Essential Elements of a Valid Contract
Valid Contract Must have The following Elements:
The agreement means communication by the parties to one other their intention to create relationship. This requires a personal from the side of one party and its acceptance by the other party. Thus a contract requires two parties-one making the personal and the other accepting it.
2. Competent of parties
According to Sec 11 of the Act, “Every person is competent to contract who is of the age of majority according to the law to which he is subject to and who is of sound mind and is not disqualified from contracting by any law to which he is subject.”
Thus, according to Section 11, every person with the exception of the following is competent to enter into a contract:-
(i) A minor,
(ii) A person of unsound mind, and
(iii) A person expressly declared disqualified to enter into a contract under any Law.
3. Free consent
Another essential of a valid contract is the consent of parties, which should be free. Under Sec. 13, “Two or more parties are said to consent, when they agree upon the same thing in the same sense.” Under Sec. 14, the consent is said to be free, when it is not induced by any of the following:- (i) coercion, (ii) misrepresentation, (iii) fraud, (iv) undue influence, or (v) mistake.
Consideration is known as ‘something in return’. It is also essential for the validity of a contract. A promise to do something or to give something without anything in return would not be enforceable at law and, therefore, would not be valid.
Consideration need not be in cash or in kind. A contract without consideration is a ‘wagering contract’ or ‘betting’. Besides, the consideration must also be lawful.
5. Lawful objects
According to Sec. 10, an agreement may become a valid-contract only, if it is for a lawful consideration and lawful object. According to Sec. 23, the following considerations and objects are not lawful:-
- If it is forbidden by law;
- If it is against the provisions of any other law;
- If it is fraudulent;
- If it damages somebody’s person or property; or
- If it is in the opinion of court, immoral or against the public policy.
Thus, any agreement, if it is illegal, immoral, or against the public policy, cannot become a valid contract.
6. No expressly declared void
The agreement must have not been expressly declared void by any law in force the county.
Under different sections of the Contract Act, 1872, the following agreements have been said to be expressly void.
- Agreements made with the parties having no contractual capacity, E.x. minor and person of unsound mind.
- Agreements made under a mutual mistake of fact.
- Agreements with unlawful consideration or object.
- Agreements, whose consideration or object is unlawful in part.
- Agreements having no consideration.
- Agreements in restraint of marriage.
- Agreements to do impossible acts.
7. Compliance with the Legal formalities
The agreement may be oral or in writing. When the agreement is in writing it must comply with all legal formalities as to attestation, registration. If the agreement does not comply with the necessary legal formalities, it cannot be enforced by law.
Contracts which must be in writing; Following the some of the contracts are documents which must be in writing,otherwise they will not be valid.
- A promise to pay a time-barred debt.
- An arbitration agreement.
- Lease agreements for a period of more than three years.
- Contracts of insurance.
- Negotiable instruments Ex: bills of exchange,cheques or promissory notes.
- Memorandum and articles of association of a company.
- Contracts relating to transfer of immovable properties.