Pages

Sunday, 19 February 2012

ESSENTIAL ELEMENTS OF A VALID CONTRACT


All agreements are not contracts. Only that agreements which is enforceable at law is a contract. An agreement which is enforceable at law cannot be contract. Thus, the term agreement is more wider in scope than contract. All Contracts are agreements  but all agreements are not contracts.

An agreement, to be enforceable by law, must posses the essential elements of a valid contract as contained in section 10 of the Indian Contract Act. According to Section 10, "All agreements are contract 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 expressly declared to be void." As the details of these essentials form the subject-matter of our subsequent chapters, it is proposed to dismiss them in brief here.

The following are the essential elements of a valid contract :

1. Offer and Acceptance.  In order to create a valid contract, there must be a 'lawful offer' by one party and 'lawful acceptance' of the same by the other party.

2. Intention to Create Legal Relationship.  In case, there is no such intention on the part of parties, there is no contract. Agreements of social or domestic nature do not contemplate legal relations.
   Case :- Balfour vs. Balfour(1919)

3.Lawful Consideration. Consideration has been defined in various ways. According to Blackstone,"Consideration is recompense given by the party contracting to another." In other words of Pollock, "Consideration is the price for which the promise of the another is brought."
consideration is known as quid pro-quo or something in return.

4. Capacity of parties. The parties to an agreement must be competent t contract. If either of the parties does not have the capacity to contract, the contract is not valid.
According the following persons are incompetent to contract.
(a) Miners,                 (b) Persons of unsound mind, and
(c) persons disqualified by law to which they are subject.

5. Free Consent. 'Consent' means the parties must have agreed upon the same thing in the same sense.
According to Section 14, Consent is said to be free when it is not caused by-

(1) Coercion, or                   (2) Undue influence, or          (3) Fraud, or
(4) Mis-representation, or         (5) Mistake.
An agreement should be made by the free consent of the parties.

6. Lawful Object. The object of an agreement must be valid. Object has nothing to do with consideration. It means the purpose or design of the contract. Thus, when one hires a house for use as a gambling house, the object of the contract is to run a gambling house.

The Object is said to be unlawful if-

(a) it is forbidden by law;
(b) it is of such nature that if permitted it would defeat the provision of any law;
(c) it is fraudulent;
(d) it involves an injury to the person or property of any other;
(e) the court regards it as immoral or opposed to public policy.

7. Certainity of Meaning. According to Section 29,"Agreement the meaning of which is not Certain or capable of being made certain are void."

8. Possibility of Performance. If the act is impossible in itself, physically or legally, if cannot be enforced at law. For example, Mr. A agrees with B to discover treasure by magic. Such Agreements is not enforceable.

9. Not Declared to be void or Illegal. The agreement though satisfying all the conditions for a valid contract must not have been expressly declared void by any law in force in the country. Agreements mentioned in Section 24 to 30 of the Act have been expressly declared to be void for example agreements in restraint of trade, marriage, legal proceedings etc.

10. Legal Formalities. An oral Contract is a perfectly valid contract, expect in those cases where writing, registration etc. is required by some statute. In India writing is required in cases of sale, mortgage, lease and gift of immovable property, negotiable instruments; memorandum and articles of association of a company, etc. Registration is required in cases of documents coming within the scope of section 17 of the Registration Act.

All the elements mentioned above must be in order to make a valid contract. If any one of them is absent the agreement does not become a contract.

54 comments:

  1. i have learned this page it is easy and simple to understand

    ReplyDelete
  2. Really its very good and understandable

    ReplyDelete
  3. really its good...law in a very simple language....


    ReplyDelete
  4. really its good...law in a very simple language....


    ReplyDelete
    Replies
    1. 'WAO' I REALLY UNDERSTOOD YOU GUYS KEEP UP

      Delete
  5. its good and easily understandable. thank you

    ReplyDelete
  6. Please kindly assist me on this assignment. and answer to be forwarded to my mail box esfakolade@gmail.com.
    Question: James an undergraduate age 19 went to a super market and order four Ipad Air, 2 Samsung Galaxy 4, and a wrist watch which he intend to present to his girl friend as a birthday gift. all these items were delivered to him at his hostel. James is the son of the college dean and has now refuse to pay the for the delivered items. Kindly advise the two parties.

    Thank you all.

    ReplyDelete
    Replies
    1. consideration must not be past so james is not bound to pay for the deliverance fee

      Delete
    2. i think wat u should u consider first is.the contract was void because they did not agree upon each other

      Delete
  7. This comment has been removed by the author.

    ReplyDelete
  8. This page is very helpful and the language is very simple.
    The Second line in the first para the line "An agreement which is enforceable at law cannot be contract" is written wrong otherwise the content is good

    ReplyDelete
  9. i am very grateful to this page because it gave us good content, precis and concise. thanks you so much for the offer and keep it up.

