INTRODUCTION

A contract plays an important role in everyday life. From buying goods to entering into employment, contracts help in regulating relationships between individuals. A contract creates legal obligations and ensures that promises made by parties are enforceable by law. However, every agreement does not become a contract. Only those agreements which fulfill certain legal requirements are treated as valid contracts.

Contracts are important in society because they give legal value to promises. They create clarity about rights and duties, reduce disputes, and build trust among people. Contracts support trade, employment, and daily transactions by ensuring fairness, responsibility, and legal protection when obligations are not fulfilled.                                                                                            

An agreement is when two or more people promise to do something or not do something, based on trust. Not all agreements are enforceable by law.

A contract is a special kind of agreement that the law recognizes and enforces. According to Section 10 of the Indian Contract Act, 1872, an agreement becomes a contract when it is made with free consent, lawful object, and is capable of being performed.

 DEFINITION / RELEVANT SECTION

A contract is the foundation of all commercial and legal relationships. For an agreement to be enforceable by law, it must satisfy certain essential conditions. These essentials are clearly provided under Section 10 of the Indian Contract Act, 1872. Understanding these elements is crucial to ensure that agreements are valid and legally binding.

Section 10

“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 hereby expressly declared to be void.” This section provides the basic framework for determining whether an agreement is legally enforceable.

1. Offer and Acceptance

For a contract to exist, there must be a lawful offer by one party and a lawful acceptance by the other. The offer and acceptance must be clear, definite, and communicated to the parties. Without mutual agreement, no contract can be formed.

2. Free Consent

Consent of the parties must be free and genuine, meaning it should not be obtained by coercion, undue influence, fraud, misrepresentation, or mistake. Consent is the backbone of any contract because a contract is invalid if obtained under pressure or deception.

3. Competency of Parties

The parties entering into a contract must be legally competent. According to the law, minors, persons of unsound mind, or disqualified persons cannot enter into a valid contract. Competency ensures that both parties understand the rights and obligations under the contract.

4. Lawful Consideration

A contract must be supported by lawful consideration, which means something of value exchanged between the parties. Consideration can be money, goods, service, or promise, but it must not be illegal, immoral, or forbidden by law.

5. Lawful Object

The purpose or object of the contract must be lawful. Agreements made for illegal activities, immoral acts, or actions prohibited by law are void. A lawful object ensures that the contract is enforceable in a court of law.

6. Not Expressly Declared Void

Certain agreements are expressly declared void under the Act, such as agreements in restraint of trade or wagering contracts. A valid contract must not fall under these void categories.

7. Intention to Create Legal Relations

Finally, the parties must have a serious intention to create legal obligations. Social or domestic arrangements without legal intent do not amount to contracts. Legal enforceability depends on this intention.

 ILLUSTRATION / EXAMPLE

1.Sale of goods

Ramesh, a shopkeeper, agrees to sell 10 books to Sita for ₹500, and both parties agree freely. All the conditions under Section 10 of the Indian Contract Act are fulfilled in this case: the offer and acceptance are present , the consent of the parties is free , both parties are legally competent , the consideration of ₹500 is lawful , and the object of the agreement, which is the sale of books, is also lawful . Therefore, this is a valid contract because all essentials required by law are satisfied.

2. Agreement with a Minor

A 16-year-old named Rahul promises to sell his bicycle to Amit for ₹5,000. While there is a valid offer and acceptance , free consent of the parties , lawful consideration , and a lawful object , Rahul is a minor and therefore not competent to contract . As a result, the agreement fails one of the essential conditions under Section 10, and it is not a valid contract.

3. Agreement for an Illegal Purpose

Sunita agrees to pay Raj ₹10,000 to help her smuggle goods illegally. In this case, there is an offer and acceptance , free consent , competent parties , and lawful consideration ; however, the object of the agreement, which involves illegal activity, is unlawful . Because Section 10 requires the object of a contract to be lawful, this agreement is void and cannot be enforced by law.

CASE LAW

1. Mohiri Bibi v. Dharmodas Ghose (1903) 30 Cal 539(PC)

Facts: Mohiri Bibi, a minor, executed a mortgage in favor of Dharmodas Ghose. Her father had given consent, but Mohiri Bibi later tried to repudiate the mortgage, claiming that she was under 18 and therefore not competent to contract.

Issue: Can a minor legally enter into a contract, and is such an agreement enforceable?

Judgment:

The court held that the agreement executed by a minor is void ab initio—it is invalid from the very beginning. Even parental consent could not make the contract enforceable.

