Essential Elements of Valid Contract
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Transcript of Essential Elements of Valid Contract
CONTRACT, DEFINITION, ESSENTIALS & TYPES
INTRODUCTION• Transactions in the form of Contracts• Rights & Obligations• Indian Contract Act 1872
– Formation & Essentials– Performance/Promises– Special contracts
• Limitations– Creates right ‘in Personam’– Applicable to those obligations which are contractual &
legal in nature
CONTRACT DEFINED
An Agreement enforceable by law is a Contract.
COMPONENTS OF CONTRACT
Agreement - An understanding between both the parties
Obligation - Agreement must give rise to rights and obligations
Enforcement - Rights and Obligations created in Agreement must be contractual in nature.
ESSENTIAL ELEMENTS OF A VALID CONTRACT
OUTLINE
OFFER & ACCEPTANCE
• First essential of a valid contract is agreement
CREATION OF LEGAL RELATIONSHIP
Agreement based on Social, Religious, Personal grounds cannot be enforced by law.
BAL FOUR Vs. BAL FOUR (1919) 2 K.B 571
BALFOUR V/S BALFOUR• Facts• Issues
– Must both parties intend that an agreement be legally binding in order to be an enforceable contract?
– Under what circumstances will a court decline to enforce an agreement between spouses?
• Holding & Rule– Yes. Both parties must intend that an agreement be
legally binding in order to be an enforceable contract.– The court will not enforce agreements between spouses
that involve daily life.
LAWFUL CONSIDERATION
Consideration means 'something in return.'
English Mercantile law’s definition of consideration .
The act of promise must be legal, moral and not against the public policy.
CONTRACTUAL CAPACITY
Legally competent for making a contract.
>- Must be of major age and not minor.
>- Must be of sound mind and not lunatic , idiot or drunkard.
>- Must not have been declared disqualified by law.
FREE CONSENT OF PARTIESConsent of both the parties and it must be free .
Not induced by Mistake (Otherwise it is void and cannot be enforced by law)
LAWFUL OBJECT OF AGREEMENT
Agreement generally is made for some purpose or object.
Object of an agreement should be to do some act which is legal.
Agreements made for doing something illegal , immoral or against public policy is not acceptable in court of law
AGREEMENT NOT DECLARED EXPRESSLY VOID
• Agreements which are expressly declared void by law.• No legal existence or sanctity.• Agreements made by parties should not fall under this
category
08/04/23 03:51Raza Lilani . [email protected]
CERTAINTY IN THE MEANING OF AGREEMENT
OTHER LEGAL FORMALITIES
• Some agreements need to satisfy conditions of being in writing, registered & duly stamped.
• No discrimination between oral & written agreements in general according to Indian Contract Act.
CLASSIFICATION OF CONTRACTS
Formation of contract
Performance of contract
Extent of validity of contract
ON THE BASIS OF FORMATION OF CONTRACTExpress contracts:-“in so far as the proposal and acceptance of any promise is made in words, the promise is said to be express leading to an express contract”
Implied contract:-“promises that are not made in writing but are inferred from the conduct of parties”
Quasi contracts:-“based on the principle of equity and justice, in spite of not having the contract rights and obligations are created”
ON THE BASIS OF PERFORMANCE OF CONTRACT
Executed contract:-“an executed contract is the one that has been performed”
Executory contract:-“a contract that has still not completed”Even if one party performs its side of contract and the other party has not performed its part of the contract its called executory contract.
ON THE BASIS OF EXTENT OF VALIDITY
Valid Contract: Contract is said to be valid if it satisfies all conditions required for its enforceability.
Void Contract: A contract which ceases to be enforceable by law becomes void.
Void agreement: Agreement which lacks any one of essentials of a valid contract except free consent it becomes void agreement.
Voidable Contract: An agreement which is enforceable by law at the option of one or more parties, but not at the option of other or others is a voidable contract.
Unenforceable Contract: Due to technical reasons it may not be allowed to be enforced in the court.
Illegal Contract: Contract is said to be illegal if its object is illegal.
CONCLUSION
Distinction between Void Agreement and Voidable contract.
Distinction between Void and Illegal agreements.