It is beneficial for U.G students of Law.

1. Meaning, Definitions and Essentials of a Valid
Contract
Mr. Amit Guleria (Double Medalist; Gold and Silver)
Assistant Professor,
Dr. B.R. Ambedkar National Law University Sonepat
Email: amitdbranlu@gmail.com

2. Why we study Law of Contract
This is a law which deals with promises. (Formation, performance and
enforceability)
It provides legal framework for commercial transactions that take place in
our day-to-day life.
It is a law that parties decide for themselves. (As they are free to decide/fix
their terms and conditions by meeting of minds).
The statutory law(s) are very significant keeping in view the competitive
exams.

3. Introductory
❖ In everyday parlance we enter into contract multiple times with others.
❖ When we purchase any house hold articles, i.e. milk, pulses, TV, refrigerator,
Laptop, mobile etc. There is a contract between buyer and seller.
(Express/Implied Consent).
❖ When we book a cab, a bus, a train or an air ticket, we enter into contract.
❖ Hence we can say that ‘contract’ has become a vital part of our life.
❖ The parties to a contract are free to enter into a contract on any terms &
conditions they choose.
❖ The rights and duties of parties and terms of agreement are decided by the
contracting parties themselves. The court of law acts to enforce agreement, in
case of non-performance.

4. ❖ Indian Contract Act, 1872 codifies the way the parties enter into a
contract, execute a contract, implement provisions of a contract and effects
of breach of a contract.
❖ So it provides a framework of rules and regulations which govern
formation and performance of contract.
❖ It is important to understand that contract need not be in writing, unless
there is specific provision in law that the contract should be in writing.
❖ For instance: Contract for sale of immovable property must be in writing,
stamped and registered (eg. Sale of a car, bike, truck etc.).
❖Contracts which need registration should be in writing (Sale of immovable
property, house, piece of land etc.).

5. Trust should be created in writing (Trust Deed).
A verbal contract is equally enforceable, if it can be proved.. A contract can be
enforced or compensation/damages for breach of contract can be obtained
through Civil Court.

6. Meaning and Definitions of Contact
General Meaning: Whenever two or more persons/parties agree to perform
some reciprocal obligation enforceable by law, they are said to be entered
in to contract.
A legal contract is an agreement between two or more parties in which
legal rights and obligations are created, and are enforced by a court.
Statutory definition: Indian Contract Act, 1872 ( Act 9 of 1872) Section 2
(h) “An agreement enforceable by law is a contract”

7. Juristic Views on Contract
Fredrick Pollock, "Every agreement and promise enforceable at law is a
contract".
Salmond, "A contract is an agreement creating and defining obligations
between the parties".
Anson, "A contract is an agreement enforceable at law, made between two
or more persons, by whom rights are acquired by one or more to acts or
forbearances on the part of the other or others".

8. Offer + Acceptance = Promise
Promise + Consideration = Agreement
Agreement + Legal Enforceability = Contract
All the contracts are agreements, but all the agreements are not contracts.
Because only those agreements are contracts which are enforceable by law.
For Instance: If two parties agree to kill some third one, for the
consideration of Rs. 1 lakh. The murder is committed, but consideration
is not paid. It cannot be enforced by law.

9. Steps Involved in a Contract
Contract
Performance of Contract
Agreement by mutual promises
Acceptance of proposal and its communication
Proposal and its communication

10. Essentials of a Valid Contract
Elements of a Valid Legal Contract
For a contract to be legally enforceable the contract must contain the following elements:
1. Offer
2. Acceptance.
3. Two Parties: Meeting of Minds.
4. Lawful object.
5. Lawful Consideration.
6. Agreement not expressly declared void by Law.
7. Intention to create legal relationship.
8. Free Consent.
9. Capacity of parties to contract.
10. Possibility of performance. (Impossible agreements are frustrated, therefore void) Sec. 56, ICA, 1872.

11. Proposal/Offer: Section 2(a) When one person signifies to another his
willingness to do or to abstain from doing anything, with a view to obtaining
the assent of that other to such act or abstinence, he is said to make a proposal.
Acceptance and Promise: Section 2(b) 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.
Parties to Contract: Section 2(c) The person making the proposal is called the
“promisor”, and the person accepting the proposal is called the “promisee”;

12. Sec. 10, ICA, 1872: What agreements are contracts.— All agreements are
contracts if they are made by the free consent of parties competent to
contract, for a lawful consideration and with a lawful object, and are not
hereby expressly declared to be void.
Nothing herein contained shall affect any law in force in [India] and not hereby
expressly repealed by which any contract is required to be made in writing or
in the presence of witnesses, or any law relating to the registration of
documents.