    ReplyDelete
  10. i am very grateful to this page because it gave us good content, precis and concise. thanks you so much for the offer and keep it up.

    ReplyDelete
  11. Thank you! This really helped me!

    ReplyDelete
  12. Linda sells a TV cabinet to Cathy. Linda tells Cathy that it is a vintage one of only three cabinets manufactured in the world when TV was first introduced. She further tells Cathy that the cabinet is set to be worth R50 000 due to its unique shape and age. When Cathy insured the cabinet the insurance company informed her that it is a virtually worthless second-hand cabinet which is one of over 10 million manufactured in China.
    2.1. Discuss whether there was a valid offer and acceptance between Linda and Cathy.

    ReplyDelete
    Replies
    1. this is misrepresentation and fraud and hence this was not a valid contract.

      Delete
    2. There is no free consent.. Between two so void contract

      Delete
  13. This comment has been removed by the author.

    ReplyDelete
  14. Thank you so much for making it easy in understanding

    ReplyDelete
  15. Thank you! This really helped me!

    ReplyDelete
  16. Really help make my life easy thanx alot

    ReplyDelete
  17. thanks........it short and clear

    ReplyDelete
  18. This comment has been removed by the author.

    ReplyDelete
  19. In a court case, party A alleged that party B had given him an option to buy his
    farm for £4 000 and that B thereafter wrongfully cancelled the option, causing
    A to suffer damages. B’s defence was that there was no legally binding
    agreement as A had not given anything in return for being granted the option.
    The appellate division rejected B’s defence and held that this was indeed an
    agreement which had been seriously and deliberately made.
    1. Discuss the doctrine of valuable consideration and iusta causa with
    reference to the above case (by name). Also discuss which of the two
    doctrines the South African law has adopted

    Please assist

    ReplyDelete
  20. ଆସନ୍ତା କାଲି ଆମୋ 卐ଶ୍ରୀ ଶ୍ରୀ ଗଣେଶମ୍ ଚତୃର୍ଥି ! ଆପଣମାନଙ୍କୁ ଆମୋର ଶୁଭ କାମନା ଜଣାଉଛୁ ।।

    ReplyDelete
  21. Thanks for the help with the that reference

    ReplyDelete
  22. Thanks... good explanation.. it is very helpful

    ReplyDelete
  23. Heah ! How is jurisdiction determined in case of email contracts?

    ReplyDelete
  24. Didn't know that a "miner" could not contract - see 4(a)

    However,I do know that a minor cannot.

    ReplyDelete
  25. Very Nice Information !!

    Thanks for sharing a informative information.

    Outline Company Incorporation

    ReplyDelete
  26. “A” bought a motor car from “B” at Rs. 4, 00,000 with a belief that car was not seriously
    accidental. “A” trusted in “B” and bought the car and found that car was perfectly fine. After a
    time, “C” offered to buy A’s car with the assurance that the car would be in a good condition. C
    bought A’s car for. 3, 25000. Later, “C” discovered that the car was seriously accidental. He
    immediately filed a suit against “A” with one of the reasons that he had committed a deliberate
    fraud with him. While on the other hand, “A” gave explanation that he was also completely
    unaware about that accident and had not committed any fraud as he found no signs of accident
    when it was purchased from “B”.

    Required
    1. Who was involved in fraudulent activity A, B or C. support your answer with some logical
    reasons?
    2. Who had misrepresented A, B or C and provide justifications.
    3. In this situation what should C do?

    plz answer this question???????

    ReplyDelete
  27. Thank you so much for enlighten the readers with such clearity about the topic. Really appreciated. RESPECT ☺

    ReplyDelete
  28. Thank you so much for enlighten the readers with such clearity about the topic. Really appreciated. RESPECT ☺

    ReplyDelete
  29. thank you..... its very useful to me...

    ReplyDelete
  30. Thanks... I really appreciate that guys.... Nice explanation, simple language, but in our country we only study 5 essential elements of contract...

    ReplyDelete
  31. Only that agreements which is enforceable at law is a contract. An agreement which is enforceable at law cannot be contract.


    AND WHAT IS THAT SUPPOSE TO MEAN?

    ReplyDelete
  32. Only that agreements which is enforceable at law is a contract. An agreement which is enforceable at law cannot be contract.


    AND WHAT IS THAT SUPPOSE TO MEAN?

    ReplyDelete
  33. Thanks for this article ... Sorry may you explain more the concept of VOID with respect to contract?

    ReplyDelete
  34. Appreciate the clarity,simplicity and easy to follow type presentation of the article.I would like to know-Will an agreement be void because it is not Registered at Registrar's office?M.B.Deshpande.

    ReplyDelete

VideoS

Loading...