A contract in law is one of the most fundamental concepts in legal studies. Whether it’s a business deal, a job offer, or the sale of a product—most transactions in life rely on contracts. But for students of law, understanding what exactly qualifies as a contract is critical to mastering the subject.

This post covers:

• • What is a contract?

  • How is it defined in Indian law?

  • What makes it legally binding?

Meaning of Contract

At its core, a contract is simply a legal promise. But not all promises are contracts.

A contract is a legally enforceable agreement between two or more parties. It is backed by law, which means if one party doesn’t fulfill their end of the bargain, the other party can take legal action.

Example:
If A agrees to sell his bike to B for ₹10,000, and B agrees, this is a contract—provided all legal conditions are fulfilled.

Definition of Contract

According to Section 2(h) of the Indian Contract Act, 1872:

“A contract is an agreement enforceable by law.”

This means:

• • First, there must be an agreement (a promise or set of promises).

  • Second, that agreement must be legally binding.

Example:
Two friends planning to meet for dinner is an agreement, but not a contract—because it’s not legally enforceable.

Agreement

The Indian Contract Act defines an agreement under Section 2(e) as:

“Every promise and every set of promises, forming the consideration for each other, is an agreement.”

In simple words, an agreement is:

• • A proposal (offer) by one person

  • Which is accepted by another

But remember: not all agreements are contracts. Only those that fulfill legal requirements (explained next) become contracts.

Essentials of a Valid Contract

For any agreement to become a valid contract, it must satisfy certain conditions. These are known as the “essentials of a valid contract.”

The essentials are:

• • Minimum two parties
  • Agreement
  • Offer and acceptance
  • Consensus-ad-idem
  • Capacity to contract
  • Free consent
  • Lawful consideration
  • Legal relationship
  • Lawful object
  • Certainty of terms
  • Possibility of performance
  • Lawful agreement
  • Legal formalities

Read the detailed post here:

Essentials of a Valid Contract

Conclusion

A clear understanding of the meaning, definition, and nature of contract in law is crucial for law students and legal professionals. It’s the base upon which all commercial and legal dealings are built. Don’t forget to explore the detailed discussion on the essentials of valid contract to complete your understanding.