The core questions
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Is an agreement to advance a loan a valid contract under Indian law?
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After the 2018 amendment to the Specific Relief Act, are courts bound to specifically enforce such an agreement?
Validity: When does a “promise to lend” become a contract?
Under the Indian Contract Act, 1872, an agreement becomes a contract only if it is enforceable by law and satisfies essentials such as lawful offer and acceptance, lawful consideration, free consent, competent parties, and a lawful object, among others. Practically, a loan agreement that meets these elements (e.g., consideration in the form of money to be advanced against a borrower’s promise to repay with agreed terms) is a valid contract; mere intent to negotiate or an incomplete understanding will not suffice.
