Essentials Of A Valid Contract

ESSENTIALS OF A VALID CONTRACT SECTION 10  All agreements are contracts if they are made  with free consent  of parties competent to contract  for a lawful object and lawful consideration; and  are not expressly declared to be void

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PARTIES COMPETENT TO CONTRACT SECTION 11, 12 Persons who are majors (persons who have completed 18 years of age), and Persons of sound mind A person is said to be of sound mind for the purpose of making a contract, when he is capable of understanding it and forming a rational judgement as to the effects of the contract upon him. EXPLANATION

1. A person usually of sound mind but occasionally of unsound mind, cannot make a contract when he is of unsound mind. 2. A person usually of unsound mind but occasionally of sound mind can make a contract when he is of sound mind.

CONSENT 

SECTION 13

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Two persons are said to consent each other when they agree upon the same thing in the same manner.

FREE CONSENT 

SECTION 14

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A consent is said to be free when it is not caused by Coercion Undue influence Fraud Misrepresentation Mistake

1. 2. 3. 4. 5.

COERCION 

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Committing or threatening to commit any act forbidden by Indian Penal Code; or Unlawful detaining or threatening to detain the property of any person to the prejudice of any person with the intention of causing any person to enter into a contract.

EFFECT The contract is voidable at the option of the person whose consent is so obtained

UNDUE INFLUENCE 1.

2.

One of the parties is in a position to dominate the will of the other The dominating party uses that position to obtain unfair advantage over the other

Dominating Position (a) Where he holds a real or apparent authority over the other or (b) Where he stands in a fiduciary relation to the other (c) Where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness or mental bodily distress

FRAUD Essentials1. There must be an intention to deceive. 2. The act must be done by a party to a contract or with his connivance or by his agent. 3. There must be a false representation of a fact, i.e., suggestio falsi. 4. There must be an active concealment of a fact of which he has the knowledge and duty to disclose, i.e. , suppressio veri. 5. Here must be afalse promise, i.e. , a promise made wothout any intention to perform it. 6. Any other act or omission which the law considers to be fraudulent or fitted to deceive which is done with the obvous intention to commit fraud. 7. The party so induced must have acted upon it and suffered loss