Chapter 11

Essentials of Valid
Contract

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Chapter Objectives
After studying this chapter you should be able to
understand:
1. Essentials of Valid contract
2. Rules regarding proposal
3. Rules regarding acceptance
4. Competency to contract
5. Free consent
6. Agreement without consideration
7. Agreement declared void

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Essentials of a Valid Contract
An agreement in order to be a contract must satisfy certain
conditions
1. There must be an agreement

2. Parties must be competent to contract

3. Consent must be free

4. Consideration must be lawful

5. Object of agreement must be lawful

6. Agreement must not be declared void expressly by law

7. Other legal requirements

Agreement: there should be a proposal (also known as offer) on the

part of one party, called the proposer (or offeror) and its
unqualified acceptance, express or implied, by the person to
whom the proposal is made, called the promisee (or offeree)

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Rules Regarding Proposal
1. An offer may be made either to a definite person or to
individuals generally
2. An offer may be made in writing, orally or by conduct
3. An offer should not be a mere statement of intention
4. An offer must be precise and definite
5. An offer may attach any conditions and prescribe any terms of
acceptance, but they must be notified to the offeree
6. A proposer cannot bind the offeree unless there is some
positive form of assent on his part
7. An offer must be communicated to the offeree or to his agent
because a person doing an act in ignorance of an offer is not
acting in terms of offer.
8. An offer may be revoked at anytime before acceptance
9. Revocation must be communicated before acceptance
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Rules Regarding Acceptance
„ Acceptance may be in writing, orally or by conduct
„ Acceptance must be a absolute and unqualified and correspond to the
terms of the offer
„ Acceptance must be expressed in some usual and reasonable manner
unless the proposal prescribes the manner in which it is to be
accepted
„ Acceptance must be made by the person to whom the offer was made
„ Acceptance may be made by any specific person or persons when the
offer was made to the world at large
„ Acceptance must be communicated by words or conduct unless
communication is waived
„ Some outward act must be done by the acceptor to show acceptance
„ Acceptance must be made within the a specified/reasonable time
„ Acceptance must be made before the offer lapses or is withdrawn
„ Acceptance of proposal is the acceptance of all its terms

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Competency to contract
„ The parties must be competed to contract
„ The person who is competent to contact is one

1. Who has attained the age of majority

2. Who is of sound mind, and

3. Who is not disqualified by any law

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Free Consent
Consent
Tow persons are said to consent when they agree upon the
same thing in the same sense i.e., they must be clear about the
nature of the transaction, identity to the parties, subject matter of
the contract

Free Consent
The consent is said to be free when it is not caused by;
a.Coercion

b.Undue influence
c.Fraud

d.Misrepresentation

e.Mistake

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Object and Consideration
„ One of the conditions of a valid agreement is that
the object or consideration should be lawful
„ Six situations when the object and consideration of
an agreement is deemed unlawful:
a. If it is forbidden by law
b. If it is fradulent
c. If it involves injury to a person or property of another
d. If the court regards it as immoral, or
e. If it is opposed to public policy

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Agreement Declared Void
1. Agreement in Restraint of marriage
2. Agreement in restraint of trade
3. Agreement in restraint of legal proceedings
4. Uncertain Agreement
5. Agreement by way of wager (bet)
6. Contingent/conditional contract

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Minors Contract
1. Contract with or by minor is void and a minor cannot bind
himself by a contract
2. Minor can be promisee
3. Minor’s agreement cannot be ratified by such minor or
his attaining majority
4. When a minor has received an benefit under void
contract he cannot be asked to refund the same
5. Minor is always allowed to plead minority
6. Minor’s estate is liable to a person who supplies
necessities of life to a minor or to one whom the minor is
legally bound to support

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