Essentials of a valid contract

Proper offer and acceptance

• Lawful offer by one party and lawful acceptance by the other party
• Terms of offer must be definite and clear
• The acceptance must be absolute and unconditional
• The acceptance must be according to the mode prescribed and must
be communicated to the offeror
Lawful consideration
• Something in return
• Agreement is legally enforceable only when both the parties give
something and get something in return
Intention to create legal relationship
• Intention must be to create legal relationship between them
• Case: Balfour v. Balfour- no legal relationship
• Mc.Gregor v. Mc.Gregor- legal relationship exists
Competent parties
• Must be capable of entering in to a valid contract
• Every person is competent to contract if he:
• Is of the age of majority
• Is of sound mind
• Is not disqualified from contracting by any law to which he is subject
Free consent
• Consent is said to be free when it is not caused by:
• Coercion
• Undue influence
• Fraud
• Mis-representation
• mistake
Lawful object
• Must not be illegal, immoral or opposed to public policy
• Eg: when ‘A’ hires a house to use as a gambling house, the object is
not lawful and thus not a valid contract
Agreement not declared void
• Must not have been expressly declared void by law in force in the
country
• Eg: agreement in restraint of trade, marriage, legal proceedings
Agreement not declared void
• Must not have been expressly declared void by law in force in the
country
• Eg: agreement in restraint of trade, marriage, legal proceedings
Possibility of performance
• Should be capable of performance
• If the act is impossible in itself, physically or legally, it cannot be
enforced
• Eg: a contract to bring stars from the sky
Certainty of Meaning
• According to section 29, an agreement the meaning of which is not
certain is void
• Eg: ‘A’ agree to sell to ‘B’, a 100 tons of oil. There is nothing to show
what kind of oil was intended. The agreement is void for uncertainty
Legal formalities
• A contract may be made by words spoken or written