ESSENTIALS OF A VALID CONTACT

A contact has been defined in section 2(h) of Indian Contract Act 1864 as “contract- an agreement enforceable by law”. Indian Contract Act defines agreement in Section 2(e) as “Every promise and every set of promise forming the consideration for each other is an agreement”. There is a bit of difference between agreement and contract as all agreements are not contract but all contracts are agreement, agreement may not be enforceable but contacts are always enforceable and agreement does not always grants a right but contract always grants a right.

ESSENTIALS OF VALID CONTRACT

According to Section 10 of Indian Contract Act all agreements are contract if they are made by the free consent of the parties, competent to contract for a lawful consideration, with a lawful object which are not expressly declared by the Act to be void and where necessary, satisfy the requirements to any law as to writing or attestation or registration.

There are basically 10 essentials of a valid contract which are as follows:-

  1. LAWFUL OFFER AND ACCEPTANCE-

There must be a “lawful offer” and a “lawful acceptance” which will result in an agreement. The term lawful here means that offer and acceptance must satisfy the requirements of the contract act.

Offer is defined in Section 2(a) as “when a person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal”.

Acceptance is defined in Section 2(b) as “promise- when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal , when accepted becomes a promise”.

  • INTENTION TO CREATE LEGAL relation

Intention to create legal obligation means that there must be an intension among the parties that the agreement should be attached by legal consequences and create legal obligations.  Agreement of a social or domestic nature does not contemplate legal relations and as such they do not give rise to a contract.

ILLUSTRATION –

An agreement to dine at a friend’s house is not an agreement intended to create legal relations and therefore it is not a contract.

CASE LAW – BALFOUR VS BALFOUR here the defendant was a civil servant in Ceylon. He and his wife were enjoying a leave in England. During the return his wife was not able to return to Ceylon due to some health issues. The defendant agreed to send 30 pounds as maintenance very month during the time they were forced to live apart. She sued him for breach of this agreement. Her action was dismissed on the grounds that no legal relations had been contemplated and therefore, there was no contract.

  • LAWFUL CONSIDERATION

The third essential element of a valid contract is the presence of a ‘consideration’. Consideration is defined in  2(d) as “when, at the desire of the promisor, the promise or any other person has done or abstain from doing, or does ,or abstains from doing or promises to do or abstain from doing , something , such act or abstinence or promise is called consideration for the promise”. It is also defined as “the price paid by one party for the promise of the other”. An agreement is legally enforced only when each of the parties gives something or gets something. Consideration is only valid when it is lawful.

The consideration is unlawful if-

  •  Law forbids it;
  • It is fraudulent;
  • Involves or implies injury to the person or property of another;
  • Is immoral pr is opposed to public policy ;
  • It is of such a nature that , if permitted it would defeat the provisions of any law
  • CAPACITY OF PARTES

The parties to an agreement must be competent to contract according to section 10 of the contract. In order to be competent to contract, according to section 11 the parties must be:

  • Of the age of maturity ;
  • Of a sound mind and ;
  • Must not be disqualified from contracting by any law

CASE LAW –

MOHORI BIBEE VS DAMODAR GHOSE

Here Damodar Ghose the defendant was a minor and sole owner of his property and his legal guardian was his mother. Brahmo Dutt a money lender through his agent Kader Nath  lent a sum of Rs 20,000 with an interest of 12% p.a. on the day of when when the deal was made Damodar Ghosh’s mother notified the appellant that Damodar is a minor and anyone who enters into a contract with him will do so at his own risk.

Therefore Brahmo dutts appeal was dismissed and his request for the return of Rs 10,500 advance was also rejected as Damodar Ghose’s mother notified the appellant about his minority. It was held that a contract with a minor is void ab initio.

