MEANING OF CONTRACT

An agreement between two or more parties, especially one that is written and enforceable by law A contract is a legally enforceable agreement between two or more parties with mutual obligations. The remedy at law for breach of contract is "damages" or monetary compensation. In equity, the remedy can be specific performance of the contract or an injunction. Both remedies award the damaged party the "benefit of the bargain" or expectation damages, which are greater than mere reliance damages, as in promissory estoppel. An agreement between two or more competent parties in which an offer is made and accepted, and each party benefits. The agreement can be formal, informal, written, oral or just plain understood. Some contracts are required to be in writing in order to be enforced. a contract is "a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty;Contracts arise out of agreements; hence a contract may be defined as an agreement creating an obligation.

NATURE OF CONTRACT
The law of contract is that branch of law which determines the circumstances in which promise made by the parties to a contract shall be legally binding on them. All of us enter into a number of contracts everyday knowingly or unknowingly. Each contract creates some right and duties upon the contracting parties. Indian contract deals with the enforcement of these rights and duties upon the parties. Indian Contract Act, 1872 came into effect from 1st September, 1872. It extends to the whole of India except the state of Jammu and Kashmir. Practically every personal business activity involves a contract; the purchase of a color TV , the renting of an apartment , buying a property. In each transaction relating to the acquisition of raw materials, their manufacture, and the distribution of the finished product by business, there are contracts that define the relationships and the rights and obligations of the parties. As pervasive as contracts are in our lives, the legal language of contracts is not very familiar to most of us. For that

reason this article is devoted primarily to the terminology or vocabulary that is needed to work with contract law. The substance of the definition of a contract is that by mutual agreement or assent the parties create enforceable duties or obligations that are legally binding. That is each party is obligated to do or to refrain from doing certain acts. The substance of the definition of a contract is that by mutual agreement or assent the parties create enforceable duties or obligations that are legally binding. The purpose of a contract is to establish the agreement that the parties have made and to fix their rights and duties in accordance with that agreement. The courts must enforce a valid contract as it is made, unless there are grounds that bar its enforcement. The courts may not create a contract for the parties. When the parties have no express or implied agreement on the essential terms of a contract, there is no contract. Courts are only empowered to enforce contracts, not to write them, for the parties. A contract, in order to be enforceable, must be a valid. The function of the court is to enforce agreements only if they exist and not to create them through the imposition of such terms as the court considers reasonable. A contract is a legally binding agreement between two or more parties. Contracts may or written or oral in order to be legally binding. It is the policy of the law to encourage the formation of contracts between competent parties for lawful objectives. As a general rule, contracts by competent persons, equitably made, are valid and enforceable. Parties to a contract are bound by the terms to which they have agreed, usually even if the contract appears to be improvident or a bad bargain, as long as it did not result from FRAUD, duress, or UNDUE INFLUENCE. It does not lay down a number of rights and duties which the law will enforce; it consists rather of a number of limiting principles, subject to which; the parties may create rights and duties for themselves which the law will upload. The parties to a contract, in a sense, make the law for themselves. So long as they do not infringe some legal prohibition, they can make what rules they like in respect of the subject matter of their agreement, and the law will give effect to their decisions

To be a legal contract it must have three elements:

offer acceptance consideration

One party promises to do something and the other party promises to do something in return - the offer and acceptance. The consideration is the exchange of something of value - everyone receives a benefit. Once the parties have entered into a contract, they cannot cancel or change it simply because they have changed their mind, unless the other party agrees to cancel or change too. One party can can sue the other by ordering the contract performed, or damages paid for the breach of contract.

ORIGIN AND SCOPE Contract law is based on the principle expressed in the Latin phrase pacta sunt servanda, which is usually translated "agreements to be kept" but more literally means "pacts must be kept".[1] Contract law can be classified, as is habitual in civil law systems, as part of a general law of obligations, along with tort, unjust enrichment, and restitution. As a means of economic ordering, contract relies on the notion of consensual exchange and has been extensively discussed in broader economic, sociological, and anthropological terms (see "Contractual theory" below). In American English, the term extends beyond the legal meaning to encompass a broader category of agreements.[2] This article mainly concerns the common law. Such jurisdictions usually retain a high degree of freedom of contract, with parties largely at liberty to set their own terms. This is in contrast to the civil law, which typically applies certain

overarching principles to disputes arising out of contract, as in the French Civil Code. However, contract is a form of economic ordering common throughout the world, and different rules apply in jurisdictions applying civil law (derived from Roman law principles), Islamic law, socialist legal systems, and customary or local law. A contracts scope refers to the work, obligations and risks that a contractor assumes in exchange for the contracts price. A contracts general scope refers to things outside of the contracts scope but still within the contracts broader general scope as determined by the contracts general intent and legal concepts such as reasonableness, substantiality and materiality.

OBJECT OF CONTRACT
The object of the contract is to ensure the realisation of reasonable expectation of the parties who enter into a contract. The contract is that which determines the circumstances in which promises made by the parties to a contract shall be legally binding on them. Its rules define the remedies that are available in a court of law against a person who fails to perform his contract, and the conditions under which the remedies are available. It is the important branch of business law. It affects all of us in one way or the other. It is, however, of particular importance to people engaged in trade. Commerce and industry as bulk of their business transactions are based on contracts. The contract introduces definiteness in business transactions. Sir. William observes in this connection that the contract is intended to ensure that what a man has been led to expect shall come to pass, and that what has been promised to him shall be performed.