Monday, December 17, 2012

What are the essential elements of a contract?

An agreement becomes enforceable by law when it fulfills certain conditions. These conditions, which may be called the essential elements of a contract, are discussed below:-
(i) Two or more parties: No one can make contract with oneself. In order to make a contract two or more parties are needed. Because every contract gives rise to certain legal obligations or duties on part of contracting parties.
(ii) Lawful offer: Section ch(2) of The Bangladesh Contract Act, 1872, provides that when a person signifies to another his willingness to do or abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal/offer. A proposal who accepted becomes a promise.
Note: Who makes proposal called--- promisor/ offeror
          Who accepts the proposal called --- promisee/offeree.
(iii) Accepting of the offer: There must be a lawful acceptance of the offer by the promise or offeree.
(iv) Lawful consideration: Subject to certain exceptions, an agreement is legally enforceable only when the parties to it gives something and gets something. The something given or obtained is called consideration. The consideration may be an act (doing something) or forbearance (not doing something) or a promise to do or not to do something. Consideration may be past. It also may be present or future. But only those considerations are valid which are lawful.
(v) Capacity of the parties: The parties to an agreement must be capable of entering into an agreement; otherwise it can not be enforced by a court of law. Want of incapacity arises from minority, lunacy, idiocy, drunkenness and similar other factors. If any of the parties to the agreement suffers from any such disability, the agreement is not enforceable by law.
(vi) Free consent of the parties: The enforcement of an agreement depends upon / on the free consent of the parties. If the agreement is induced by coercion, undue influence, mistake, misrepresentation and fraud that will not treated as genuine consent and that contract will not be treated as valid contract.
(vii) Lawful object: The object for which the agreement has been entered into must not be illegal or immoral, or opposed to public policy.
(viii) Agreement must not be in abuse of legal process: The following categories of agreements which are expressly declared to be void. They are-
1.      Agreement in restraint to marriage.---------------- sec.26
2.      Agreement in restraint of trade----------------------sec.27
3.      Agreement in restraint of legal proceedings------ sec.28
4.      Wagering agreement.----------------------------------sec.30
(ix) Writing, Registration and legal formalities: Agreement may be oral, written or registered. An oral contract is also good contract, except in those cases where writing and registration is required by some statute. The terms of an oral contract are difficult to prove. Therefore important agreements are usually entered into in written even in cases where writing is not compulsory.

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