Professional Documents
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81
By youcanwin
What is a contract?
2. Lawful object
5. Free Consent
7. Certainty of meaning.
8. Possibility of performance.
9. Lawful consideration
Intention to create legal relationship: The parties entering into a contract must
have an intention to create a legal relationship. If there is no intention to create
a legal relationship, that agreement cannot be treated as a valid contract.
Generally there is no intention to create a legal relationship in social and
domestic agreements. Invitation for lunch does not create a legal relationship.
Certain agreements and obligation between father and daughter, mother and
son and husband and wife does not create a legal relationship. An agreement
wherein it is clearly mentioned that "This agreement is not intended to create
formal or legal agreement and shall not be subject to legal jurisdiction in the law
of courts." cannot be treated as a contract and not valid.
Lawful Object: The objective of the agreement must be lawful. Any act prohibited
by law will not be valid and such agreements cannot be treated as a valid
contract. A rents out his house for the business of prostitution or for making
bomb, the acts performing there are unlawful. Hence such agreement cannot be
treated as a valid contract. Therefore the consideration as well as the object of
the agreement should be lawful.
Proper offer and it s acceptance: To create a valid contract, there must be two or
more parties. One who makes the offer and the other who accepts the offer. One
person cannot make an offer and accept it. There must be at least two persons.
Also the offer must be clear and properly communicated to the other party.
Similarly acceptance must be communicated to the other party and the proper
and unconditional acceptance must be communicated to the offerer. Proper offer
and proper acceptance should be there to treat the agreement as a contract
which is enforceable by law.
Free Consent: According to section 14, consent is said to be free when it is not
caused by (i) coercion, (ii) undue influence (iii) fraud, (iv) misrepresentation, or
(v) mistake. If the contract made by any of the above four reason, at the option
of the aggrieved party it could be treated as a void contract. If the agreement
induced by mutual mistake the agreement would stand void or canceled. An
agreement can be treated as a valid contract when the consent of the parties are
free and not under any undue influence, fear or pressure etc. The consent of the
parties must be genuine and free consent.
Certainty of meaning: Wording of the agreement must be clear and not uncertain
or vague. Suppose John agrees to sell 500 tones of oil to Mathew. But, what kind
of oil is not mentioned clearly. So on the ground of uncertainty, this agreement
stands void. If the meaning of the agreement can be made certain by the
circumstances, it could be treated as a valid contract. For example, if John and
Mathew are sole trader of coconut oil, the meaning of the agreement can be
made certain by the circumstance and in that case, the agreement can be
treated as a valid contract. According to Section 29 of the Contract Act says that
Agreements, the meaning of which is not certain or capable of being made
certain, are void.
Legal formalities: The contract act does not insist that the agreement must be in
writing, it could be oral. But, in some cases the law strictly insist that the
agreement must be in writing like agreement to sell immovable property must
be in writing and should be registered under the Transfer of Property Act, 1882.
These agreement are valid only when they fulfill the formalities like writing,
registration, signing by the both the parties are completed. If these legal
formalities are not completed, it cannot be treated as a valid contract.