Contract and agreement:
In the
general contract is an agreement between two or more parties. In fact, such
agreements are not contract. Only those agreement which are enforceable by the
law are contract. In the agreement, the parties of it make promises about
something which is to be performed, when such promises or expectation of the
parties become an agreement and when this agreement is backed up by law it
becomes a contract which creates legally binding obligation between the
parties.
The
scope of an agreement is wider than of contract because a contract must fulfill
some essential elements. It has a limited scope which exists within the
limitation of legality. Thus all contracts are agreements but all agreement are
not contract. Thus the contract
essentially consists of two elements first is agreement and second is its
enforceability. Where certain duties or obligation are created by agreement
between the parties, contract law deals with, whereas an agreement which does
not create an obligation is not the subject matter of contract law.
The
essential elements of a valid contract are as follows:
1) Offer and Acceptance:
There
must be an agreement between two parties to create a contract. The agreement
involves a valid offer by one party and valid acceptance of the offer by other
party. Therefore the journey of contract always starts with offer and
acceptance.
2)
Consideration:
Consideration
means something in return. It has the motivation power to fulfill the promise.
The agreement born when contracting parties are giving and getting something in
return. It is not necessary to be cash or kind, it may be a promise to do or
not to do something. But it must be real and lawful, which may be in the past,
present, and future.
3)
Legal Relationship:
At
the time of entering into an agreement the parties should have the intention to
create a legal relationship between them to avoid all types of conflicts. This
type of legal relationship helps the victim party to have a legal remedy in
case of failure of either party. Agreement without legal relation can not be
enforced. For example, The relationship between a loaner and borrower can not
attract the law of contract. The father promises his son to get a cycle if he
passed the exam. Son passed the exam, The son claims for his prize. In such
matters, the father not bound to take a cycle for his son, because they had no
such intention to create a legal relationship while making the promises. To be
fallen in contract law the parties of the agreement must have the intention to
establish a legal relationship between them.
4)
Free Consent:
When
the parties of the contract agree upon the same thing in the same sense, their
consent must be free from oppression, under influence, misrepresentation, fraud,
and mistake of law. The consent must be made with knowingly and freely. If the
consent is not free the parties can avoid the contract.
5)
Meeting of Minds:
To
be a contract, two or more than two persons must agree upon the same thing in
the same sense. If 'A' wants to purchase 'X' but B wants to sell 'Y' then there
is no contract raised between 'A' and 'B' because there is no meeting of minds.
6)
Competent ( Capable) parties:
The
parties who are involved in the agreement must be competent to contract. If
incompetent parties are in a contract, it is not valid. The parties not capable
to contract are a minor person of unsound mind and legally disqualified person.
7)
Lawful Objectives:
The
objectives of the agreement must be lawful to be a valid contract. If the
subject matter of the agreement is not lawful ( illegal, immoral, and opposed
to public policy) are not contract, and the agreement having these types of
objectives are not enforced by law.
8)
Not declared to be void:
Those
agreements which are expressly declared void by the contract and other law
forces are not the contract. Agreement to kill the life of others or an agreement
to steal goods is illegal and void. Similarly, agreement in restraint marriage
or profession is void by NCA.
9)
Certainty:
The
objectives of an agreement must be certain and clear and practical. The
contract which is uncertain due to lack of providing reasonable meaning is
void. For example, A agrees to B that he will purchase another car if the first
car becomes lucky to him. Such an agreement can not enforce against A, and B
can not claim for another purchase by A. Because the term ' lucky' does not
have any certain and clear meaning in practical life.
10)
Possibility of performance:
The
objectives or the action to complete the agreement must be possible to perform.
Any act which can not be done or is non- performable does not create a legal
obligation to the contracting parties.
11)
Legal formalities:
The
contract must be in written form and comply with other legal provision such as
registration in a government office
Reviewed by Bijay Munikar
on
September 24, 2020
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