Oct 18,2019 | 15 min read

Elements and Importance of a Contract

Author - Associate Aliza Abdin

A contract is imperative to establish a mutual agreement between any two persons involved. The contract includes various aspects like terms of the employment and ownership to one’s property. A contract agreement is indispensable to have a steady business, and provides more transparency to the concerned persons and acts as evidence in case of any conflicts or misunderstanding.

A valid contract must contain the essential elements to make it a legally supported document.

An Offer

The preceding step in drafting a contract is the offer by one person and the acceptance by another person. This offer, when agreed legally, becomes an agreement. It means that the person is agreeable to all the terms and conditions specified in the contract and would live by them, formally.

Legal Relationship

A legal association is obligatory for parties involved in the business. It works when any one of the parties breaks to keep up their words. In such a case, they suffer the losses under the contract rules. It means that the party can claim for the loss by presenting the agreement as legal proof in the court.


The parties signing the contract must provide mutual consent. The involved parties must think in one direction and be on par with each other.

Competency of Parties

It means that both parties must be capable of signing a contract. Any person who has a black mark in business or disregarded as illegal in business affairs are not competent to sign a contract.

According to Section 11, people under the following situations are not eligible for a Contract:

  1. A minor person.
  2. A person with a lack of clarity in thoughts or is unstable.
  3. A person disregarded legally unfit for signing a contract due to misconduct in business.

Free consent

Under Section 13, it is crucial to seek consent from each party by accepting the terms and conditions in the agreement. Free consent refers to self-sufficient consent, which is not imposed, deceived, false, and exaggerated.

Lawful Object

According to Section 10, an agreement becomes a valid contract only if it satisfies the lawful conditions.

The below considerations are considered unlawful:

  1. If it is forbidden by law.
  2. If it is bound to fraudulent acts.
  3. If it damages a person’s property or respect.
  4. If it is regarded immoral considering the public policy.

Legal consideration

The agreement must declare legal consideration to become lawfully valid. Consideration is providing something in return, for fulfilling the responsibility. Then only, it becomes a valid enforceable agreement.

Explicitly Declared Void

There are certain agreements, which are considered void by the law of a country and such agreements are not legally enforceable, even if they hold all the essential elements of a contract. Such agreements are not in public interest, which includes restraint of trade and marriage. It is considered void because marriage is the individual right of a person.

Certainty and Possibility of Performance

The possibility of an agreement relates to actions, which are feasible in real life. Only such agreements will be considered legal and will be executed by the law. If an agreement is uncertain, then the agreement is regarded void legally.

Legal Formalities

A legally written agreement must comply with all standards and be duly attested and approved to be a valid agreement. If it fails, then it would not be enforceable by law.


A contract holding the above elements makes it a binding document. It, in turn, promotes business by building a healthy relationship between the parties. Hence, to achieve business goals and thrive in this aggressive market, it is crucial to adhere to all the laws in the contract.

Need Free Legal Advice or Assistance Online?

For any Contracts & Legal Documentation / Agreements related matter, please Post Your Requirement anonymously and get free proposals OR find the Best Contracts & Legal Documentation / Agreements Lawyers and book a free appointment directly.


'What to do when a Builder Delays Possession of Property?" By LAWKHART LEGAL

"E-Voting: It Is Time To Press For Internet Voting In Elections" By Dr. Vinod Surana

"Why Are Agreements Essential For A Startup?" By Lawkhart Legal

"Different Types Of Investment Available To Start-Ups" By Parshav Jain

"Digitally Signing Documents- How Legal Is It" By Sugyata Choudhary

"Halliburton Co. v. Chubb Bermuda Insurance Ltd." By Sugyata Choudhary

"Right To Information" By S Kashif Hussain

"Relevance Of IPR In Today's World" By Tanu Singh

"Benefits Of Patenting" By Tanu Singh


Lawyered Team

Lawyered Team