Essentials of a valid Contract

Essentials of a valid contract.

What is a contract?

A contract is an agreement that can be enforceable by law.   An agreement is  an offer and its acceptance.  An agreement which can be enforceable by law must have some essential elements. According to Section 10 "All agreements are contracts if they are made by the free consent of the parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void" As per the above section, a contract must have the following elements.

1.  Intention to create legal relationship.

2.  Lawful object

3.  Agreement not expressly declared void

4.  Proper offer and it s acceptance

5.  Free Consent

6.  Capacity of parties to contract

7.  Certainty of meaning.

8.  Possibility of performance.

9.  Lawful consideration

10.  Legal formalities


Intention to create legal relationship: The parties entering into a contract must have an intention to create a legal relationship. If  there is no intention to create a legal relationship, that agreement cannot be treated as a valid contract. Generally there is no intention to create a legal relationship in social and domestic agreements. Invitation for lunch does not create a legal relationship. Certain agreements and obligation between father and daughter, mother and son and husband and wife does not create a legal relationship. An agreement wherein it is clearly mentioned that "This agreement is not intended to create formal or legal agreement and shall not be subject to legal jurisdiction in the law of courts." cannot be treated as a contract and not valid.

Lawful Object: The objective of the agreement must be lawful. Any act prohibited by law will not be valid and such agreements cannot be treated as a valid contract. A rents out his house for the business of prostitution or for making bomb, the acts performing there are unlawful. Hence such agreement cannot be treated as a valid contract. Therefore the consideration as well as the object of the agreement should be lawful.

Agreement not expressly declared void: Section 24 to 30 specify certain types of agreement which have been expressly declared void. For example Restraint of marriage which has been expressly declared void under Section 26. If John promises to pay $50 to Mary if she does not marry throughout her life and Mary promise not to marry at all. But this agreement cannot be treated as a valid contract owing to the fact that, under section 26 restraint of marriage expressly declared void. Some of the agreement which have been expressly declared void are agreement in restraint of legal proceedings, agreement in restraint of trade, agreement in restraint of marriage and agreement by way of wager.

Proper offer and it s acceptance:
To create a valid contract, there must be two or more parties. One who makes the offer and the other who accepts the offer. One person cannot make an offer and accept it. There must be at least two persons. Also the offer must be clear and properly communicated to the other party. Similarly acceptance must be communicated to the other party and the proper and unconditional acceptance must be communicated to the offerer. Proper offer and proper acceptance should be there to treat the agreement as a contract which is enforceable by law.

Free Consent: According to section 14, consent is said to be free when it is not caused by (i) coercion, (ii) undue influence (iii) fraud, (iv) misrepresentation, or (v) mistake. If the contract made by any of the above four reason, at the option of the aggrieved party it could be treated as a void contract. If the agreement induced by mutual mistake the agreement would stand void or canceled. An agreement can be treated as a valid contract when the consent of the parties are free and not under any undue influence, fear or pressure etc. The consent of the parties must be genuine and free consent.

Capacity of parties to contract: Parties entering into an agreement must be competent and capable of entering into a contract. If "A" agrees to sell a Government property to B and B agrees to buy that property, it could not treated as a valid agreement as A is not authorized or owner of the property. If any of the party is not competent or capable of entering into the agreement, that agreement cannot be treated as a valid contract. According to Section 11 of the Act which says that 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. So it is clear that the party must be of sound mind and of age to enter into a valid agreement which can be treated as a valid contract.

Certainty of meaning: Wording of the agreement must be clear and not uncertain or vague. Suppose John agrees to sell 500 tones of oil to Mathew. But, what kind of oil is not mentioned clearly. So on the ground of uncertainty, this agreement stands void. If the meaning of the agreement can be made certain by the circumstances, it could be treated as a valid contract. For example, if John and Mathew are sole trader of coconut oil, the meaning of the agreement can be made certain by the circumstance and in that case, the agreement can be treated as a valid contract. According to Section 29 of the Contract Act says that Agreements, the meaning of which is not certain or capable of being made certain, are void.

