LAW OF CONTRACT
INTRODUCTION
An agreement is a promise
made by two or more parties
where they have agreed to
carry out the obligation
contained in the promise
The promisor promises to carry
Introduction
out his promise to the promisee
All contracts are agreements
but not all agreements are
contracts
Section 2 (h) of the Contracts
Act 1950 defines a contract as
‘an agreement enforceable by
law’
Definition of contract
• A contract is an agreement enforceable
by law
• i.e. the law will help the parties to enforce
the contract
• If one party refused or failed to perform his
promise, the other party may take legal
action in court
• The court will order the party in default to
perform the contract or face the legal
sanctions i.e. punishment such as payment
of compensation, imprisonment, seizure of
property, bankruptcy etc.
• An agreement which is not a
contract is not legally binding
The effect
between the parties
• Therefore, if any dispute or
breach occurs, the parties
cannot bring the matter to court
• The parties cannot sue in court
• They will have to settle the
matter outside the court, among
themselves
• In order to bring the matter to
court, the agreement must be
upgraded into a contract
5
ELEMENTS OF CONTRACT
INTENTION TO
OFFER ACCEPTANCE CONSIDERATION CREATE LEGAL
RELATION
CAPACITY TO
FREE CONSENT CERTAINTY LEGALITY
CONTRACT
Basic
elements of
agreement
Basic elements
of agreement
Offer + Upgrade to The other 6
Agreement
Acceptance contract elements