Elements and Requisites of a valid contract
By Shreya Verma
Contract is an agreement which is lawfully enforceable. And it is lawfully enforceable only if it complies with the provisions of the Indian Contract Act, 1882. Contract is a law but only between the parties. Indian Contract Act does not enumerate any rights or duties of parties, rather it really leaves principle for enforcement of those rights and duties.
Elements of a Contract: There are four basic elements of the contract which are:
(i) proposal or offer- when a person signifies his willingness to do or not to do an act to another person, with a view of obtaining assent of that other person.
(ii) acceptance- when the person to whom the acceptance is made give his assent to comply with the proposal.
It is essential that both the proposal and the acceptance must be communicated.
(iii) consideration- when the promisee, at the desire of the promisor does, agrees to do or promises to do or abstain from doing something in such act or promise is the consideration for other. Consideration thus must be paid and it can be paid in present past or future.
Consideration is an essential part of a contract. Any contract sans consideration is void ab initio.
(iv) capacity to contract- a person is incapable of entering into contract if he is not in a position to to understand the terms of the contract by virtue of minority or unsoundness of mind, or if, he has been prohibited to enter into a contract by virtue of a law in force for the time being.
Requisites of a valid contract:
An agreement is legally enforceable becomes a contract only if it complies with the provisions as provided under section 10 which talks about requisites of a valid contract. Section 10 of Indian Contract Act lays down five:
Person entering into the contract should be capable of entering into a contract: Section 10 and section 11 deals with provisions as to when a person is not capable of entering into contract, a person is not people of giving consent if he is a minor for person of unsound mind or the one who has been expressly declared by law to be incapable of entering into contract (e.g., a forest Guard cannot participate in auction of wood)
Free consent: Consent is said to be a free consent if it is not induced by any undue influence, coercion, fraud misrepresentation, or mistake. A contract for which the consent was obtained by way of undue influence, coercion, fraud or misrepresentation is voidable at the option of the person whose consent was obtained and when both the parties were at mistake of fact the agreement will be void.
the contract must have a lawful object: Section 23 of Indian Evidence Act lays down as to what object and consideration are considered to be lawful- It is not forbidden by law; it would not defeat the provisions of any law; or is not fraudulent; or does not involve or implies injury to the person or property of another; or the Court does not regard it to be immoral; or it is not opposed to public policy.
the contract must have a lawful consideration: A contract which does not comply with the provisions of Section 23 is void. And a contract without consideration too is void under the provisions of Section 25.
such contract must not be declared to be void: Section 26-30 lies down the situations when a contract is expressly declared to be void. Contract expressly declared to be void when it is in restraint of legal proceeding, marriage, trade or wagering agreements etc.