When parties agree on certain terms and conditions, they make an agreement. When the agreement has to be enforced by law, then a contract has to be made. Section 2(h) of the Indian Contract Act, 1872 defines a Contract. It is an agreement enforceable by law.

An agreement is every promise and every set of promises, forming consideration for each other. A proposal, when accepted, becomes a promise.

Enforceable by law

An agreement, to become a contract, must give rise to a legal obligation or duty. An agreement may be a social agreement or legal agreement. But only those agreements which are enforceable in a court of law are contracts. Therefore, all contracts are an agreement but not all agreements are contracts.

Section 10

Section 10 of the Indian Contract Act, describes the essentials of the valid contract. According to it, the essentials are:

1. Offers and Acceptance

There should be a valid offer and acceptance in a contract. There should be an offer from one party to do or abstain from doing something and its acceptance by the other party is the two basic elements of a contract. The offer and acceptance must be lawful.

Also Read: The concept of free consent under Contract Law 

2.Legal Relationship

The parties to an agreement must create a legal relationship. Agreements of a social or domestic nature do not create legal relations and cannot give rise to a contract. For example, A invited B to dinner and B accepted the invitation. It is a social agreement. If A fails to serve dinner to B, B cannot go to the courts of law for enforcing the agreement.

3. Lawful Consideration

Consideration means ‘something in return’. The consideration has to be in monetary terms only. The consideration of the past and future is also a valid consideration. As per section 23 of the Indian Contract Act, 1872 unlawful considerations include:

  1. Law forbids it.
  2. Is of such a nature that, if permitted, it would defeat any law; or is fraudulent.
  3. Involves or implies injury to the person or property of another.
  4. The Court regards it as immoral or opposed to public policy.

These conditions will render the agreement illegal.

4.Competent to Contract

The parties to the contract must be competent to contract. The parties must be above 18 years of age and one of sound mind. A person should not be disqualified from contracting by any law. A contract with a person not competent to contract is void.

5.Free Consent

The consent of the parties for the acceptance should be taken freely. The contracts will be void if the consent is not obtained freely. It will be a free consent if it is not obtained by:

a. Misrepresentation

b. Fraud

c. Coercion


e. Undue Influence

6. Lawful object

The object of the law should be lawful.


The terms and conditions of the contract should be clear and certain.

8.Possibility of Performance

The Act mentioned in the contract should be possible to perform. A contract cannot enforce an impossible act.

9.Not Declared Void

The contract should not have been declared void.

Also Read: Types of Contracts 

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