RAZA LILANI razamr@hotmail.com 10/9/2012

Capacity of parties to contract – Competent parties:

Every person is competent to contract who is of the

age of majority according tothe law to which he is

subject, and who is of sound mind, and is not

disqualifiedfrom contacting by any law to which he is

subject.

1) Proposal and Acceptance: When one person signifies to

another his willingness to do or abstain from

doinganything with a view to obtaining the assent of

that other to such act or abstinencehe is said to make a

proposal.Thefirst steptowards creating a contract is that

one person shall signify or make aproposal or offer to

the other, with a view to obtaining the acceptance of

thatanother person to whom the offer is made. A

proposal when accepted becomes apromise.When the

person to whom theproposalis made signifies his assent

thereof theproposal is said to be accepted. A proposal

when accepted becomes apromise.

2) Consideration: When at the desire of the promisor the

promisee or any other person has done orabstained

from doing, or does or abstains from doing or promises

to do or toabstain from doing something such act or

abstinence or promise is called aconsideration for the

promise.

RAZA LILANI razamr@hotmail.com 10/9/2012

3) An agreement must not be expressly declared to be void

: A void agreement is not enforceable by law (Sec 2(g)).

It has no legal sanctity. Itdoes not give rise to any rights

and obligations. Various agreements are

expresslydeclared void under the Act.

4) Free Consent: Parties to a contract must give their

consent. The parties must be ad idem, forexample both

the parties must agree upon the same thing in the same

sense. Twoor more persons are said to consent when

they agree upon the same thing in thesame sense. Mere

consent is not enough. Consent of parties must be free,

forexample it must not have been obtained (1) coercion,

(2) undue influence, (3)fraud, (4) misrepresentation, or

(5) mistake.

5) Writing & Agreement;

Oral contract is a valid contact. However the contract must be

in writing andregistered, if so required by any law, for

example, gift, mortgage, sale, lease underthe Transfer of

Property Act 1882, Memorandum and Articles of Association

of aCompany under the Indian Companies Act, contracts

under sub sections (10 and 3)of section 25 of the Indian

Contract Act, etc. Documents specified under section 17of the

Indian Registration Act, 1908, are required to be registered