Valid Contract: Which agreement has satisfied all essential elements is called the valid Contract. Only valid Contract can establish the legal relation between the contracting parties.
A valid contract is an agreement which can create the rights and obligations between parties and enforceable by law. An agreement becomes enforceable by law which satisfied all essentials elements of valid contract.
The essential elements of a valid contract is,
•Plurality of parties
•Proper offer and acceptance
•Intention to establish the legal relationship
•Lawful Consideration
•Free Consent
•Capacity of the parties (Minor, (who has not attained age of eighteen) and unconscious person Sec. 506 of General civil Code 2074)
•Lawful Object
•Written form and registration
•Certainty and Clarity
•Possibility to Performance
•Not expressly declared void
•Legal formalities
An agreement becomes enforceable by law when all the essential elements of a valid contract are present. Thus, absence of any of the above said elements is adequate to make the contract invalid.
1. Plurality of parties:
There must be at least two parties to form a contract. A single person can not enter into a contract. Two parties, namely offerer and acceptor must be under an agreement for a valid contract.
2. Proper offer and acceptance:
There must be at least two parties one making the offer and the other accepting it. Offer means if somebody makes proposals to do something or not to do something. Offer and acceptance is most important elements for valid contract.
3. Intention to create legal relationship
To constitute a contract legal relationship between or among parties should be seen otherwise remedy of that contract could not be achieved.
4. Lawful Consideration
An agreement is legally enforceable only when each of the party gives something and gets something. Consideration has been defined as the price paid by one party for the promise of other
5. Free Consent
Free consent of all the parties to an agreement is another essential element of valid contract. Consent means that the parties must have agreed up on the same thing in the same sense. There is absence of free consent the agreement does not amount the valid status.
6. Capacity of the parties
The party to an agreement must be competent to enter into an agreement of contract. The parties must be the age of majority, sound mind and must not be disqualified by any law to which they are subject.
7. Lawful Object
The object for which the agreement has been entered in to an agreement must not be fraudulent, illegal, immoral, or opposed to public policy or must not imply injury to the person or property of another.
8. Written form and registration
According to the Indian Contract Act, 1872 a contract may be oral or in writing. But in certain special cases it lays down that the agreement to be valid must be in written form and registered.
Challenges of Valid Contracts in Nepal’s Software Industry
Nepal’s growing IT sector faces several legal and practical challenges in enforcing valid contracts:
- Lack of Clear IT Laws
- Nepal’s legal system has weak digital contract enforcement, making disputes harder to resolve.
- Payment & Scope Disputes
- Clients may refuse payment claiming “unsatisfactory work”, even if the contract was fulfilled.
- Example: A client rejects a delivered software product, demanding unrealistic changes.
- Verbal Agreements & Trust-Based Deals
- Many Nepali IT firms work on verbal promises rather than written contracts, leading to conflicts.
- Intellectual Property (IP) Issues
- Without clear contracts, ownership of software code can be disputed between developers and clients.
- Foreign Clients & Cross-Border Legal Issues
- If a Nepali developer works for an international client, which country’s laws apply? Enforcement becomes difficult.
- Fraud & Non-Payment
- Some clients disappear after receiving work, refusing to pay, and weak legal systems make recovery hard.
- Unclear Termination Clauses
- Many contracts don’t specify what happens if a project is canceled, leading to financial losses.
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