CON · S01Session 1 · 26–27 Sep · 6 min read

Why should a contract be binding?

Parliament makes a statute. Two private parties make a contract. Seven theories explain why a court enforces what the parties made, and the ICA is built on one of them.

ICA ss. 2(h), 10 · Fried · BarnettReleased week of 28 Sep

s. 16(3)

5. Fairness and bargain

Substantive fairness: an unconscionable contract should not bind. Example from class: an illiterate elderly woman sells property worth crores for ₹2 lakh. Section 16(3) of the ICA reflects this idea. This theory tells you which contracts bind. It does not tell you why they bind.
Bargain theory: a contract binds because the parties bargained, for example from ₹25/kg down to ₹23/kg.

Weakness

The ICA requires consideration. A bargain can exist without consideration. So bargain theory rests on something that the law does not require.

Barnett

6. Consent

Key point

A right passes from one person to another only with the owner's consent. The law enforces that consent.

Randy Barnett places contract in a system of rights:

Rights in property: you cannot use my phone without my consent.
Rights in the person: I sell my business and agree not to compete. I transfer property, and I also limit my right to trade.

Consent is will that a person has expressed. A court can test it objectively. This removes the main weakness of will theory.

Promisegives a moral duty

Willmakes it a legal duty

Consentmakes the will objective

s. 10

7. The theories in the ICA

The ICA of 1872 is built on will theory. The French jurist Pothier influenced the English courts, and the ICA followed English law. You will see will theory in offer, acceptance, consideration and consent.

s. 2(h): a contract is an agreement enforceable by law.
s. 10: an agreement is a contract when all five conditions are met:

1Free consent
2Competent parties
3Lawful consideration
4Lawful object
5Not declared void

Contract (s. 10)

s. 14: consent is free when there is no coercion, undue influence, fraud, misrepresentation or mistake.
Most contracts need no writing. A transfer of immovable property is an exception.

Table

The seven theories

Theory	Why a contract binds	Weakness	In the ICA
Promise (Fried)	A promise creates a moral duty	A moral duty is not a legal duty	–
Will	The parties willed it	Will is subjective	Offer and acceptance, s. 2
Reliance (Fuller and Perdue, Atiyah)	The other party relied on it	Circular	–
Efficiency	Enforcement helps markets	Also supports breach	–
Substantive fairness	Only fair contracts bind	Says which contracts bind, not why	s. 16(3)
Bargain	The parties bargained	The law also needs consideration	ss. 2(d), 25
Consent (Barnett)	Rights pass only with consent	–	Free consent, ss. 13–14

Traps

Exam traps

A theory explains why contracts bind. Section 10 decides whether a given agreement binds.
Every contract is an agreement. Not every agreement is a contract (s. 10).
A will (testament) is not a contract. Only the testator decides its terms.
The ICA rests on will theory, through Pothier. Do not name consent or efficiency as its basis.

Reading

Readings

Charles Fried, "The Ambitions of Contract as Promise" (2014). Mandatory.
Randy Barnett, "A Consent Theory of Contract", 86 Colum. L. Rev. 269 (1986). Mandatory.
Atiyah, The Rise and Fall of Freedom of Contract (1979), and Fried, Contract as Promise (1981). Suggested. Not yet in Drive.

Practice · Session 1

Test yourself on this session

All 5 adapted from past NLSIU exam papers, 2025

Question 1 of 5ICA ss. 2(h), 10A promises to sell B his car for ₹5 lakh, and B promises to pay. C promises his wife a saree for her birthday. Both are agreements. Which statement best explains why only the first is likely to be a contract?

Answer all of them, then submit to see your score.5 questions · about 4 minStart MCQsFree for Session 1: answers and why after you submit.