Thursday, May 30, 2024





Explain the essential elements of a valid contract as per Section 10 of the Indian Contract Act, 1872.

Section 10 of the Indian Contract Act, 1872 states that “All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.”
Thus the essential elements that are required for the formation of a valid contract are-

1. Offer and Acceptance (Consensus ad idem): There must be a clear and unequivocal offer made by one party to another. The offer should be communicated with the intention that it can be accepted, leading to a mutual understanding of the terms of the contract. The acceptance must be absolute and identical to the terms of the offer.

2. Intention to Create Legal Relations: The parties involved in the contract must intend for their agreement to have legal consequences. If the parties do not intend to be legally bound, such as in cases of social agreements or domestic agreements then there is no contract. Balfour v/s Balfour is the leading case on the “Intention to create a legal relationship”.

3. Lawful Consideration: Consideration as defined under section 2(d) of the Indian Contract Act refers to something of value exchanged between the parties as part of the contract. It can be in the form of money, goods, services, or even refraining from doing something. For a contract to be valid, there must be a lawful consideration on both sides – something that is not illegal, immoral, or against public policy as provided under Section 23.

4. Parties competent to contract: The parties entering into the contract must have the legal capacity to do so. This means they must be of sound mind, of legal age, and not disqualified by law from entering into contracts. Minors, persons of unsound mind, and those disqualified by law cannot form valid contracts as provided under Section 11.

5. Free Consent: As per Section 14, Consent is said to be free when it is not affected by Coercion, undue influence, Fraud, Misrepresentation, or Mistake. If consent is affected by any of the factors then as per Section 19, the contract will be voidable at the option of the aggrieved party.

6. Lawful Object: As per Section 23, the object of the contract must be lawful. It should not involve any activity that is illegal, immoral, or against public policy. Contracts with unlawful objects are void.

7. Certainty and Possibility of Performance: The terms of the contract must be clear, certain, and capable of being performed. If the terms are vague or impossible to perform, the contract might be unenforceable.

8. Not Expressly Declared to be Void: The contract must not fall under the categories of contracts that are expressly declared void as per Section 24 to 30 of the Indian Contract Act or any other law for time being in force.

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