Explain the essential of contract and acceptance in legal aspects of business?

Answer 1

ESSENTIALS OF A VALID CONTRACT All contract are agreements but all agreements need not be contracts. The agreements that create lagal obligations only are contracts. The validity of an enforceable agreement depends upon whether the agreement satisfies the essential requirements laid down in the Act. 'All the agreements are contracts if they are made by the free consent of the parties competent to contract for a lawful object and are not hereby expressly declared to be void'. a. Agreement: An agreement which is preliminary to every contract is the outcome of offer and acceptance. An offer to do or not to do a particular act is made by one party and is accepted by the other to whom the offer is made. b. Free consent: The parties should agree upon the same thing in the same sense and their consent should be free from all sorts of pressure. In other words it should not be caused by coercion, undue influence, misrepresentation, fraud or mistake. c. Contractual capacity: The parties entering into an agreement must have legal competence. In other words, they must have attained the age of majority, should be of sound mind and should not be disqualified under the law of the land. A contract entered into between the parties having no legal capacity is nullity in the eyes of law. d. Lawful consideration: There must be consideration supporting every contract. Consideration means something in return for something. It is the price for the promise. An agreement not supported by consideration becomes a 'nudum pactum' i.e., naked agreement. e. Lawful object: The object or purpose of an agreement must be lawful. It should not be forbidden by law, should not be fraudulent, should not cause injury to the person or property of another, should not be immoral or against public policy. f. Not expressly declared void: The statute should not declare an agreement void. The Act itself has declared certain types of agreements as void. g. Possibility of performance: The agreement should be capable of being performed. h. Certainty of terms: The terms of the agreement should be certain. i. Intention to create legal obligation: Though Sec. 10 is silent about this, under English law this happens to be an important ingredient. Legal formalities: Indian contract Act deals with a simple contract supported by consideration. Agreements made in India may be oral or written. However, sec.10 states that where the statute states that the contract should be in writing and should be witnessed or should be registered, the same must be observed. Otherwise the agreement can't be enforced e.g., Under Indian Companies Act.