Law Assignment help on : Important elements of a valid contract

Law Assignment help on :  Important elements of a valid contract

ABSTRACT

The report is prepared to outline the important elements of a valid contract. It is very important for the marketing managers to have proper knowledge about what a contact is and what are the important elements of a valid contract.

INTRODUCTION

In order to understand the essentials of a valid contract it is very important to understand what a contract is. As per the Contract Act 1872 section 2(h) any agreement which is enforceable by law is a contract. Section 2(e) defines that every promise or set of promises which form a consideration for each other. Section 2(b) defines promise as,” When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise”. It is very clear that if a person enters into an agreement, then that agreement is a proposal which is accepted. There are two essential fundamentals of an agreement. The first is the offer and the second is the willingness or the acceptance for that particular offer. If any of the two is absent then it cannot be considered as an agreement. However some light should be thrown upon the fact that all agreements are not entertained as contracts as per the Contract Act as these are not contracts. Only an agreement that has a legal obligation is considered as a contract. No social agreements are entertained by the Indian Contract Act. For example A promises his daughter a pocket money of 500 rupees every month but later he refuses to give her the same amount. Such a case will not be entertained because there was no legal obligation. Thus all agreements cannot be known as contracts but every contract is an agreement. (New Age Publishers n.d)

ESSENTIAL ELEMENTS OF A VALID CONTRACT

As per section 10 there are certain essential elements that make up a contract. These are

• Agreement: it is already discussed that to make up a contract there should be an agreement between two parties. The party that is said to present the offer is known as the offeror and the party that accepts the offer is known as the offeree. It is important that there are two parties in order to enter into an agreement. It is also important for both the parties to enter into an agreement for the same thing. For example A has two bikes. He wants to sell one of his bike to B. B wants to buy bike number one but A wants to sell bike number two. Thus it can be said that the two parties did not enter into a contract because they did not agree on the same thing and at the same time.
• Intention to Create Legal relationship: an agreement which can be recognized as social or personal in nature cannot be considered as a valid contract. There should be the willingness to have a legal obligation, only then the contract is a valid contract. This can be explained with the help of an example. A husband makes a promise to his wife to pay her a certain amount. On failure of doing so the wife sued her husband. The case was taken to the court but it was held that she could not recover anything from the husband because they had not entered into a legal agreement. [Balfour vs. Balfour (1919)] there are however certain cases in which the agreements that are social or domestic have the willingness to enter into a legal relationship. This will determined by referring to the facts of the case. (New Age Publishers n.d)
• Free and Genuine consent: two parties can enter into a contract only if they are willing to enter into the contract and they are aware of all the facts of the contracts. If the acceptance of offeree is obtained by taking the help of fraud, coercion, undue influence, misrepresentation or mistake, then the contract is not valid.
• Parties competent to contract: one can enter into a contract only if they are competent to enter into a contract. Section 11 says that a person is competent to enter into a contract if (a) is not a minor (b)is not unsound (c) is not disqualifies from entering into a contract by any law.
• Lawful consideration: the agreement is backed by consideration which means that every party should receive something in return. The consideration is not necessarily in monetary terms. If any party doesn’t receive anything that the contract is invalid.
• Lawful Object: the main objective to enter into the contract should be legal. Anything that is illegal cannot be enforceable by law.
• Agreements not declared illegal or void: the law has stated that there are certain agreements that are illegal and void. In these cases the contract is not valid even if it contains all the important elements of a valid contract.
• Certainty of Meaning:  this means that the meaning of the agreement should be such that it is capable of doing. For example if a person wants to buy a certain amount of cloth then he should specify what kind of cloth he wants else it is very ambiguous.
• Possibility of performance: the terms and conditions of the agreement should be possible to perform. If a person asks to get stars from the sky which is impossible then it is not a valid agreement.
• Necessary legal formalities: the contract can be either in written or can be entered into orally. However if there is a contract that requires certain legal formalities then all those have to be fulfilled only then it can be considered as a valid contract. This may include, registration, attestation etc.

IMPACT OF DIFFERENT TYPES OF CONTRACT

There are various types of contracts. These can be classifies as per validity, mode of formation and performance.

From the point of view of validity:

• Valid contracts: any contract that is backed by all the essential elements of a contract is considered to be valid
• Voidable contract: such kind of contract are those which can be broken if one of the parties wants to the end the contract. If one of the parties thinks that the facts of the contract were misrepresented or there was any mistake, or the contract was entered by fraud, coercion or undue influence then he can ask to end the contract. However till the time the contract is not repudiated it is still valid.
• Void Contracts or Agreements: Section 2(i) states that any contract which is not enforceable by both the parties is void. For example a contract with a minor is void.
• Illegal Agreement: this kind of contract is that where the party receives something that is not permitted by law. The consideration is illegal in this case. The facts of the contracts do not abide the provisions of the law. If the contract harms anyone, is fraud or immoral then it is an illegal contract.
• Unenforceable contract: such kind of contract can be entered into because there is some facts or formalities missing like writing, registration etc. it is neither void nor voidable.

Classification according to mode of formation:

• Express Contract: the facts and the terms and conditions of the contract should be in words either written or spoken.
• Implied Contract: sometimes the terms of the contract are assumed by the behavior of the two parties or the situation in which they are. For example if a person takes a bus to go to the office then he enters into an implied contract where he has to pay for the ticket in order to travel to his destination.
• Quasi Contracts: if a man leaves his goods with his friend and his friend uses the goods, then he is to pay the man for using his goods. Such kinds of contracts are quasi contracts.

Classification according to performance

• Executed Contract: this kind of contract is that where all the legal formalities have been done and nothing is left.
• Executory Contract: this kind of contract is which is not complete. There are certain formalities which are left.
• Unilateral Contract: this is a contract where one party is left to perform and the other party has completed his formalities.
• Bilateral Contract: this is a contract where both the parties have to perform and they have not yet done anything. This is in a way similar to the executory contract.

TERMS IN A CONTRACT

When two parties enter into a contract there are certain terms on which both have to agree or one party induces the other party to enter into the contract. The normal rule is that if a party has entered into a contract then that party is bound by all the facts and the terms which have been stated in the contract. Collateral contract: this contract is separate altogether which exists along with the main contract. This occurs when a party refuses to enter into the main contract but is ready to enter into a collateral contract if certain assurances are mentioned in the contract. Conditions and Warranties: there are terms in contracts. The terms that are more important are known as conditions and the less important terms are known as warranties. If any condition is not fulfilled then it can end up making the contract void or voidable. If a term is a warranty that if it is not that important then the accused party will just be able to recover the monetary damages and nothing else. (Law handbook 2012)

If you want Law Assignment Help study samples to help you write professional custom essay’s and essay writing help.

Receive assured help from our talented and expert writers! Did you buy assignment and assignment writing services from our experts in a very affordable price.

To get more information, please contact us or visit www.myassignmenthelp.Com