Essential Elements of a Valid Contract

Essential Elements of a Valid Contract

In a layman’s term, a contract means when two parties put into writing an agreement which consists of specific obligations or promises that are to be performed by such parties, and when such written agreement becomes enforceable by law, it becomes a contract. When the agreement has gained the force of law only for those who are a party to the contract and any violation of those obligations or promises would captivate legal action as well as contradiction or repudiation of the contract, this is also called being enforceable by law. The definition of a contract as provided u/s 2h of the Indian Contract Act is, that an agreement that is enforceable by law is a contract. An agreement is a settlement between two parties which consists of obligations, or promises which both parties require to fulfil. When such an agreement is made binding by the law, it becomes a contract. For that, an agreement is inclusive of reciprocal promises or obligations that are to be performed by parties to the contract.

Essentials of a Valid Contract

Section 10 of the Indian Contract Act defines the conditions that are required for an agreement to be counted as a contract. They are as follows:

  • Offer. To begin with, there must be an offer from either side of the party, without an offer a contract cannot come to light. Nonetheless, in rare cases, the principle of offer could not be applied.
  • Acceptance of the offer. Followed by the offer, acceptance of the offer must be accepted and must be accepted by the person to whom it was planned. Like, An offer made to C by D, must be accepted by C only.
  • The parties must be competent to the contract under the laws they are subjected to. That is, they must be legally capable of entering into the contract.
  • Consideration. for the performance of promises there must be considerations. something is given for the performance of the promise from both parties to the contract.
  • Free consent. Parties to the contract must enter into the contract with a free consent without any coercion or undue influence.
  • A contract must not be declared as void expressly.


An offer is the foremost thing for forming a contract described u/s 2a of the Indian Contract Act which simply means willingness to do something or not to do something. An offer must be communicated by means of communication to the offeree, Offers can be expressed or implied and shall not contain anything that is illegal or unlawful.

However, there is a minute difference between offer and invitation to offer. An invitation for offer refers to others making an offer which is not within the purview of the definition of ‘offer’ by the Contract Act.


Section 2b of the Indian Contract Act has mentioned acceptance of the offer. Simply put, once the offer made by one party is accepted by another party and the same has been communicated between each other the parties are then obligated to their promises respectively. One of the best known cases for acceptance of the offer is Lalman Shukla v. Gauri Dutt.


A Contract is formed when a person, C, makes an offer to another person, D. When such an offer is accepted by  D, the other person, it becomes an agreement. Consideration refers to the weightage given for the performance of a promise. Generally, a contract having no consideration is void but exceptions to this fact have been provided u/s 25 of the Contract Act.

Free Consent

As per Section 10 of the Indian Contract Act, a contract is only valid if was entered into by free consent of the parties. The usual affirmation that the consent was not free is not maintainable. It must be proved that the consent of both the parties to the contract was deprived by either of the five elements that are mentioned u/s 14 of the Contract Act. If the consent escapes any of the elements mentioned u/s 14 then the contract becomes voidable at the option of the party whose consent was forcefully obtained.

Intention to create legal relationship

The intention to create a legal relationship is one of the most fundamental aspects of the law. It is specified as an intention to enter into a legally conclusive agreement or contract and implies that the parties to the contract take into consideration and accept the legal repercussions in case of a breach of contract.


As per Section 10 of the Contract Act, an agreement is a contract that is made among other essentials to form a contract, by the free consent of parties who are competent to enter into a contract. By being competent to a contract it is meant that people belonging to the age of majority I.e., 18 years of age are legally capable enough to enter into a contract and are of sane mind, and are not disqualified to contract by any law to which such person is subjected to, are competent to contract. It is to be kept in mind that if a minor enters into a contract, it becomes void ab initio, which means null and void right from the very beginning of the formation of the contract.

Lawful object

As per Section 10 of the Contract Act, the consideration and object of the contract being formed should be lawful which is one of the essential elements to form a contract.

Not expressly declared as void

Apart from the conditions provided u/s 10 of the Contract Act, the Indian Contract Act has identically certain clauses to be void. Sections 26 to 30 talks about such types of contracts.


All the aforementioned information and essentials are the common and basic principles in order to form a contract, nonetheless, it is to be kept in mind that there may be other such conditions which might be written down by a special law or any specific type of contract. For example, a contract dealing with Intellectual Property Rights has to endure all the rules laid down by the laws that deal with Intellectual Property Rights.