Essentials of a valid contract.docx

Essentials of a valid contract.docx - Essentials of a valid...

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Essentials of a valid contract Introduction We have come to understand that an agreement enforceable by law is a contract. We have also noted that an agreement is made when an offer is accepted. Once the agreement is formed, then one has to see whether the agreement is enforceable by law or not. Sec.10 of the Contract Act stipulates the conditions that make the agreement lawfully building and hence a contract. The following conditions are essential to make the agreement binding in law (Valid Contract). I. Parties are required to be legally competent to enter into the agreement. (Sec.11& 12) II. Parties must have exercised free consent (Sec.13-22) III. There must be lawful object and consideration (Sec.23-25) IV. The agreement must not be otherwise void (Sec.26-30) I. Capacity (Competent to enter) of the Parties – (otherwise void contract) An agreement made between parties competent to enter into a contract shall be enforceable by law provided certain other conditions are fulfilled. Natural and Legal Person Persons may be either person in fact i.e., natural person or person in law i.e. legal person or juristic person. Natural persons have unlimited power of capacity to enter into a contract, but juristic persons capacity is limited for the purpose and object according to their memorandum of association (in case of company) or in their partnership deed etc. Sec.11 of the Act , lays down that, “ every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind….”. Thus Contract Act disqualifies three categories of persons from entering into a contract, viz: i). Minors and ii). Unsound mind and iii) Legal insanity i) Minors
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Who is a Minor? Who has not attained age of 18 or 21 ? In General = who has not attained the age of 18 But Where a guardian has been appointed to the person or property of a minor by a court, the age of majority of such person is 21 years and not 18 years. Effect of Minor’s Contract a) Void ab Initio --- Any contract entered into by a minor is Void ab initio (from beginning) regardless of whether the other person was aware of his minority or not. B) No Ratification --- A minor’s agreement cannot be ratified even on his reaching age of majority.
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  • Fall '17
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