Contract
/ˈkɒntrækt/
Legal Term
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Definition
A legally enforceable agreement between two or more parties. Under the Indian Contract Act, 1872, a valid contract requires: offer, acceptance, lawful consideration, capacity of parties, free consent, and a lawful object. Contracts may be express (written or oral) or implied by conduct.
Examples
Case Study
Balfour v. Balfour (1919) established that domestic arrangements between spouses are not contracts because parties do not intend to create legal relations. In India, Section 10 of the Contract Act requires free consent — Section 14 defines free consent as consent not caused by coercion, undue influence, fraud, misrepresentation, or mistake. In LIC v. Consumer Education & Research Centre (1995), the Supreme Court held that standard-form consumer contracts with oppressive clauses may be struck down as unconscionable.
Key Cases
LIC v. Consumer Education & Research Centre
1995(1995) 5 SCC 482
Supreme Court held that unconscionable, one-sided contract terms in standard-form contracts may be struck down. Article 14 equality applies to contractual dealings by the State — government contracts cannot be arbitrary or oppressive.
View on Indian Kanoon →Hadley v. Baxendale
1854(1854) 9 Exch 341
Foundational authority on remoteness of damage in contract law. Damages are limited to losses arising naturally or those in reasonable contemplation of parties at the time of contracting.
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