Contract Formation Essentials

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What is the definition of a contract according to Section 2(h) of the Indian Contract Act, 1872?

An agreement enforceable by law

What are the essential elements of a contract?

Offer and Acceptance, Consideration, Capacity of parties, Free consent, Lawful object, and Not expressly declared void

What are the characteristics of an offer?

It must be clear, definite, and communicated to the offeree

What is the requirement for the acceptance of an offer?

Unconditional assent to the terms of the offer, communicated to the offeror

What is consideration in the context of a contract?

Something of value given in exchange for a promise

Who are considered incompetent to contract?

Minors, lunatics, and persons disqualified by law

Study Notes

Contract Formation

Definition of Contract

  • A contract is an agreement enforceable by law
  • Section 2(h) of the Indian Contract Act, 1872 defines a contract as "an agreement enforceable by law"

Essential Elements of a Contract

  • Offer and Acceptance
  • Consideration
  • Capacity of parties
  • Free consent
  • Lawful object
  • Not expressly declared void

Offer

  • A proposal made by one party to another
  • Must be clear, definite, and communicated to the offeree
  • Can be express or implied

Acceptance

  • Unconditional assent to the terms of the offer
  • Must be communicated to the offeror
  • Can be express or implied

Consideration

  • Something of value given in exchange for a promise
  • Must be sufficient but need not be adequate
  • Can be past, present, or future

Capacity of Parties

  • Parties must be competent to contract
  • Minors, lunatics, and persons disqualified by law are incompetent to contract

Free Consent

  • Parties must give their consent freely
  • Consent can be vitiated by coercion, undue influence, fraud, or misrepresentation

Lawful Object

  • The object of the contract must be lawful
  • Contracts with illegal or immoral objects are void

Contract Formation

Definition of Contract

  • A contract is an agreement enforceable by law, as defined in Section 2(h) of the Indian Contract Act, 1872.

Essential Elements of a Contract

  • A contract requires the presence of six essential elements: offer and acceptance, consideration, capacity of parties, free consent, lawful object, and not expressly declared void.

Offer

  • An offer is a proposal made by one party to another, which must be clear, definite, and communicated to the offeree.
  • An offer can be express or implied.

Acceptance

  • Acceptance is an unconditional assent to the terms of the offer, which must be communicated to the offeror.
  • Acceptance can be express or implied.

Consideration

  • Consideration is something of value given in exchange for a promise, which must be sufficient but need not be adequate.
  • Consideration can be past, present, or future.

Capacity of Parties

  • Parties must be competent to contract, meaning they must have the legal capacity to enter into a contract.
  • Minors, lunatics, and persons disqualified by law are incompetent to contract.
  • Parties must give their consent freely, without any coercion, undue influence, fraud, or misrepresentation.
  • If consent is vitiated by any of these factors, the contract may be void or voidable.

Lawful Object

  • The object of the contract must be lawful, meaning it must not be illegal or immoral.
  • Contracts with illegal or immoral objects are void.

Test your understanding of the definition and essential elements of a contract, including offer and acceptance, consideration, capacity, free consent, and lawful object.

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