Q1. how a proposal is converted in to a promise ?

answer with Promise:

section give an illustrations . Once Mr. Rahul accepts the offer, the proposal becomes a promise.
Both parties now have a legal obligation.

Answer Under the Indian Contract Act, 1872, a proposal becomes a

promise when it is accepted by the person to whom it is made. The Act “I, Ravi, promise to sell my car to you, Rahul, for ₹500,000, and you
provides specific provisions regarding the formation of contracts, promise to pay me that amount.”
including how proposals (offers) are converted into promises. According to Section 2(c), the acceptance turns the proposal into a
promise.
Conditions for the Conversion of Proposal into Promise:
Key Sections in the Indian Contract Act
For a proposal to convert into a promise under the Indian Contract Act,
1. Section 2(a) – Proposal (Offer): A proposal is defined as the following conditions must be met:
an offer made by one party to another, expressing the
willingness to do or refrain from doing something in order
to obtain the assent of the other party. 1. Offer must be made with the intention to get assent:
The proposal must be made by one party with the intention
of getting the assent of the other party. This shows the
"When one person signifies to another his willingness of the offeror to be bound by the agreement if
willingness to do or to abstain from doing accepted.
anything, with a view to obtaining the assent of 2. Acceptance must be absolute and unqualified:
that other to such act or abstinence, he is said According to Section 7 of the Indian Contract Act, the
to make a proposal." acceptance must be absolute and unqualified. If the
acceptance includes any condition or modification, it is not
a valid acceptance and would be considered a counter-offer,
2. Section 2(b) – Acceptance: Acceptance is defined as the
not an acceptance.
assent given by the person to whom the proposal is made.
The proposal becomes a promise once it is accepted.
“In order to convert a proposal into a promise,
the acceptance must be absolute and
"When the person to whom the proposal is
unqualified. If the acceptance is conditional, it
made signifies his assent thereto, the proposal
amounts to a counter-proposal.”
is said to be accepted."

3. Acceptance must be communicated: The acceptance of

3. Section 2(c) – Promise: A promise is an agreement
the proposal must be communicated to the offeror.
between two parties, formed when the proposal is accepted.
According to Section 4, the communication of the
Once a proposal is accepted, it becomes a promise, and it is
acceptance is complete when it comes to the knowledge of
legally binding.
the offeror.

"A proposal, when accepted, becomes a

“The acceptance of a proposal is complete
promise."
when it is communicated to the offeror.”

4. Section 4 – Communication of Proposal, Acceptance,

4. Time-bound: If a time for acceptance is specified in the
and Revocation: This section lays down that for a
proposal, the acceptance must happen within that time
proposal to become a promise, the acceptance must be
frame. If no time is specified, the offer remains open for a
communicated to the offeror.
reasonable time.
Example in the Context of the Indian Contract Act:
"The communication of a proposal is complete
when it comes to the knowledge of the person
1. Proposal (Offer):
to whom it is made."
Mr. Sharma offers to sell a plot of land to Mr. Gupta for
₹10,00,000 on November 1st.
"The acceptance of the proposal is complete According to Section 2(a), this is a proposal.
when it is communicated to the offeror." 2. Acceptance:
Mr. Gupta responds on November 3rd by saying, “I accept
your offer to buy the land for ₹10,00,000.”
How a Proposal Becomes a Promise: This is an acceptance, and according to Section 2(b), it
becomes a promise once accepted.
Let’s break down the process with a simple illustration, applying the 3. Promise:
provisions of the Indian Contract Act. Now, both parties have a promise under Section 2(c),
Illustration: where Mr. Sharma promises to sell the land, and Mr. Gupta
promises to pay ₹10,00,000.
Conclusion:
Proposal:
Mr. Ravi (Offeror) offers to sell his car to Mr. Rahul (Offeree) for
₹500,000. Mr. Ravi’s offer is a proposal. A proposal becomes a promise when it is accepted without any
modifications, and this acceptance must be communicated to the
offeror. Under the Indian Contract Act, 1872, a proposal (offer) is
“I, Ravi, offer to sell my car to you, Rahul, for ₹500,000.” converted into a promise through the acceptance by the other party,
According to Section 2(a), Mr. Ravi has made a proposal to Mr. Rahul. creating a legally binding contract.
Q2.Consideration is a vital element in valid contract .justify the
Acceptance: statement .state the circumstances where consideration is not
Mr. Rahul thinks about the offer and agrees to buy the car for the price necessary .
stated by Mr. Ravi.
Answer Consideration as a Vital Element in a Valid Contract:
“I, Rahul, accept your offer to buy the car for ₹500,000.”
According to Section 2(b), Mr. Rahul’s agreement constitutes
acceptance of the offer. In contract law, consideration refers to something of value that is
exchanged between the parties involved in a contract. According to the
Indian Contract Act, 1872, consideration is a crucial element for a Example:
contract to be valid, and it must be present for an agreement to become A mother promising to transfer her property to her son out of love and
legally enforceable. affection is enforceable, provided it is in writing and registered.

