There are various conditions to form a valid contract such as
1. Offer and Acceptance
There must be a lawful offer and acceptance for the formation of an agreement. The adjective ‘lawful’ implies that the offer and acceptance must satisfy the requirements of the ICA in relation thereto. The offer or proposal is defined under section 2(a) of the ICA. In Felthouse v. Bindley, (1862) EWHC CP J 35, it was held that “an offer cannot prescribe silent mode of acceptance.”
A mere initiation to offer cannot be construed for an offer. In Carlil v. Carbolic Smoke Ball Co., (1892) 2 QB 484 a medical firm carbolic smoke ball company advertised that any person who caught influenza after using the medicine of the company (viz. Carbolic smoke ball), for a specified period, would be given 100 pounds. Mrs. C, after using the medicine (as prescribed by the company) nevertheless caught influenza. It was held that she was entitled to recover 100 pounds because the Company’s advertisement was something more than an invitation to transact business.
2. Intention to Create a Legal Relationship
There must be a clear intention among the parties that the agreement should be attached by legal consequences and create a legal obligation. Agreements of a social or domestic nature do not contemplate a legal relationship, and as such, they do not give rise to a contract. In Jones v. Padvattan, (1969) 1 WLR 328 it was held that domestic agreements are presumed not to be legally binding unless there is a clear intention.
3. Lawful Consideration
The next condition for a valid contract is a consideration. The term consideration has been defined under Section 2(d) of the ICA. In Currie v. Misa, (1875-76) LR 1 App Cas 554, Justice Lush defined consideration as “a valuable Consideration in the sense of law may consist either in some Rights, Interest, Profit or Benefit accruing to one party or some forbearance detriment, loss or responsibility given, suffered or undertaken by the other”. As per Section 25, an agreement without the consideration is void.
For example: If A promises to give a gift of Rs. 500 to B, and subsequently changes his mind, B cannot succeed against A for breach of promise, as B has not given anything in return.
4. Competent parties
Section 11 of ICA declares the criteria for parties who are competent to contract such as:
- Must attain the age of majority
- Person of sound mind
- The person should not be disqualified by law
5. Free consent
Section 14 of ICA defines the term free consent. According to this section consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation, mistake.
6. Lawful object
For the formation of a contract, it is necessary that the parties to an agreement must agree to a lawful object. The object must not be fraudulent, illegal, immoral or against the public policy or must not imply injury to the person. For example: If A forces B to sign a contract for murdering C. This is not a lawful object. Hence, the contract will be void.