Possibility of performance: As per section 56, if the act is impossible of performance, physically or legally, the agreement cannot be enforced by law. There must be possibility of performance of the agreement. Impossible agreements like one claims to run at a speed of 1000km/hour or Jump to a height of 100feet etc. would not create a valid agreement. All such acts which are impossible of performance would not create a valid contract and cannot treated as a valid contract. In essence, there must be possibility of performance must be there to create a valid contract.

Lawful consideration: An agreement must be supported by a consideration of something in return. That is, the agreement must be supported by some type of service or goods in return of money or goods. However, it is not necessary the price should be always in terms of money. It could be a service or another goods. Suppose X agrees to buy books from Y for $50. Here the consideration of X is books and the consideration of Y is $50. It can be a promise to act (doing something) or forbearance (not doing something). The consideration may be present, future or can be past. But the consideration must be real. For example If John agrees to sell his car of $ 50000 to Peter for $20000. This is a valid contract if John agrees to sell his car not under any influence or force. It can be valid only if the consideration of John is free. An agreement is valid only when the acts are legal. Illegal works like killing another for money, or immoral works or illegal acts are cannot be treated as a valid agreement. So, illegal works will not come under the contract act.

Legal formalities: The contract act does not insist that the agreement must be in writing, it could be oral. But, in some cases the law strictly insist that the agreement must be in writing like agreement to sell immovable property must be in writing and should be registered under the Transfer of Property Act, 1882. These agreement are valid only when they fulfill the formalities like writing, registration, signing by the both the parties are completed. If these legal formalities are not completed, it cannot be treated as a valid contract.

Most important essentials of a valid contract are mentioned above. These elements should be present in a contract to make it a valid contract. If any one of them is missing we cannot treat that agreement as a valid contract.


The Law of Contract.

Meaning and source of Mercantile law

More by this Author


Comments 124 comments

drcrischasse profile image

drcrischasse 7 years ago from NH/Foxboro

great advice, Thank you


profile image

Amandamic21 7 years ago

Great hubs, very interesting and informative. Contains information that is useful to a varied audience.


youcanwin profile image

youcanwin 7 years ago Author

Thanks for your comments


zzron profile image

zzron 7 years ago from Houston, TX.

Very nice writing, I look forward to reading more, your newest follower.


youcanwin profile image

youcanwin 7 years ago Author

Thanks zzron for your visit and comment


mohamed ismail 6 years ago

THANKS FOR POST SUCH USEFUL ARTICLE..


KKalmes profile image

KKalmes 6 years ago from Chicago, Illinois

hello youcanwin, thumbs up and awesome that you would take such time and effort to share your wealth of information and knowledge.

bookmarked and new fan...


M. Faizan Shaikh 6 years ago

it was very helpful for me to complete my assignment.


usman sheikh 6 years ago

this web having all solutions


murk 6 years ago

hi youcanwin im thamkfull to you it is very helpful for me to coplete my assignment!


skhu 6 years ago

very good information


Dimension A Salon 6 years ago

Thanks! I referenced this article for a Master's assignment that was needing understanding about the Law of Contracts.


aneel shahzad 6 years ago

nice i think but lack of examples


prince mittal 6 years ago

good


bulbul 6 years ago

nice


Antony 6 years ago

Nice


Prakash 6 years ago

The article "Essentials of a valid Contract" was very helpful in completing my assignment. Thanks for it..


trinity 6 years ago

good account of contract of law. can you please sent me more information about law on my account.


gouthami 6 years ago

these helps me a lot.thanks


6 years ago

Thank you for writing in good sense.


husain 6 years ago

this is beter way to help others.

its good for us nd gret effort from u.


JF Nthele 6 years ago

The article was very helpful


ALI 6 years ago

IT IS VERY NICE WEB.


