The value of a contract in today’s life is bigger than the earlier times and the reason behind the importance of the contract is the increasing number of complications in the existing society. A contract is a very common necessity that is required in daily life, professional life and also used for special purposes. This paper discusses the contract, several related aspects and the requirements of a valid contract.
The term contract is derived from a Latin word “Contractum” which means drawn together and is based on the principle pacta sunt servanda which means pacts must be kept. There are several ways to define a contract but the most appropriate way is a “promise enforceable by the law”. According to section 10 of the Indian contract act “All agreements are contracts if they are made by the free consent of parties, competent of contract for a lawful consideration and with a lawful object and are not hereby expressly declared to be void”.
The Requirements of a valid contract are as follows:-
a. Agreement- in an agreement, two parties are necessary, The offerer and the acceptor. To make a valid agreement, there must be a promise and an acceptance.
b. Mutual consent of the parties- there must be mutual consent between the parties to the contract and the consent must be given by a free will and without any kind of pressure or under influence.
c. Competent to contract – the parties to the contract must be competent to constitute a valid contract. It means that the parties to the contract are major and not minors who has the capacity to understand and form the effect of the contract.
d. Lawful consideration – there must be a lawful consideration between the parties to the contract. The consideration should not be something which is not permitted by the law or is contrary to the available rules.
e. Lawful object – the subject of the contract should be a lawful and not illegal otherwise the contract is not a legal one and has no legal value.
The contract is the merchandise of the modern world’s legal and complex commercial activities which involves a number of trifles in it. In earlier times there was a contract but the terms and complicacies of the contract were not like they are in today’s time. The contract has become a common yet very important part of the today’s world.
The contract should be in writing and there are several reasons behind this requirement. All the courts, government bodies and institutions believe only when the contract is in a written form. To avoid the problems or unfavorable situations in today’s world the parties to the contract should make all the terms clear and in a written form so that the contract could be made enforceable by a competent authority or a court of law, in case any need arises at any point of time.
Though oral contracts are also valid but their veracity may be manipulated and since they are not in the written form, the dispute related to such contracts may take place in future. Once the contract is in a written form and duly signed by the parties to the contract, it has a binding effect on all the parties to the contract. In case any party to the contract tries to manipulate the terms of the contract for his own interest, the other party can sue him for the breach of the contract and the chances are that he or she will also get success in doing so.
When a law is in a written form, it is easy for all the genuine parties as well as for the courts while deciding the disputed matters. It is also necessary for the impartiality of the judiciary because once the terms of the contract are written it is not possible to interpret them in favor of one party and defeating the interests of other party. The decision has to be in accordance to the law considering the terms of the contract, made between the parties of the contract. It is difficult to manipulate the written law when compared to the oral commitments or contracts. A written law is like a solemn truth and once after a mutual consent, the contract is signed between the parties, it is the not possible for any party to avoid the agreed terms of the contract.
After having observed the above mentioned analysis, it is clear that the valid contract has certain requirements and to make a valid contract, all the terms should be fulfilled. It is also worth mentioning here that the terms of the valid contract should be clear and preferably in writing to avoid various complexities. Further it is also suitable for the individuals, parties to the contract, various authorities and also for the courts to avoid the inconveniences that may arise due to indistinguishable terms of the contract.
