Essential Elements of a Contract


According to William Anson__“It is an agreement enforceable at law made between two or more persons,by which rights are required by one or more to acts or forbearances on the part of the other or others”.

According to Salmond__“An agreement creating and defining obligations between the parties”.

According to¬†Federick Pollock__” Every agreement and promise enforceable at law is a contract”.

Sec 2(h) of the Indian Contract Act defines ‘It is an agreement enforceable at law’. Every contract,thus combines two essential elements (i) agreement and (ii)obligation. It creates rights and obligations between the parties to the contract,which are correlative. In case a party refuses to honour a contracted obligation it will give right of action to the other party.

Essential Elements of a Contract

1. Two parties

Two parties are necessary to make a contract. The person who makes the promise is known as the ‘promisor’ and the person to whom the promise is made is known as a ‘promisee’

2. An agreement

There has to be an agreement between two parties. An offer when accepted becomes an agreement. Thus, an agreement implies an offer and acceptance. The term of implies the willingness of a person to do or not do something and on its communication to other,while acceptance means assent by the party to whom the offer has been made.

3. Legal obligation

The agreement should give rise to a legal obligation,i.e,obligation which is enforceable at law. Agreements which gives rise only to social or domestic obligations cannot be termed as contracts. An agreement to go to a picture or attend a marriage ceremony is not a contract as it doe’t give rise to any legal obligation. They are often not intended to a binding in law. The most usual form of agreements,which do not constitute a contract,are the agreement made between husband and wife. There are not contracts because the parties do not intend that they should be attend by legal consequences. But where A agrees B to supply him 1,000 bales of cotton at Rs.100 per bale,there is a contract,because if any party is not prepare to fulfil his part,the other party can have recourse to legal remedies.