreements relating to social matters.
2. Domestic arrangements between husband and wife.
3. Past voluntary services.

Offer + Acceptance = Agreement

What is an Contract?

Section 2(h) of Indian Contract Act, 1872, defines contract as an agreement enforceable by law. 

According to Salmond, "A contract is an agreement creating and defining obligations between the parties."

Agreement + Enforeceability = Contract

 Essential elements of a Valid Contract

1.  At least 2 parties involved.
2.  Agreement.
3. The agreement is supported by a lawful consideration. 
4. The parties to the contract are legally capable of contracting. 
5. Genuine consent between the parties.
6. The object and consideration of the contract is legal.
7. The terms of the contract are certain.
8. The agreement is capable of being performed. 

                                

 What is an Offer?

An offer is proposal by one person whereby he expresses his willingness to enter into a contractual obligation in return for a promise, act or forgiving.

Rules governing Offer 

1. The offer must be clear, definite, complete, and final.
2. The offer must be communicated to the offeree.
3.  Communication of an offer maybe made by expressed words or it maybe in implied by conduct.
4. Communication of the offer maybe general or specific.

Lapse of Offer

1. If it is not connected within the specified time or within a reasonable time.
2. If it is not accepted in the mode prescribed or if no mode is prescribed in some usual and reasonable manner.
3. The offeree rejects it.
4. Either the offeree or offerer dies before acceptance.
5. If the offeree makes a counter offer.

 Revocation of Offer

An offer may be  revoked  by the offerer anytime before acceptance. Revocation must be communicated to the offeree. The revocation must reach the offeree before he sends out the acceptance.

Acceptance

Acceptance is the act of assenting by the offeree to an offer.

Rules governing acceptance

1. Acceptance maybe expressed or implied.
2. If a particular method of acceptance is prescribed, the offer must be accepted in a prescribed manner.
3. Acceptance must be unqualified and absolute and must correspond with all the terms of the offer.
4. A counter offer or conditional acceptance operates as a rejection to the offer and causes it to lapse.
5. Acceptance must be communicated to the offerer.
6. Near silence on part of the offeree does not amount to acceptance.
7. If the offer is one which is to be accepted by being active upon, no communication of acceptance is necessary unless communication is stimulated for in the offeree itself.
8. Acceptance must be given within a reasonable time and before the offer is revoked or before it lapses.   

NOTE: 

1.   Expressed- Through words, oral or written.
2.  Implied- Through conduct, by behavior.
3. General- World at large, no specific party involved.
4.  Specific- Specific party involves.