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Sir
William Anson defines contract as " a legally binding agreement
between two or more persons by which rights are acquired
by one or more to act or forbearances on the part of the
other or others". Thus it is an agreement upon a sufficient
consideration to do or not to do a particular thing.
In my previous article I mentioned that all contracts are
agreements, but all agreements are not contracts. Therefore
it is necessary to know what are the essentials of a valid
contract.
Essentials
of a valid contract:
The following are the essentials of a valid contract.
1.
Consensus-ad-idem: It means identity of minds. There
must be two parties to a contract. The minds of both the
parties to the contract must be ad-idem. The two parties
must have agreed about the subject matter of the contract
at the same time and in the same sense.
2.
Legal Relationship: The agreement must create legal
relationship between the parties. If there is no intention
on the part of parties to create legal relationship, there
is no contract. An agreement to dine at a friend's house
is not an agreement intended to create legal relations and
therefore, is not a contract.
A father promises to pay his son Rs.200 every month as pocket
allowance. Later he refuses to pay. The son cannot recover
it as it is a domestic agreement and does not intend to
create legal relations.
3.
Lawful Consideration: Consideration means "something
in return". In other words, it means "something in exchange
for something". It is the price for the promise. Every valid
agreement without consideration is void. An agreement with
unlawful consideration is void. For example, A promises
to obtain for B an employment in public service and B promises
to pay Rs. 20000 to A. The agreement is void as the consideration
for it is unlawful. In English law, no consideration is,
however, necessary in the case of formal contracts.
4.
Lawful Object: The object or the purpose of an agreement
must be lawful. It must not be immoral or illegal or oppose
to public policy.
5.
Competent parties: At least two parties are essential
for every valid contract. Further, the parties must be legally
competent to contract. If they are not competent, the contract
is not valid. Every person is competent to contract if he
has attained the age of majority and he is of sound mind.
6.
Free Consent of parties: The consent of the parties
to the agreement must be true, full and free. Otherwise,
the contract is unenforceable. Consent is said to be free
when it is not obtained by coercion, undue influence, misrepresentation,
mistake and fraud.
7.
Certainty of terms: The terms of the agreement must
be precise and certain. They must not be vague or uncertain.
If so, the agreement is not enforceable.
8.
Possibility of performance: The agreement must be capable
of being performed. An agreement to do an impossible act
cannot be enforced. Law does not compel anybody to do an
impossible act.
9.
Agreement not expressly declared void: The agreement
must not have been expressly declared void by any law in
force in the country.
10.
Compliance with the legal formalities: According to
the Indian Contract Act, an agreement may be oral or in
writing. Where the agreement is to be in writing, it must
comply with the necessary legal formalities as to writing,
registration and attestation. If the agreement does not
comply with the necessary legal formalities, it cannot be
enforced by law. In India, writing is required in case of
lease, gift, sale and mortgage of immovable properties.
Sandeep
Shenoy,
Advocate,
Mysore.
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