A valid contact must have the following essentials

  1. Two parties : for a valid contract, there must be two parties
  2. Offer and acceptance: There must be an offer and acceptance One party has to make an offer and the other party has to accept it.
  3. Consensus-ad-idem or Identity of Minds: The parties to the contract must have agreed about the subject matter of the contract at the same time and in the same sense.


Illustration: A has two houses, one at Chennai and another at Coimbatore. He has offered to sell one to B. B accepts thinking to purchase the house at Coimbatore, while A, when he offers, has in his mind to dispose of house at Chennai. There is no Consensus-as-idem.


  1. Consideration: It means “Something in return” Every contract must be supported by consideration.

Illustration : A offers to sell his watch for Rs. 500 to B and B accepts the offer. Thus Rs. 500 is the consideration for the watch and vice-versa.


  1. Capacity; The parties to the contract must be competent to contract. For example a contract by a minor is void
  2. Free Consent: The consent of the parties must be free from any flow – it must not be caused by a mistake or coercion or undue influence
  3. Lawful consideration: The consideration to a contract must be lawful

Illustration: A promises to pay Rs. 500 – to B, in consideration of B murdering C. The consideration is illegal.

  1. The objects of the contact must be lawful

Illustration: A promises to pay Rs. 500 – for letting B’s house for running a brothel. The objects is illegal. Hence, the contract is void.

Thus, “the essence of legal contract is that there shall be an agreement between two persons, that one of them shall do something either for the benefit of the other or for his own detriment and that these persons intend that the agreement shall be enforceable at law”

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