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ESSENTIALS OF A CONTRACT AND THEIR EXAMPLES

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.
EXAMPLE - A proposes to sell his Linea car to B for a said amount ( offer ) , B accepts the offer and
agrees to buy the car for the said amount ( acceptance ) . I
2. CONSENT
Two requirements of any contract in respect to the element of contract are

a) Presence of consent itself This basically means agreeing on the same thing in the same sense .
b)

The contract is legally not valid unless the parties understand


each other and the subject matter of the consent .
EXAMPLE A has 2 pet dogs names Fluffy and Buddy . A makes an offer to sell his pet dog ( Buddy
) . B accepts the offer thinking that A wants to sell Fluffy . In this case , the consent is not there as
both the parties are not agreeing on the same thing .

c) Free consent
This means that the consent should be given freely . This means that the party accepting the offer
must do so without any physical or mental pressure . Consent is said to be free when it is not
caused by

Coercior ,
Undue influence , or
Fraud , or
Misrepresentation , or
Mistake
Ex- A threatens B that if B does not sell his house to A , A will kill him . B sells his house to A
because of this threat . So , there is no legal contract .
3. COMPETENCE OF THE PARTIES TO CONTRACT
The following people cannot enter into a contract and if they do , the contract is void ab initio

Minors ( under 18 yrs of age )


People with unsound mind

Example- A 15 year old boy , Anmol agrees to sell the house he lives in to Raj , a 30 year old techie
for 10 lakh rupees . B gives the whole amount to A . This contract is void ab initio as a minor is not
competent to enter into a contrat .
4. LAWFUL CONSIDERATION IS A MUST
A contract cannot be made and enforced for an unlawful and illegal object like smuggling etc.

Example A agrees to give B , a contract killer if B kills As wife . After B kills As wife , A refuses to
give the promised payment . In this case , B cannot sue A in court as there was no legal contract as
the essential element of the contract was not lawful .
5. AGREEMENT NOT EXPRESSLY DECLARED VOID

The agreement must not have been expressly declared void under the provisions of
Sections 24 to 30 of the Indian Contract Act, 1872. These provisions include agreement in

* Restraint of marriage,
* Restraint of legal proceedings
* Restraint of trade and agreement by way of wager
Example - Anshu , Roshnis mother agreed to pay Rs 50,000 to Roshnis lover , Kanan if he
does not marry Roshni . After Anshu gives the money to Kanan but Kanan still marries Roshni .
Anshu sued Kanan and it was declared that Anshu was not entitled to recover anything as this
agreement was in restraint of marriage and thus void .

6. Possibility of Performance
The terms of the agreement must be such as are capable of performance.
According to Section 56, an agreement to do an impossible act is void.

Example Ron agrees to bring Harrys dead mother back to life in exchange of
2 lakh rupees . This agreement is void because this is an agreement to do
impossible task .

7. Intention to create legal relations:


There must be an intention among the parties that the agreement should be attached by
legal consequences and create legal obligations. Agreements of a social or domestic nature
do not contemplate legal relations, and as such they do not give rise to a contract.
Ex- A , Js husband agrees to take her for dinner on their anniversary but could not sue to
some urgent work-related accident . J cannot sue A as this was a social contract and not a
legal one .
8. Certainty:

Section 29 of the Contract Act provides that Agreements, the meaning of which is not
certain or capable of being made certain, are void. In order to give rise to a valid contract
the terms of the agreement must not be vague or uncertain. It must be possible to ascertain
the meaning of the agreement, for otherwise, it cannot be enforced.
Example A agrees to sell B thousands of games. There is nothing whatever to show what kind of
games was intended or the number of games . The agreement is void for uncertainty .
9. Writing and registration:
According to the Indian Contract Act, a contract may be oral or in writing. But in certain
special cases it lays down that the agreement, to be valid, must be in writing or/and
registered. For example, it requires that an agreement to pay a time barred debt must be in
writing and an agreement to make a gift for natural love and affection must be in writing and
registered (Sec. 25).
Similarly, certain other Acts also require writing or and registration to make the agreement
enforceable by law which must be observed.
Thus, (i) an arbitration agreement must be in writing as per the Arbitration and Conciliation
Act, 1996; (ii) an agreement for a sale of immovable property must be in writing and
registered under the Transfer of Property Act, 1882 before they can be legally enforced.
10. Unlawful object:
For the formation of a valid contract it is also necessary that the parties to an agreement
must agree for a lawful object. The object for which the agreement has been entered into
must not be fraudulent or illegal or immoral or opposed to public policy or must not imply
injury to the person or property of another (Sec. 23).
If the object is unlawful for one or the other of the reasons mentioned above the agreement
is void.
Example - A knowingly lets his house to a prostitute to carry on prostitution . He cannot
recover the rent through a court of law as the object is unlawful .