Introduction:
The Contract Act, 1872 lays down the general principles subject to which the contracting parties may create the rights and duties for themselves. These general principles are contained in section 1 - 75. The principal nature of Law of Contract, therefore, are as follows:
(i) The parties to the Contract make the law for themselves.
(ii) It does not override customs or usages.
(iii) The Act is not exhaustive.
Definition of Contract:
The starting point of a contract is a promise or an agreement. Section 2(e) defines an agreement as, "every promise and every set of promises, forming consideration for each other". I other words, an agreement is formed where one party makes the proposal and the other party accepts it. But a contract is more than mere agreement.
According to Section 2(h), a contract is, "an agreement enforceable by Law".
Essentials of a valid Contract:
According to Section 10 read with section 2(h) of the Contract Act, 1872, the following are the essentials of a valid Contract.
Agreement: Agreement is fundamental to a contract. It is the result of offer and acceptance. An offer consists of the expression of willingness by a party to do or not to do an act. The other party must accept the offer in the same sense.
Consensus as idem: For a valid agreement to ensure , there must be a complete meeting of minds between the contracting parties.
Free Consent: The contracting parties must give their consent freely. It must not be given due to coercion, undue influence, fraud, misrepresentation or mistake. The absence of free consent would affect the legal enforceability of a contract.
Contractual Capacity: The parties making the contract must be legally competent in the sense that each must be of the age of majority, of sound mind and not expressly disqualified from contracting (section 11). An agreement by incompetent parties shall be a legal nullity.
Lawful Consideration: Consideration is the price for which the promise of the other party is sought. Without consideration, a contract is regarded as a nudum pactum. Each of the contracting parties must give as well as get something. Moreover, the consideration must be Lawful.
Lawful Object: The object of the agreement must be lawful. it is considered unlawful if is (i) illegal, (ii) immoral, (iii) fraudulent, (iv) of a nature that, if permitted, it would defeat the provisions of any law, (v) causes injury to the person or property of another, or (vi) opposed to public policy.
Not Expressly Declared Void: The agreement must not have been declared void by any law in force in India. The Act has itself declared void certain types of agreements such as those in restraint of marriage, or trade, or legal proceedings as well as wagering agreements.
Intention to create legal relations: Though not mentioned in section 10, it forms an essential ingredient of a contract under the English law. Thus, the agreement sought to be enforced should contemplate legal relations between the parties to it.
Certainty of meaning: The terms of the agreement must be certain, or capable of being made certain
Legal Formalities: Second para of Section 10 provides that nothing herein contained shall effect any ... by which any contract is required to be made in writing, or in the presence of witnesses, or any law relating to the registration of documents. Therefore, where the Law requires an agreement to be put in writing or to be registered, the same must be complied with.
Conclusion:
Therefore, for a contract to be legally binding and valid, it has to fulfil the above said essential features.
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