Essential Elements For Valid Contract

Essential elements under Section 10 of Indian Contract Act

a) Agreement

b) Free Consent

c) Competency of the parties

d) Lawful Consideration

e) Legal object

f) Not expressly declared to be void

Not given under section 10 but still are essentials of valid contract –

a) Two parties

b) Intention to create a legal relationship

c) Legal formalities

d) Certainty of meaning

e) Possibility of performance

1) Two parties – There should be at least 2 parties for a contract.

2) Offer – There shall be an offer or proposal by one party

3) Acceptance – Offer made should be accepted by the other party

4) Lawful consideration – The agreement shall be supported by lawful consideration

5) Lawful object – The object and consideration of the contract shall be legal

6) Competent (capacity) to contract – Section 11

a) The parties to the contract shall be competent to contract

b) For a person to become competent to contract –

- Such person should be major (18+)

- Such person should be of sound mind (Section 12)

- Such person should not be disqualified by law

7) Free consent –

a) There shall be free consent between the parties to the contract

b) Consent is said to be free when the following elements are absent (Section 14)

- Coercion (Section 15)

- Undue influence (Section 16)

- Fraud (Section 17)

- Misrepresentation (Section 18)

- Mistake (Section 20, 21, 22)

8) Intention to create legal relationships – The intention of the parties to a contract must be to create a legal relationship between them.

Example: A husband promising his wife to buy her a ‘necklace’ on occasion of her birthday is not a contract.

9) Possibility of performance – The agreement should be capable of being performed Example - if A promises B to bring rainfall through magic. Such agreement cannot be enforced

10) Legal formalities – Legal formalities if any required for a particular agreement such as registration, and writing, must be followed