The Indian Contract Act, 1872 (Section 10) lays down that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void.
The 7 Essentials
- Offer and Acceptance — a definite proposal and its unconditional acceptance
- Intention to create legal relations — social/domestic agreements are generally NOT contracts
- Lawful consideration — something of value exchanged (can be past, present, or future)
- Capacity of parties — must be 18+, of sound mind, not disqualified by law
- Free consent — no coercion, undue influence, fraud, misrepresentation, or mistake
- Lawful object — the purpose must not be illegal, immoral, or against public policy
- Certainty and possibility of performance — terms must be clear and performance must be possible
Void vs. Voidable
| Type | Meaning |
|---|---|
| Void contract | No legal effect from the start (e.g., contract with a minor) |
| Voidable contract | Valid until the aggrieved party chooses to rescind it |
| Unenforceable | Valid but cannot be enforced due to a technicality (e.g., no stamp duty) |
An agreement without consideration is void — “No consideration, no contract.”