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What is a Contract?
It is an agreement that is enforceable by law.
What is an Agreement?
An agreement is a promise or set of promises.
When a contract is considered to be valid?
A Contract is considered to be valid when:
The agreement has been made between two or more parties who are legally competent and authorized to enter into a contract. For e.g. you can not enter into a contract with a minor.
The agreement has been made on the free will of the parties. Free will means, the agreement has been made:
Without giving threats or use of physical force.
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Without any undue influence i.e. party in the dominating position didn't take advantage of its position or authority to get consent from the other party.
Without fraud. Fraud means deceiving or misleading someone intentionally.
Without misrepresentation of facts.
Not by mistake. You can declare a contract as Null and Void if your are able to prove in the court of law that the agreement has not been made on the free will or the other party is not authorized or legally competent to enter into a contract.
The contract contains consideration (i.e. benefits and detriments). A contract without detriments (i.e. damages and harms) is legally insignificant.For e.g. if your contract doesn’t contain the penalty/compensation if a certain clause is violated, then it has no significance.
The objects and consideration in the contract are not lawful either wholly or in parts. For e.g. the following contract is considered to be void: 'After getting payment of US $ 1.22 million from Black Rose Corporation you will kill person 'A' or you will do a robbery on our behalf.'
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