Question 1. What are the essentials of a valid contract?

Answer. Essentials Elements of a Valid Contract

According to the Indian Contract Act 1872, "Agreements are also contracts made by the consent of
parties, competent to contract to consider with a lawful object and are not hereby expressly
declared to be void”. Therefore, the contract or the agreement must carry essential aspects to
maintain the normal phase of duties by both parties.

Example:

A and B underwent the contact, where A will purchase 10 bags of cement for Rs 1, 00,000. B
promises to supply the same in the given period and the quality mentioned. A promise to pay the
sum as per the mentioned method in the contract. In this case, both parties have to perform the act
as per the agreement signed.

Essential Elements of a Valid Contract

To explain the essentials of a valid contract, we bring you with the list unfolded by the Indian
Contract Act 1872-

 Offer and Acceptance

Generally, the written contract only unfolds when the other party accepts the offer by one party and
is definite in all sense. The offer or agreement must be clear and complete in all sense. Both parties
should communicate to ensure there is no lapse of the contract act. Both the offer and acceptance
must be "consensus ad idem", meaning, both parties must comply on the same thing.

 Intention to create a Legal Relationship

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.

 The intent of Legal Obligations

One of the essential elements of a valid offer is that both parties subject to a contract must be clear
with the intentions of creating a legal relationship. This also means that agreements that are not
enforceable by the law like agreements between relatives are enforceable in the court of law.

 Possibility of Performance of Agreement

In this case, suppose two people decide to undergo an agreement where person A agrees to bring
person B’s dead relative back to life, this will not fall under the legal contract act because bringing
back the deceased person alive is an impossible task. Thus, the agreement does not stand valid.

 Legal Formalities
In this agreement, 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 essentials of a valid consideration, the terms and
conditions of the contract should be concrete. Any contract, which is uncertain in any sense, can be
termed as void. The terms mentioned in the agreement should be capable of performing specific
thoughts.

 Consideration

Consideration means the moral value given for the performance of the promise. It should not be
only limited to money, but there should be some value to what has been agreed upon. One of the
essentials of valid consideration is that it should not be adequate, but should carry some value.

Question 2. Describe the following illustrations with supporting statements-

a) A boy threatens his girlfriend to release a property else he will leave her. She signs the
agreement as she wants to continue the relationship. What is the status of the contract in
this case?

Ans. In Indian Contract Act, committing any act which is forbidden by law defined under the Indian
Penal Code or Unlawful to confine property. The act is harmful to the other party and some legal
action may arise out of it. This is amounting to coercion. It is invalid to contract (Under Section 15).

According to section 15 of the Indian Contract Act, 1872, coercion is defined as the committing, or
threatening to commit, any act forbidden by the Indian Penal Code (45 of 1960), or the unlawful
detaining, or threatening to detain, any property to the prejudice of any person whatever, with the
intention of causing any person to enter into an agreement. Coercion is referred to a practice of
forcing an individual to come into a contract. When threat or actual harm is used to force someone
to enter into a contract, the consent obtained for the same is not free consent. Coercion may involve
the actual infliction of physical pain or injury, or psychological harm in order to enhance the
credibility of a threat. The threat of further sabotage may lead to the cooperation or obedience of
the person being coerced

b) Ram offers to sell his laptop to Rita at Rs. 35000/- Rita replies that she will buy it for Rs.
30000. Is the acceptance valid?

Ans. Before the information of contract we can bargain for the product and both parties can apply
terms and conditions in the light of law, if both the parties were ready to accept that offers then the
contract will be formed and valid.

C)A tells B to communicate his acceptance to him by what’s app message. B is ready to accept
A’s offer and sends his acceptance by post. Discuss the validity of the acceptance.

Answer. Acceptance must be unconditional and absolute. There cannot be conditional acceptance,
that would amount to a counteroffer which nullifies the original offer. Let us see an example. An
offer to sell his cycle to B for 2000/-. B says he accepts if A will sell it for 1500/-. This does not amount
to the offer being accepted, it will count as a counteroffer.
Also, it must be expressed in a prescribed manner. If no such prescribed manner is described then it
must be expressed in the normal and reasonable manner, i.e., as it would be in the normal course
of business. Implied acceptance can also be given through some conduct, act, etc.

However, the law does not allow silence to be a form of acceptance. So, the offeror cannot say if no
answer is received the offer will be deemed as accepted.

d) A, the sub-ordinate sells his land to B, who is his employer. The price is quite low when
compared to the market price. B offers promotion to A. is the contract of sale valid?

Ans. If the seller sells his land happily with his consent, then the sale is valid. On the other hand, B
offers promotion to A. seller seeing more profit in the promotion.

