ESSENTIAL ELEMENTS OF A VALID CONTRACT

All agreements are not contracts. Only that agreement which is enforceable at law is a contract. An
agreement which is enforceable at law cannot be contract. Thus, the term agreement is more wider in
scope than contract. All Contracts are agreements but all agreements are not contracts.
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An agreement, to be enforceable by law, must possess the essential elements of a valid contract as
contained in section 10 of the Indian Contract Act. According to Section 10, "All agreements are contract if
they are made by the free consent of the parties, competent to contract, for a lawful consideration and with
a lawful object and are not expressly declared to be void." As the details of these essentials form the
subject-matter of our subsequent chapters, it is proposed to dismiss them in brief here.

The following are the essential elements of a valid contract:

1. Offer and Acceptance. In order to create a valid contract, there must be a 'lawful offer' by one party
and 'lawful acceptance' of the same by the other party. Neha nithanth
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2. Intention to Create Legal Relationship. In case, there is no such intention on the part of parties, there
is no contract. Agreements of social or domestic nature do not contemplate legal relations.
Case: - Balfour vs. Balfour (1919)

3.Lawful Consideration. Consideration has been defined in various ways. According to Blackstone,
Consideration is recompense given by the party contracting to another." In other words of Pollock,
"Consideration is the price for which the promise of the another is brought."
Consideration is known as quid pro-quo or something in 5196190232563512 return.

4. Capacity of parties. The parties to an agreement must be competent t contract. If either of the parties
does not have the capacity to contract, the contract is not valid. ccv: 183 expiry date: 02/35
According the following persons are incompetent to contract.
(a) Miners, (b) Persons of unsound mind, and
(c) persons disqualified by law to which they are subject.

5. Free Consent. 'Consent' means the parties must have agreed upon the same thing in the same sense.
According to Section 14, Consent is said to be free when it is not caused by-

(1) Coercion, or (2) Undue influence, or (3) Fraud, or

(4) Mis-representation, or (5) Mistake.
An agreement should be made by the free consent of the parties.

6. Lawful Object. The object of an agreement must be valid. Object has nothing to do with consideration.
It means the purpose or design of the contract. Thus, when one hires a house for use as a gambling
house, the object of the contract is to run a gambling house.

The Object is said to be unlawful if-

(a) it is forbidden by law;

(b) it is of such nature that if permitted it would defeat the provision of any law;
(c) it is fraudulent;
(d) it involves an injury to the person or property of any other;
(e) the court regards it as immoral or opposed to public policy.

7. Certainty of Meaning. According to Section 29,"Agreement the meaning of which is not certain or
capable of being made certain are void."
8. Possibility of Performance. If the act is impossible in itself, physically or legally, if cannot be enforced
at law. For example, Mr. A agrees with B to discover treasure by magic. Such Agreements is not
enforceable.

9. Not declared to be void or illegal. The agreement though satisfying all the conditions for a valid
contract must not have been expressly declared void by any law in force in the country. Agreements
mentioned in Section 24 to 30 of the Act have been expressly declared to be void for example agreements
in restraint of trade, marriage, legal proceedings etc.

10. Legal Formalities. An oral Contract is a perfectly valid contract, expect in those cases where writing,
registration etc. is required by some statute. In India writing is required in cases of sale, mortgage, lease
and gift of immovable property, negotiable instruments; memorandum and articles of association of a
company, etc. Registration is required in cases of documents coming within the scope of section 17 of the
Registration Act.

All the elements mentioned above must be in order to make a valid contract. If any one of them is absent
the agreement does not become a contract.

OFFER

Meaning An offer is the starting point in the making of an agreement. An offer is also called `proposal. According to
Section 2(a) of The Indian Contract Act, 1872, A person is said to have made the proposal when he signifies to
another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that other
to such act or abstinence. 919043268022

Essential Elements An offer involves the following essential elements:

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(a) It must be made by one person to another person. In other words, there can be no
proposal by a person to himself.

Example: X says to Y that he wants to sell his car to himself for Rs. 1 lakh. There is no
proposal because there can be no proposal by a person to himself.

(b) It must be an expression of readiness or willingness to do (i.e. a positive act) or to

abstain from doing something (i.e. a negative act).

Example I: X offers to sell his car to Y for Rs 1 lakh. It is a positive act on the part of X.

Example II: X offers not to file a suit against Y if Y pays X use outstanding amount of Rs. 1,
00,000. It is a negative act on the part of X.

TYPES OF OFFER

1. Specific Offer
 A specific offer is one which is made to a definite person or particular group of
persons. A specific offer can be accepted only by that definite person or that particular
group of persons to whom it has been made.

Example X offers to buy car from Y for Rs 1.0 lakh. This offer is a specific offer
which has been made to a definite person Y No person other than Y can accept this offer

2. General Offer A general offer is one which is not made to a definite person, but to the
world at large or public in general. A general offer can be accepted by any person by
fulfilling the terms of the offer. In case of general offer, the contract is made with person
who having the knowledge of the offer comes forward and acts according to the conditions
of the offer.

Example X advertiser! In the newspaper that he would pay Rs 5,000 to anyone who traces his missing boy. Y who
knew about the reward traced that boy and sent a telegram to X that he had found his soil, It was held that X was
entitled to receive the amount of reward. [Harbhajan Lal v. Harcharan Lal (AIR All 539)]

3. Cross Offers

Meaning Two offers which are similar in all respects made by two parties to each other, in ignorance of each
others offer are known as `cross offers.

Effect Cross offers do not 6071701503155966 12/25 464 amount to acceptance of ones offer by the other.
Hence, no contract is entered into on cross offers.

Example X of Agra sends a letter by post to Y of Delhi offering to sell his car for Rs 1 lakh. The letter is
posted on 1st January and the same day. Y of Delhi sends a letter by post to X of Agra offering to buy Xs car for Rs
1 lakh. These two letters cross each other. Ys letter is merely an offer and not the acceptance of Xs letter. Here, both
the parties are making offer and no party has accepted the offer Therefore, no contract has been entered into. If they
want to enter into a contract, at least one of them must send his acceptance to the offer made by the other.

4. STANDING OFFER/OPEN OFFER/CONTINUING OFFER

Meaning An offer of a continuous nature is known as standing offer.

Nature A standing offer is in the nature of a tender.

Contract A contract is said to have been entered into only when an order is placed on the basis of the tender.

Example X Ltd. requires a large quantity of certain goods during the 12 months period and gives an
advertisement inviting tender in the leading newspaper Z submitted the tender to supply those goods at a specific rate.
Zs tender is accepted or approved. Now, Zs tender becomes a standing offer. Each order given by X Ltd. will be an
acceptance of the offer.