Indian Contract Act 1872 | Contract Act | Definition of Contract, | Agreement | Sec 2(h) and Sec 10 | Lawful Agreement | Valid Contract | Business Law and Contract | Question of Contract
Ques;- Define
the term “Contract” under Indian Contract Act, 1872. What are the essential
features of a valid contract? Explain.
Ans:
Contract
According to Section
2 (h) of the Indian Contract Act, 1872; “An agreement enforceable by law
is a contract.”
Above definition
states that contract is an agreement, which creates legal obligation i.e. which
binds the parties to the contract legally.
According to Section
10 of the Indian Contract Act, 1872; “All agreements are contract if
they are made by the free consent of the parties, competent to contract, for a
lawful consideration, with a lawful object, and are not expressly hereby
declared to be void.”
Elements or
Characteristics or Essential features of a valid contract
On the basis of
above definition it is clear that a contract being valid must possess following
elements;
1. Offer and Acceptance; An agreement
involves two parties one making the offer and the other accepting it, offer
must be definite and it should be accepted unconditionally.
2. Intention to create legal relationship;
An agreement should be entered into with an intention to create legal
relationship or obligation. The agreement should not be religious; otherwise it
won’t create a legal relationship and will not become a contract.
3. Lawful Consideration; An agreement must
be supported by consideration. Both the parties must get something in return
for the promise. Simply speaking consideration is the price for the promise.
4. Capacity to Contract; According to Sec
11 of the Indian Contract Act, 1872, every person is competent to contract who
is (i) a major (ii) of sound mind and (iii) not disqualified by law to enter
into contract.
5. Free Consent: For a valid agreement,
parties must give their consent, ‘consent’ means that two person have agreed
upon the same thing in the same sense.
6. Lawful object; An agreement must be made
for a lawful purpose. The object of an agreement should not be:- (a) fraudulent
(b) unlawful (c) immoral or (d) opposed to public policy. Such as agreements
are not enforceable by the law.
7. Not Expressly declared to be void: It is
a corollary of the above rule, i.e lawful object. There are a large number of
agreements which the law has expressly declared void as these agreements are
not in public interest.
8. Possibility of performance; An agreement
must be capable of performance. Therefore, an agreement to do an act impossible
in itself cannot be enforced as it cannot be performed. Law does not compel
anybody to do an impossible act.
9. Legal Formalities; Generally students
have a wrong notion that only written agreements are enforceable. It should be
carefully understood that oral and written agreements are equally enforceable;
however there may be some other formalities to be fulfilled.
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