Essentials of a Valid

Contract
Law of Contract..
Presented by:- Submitted to:-
Bilal Khan Niazi, Respected Madam
Roll no:- 1819
Gomal Law College, DI Khan
Nadia Urooj
 1 Abstract. 4
Table of 2 Statutory Reference, Article 10 4-6

Contents
3 A) Agreement,
● 2 or more persons
● Offer and acceptance 7-18
● Consideration
● Certainty.
4 B) Free Consent 19-22
5 C) Parties Competent to Contract. 23-29
6 D) Lawful Consideration and Object. 30-32
7 E) Not expressly declared to be Void. 33-34
8 F) Possibility of Performance. 36-37
 Abstract
The essentials of a Valid Contract can
be described with reference to both i.e
● Statue i.e Contract Act
● Jurisprudence. Or General Terms
We are going to describe both of them
one by one.
Statutory References

Reference to Contract act, 1872

According to Section 10:-
“All agreements are contracts if they are made by the
free consent of Parties competent to contract, for a
Lawful consideration and with a lawful object, and
are not hereby expressly declared to be void. “

●So section 10 describes essential elements for an

agreement to acquire the status of Contract, which
becomes legally enforceable.
Following are the essential elements of contract
described in Section 10 of Contract act,1872
Essentials :-
A. An Agreement.
B. Free Consent.
C. Parties competent to Contract.
D. Lawful Consideration and Objects.
E. Not Expressly declared void in Contract Act.
There is also another essential described in sec
56 of this act.
F. Possibility of Performance.
A). An Agreement :-
 In order to make a Contract 1st of All there must be an
Agreement. Which has it's own essential elements which
would we discuss in “General essentials,” part.

Requirements of an Agreement :-
Following are the General requirements for an Agreement.
● 2 or more parties.
● Offer and acceptance.
● Consideration.
● Certainty.
These may also be referred as Essentials of valid Contract
according to Jurisprudence.
1). Two or more People:-
To make an Agreement the primary requirement is 2
or more people having same thing in common.
When 2 or more people agree upon the same thing, it
becomes an Agreement and if that agreement meets
all the requirements of enforceability then it acquires
the status of “Contract”.
Example:-
While buying something the least amount of persons
required is 2. I.e buyer and Seller.
2). Offer & Acceptance:-
Offer:-
The first element in a valid contract would be
offer. An offer or a promise or an agreement
needs to be in contract because if there is no
offer than there will be no contract.
There is a difference of offer between an
advertisement and an option.
● To make an offer, there should be at least two
parties or even more so that it would be legally
capable of entering into a contract. If the
offer is accepted than it would constitutes to
an Agreement.
Example:-
One have to offer the shopkeeper money to busy
some products. Without offering money the
shopkeeper can't agree.
Acceptance -
After having an offer in the contract, there
should be acceptance. For a contract to be made
there should be acceptance from the other party
or person.
★ When the other party is clear with the offer,
there would make an acceptance once they are
clear with the rules and regulations being
offer in the contract.
There will be no contract if the parties are still
negotiating or discussing and have not made accept
the offer.
➢ The person or party can accept the offer being
made in writing or orally which is made verbally or
being spoken out
Example :-
I have to accept to pay shopkeeper Sum of Money in
order to get some products. Otherwise there would
be no agreement.
3). Consideration:-
“Consideration in a contract would mean the other person
would be giving back something in return”.
It would be consider as an exchange which would be
made between the promisee and promissor. There
should be consideration in a contract so that it would
be legally valid.
Example:-
Buyer and Shopkeeper are making considerations for
each other in the form of money and Products to
make an Agreement.
Exception:-
There is exception to this Rule in section 25,
in which agreements are also enforceable
even without consideration in Following cases
● Unwritten and Registered and is made on
account of Natural love and affection.
● Promise to compensate for something.
● Promise to pay time barred loan.
4). Certainty:-
“The terms and regulations being made in a contract should be stated
clearly and understood by the parties of the agreement. If the
agreement is not certain, it would be no longer valid.”
Example:-
if the guest wants to stay in a hotel, , the guest needs to
inform how many days he or she is staying at the hotel, the
type of room, and also the date when he or she are going stay
and the number of days he or she is staying.
5). Consensus-ad-idom:-
● It means, “Same thing in the minds of both”
➢ There must be uniformity of thoughts between
the parties agreeing to an agreement. They must
be of the same view about the object they are
agreeing to.
Example:-
While dealing with a trader, a buyer and trader
must be on one thought about which product they
are talking about.
Till here, we discussed the
Essentials of an Agreement which
are the indirect essentials of a
contract.
Now we discuss the further
essentials of a legally valid
Contract.
B). Free Consent
It is Defined in sec 14 of contract Act, 1872