Section 2(d) of the Indian Contract Act, 1872 defines 3. Promise to Pay a Time-Barred Debt (Section 25(3)):
consideration as:
A promise to pay a time-barred debt (a debt for which the period of
"When, at the desire of the promisor, the promisee or any other person limitation has expired) is enforceable even without consideration. The
has done or abstained from doing, or does or abstains from doing, or Indian Limitation Act, 1963, provides a period beyond which a debt
promises to do or to abstain from doing, something, such act or cannot be recovered by legal action. However, if the debtor voluntarily
abstinence or promise is called a consideration for the promise." promises to pay this debt after the limitation period has passed, it
becomes enforceable as a valid contract, even without consideration.

In simpler terms, consideration refers to what each party gives or

promises to give in exchange for the other party’s promise. It is the Example:
price for the promise made by the other party. If a person owes ₹50,000, and the debt has expired under the
Limitation Act, but the debtor still promises to pay the debt, that
promise becomes enforceable despite the lack of fresh consideration.
Importance of Consideration in a Valid Contract:
4. Contract of Agency (Section 185):
1. Binds the Parties Legally:
Consideration is essential to make the contract enforceable
In a contract of agency, a principal may authorize an agent to act on
in a court of law. Without consideration, there is no legal
their behalf, and the principal’s promise to pay the agent does not
obligation for either party to perform their promise, making
require consideration to be valid. In this case, the agent is entitled to
the agreement merely a "gratuitous promise" (a promise
compensation for their work even if no formal consideration is
made without any consideration) and not legally binding.
exchanged.
2. Reflects Mutual Benefit:
The presence of consideration ensures that both parties are
exchanging something of value, creating a mutual benefit Example:
and a balance in the agreement. This mutual exchange If a person hires an agent to manage their business, and the agent
ensures that there is fairness and accountability on both performs the work, the agent's entitlement to commission or
sides. compensation does not require fresh consideration beyond the original
3. Prevents Unilateral Promises: agreement.
Consideration helps avoid unilateral promises that one
party might make without any expectation of return. For 5. Contracts Made by a Minor’s Guardian (Section 11 and
example, a promise to give a gift without receiving
Section 25(5)):
anything in return would be unenforceable under the Indian
Contract Act because there is no consideration.
4. Avoids Capricious Agreements: Though a minor cannot contract by themselves, an agreement made by
The need for consideration prevents casual or capricious a guardian on behalf of a minor can be valid without consideration, as
promises from becoming enforceable. This is to ensure that long as it benefits the minor. This exception ensures that minors are
the promise is made with a serious intent to bind both protected while still allowing them to enter into beneficial agreements.
parties to perform an act or refrain from an act. Conclusion:
Exceptions: Circumstances Where Consideration is Not Necessary
In conclusion, consideration is indeed a vital element in forming a
(under the Indian Contract Act):
valid contract as it ensures the agreement is enforceable, binding, and
reflects the mutual intent of the parties involved. However, there are
While consideration is generally necessary for a valid contract, there exceptions under the Indian Contract Act, 1872, where a contract
are some situations where a contract can still be enforceable without may still be valid without consideration. These exceptions include:
consideration. These exceptions are outlined in Section 25 of the
Indian Contract Act, 1872.
1. Contracts in writing and registered, such as gifts.
1. A Contract Made Without Consideration but in Writing and 2. Contracts made out of natural love and affection
Registered (Section 25(1)): (between family members).
3. Promises to pay time-barred debts.
4. Contracts of agency, and
If a contract is made without consideration but is written and 5. Agreements made by a minor’s guardian that benefit the
registered under the Indian Registration Act, 1908, it can still be valid. minor.
In other words, a gift or an agreement to make a gift can be enforced
even without consideration, provided it is in writing and registered.
In these cases, the contract is enforceable even without the requirement
of fresh consideration, acknowledging the various social and legal
Example:
contexts where consideration may not be required.
If a person gifts a property to another person, the gift is enforceable
even without consideration, provided the agreement is in writing and
registered. Q3. The doctrine of English law relating to frustration of contract has
no application to india in view of the statutory provision contained in
2. Natural Love and Affection (Section 25(2)): section 56 of the contract act 1872 .

