Section 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 2 is the interpretation clause of the Act. Its first three clauses, (a), (b) and (c), define the words every later section uses: proposal, acceptance, promise, promisor and promisee. If you understand these three clauses, the rest of the Act on formation of contracts reads easily.
A person makes a proposal when he signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other (2(a)). When the person to whom it is made signifies his assent, the proposal is accepted, and a proposal, when accepted, becomes a promise (2(b)). The proposer is the promisor; the person accepting is the promisee (2(c)). Section 2 itself has no illustrations in the text we read.
How section 2 is arranged
The section opens: "In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context". That opening matters. The definitions apply throughout the Act, but a particular section may show a different meaning from its context. This article covers clauses (a) to (c). Clause (d) on consideration is in our article on section 2(d), and clauses (e) to (j) are in our article on agreement, reciprocal promises, void and voidable contracts.
| Clause | Word defined | Text in short |
|---|---|---|
| 2(a) | Proposal | One person signifies to another willingness to do or abstain from doing anything, to obtain the other's assent |
| 2(b) | Acceptance and promise | The other signifies assent: the proposal is accepted; an accepted proposal becomes a promise |
| 2(c) | Promisor and promisee | The proposer is the promisor; the acceptor is the promisee |
If you are drafting an offer letter, quotation or proposal that is meant to become binding on acceptance, our agreement drafting service can help you word it with these definitions in mind.
Clause (a): what is a proposal
The Act says: "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".
Take the limbs one by one.
- "One person signifies to another". There must be a communication from one person to another. The Act's later sections say when a communication is made and when it is complete; see our article on sections 3 and 4 and related sections.
- "His willingness to do or to abstain from doing anything". A proposal can be to do something (deliver goods, render a service) or to refrain from doing something (not to compete, not to sue).
- "With a view to obtaining the assent of that other". The purpose of the statement must be to get the other person's agreement to that act or abstinence. A statement made without that purpose does not fit the definition on the text we have.
The Act uses the word "proposal", not "offer". The word "offer" is the common business word; the statute's own term is "proposal". In this series we use the Act's word and mention "offer" only where it helps readers recognise the idea.
Clause (b): acceptance, and how a proposal becomes a promise
Clause (b) reads: "When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise".
Two points follow from the text:
- Acceptance is signifying assent. The Act does not say here how it must be signified. Section 7 later says what the acceptance must be, and section 9 distinguishes express and implied promises. See our article on sections 7 to 9.
- A promise is born at acceptance. Before acceptance there is only a proposal. After acceptance there is a promise. This is the link between clause (a) and clause (e), which says every promise and every set of promises forming the consideration for each other is an agreement.
Clause (c): promisor and promisee
Clause (c) names the parties: "The person making the proposal is called the 'promisor', and the person accepting the proposal is called the 'promisee'".
This is useful vocabulary. Throughout the Act, the "promisor" is the one whose promise is being discussed. Note that in a contract of exchange, each party is a promisor in respect of his own promise and a promisee in respect of the other's. Clause (c), on its words, names the proposer as promisor and the acceptor as promisee. The text does not say more about the exchange case in this clause, so look to clause (f) on reciprocal promises for that.
Section 2 has no illustrations here
Unlike several later sections, section 2 in the text we read carries no illustrations under clauses (a) to (c). So the example below is entirely our own.
Example (our own, not from the Act). Meera, an independent designer, emails Rohan's company: "I will design your annual report for the fee in my attached quote, and I need your confirmation by Friday." Meera has signified her willingness to do something (design the report) with a view to obtaining Rohan's assent. That is a proposal under 2(a), and Meera is the proposer. Rohan replies on Thursday: "Confirmed, please start." He has signified his assent, so under 2(b) the proposal is accepted and becomes a promise. Meera is the promisor and Rohan the promisee under 2(c). Whether the resulting agreement is a contract depends on further sections, especially section 10.
What can the parties change?
The opening words of section 2 say the definitions apply "unless a contrary intention appears from the context". That is a statement about how the Act itself is read, not a power given to contracting parties to redefine the Act's terms. What parties can do is choose how they make and accept proposals: sections 7 and 8 allow the proposal itself to prescribe the manner of acceptance. Those rules are covered in the articles on sections 7 to 9.
Practical points
- Label your documents clearly. A quotation that says it is "subject to your confirmation" reads as a proposal. Say so if you intend it to be one.
- Know who is who. In a dispute, ask who made the proposal and who accepted it. That decides who is called promisor and promisee in the Act's language.
- Watch for conditions. Section 7 requires an acceptance to be absolute and unqualified. A reply with new conditions does not fit the definition in 2(b) as the Act develops it.
- Keep records. Emails and messages that signify willingness and assent are the raw material of 2(a) and 2(b).
Need help with a proposal or quotation?
If you send proposals, quotations or engagement letters and want them to work as intended once accepted, our agreement drafting team can review the wording and the acceptance mechanism. Share what you currently send out and we can suggest clearer language.
Key takeaways
- A proposal is a signified willingness to do or abstain from doing something, with a view to obtaining the other's assent (2(a)).
- When the person to whom it is made signifies assent, the proposal is accepted and becomes a promise (2(b)).
- The proposer is the promisor and the acceptor is the promisee (2(c)).
- The definitions apply "unless a contrary intention appears from the context".
Read next
- Section 2(d): consideration
- Sections 2(e) to 2(j): agreement, reciprocal promises, void and voidable contract
- Offer and acceptance: sections 3 to 9
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.