Essential conditions of valid contract
Q.1. Write a short note on 'Essentials of a valid contract.
or
“All contracts are agreements but all agreements are not contracts." Comment on this statement.
or
A invited B to a dinner at his house on Sunday. B hires a taxi and reaches A's house at the appointed time, but A failed to perform his promise. B felt insulted and filed a suit for recovery or the amount of Rs. 100 which he had spent on hiring taxi Decide.
Or
L, a civil servant, employed in India, went to England with his wife, M. she could not return with him and had to stay in England for some treatment. L promised to send her some money to meet her expenses and the cost of treatment. He did not send the money for some time and stopped it after some time. Differences arose and the amount fall into arrears. M sued her husband. Can she succeed? Give reasons.
Ans. Essentials of a Valid Contract
Section 2(h) of the Indian Contract Act, 1872, defines the term "contract" as an agreement enforceable by the law'.
An agreement is a promise and a 'promise' is an accepted proposal. Thus, every agreement is made up of a proposal or offer from one side and its acceptance by the other. Every contract is an agreement, but every agreement is not a contract. An agreement becomes a contract when the following conditions are satisfied (Sec. 10 of the Contract Act)
To make an agreement a valid contract the following conditions must be fulfilled:
(1) The intention to create the legal relationship: The parties making an offer and acceptance must make them with the intention to create a legal relationship means the desire of the parties to the contract to seek the help of law court in the case of breach of contract. Thus, if A agrees to B's offer to dine with him at night, it is not the intention of B to enforce this agreement in a court of law if A fails to dine.
In McGregory Mc. Gregor (1888) 21 QBD 424, a husband and wife withdrew their complaints under an agreement by which the husband promised to pay her an allowance and she to refrain from pledging his credit. Held that there is a binding contract. However, in Balfourv Balfour (1919) 2 K.B. 571, a couple went to England on leave. For health reasons, the wife was unable to accompany the husband again to Ceylon (Husband's place of work). The husband promised to pay 30 pounds per month to his wife for maintenance, but he failed to pay. The husband was held not liable as there was no intention to create a legal relationship. The court observed that arrangements between husband and wife usually do not result in contracts, even though they may be what would constitute consideration for the agreement. The reason is that the parties did not intend that they shall be attended by legal consequences. In Jones v. Padavattor: (1969) 2 A|| ER 616, the daughter acting on her mother's promise left her service and gone to another country for education. The mother undertook to foot the expenses. For, five long years the daughter could not complete her education. Differences arose between them and the mother stopped payments. Held that the engagement did result in a contract, but the agreement could last only for a period reasonably sufficient for the daughter to complete her education and the period of five years was more than sufficient for the purpose.
In Rose and Frank Co. v Crompton & Bros. Ltd. (1925) A.C. 445, the agreement provided that: "This arrangement is not entered into as a formal or legal agreement and shall not be subject to legal jurisdiction in the Law Courts... that it will be carried through by the parties with mutual loyalty and friendly co-operation." One of the parties made a breach of this agreement. Held that since the agreement had provided that it was not a legal agreement the same was not enforceable.
(2) Lawful offer and lawful acceptance: The offer and acceptance must be in conformity with law. This means that offer and acceptance must not be made by disqualified persons, or for an illegal purpose or for a purpose which is expressly declared to be void by the provision of any law.
(3) Capacity of the parties: The person who enters into a contract must be the capable person to contract according to the law to which he is a subject. He must not be a minor, or a person of unsound mind or a disqualified person.
(4) Free consent: The parties entering into a contract must give their free consent. Their consent to the contract must not be influenced by either of the following elements: (1) coercion, (2) undue influence, (3) fraud, (4) misrepresentation or (5) mistake. (Section 14 of the Indian Contract Act, 1872.)
(5) Lawful object and design: The purpose and the object of making contract must not be prohibited by law. (Section 23) (6) Lawful consideration: The consideration must not be illegal. It means that consideration must not be prohibited by any law. (Section 23)
(7) Statutory formalities: When by any statute it is required that an agreement should be made in writing or registered or made in the presence of requisite witnesses, these formalities must be complied with. In England an agreement between a master and seamen cannot be enforced in the court of law unless it is made in writing. Similarly, in India the Registration Act, 1908 requires that an agreement for sale of immovable property must be registered if its value exceeds Rs. 100. So an unregistered deed of sale of an immovable property for the value of more than Rs. 100 is invalid under section 17 of the Indian Registration Act, 1908.
(8) Certainty: The contract must be certain or at least must be made certain. If it is uncertain or its meaning is uncertain or incapable of being made certain, then the agreement is void. Thus if a customer asks his grocer to supply him one kilogram of oil without specifying the quality of oil and the grocer deals in several qualities of oil, this agreement fails on the ground of uncertainty. (Section 29)
(9) Possibility: The agreement must be capable of being performed. This is based on the maxim "lex non-cogit ad impossibilia" which means that law does not compel to do what is impossible. Thus, if Ram agrees to bring gold from the Moon by driving a car, the agreement is void, as it is impossible for Ram to drive to the Moon. (Section 56)
References
Avtar Singh – Law of Contract and Specific relief.
Mulla --- Law of Contract and Specific relief.
Dr. H.K. Saharay- Law of Contract.
Dr R.K. Bangia—Law of Contract.
https://www.slideshare.net/shrinivas1648/law-of-contract-business-law
Comments
Post a Comment