ELEMENTS OF A VALID CONTRACT
Author : Fiza Hussain
Under Sec 2(h) of the Indian Contract Act, 1872, a contract is defined as an agreement enforceable by law. This article aims to shed light on the various factors that are required to make a contact legally valid. The law of contracts confines itself to the enforcement of voluntarily created civil obligations.
It does not cover the whole range of civil obligations. There are several obligations of civil nature, like those imposed by the law or created by the acceptance of a trust, whose violation may be actionable under the law of torts, or under a statute, but they are outside the field of contract. The law of contract is also not able to take care of the whole range of agreements.
Many agreements remain outside its purview because they do not fulfill the requirement s of a contract. In addition, there are some agreements which literally satisfy the requirements of a contract, such as proposal, acceptance, consideration, etc., but which do not catch its spirit and they are not enforced because it does not sound to be reasonable to do so. They are excluded under the legal device that the parties must not have intended legal consequences.
Section 2(a) of ICA defines proposal. It is when a person signifies to another his willingness to do or abstain from doing anything with a view to obtain the assent of the other for such act or abstinence. The person who makes the proposal is called “promiser” or “offeror” and the person to whom it is made is called “promisee” or “offeree”. Section 2(c) defines promiser and promisee. A proposal may be communicated in any way which has the effect of laying before the offeree the willingness to do or to abstain. It may, for example, be done by words of mouth, or by writing, or even by conduct.
Proposals may be implied or expressed. An offer and acceptance need not always be formal, nor does the law of contract or sale of goods required that consent to contract must be in writing. An offer which is expressed by conduct is called implied offer and one which is expressed by words, written or spoken, is called an express offer and acceptance may likewise be made expressly or impliedly. The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. Therefore it is essential to understand that an offer cannot be complete unless it has been brought to the knowledge of the person to whom it is made.
Acceptance has been defined under Section 2(b) Of the Indian contract act, 1872. When the person to whom the proposal is made signifies his assent, the proposal is set to be accepted. Communication of acceptance must be made to the offeror himself. It is also been mentioned that an offer cannot impose upon the offeree the burden of refusal.
The offer cannot say that if no answer is received within a certain time, the same shall be deemed to have been accepted. Acceptance should be made in the same manner as indicated by the offeror. The acceptance of the offer must be absolute and unqualified.
It may be expressed in some usual and reasonable manner, unless the proposal prescribe the manner in which it is to be accepted. If proposal prescribes a manner in which it is to be accepted the and the acceptance is Made in such a manner, the proposer Make, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; But, if he fails to do so, he accepts the acceptance.
Section 14 of the Indian contract act defines free consent. Consent is said to be free when it is not caused by the following:
- Undue influence
Section 15 of the Indian contract act defines coercion. Coercion is defined as the committing or threatening to commit any act forbidden by the Indian Penal Code. An agreement the consent to which is caused by coercion is voidable at the option of the party whose consent was so caused.
Undue influence is defined at a section 16 of the Indian contract act. When a person who is under the influence of a dominant authority of a fiduciary relationship agrees to enter into a contract then he said to be under an undue influence.
Sometimes the parties to an agreement are related to each other and one of them is able to dominate the will of the other. The person who occupies the superior position may prevail upon the other to obtain his consent to an agreement to which he, but for the influence you exerted, would not have consented.
The relationship between the parties so as to enable one of them to dominate the will of the other is a sine qua non for undue influence to come into play. A contract between persons related therefore is voidable if the consent was obtained by abusing the confidence.
Fraud is defined under section 17 of the Indian contract Act. Any of the following acts committed by a party to contract or by his agent. These include:
1.The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
2. the active Concealment of a fact by 1 having knowledge or belief of the fact;
3.A promise made without any intention of performing it;
4.Any other act fitted to deceive;
5.Any such act or omission as the law specifically declares to be fraudulent.
Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.
The duty to disclose the truth will arise in all cases where one party reposes, and the other accepts, confidence. Duty to speak also arises when one of the parties certainly without any means of discovering the truth and has to depend on the good sense of the other party. An insurance company comma for example comma knows nothing about the Life or circumstances of the assured. It has to depend on the disclosures made by the assured.
Misrepresentation is defined under section 18 of the Indian contract act. Misrepresentation means misstatement of fact material to the contract. It includes the following:-
1.Positive assertion in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true.
2.Any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claimed under him.
3.Gosing however innocently a body to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.
Mistake we operate a formal contract in two ways will stop it. First, defeat the consent altogether that that the parties are supposed to have given, that is to say, the consent is unreal. Second, the mistake may mislead the parties as to the purpose which they contemplate. When both the parties to an agreement under a mistake as to the matter of fact essential to the agreement, the agreement is void.
Consideration is the price for a promise. According to Blackstone consideration is the recompense given by the party contracting to the other. It is essential that consideration should be of some value. Situation is the return or quid pro quo, for something of value received by the promisee as inducement of the promise. Consideration should not be illegal or prohibited by the law. Section 25 Dayton contract act declares that new agreement without consideration is void. The definition of consideration in section 2(d)clearly emphasizes that act or abstinence which is to be a consideration for the promised must be done or promised to be done in accordance with the desire of the promisor.
- Anil K. Nair Law of Contracts- I
- Avatar Singh Law of Contracts