The Indian Contract Act, 1872, governs how agreements become legally binding contracts in India. It defines critical terms such as "contract" (an agreement enforceable by law) and outlines requirements like free consent and lawful object. Legal maxims, such as Quid Pro Quo (something for something), complement these definitions by providing foundational principles that courts use to interpret contracts. This article provides a detailed glossary of legal contract terminology as defined in the Act, supplemented by legal maxims that guide its interpretation, offering a robust resource for students, professionals, and laypersons.
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How to Use Legal Contract Terminology
This glossary is designed for students, professionals, or anyone seeking to understand contract terminology under Indian law. Each term is defined as per the Act, ensuring accuracy. For practical applications, cross-reference with the Act’s full text or seek legal advice.
General Definitions (Section 2)
Contract: An agreement enforceable by law [Section 2(h)].
Agreement: Every promise and every set of promises forming the consideration for each other [Section 2(e)].
Consideration: When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise [Section 2(d)].
Promise: A proposal, when accepted, becomes a promise [Section 2(b)].
Proposal: When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal [Section 2(a)].
Promisor and Promisee: The person making the proposal is called the "promisor," and the person accepting the proposal is called the "promisee" [Section 2(c)].
Reciprocal Promises: Promises which form the consideration or part of the consideration for each other [Section 2(f)].
Void Agreement: An agreement not enforceable by law is said to be void [Section 2(g)].
Voidable Contract: An agreement enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others [Section 2(i)].
Void Contract: A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable [Section 2(j)].
Key Concepts for Valid Contracts
The Indian Contract Act, 1872, outlines essential elements for a contract to be valid and enforceable. These concepts, including offer, acceptance, consideration, and consent, form the foundation of legally binding agreements under the Act.
Offer: Synonymous with "proposal" [Section 2(a)].
Acceptance: Synonymous with "acceptance of proposal" [Section 2(b)].
Consideration: As defined in Section 2(d).
Capacity: Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject [Section 11].
Free Consent: Consent is said to be free when it is not caused by coercion [Section 15], undue influence [Section 16], fraud [Section 17], misrepresentation [Section 18], or mistake [subject to Sections 20, 21, 22].
Lawful Object and Consideration: The consideration or object of an agreement is lawful unless it is forbidden by law, or is fraudulent, or involves injury to the person or property of another, or is immoral, or is opposed to public policy [Section 23].
Not Expressly Declared to be Void: Refers to agreements that are not void under Sections 24 to 30 (e.g., agreements without consideration, agreements in restraint of marriage, trade, or legal proceedings).
Other Important Definitions
This section clarifies critical terms under the Indian Contract Act that shape the validity and enforceability of contracts. Definitions like consent, coercion, and fraud provide clarity on factors affecting contractual agreements.
Consent: Two or more persons are said to consent when they agree upon the same thing in the same sense [Section 13].
Coercion: 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 whatsoever, with the intention of causing any person to enter into an agreement [Section 15].
Undue Influence: 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 [Section 16].
Fraud: Means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract: (1) suggestion as a fact of that which is not true; (2) active concealment of a fact; (3) a promise made without any intention of performing it; (4) any other act fitted to deceive; (5) any act or omission declared fraudulent by law [Section 17].
Misrepresentation: Means and includes (1) the positive assertion of that which is not true, though believed to be true; (2) any breach of duty without intent to deceive; (3) causing a party to make a mistake as to the substance of the agreement [Section 18].
Contingent Contract: A contract to do or not to do something, if some event, collateral to such contract, does or does not happen [Section 31].
Special Contracts
Special contracts under the Indian Contract Act govern specific types of agreements with unique characteristics. These include contracts of indemnity, guarantee, bailment, pledge, and agency, each with distinct legal implications.
Contract of Indemnity: A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person [Section 124].
Contract of Guarantee: A contract to perform the promise, or discharge the liability, of a third person in case of his default.
Surety: The person who gives the guarantee.
