2. Case

3. The director of a tramway co. issued a prospectus stating that they had the right to run tramcars with steam intead of with horses as before. In fact, the act incorporating company provided that such power might be used with saction of the board of trade. But the board of trade refused to give permission and the company had to be wound up. A shareholder sued the director for damages for fraud. The house of loards held that the directors were not liable in fraud because they honestly believed what they said in the prospectus to be true6.Lawful object:<br />For the formation of a valid contract it is also necessary that the parties<br />to an agreement must agree for a lawful object. The object for which the agreement hasbeen entered into must not be fraudulent or illegal or immoral or opposed to public policyor must mot imply injury to the person or the other of the reasons mentioned above theagreement is void.<br />E.g<br />A partnership entered into for the purpose of doing business in a alcoholic drink on a licence granted only to one of the partner is void.<br />7.Writing and registration<br />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.<br />No particular form of writing is required to constitute a contract. Intentions of theparties to enter into a particular contract and to give effect to it must be manifest init, in order to constitute a valid contract.<br />8.Certainty<br /> Section 29 of the contract Act provides that “Agreements, the meaning of<br />which is not certain or capable of being made certain, are void.” In order to give rise to avalid contract the terms of the agreement must not be vague or uncertain. It must bepossible to ascertain the meaning of the agreement, for otherwise, it cannot be enforced<br />E.g. A agrees to sell to B quot;
my white horse for rupees five hundred or rupees one thousandquot;
. There is nothing to show which of the two prices was to be given. The agreement is void<br />9.Possibility of performance.<br /> Yet another essential feature of a valid contract is that it<br />must be capable of performance. Section 56 lays down that“An agreement to do an actimpossible in itself is void”. If the act is impossible in itself, physically or legally, theagreement cannot be enforced at law<br />10. Enforceable by Law:<br />A contract in order to be valid must be enforceable by law which elementdistinguishes agreement and contract. It is enforceable by law it is contractotherwise it is an agreement.<br />