Essentials of valid Contract

First take a look at the meaning of contract.
According to Section 2(h) of the Indian Comtract Act 1872:  “An agreement enforceable by law” is a contract. It means a contract is an object which is stated to make legal meaning.
Also, the contract is voluntary in nature because if an agreement is made, it is understood that it is made mutually.

Thus a valid contract defined in simple terms is a contract  which is acceptable by both the parties to fulfill certain objective and forming a legal relation between the parties or a valid contact is a written or expressed agreemnet between two parties to provide a product or service.There are six elements which make a contract a valid contract.These essentials are as follows:

  1. Offer and Acceptance: There must be a “lawful offer” and a “lawfu acceptance”- thus resulting to be an agreement. An offer can be made to some specific person or to the whole of the world.
    • Offer:  Section 2(a) defines an offer as, “a proposal made by one person to another to do an act or abstain from doing it.” The person who makes the offer is known as the promisor or offer or and the person to whom an offer is made is known as the promisee or the offeree. Offer made should be reasonable and logical.
    • Acceptance:  A contract comes into being from the acceptance of an offer. When the person to whom the offer is made signifies his assent thereto, the proposal is said to be accepted (Sec. 2(b). Thus, acceptance of the offer must be absolute and unqualified. It cannot be conditional.
  2. Intention to create legal relations:  Agreement of social and domestic nature do not form any legal relations and thus fails to be a valid contract.
    Ex- Rose & Frank co. v/s Crompton Brothers Ltd.
    In above case R company was appointed as the agent od the C co. One clause of the agreement was “This agreement is not entered into as a formal or legal agreement and shall not be subject to legal jurisdiction in the law courts”. It was held that there was no intention to create legal relations on the part of the parties to the agreement and hence there was no contract.
  3. Lawful Consideration:  Consideration has been defined as the price paid by one party for the promise of the other.  That means a promisor must offer the same value to the promisee value. For example if A enters into a contract with B for the sale of the scooter. Then  A should offer the price exactly of the value of the scooter in market. In other words the exchange value should be equal from both the ends.
    An agreement is legally enforceable only hwn each of the parties to it gives something and gets something.
  4. Free Consent:  Free consent of all the parties to an agreement is essential of a valid contract. “Consent -means the parties must have agreed upon the same thing in the same sense. (Sec 13)”. If an agreement is induced by:
    • Coercion
    • Under Influence
    • Fraud
    • Misrepresentation
    • Mistake

    Then contract is voidable.

  5. Lawful Object: Parties must agree for lawful object.The object for which the agreement has been entered into must not be fraudulent oe illegal or immoral or opposed to public policy or must not imply injury to the person or property of another.
  6. Capacity of Parties:The parties to an agrrement must be competent to ontract, otherwise it cannot be ebforced by law. A competent parties are the major and a person with the sound mind. Incompetent parties are minors, lunatic, idiocy, drunkness state etc.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Blog at

Up ↑

%d bloggers like this: