Meaning & Essential Elements of a Valid Contract


A contract is an agreement made between two (or) more parties which the law will enforce. According to section 2(h) of the Indian contract act, 1872. “An agreement enforceable by law is a contract.

Essential elements of a valid contract:

1) Offer and acceptance:

• To constitute a contract there must be an offer and an acceptance of that offer.

• The offer and acceptance should relate to the same thing in the same sense.

• There must be two (or) more persons to an agreement because one person cannot enter into an agreement with himself.

2) Intention to create the legal relationship:

• The parties must have the intention to create a legal relationship among them.

• Generally, the agreements of social, domestic, and political nature are not a contract.

• If there is no such intention to create a legal relationship among the parties, there is no contract between them

3) Free and Genuine consent:

• The consent of the parties to the agreement must be free and genuine.

• Free consent is said to be absent if the agreement is induced by


b)undue influence,


d) Misrepresentation,


4) Lawful Object:

• The object of the agreement must be lawful. In other words, it means the object must not be

(a) Illegal,

(b) immoral,

(c) opposed to public policy.

• If an agreement suffers from any legal flaw, it would not be enforceable by law.

5) Lawful Consideration:

• An agreement to be enforceable by law must be supported by consideration.

• Consideration means “an advantage or benefit” moving from one party to another. In other words “something in return”.

• The agreement is enforceable only when both the parties give something and get something in return.

• The consideration must be real and lawful.

6) Capacity of parties:

• The parties to a contract should be capable of entering into a valid contract.

• Every person is competent to contract if

(a). He is the age of majority.

(b). He is of sound mind and

(c). He is not disqualified from contracting by any law.

• The flaw incapacity to contract may arise from minority, lunacy, idiocy, drunkenness, etc..,

7) Agreement not to be declared void:

• The agreements must not have been expressly declared to be void u/s 24 to 30 of the act.

8) Certainty:

• The meaning of the agreement must be certain and not be vague (or) indefinite.

• If it is vague (or) indefinite it is not possible to ascertain its meaning.

9) Possibility of performance:

• The terms of an agreement should be capable of performing.

• The agreement to do an act impossible in itself is void and cannot be enforceable

10) Necessary legal formalities:

• According to the Indian contract Act, oral (or) written are perfectly valid.

• There is no provision for contracting being written, registered, and stamped.

• But it is required by law, that it should comply with legal formalities, and then it should comply with all legal (or) necessary formalities for its enforceability.

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