Under Section 25(2), a promise made without consideration is valid if Answer The doctrine of frustration in English law and the statutory
it is made out of natural love and affection between the parties. provision contained in Section 56 of the Indian Contract Act, 1872
However, this promise must be: address similar issues, but they do so in different ways. To understand
this statement, let's examine both concepts and how they relate to each
other in the context of Indian contract law.
 Made in writing,
 Registered under the Indian Registration Act, Doctrine of Frustration in English Law
 Between parties who are in a close relationship (such as
between parent and child, husband and wife, or siblings).
In English law, the doctrine of frustration arises when an unforeseen 1. Void vs. Discharged:
event occurs that makes the performance of a contract impossible, or o Under English law, frustration leads to
radically different from what was initially agreed upon. Frustration discharge of the contract. The parties are
discharges the parties from their obligations under the contract, and released from their obligations, but the
neither party can sue for non-performance. contract is not considered void.
o Under Section 56 of the Indian Contract Act,
The classic example in English law is Krell v. Henry (1903), where a the contract becomes void due to
man rented a room to watch a royal procession, but the procession was impossibility or illegality. There is no question
canceled due to illness of the king. The court held that the contract was of the contract being discharged; it is
frustrated, as the event had become impossible to perform, and the considered void from the outset or when the
purpose of the contract was defeated. event happens.
2. Wider Application of Impossibility:
In English law, frustration typically results from: o The English doctrine of frustration allows for
more flexibility and broader application. It is
often based on a radical change in
1. Impossibility of performance: When an event occurs that circumstances, even if performance is not
makes the performance of the contract physically or physically impossible, but very different from
legally impossible (e.g., destruction of subject matter). what was intended.
2. Radical change in circumstances: When the circumstances
o Section 56 of the Indian Contract Act focuses
of the contract change so drastically that performing it
more on literal impossibility or illegality. It
would be fundamentally different from what the parties
doesn’t explicitly cover situations where the
had originally agreed to.
contract’s purpose is radically altered due to
unforeseen events, unlike the English law.
Frustration in English law allows for the termination of the contract, 3. No Reference to Radical Change of Circumstances:
and in most cases, the loss is borne by the parties based on their own o The English law allows frustration if the
agreement (such as the allocation of the risk of frustration in the purpose of the contract is frustrated, even if
contract). the performance is still possible in a literal
Section 56 of the Indian Contract Act, 1872 sense (e.g., Krell v. Henry).
o Section 56 does not contain any provision
Section 56 of the Indian Contract Act, 1872 deals with frustration of regarding the frustration of purpose. It only
contract in a way that is somewhat similar to the English doctrine but covers cases where the contract becomes
is more prescriptive. Section 56 can be broadly divided into two parts: impossible to perform or is rendered illegal.
4. Restitution:
o In English law, upon frustration, the parties
1. Impossibility of performance. are typically restored to their original position
2. Performance becomes illegal or unlawful. through the doctrine of restitution.
o In Indian law, Section 56 does not specifically
Section 56 of the Indian Contract Act, 1872 reads:
provide for restitution, but the general
principle of quantum meruit (payment for the
“An agreement to do an act impossible in itself is void. A contract to value of work done) may apply in some
do an act which, after the contract is made, becomes impossible, or, by situations.
reason of some event which the promisor could not prevent, unlawful, Conclusion:
becomes void when the act becomes impossible or unlawful.”

