Introduction
Section 10 of the Indian Contract Act, 1872, outlines the basic legal requirement that all agreements become legally binding contracts. Such as if any agreement is made by free consent of the contracting parties, with lawful object and consideration that can be treated as a legally valid and enforceable contract. This section ensures that, contracts must legally value and valid until if agreements are declared illegal or void in the other terms of the laws. Let’s explore more details of Section 10 of the Indian Contract Act, 1872.
Analysis of the Indian Contract Act,1872, Section 10:
Section 10 of the ICA defines the criteria on which agreements are treated as legally binding and enforceable contracts. Some essential elements need to fulfil this concept.
According to Section 10 of the Act, agreements are contracts if they meet certain legal requirements. Such as it was made by the contracting parties with free consent. The parties who entered into the contract have lawful considerations and objects. An agreement is not expressly declared as void or illegal by law in India, and it also specifies that, if any contract is required to be in writing form, registration of documents, or the presence of a witness is required by law in India.
Classification of Agreements:
Agreements can be classified into two categories that are mentioned below:
1 Agreements enforceable by law:
If agreements meet the basic requirements of valid contracts that can be considered in this category and become enforceable by law in India.
As we refer to the provisions of the Act, sections 2(h) and 10 define the essential elements that make a valid contract. According to these provisions, if any elements are missing or not fulfilled, said contract is not considered a legally valid contract in the eyes of the law. All of these things require one important element is required, that the parties who enter into a contract must have free consent.
2 Agreements not enforceable by law:
Agreements do not cover the basic requirements of a valid contract that cannot be enforced by law. As we refer to provision 2 (g) of the Act, said agreements are considered to be void. Let’s see an example, if you agreed with a minor, it would be void in the eyes ofthe law. Sections 24 to 30 of the Indian Contract Act specified the terms on which based the agreements can be considered as void.
Essential elements of a valid contract:
Some essential elements make a valid contract, which are given below:
Offer and acceptance:
The contract began with the involvement of two parties; one made an offer, and the other accepted it. Thus, it must be important for a contract that one party offer and the other must accept it. After, it becomes an agreement. Here, the party that makes an offer is called the offeror, and the other party that accepts this offer is called the offeree.
Free consent:
A consent is a significant element of a contract. We refer to the provision of section 13 of the act, according to which, when two or more persons agree and consent upon the same thing in a similar manner. The consent must be free will between the parties and not made by coercion, undue influence, fraud, mistake or misrepresentation. When a consent is taken due to any of those reasons, said agreement become a voidable from the party whose consent was taken wrongfully by caused. There is an option for the aggrieved party to declare a contract voidable. And if the consent was taken by mistake, the said agreement is declared void.
Competency to contract:
For making a valid and legally enforceable contract, the parties must be competent. As we refer to section 11 of the Indian Contract Act, their define the competence to enter into the contract. According to this section person who enters into the contract must be a major, of sound mind, and not disqualified by law.
Key factor of competency to contract:
Age of majority:
As per the provisions of the Indian Majority Act, 1875, the majority age in India is 18 years. The completion of 18 years is a person treated as a major. If a guardian is appointed for a person by law, the majority age is 21 years. A person who has not completed 18 years is disqualified from entering into a contract. They are not able to know the liabilities towards the contract. Thus, a contract with a minor is void in the eyes of the law; it’s also called as void as initio.
Soundness of mind:
The contracting parties must have a sound mind and be capable of understanding the contract terms and liabilities.
Disqualified by Law:
If a person is barred by law from entering into a contract, there is no effectiveness of such a contract, and it is void. Such as an alien enemy, an insolvent person, etc. that types of persons are not allowed to enter into the contract.
Lawful Consideration:
The lawful consideration is a key element of a contract. We refer to the provision of section 23 of the Indian Contract Act, 1872, there was a explained the terms of consideration and object of a contract. If these terms are not completed in a legal way, the contract that is made on that based become void.
Consideration means some value, which is given by one party to another in term of exchange for a promise. It can be in different forms, such as in terms of money payment, providing goods, services, or doing or not doing something.
According to the Indian Contract Act, the consideration must be lawful; it does not go beyond the statutory provision of law. If the consideration is prohibited by law, such as any illegal act which is borne under the Indian Penal Code, or any other laws. The contract on that basis is void in the eyes of the law.
It is also to be noted that the consideration does not fall under fraudulent, like misrepresentation, defeating the provision of law, immoral, against the public policy, involving harm or injury to a person or property.
Lawful Object:
The object is referring the purpose or intent of an agreement; that’s why it is necessary that it must be lawful. If the object of a contract is not covered under the provisions of the law, immoral or contrary to public policy. The contract made on that based become a void.
If the contract object is forbidden by law, like involving illegal activities, injury to a person or harm to property. For example, if the parties enter into a contract to smuggle illegal items, it is void. Because the intent or object of the parties is unlawful, which is prohibited by law.
Agreement not expressly declared void:
Certain agreements are expressly declared as void under the provisions of the Indian Contract Act. According to provisions of sections 24 to 30 of this Act, some agreements are expressly declared as void. Such as an agreement that is made related to restraining of marriage, trade, wager, or any uncertain terms, etc.
Certain types of agreements that are declared void under the Indian Contract Act, 1872, are listed below:
- Agreements related to restraint of trade, which are covered under section 27.
- Agreements related to the restraint of marriage, which is covered under section 26.
- Agreements related to uncertain terms that are covered under section 29.
- Agreements related to wagering, which is covered under section 30.
Adherence to Formalities:
There is no mandatory requirement that every contract must be written in form under the provisions of the Indian Contract Act. However, certain types of contracts are required in written form for legal validities by other laws.
According to the Indian Contract Act, section 10 there are some exemptions that need to follow other legal provisions of other laws for certain types of contracts, such as,
- Contracts related to real estate have to be registered under the provisions of the Registration Act, 1908.
- Certain types of contracts must be written in form for claiming rights under the provisions of the Specific Relief Act, 1963.
- Certain types of contracts must be paid stamp duty under the provisions of the Stamp Act. Section 10 of the Indian Contract Act, 1872.
practical applications:
Section 10 of the ICA defines the legal validity and enforceability of agreements under certain conditions. It protects the rights of the parties to the contract. Some of the practical applications of this section are listed below:
Employment contracts: It protects the employees’ rights from unlawful terms with employers and make legally binding agreements.
Commercial agreements: It ensures that business contracts between parties have to be legally binding by free consent, competency and consideration.
Consumer contracts: It provides safety against fraud and misrepresentations to consumers.
Property agreements: It provides a safeguard to the contracting parties with lawful consideration and object; also validates sale, lease and mortgage agreements.
E-Commerce Contracts: It provides a safeguard to the users in the form of digital agreements against the consent and transparency.
Third-Party Beneficiary Agreements: It gives a legal right of enforcement to a third-party beneficiary, without their direct involvement in agreements.
Insurance Agreements: It protects the rights of parties involved with the fairness of insurance terms and policies.
Loan agreements: It provides more transparency and protect the contracting parties against undue influence.
Conclusion:
The Indian Contract Act, 1872, section 10 outlines the formation of a legally valid contract in India. According to that, agreements must be fair, lawful and enforceable by law. Everyone should know the basic essentials of a legally valid contract. It not only helps businesses, but also protects individuals and organisations, who also protect their rights in the relations of contractual relationships and avoid unnecessary disputes. Section 10 of the ICA sets out the terms on which the contracting parties enter into a legally valid contract and create healthier and wealthier relationships beyond the court of law.