BIKRAM 6 years ago

VERY EASSY


indhu 6 years ago

very easy solution


lucky7 6 years ago

thanks for a great article!! Things are much clearer now!


usmanzeb 6 years ago

very good i like it and i aslo write in exam question


nisha 6 years ago

nice work


faith 6 years ago

i loved it for it helped me revise on my exam


hello 6 years ago

Thanks for this! Very helpful


teju 6 years ago

it is very useful for my assignment


CiCi 6 years ago

it rili helpd me, its anice article


Francis 6 years ago

wat a great knowledge i recruited from the post....i'll surely share it with my colleagues!thanks....


Nicholas kosgey 6 years ago

The article is fantastic and detailed,it made my assignment easier,many thanks for posting and making it real


shilpa 6 years ago

thanks a lot..........!

i have comleted my assingnment with the help of this in4mation.


ravi  5 years ago

thanks dude


parvej khan 5 years ago

oh its good


kavita  5 years ago

thank you!helped with my assignment - dont worry i referenced!


anu 5 years ago

thank you. helped me for exams


Precious 5 years ago

It helped me a lot 2 understand da essentials of a contract.


chadan kumar singh 5 years ago

Really Gr8


Nida Akhtar 5 years ago

its a true soltn of my questn ,i like this web..


sujata patjoshi 5 years ago

thanx


Sunil Palo 5 years ago

Thanks


Selvamc2011@gmail.com 5 years ago

It is useful for me


onziru brenda 5 years ago

thanks it really helped me during my revision


odhiambo 5 years ago

well presented.I loved it, and thanks


Sayed Mehran Ali (khairpur) 5 years ago

Oh this topic was very nice and i cleared my all problems through this topic its going to be very helpful to others


JACQUELINE 5 years ago

IT HAS TRULY HELPED.THUMBS UP!


vadivalagia nambi 5 years ago

how can i get this in tamil?


Husnain 5 years ago

Well'

i opend this site after my exams but it should be v.helpful to each. This way z v.easy 2 undrstand.

In which the lack of illustration & also case laws.

Thnx.


XOLILE MPALO 5 years ago

This site is awesome, hope most people get a wonderfull help from it... To me it is usefull. Thank to founders of it


sinini 5 years ago

It has helped me big time, thank you keep up the good work.


Sunil Tara 5 years ago

I like it, which helped me lot.


kenny onney 5 years ago

thnx a lot,. coz the article is very helpful.. blessed be you.


kavita 5 years ago

i seek that ill get still more information


hashi-som 5 years ago

thanks a lot, realy its a good topic..... i recommend to expend it....... thanks


maninder singh 5 years ago

thanks


shahid 5 years ago

thanks


manish 5 years ago

thanx its very help full


saher 5 years ago

these questin helped me out in completing my assignment!!!


Edidiong emmanuel sandy 5 years ago

Nice solution to both individual n company. U are good to go. Frm akwa ibom. Nija


salony 5 years ago

thnx it help me in xam..


P.mujinja@yahoo.com 5 years ago

thanx u


flavae 5 years ago

thanx major time


Gullit Rama Salim 5 years ago

It is good to educate the society many people in this modernized society entered into agreement without understanding the terms of contract all they think about is just the money


Akshay Ashok Chavan 5 years ago

thnx 4 giving such a vast info.......


Gamu 5 years ago

Thanx


Aakash 5 years ago

thank you i hope it would help me in my tomorrows exam of business law


Humaira 5 years ago

very nice


chaitanya 5 years ago

thank you


Richard 5 years ago

0750404330


Nickya 5 years ago

This information is soooooooo, sick gracias amigos*


Godknows Cee 5 years ago

thank you very much for the information. it was very useful to me.


