what are the essentials of a valid contract Related: Law of Contract, Nature, Offer, Acceptance - Business Law?

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what are the essentials of a valid contract Related: Law of Contract,...

Essential Elements of a Valid Contract are:

Offer and Acceptance : In order to create a valid contract, there must be an agreement between the two parties. An offer from one party to do or abstain from doing a particular act and its acceptance by the other party are two basic elements of an agreement. Both offer and acceptance should be lawful. The offer must be certain and must be communicated to the offerer. Similarly, acceptance must be absolute and unconditional, it must be given in the mode prescribed and should be communicated.

Intention to create Legal Relationship : There should be an intention on the part of the parties to the agreement to create a legal relationship.

Lawful consideration : The agreement must be supported by a lawful consideration on both sides.

Parties competent to contract : The parties to a contract must be capable of entering into a valid contract. According to Section 11, every person is competent to contract if he

Is of the age of majority,

Is of sound mind, and

Is not disqualified from contracting by any law to which he is subject.

Free consent : The contract must have been ,made with the free consent of the parties. Consent is said to be free if it is not induced by coercion, undue influence, fraud, misrepresentation or mistake.

Lawful object : The object of the agreement should be lawful and not the one which the law disapproves.

Not expressly declared void : The agreement must not have been expressly declared to be void. There are certain agreements which have been expressly declared void by the Indian Contract Act, like, agreements in restraint of marriage, agreements in restraint of trade or agreements in restraint of legal proceedings, agreements with uncertain meaning etc.

Certainty of meaning : The meaning of the agreement must be certain, otherwise the agreement will not be enforceable by law. For example, if X agrees to sell to Y 500 liters of oil @ 50 per liter, the agreement is not enforceable as there is nothing to show the type of oil being sold.

Possibility of performance : The act contemplated in the agreement should be capable of performance. An agreement to do an act impossible in itself cannot be enforced.