Under the Indian Contract Act, certain Agreements can be classified as Contracts.
Offer and Acceptance : A contract begins with a clear and specific offer made by one party and accepted by the other party without any conditions or modifications.
Intention to Create Legal Relations : Both parties must intend to create a legally binding agreement. Social or domestic arrangements usually lack this intention.
Mutual Consent : For an agreement to be considered a contract, there must be a clear and unequivocal agreement between the parties. It means that both parties involved must willingly and understandingly agree to the terms of the contract.
Lawful Consideration : There must be a lawful consideration exchanged between the parties. Consideration refers to the value or benefit that each party receives or expects to receive from the agreement. It can be in the form of money, goods, services, or even a promise to do or not to do something.
Lawful Object : The object or purpose of the contract must be lawful. It cannot involve any illegal activities or be against public policy. Any agreement with an unlawful object is deemed void.
Competency of Parties : The parties entering into a contract must be competent to do so. Competency refers to their mental capacity and legal status. Minors, persons of unsound mind, and those disqualified by law cannot enter into a valid contract.
Free Consent : The consent of the parties must be free from any undue influence, coercion, misrepresentation, or mistake. It means that the parties should willingly and knowingly enter into the contract without being forced or deceived.
Certainty and Possibility of Performance : The terms and conditions of the contract must be certain and capable of being performed. The obligations and promises of the parties should be clear and specific, leaving no room for ambiguity.
Not Expressly Declared Void : The Indian Contract Act specifically mentions certain agreements that are expressly declared void, such as agreements with minors, agreements made under coercion or undue influence, and agreements with unlawful objects.
Legal Formalities : Some contracts, such as those relating to the sale of immovable property, require additional legal formalities like registration to be enforceable. It’s always recommended to consult with a legal professional for specific advice regarding contracts under the Indian Contract Act.
These provisions collectively define what can be considered a contract under the Indian Contract Act.
ILLUSTRATIONS (WHAT MAKES AGREEMENTS INTO CONTRACT) –
- John offers to sell his car to Sarah for ₹10,000. Sarah accepts the offer and agrees to purchase the car at the stated price.
- John and Sarah agree that their car sale transaction will be legally binding, and they both understand and acknowledge the legal consequences of the agreement.
- John agrees to sell his car to Sarah for ₹10,000, and Sarah agrees to pay John the agreed amount upon receiving the car.
- John and Sarah are both adults over the age of 18 and are mentally competent to enter into a contract.
- John and Sarah negotiate the terms of the car sale freely, without any coercion or deceptive tactics.
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