Essential Elements of a Contract in Indian Contract Act, 1872

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The following are the essential elements of a Contract as defined in Section 10 of the Indian Contract Act, 1872.

Contents

Agreement - Offer and Acceptance

The parties to the contract should have a mutual understand regarding the subject-matter of the contract. There must be a "lawful offer" and "lawful acceptance" thus resulting in an agreement. The parties must have agreed to the subject-matter in the same sense.

Legal purpose

There must be an intention among the parties that the agreement should be attended to by legal consequences and create legal obligation.Agreements of social or domestic nature do not contemplate legal relations.

Related Case Laws

Lawful Consideration

Consideration means 'something in return'. In every legal contract, there must be something in return. An agreement is legally capable to be enforced only when each of the parties to it gives something and gets something. The consideration should not be unlawful, illegal, immoral or opposed to public policy.

Capacity to contract

Every person who enters into a contract must be competent. In other words, the person should be of the age of majority, should have a sound mind, and must not be disqualified from any law to which they subject. Minors, lunatics, unsound and intoxicated persons are incompetent to enter into a contract. However, there are exceptions as defined in Section 68. In case of an exception the minor or lunatic is not personally liable.

Consent to contract

All the parties must have agreed upon the subject matter of the agreement in the same sense. Section 14 says that if the agreement is induced by coercion, fraud misinterpretation or mistake, it is said to be "no free consent" and such a contract is voidable and cannot be enforceable by law.

Lawful object

If the object in the agreement is unlawful, the agreement is void.
Eg: The landlord cannot recover rent through court of law when he knowingly lets his house to carry on prostitution.

Certainty

Every agreement of the contract must be certain. If the agreement is not certain or incapable of being made certain, it is void.

Possibility of Performance

Every contract must be capable of performance. Otherwise, the agreement is void. An agreement to do an impossible act whether physically or legally, is void.

Not expressly declared void

The agreement must not have been expressly declared to be void under the Act. Examples of such agreements are restrainment of trade, marriage, legal proceedings and wagering agreements. Such agreements are not enforceable by law.

Legal formalities like Writing, Registration etc.

A contract may be oral or in writing according to the Indian Contract Act. In certain special cases the agreement must be in written. In some cases like contracts by companies, selling or buying of shares etc., the contract must be registered.

All the above ingredients must be satisfied in every valid contract. It can be noted that all contracts are agreements, but not all agreements are contracts.


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