The statement that "the doctrine of English law relating to frustration

This provision, unlike the English law's doctrine of frustration, has of contract has no application to India in view of the statutory
specific language that: provision contained in Section 56 of the Contract Act, 1872" is correct,
and here's why:

 Declares contracts to do an impossible act as void from

the beginning (i.e., void ab initio).  In Indian law, Section 56 provides a statutory
 Contracts that become impossible or unlawful after framework for dealing with frustration through the
being made are void from the time the impossibility or concepts of impossibility and illegality, making it a more
rigid and specific provision compared to the flexible
unlawfulness arises.
doctrine of frustration in English law.
 English law's doctrine of frustration is broader and more
Key Features of Section 56: flexible, allowing for the termination of contracts based on
a radical change in circumstances or a change in the
1. Impossibility: If an act becomes impossible to perform purpose of the contract, even if the performance is still
due to unforeseen circumstances, the contract becomes possible. Indian law, however, primarily focuses on
void. For example, if a party undertakes to deliver goods impossibility and illegality and declares such contracts
that are destroyed in a fire, the contract is void due to void.
impossibility of performance.
2. Illegality: If an act becomes illegal after the contract is In short, while both English law and Indian law recognize the concept
made (e.g., government regulations change and make the of frustration, the specific statutory provisions under Section 56 of the
subject of the contract unlawful), the contract becomes Indian Contract Act provide a distinct and self-contained approach
void. that overrides the need for the English law's general frustration
3. No Need for Frustration Doctrine: Unlike the English doctrine .
law's general doctrine of frustration, where parties may be
discharged from performance due to the change in
circumstances, Section 56 deals with contracts that are Q4.When is a contract said to be induced by undue –influence ?
void rather than merely discharged. As a result, the rights
and obligations of the parties do not continue once the
Ans Under the Indian Contract Act, 1872, a contract is said to be
contract becomes void due to impossibility or illegality.
induced by undue influence when one of the parties to the contract is
Key Differences Between English Law and Indian Law (Section 56)
able to dominate the will of the other party and use that power to obtain
an unfair advantage in the agreement. This is governed by Section 16
of the Indian Contract Act, which provides the definition and criteria 3. Guardian and ward
for undue influence. 4. Employer and employee
5. Debtor and creditor
Section 16 of the Indian Contract Act, 1872:
In these relationships, the law assumes that the person in a position of
power might influence the other party unfairly, and thus, the contract
The section states that a contract is induced by undue influence when: could be considered induced by undue influence unless proven
otherwise.
“A contract is said to be induced by undue influence where the
relations subsisting between the parties are such that one of the parties When is a Contract Not Induced by Undue Influence?
is in a position to dominate the will of the other and uses that position
to obtain an unfair advantage over the other.”
While undue influence can lead to a voidable contract, not every
relationship where one party is in a dominant position results in undue
This means that undue influence occurs when one party exploits their influence. Some scenarios do not qualify as undue influence, such as:
power over the other to influence their decision in the contract, thus
making it unfair or one-sided.
1. Free Consent:
If the party in the weaker position consents freely and
Elements of Undue Influence voluntarily to the terms, even if there is an element of trust
or dependency, then the contract may not be voidable on
1. Relationship Between the Parties: grounds of undue influence.
o For undue influence to be established, there 2. Absence of Unfair Advantage:
must be a relationship between the parties in If the dominant party is not using their position to take an
which one party has the ability to dominate unfair advantage or if the terms are fair and reasonable, the
the will of the other. contract will not be deemed induced by undue influence.
3. Independent Advice:
o The relationship may arise from trust, If the weaker party had the opportunity to seek independent
confidence, or dependency, such as
advice before entering into the contract, undue influence
relationships between:
may not be presumed. This helps to show that the weaker
 Parent and child party made an informed and voluntary decision.
 Guardian and ward Legal Consequences of Undue Influence
 Doctor and patient
 Husband and wife  Voidability of the Contract:
 Master and servant A contract induced by undue influence is voidable at the
 Debtor and creditor discretion of the party who has been subjected to undue
2. Ability to Dominate the Will: influence. The party who was influenced may choose to
o One party must be in a position where they can either affirm or rescind the contract. If the influenced
exercise control over the other party’s party chooses to rescind, they must do so within a
decision-making. This could involve physical, reasonable time.
mental, or emotional pressure, manipulation, or  Restoration of Position:
exploitation. When a contract is rescinded due to undue influence, the
3. Use of Position to Obtain Unfair Advantage: parties must be restored to their original positions, if
o The party in a dominant position uses their possible. This means that the influenced party may seek to
power to obtain an unfair advantage over the recover any property or benefit transferred under the
other party in the contract. The contract must contract.
be such that it would not have been agreed to
under normal circumstances, had the dominant
 Burden of Proof:
The burden of proving that the contract was induced by
party not exploited their position.
undue influence lies with the party alleging it. However,
4. Unfair Terms:
once the presumption of undue influence is raised
o The contract resulting from undue influence (especially in relationships listed under Section 16(2)), the
often involves terms that are unreasonable, burden shifts to the dominant party to prove that the
oppressive, or heavily favor the dominant contract was not induced by undue influence.
party. It may place the weaker party in an Conclusion
unjust or unfavorable position.

