Validity of a Contract

INTRODUCTION

A contract is an agreement to do or not to do something. According to Salmond, a contract is “an agreement creating and defining the obligations between two or more parties “

A contract can only be formed when an offer by one party is accepted by the other which means there should be both offer and acceptance in order to carry out the proposal.

A proposal is a process of a person’s willingness to do something and when the person to whom the proposal is made gives his consent too, the proposal is said to be accepted.

ELIGIBILITY

A person can enter into a contract when there is achievement of following conditions: 1) person attains the required age that is when the person is a major, 2) the person is mentally stable to understand the terms and conditions of the contract, the person is not disqualified from contracting and 3) the person is competent to contract.

Hence the fact from the above criteria is clear that a minor is not eligible for entering into a contract.

 A CONTRACT MUST HAVE THE FOLLOWING

Parties: A contract must have two parties. One party making the proposal and the other party accepting it.

Consent: A valid contract also requires the consent of both the parties which must be free, mutual, and communicated to each other.

Object: The thing which is being agreed to is also known as the object or subject. It must be lawful, possible, and definite.

Consideration: Each party must have a profit or must gain something.

All contracts have to be in writing except for a few. Several contracts are not considered valid unless it is in writing. Hence it is important to have a written contract that is lawfully enforceable.

VALIDITY OF MERE AGREEMENT

For the validity of the contract, the mere agreement of the parties is enough. There is no need for:

Consideration: In commercial dealings, this is a minimum requirement because context obligations are almost taken by both the parties.

Cause: there is no requirement of cause which is to some extent similar to consideration.

All contracts Consensual: Some civil law systems have retained certain types of real contracts. These rules are not easily compatible with modern business perceptions and hence are excluded by this Article.

ELEMENTS OF CONTRACT

1. Offer: An offer forms a vital part of the contract because if there is no offer, there will be no contract. In the Contracts Act, 1950, the first and foremost element in a contract would be offered. Without an offer, a contract would not be legally valid or acceptable. There is a firm difference in offer. An offer may be an advertisement or an option. There should be at least two parties to make the offer legally acceptable. It is necessary for the other party to know the terms and conditions of an offer.
2. Acceptance: After the making of an offer, there is acceptance of the offer. When the party to whom the offer is made is clear with the offer, they would accept it once they are sure about the terms and conditions of the contract. The validity of the contract would not be considered if the party has not accepted or is still negotiating.
3. Consideration: It is another important element in the contract. It means that both the party would gain some profit. Consideration is an exchange between both the parties. In order to make a contract valid, Consideration forms an important part.
4. Intention to create legal relations: This forms an important part of the validation of the contract. The agreement would not be considered valid unless both the parties intend to create relations that are enforceable by law.
5. Certainty: The rules, terms, and conditions of the contract should be clear to both parties. The certainty forms a vital role in a contract as, without it, the contract would not be considered void.
6. Capacity: For a contract to make, the parties must be legally capable. The parties must be a major, mentally sound, not disqualified from contracting and competent to contract.

An agreement is necessary for the carrying out of a contract and all the essentials form an important part of the validity of the contract.