What is Contract?

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According to the section 2(h) of the Indian Contract Act 1872, "An agreement enforceable by law is a contract."

In order to understand it deeply we shall have to understand what agreement is first because it is created before an agreement takes place between the parties.

AGREEMENT-

According to section 2(e) of the Act, the term "Agreement" is defined as "Every promise and every set of promises, forming the consideration for each other"

section 2(b) defines promise as "When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. Proposal when accepted, becomes a promise."

As a conclusion we say that , an agreement is the result of the proposal made by one party to the other party and that party gives his acceptance thereto.


Agreement              =               Offer / Proposal          +              Acceptance


For an offer to be said as Agreement , acceptance is needed or essential. When a proposal is accepted and becomes agreement, it needs to be enforceable by law so as to be called as a Contract.
We can say-


Contract              =             Accepted Proposal        +         Enforceability by law




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