A valid contract is enforceable by law; if it is not valid, it may lead to obstruction of businesses and unlawful and insincere dealings. Let us learn about the essential features of a valid contract.

In a business, a contract or agreement plays a significant role in the smooth functioning between two parties. In simple terms, a contract is a written agreement between two parties, which contains certain obligations and is enforced by the law. Violation of the contract or law can attract legal action by any of the parties, including cancellation of the entire contract. Any individual entering into a written agreement should be knowledgeable enough about the essentials of a contract.

The Indian Contract Act, of 1872 itself defines and lists the Essentials of a Contract either directly or through interpretation through various judgments of the Indian judiciary. Section 10 of the contract enumerates certain points essential for valid contracts like Free consent, Competency Of the parties, Lawful consideration, etc.

Essentials of a Valid Contract


First, an offer must be extended in order to begin a contract. This should include details of the agreement and its terms and conditions. Simply put, the offer is the offeror’s attempt at entering into a contract with another. 

Sometimes businesses will look for contractors through an invitation to treat by letting people know that they are interested in entering into a contract. 


Once the offer is extended, it’s in the hands of the offeree to either accept or reject the proposal and its terms and conditions. Offerees can accept offers via mail, email, or verbally. 

Most states use the mailbox rule meaning that, if an offer is accepted via mail or email, the moment the acceptance is placed in a mailbox to be mailed or sent via email, it has officially been accepted. This holds true even if the offerer never receives the acceptance. Within this acceptance, there needs to be a clear statement that the terms of the agreement are all accepted. 

The Intent of Legal Obligations

One of the essential elements of a valid offer is that both parties subject to a contract must be clear with the intention of creating a legal relationship. This also means that agreements that are not enforceable by the law like agreements between relatives are enforceable in a court of law.

People also read: Importance Of Well Drafted Contract For Your Business and What Makes It Necessary


Quid Pro Quo means ‘something in return’ which means that the parties must accrue in the form of some profit, rights, interest, etc., or seem to have some form of valuable “consideration”.

Something of value must be exchanged in order to have a valid legal agreement as any agreement without consideration is void. Thus if there will be no consideration then the agreement will be void and it will not be enforceable by law and there will be no contract.

Lawful Consideration

In Section 23 of the Act, the unlawful considerations are defined as all those which:

  1. it is forbidden by law.
  2. is of such a nature that, if permitted, it would defeat the provisions of 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.

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Each party must be fully able or have the legal capacity to enter into the contract in order for it to be considered valid. For instance, you cannot enter into a legal contract with a three-year-old. Both parties must be of their right mind in order to form a contract, so a valid agreement could not take place if one of the parties is under the influence of any mind-altering substance. 

This also includes the desire of both parties to enter into the agreement free from coercion. 


Contracts cannot be created to govern the trade of illegal products or services. A drug dealer cannot enforce a contract with their buyer if their buyer doesn’t pay them. 

Each party must show legal intent, meaning that they intend for the results of their agreement to be completely legal. 

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