Most people assume that once one party has made an offer and the other party has accepted, a contract has been formed. However, there is more to a valid contract than this, and it has nothing to do with how formal the agreement is. A contract can be formal or informal, written or even oral.

Offer and Acceptance

Generally, the written contract only unfolds when the other party accepts the offer by one party and is definite in all sense. The offer or agreement must be clear and complete in all sense. Both parties should communicate to ensure there is no lapse in the contract act. Both the offer and acceptance must be “consensus ad idem”, meaning, both parties must comply with the same thing.

Intention to create a Legal Relationship

To bind, both parties should have a specific intention that can create a legal relationship, resulting in an agreement. Agreements in social or household nature are not contracts because parties do not intend to build legal relationships.

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 intentions of creating a legal relationship. This also means that agreements that are not enforceable by the law like agreements between relatives are enforceable in the court of law.

Possibility of Performance of Agreement

In this case, suppose two people decide to undergo an agreement where person A agrees to bring person B’s dead relative back to life, this will not fall under the legal contract act because bringing back the deceased person alive is an impossible task. Thus, the agreement does not stand valid.

Legal Formalities

In this agreement, if there is any uncertainty and both parties are not capable of finding the right path, then it is deemed void. As a part of the essentials of a valid consideration, the terms and conditions of the contract should be concrete. Any contract, which is uncertain in any sense, can be termed as void. The terms mentioned in the agreement should be capable of performing specific thoughts.


Consideration means the moral value given for the performance of the promise. It should not be only limited to money, but there should be some value to what has been agreed upon. One of the essentials of valid consideration is that it should not be adequate, but should carry some value.

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