Definition of contract

A contract is an agreement made up two parties that is binding legally or enforceable by law. In

the other word, an agreement that enforceable by law is a contract. Contracts that are require by

law to be in writing for example, the contract to buy and sell land or buy a car and door-to-door

sales contracts. However, not all contracts need to be in writing, it is possible to have the terms

agreed between the parties written down and attached to or kept it with as example, the

pamphlets, copies of quotations, brochures etc.

Essential elements of valid contract

1) Proposal and acceptance

As a general proposition of law, the acceptance of the offer made by one party by the other

party is what creates the contract. This acceptance, as a general rule, cannot be withdrawn,

nor can it vary the terms of the offer, or alter it, or modify it. To do so makes the acceptance

a counter-offer. Though this proposition may vary from state to state, the general rule is that

there are no conditional acceptances by law. In fact, by making a conditional acceptance, the

offeree is rejecting the offer. However the offerer, at his choosing, by act or word which

shows acceptance of the counter-offer, can be bound by the conditions tendered by the

offeree. For example, The case of Stevenson, Jacques & Co v. McLean, Plantiffs telegraphed

defendant :"Please wire whether you would accept forty for delivery over 2 months, or if not,

longest limit you would give." regarding defendant offer to sell the iron and offer open for a

period of time.
2) Consideration

Consideration for a contract may be money or may be another right, interest, or benefit, or it may

be a detriment, loss or responsibility given up to someone else. Consideration is an absolutely

necessary element of a contract. As a word of caution, it should be noted that consideration has

to be expressly agreed upon by both parties to the contract or it must be expressly implied by the

terms of the contract. A potential or accidental benefit or detriment alone would not be construed

as valid consideration. The consideration must be explicit and sufficient to support the promise

to do or not to do, whatever is applicable. However, it need not be of any particular monetary

value. Mutual promises are adequate and valid consideration as to each party as long as they are

binding. This rule applies to conditional promises as well. As additional clarification, the general

rule is that a promise to act which you are already legally bound to do is not a sufficient

consideration for a contract. The courts determine the application. Example cases is Braithwait

killed someone and then asked Lampleigh to get him a pardon. Lampleigh got the pardon and

gave it to Braithwait who promised to pay Lampleigh £100 for his trouble. It was held that

although Lampleigh's consideration was past (he had got the pardon) Braithwaite's promise to

pay could be linked to Braithwaite's earlier request and treated as one agreement, so it could be

implied at the time of the request that Lampleigh would be paid.

3) Capacity of parties to contract

The general presumption of the law is that all people have a capacity to contract. A person

who is trying to avoid a contract would have to plead his or her lack of capacity to contract

against the party who is trying to enforce the contract. For example, he would have to prove

that he was a minor, adjudged incompetent or drunk or drugged, and so forth. Often this is

the most difficult burdens of proof to overcome due to the presumption of one's ability to

contract. A agrees to sell his house to B for rupees 10 lack. B promise to pay a sum of

amount is the consideration for A. Capacity of parties: An agreement is enforceable only if it

is entered into by parties who possess contractual capacity. It means that the parties to an

agreement must be competent to contract. According to section 11 in order to be competent

to contract the parties contracting by any law to which they are subject. A contract by a

person of unsound mind is void from the beginning. So these elements may be considered for

the consideration in the contract.