According to section 2(d) of the Indian Contract Act “when at the desire of the promisor, promise or
any other person has done or abstained from doing or does or abstains from doing or promises to
do or to abstain from doing something, such act or abstinence, or promise is called a consideration
for the promise.

e) A owns a piece of Land. B discovers that the land has vein of ore. A is unaware of it and
sells the Land at an undervalue to B after B successfully conceals about it from A. is the
contract valid?

B, having discovered a vein of ore on the estate of A, adopts to conceal and does conceal, the
existence of the ore from A. B is able to buy land at an under value. A may cancel the contract
because it is fraud committed against him by B.

Section 19. Voidability of agreements without free consent. —When consent to an agreement is
caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option
of the party whose consent was so caused. ... The contract is voidable at the option of B.

f) “If you do not deny it, I shall accrue that the horse is sound.”- this was A’s statement while
buying the horse from B. B says nothing. Is it fraud?

Answer. A party to a contract whose consent was caused by fraud or misrepresentation, may, if he
thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which
he would have been if the representations made had been true.

(Section 19)

Exception. —If such consent was caused by misrepresentation or by silence, fraudulent within the
meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so
caused had the means of discovering the truth with ordinary diligence.

Explanation. —A fraud or misrepresentation which did not cause the consent to a contract of the
party on whom such fraud was practiced, or to whom such misrepresentation was made, does not
render a contract voidable.
g) A enters into an agreement with B to traffic children from one Kolkata to Mumbai. What is
the legal status?

Ans. Criminal Law (Amendment) Act 2013, provide comprehensive measures to counter the human
trafficking include trafficking of children for exploitation in any form including physical exploitation
or any form of sexual exploitation, slavery, servitude or the forced removal of organs.

According to act The Criminal Law (Amendment) Act, 2013 (Nirbhaya Act) is an Indian legislation
passed by the Lok Sabha on 19 March 2013, and by the Rajya Sabha on 21 March 2013, which
provides for amendment of Indian Penal Code, Indian Evidence Act, and Code of Criminal Procedure,
1973 on laws related to sexual offences.

h) A enters into a contract with B to sell his horse. B wants the horse that is ideal for racing as
he wants to participate in a horse racing competition. A sell a sick horse to B showing it as an
ideal horse for racing. Which clause related to validity shall be applicable?

Answer. Under section 17, withholding part of information amounts to fraud. Speaking half-truth is
also misrepresentation of facts disclosed. When there is duty to disclose all facts and figures, then
non-disclosure or half disclosure of facts amounts to fraud.

SECTION 17 in The Indian Contract Act, 1872

17. ‘Fraud’ defined.—‘Fraud’ means and includes any of the following acts committed by a party to a
contract, or with his connivance, or by his agent1, with intent to deceive another party thereto or his
agent, or to induce him to enter into the contract:— —‘Fraud’ means and includes any of the
following acts committed by a party to a contract, or with his connivance, or by his agent1, with
intent to deceive another party thereto or his agent, or to induce him to enter into the contract\:—"

(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

(2) the active concealment of a fact by one having knowledge or belief of the fact;

(3) a promise made without any intention of performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law specially declares to be fraudulent. Explanation. —Mere
silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud,
unless the circumstances of the case are such that, regard being had to them, it is the duty of the
person keeping silence to speak2, or unless his silence, is, in itself, equivalent to speech.

I)Mr. B entered into a contract with a whole seller to supply him 100 tins of jam. Jams were
stored in the warehouse at the time of execution of contract. Goods stored in the warehouse
got destroyed by fire. Is the contract enforceable and why?

Ans. The contract will be enforceable until when the second party not fulfil the requirement of the
first party or return him his amount.
j) A horse was bought for Rs. 10000/- and promised to pay Rs. 2000/- if the horse proved to be
lucky. Discuss the validity of the contract?

Ans. An agreement to agree in future is void, for there is no certainty whether the parties will be able
to agree in future. Thus, there will be no contract to contract. The agreement is void due to
uncertainty of terms (Under Section 29).

(Under Section 29).

Section 29 in The Indian Contract Act, 1872

29. Agreements void for uncertainty. —Agreements, the meaning of which is not certain, or capable
of being made certain, are void. —Agreements, the meaning of which is not certain, or capable of
being made certain, are void." Illustrations

(f) A agrees to sell to B “my white horse for rupees five hundred or rupees one thousand”. There is
nothing to show which of the two prices was to be given. The agreement is void. (f) A agrees to sell
to B “my white horse for rupees five hundred or rupees one thousand”. There is nothing to show
which of the two prices was to be given. The agreement is void."