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CS Professional · Drafting, Pleadings and Appearances · Drafting of Agreements, Deeds and Documents

Neha enters into an agreement with Imran, and both are competent, consent freely, and have a lawful consideration and object. The agreement relates to a transaction for which a law in force requires writing and registration. Neha argues that Section 10 of the Indian Contract Act, 1872 makes the oral agreement a valid contract anyway. Is she correct?

Neha is not correct. Section 10 of the Indian Contract Act makes agreements contracts when the essentials are met, but it expressly preserves any law requiring writing or witnesses, and any law on registration of documents. Where such a law applies, its formalities must also be complied with.

  1. AYes, free consent and lawful consideration alone make every agreement a contract
  2. BYes, but only between the parties and not against third parties
  3. CNo, because Section 10 does not affect any law requiring a contract to be in writing or in the presence of witnesses, or any law relating to registration of documentsCorrect
  4. DNo, because Section 10 requires every contract to be registered

Explanation

Section 10 states that agreements are contracts if made by free consent of competent parties for lawful consideration and object and not declared void. Its second paragraph preserves any law requiring writing or witnesses and any law on registration of documents. So where such a law applies, its formalities must still be met. It does not require registration of every contract.

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