In summary, undue influence under the Indian Contract Act, 1872

Examples of Undue Influence: refers to situations where one party uses their position of power or trust
to dominate the will of the other party and gain an unfair advantage.
This leads to a contract that is voidable at the discretion of the
 Example 1: A father who is in a financially dominant influenced party. Section 16 of the Indian Contract Act defines undue
position may force his adult child to sign over a piece of influence, outlines the relationships where it is presumed to exist, and
valuable property at a much lower price than its market provides remedies for the affected party, allowing them to rescind the
value. contract if it was induced by undue influence.
 Example 2: A doctor convinces a patient to sign a contract
to sell their property at an undervalued price, using their
trust and dependence on the doctor’s advice. Q5.What essentials are to be proved and to whom if a contract is
sought to be avoided on the ground of undue influence ?

Presumption of Undue Influence:

Ans In order to avoid a contract on the ground of undue influence
under the Indian Contract Act, 1872, the party seeking to rescind
Section 16(2) of the Indian Contract Act lays down a presumption that (cancel) the contract must prove certain essential elements to the
can help identify undue influence. It provides a list of relationships satisfaction of the court. If a contract is sought to be avoided on the
where undue influence is presumed to exist, unless the contrary is grounds of undue influence, the burden of proof lies with the party
proven. These relationships include: alleging undue influence (i.e., the party seeking to rescind the
contract). Below are the key essentials that need to be established:
1. Parent and child
2. Husband and wife Essentials to Prove Undue Influence:
 1. Existence of a Relationship of Trust and Confidence: by the parent, unless the parent can prove otherwise, such
o The party alleging undue influence must show as by showing that the child freely agreed to the terms
that there was a relationship of trust and without being overborne.
confidence between the parties involved in the To Whom the Proof Must Be Presented:
contract.
o This can include relationships like parent and The party alleging undue influence must prove the essentials of the
child, guardian and ward, doctor and claim before a court of law. The court will examine the following:
patient, husband and wife, employer and
employee, etc.
o The relationship must be such that one party 1. Evidence of the Relationship:
has the ability to dominate the will of the Proof of the relationship of trust and confidence between
other party. the parties, such as personal or professional ties, prior
2. Domination of Will: history of dependency, or influence, should be presented.
o The party seeking to rescind the contract must For example, showing that one party was the guardian of
prove that the person in a dominant position the other party, or that a debtor was under the financial
had the ability to dominate the will of the control of a creditor.
other. 2. Evidence of Domination of Will:
Evidence that one party had the power to dominate the will
o This could involve manipulation, pressure, or of the other should be demonstrated. This can be shown
exploitation of the trust and confidence that
through testimony, documents, or other circumstantial
exists between the parties.
evidence that indicates undue influence was exerted.
3. Unfair Advantage:
