LAW OF CONTRACT
A contract is defined as a legally binding agreement between a minimum of two parties to perform or refrain from performing certain actions.
As articulated by A.J. Salmond: “A contract is an agreement that establishes and delineates obligations between two or more parties.”
ESSENTIAL ELEMENTS OF A ENFORCEABLE AND VALID CONTRACT
A Valid Contract constitutes a legally binding agreement that can be enforced by law. It necessitates the mutual agreement of the parties involved and the satisfaction of particular criteria as outlined in contract law.
The following are the fundamental components required for a contract to be considered valid and enforceable:
- Multiple parties
- Offer and acceptance
- Intent to establish a legal relationship
- Voluntary consent
- Capacity to contract or competency of the parties
- Lawful object
- Not expressly declared void
- Clarity and certainty
- Possibility of performance
- Legal formalities
Offer and Acceptance: There must be an agreement between two parties to create a Valid contract. The agreement involves a valid offer by one party and valid acceptance by the other party.
Consideration: Consideration means something in return. It has motivating power to fulfill the promise. The agreement between two contracting parties is giving and receiving something in return. It is not necessary to be cash, it may be a promise to do or not to do anything, but it must be real and lawful.
Legal Relationship: At the time of entering into a contract the parties should have an intention to create a legal relationship. A social or moral duty to do or not to do something is not enforceable by law as they do not create any legal remedy in case of failure of either party. Agreement without legal relation cannot be enforced by the court.
Free Consent: The parties must enter into a contract with free consent of their own mind; free from oppression, undue influence, misrepresentation, and mistake of law.
Competent (Capable) Parties: The parties who are involved in the contract must be competent to contract. If incompetent parties are in a contract, it is not valid. Competent parties to contract are minor person of unsound mind and is legally disqualified to contract.
Lawful Objectives: The objectives of agreement must be lawful to be a valid contract. If the subject matter of agreement are not lawful (illegal, immoral or oppose to public policy) no contract will arise, and the contract is void.
Meeting of minds: A valid contract necessitates that both parties possess a mutual understanding and agreement regarding the terms and conditions outlined within the contract. It is essential for the parties to concur on the same subject in an identical manner. For instance, if Party A intends to acquire ‘X’ while Party B aims to sell ‘Y,’ a contract cannot be established due to the absence of a meeting of minds.
Not Declared to be Void: Those agreements which are expressly declared void by the contract and other law are not enforceable by the court. Example, an agreement to sell a sword for some reward, or to make a bet, agreement in restraint marriage, trade, profession, or are void. Similarly agreement in restraint marriage, or profession are void.
Certainty: The objective of a contract agreement must be with clear and practical. The contract which is uncertain due to lack of providing reasonable meaning is void. For example: A agrees B that he will purchase some rice if the first car deals in for another purchase by A. Because the term ‘lucky does not be cannot certain and clear meaning in English agreement and it is void.
Possibility of Performance: The objectives or the action to complete the agreement must be possible to perform. Any act which cannot be done or is non-performable does not create legal obligation to the contracting parties.
Legal Formalities: The contract must be in written form and comply with other legal provision. It must fulfill the requirement of written.
In conclusion a contract constitutes a legally enforceable agreement among two or more parties, necessitating specific fundamental components for its legitimacy. These components encompass a legitimate offer and acceptance, lawful consideration, the intention to establish a legal relationship, the voluntary consent of capable parties, lawful purposes, and adherence to legal formalities. In the absence of these components, a contract cannot be deemed valid or enforceable in accordance with the law.
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