Section 2(h) of the Indian Contract Act, 1872 defines a contract as an agreement enforceable by law. Section 2(e) defines agreement as “everypromise and every set of promises forming consideration for each other.” Section2(b) defines promise in the word: “When the person to whom the proposal ismade signifies his assent thereto, the proposal is said to be accepted. A proposalwhen accepted becomes a promise.”
From the above definition of promise, it is obvious that an agreement is anaccepted proposal. The two elements of an agreement are:
1: – Offer of a proposal.
2: – An acceptance of that offer or proposal.
What agreement are contracts? All agreements are not studied under the Indian Contract Act, assome of them are not contracts. The Contract Act is the law of thoseagreements, which create obligations, and in case of a breech of a promise byone party to the agreement, the other has a legal remedy. Thus, a contract consists of two elements,
2.Legal Obligations i.e. It should be enforceable at lawHowever, there are some agreements, which are not enforceable in a law court.Such agreements donot rise to contractual obligations and are not contracts.
Essential Elements of Valid Contracts
All agreements are contracts if they are made by free consent of parties,Competent to contract, for a lawful consideration and with a lawful object and are not here by expresslydeclared to be void.Thus the essential elements of a valid contract can be summed up as follows:
1. The importance of a contract law to the private market system is vital for our private enterprise economy. It helps make buyers and sellers willing to do business together. Contract laws allows private agreements to be legally enforceable. Contract laws provides enormous flexibility and precision in business dealings. It provides flexibility in that you can agree to literally anything that is ...
2.Intensions to create legal relationships
3.Free and genuine consents
4.Parties competent to contract
7.Agreements not declared void or illegal
8.Certainty of meaning
9.Possibility of performance
10.Necessary illegal formalities
As already mentioned, to constitute a contract there must be an agreement. An agreement is composed of two elements, Offer and Acceptance.The party making the offer is known as a offeror, the party to whom the offer ismade is know as the offree. Thus, there are essentially to be two parties to anagreement. They both must be thinking of the same thing in the same sense. Inother words, there must be consensus-ad-idem.
Intensions to Create Legal Relationships: As already mentioned there should be an intension on the part of the parties to the agreement to create a legalrelationship. An agreement is purely social or domestic nature is not a contract.
Free and Genuine Consent:
The consent of the parties to the agreement mustbe free and genuine. The consent of the parties should not be obtained bymisrepresentation, fraud, undue influence, coercion or mistake. If the consent isobtained by any of these flaws, then the contract is not valid.
Parties Competent to Contract:These parties to a contract should be competent to enter to a contract. According to section 11 ,every person iscompetent to contract if he, (1) Is of the age of majority, (2) Is sound mind, and (3) Is not disqualified from contracting by any law to which he is subject. Thus,there may be a flaw in capacity of parties to the contract. The flaw in capacitymay be due to minority, lunacy, idiocy, drunkenness or status. If a party to acontract suffers from any of these flaws, the contract is an
Contracts Business Law Jan, a student at a university, places an ad in the student newspaper offering to sell her Toyota automobile. Robert, upon reading the ad, calls Jan and agrees to met Jan to examine the car. When Jan and Robert meet, Robert offers to purchase the car for $2,000. Jan informs Robert to go to his bank and get a cashiers check for that amount. An also informs Robert that upon ...
unenforceable except in certain exceptional circumstances.
The agreement must be supported by consideration onboth sides. Each party to the agreement must give or promise something and receive something or promise in return. Consideration is the price for which thepromise of the order is sought. However, this price need not be in terms of money. In case promise is not supported by consideration, the promise will beNudum Pactum (a bare promise) and is not enforceable at law. Moreover theconsideration must be real and lawful.
The object of the agreement must be lawful and not one which the law dis-approves.
Agreements not Declared Illegal or Void: There are certain agreements, which have been expressly declared illegal or void by the law. In such cases,even if the agreement possesses all the element of a valid agreement, theagreement will not be enforceable at law.
Certainty of Meaning:
The meaning of agreement must be certain or capable of being certain otherwise the agreement will not be enforceable at law.