Contract Law in India: A Crash‑Course for AP LAWCET Aspirants

1. Foundations of a Valid Contract

At its core, a contract is a promise that the law will enforce. In India, the Contract Act, 1872 (CA) lays down the bare bones: offer, acceptance, consideration, intention to create legal relations, and lawful object. Think of it as the “deal‑making handshake” you’re used to in corporate finance—only now the handshake has a legal contract attached.

Offer and acceptance must be “certain” and “unambiguous.” A vague email saying “let’s talk” doesn’t cut it. Acceptance must be communicated in the manner prescribed by the offer or, if none, by the Act (Section 10). The classic “mirror image” rule still applies, but courts are forgiving if the acceptance is a reasonable variation.

Consideration (Section 2) is the price of the promise. In the corporate world you’d call it “value exchange.” It can be cash, services, or even a promise to refrain from a particular action (Section 2(1)(c)). But it must be real, not a sham. Courts have been very strict on “sham consideration”—the old “promise to pay a debt” that never existed.

Intention to create legal relations (Section 11) is usually presumed in commercial contracts but not in social or domestic agreements.