Essential Elements of a Valid Contract
Contract is the heart of most professional relationships. A contract is legally enforceable which ensures that if one party fails to do what he or she has agreed to do, the other party can then proceed to the court as a result of violation of the terms of the contract. However, a contract can be considered valid only if it satisfies certain essential terms and conditions:
- Offer and Acceptance: In order to constitute a valid contract, there must be at least two parties, i.e., one who proposes the offer and the other who accepts the same. Hence, the acceptance of such a proposal is said to form an agreement.
- Free Consent: This ensures that the parties to the contract must agree on the same thing in the same sense. Free consent implies no influence of coercion, undue influence, fraud, misrepresentation and mistake.
- Competent Parties: This implies the party’s ability to enter into a contract. The Indian Contract Act specifically mentions who is capable of entering into a contract, such as a person of sound mind, a person who has attained the age of majority and a person who is not prohibited by law.
- Lawful Consideration: Consideration implies when both parties agree to do or not to do something. In addition, it is very important for consideration to be lawful otherwise the contract shall be declared void.
- Intention to create legal relations: Considering intention, it must be in sync with creating legal relations as it is highly required to accept the legal consequence of entering into an agreement.
- Contract is not expressly declared null and void: The provisions of the act mention unlawful agreements that are forbidden by the law. If the acts impact any injury to a person or a property, it shall be void in nature.