Essential Elements of a Valid Contract

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Essential Elements of a Valid Contract

Unread postby Admin » Thu Jan 24, 2013 2:31 pm

Essential Elements of a Valid Contract
According to Section 10, "All agreements are contracts, if they are made by the free consent of the parties, competent to contract, for a lawful consideration with a lawful object, and not hereby expressly to be void."

Essential Elements of a Valid Contract are:
1. Proper offer and proper acceptance. There must be an agreement based on a lawful offer made by person to another and lawful acceptance of that offer made by the latter. Section 3 to 9 of the Contract Act, 1872 lay down the rules for making valid acceptance.

2. Lawful consideration:
An agreement to form a valid contract should be supported by consideration. Consideration means “something in return” (quid pro quo). It can be cash, kind, an
act or abstinence. It can be past, present or future. However, consideration should be real and lawful.

3. Competent to contract or capacity:
In order to make a valid contract the parties to it must be competent to be contracted. According to section 11 of the Contract Act, a person is considered
to be competent to contract if he satisfies the following criterion:
• The person has reached the age of majority.
• The person is of sound mind.
• The person is not disqualified from contracting by any law.

4. Free Consent:
To constitute a valid contract there must be free and genuine consent of the parties to the contract. It should not be obtained by misrepresentation, fraud, coercion, undue
influence or mistake.

5. Lawful Object and Agreement:
The object of the agreement must not be illegal or unlawful. 6. Agreement not declared void or illegal: Agreements which have been expressly declared void or illegal by law are not enforceable at law; hence does not constitute a valid contract.

7. Intention to Create Legal Relationships
8. Certainty, Possibility of Performance
9. Legal Formalities
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