1. Requirements for a Valid Contract

 

A valid contract is an agreement, which is binding and enforceable. In a valid contract, all the parties are legally bound to perform the contract. The Indian Contract Act, 1872 defines and lists the essentials of a valid contract through interpretation through various judgments of the Indian judiciary. Section 10 of the contract act enumerates the points of essentials for valid contracts. In this article, we will look at the various requirements for a valid contract in detail.

 

2. Contract – An Outline

 

The Contract Act, 1872 states that ‘an agreement enforceable by law is a contract’. Thus for a valid contract, there has to be an agreement which is enforceable by law. Further, for enforceability, an agreement must possess the essential elements of a valid contract as contained in the Contract Act, 1872.

 

3. Agreement

 

The first recruitment of a valid contract is an agreement. Every promise and all set of promises, forming the consideration for each other is an agreement. When a person to whom the proposal is made defines his assent, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.

 

An agreement is valid when one party makes a proposal or offer to other party signifies his assent. The following are required for a valid agreement.

 

1. The agreement must be between two persons. It is required to be between an offeror who accepts the offers becomes an acceptor. Both these parties should be different persons, as one cannot enter into an agreement with himself.

 

2. Both the offeror and offeree in the same sense and at the same time should understand the agreement.

 

4. Enforceability

 

An agreement to mature into a contract must create legal obligation as per the provision of contract laws that is a duty enforceable by law. A brief on all essentials of a valid contract is as follows:

 

1. Offer and Acceptance

 

All offers must be valid and once accepted, it binds both the parties into a valid agreement. The offer is now an acceptor, and thus the agreement is made between an offeror and an acceptor. The adjective lawful suggests that the offer and acceptance must satisfy the recruitments of the contract act in relation.

 

2. Legal Relationship

 

Parties to a contract must desire to constitute a legal relationship. It results when the parties know that if any one of them fails to fulfil his/her part of the promise, he/she would be liable for the failure of the contract.

 

If there is no desire to create a legal relationship, there is no contract between the parties. Agreements of social or domestic natures, which do not contemplate a legal relationship, are not contracts.

 

3. Lawful Consideration

 

Consideration is described as something in return. It is also vital for the validity of the contract. A promise to do something or to provide something without anything in return will not be enforceable by law and, therefore, will not be valid.

 

5. Competency of Parties

 

According to the Contract Act, every person is competent to contract who is the age of majority to which he/she is subject to and who is of the sound mind and is not disqualified from the contracting by any law to which he/she is subject.

 

Thus, according to the Contract Act, every person with the exception of the following is competent to enter into a contract:

 

1. A minor
2. A person of unsound mind
3. A person expressly declared disqualified to get into a contract under any Law

 

6. Lawful Objects

 

According to the Contract Act, an agreement may become a valid-contract only, if it is for a lawful consideration and lawful object. The below-mentioned considerations and objects are not lawful as per the Contract Act:

 

1. If it is forbidden by law
2. If it is against the provision of any other laws
3. If it is fraudulent
4. If it damages somebody’s person or property
5. If it is in the opinion of courts, immoral or against the public policies

 

If an agreement is illegal, immoral or against public policy, such agreement becomes an invalid valid contract.

 

7. Writing and Registration

 

The agreements may be oral or in writing. When the agreement is in writing it should comply with all legal formalities as to attestation and registration. If the agreement does not abide by the requisite legal formalities, the law cannot enforce it.

 

1. Certainty

 

To give rise to the valid contracts, the terms of the must not be vague or uncertain. Ascertaining the meaning of the agreement for must be possible. Otherwise, it cannot be enforced.

 

2. Possibility of Performance

 

A valid contract must be capable of performing. An agreements to do an act impossible in itself are void. If the act is impossible in itself, physically, practically or legally then the agreement is not enforceable.

 

3. Not Expressly Declared Void

 

The agreement must have been expressly declared to be void under the contract laws. This act specifies certain types of agreement that have been expressly declared to be void.

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