Introduction
Contract Act defines a Contract as “An agreement which is enforceable by Law”. An agreement consists of reciprocal Promises where both parties have agreed to perform something for the other.
Contracts are the very bedrock on which all businesses are run as they define relationships with outside parties. It is highly advisable to get professional advice from a lawyer specializing in contract review during a contract negotiation so that all the terms and conditions can be properly understood and agreed upon.
Essentials of Valid Contract
- An Offer by the interested party expressing interest towards entering into a contract with another.
- Acceptance or Rejection in the hands of the offeree of the proposal and its terms and conditions, if any.
- Meeting of the minds or Consensus Ad Idem where both parties accept the terms of the contract in the “same sense”.
- Consideration i.e., something given for the performance of promise from both parties to the contract.
- Contract is valid if it was entered into by free consent of the parties.
- Agreement is a contract if it is formed (among other essentials), by the free consent of parties who are competent to contract.
- Lastly, the consideration and object of the contract should be lawful