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Essentials of Valid Contract



Following are the elements which are essential for valid contract.

Section 10 of the contract act states that “all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration with lawful object, and are hereby expressly declared to be void ”.


Every promise or set of promises forming the consideration for each other is called agreement.

Agreement to be termed as contract must have:

Offer and acceptance:

To determine whether an agreement have actually been conducted, it is normally necessary to inquire whether in the negotiations which have taken place between the parties, there has been definite offer by one party, and an equally definite acceptance of that offer by the other.

Legal obligation:

A contract must create legal obligations. A promise which is voluntary and by which the parties do not intend to create any legal obligation cannot amount to a contract. (Air pat 231 -32 Pat 152 (DB)

Plurality of parties:

A contract implies two parties. The same party cannot be party to a contract on both sides and hence there can hardly be a contract between A on one side and A and B on the other side.

Competent to contract:

In order to constitute a valid contract, the parties must be competent to contract. Section 11 of the Act states that “every person is competent to contract who is of the age of majority according to the law to which the is subject and who is of sound mind, and is not disqualified from contracted by any law to which he is subject.”

Contract by minor void:

A contract by minor is void ab initio and not merely voidable and hence cannot be sued upon. Such a contract has no existence in the eye of law.

Contract by person of unsound mind:

Persons insane and persons disqualified by law are treated in the section ejusdem generis with minors without reservation, modifications or qualification of any kind. Therefore, a contract by a person of unsound mind is void ab initio and not merely voidable.

Disqualification to contract under other law:

Agreements by disqualified person are void.

Free consent:

The agreement must have been made by the free consent of the parties i.e., when they agree upon the same thing in the same sense.

To constitute free consent following conditions must fulfilled.

  • Both the parties agree upon the same thing in the same sense.

Such consent should not have been caused by

  • Coercion (as defined in S.15 of Act)
  • Undue influence (as defined in S.16 of Act)
  • Fraud (as defined in S. 17)
  • Misrepresentation (as defined in S.15 of Act)
  • Mistake (as defined in 20-22).

Consent is free, when the activity of man, by which it is effective, works without obstacle to impede its exercise. The obstacles are stated in S.14. The law upon the question of free consent is given in the statue itself, and therefore, the court has to administer the law in a case which comes within its provisions irrespective of the consideration whether the application of the provisions would or would not disfavour the abuse of moral influence or encourage moral cowardice.

Lawful consideration:

Every agreement of which object or consideration was unlawful would be void. Where consideration or object of agreement was lawful, but the same of such nature that if permitted, it would defeat provisions of any law or court regard the same as opposed to public policy, it would be void.                                                                                                                                                                (1991 CLC 1591)

The agreement must be for lawful consideration and lawful object. The consideration and object are said to be unlawful, if

  • It is forbidden by law, whether it is express or implied.
  • It is of such a nature that if permitted, it would defeat the provision of any law.
  • It is fraudulent.
  • It involves on injury to the person or property of another.
  • The court regards it as immoral or opposed to public policy.

Not to be void:

A lawful agreements or contracts consisted of three essentials; namely proposal, acceptance and consideration. Any transaction without consideration could not be lawfully enforced nor on the basis thereof declaration of any right could be made.

Under this act the following agreement are declared void.

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