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The
various modes of transfer of property are Sale
a)
What
is valid agreement?
b)
When
agreement becomes contract?
c)
What
is the effect of agreements made not according to the law?
The term “agreement” has been
defined in Sec 2(C) of the Indian contract Act, 1872 as, “Every promise and
every set of promises, forming the consideration for each other, is an
agreement”.
One person is said to make a
promise to the other, if his /her offer is accepted by the other person. When this promise is supported by
consideration, it becomes a contract.
Therefore first and foremost requirement of agreement is, it must have
been supported by the consideration.
However, the consideration is not an determining factor in certain cases
as detailed in Section 25 of Indian Contract Act
q Gift to near & dear ones,
q Something given for past
service
q Acknowledgement of time barred
debt.
The second important requirement of agreement, for an
agreement to be enforceable by law, it must fulfill the conditions set out in
Sec – 10 of the Indian contract Act.
They are :
q Agreement must be made
q By competent parties,
q With free consent,
q For lawful consideration and
q For lawful object.
Sec – 11 of the Indian Contract
Act defines competent parties as, those persons who have
q Attained the age of majority
q Are of sound mind, and
q Are not disqualified by any
provisions of law.
The age of majority for any
person is 18 years under the Indian Majority Act. In case of a person is
suffering from any mental disease during certain intervals of time, he or she
can enter into an agreement during the time such person is of sound mind. Now the question that arises for
consideration is if person is drunk or intoxicated due to drugs can he enter
into an agreement. In this kind of
situation, if the intoxicated person is in position to understand and
appreciate the pros and cons of terms and conditions of the agreement, there is
no bar for the drunken person to enter into an agreement. However, in case of
any disputes, it has to be established to the satisfaction of the court that
the person suffering from mental disease, under intoxication was in a position
to understand the terms, pros and cons of agreement.
Another requirement for a
person to enter into an agreement is that, such person should not have been
disqualified by any law in force like insolvency Act.
The parties to the agreement
should have agreed to the terms with free consent. Any consent is said to be
free, when it is not given under.
q Coercion,
q Undue influence,
q Fraud
q Misrepresentation.
In case consent is given under
by any of above elements then the agreement or contract becomes voidable. The
effect of voidable contract is the contract becomes enforceable only at the
option of the party whose consent has been taken by coercion or undue influence
or fraud or misrepresentation. Under
voidable contract if any property is sold, the purchaser gets a valid title so
long the contract is not cancelled on the ground that contract is voidable.
U/S 10, the third & fourth
essential requirement of agreement are :-
q Lawful consideration &
q Lawful object.
If the consideration and object
of contract is not lawful, then such agreement becomes void, Contracts or
illegal contracts u/s 23 & 24 of the Indian Contract Act. If any property is sold under void or illegal
contract, then purchaser would not get valid title to the property. Void
contracts are not enforceable.
If a contract is declared as
void, the transferee of property would not get valid title to the property, the
position of parties is like as if they are not entered into the contract at
all. Therefore u/s 64 of the contract
Act, the parties are liable to return the advantages they have taken under void
contract.
As stated earlier, in voidable
contract the transferee will get a valid title, so long the contract is not
cancelled by the party whose consent was obtained under coercion, undue
influence, fraud, misrepresentation. Such party has to exercise his option of
treating the contract as void within the limitation period, which is three
years. In case of illegal contracts, if one party has given or delivered
something to the other party the same cannot be recovered at all.
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