Essay on The Essential Elements of a Contract

An agreement, Becomes enforceable by Law when if fulfils certain conditions these conditions are as follows:

1. Offer and Acceptance:

There must be a lawful offer by one party and a lawful acceptance of the offer by the other party or parties. The adjective “lawful” implies that the offer and acceptance must conform to the rules laid down in the Indian Contract Act regarding offer and acceptance.

2. Legal Relationship:

There must be an intention (among the parties) that the agreement shall result in or create legal relations. An agreement to dine at a friend’s house is not an agreement intended to create legal relations and not a contract. But an agreement to buy and sell goods or an agreement to marry, are agreements intended to create some legal relationship and are therefore contracts, provided the other essential elements are present.

3. Lawful Consideration:

Subject to certain exceptions, an agreement is legally enforceable only when each of the parties to it gives something and gets something. An agreement to do something for nothing is usually not enforceable by law. The something given or obtained is called consideration. The consideration may be an act (doing something) or forbearance (not doing something) or a promise to do or not to do something. Consideration may be past (something already done or not done). It may also be present or future. But only those considerations are valid which are “lawful” (What is meant by “lawful consideration”).

4. Capacity:

The parties to an agreement must be legally capable of entering into an agreement, otherwise it cannot be enforced by a court of law. Want of capacity arises from minority, lunacy, idiocy, drunkenness, and other similar factors. If any of the parties to the agreement suffers from any such disability, the agreement is not enforceable by law, except in some special cases.

5. Free Consent:

In order to be enforceable, an agreement must be based on the free consent of all the parties. There is absence of genuine consent if the agreement is induced by coercion, undue influence, mistake, misrepresentation, and fraud. An agreement vitiated by any of these factors cannot be enforced by the party guilty of coercion, undue influence etc. The other party (the aggrieved party) can enforce it, subject to rules laid down in the Act.

6. Legality of the Object:

The object for which the agreement has been entered into must not be illegal, or immoral or opposed to public policy.

7. Writing and Registration:

An oral contract is a perfectly good contract, except in those cases where writing and/or registration lease, gift, sale and mortgage of immovable property; negotiable instruments; memorandum and articles of association of a company etc. Registration is compulsory in cases of documents coming within the purview of Section 17 of the Registration Act, e.g. mortgage deeds covering immovable property. The terms of an oral contract are sometimes difficult to prove. Therefore, important agreements are usually entered into in writing even in cases where writing is not compulsory.

8. Certainty:

The agreement must not be vague. It must be possible to ascertain the meaning of the agreement, for otherwise, it cannot be enforced.

9. Possibility of Performance:

The agreement must be capable of being performed. A promise to do an impossible thing cannot be enforced.

The elements mentioned above must all be present. If any one of them is absent, the agreement does not become a contact. An agreement which fulfils all the essential elements is enforceable by law and is called a contract. From this it follows that, every contract is an agreement but all agreements are not contracts.

Every contract gives rise to certain “obligations” or duties on the part of the contracting parties. The obligations are enforced by the court.