Essential Elements of a Valid Contract with examples

Meaning of essential elements of a valid contract:

All agreement does not contract only these agreements which are enforceable at law is a contract. An agreement that can be enforced at law must fulfill certain essential elements. These are also known as the essentials of a valid contract.

Definition of contract:

Under section 2(c) of the Indian contract. A contract may be defined as “every promise or a set promises forming the consideration for each other is an agreement”. A promise is a proposal accepted by the person to whom it is made.

Essential Elements of a valid contract:

The following are the essentials of a valid contract,

1. Legal Formalities:-

A contract can be made either by word of mouth or in writing law requires that all the contracts must be written properly stamped and registered otherwise it may not be enforceable at law on a later stage.

2. Lawful consideration:-

In every agreement and every person promises to give something in order to get something. That something in exchange is called consideration. The consideration must be lawful otherwise the contract will be valid.

Example- Promises to obtain for Y employment is public services and Y promises to pay Rs 2000/- to X. The agreement valid as the consideration for it is unlawful.

3. Mutual Consent:-

The parties to the agreement must agree about the subject matter sometimes in the same sense. There must be a union of mind between two parties.

Example- X is the owner of two cars one is white and another is black. He offers to sell Y one car, X white giving the offer intends to be the black car. Y accepts the offer thinking that is white. There is no mutual consent and for this reason, there is no contract.

4. Offer and acceptance:-

In every agreement there must be two parties one party must give a valid offer and another party must have to accept it. Therefore one person can not make any contract to himself.

5. Capacity of parties:-

All the parties entering into a contract must have the capacity to make contracts due to the incapacity of the parties. The parties must be majored be age must sound mind and must not be insolvent the contract will be avoided.

Example- X agrees to sell his house to a Handbag for Rs 500/- this is not a valid contract because it can not be enforced in the court of law as one of the parties is a Handbag.

6. Lawful Object:-

The object refers to the purpose for which the agreement is made the object must be lawful to create a valid contract.

Example- X hires a house from Y to use it as a gambling house. The agreement is void because it’s an object that is unlawful.

7. Possibility of performances:-

The terms of the contract must be capable of being performed. A promise to do an impossible act is not valid.

Example- X promises to do an impossible act is not valid. This is not valid contract.

8. Free consent:-

In the agreement consent of the parties must be given follow. The agreement made by means of ground coercion or undue influences can not be enforced at law. That contract is invalid.

Example- X is a doctor while making treatment a patient makes an agreement to purchase. Y is a car worth rupees-100000/- to Rupees-10000/- the only Y agrees with the proposal. This not cash a contract because the consent of Y is not free as it is obtained by undue influence.

9. Legal relation:-

The party of the contract must have an intention to create legal relations with each other. if one party fails to fulfill his obligation another party can take legal action against him. A friendly agreement is no contract because there is no legal relationship between the parties.

Example- A invites his friend B to attend his marriage party on a certain day. B accepts the invitation, this is a not contract but it is a social agreement.

10. Lin certainty:-

The terms and conditions of the contract must be definite clear and certain.

Example- X offers to sell his motorcycle for rupees-10000/ or rupees- 15000/. This is not a valid contract because the price is not clear.

Originally published at https://ajinformer.com on December 10, 2020.