The law of contract is applicable not only to the business community, but also to others. Every one of us enters into number of contracts almost everyday, and most of the time we are doing so without realizing what we are from the point of law. The law of contract furnishes the basis for the other branches of mercantile law. The enactment relating to sale of goods, negotiable instruments, insurance, partnership and insolvency are all founded upon the general principal of contract law.
Definition of Contract
According to Section 2(h) of Indian Contract Act 1872, “An agreement enforceable by law is a contact.” A contractual relation comes into existence when only one party makes a proposal or offer to the other party and that other party signifies or gives his acceptance.
Essential element of valid contract is as follows:
1) Offer and acceptance:
There must be a ‘lawful offer’ and ‘lawful acceptance of the offer. 2) Intention to create legal relation
There must be an intention among the parties that the agreement should be attached by legal consequences and create legal relation. 3) Lawful consideration
There must be a lawful consideration. Consideration has been defined as the price paid by one party for the promise of the other. 4) Capacity of parties
According to Section 11 of Contract Act 1872, In order to be competent to contract the parties must be of the age of majority and of sound mind and must not be disqualified from contracting by any law to which they are subject. 5) Free consent
According to Section 13 of contract act 1872,”Consent means that parties must have agreed upon the same thing in the same sense.” It is an essential element of a valid contract. 6) Lawful object
For the formation of a valid contract it is also necessary that the parties to an agreement must agree for a lawful object. 7) Writing and registration
According to the Indian Contract Act a contract may be oral or in writing. But in certain special cases it lays down that the agreement, to be valid, must be in writing or registered. 8) Certainty
According to Sec29 of Contract Act 1872,”Agreement the meaning of which is not certain or capable of being made certain, are void.” While discussing the essential elements of a valid contract in the above discussion we observed that as a first step in the making of a contract there must be lawful offer by one party and a lawful acceptance of the offer by the other party.
According to sec 2(a) of contract act 1872,”When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such to such act or abstinence, he is said to make a proposal.”
Legal rules regarding a valid offer are described below:
1) An offer may be express or implied
An offer may be made either by words or by conduct. An offer which is express by words spoken or written is called an express offer and the one which is inferred from the conduct of a person or the circum stances of the case is called an implied offer. 2) An offer must contemplate to give rise to legal consequences and be capable of creating legal relation If the offer does not intend to give rise to legal consequences ,it is not a valid offer in the eye of law. 3) The terms of the offer must be certain and not loose or vague If the terms of the offer are not definite or certain, it does not amount to a lawful offer.
4) An invitation to offer is not an offer
An offer must be distinguished from an invitation to receive offer or as it is sometimes expressed in judicial language an invitation to treat. 5) An offer may be specific or general
An offer is said to be specific when it is made to a definite person. A general offer on the other hand is which is made to the world at large or public in general. 6) An offer must be communicated to the offree
An offer is effective only when it is communicated to the offeree.Until the offer known to the...