Understanding Section 2 of the Indian Contract Act, 1872

Understanding Section 2 of the Indian Contract Act, 1872

Contracts form the backbone of business and legal relationships. But have you ever wondered how the Indian Contract Act defines a contract? Let’s simplify Section 2 of the Indian Contract Act, 1872, with relatable examples:-

1. Proposal (Offer)-(Section 2(a)

When one person expresses a willingness to do or abstain from doing something to get another’s assent, it’s a proposal. Example: “I’ll sell my car to you for Rs 3,00,000.” That’s a proposal!

2. Promise-(Section 2(b)

When the person to whom the proposal is made accepts it, the proposal becomes a promise. Example: “Yes, I’ll buy your car for Rs 3,00,000.” Now we have a promise!

3. Promisor & Promisee-(Section 2(c)

The person making the proposal is the promisor, and the one accepting it is the promise.

4. Consideration-(Section 2(d)

This is the essence of the agreement—what each party gives or does in return.
Example: If I deliver a product, and you pay me Rs 10,000 for it, the product and the payment are considerations for each other.

5. Agreement- (Section 2(e)

Every set of promises that forms the consideration for each other is an agreement.

6. Void Agreement- (Section 2(g)

An agreement not enforceable by law is void.
Example: “I’ll pay you Rs 1,00,000 if you bring rain by dancing.” Impossible and unenforceable—hence void!

7. Contract- (Section 2(h)

An agreement enforceable by law is a contract. Without legal enforceability, it’s just a promise!

8. Voidable Contract- (Section 2(I)

An agreement enforceable by one party but not the other is voidable.
Example: A contract signed under coercion can be voided by the victim.

9. Void Contract- (Section 2(j)

A contract that was valid but later becomes unenforceable is void.
Example: A contract to export goods becomes void if the government bans such exports.

Contracts are not just legal Paper—they govern the trust, actions, and mutual respect in professional and personal commitments.