Meaning and Nature of Contract

Meaning and Nature of Contract


The term contract is not a recent invention; rather, it is a centuries-old concept with roots in Ancient Civilization. The history of the contract has been heavily impacted by Roman thinking, with Plato being one of the philosophers who paid considerably greater attention to the basic categories of contract cancellation, which still exist today. The general kind, stipulatio, used to require various in order to generate an obligation or it could have been written down in a contractus litteris, and the Roman law has identified the discrete categories of contractual transactions that have their own requisites that must be fulfilled in order to get the promises enforced. The English judicial system did not exist in large numbers throughout the Middle Ages. There used to be a jury system in place at the time. Following the Industrial Revolution, English courts were increasingly familiar with the concept of contract freedom. As a result, in the twentieth century, legislation began to change the attitude of the courts, resulting in the implementation of contract law.

Contracts have long played an important role in our lives. Hundreds of times a year, whether deliberately or unknowingly, we enter into a contract. We enter into an arrangement with the store even when we buy candies. We engage into a contract every time we go to a restaurant or hire a cab. Despite the fact that contract law evolves throughout time, contract jurisprudence stays consistent. We all understand what a contract is, yet new scenarios happen every day, prompting the issue of whether this specific arrangement should be considered a contract or not. 

Contract Defined:

A contract is defined as a legally binding agreement. A contract is made up of reciprocal (mutual) promises made by the two parties. In the case of a contract, each party is legally obligated to keep their commitment. When a contract meets the legal conditions, it is legally enforceable.

An agreement is a pledge made between two parties that creates legal duties for both parties. Every promise and every group of promises comprising the consideration for each other constitutes an agreement, according to section 2(e) of the Act. Both parties make pledges as part of an agreement. All agreements are contracts if they are made with the free assent of parties competent to contract, for a legal consideration, and for a legal purpose, and are not expressly declared void.

For example, ‘A’ promises to give his watch to ‘B,’ in exchange for ‘B’ promising to pay ‘A’ Rs. 2,000. ‘A’ and ‘B’ are supposed to have reached an agreement.

A contract could be a promise to do something or a pledge to refrain from doing something. A contract involves the consent of two or more people, with one of them usually making an offer and the other accepting it. A contract is a pact or series of commitments that result in legal responsibilities that can be enforced or recognised.

According to section 2(h) of the Indian Contract Act, 1872, contract is an agreement enforceable by law. When an agreement meets all of the criteria of a valid contract listed in Section 10, it becomes a contract.

Contract is formed in 3 steps given below: –

  • Offer + acceptance = Promise
  • Promise + consideration = Agreement
  • Agreement + enforceable by law = Contract

Nature of Contract:

The nature of contract is that it is a branch of law that establishes the conditions under which promises made by contracting parties are legally binding on them. It does not specify the duties and responsibilities that the law will enforce, but it does provide a set of limiting principles under which the parties may construct rights and obligations for themselves that the law will enforce.

A contract is an enforceable legal agreement between two or more people in which rights are gained on one side in exchange for acts or forbearances on the other. There must be an offer and an acceptance before a contract can be formed, and the law attaches a binding force of duty to the promises that arise from the offer and acceptance. While bargaining, the parties in the landmark case of Mohori Bibee v. Dharmodas Ghosh  (1903) 30 Cal. 539 tend to be on an equal footing in that respect. The obligations imposed under a specific contract are not imposed by someone else; rather, they are self-imposed by the parties themselves, and contract law is only concerned with the actual fulfilment of specific conditions by the parties in order to have the transaction recognised as a legally binding agreement and thus made enforceable.


To conclude, understanding the definition and notion of contract is critical to understanding the overall concept. Furthermore, the nature of a contract differs in many ways, thus it’s critical to remember that such regions are fully studied. The sorts of contracts offered are undoubtedly the most common, and they are classified according to the Indian Contract Act, 1972. The contract’s scope is expanding, and it differs greatly from one component to the next.

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