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- Who are the persons by whom contract may or must be...Essentials of valid contractQ. What are the essentials of a valid contract? Discuss them briefly. (2000) (2003).
Law of contract 1872 provides the rules relating to commercial transactions. It is very important branch of mercantile law. It determines the circumstances. In which promises made by the parties to a contract shall be legally binding on them. The contract Act 1872 extends to whole of Pakistan. It does not affect any usage or custom of trade or any incidents of any contract not inconsistent with the provisions of the Act.
2. Definition of contract:
(I) Simple words
“A contract is an agreement between two or more persons to do or not to do some particular thing such agreement being enforceable at law.
(II) According the contract act 1872:
“An agreement enforceable at law is a contract”
(III) According to Salmond:
“An agreement creating and defining obligation: between the parties”.
(iv) According to Pollack:
“Every agreement and promise enforceable at law is contract.”
3. Conditions for contract:
There are two conditions for contract
(i) An agreement
(ii) An agreement should be enforceable by law. Contract = Agreement + Enforceability.
4. Classification of contracts
Classification of contracts is as under:
(i) According to validity or enforceability.
(ii) According to formation or creation.
(iii) According to performance.
If there is an agreement between A and B that A will construct a house for B and B will pay 5 Lack to A, that agreement is a contract.
6. Essentials for valid contract:
Followings are essentials for valid contract.
There must be lawful proposal by one party to another party.
There must be lawful acceptance by other party.
There should be an agreement between the two parties i. e. proposer and Acceptor.
(IV) Written :
It is necessary that agreement between the parties should be in written form.
(V) Lawful relationship:
Agreement between parties must be lawful, because unlawful agreement cannot be enforceable at law.
(VI) Legal relationship:
Parties must intend to create legal relationship.
(VII) Lawful object:
The object of contract must not be
(i) Illegal or unlawful
(iii) Opposed to public policy
(VIII) Competency of parties:
Parties of the contract must be competent to enter into contract. According to the contract act every person is competent to contract. Who
(a) Has attained the age of majority
(b) Who is of sound mind.
(c) Is not disqualified from contracting by law to which he is in subject.
Consideration is “something in return”. An agreement is invalid if it has been concluded without any consideration.
(X) Free consent:
For a valid contract, it is necessary that the consent of the parties to the contract must be free.
(XI) Certain and definite:
Contract must not be uncertain, vague, or indefinite where the agreement is vague and its meaning can’t be ascertained, it shall be unenforceable.
(XII) Not declared void:
Agreement must not have been declared void by any law in force in the country because a void agreement is not enforceable by law and it has not legal existence.
(XIII) Possibility of performance:
In order to make valid contract it is necessary that it must be capable of being performed.
7. Legal formalities:
To conclusion it can be said that, a contract is an agreement which is enforceable at law. An agreement becomes enforceable by law when it fulfils some conditions. These conditions may be called essentials of a valid contract. If any of the essential element is missing the contract is either voidable, void, illegal or unenforceable in the eye of law.
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