Definition:-
A consent is said to be Free, if it is not caused by Following:
● Coercion ,Defined in Section 15.
● Undue Influence ,Defined in Section 16.
● Fraud, Defined in Section 17.
● Misrepresentation,Defined in Section 18.
● Mistake.subject to the provisions of Sec 20,21,22.
If it is caused by any of the above, then consent is said to be
Caused.
Voidability in the absence of Free
Consent:-
According to Section19:-
If the consent to an agreement is caused by following,
● Coercion
● Fraud
● Misrepresentation
➢ Then Agreement is contract voidable at the option
of party whose consent was so caused.
Example:-
A,intending to deceive B, falsely represents that his cow gives
10 liters of milk daily, so induces B to buy Cow. The Contract i
Voidable at option of B.

Exceptions:-
Following are exceptions to this rule;
● Party having means of discovering truth.
● Act not causing consent of the party to enter
into Agreement.
C). Parties Competent
to the Contract.
According to Section 11 of Contract Act 1872.
Every person is competent to form a contract, who attans
the following criteria :
● Age of Majority.
● Soundness of Mind.
● No disqualification from Contracting.
➢ Here person also includes Fictitious (Legal)
person e.g companies Incorporated by law,
institutions etc.
i). Age of Majority:-
The person must be of the age of majority
according to law which he is the Subject.
According to Sec 3 of Majority Act, 1875:-
“Every person domiciled in Pakistan shall
be deemed to have attained his majority
when he shall have completed his Age of
18 years and not before.”
● So a person above 18 years can enter to
a contract.
ii). Soundness Of Mind:-
In the absence of sound mind no
contract can be entered at all.
● Such Contract will be Void ab initio
and not merely voidaboe.
According to Sec 12 of Contract Act , 1872:-

Definition:-
“A person is said to be of sound mind for purpose
of making a contract, if he at the time of making
the contract is:-
● Capable of understanding it.
● Capable of forming a rational judgements as it
is to effect uppn his interest .”
iii) No Disqualification from
Contracting:-
The person must not be disqualified
from contracting by any Law to
which he is subject.
It's also an essential for a Legally
Valid Contract.
 According to Caltex Oil Ltd V.
Yasmin. 1993CLC 1978(e)
Where a lease was granted by minor’s
guardian on behalf of minor, unless such
contract was approved or ratified by minor
on his attaining majority, he was bound by
his terms.
D). Lawful Considerations
and Objects.
According to Sec 23 of Contract Act , 1872:-

Definition:-
The consideration or object of an Agreement is lawful,
● Unless it is Forbidden by Law, or
● Unless it would defeat the provisions of any law, If
it is of such nature that if permitted by Law, or
● Unless it is Fraudulent, or
● Unless the court regards it as immoral or opposed
to Public Policy.
➢ Every agreement in which object or consideration
is unlawful is void.
Examples:-
● A,B & C enter into agreement for
division of gains acquired by Fraud---> void
● A promises B to recruit him in Public
services & B promises to pay A Rs
10000, -----> void
E). Not Expressly
Declared to be Void:-
Section 10 describes this essential also to
make an Agreement enforceable i.e Valid
contract, that a certain agreement should not
be expressly declared to be Void in Contract
act 1872. There are following agreements
which are expressly declared to be void in
contract act
● Agreement in restrain of marriage .
● Agreement in restrain of Trade.
● Agreement in restrain of Legal Proceedings .
● Agreement having uncertainty in meaning.
● Agreement by the way of wager.
F) Possibility of
Performance:-
 According to Section 56:-
An agreement to do an act impossible in itself
is Void.
In order to make an Agreement enforceable by
law, i.e Legally Valid Contract there must be
possibility of Performance.
● If a contract is found to be impossible to be
performed afterwards then it becomes Void.
 Summary
So we discussed the essentials of Legally Valid contract.
Which are following.
● 2 or more persons
● Offer and acceptance
● Lawful consideration and Objects
● Certainty
● Free Consent
● Parties Competent to the contract.
● Not expressly declared to be Void.
● Possibility of Performance.
 Point
Without any of above discussed Essentials
an Agreement is Void and not enforceable
by Law, except that of Free consent,
without which an Agreement may be
enforced or not depending upon the choice
of party whose consent was caused to enter
into Agreement.
 Thankyou Mam
Yours Obedient.

Presented by:-
Date of Submission:- Bilal Khan Niazi,
9, Jun, 2020 Gomal Law College, DI Khan