Chapter PRELIMINARY - Preliminary
Section 2
Section 2: Definitions for contract formation
Section 2 supplies the vocabulary used to decide whether dealings create an enforceable contract. It distinguishes a proposal, acceptance, promise, consideration, agreement and contract, and also distinguishes void from voidable arrangements.
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Need advice on Section 2?
This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:—
(a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal;
(b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise;
(c) The person making the proposal is called the “promisor”, and the person accepting the proposal is called the “promisee”;
(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;
(e) Every promise and every set of promises, forming the consideration for each other, is an agreement;
(f) Promises which form the consideration or part of the consideration for each other are called reciprocal promises;
(g) An agreement not enforceable by law is said to be void;
(h) An agreement enforceable by law is a contract;
(i) An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract;
(j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.
Rule and business relevance
A proposal becomes a promise on acceptance. Consideration is the described act, abstinence or promise at the promisor's desire and may come from the promisee or another person. An agreement enforceable by law is a contract; an agreement not enforceable is void. A voidable contract is enforceable at the option of specified parties rather than all parties.
Limits and related provisions
Using the word 'agreement' on a document does not establish enforceability. Capacity, free consent, lawful consideration/object and any applicable formalities still matter. The fact that consideration may move from another person does not by itself decide who can sue on every contract.
Hypothetical business example
Hypothetical: a supplier sends a proposal and the buyer accepts its terms. The parties identify their promises and consideration, then check the remaining enforceability requirements instead of assuming a heading marked 'contract' answers every legal question.
Practical decision flow
Identify the proposal, assent, promisor and promisee from the actual communications.
Map the acts, abstinence or promises alleged to supply consideration and whose desire they fulfil.
Assess enforceability and any void or voidable status under the relevant substantive provisions.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Identify the proposal, assent, promisor and promisee from the actual communications.
- Map the acts, abstinence or promises alleged to supply consideration and whose desire they fulfil.
- Assess enforceability and any void or voidable status under the relevant substantive provisions.
Avoid
- Using the word 'agreement' on a document does not establish enforceability. Capacity, free consent, lawful consideration/object and any applicable formalities still matter. The fact that consideration may move from another person does not by itself decide who can sue on every contract.
Glossary
- Consideration
- The act, abstinence or promise described in clause (d), done at the promisor's desire.
- Voidable contract
- A contract enforceable at the option of one or more parties but not at the option of the other or others.
Frequently asked questions
Is every agreement a contract?
No. Section 2(h) requires an agreement enforceable by law.
Must consideration always come only from the promisee?
Clause (d) includes the promisee or any other person, subject to its conditions. That does not resolve every separate enforcement issue.
Are void and voidable the same?
No. A void agreement is not enforceable by law; a voidable contract involves the specified party's option.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026