JAGAT PAL 5 years ago

very gud lines.


suraja 5 years ago

does promise to marriage is valid in indian contract act?


angela 5 years ago

thanks a great deal. i benefitted from ur contribution


shabnam 5 years ago

its gud dude..it help to understand it vry clearly...

thanx.........


shuaibu jigawa 4 years ago

nce and wanderful sit in d net service,it also help on my assignment on law of contract.TANX SO MUCH


ravi 4 years ago

thanks


Manka mwasha 4 years ago

Ooooh...i gota nothing 2 explain 2 u cz u are sooo real amazing aaah u treated me perfect well abt law as a student of businec administration...


Haldiraam 4 years ago

Or bhayi kya haal he... Sab vadiya...????


Attaullah 4 years ago

Its very easily understandable


kutty de bchyon 5 essentails se 10 kr kk pury c 4 years ago

dgadhgajdgh g adgja dag dagahgd a dd


Daniel ojogba joseph 4 years ago

Thank u so much, ur work juz helped me


Anik 4 years ago

Very much effective for the students.


adil dastan 4 years ago

very good to share information ..


Afrin 4 years ago

Like this very much...it help me in my presentation..thanks very very very much:-*


mbenjani chagwiza 4 years ago

oh wat a useful document


adekoya olusegun 4 years ago

nice 1 i got more dan wot i wanted. 10x a lot


preety doll 4 years ago

that's great for us...thanks for bundle


shufa 4 years ago

thank you.its very supportive.


hemant chaudhary 9435051747 4 years ago

this is very useful law & interesting law


gurpreet 4 years ago

thanks for helping me


anime dress up games 4 years ago

This is what I want to know,thanks very much!


ida_sayang 4 years ago

thanx..its very helpful..


vikas verma 4 years ago

thank u very much ... this will help me lot in making my assignment as well as in my study of law as an MBA student...


daines dausoni 4 years ago

thnx.....its vryhlpful


ruchila naik 4 years ago

2day is my business law exam & this notes is helpful for my studies.

THANK U VERY MUCH.... :)


farengayts 4 years ago

Заказ от space-shop.org получил,бонусы впичитлили магаз ровный. Админ вам удачи и процветания с магазинам спасиба за бонусы.


mianmuhammdsaeedilyas 4 years ago

It is full of information for me.Thanks.


sanju 4 years ago

thank you so much


hina 4 years ago

very goooooooooooooooooooooooooooooood job ........................thnx


Lasu M.Joseph 4 years ago

Good. That is true works of charity. Leting one have something out of generousity is more than paying for it; b'se your treasures are already kept for you somewhere; could be in heaven or else where.


shazia naz 4 years ago

superb writing.it is very useful to all of us.


9203078940207 4 years ago

thank u for help me


jyoti morodia 3 years ago

thanx


Arindam 3 years ago

Gitangshu and Pradip agree to purchase a property jointly at an auction sale and not to bid against each other. Is this a valid agreement?


issack 3 years ago

thank for the notes it help me a lot for the understanding the contract law


misbah 3 years ago

thanx


srijib goswami 3 years ago

thank you for giving me the total informatio.


dikshitha 3 years ago

i want more explanation sir

if your looking more info about this pls contact 9886098860


monica waweru 3 years ago

that article meet my expectation..i like it


omari dsm 2 years ago

pooooooooooooooooooooooooooooooooa


mather 2 years ago

Thank u much i am satisfied for what i had been looking.


ganu 2 years ago

So easily to answer in bsl question


Harsh 2 years ago

Thank q sir always admire of ur thoughts


sarah 2 years ago

All i can say is thank you and may God bless you abundantly


Sombwe B.M 2 years ago

thanks I LIKE IT!!!!!!!!!!!!!!


cathryn catty 23 months ago

thanxs for your information it has been so helpful to me


asim 22 months ago

Length zaysda by atni no chalti in Punjab university ma.


Oluwayinka.E.A 21 months ago

Very nice work.Thank u GOD bless you


Johng193 21 months ago

I like what you guys are up too. Such smart work and reporting! Carry on the excellent works guys Ive incorporated you guys to my blogroll. I think it'll improve the value of my website eaekcgkaagdd


Murugavel 16 months ago

Thanks very usefully

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working