Contract The term 'Contract' is defined under Section 2(h) of the Act. It provides that 'an agreement enforceable by law is a contract'. Therefore, from this definition we find that essential element of contract is (1) there should be an agreement and (2) it must have element of enforceability. Therefore, those agreements which are enforceable are called contracts. Enforceability means that it is recognized in the eyes of law and the courts of law will enforce the agreement. Agreement As far as 'agreement' is concerned, it is defined in Section 2(e) . It provides that 'every promise and every set of promises, forming consideration for each other, is an agreement'. Section 2(b) provides that a proposal when accepted becomes promise. Thus, it can be said that a proposal when accepted becomes promise. Every promise is an agreement and when such agreement is enforceable by law it is called contract. For example, 'A' proposes to 'B' '...