Enumerate the essentials of a valid contract. What is the distinction between void and voidable agreement?

Question: Enumerate the essentials of a valid contract. What is the distinction between void and voidable agreement? [Punjab JS 2003]

Find the answer to the mains question only on Legal Bites. [Enumerate the essentials of a valid contract. What is the distinction between void and voidable agreement?]

Answer

A contract is defined under Section 2(h) of The Contract Act, 1872 means “any agreement which is enforceable by law”.

The word agreement is also defined under Section 2(e) of The Contract Act, 1872 means “Every promise and every set of promise, forming the consideration for each other, is an agreement.”

Elements of a Valid Contract

1. Offer and Acceptance

To get started for a contract, there must be an offer from either side of the party, without the offer a contract cannot be formed. There must be an offer from one party and acceptance from the other party. The offer and acceptance must be ‘lawful’ which means it must meet the requirement of the Contract. When the offer is accepted, and such acceptance has been conveyed, to the offeror, the parties are restricted by their appropriate promises.

2. The Intention of creating a Legal Relationship:

The parties which are forming an agreement must have an intention to create a Contract. There must involvement of Legal Obligations and both parties must be aware of the Legal Consequences. In those contracts where is, no Legal Obligations involved such contracts are not enforceable by Law, e.g.: – social or domestic agreement with family, relatives, or friends.

3. Lawful Consideration

Consideration in a layman language means something in return for something. To make a valid Contract enforceable by law it should have Lawful Consideration. Consideration means a benefit granted for the fulfillment of a promise. It need not significantly be money; however, it should be something that has been acknowledged by the parties and has some significance.

4. Parties must be sufficient to contract (Capacity):

Parties must be capable enough to enter into a Contract i.e., competent to contract. Every party is competent to contract if he fulfills the requirement given under Section 14 of The Indian Contract, 1872 concurrently.

1. 1. A person should attain the age of majority i.e., 18 years. If the contract is done with the minor then the contract will become void i.e., “Void ab Initio”
   2. The party should be of sound mind (sane mind).
   3. He/She is not disqualified from contracting by any Law to which he is subject, want of capacity may thus arise from minority, lunacy, idiocy, drunkenness, If any of the parties to a Contract suffers from such disability, the agreement is not enforceable excepting perhaps in some special cases

5. Free consent by the parties

1. This means parties that are entering into a contract should do it with their will without the external factors or forces. Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation, or mistake.

6. Lawful object

The object must be lawful in other words we can say that it should not be illegal, immoral, or against the policy of the law. Every agreement which contains unlawful objects results in the formation of a void contract.

The distinction between Void Agreement and Voidable Agreement

1. A void agreement is defined under Section 2(g) of The Contract Act,1872 as: An agreement not enforceable by law is said to be void and voidable agreement is defined under Section 2(i) as: An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract.

2. A void agreement being a dead letter does not create any right or liability to any party whereas a voidable contract continues to be valid, at the option of one party to it, it is the desire of one party either to rescind it or continue it.

3. A void contract has been detailed in Sections 32, 35, and 56 of The Indian Contract Act,1872 whereas a voidable contract has been discussed in Sections 19 and 19-A, 38, 39, 55, and 64 of The Indian Contract Act,1872.

4. The void contract being unenforceable, cannot be validated at all even by consent of parties to it whereas a voidable contract is not void until rescinded by the party at whose option it is voidable therefore continues to be valid until rescinded.

5. In the case of a void contract, for example, the basic position is that such a contract is simply one which the law holds to be no contract at all, a nullity from the beginning. No property would pass under such a contract; so, for example, a third party who purchased goods that had been the subject of a void contract would acquire no title to the goods and have to deliver them up to the true owner. On the other hand, in a voidable contract nevertheless, the contract is not a nullity from the beginning. Until it is rescinded, it is valid and binding. A third party, therefore, who in good faith purchases goods which have been the subject of a voidable contract without notice of the prior defect acquires a good title to the goods and cannot be compelled to surrender them to their former owner.

---

Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X