Definition and Eleme

DEFINITION AND ELEMENTS OF CONTRACT
Contracts are agreements between two or more persons, to achieve a particular purpose, specifying the rights
and duties between each other. The term 'contract' has a very wide ambit and can include complex
commercial agreements to simpler agreements one enters into on a daily basis.They involve any agreement
between two or more than two individuals to do something in exchange for another thing.
The term contract is defined in Section 2(h) of the Indian Contract Act,1872,as follows:" An Agreement
enforceable by law is a contract".
Thus for the formation of a contract there must be(1) an agreement,and (2) the agreement should be enforceable
by law.
Every contract is an agreement, but every agreement is not a contract. An agreement becomes a contract
when the following conditions are satisfied:(1) There is some consideration for it. [Ss. 2(d) and 25]
(2) The parties are competent to contract.' [Ss. 11 and 12)
(3) Their consent is free. [Ss. 13-22]
(4) Their object is lawful. [Ss. 23-30]
Section 10 states that: “All agreements are contracts if they are made by the free consent of parties competent
to contract, for a lawful consideration and with a lawful object and are not hereby expressly declared to be void.
ESSENTIAL ELEMENTS OF A CONTRACT.A contract can be entered between two or more parties only, no
one can make a contract with himself. Thus, at least two parties are required to enter into a contract. .A contract
party is an individual or business who enters into a binding agreement with another contracting party, thus
accepting the obligations, responsibilities, and benefits specified within the agreement.
1. There must be at least two parties- one making the offer and the other accepting it. Such offer and
acceptance must be valid.The offer or agreement must be clear and complete in all sense. Both parties
should communicate to ensure there is no lapse in the contract act.
2. To bind, both parties should have a specific intention that can create a legal relationship, resulting in an
agreement. Agreements in social or household nature are not contracts because parties do not intend to
build legal relationships.In other words, agreements made by the parties without an intention to create a
legal obligation are not enforceable by law.
3. There must be free consent of the parties to the contract.Any contract attains legal sanctity when the
parties entering into it give their unconditional, absolute and free consent. Thus, in the case of Coercion,
undue influence, fraud, misrepresentation the contract is voidable but in the case of bilateral mistake, the
contract will be void.
4. Agreements must be capable of performance.When a contract is made and afterward, it becomes
impossible or unlawful to perform due to some reason which the promisor could not prevent, the contract
becomes void.
5. The person to be competent to contract must be major, must be of sound mind and must not be declared
disqualified from contracting by any law to which he is subject. If the parties to agreement are not
competent to contract, then no valid contract comes into existence.
6. Objectives of an agreement should be lawful. It must not be illegal or immoral or opposed to public policy.
It is lawful unless it is forbidden by law. When the object of a contract is not lawful, the contract is void
7. An agreement must be supported by lawful consideration. Consideration means something in return. It
should not be only limited to money, but there should be some value to what has been agreed upon.
8. Consensus ad idem in contract law means there has been a meeting of the minds of all parties involved and
everyone involved has accepted the offered contractual obligations of each party. Consensus ad idem is a
Latin term that means, simply, agreement.
9. There are certain essential elements of a valid contract. And if those elements are not present, the contract
would then be void or voidable. However, there are certain agreements that are expressly void agreements.
This means these agreements that are declared void by the law itself.
10. If there is any uncertainty and both parties are not capable of finding the right path, then it is deemed void.
As a part of the essentials of a valid consideration, the terms and conditions of the contract should be
concrete.
CASE LAW:
In the case of Balfour v. Balfour [1919].A husband agreed to pay his wife a certain amount as
maintenance every month while he was abroad. Husband failed to pay the promised amount. The wife
sued him for the recovery of the amount. As it was a social agreement she cannot recover the amount as
the parties did not intend to create any legal obligations.
Powell v. Lee(1908).Powell had applied to a school for the position of headmaster. A school manager
informed him about his selection unofficially. However, later the school managers decided to appoint
someone else and Powell brought a suit alleging breach of contract that resulted in damages. The King’s
Bench Division upheld the decision that for an acceptance to be valid, the same should be communicated
by the person in an authorized capacity.

Definition and Eleme

Uploaded by

Copyright:

Available Formats

Definition and Eleme

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Definition and Eleme

Uploaded by

Copyright:

Available Formats

DEFINITION AND ELEMENTS OF CONTRACT

You might also like