Q. Describe the essentials of a valid contract. When does an agreement become void?
Definition of Contract (Easy for Exams)
According to Section 2(h) of the Indian Contract Act, 1872,
A contract is an agreement enforceable by law.
In simple words,
When two or more persons make an agreement and the law recognizes and enforces it, it becomes a contract.
Not every agreement is a contract. To become valid, an agreement must satisfy certain legal conditions called essentials of a valid contract.
Essentials of a Valid Contract
For an agreement to be a valid contract, the following essentials must be present:
1) Offer and Acceptance
There must be a lawful offer by one party and a lawful acceptance by the other.
Offer means willingness to do or not to do something.
Acceptance means agreeing to that offer.
Example:
Ravi offers to sell his laptop to Suresh for ₹30,000.
Suresh agrees to buy it.
Here, Ravi’s offer and Suresh’s acceptance create agreement.
Without offer and acceptance, no contract exists.
2) Intention to Create Legal Relations
The parties must intend that the agreement should be legally binding.
Social or domestic agreements are not contracts.
Commercial agreements are usually contracts.
Example:
A father promises his son pocket money — not a contract.
But Ravi agrees to sell goods to a shopkeeper — it is a contract.
So, legal intention is necessary.
3) Lawful Consideration
Consideration means something in return.
One party gives something and the other receives something.
It may be money, service, goods, or promise.
Example:
Ravi sells a phone and Suresh pays ₹20,000.
Phone = consideration for Suresh
Money = consideration for Ravi
Without consideration, agreement is generally void.
4) Capacity of Parties
The parties must be competent to contract.
A person is competent if he:
Is a major (18 years)
Is of sound mind
Is not disqualified by law
Example:
If a 15-year-old buys a bike on credit, the agreement is void because a minor cannot contract.
So, legal capacity is required.
5) Free Consent
Consent must be free. It should not be caused by:
Coercion
Undue influence
Fraud
Misrepresentation
Mistake
If consent is not free, the contract becomes voidable.
Example:
Suresh threatens Ravi to sign a sale deed.
Ravi signs out of fear.
Here consent is obtained by coercion.
Ravi can cancel the contract later.
So, free consent is essential.
6) Lawful Object
The purpose of the contract must be legal.
It must not be illegal, immoral, or against public policy.
Example:
Agreement to sell drugs illegally is void.
Agreement to commit theft is void.
Thus, object must be lawful.
7) Certainty of Terms
The terms of the contract must be clear and definite.
Uncertain agreements are void.
Example:
Ravi agrees to sell “some goods” to Suresh.
What goods? How many? At what price?
This is uncertain, so it is void.
8) Possibility of Performance
The act promised must be possible.
Impossible agreements are void.
Example:
Ravi agrees to bring the moon for Suresh.
This is impossible, so void.
9) Legal Formalities
Some contracts must be in writing, stamped and registered.
Example: sale of immovable property.
If law requires formality and it is not followed, the contract becomes invalid.
When Does an Agreement Become Void?
According to Section 2(g),
A void agreement is one which is not enforceable by law.
An agreement becomes void in the following cases:
If Essential Elements Are Missing
Agreement with Unlawful Object
Agreement Without Consideration
Agreement with Uncertainty
Agreement with Impossible Act
Agreement in Restraint of Trade
Agreement by Mistake of Fact
Difference Between Agreement and Contract (Short Note)
Agreement = Offer + Acceptance
Contract = Agreement + Legal enforceability
Conclusion (For Scoring)
To conclude, a valid contract requires offer and acceptance, intention, lawful consideration, capacity, free consent, lawful object, certainty, possibility of performance and legal formalities. If any of these essentials are missing, the agreement becomes void. The Indian Contract Act, 1872 ensures that only fair, lawful and enforceable agreements are treated as contracts.
One-Line Exam Memory Tip
A contract is an agreement enforceable by law, and an agreement becomes void when it lacks legal essentials or contains illegality, uncertainty or impossibility.