Section 2 of the Indian Contract Act, 1872: Interpretation Clause
Section 2 contains the core statutory definitions used throughout the Indian Contract Act, 1872. It explains how terms such as proposal, acceptance, promise, consideration, agreement, contract, void agreement and voidable contract are understood under the Act.
Meaning and scope of Section 2
Section 2 begins by providing that the listed words and expressions are used in the stated senses unless a contrary intention appears from the context. These definitions provide the vocabulary for determining how a proposal develops into an agreement and, where the legal requirements for enforceability are satisfied, a contract.
Definitions under Section 2
Proposal - Section 2(a)
A person makes a proposal when that person signifies willingness to do, or abstain from doing, something with a view to obtaining the other person's assent.
Acceptance and promise - Section 2(b)
When the person to whom a proposal is made signifies assent, the proposal is accepted. An accepted proposal becomes a promise.
Promisor and promisee - Section 2(c)
The person making the proposal is the promisor, and the person accepting it is the promisee.
Consideration - Section 2(d)
At the desire of the promisor, an act, abstinence or promise by the promisee or any other person may constitute consideration for the promise.
Agreement - Section 2(e)
Every promise, and every set of promises, forming consideration for each other is an agreement.
Reciprocal promises - Section 2(f)
Promises that form the consideration, or part of the consideration, for each other are reciprocal promises.
Void agreement - Section 2(g)
An agreement not enforceable by law is void.
Contract - Section 2(h)
An agreement enforceable by law is a contract.
Voidable contract - Section 2(i)
An agreement enforceable by law at the option of one or more parties, but not at the option of the other party or parties, is a voidable contract.
Contract becoming void - Section 2(j)
A contract becomes void when it ceases to be enforceable by law.
How the definitions work together
A proposal under clause (a) may become an accepted proposal under clause (b), and therefore a promise. The parties are then described as promisor and promisee under clause (c). Consideration is defined by clause (d), while clause (e) defines an agreement. Clause (h) supplies the crucial distinction between an agreement and a contract: enforceability by law.
Clauses (g), (i) and (j) distinguish different consequences of enforceability. A void agreement is not enforceable by law; a voidable contract is enforceable at the option of one or more parties but not the other or others; and a contract becomes void when it ceases to be enforceable.
Section 2 and Section 10
Section 2 provides the definitions, while Section 10 - What agreements are contracts addresses the statutory requirements governing when agreements are contracts. The provisions should therefore be read together when examining formation and enforceability.
Official text
For the authoritative Central Act text and legislative updates, see the Indian Contract Act, 1872 on India Code.