Essential elements of a valid contract

 

A Contract is an agreement made between two or more parties which the law will enforce. Section 2(h) of the Indian Contract Act,1872 defines Contract as an agreement enforceable by law

According to section 10 of the Indian Contract Act,1872 “all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

These are the essential elements of a valid Contract:

1.     Offer and Acceptance: There must be two parties to an agreement that is one party making the offer and other party accepting it. The terms of the offer must be definite and the acceptance of the offer must be absolute and unconditional. The acceptance must also be according to the mode prescribed and must be communicated to the offer.

2.     Intention to create legal relationship: when the two parties enter into an Agreement their intention must be to create legal relationship between them, if there is no such intention all the part of the parties there is no contract between them.

Example: A husband promised to pay to house hold allowance of RS- 1000/- every month. Later the parties separated and the husband failed to pay the amount. The wife sued for the allowance. Held agreements such as this were out side the realm of contract all together.

3.     Law full consideration: An agreement to be enforceable by law must be supported by consideration. Consideration means an advantage or benefit moving from one party to another party. The agreement is legally enforceable only when both the parties give something and get something in return. A promise to do something get in nothing return is not enforceable by law. Consideration may by past, present or future and it must be real and lawful. [Section- 2(b),23 and 25]

4.     Capacity of Parties: The parties to an agreement must be capable of entering into a valid contract. Every person is competent to contract who is of the age of majority according to the law to which he is subject and who is of sound mind and is not disqualified from contracting by any law to which he is subject.[Section 11]

5.     Free and genuine consent: It is essential to creation of every contract that there must be free and genuine consent of the parties to the agreement. The consent of the parties is to be free when they are of the same mind on all the material terms of the contract. The parties are said to be of the same mind when they agree about the subject matter of the contract in the same sense at the same time.

6.     Lawful object: The object of the agreement must be lawful, in other words it means that the object not be:- (i) illegible

                                                   (ii) immoral             

                                                   (iii) opposed to public policy 

If an agreement suffers from any legal flow it could not be enforceable by law.

7.     Agreement not declared void: The agreement must not have been expressed decleared void by law in force in the country.

8.     Certainty and possibilities of performance : The agreement must be certain and not vague definite. If it is vague and not possible to ascertain its meaning it can not be enforced.

9.     Legal formality : A contract may be by words spoken or written. As regards the legal effects there is no difference between a contract in writing and the the contract make by word of mouth. It is however in the interest if the parties that the contract should be in writing. There some other formalities also which have to be complied with in order to make an agreement legal enforceable.