Legal Principle:

Agreements with minors are void under law.

Competency to contract is an essential condition under Section 10 of the Indian Contract Act, 1872.

Intention or consent cannot make a minor legally bound.

• Why Agreement Was Not a Contract:

Since Mohiri Bibi was a minor, she lacked legal capacity, and one of the essential conditions of a valid contract: competent parties,was not fulfilled.

• Importance of Intention to Create Legal Relations:

Even if a minor shows willingness or intention, the law does not enforce it. This case emphasizes that legal capacity is as important as intention for a contract to be valid.

2. Balfour v. Balfour (1919) 2 KB 571

Facts: Mr. Balfour, while posted abroad, promised to pay his wife £30 per month. Later, he stopped payments. Mrs. Balfour sued to enforce the promise.

Issue: Was the agreement between husband and wife legally enforceable as a contract?

Judgment: The court held that the agreement was a domestic arrangement and lacked intention to create legal relations. Therefore, it was not enforceable.

Legal Principle:

Domestic or social agreements are presumed not to create legal obligations.

Intention to create legal relations is an essential element of a valid contract.

A contract requires both consent and serious intention to be legally bound.

• Why Agreement Was Not a Contract:

Although there was offer, acceptance, and consideration, the parties did not intend to create a legal obligation; it was a personal domestic arrangement.

• Importance of Intention to Create Legal Relations:

This case shows that consent alone is not enough; parties must intend that the law will enforce the agreement. Without this intention, no contract exists.

PRACTICAL APPLICATION

Section 10 of the Indian Contract Act, 1872 provides the essentials of a valid contract, including offer and acceptance, free consent, competent parties, lawful consideration, and lawful object. These rules are applied in many real-life agreements to ensure fairness and enforceability.

In employment contracts, employers and employees enter agreements specifying salary, working hours, and duties. Section 10 ensures both parties are legally competent and agree freely, preventing disputes if one party tries to enforce unfair terms.

For rent agreements, Section 10 ensures the tenant and landlord are competent, rent and deposit terms are lawful, and the agreement has mutual consent. This protects both parties if issues like non-payment or eviction arise.

In business transactions, contracts for supply, services, or partnership must follow Section 10. It ensures the consideration (payment or service) is lawful, and all parties understand their obligations. This helps prevent exploitation and strengthens commercial trust.

Online agreements such as subscriptions, e-commerce purchases, or app terms are also covered under Section 10. Clicking “I agree” indicates offer and acceptance, and lawful consideration like payment confirms the contract. Section 10 ensures that even digital agreements are valid and enforceable.

Role of Lawyers: Before finalizing a contract, lawyers check compliance with Section 10, ensuring parties are competent, terms are lawful, and the contract reflects the intention to create legal relations. This protects parties from entering void or unenforceable agreements.

In practice, Section 10 safeguards both parties by providing clarity, preventing disputes, and giving legal enforceability. Whether it is employment, rent, business, or online agreements, understanding Section 10 helps in creating valid, fair, and protective contracts.

CONCLUSION

Section 10 of the Indian Contract Act, 1872 lays down the essential ingredients of a valid contract. These essentials: offer and acceptance, free consent, competency of parties, lawful consideration, lawful object, and intention to create legal relations form the backbone of enforceable agreements. Without fulfilling these conditions, an agreement cannot be recognized as a contract by law.

The importance of these essentials is not only theoretical but also practical in daily life. Employment contracts, rent agreements, business deals, and even online agreements all rely on Section 10 to ensure clarity, fairness, and legal enforceability. Competency protects minors or those not legally capable from being exploited. Free consent ensures parties are not forced or misled. Lawful consideration and lawful object maintain that agreements are ethical and legally acceptable. Finally, a clear intention to create legal relations separates serious contracts from casual promises in social or domestic contexts.

Awareness of these essentials is critical. A person who understands the requirements of a valid contract can avoid disputes, protect their rights, and make informed decisions. Lawyers often check agreements against Section 10 to ensure validity, which safeguards both parties and gives confidence that their obligations will be enforceable in law.

In simple words Section 10 is the foundation of contract law in India. It not only defines what makes an agreement legally binding but also provides a framework for fairness, protection, and trust in personal, business, and digital transactions. Understanding these principles empowers individuals to enter contracts wisely, uphold their rights, and prevent legal complications. Simply put, a valid contract is more than just an agreement it is a legally protected promise grounded in fairness, consent, and intention.

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