Contract: An agreement enforceable by law is a contract. Thus for the formation of a
contract there must be
1. An agreement
2. The agreement should be enforceable by law
An agreement is defined as every promise and every set of promises forming the
consideration for each other and a promise is an accepted proposal.
FORMATION OF A CONTRACT
For the formation of a contract the process of proposal or offer by one party and the
acceptance thereof by the other is necessary. This generally involves the process of
negotiation where the parties apply their minds make offer and acceptance and create a
When one person signifies to another his willingness to do or abstain from doing
anything with a view to obtaining the assent of the other to such act or abstinence, he is
said to make a proposal.
When the person to whom the proposal is made signifies his assent thereto, the proposal
is said to be accepted.
In order to convert a proposal into a promise, the acceptance must be
1. Absolute and unqualified – Any departure from the terms of the offer or any
qualification vitiates the acceptance unless it is agreed to by the person from
whom the offer comes. An acceptance with a variation is no acceptance; it is
simply a counter proposal.
2. Expressed in some usual and reasonable manner. – If the proposer prescribes
any particular manner of acceptance it has to be in that manner and where no
manner is prescribed it should be in a usual and reasonable manner.