The Indian Contract Act, 1872 under section 2(h) defines the term contract as agreements which are enforceable by law. The definition prescribed by the Act ensures that all contracts are agreements but all agreements are not contracts because for an agreement to be a contract it must be enforceable by law and it is not necessary that all agreements will be enforceable by law. Having understood that to form a contract it is necessary that it must be an agreement which is enforceable by law. It is important to understand the definition of an agreement as well. Section 2(e) of the Indian Contract Act, 1872 defines the term agreement as a promise and every set of promises which form a consideration for other is regarded as an agreement. When a proposal made by one party to the other party is accepted it is said to have become a promise.
Section 10 of the Indian Contract Act, 1872 prescribes the conditions which are to be satisfied for making an agreement a legally binding contract.
This section again emphasis that all agreements are contracts when they are made with free consent by the parties who are competent to execute a contract and for which a lawful consideration is paid. This section also states that the object of the contract must be lawful and it must not be expressly declared void under any provision of the law.
Best civil lawyers in Delhi focus on the 5 essentials which are to be satisfied for making a valid contract. These 5 essentials form the steps to making a legally binding contract as well.
Following are the essentials of a legally binding contract as stated under section 10 of the Indian Contract Act, 1872 which are to be satisfied for making a contract.
1. Offer/Acceptance:
The birth of a contract is marked with an offer/proposal made by one party which is accepted by the other party unconditionally and in totality. Section 2(a) of the Contract Act, 1872 defines proposal as a situation when a person signifies to other party/person his/her willingness to do or abstain from doing anything with a view to obtain the assent of the other person in connection with the act or abstinence. It is important to note that when the offer of one party is unconditionally accepted by the other party only then it is said that the offer is accepted. Where the opposite party makes any modifications in the offer made then it is said to be a counteroffer which does not have the effect of making a binding contract. An offer is also to be distinguished from an invitation to treat as an invitation to treat is simply an invitation whereby people are invited to make an offer a common example of an invitation to treat are goods displayed in a shop. It is also essential that the parties must agree to the same thing in the same manner which is also known as the meeting of the minds of the parties (consensus ad idem).
2. Competence of parties:
To make a legally binding contract it is important that a contract is concluded between parties who are competent to form and execute a contract. Were the parties to the contract are incompetent the contract is said to be void. The Indian Contract Act under section 11 enlist the people who are declared incompetent to form a contact. Section 11 states that 1). a minor i:e a person who has not attained the age of 18 years is not competent to make a legally valid and a binding contract, 2). a person of unsound mind except for the times of his/her lucid intervals is incompetent to form a contract and lastly 3). persons who are otherwise disqualified by law from entering into a contract are incompetent to form a legally binding contract.
3. Consideration:
Consideration is an essential element of a contract. It is defined under section 2(d) of the Indian Contract Act, 1872. This section states that when at the desire of the promisor, the promise or any other person has done or abstained from doing or does or abstains from doing, or even promises to do or abstain from doing something then such an act or abstinence of the promise is called a consideration for the promise. In short, consideration is considered to be something done in return for something (quid pro quo)
4. Free consent:
free consent is highly essential for the purpose of forming a contract because if the consent is not free then the contract is a voidable contract. Which can be avoided at the instance of the party whose consent was so obtained. Section 14 of the Indian Contract Act states that a consent is regarded as a free consent when it is not obtained by:
a. Coercion
b. Undue influence
c. Fraud
d. Misrepresentation
e. Mistake
5. Must not be expressly declared void:
The contract must not have been entered for an illegal or an immoral purpose. Any contract which is entered for any illegal purpose is not a valid contract and is therefore declared void.
Best civil lawyers in Bangalore, Delhi, and all metropolitan states emphasis that the abovementioned essentials be satisfied in order to make a legally binding contact. Once the essentials are satisfied then only a contract is said to be enforceable by law. If anyone of the abovementioned essentials is not present then a contract is not concluded and the same is not enforceable in law.
Source : https://www.lawzgrid.com/legal-blog/blog-details/5-Steps-to-Forming-A-Legally-Binding-Contract