The Contract Act-1872

Headlines of the Essential Elements of a valid contract

Now, we can say that, every contract is an agreement but all agreements are not contracts. The legal obligations are enforced by the court.

These essential elements are discussed below:

 

1.Offer and acceptance

There must be a lawful offer by one party and a lawful acceptance by the other party.

The word ‘lawful’ implies that the offer and acceptance must conform to the rules laid down in the contract act.

Sec-2 

2.Legal relationship

There must an intention among the parties that the agreement shall create legal relationship.

An agreement to dinner at a friend’s house is not an agreement.

But an agreement to buy and sell is agreement intended to create legal relationship and is therefore a contract.

Sec-3 

3.Lawful consideration

Subject to certain objections, as agreement is legally enforceable only each of the parties give something and get something.

An agreement to do something for nothing is usually not enforceable by law.

The something given or obtained is called “consideration”. It may be an ant to do something or not to do something. 

4.Capacity of parties

The parties to an agreement must be legally capable of entering into an agreement, otherwise it can not be enforced by a court of law.

Lack of capacity arises from minority, lunacy, idiocy, drunkenness and from similar other factors.

If any of the parties of the agreement suffers from any such disability, the agreement is not enforceable by law, except in some special cases. 

5.Free consent

In order to be enforceable, an agreement must be based on the free/genuine consent.

 A consent will be said a genuine consent if it is free from coercion, undue influence, mistake, misrepresentation, and fraud.

A person guilty of such factors can not can not enforce the agreement.

6. Legality of the objectives

The object for which the agreement has been entered into must not be illegal, or immortal or opposed to public policy.

An agreement is unlawful in the following cases (Section-23):

i)i) If it is forbidden by law

ii)ii) If it is of such a nature that, if permitted, it would defeat the provisions of any law 

iii) If it is fraudulent

iv) If it involves or implies injury to the person or property of another.

v) If the court regards it as immortal

vi) If the court regards it as opposed to public policy.

See examples.

7. Certainty

A contract create legal obligation.

The agreement must not be vague.

It must be possible to ascertain the meaning of the agreement.

Otherwise it can not be enforceable by law. 

8. Possibility of performance

The agreement must be capable of being performed.

A promise to do an impossible thing can not be enforceable by law.

Possibility of performance means the “performance of the contract”.

Each party must perform or offer to perform the promise which he has made. 

9. Void agreement

Void means not valid or legal. An agreement which does not satisfy the essential elements of a contract may be either (i) void or (ii) voidable.

X enters into a wagering agreement and borrowed Tk 100 from C for the purpose. The main agreement is void but the loan transaction being collateral to it is valid even though the creditor is aware of the purpose of the loan. 

10.Written and legal formalities

A contract may be written, registered or even oral.

The terms of an oral contract are sometimes difficult to prove. Therefore important agreements are written.

Even registration is compulsory in some documentation.