This document contains notes on the essential elements of a valid contract according to the Contract Act 1872. It discusses the requirements of offer and acceptance, lawful object, intention to create a legal relationship, free consent, capacity of parties, certainty and possibility of performance, and lawful consideration. It also examines exceptions like agreements of a social nature and between husband and wife. Key elements outlined include lawful offer and acceptance, consent free from coercion or undue influence, clear and unambiguous terms, and an object that is not fraudulent, illegal, immoral or against public policy.
3. ▶ Every promise and every set of promises, forming
the consideration for each other, is an agreement.
{Section 2(e)}
▶ A person makes a proposal (Offer). When it is
accepted by other, it becomes a promise
(Acceptance). Thus, Offer + Acceptance = Promise
Only a mutual promise forming consideration for
▶
each other is ‘agreement’. Thus, Promise +
Consideration = Agreement
4. ▶ “An agreement enforceable by law” is Contract. -
Section 2(h)
▶There must be legal relationship.
◦ Agreements of social or domestic nature are not contracts.
◦ Examples:
Invitation to a Birthday party
Invitation to a Dinner etc
5. ▶The promisee is the person receiving the promise from
the promisor. The promisee is the person who has
been promised something, as opposed to the promisor
who makes the promise to someone.
6.
7. ▶ 1. Proper offer and its acceptance
2. Lawful object
3. Agreement not expressly declared void
4. Intention to create legal relationship.
5. Free Consent
6. Capacity of parties to contract
7. Certainty of meaning.
8. Possibility of performance.
9. Lawful consideration
10. Legal formalities
9. In order to create a valid contract, there must be a
'lawful offer' by one party and 'lawful acceptance' of
the same by the other party.
10. ● Agreements which create legal relations or are capable of
creating legal relations are contracts, for example, an invitation
to a dinner does not create any legal relation and therefore is
not a contract.
● Husband & Wife Agreements
The courts consider domestic arrangements between husband
and wife to be social agreements and not legally enforceable:
Balfour v Balfour.
11. When, at the desire of the promisor, the promisee or
any other person
■has done or abstained from doing (PAST), or
■does or abstains from doing (PRESENT), or
■promises to do or to abstain from doing, something
(FUTURE),
such act or abstinence or promise is called a
consideration for the promise. -Section 2 (d)
A promise without consideration is not ‘agreement’
12. CAPACITY OF PARTIES
▶The parties to an agreement must be
competent to contract. If either of the parties
does not have the capacity to contract, the
contract is not valid. Accordingly the following
persons are incompetent to contract.
(a) Minors,
(b) Persons of unsound mind, and
(c)persons disqualified by law to which they
are subject.
13. ▶Two or more persons are said to consent when
they agree upon the same thing in the same
sense. (Section 13)
14. Consent of both parties must be free.
Consent is said to be free when it is not caused by
(1) coercion, as defined in section 15
(2) undue influence, as defined in section 16
(3) fraud, as defined in section 17
(4) misrepresentation, as defined in section 18
(5) mistake, subject to the provisions of sections 20, 21
and 22.
15. The object for which the contract has been entered into
must not be fraudulent or illegal or immoral or
opposed to public policies.
16. If the act is impossible in itself, physically or
legally, if cannot be enforced at law. For
example, Mr. A agrees with B to discover
treasure by magic. Such Agreements is not
enforceable.
17. The terms of a contract should be clear. In
other words, the contract must not be
vague. Contracts which are vague cannot
be enforced.
18. There are Certain agreements which have been
expressly declared void by the law. Thus an
agreement made by parties should not fall in
this category.
19. Oral contract is a valid contact. However the contract
must be in writing and registered, if so required by any
law, for example, gift, mortgage, sale, lease under the
Transfer of Property Act 1882, Memorandum and
Articles of Association of a Company under the
Companies Ordinance 1984