Essentials of Valid Contract

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In a business, contract or agreement plays a significant role in smooth functioning between two parties. In simple terms, the contract is a written agreement between two parties, which contains certain obligations and enforced by the law. Violation of the contract or law can attract legal action by any of the parties, including cancellation of the entire contract. Any individual entering into a written agreement should be knowledgeable enough with an essential of a contract.

Definition of Contract

The Indian Contract Act 1872 states the term contract is like an agreement that creates an obligation between parties. According to the act, the contract is "an agreement enforceable by law."

The act also lists the essentials of a valid contract directly or through various judgements of the Indian judiciary.

Essentials Elements of a Valid Contract

According to the Indian Contract Act 1872, "Agreements are also contracts made by the consent of parties, competent to contract to consider with a lawful object and are not hereby expressly declared to be void”. Therefore, the contract or the agreement must carry essential aspects to maintain the normal phase of duties by both parties.


A and B underwent the contact, where A will purchase 10 bags of cement for Rs 1, 00,000. B promises to supply the same in the given period and the quality mentioned. A promise to pay the sum as per the mentioned method in the contract. In this case, both parties have to perform the act as per the agreement signed.

Essential Elements of a Valid Contract

To explain the essentials of a valid contract, we bring you with the list unfolded by the Indian Contract Act 1872-

  • Offer and Acceptance

Generally, the written contract only unfolds when the other party accepts the offer by one party and is definite in all sense. The offer or agreement must be clear and complete in all sense. Both parties should communicate to ensure there is no lapse of the contract act. Both the offer and acceptance must be "consensus ad idem", meaning, both parties must comply on the same thing.

  • Intention to create a Legal Relationship

To bind, both parties should have a specific intention that can create a legal relationship, resulting in an agreement. Agreements in social or household nature are not contracts because parties do not intend to build legal relationships.

  • The intent of Legal Obligations

One of the essential elements of a valid offer is that both parties subject to a contract must be clear with the intentions of creating a legal relationship. This also means that agreements that are not enforceable by the law like agreements between relatives are enforceable in the court of law.

  • Possibility of Performance of Agreement

In this case, suppose two people decide to undergo an agreement where person A agrees to bring person B’s dead relative back to life, this will not fall under the legal contract act because bringing back the deceased person alive is an impossible task. Thus, the agreement does not stand valid.

  • Legal Formalities

In this agreement, if there is any uncertainty and both parties are not capable of finding the right path, then it is deemed void. As a part of essentials of a valid consideration, the terms and conditions of the contract should be concrete. Any contract, which is uncertain in any sense, can be termed as void. The terms mentioned in the agreement should be capable of performing specific thoughts.

  • Consideration

Consideration means the moral value given for the performance of the promise. It should not be only limited to money, but there should be some value to what has been agreed upon. One of the essentials of valid consideration is that it should not be adequate, but should carry some value.

Some pointers under consideration are:

Consideration is wholly according to the desire of the promisor, which means the review must come from the promisor. Consideration can be either:

  • Past Consideration

  • Present Consideration

  • Future Consideration

  • Consideration can be tangible, like the performance of the service like teaching and labour.


These are the essentials of a valid contract, which needs to be fulfilled led by the contract act of India. Before getting into any agreement, it is essential to know what action has led.

FAQ (Frequently Asked Questions)

Q1. What are the five elements of a Contract?

Ans. Under the essentials of a contract, both parties should know five critical elements. These are-

  1. Offer

  2. Acceptance

  3. Consideration

  4. Capacity

  5. Lawful Purpose

Q2. What are the essentials of Valid Acceptance?

Ans. The Indian Contract Act, 1872, acceptance is "When the person to whom the offer is made signifies his assent to it, the proposal is said to be accepted." There are two essentials of valid acceptance-

  • Be Absolute and Unqualified

  • If the said proposal prescribes a specific manner to be accepted, but not made in the said manner, the proposer within the reasonable time after the acceptance is communicated to him, insist to accept the proposal in the prescribed manner, but if fails to do so, he is liable to accept the acceptance.

Q3. What are the essentials of Bailment?

Ans. As per the Indian Contract Act, 1872, "essentials of bailment is the process of delivering goods by person A to person B for a purpose. Bound by the contract, when the purpose is fulfilled, the product should be returned or disposed of according to the directions set by the person delivering them." The person who delivers the goods is known as a bailor. The person to whom such goods are delivered is known as bailee.