1. Offer and Acceptance

Offer: An offer must be clear, definite, and communicated to the other party. It represents a willingness to enter into a contract on specified terms.

Acceptance: Acceptance must be communicated clearly and must be in agreement with the terms of the offer. It must be absolute and unqualified.

Example: If Raj offers to sell his car to Meera for ₹5 lakh, and Meera agrees to buy it for the same amount, this constitutes an offer and acceptance. If Meera tries to negotiate the price or change any terms, it would be considered a counter-offer, not acceptance.

2. Mutual Consent

Both parties must agree to the terms of the contract with a common understanding of its terms. This is known as a “meeting of the minds.”

Example: Amit offers to buy a laptop from Priya for ₹30,000. Priya accepts the offer, and both parties understand and agree on the price, delivery date, and laptop specifications. This mutual agreement is essential for a valid contract.

3. Capacity to Contract

Parties must be of sound mind, not minors, and not disqualified by law from contracting. Generally, individuals above 18 years of age with mental capacity can contract.

Example: If a 17-year-old student enters into a contract to buy a smartphone, the contract is not enforceable because minors are not legally competent to contract. However, if an adult like Ramesh signs a similar contract, it is valid provided the other conditions are met.

4. Lawful Consideration

Consideration refers to something of value exchanged between the parties. It must be lawful, meaning it should not be illegal or immoral.

Example: If Simran agrees to pay ₹10,000 for a service provided by Neha, and both agree on this term, it is valid consideration. However, a contract where Simran agrees to pay for illegal drugs would be void as it involves unlawful consideration.

5. Legality of Object

The object or purpose of the contract must be lawful. Contracts with illegal purposes are void.

Example: A contract to engage in a legal business, like selling furniture, is valid. Conversely, a contract to commit a crime, such as theft, is void because the object of the contract is illegal.

6. Free Consent

Consent must be obtained freely without coercion, undue influence, fraud, misrepresentation, or mistake. If consent is obtained through these means, the contract is not valid.

Example: If Ravi pressures Sita into signing a contract to sell her property under duress, the contract is voidable because Sita’s consent was not given freely.

7. Possibility of Performance

The terms of the contract must be such that they can be performed. Contracts with impossible terms are void.

Example: A contract to deliver a product that doesn’t exist or cannot be produced is void. For instance, a contract to create a perpetual motion machine, which is scientifically impossible, would be void.

8. Not Declared Void by Law

The contract must not fall into categories specifically declared void by law. Certain contracts, such as those violating public policy or certain statutory provisions, are not enforceable.

Example: A contract to sell goods below market price to evade taxes is void as it is against public policy and legal regulations.