1-Describe the essentials of a
valid contract . When dos an
agreement become void ?
According to the Indian
Contract Act 1872,
"Agreements are also
contracts made by the
consent of parties, competent
to contract to consider with a
lawful object and are not
hereby expressly declared to
be void”. Therefore, the
contract or the agreement
must carry essential aspects to
maintain the normal phase of
duties by both parties.
Example:A and B underwent
the contract, where A will
purchase 10 bags of cement
for Rs 1, 00,000. B promises to
supply the same in the given
period and the quality
mentioned. A promise to pay
the sum as per the mentioned
method in the contract. In this
case, both parties have to
perform the act as per the
agreement signed.
To explain the essentials of a
valid contract, we bring you
with the list unfolded by the
Indian Contract Act 1872-
Offer and Acceptance--
Generally, the written
contract only unfolds when
the other party accepts the
offer by one party and is
definite in all sense. The offer
or agreement must be clear
and complete in all sense.
Both parties should
communicate to ensure
there is no lapse in the
contract act. Both the offer
and acceptance must be
"consensus ad idem",
meaning, both parties must
comply with the same thing.
Intention to Create a Legal
Relationship--To bind, both
parties should have a specific
intention that can create a
legal relationship, resulting
in an agreement.
Agreements in social or
household nature are not
contracts because parties do
not intend to build legal
relationships.
The Intent of Legal
Obligations--One of the
essential elements of a valid
offer is that both parties
subject to a contract must be
clear with the intentions of
creating a legal relationship.
This also means that
agreements that are not
enforceable by the law like
agreements between
relatives are enforceable in
the court of law.
Possibility of Performance
of Agreement--In this case,
suppose two people decide
to undergo an agreement
where person A agrees to
bring person B’s dead
relative back to life, this will
not fall under the legal
contract act because
bringing back the deceased
person alive is an impossible
task. Thus, the agreement
does not stand valid.
Legal Formalities--In this
agreement, if there is any
uncertainty and both parties
are not capable of finding
the right path, then it is
deemed void. As a part of
the essentials of a valid
consideration, the terms and
conditions of the contract
should be concrete. Any
contract, which is uncertain
in any sense, can be termed
as void. The terms
mentioned in the agreement
should be capable of
performing specific
thoughts.
Consideration-Consideration
means the moral value given
for the performance of the
promise. It should not be
only limited to money, but
there should be some value
to what has been agreed
upon. One of the essentials
of valid consideration is that
it should not be adequate,
but should carry some value.
Meaníng of Void
Agreement: -According to
Section 2(g), of the Indian
Contract Act, 1872, an
agreement which is not
enforceable by law is known
as void agreement. An
agreement that was void from
the beginning is said to be ab-
initio. For example: - An
agreement by a minor is
considered as void agreement.
Agreements without
consideration are also void. An
agreement which impose any
restrictions on marriage and
an agreement that impose any
restrictions on trade.
2. “Two or more persons are
said to consent when they
agree upon the same thing in
the same sense “ Explain This
statement
The analysis of this section
shows that ‘consent’ means
that the parties should have
meeting of minds, i.e., the
parties must understand the
subject matter of the contract
in the same sense. For the
creation of a contract, there
must be consensus ad idem
(meeting of minds). Consent is
an important and a basic
element in the formation of
contract.
Example :-A agree with B to
sell his car for 50,000. A had 2
cars namely car X & car Y. A
was talking about car X & B
believed that the contract was
regarding car Y. here there is
no consensus between the
parties & the contract is void
due to mutual mistake of fact.
3. What are the various Discharge by Breach of
ways in which a contract Contract:- If a party to a
may be discharged? contract fails to perform his
A contract creates certain obligation according to the
obligations on one or all time and place specified, then
parties involved. The he is said to have committed
discharge of a contract a breach of contract.
happens when these Also, if a party repudiates a
obligations come to an end. contract before the agreed
There are many ways in which time of performance of a
a contract is discharged. contract, then he is said to
Discharge by Mutual have committed
Agreement :-If all parties to a an anticipatory breach of
contract mutually agree to contract.
replace the contract with a
new one or annul or remit or
alter it, then it leads to a
discharge of the original
contract due to a mutual
agreement.
Discharge of a Contract by
Lapse of Time:- The
Limitation Act, 1963
prescribes a specified period
for performance of a
contract. If the promisor fails
to perform and the promisee
fails to take action within this
specified period, then the
latter cannot seek remedy
through law. It discharges the
contract due to the lapse of
time.
Discharge of a Contract by
Operation of Law:- A
contract can be discharged by
operation of law which
includes insolvency or death
of the promisor.
4. What remedies are
available to an aggrieved
party on the breach of
contract? When a promise or
agreement is broken by any of
the parties we call it a breach
of contract. So when either of
the parties does not keep their
end of the agreement or does
not fulfil their obligation as per
the terms of the contract, it is a
breach of contract. There are a
few remedies for breach of
contract available to the
wronged party. Let us take a
look.
1] Recession of Contract :-
When one of the parties to a
contract does not fulfil his
obligations, then the other
party can rescind the contract
and refuse the performance of
his obligations.As per section
65 of the Indian Contract Act,
the party that rescinds the
contract must restore any
benefits he got under the said
agreement. And section 75
states that the party that
rescinds the contract is entitled
to receive damages and/or
compensation for such
a recession.
2] Sue for Damages - Section
73 clearly states that the party
who has suffered, since the
other party has broken
promises, can claim
compensation for loss or
damages caused to them in
the normal course
of business.
Such damages will not be
payable if the loss is
abnormal in nature, i.e. not in
the ordinary course of
business. There are two types
of damages according to the
Act,
Liquidated Damages:
Sometimes the parties to a
contract will agree to the
amount payable in case of a
breach. This is known as
liquidated damages.
Unliquidated Damages: Here
the amount payable due to
the breach of contract is
assessed by the courts or any
appropriate authorities.
3] Sue for Specific
Performance-This means the
party in breach will actually
have to carry out his duties
according to the contract. In
certain cases, the courts may
insist that the party carry out
the agreement.
So if any of the parties fails to
perform the contract, the
court may order them to do
so. This is a decree of specific
performance and is granted
instead of damages.
For example, A decided to buy
a parcel of land from B. B then
refuses to sell. The courts can
order B to perform his duties
under the contract & sell the
land to A.