  • FREE COSENT-

In a contract both parties must agree and give consent to the same thing in the same sense to constitute a valid contract and the consent must be given freely. Section 14 of the act defines free consent as

Consent is said to be free when it is not caused by—

  • Coercion, as  defined in  section 15 as “Coercion  is the committing, or  threatening  to commit, any  act  forbidden by  the  Indian  Penal  Code  (45  of  1860)or  the  unlawful  detaining,  or  threatening  to  detain,  any  property,  to the prejudice  of  any  person  whatever, with  the  intention of  causing  any  person  to  enter  into  an agreement.”
  • Undue  influence,  as  defined in  section 16 as “contract  is  said  to  be  induced  by  “undue  influence”  where the  relations  subsisting  between  the  parties  are  such  that  one  of  the  parties  is  in  a  position  to  dominate  the will  of  the other  and uses  that  position  to  obtain  an unfair  advantage over  the other.”
  • fraud, as defined in section 17 as “Fraud”  means  and  includes  any  of  the  following  acts  committed  by  a  party to  a  contract,  or  with  his  connivance,  or  by  his  agent 2 ,  with  intent  to  deceive  another  party  thereto  of  his agent, or  to  induce him  to enter  into  the contract:—

 (1)  the  suggestion,  as  a  fact, of  that  which  is  not  true, by  one who does not  believe  it  to be  true;

 (2)  the  active concealment  of  a  fact  by  one having  knowledge or  belief  of  the  fact;

 (3)  a  promise  made  without  any  intention of  performing  it;

 (4)  any  other  act  fitted  to deceive;

(5)  any such act  or  omission as  the  law specially  declares  to be  fraudulent.”

  • misrepresentation, as  defined in  section 18 as

 (1)  “the  positive  assertion,  in  a  manner  not  warranted  by  the  information  of  the  person  making  it, of  that  which  is not  true, though he believes  it  to be  true;

 (2)  any  breach  of  duty  which,  without  an  intent  to  deceive,  gains  an  advantage  to  the  person committing  it,  or  any  one  claiming  under  him;  by  misleading  another  to  his  prejudice,  or  to  the prejudice  of  any  one claiming  under  him;

 (3)  causing,  however  innocently,  a  party  to  an  agreement,  to  make  a  mistake  as  to  the  substance of  the thing  which  is  the  subject  of  the agreement.”

  • mistake, subject  to  the  provisions of  sections  20, 21  and 22. As
  • “Section 20- Agreement  void  where  both  parties  are  under  mistake  as  to  matter  of  fact.—Where  both  the parties to  an agreement  are  under  a mistake as  to a matter  of  fact  essential  to the agreement, the agreement.
  • Section 21-Effect  of  mistakes  as  to  law.—A  contract  is  not  voidable  because  it  was  caused  by  a  mistake  as to  any  law  in  force  in [India];  but  a  mistake  as  to  a  law  not  in  force  in  1[India]  has  the  same  effect  as  a mistake of  fact.
  • Section 22-Effect  of  mistakes  as  to  law.—A  contract  is  not  voidable  because  it  was  caused  by  a  mistake  as to  any  law  in  force  in [India];  but  a  mistake  as  to  a  law  not  in  force  in  1[India]  has  the  same  effect  as  a mistake of  fact.”
  • LAWFUL OBJECT –

The object used in the formation of a valid contract must be and also on which the parties much agree should be lawful. If the object or consideration is unlawful the agreement will not be enforceable. The object for which the agreement has been entered into must not be fraudulent or illegal  or immoral or opposed to public policy or must not imply injury to the person or property or property of another.

  • ORAL,WRITING AND REGISTRATION

Indian Contract act says an agreement can be oral or in writing unless it is required, mentioned or in special cases require them in writing. As under Section 25 of the act – it requires that an agreement to pay a time barred debt must be in writing and an agreement to make a gift for natural love and affection must be in writing and registered.

Similarly, certain other laws may require writing or/and registration to make the agreement enforceable.

  • CERTAINTY-

The agreement must not be vague or uncertain in order to make a valid contract. It must be possible to ascertain the meaning of the agreement, for otherwise, it cannot be enforced. As section 29 of the act states that “agreements, the meaning of which is not certain or capable of being made certain, are void”.

  • POSSIBILITY OF PERFORMANCE-

A contract must be capable of performance as Section 56 of Indian contract act states that  “An agreement to do an act impossible in itself is void” and with this the agreement cannot be enforced by law.

  1. NOT EXPRESSLY DECLARED VOID –

Section 24-30 specifically describes certain types of agreements which have been expressly declared to be void. So the agreement must not have been expressly declared to be void under the act.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

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