Contract Act

Essentials of Contract

What are the essentials of contract under Indian Contract Act?


A contract is an agreement enforceable by law. An agreement is enforceable by law if it is made by the free consent of the parties who are competent to contract and the agreement is made with a lawful object and is for a lawful consideration, and is not expressly declared to be void. The agreement which is not enforceable by law is not called a contract.

Eg. An agreement to sell a radio set may be a contract, but an agreement to go to see a movie may be a mere agreement not enforceable by law.

Agreement + Enforceability at law = Contract “All agreements are not contracts but all contracts are agreements


According to S. 2 (e) “Every promise and every set of promises, forming the consideration for each other, is an agreement”. In an agreement there is a promise from both sides. Eg. A promises to deliver his watch to B and in return B Promises to pay a sum of Rs. 2,000 to A. There is said to be an agreement between A and B. A promise is the result of an offer by one person and its acceptance by the other. Section 2(b) of the Act, defines “promise” as “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.”


All agreements are contracts if they are made

  • Between Two persons
  • Free consent of parties

 Two or more persons are said to consent when they agree upon the same thing in the same sense. Consent is free when it is not caused by mistake, misrepresentation, undue influence, fraud or coercion. When consent is caused by any of above said elements, the contract is voidable at the option of the party whose consent was so caused.

  • Competent to contract

 Competent to contract means the legal ability of a person to enter into a valid contract. Every person is competent to contract who (a) is of the age of majority according to the law to which he is subject and (b) is of sound mind and (c) is not otherwise disqualified from contracting by any law to which he is subject.

  • Lawful consideration and lawful object

An agreement where the object or the consideration is unlawful is void. Object or consideration is unlawful if it is forbidden by law, it defeats the provisions of law; or is fraudulent, or involves injury to the person or property of another, or is immoral, or is opposed to public policy. Besides the above said agreements, certain agreements have been expressly declared to be void by the Contract Act such as – wagering agreements, agreement with uncertain meaning, agreements where consideration is unlawful in part etc.

  • Are not expressly declared to be void.

The agreement entered into must not be which the law declares to be either illegal or void. An illegal agreement is an agreement expressly or impliedly prohibited by law. A void agreement is one without any legal effects

Also Read: What are the Essentials of the Valid Contract in India


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