Section 10: What Agreements Are Contracts

In one line

Section 10 is the gate every agreement must pass through to become a contract, and the whole of this module is that one section opened out.

In the words a student can write in an exam: section 10 of the Indian Contract Act 1872 provides that "All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void." Five requirements sit in that sentence, and sections 11 to 30 are nothing but the Act's own definitions of them.

Why the law has this at all

By the end of Module I a student knows how an agreement is made: a proposal under section 2(a), an acceptance under section 2(b), and the two together producing a promise and then an agreement under section 2(e). What Module I never asked is whether the law will do anything about it.

That is a separate question, and it has to be. People agree to all sorts of things. A fourteen year old agrees to buy a motorcycle. A frightened man agrees at knifepoint to sell his shop. Two traders agree to fix prices unlawfully. Every one of those is an agreement in the section 2(e) sense: there is a proposal, there is an acceptance, and there are two consenting minds.

If the law enforced all of them it would be lending the courts, and ultimately the police, to a child, to a robber and to a conspiracy. So the Act draws a line, and section 10 is where the line is drawn. An agreement is the raw material. A contract is an agreement the law has agreed to back.

The provision itself

"All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void."

The section then adds a saving clause that students routinely miss:

"Nothing herein contained shall affect any law in force in India and not hereby expressly repealed by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents."

Broken down: the requirements

Read section 10 with section 2(h), which defines a contract as "an agreement enforceable by law", and the structure becomes visible. There must first be an agreement, and that agreement must then answer to each of the remaining four.

1. An agreement. Section 2(e): "Every promise and every set of promises, forming the consideration for each other." Without a proposal and an acceptance there is nothing for section 10 to work on. This is Module I's ground, taken up in [Agreement, Contract, and the Difference that Decides Cases].
2. Free consent of the parties. Consent is defined in section 13 and freedom of consent in section 14. The five things that destroy freedom are coercion, undue influence, fraud, misrepresentation and mistake, and sections 15 to 22 define each.
3. Parties competent to contract. Section 11 supplies the test: age of majority, soundness of mind, and not disqualified by any law.
4. A lawful consideration and a lawful object. Consideration is defined in section 2(d); section 23 says when a consideration or an object is unlawful.
5. Not expressly declared void by the Act. Sections 24 to 30 are the express declarations, and section 56 adds another.