Section 2(h) of Indian Contracts Act, 1872 defines “contract as an agreement enforceable by law”. Contracts are often verbal or spoken. Consistent with Salmond, “A contract is an agreement creating and defining obligation between two or more persons by which rights are acquired by one or more acts or forbearance”. There are certain elements of a contract, without which contracts could be rendered as void. This text would give an overview of the main elements of a legitimate contract under the Indian Contracts Act, 1872. 
Valid contract = Agreement + Enforceability
The importance of legal enforceability could be better understood through an illustration: X and Y entered into an agreement. X agrees to shop for Y’s car for a fixed amount. This is a contract fulfilling the required ingredients of a legitimate contract. On the contrary, if X may be a minor or if the agreement is for immoral purposes, then the enforceability of the agreement is questionable. We would deal with a plethora of such points which can validate or invalidate a contract.
Essentials of a valid Contract
1. Offer and acceptance
2. Certainty of terms
3. Legal relationship between parties; consensus ad idem
4. Lawful object and lawful consideration
5. Capacity
6. Free consent (absence of influence by external factors)
7. Agreement not expressly declared void.
1. Offer and acceptance
In simple terms, an offer or proposal is basically a person signifying his/her willingness to do or abstain from doing something. A valid offer is one that intends to create legal consequences. In Wilkie v. London Passenger Transport Board[1], plaintiff was issued a free travel pass being an employee of the defendants. While boarding an omnibus, he was thrown off due to the negligence of the conductor. Plaintiff filed a suit against defendants for the injuries suffered by him. The court dismissed the appeal stating that it is nothing but a license subject to conditions. There was not any intention to enter into a contract.
The offeree signifies his acceptance to give raise to an agreement. Acceptance must be communicated.
Proposal + Acceptance = Promise.
2. Certainty of terms
The terms of the contract must be certain. The terms and conditions prescribed in the contract must be clear and well understood by the parties to the contract.
In Taylor v. Partington,
3. Legal relationship between parties; consensus ad idem
A valid offer is one that creates legal relationship between the parties. For example, if there is an explicit clause signifying the intention of the parties to not enter into any legal obligations, it cannot give rise to a valid contract.
Consensus ad idem is the general rule followed in the case of contracts. Literal meaning of the maxim is “meeting of minds”. That is, the contracting parties must have the same intention. However, the application of this rule might be different in different cases.
4. Lawful object and lawful consideration
Lawful object: The contract must be based on a lawful object. X enters into an agreement with Y for kidnapping Z. This is not a valid contract as the object is not legitimate. Contract is void.
Lawful consideration (defined under 2(d) of the Act): An agreement without consideration is void. Example: X agrees, for no consideration, to pay Y Rs. 500. This agreement is void. This rule is however subject to certain exceptions as under section 25 of the act.
5. Capacity
Competent parties to contract are explained under section 11 of the Act. Children below the age of 18 years (minors) do not possess the capacity to enter into a contract. An agreement with a minor is void ab initio (void from the beginning) as held under the famous case of Mohri bibi v. Dharmodas Ghose[2]. Similarly persons of unsound mind are also disqualified from contracting.
6. Free consent (absence of influence by external factors)
Free consent is one which is not caused by coercion, undue influence, fraud, misrepresentation and mistake.
a) Coercion: Committing or menacing to commit an act that is forbidden by the Indian Penal Code, or unlawful detaining, or threatening to death in order to force the person to enter into the contract.
b) Undue influence: when one of the parties is in a position to dominate the will of the other and uses the position to obtain an unfair advantage.
c) Fraud: An act done with the intention to deceive another party in order to induce him to enter the contract.
d) Misrepresentation: Can be described as “false representation”.
e) Mistake: A mistake of law does not quash a contract but a mistake of fact can invalidate the contract.
7. Agreement not expressly declared void.
Agreement must not be expressly declared void. This can include:
· agreement without consideration,
· agreement in restraint of marriage
· agreement in restraint of trade
· agreements in restraint judicial proceedings
· wagering agreements.
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