Essentials Elements of a Valid Contract

Section 10 of the Indian Contract Act,1872 lays down conditions which

makes a contract valid.
Following are some of those conditions :
1. Offer
2. Acceptance
3. Intention to Create Legal Relationship
4. Lawful Object and Lawful Consideration
5. Consideration should not be forbidden by law
6. Capacity to Contract
7. Possibility of Performance
8. Legal Formalities
9. Free consent
 Offer
• According to section 2 (A) of the Indian
Contract Act,1872 “When one person signifies
to another his willingness to do or to abstain
from doing anything, with a view to obtaining
the assent of that, he is said to make a
proposal’’ or “Offer”
 Acceptance

• According to section 2(b) of Indian Contract

Act,1872, when a person to whom an
proposal has been made, signifies his assent
Following are some conditions of a valid Acceptance :
Acceptance must be absolute and unqualified
Acceptance must be Communicated
Acceptance must be communicated within a
reasonable time
• Intention to Create Legal Relationship
The intention of the Parties must be to create a
Legal Relationship between them. Agreement
of social or domestic nature(agreement
between spouses, friends or Children) are not
enforceable by law. The parties to the
agreement must make it clear while entering
into a contract that they want to create a legal
relationship. If any party to the contract fails to
comply with the terms of the agreement then it
will amount to breach of contract and will give
rise to legal consequences.
 Lawful Object and Lawful Consideration

• Section 2(d) of Indian Contract

Act,1872 defines consideration as ‘’When, at
the desire of the promisor, the promisee or any
other person has done or abstained from
doing something such act or abstinence or
promise is called a consideration for the
promise;’’
 Consideration should not be forbidden by law

• Consideration should not be of such nature, if

permitted, it would defeat the provisions of
any law or, is fraudulent.
• If consideration involves or implies injury to
the person or property of another. The Court
regards it as immoral or opposed to public
policy.
 Capacity to Contract

• The parties to the contract must be

competent. An
agreement with a person who is a minor will
be void ab initio. Section 11 of Indian Contract
Act lays conditions to specify competency of
parties to the contract.
 Possibility of Performance

• Agreement must be capable of performance.

If agreement is not capable of performance, it
is void. In order to make an agreement valid,
the terms of the agreement must be clear,
certain and capable of performance. An
agreement to do an impossible act is void.
 Legal Formalities

• According to Indian Contract Act,1872, a contract

can be both in oral or in writing. Contract involving
movable property can be made orally but contract
involving immovable property must always be in
writing. However, it is advisable that the contract
must always be in writing because it will be easier
to prove in the court if any dispute arises between
the parties in future. Contract must be signed and
attested by witness and registered if required by
the law.
 Free Consent

• The parties must enter into an agreement with free consent.

The parties should enter into an agreement with his own
wish and will and not by coercion, undue influence, fraud,
mistake or misrepresentation.
Consent will be deemed to be free only if it does not constitute
the following elements;
1. Coercion
2. Undue Influence
3. Fraud
4. Misinterpretation
5. Mistake