Principal Debtor: The person in respect of whose default the guarantee is given.
Creditor: The person to whom the guarantee is given [Section 126].
Bailment: The delivery of goods by one person (bailor) to another (bailee) for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them [Section 148].
Pledge: The bailment of goods as security for payment of a debt or performance of a promise.
Pawnor: The bailor in a pledge.
Pawnee: The bailee in a pledge [Section 172].
Agent and Principal: An agent is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the "principal" [Section 182].
Legal Maxims Relevant to Indian Contract Act, 1872
Following are some important legal contract terminologies in contract law:
Ex Dolo Malo Non Oritur Actio: An action cannot arise from fraud. It prevents enforcement of contracts induced by fraud (Section 17, voidable under Section 19).
Ex Nudo Pacto Non Oritur Actio: A bare promise without consideration cannot be enforced. It aligns with Section 25, requiring consideration for a valid contract, with exceptions.
Caveat Emptor: Let the buyer beware. It means that the buyer must ensure goods’ quality in sale contracts, unless warranty or fraud exists.
Respondeat Superior: Let the master answer. It means that the employer is liable for employee’s wrongful acts within employment scope, relevant in agency contracts.
Qui Facit Per Alium Facit Per Se: He who acts through another does the act himself. This maxim supports vicarious liability in agency relationships (Section 182).
Delegatus Non Potest Delegare: A person cannot delegate power unless authorized. It ensures obligations are performed by the authorized party, unless delegation is permitted.
Quid Pro Quo: Something for something. It emphasizes consideration as essential for a valid contract (Section 2(d)).
Actio Personalis Moritur Cum Persona: A personal right of action dies with the person. This maxim says that personal claims end with death, but contractual rights generally pass to legal representatives.
Vigilantibus Non Dormientibus Jura Subveniunt: The law assists those who are vigilant, not those who sleep on their rights. It stresses timely action in enforcing contractual rights, especially under limitation periods.
Qui Sentit Commodum Debet Et Onus: He who enjoys the benefit ought also to bear the burden, which means that one benefiting from a contract must bear associated responsibilities.
Summary
The terminology forms the backbone of contract law, ensuring agreements meet legal standards like offer, acceptance, and consideration. Maxims provide interpretive clarity; for instance, Quid Pro Quo underscores the necessity of consideration, while Caveat Emptor guides sale transactions. These principles are applied in judicial decisions, academic studies, and contract drafting, ensuring fairness and legal enforceability.
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Legal Contract Terminology: FAQs
Q1. What are the terms in a contract?
Terms are the provisions or conditions in a contract that define the rights, obligations, and responsibilities of the parties. They include express terms (explicitly stated) and implied terms (inferred by law or custom).
Q2. What are the 5 C's of a contract?
The 5 C's are: Consent: Agreement on the same terms (Section 13), Capacity: Parties must be competent (Section 11), Consideration: Something of value exchanged (Section 2(d)), Certainty: Terms must be clear (Section 29) and Compliance: Must align with legal requirements (Section 23).
Q3. What are the 7 essential elements of a contract?
Offer: A clear proposal (Section 2(a)) Acceptance: Unconditional agreement to the offer (Section 2(b)), Consideration: Value exchanged (Section 2(d)), Capacity: Parties must be competent (Section 11), Free Consent: No coercion, fraud, etc. (Section 14), Lawful Object: Purpose must be legal (Section 23) and Not Expressly Void: Not prohibited by law (Sections 24–30).
Q4. What are the 4 terms of a contract?
Contracts typically have: Express Terms: Explicitly agreed conditions, Implied Terms: Assumed by law or custom, Conditions: Essential terms; breach voids contract and Warranties: Secondary terms; breach leads to damages.
Q5. What are the 4 C's of contracts?
The 4 C's are: Consent: Mutual agreement (Section 13), Capacity: Legal competence (Section 11), Consideration: Value exchanged (Section 2(d)) and Clarity: Clear and certain terms (Section 29).
