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Essential Elements of a Valid Contract

C
CA Prashanth Reddy
25/05/2017 0 0

Essential Elements of a Valid Contract:

(i) Agreement:

In order to constitute a contract, there must be an agreement in first place. An agreement in turn is composed of two elements-offer and acceptance. Thus there must be at least two parties-one making the offer and another accepting it. The terms of offer must be definite and the acceptance must be absolute and unconditional.

(ii) Free Consent:

According to Sec 14, ‘Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake. If consent is not free, then no valid contract comes into existence. This will discussed in detail subsequently.

(iii) Lawful consideration:

The agreement must be supported by a lawful consideration. Consideration means ‘something in return’. ‘Something in return’ may be an act or abstinence. But it must be real and lawful. This will be discussed in detail subsequently.

(iv) Parties are competent:

The parties to an agreement must be capable of entering into a contract. A person is considered competent if he is (a) eighteen years of age (b) of sound mind (c) not disqualified from contracting by any law to which he is subject. Existence of free consent implies the consent of the parties must be free and genuine i.e. not induced by coercion, undue influence, fraud or misrepresentation. This will be discussed in detail subsequently.

(v) Legality of object:

There must be legality of object and consideration failing which it will not be a valid contract. This will be discussed in detail subsequently.

(vi) Legal Relationship:

The parties must intend to create a legal relationship. Agreements of social or domestic nature do not contemplate legal relationship, so they are not contracts.

Example: A husband promising his wife to buy her a ‘necklace’ on occasion of her birthday is not a contract.

(vii) Agreements not expressly declared to be void:

The agreement not expressly declared void or illegal by law. This will be discussed in detail subsequently.

(ix) Certain and Capable of Performance:

The terms of agreement must be certain and capable of performance.

Example: D agrees to sell C garments. The type, quality, value etc are not discussed. The agreement cannot be enforced as terms are uncertain. Similarly, if A promises B to bring rainfall through magic. Such agreement cannot be enforced.

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