Hello everyone, today we are going to discuss what is contract? Elements of a legal contract. In our previous post we discussed planning marketing: partnering to build customer relationship So let’s start, we hope you will enjoy this session.

What is contract?

what is contractA contract is defined as “An agreement which is enforceable by law is called contract”. This definition points out two factors of the contract first one there must be an agreement and the second one is agreement must be enforceable by law. When two or more parties agree to do or perform certain things is called an agreement. So we can say that every contract is an agreement, but all agreements are not contracts. For example, an agreement to marry someone is an agreement intended to create a legal relationship and is therefore a contract. But an agreement to restrain someone’s marriage is not a contract because it is not enforceable by law.

Elements of a legal contract

There are certain conditions which an agreement must fulfill to become enforceable by law. These conditions are called essential elements of a legal contract. Now we will discuss these elements
Elements of a legal contract
  • Offer and acceptance: For an agreement to be enforceable by law, there has to be lawful offer by one party and other party must accept that offer lawfully. There are some rules regarding making an offer and accepting that offer. We will discuss these rules regarding offer and acceptance in our next post. So keep visiting.
  • Intention to create legal relationship: A contract doesn’t exist simply because there is an agreement between parties. There must be an intention between parties that agreement shall create a legal relationship. For example,you made an agreement to have dinner at your friend's home, such agreements are not intended to create legal relationship so these agreements cannot be legal contract, but an agreement to marry someone is an agreement intended to create legal relationship therefore it is a contract.
  • Lawful consideration: An agreement to do something for nothing is not enforceable by law. An agreement is enforceable by law only when each party gives something and gets something.
  • Capacity of parties: To form a legal contract the parties to an agreement must be capable of entering into an agreement, otherwise it will not be enforced by the law. For example, if any party or parties suffer from disability like lunacy, idiocy, minority, drunkenness etc. then it is not enforceable by law except some special cases.
  • Free consent: Free consent is defined as ‘a consent is said to be free when two or person agree upon the same thing in the same sense’. An agreement must be based on the free consent of all parties. If there is absent of genuine consent for example if the agreement is established by fraud, mistake, misrepresentation, undue influence etc. then it will not be enforceable the law. A person guilty of coercion, undue influence cannot enforce the agreement. But other party or parties can enforce it, depends on certain rules.
  • Legality of the object: The object for which agreement has been established have to be legal in order to make it a valid contract. An agreement based on an illegal object obviously is not enforceable by law.
  • Certainty: An important element to build a legal contract is certainty. In general rules, the court will not enforce if the agreement is vague or incomplete. It must be possible to ascertain the meaning of the agreement.
  • Possibility of performance: The agreement must be capable of being performed. A promise to do an impossible thing cannot be enforced by court. For example, Alex agrees with Taylor to discover treasure by magic. Such agreements are not enforceable by law.
  • Void agreements: An agreement made must not be have been declared to be void. Basically, there are five categories of agreement which are expressly declared void. Such as
       (a) Agreement in restraint of marriage
       (b) Agreement in restraint of trade
       (c) Agreement in restraint of proceedings
       (d) Agreements having uncertain meaning
       (e) Wagering agreement
  • Writing, registration and legal formalities: An oral contract is accepted as a perfectly good contract expect some special cases where writing or registration is required by some statute. Basically, writing is required in case like lease, sale, memorandum, articles of association of a company and registration is required in cases like mortgage deeds covering immovable property.
The elements mentioned above all must be present. If any of them is missing then it will not be a legal contract.
What is contract? Elements of a legal contract
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