All Contracts Are Agreements but All Agreements Are Not Contract

2212 WordsJan 15, 20129 Pages
LAW OF CONTRACT The Law of Contract is that branch of law which determines the circumstances in which promise made by the parties to a contract shall be legally binding on them. All of us enter into a number of contracts everyday knowingly or unknowingly. Each contract creates some right and duties upon the contracting parties. Indian contract deals with the enforcement of these rights and duties upon the parties. Indian Contract Act, 1872 came into effect from 1st September, 1872. It extends after independence to whole Pakistan and known as “Contract Act, 1872”. Contract law is based on the principles expressed in Latin phrase; “PACTA SUNT SERVANDA”. The meaning of this phrase is “agreements to be kept”, but more literary means “PACTA”…show more content…
Agreement not declared void or illegal: Agreements which have been expressly declared void or illegal by law are not enforceable at law; hence does not constitute a valid contract. Certainty and possibility of performance: The terms of agreement must be certain and not vague. If it is not possible to ascertain the meaning of the agreement, it is not enforceable at law. Also, agreements to do impossible acts cannot be enforced. Legal formalities: A contract may be oral or in writing. If, however, the law requires for a particular contract, it should comply with all the legal formalities as to writing, registration and attestation. 6 – Agreement Is An Essential Of A Valid Contract: To constitute a contract there must be an agreement. 7 – Explanation of the Agreement: An agreement is composed of two elements—offer and acceptance. The party making the offer is known as the offeror, the party to whom the offer is made is known as the offeree. Thus, there are essentially to be two parties to an agreement. They both must be thinking of the same thing in the same sense. In other words, there must be consensus-ad-idem (meeting of minds). Example: Thus, where ‘A’ who owns 2 cars x and y wishes to sell car ‘x’ for Rs. 30,000. ‘B’, an
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