PRINCIPLE: A contract is an agreement enforceable by law. All agreements are contracts if they are made with free consent by parties competent to contract for a lawful consideration and with a lawful object. FACT: A, a 40-year-old businessman of sound mind, agrees to sell his bungalow worth 40 lakhs for 1 lakh. The agreement is: (1) Invalid due to inadequate consideration (2) Valid as there is lawful consideration (3) Valid as A entered into it with free consent (4) Valid because A has capacity to contract.

Answer: Option D