Sociology | Mercantile Law | International Law | International Relations
Sec.10 defines, “An agreement is a contract if it is made by the free consent of the parties, competent to contract, for a lawful consideration and for a lawful object.”
The direct conditions laid down in Sec.10 and few derived condition are called “Essentials of a valid Contract”.
Essentials of a valid Contract
For an agreement to become a contract; it must satisfies the following conditions:
1. Agreement
Offer by one party, and the acceptance by other party.
2. Consensus ad Idem
Consensus an idem means that both the parties agree on the same thing in the same sense.
3. Legal Relationship
It arises when both the parties know that they would be attended by legal consequences if they default.
4. Lawful Consideration
Consideration means “Something in return”. For a valid cntract, consideration must be lawful.
For example, A agrees to sell his house to B for Rs.500,000. Here, for A, the consideration is Rs.500,000 and for B, the consideration is House.
5. Capacity of Parties
Parties must be competent to contract, that is, any party must not a minor, detain person etc.
6. Free Consent
Consent must be free, that is, it must not caused by coersion, mis-representation, fraud, undue influence etc.
7. Lawful object
The object of contract must not be:
- Illegal or unlawful
- Immoral
- Opposed to public policy
- Contract must be certain and capable of being performed.
- Appropriate legal formalities must be performed like writing, registration, witnesses, attestation etc.