What are the Requirements for a Valid Contract?

An agreement that is binding and can be enforced is known as a Valid Contract.All the parties of the contract are bound to perform the contract legally under a valid contract. The essentials of a valid contract are listed and defined by the Indian Contract Act, 1872 by interpreting different judgements of the Judiciary of India. Under Section 10 of the Contract Act, the essential points of a valid contract are specified. In this blog, we will discuss in detail the different requirements of a valid contract.

Under the contract act, 1872, a contract is defined as an agreement that can be enforced by the law. Therefore, for a valid contract, the agreement must be enforceable by the law. Moreover, the essential elements of a valid contract must be possessed by the agreement as per the contract act, 1872.

Contract= Agreement + Enforceability

A Valid Contract Formation

For the formation of a valid contract, the following two requirements must be met:

1. Agreement

The primary requirement of a valid contract is an agreement. An agreement is made of all the promises that form consideration for each other. The proposal will be deemed as accepted if the person for whom the proposal was made defines his assent. Once a proposal has been accepted, it becomes a promise.

An agreement is considered to be valid when one of the parties makes a proposal and the other party defines his assent. The requirements of a valid contract are listed below:

1. The agreement should be drawn between two individuals: an offeror and an offeree. Both the parties should be different since an agreement can not be drawn with oneself.
2. Both the offeror and the offeree, should understand the agreement in the same sense and at the same time.

2. Enforceability

For an agreement to be considered a contract, it must create lawful responsibilities according to the guidelines of contract laws which is a duty that can be enforced by the law. Any agreement which does not provide any sort of enforceability, will not be considered a contract.

Valid contract essentials

The various essentials of a valid contract are discussed below:

1. Offer and acceptance

All the offers should be valid and should bind both the parties into a valid contract once they have been accepted. The offeree becomes an acceptor and hence the agreement is drawn between an acceptor and an offeror. As per the laws, the requirements of the related contract act must be satisfied by the offer and acceptance.

2. Legal relationship

A legal relationship must be formed by the parties of the contract. It is beneficial as if one of the parties fails to fulfil its part of promise, then he/she will be responsible for the contract’s failure.

3. Lawful consideration

Consideration means to expect something in return. Lawful consideration is also important to the contract’s validity. A promise to do something without expecting anything in return can not be enforced by the law  and will be invalid. A contract without any sort of consideration can be deemed a betting or a wagering contract.

4. Competency of parties

Both the parties must be capable of entering into a contract. Under the guidelines of the contract act, any individual who is of maturity age and is of sound mind and has not been disqualified to enter a contract by any law.

5. Free consent

 The consent of both the parties is quite essential for a valid contract and it should be free. Two parties are considered to be consenting if they agree upon the same thing and understand it in the same sense. A consent is free if it is not induced by any of the following:

1. Coercion
2. Fraud
3. Misrepresentation
4. Mistake
5. Undue influence

6. Lawful objects

An agreement will be considered as a valid contract if it has been drawn for lawful object and consideration. The objects and considerations that are listed below are not lawful:

1. It is Prohibited by the law
2. It is a fraud
3. It causes damage to someone's property or individual
4. If it violates the guidelines of a law
5. If it is immoral or against the policies of the public as per the opinion of the court.

7. Writing and registration

The agreement can be drawn either orally or in written form. When an agreement is drawn in the written form, it needs to comply with all the legal activities like registration or attestation in order to make it a valid contract.

8. Certainty

In order to form a valid contract, the terms of the contract should be clear and certain in order  for it to be enforced by the law.

9. Possibility of performance

It is essential that a valid contract is capable of performing.If an agreement has been made to perform an act that is impossible either practically or legally, then it can not be enforced by the law and will be considered an invalid contract.

10. Not expressly declared void

Under the contract laws, the agreement should have been declared as void  expressly. The agreements that have been expressly declared void are listed below:

1. A restraint of marriage agreement
2. A restraint of trade agreement
3. An agreement which is drawn by way of wager

Conclusion

In this blog, we discussed in detail a valid contract, requirements of its formation and the various essentials of a valid contract like offer and acceptance, legal relationship, lawful consideration, competency of parties etc.