Contract :
It is an understanding or agreement by a person or a firm to do any work under certain terms and conditions.
The work may be for the construction, maintenance & repair, for the supply of materials, for the supply of labor, etc.
A contract is an agreement which can be enforced by law.
In order to make this agreement valid, there must be a definite offer and equally definite and unconditional acceptance of this offer.
As per The Indian Contract Act, of 1872 section 2(a),
Proposal :
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 or offer. An offer to proposal must be made “with a view to obtaining the assent of the person to who it is made.
Thus, a simple advertisement or circular stating that certain goods are for sale by tender, is an offer. Similarly, a tender notice inviting tender is also called offer.
Acceptance :
When the person to whom the proposal is made signifies his assent there to, the proposal is said to be accepted. A proposal when accepted, becomes a promise. To binding and effective, the acceptance must be unconditional and absolute. A conditional acceptance amounts to a counter offer.
Essential Requirements of a Valid Contract :
- Contract should be made by parties competent to contract.
- Contract should be made by free consent of parties.
- There should be a definite proposal and its acceptance.
- Subject matter of the agreement must be legal and definite.
- There must be a lawful consideration.