3. Evidence of Unfair Advantage:
o The party alleging undue influence must show The court will look for evidence that the terms of the
that the dominant party used their position to contract were unreasonably favorable to the dominant
obtain an unfair advantage in the contract. party. This can be shown through documents, testimonies,
o This means that the terms of the contract were or expert evidence indicating that the weaker party was
unreasonably favorable to the dominant party, unduly pressured into agreeing to the terms.
and would not have been agreed to by the 4. Restoration or Attempt to Restore Benefits:
influenced party in the absence of undue The court will expect the party seeking rescission to restore
influence. or offer to restore any benefit that they may have received
4. Circumstances of Pressure or Manipulation: under the contract. If the party seeking rescission has
o The party must demonstrate that the weaker already enjoyed the benefit, they must be willing to return
party was pressured, manipulated, or it as far as possible.
otherwise coerced into agreeing to the terms of Legal Consequences if Undue Influence is Proven:
the contract.
o This can include situations where the If the court is convinced that undue influence was used to induce the
influenced party was not fully aware of the
contract, the following consequences can arise:
consequences of their actions, or their will was
overborne by the dominant party.
5. Voidable Nature of the Contract: 1. Rescission of the Contract:
o The party seeking to rescind the contract must The contract can be rescinded (cancelled) by the party
show that the contract was voidable and that whose consent was obtained through undue influence. The
they have exercised their right to rescind it party alleging undue influence may ask the court to set
within a reasonable time. aside the contract.
o They must also be willing to restore any 2. Restoration of Position:
benefits or property transferred under the Upon rescinding the contract, both parties may be required
contract to the other party, if possible, in to restore the benefits that they have received from the
accordance with the principle of restitution. contract. This follows the principle of restitution, aiming
Burden of Proof: to put the parties back in the position they were in before
the contract was made.
3. Damages or Compensation:
 Burden on the Alleging Party: In some cases, the party alleging undue influence may be
The burden of proof lies on the party alleging undue entitled to damages or compensation for any loss suffered
influence to establish the essential elements listed above. due to the contract, depending on the facts of the case and
The party claiming that the contract is induced by undue the terms of the contract.
influence must show that the will of the other party was Conclusion:
overborne due to the influence of the dominating party.
 Shifting of Burden in Certain Relationships: To avoid a contract on the ground of undue influence under the
Section 16(2) of the Indian Contract Act provides a Indian Contract Act, 1872, the party seeking to rescind the contract
presumption of undue influence in certain relationships must prove the following essentials:
of trust and confidence, unless proven otherwise. These
relationships include:
o Parent and child, 1. Existence of a relationship of trust and confidence.
2. Domination of will by one party over the other.
o Guardian and ward, 3. Unfair advantage gained by the dominant party.
o Doctor and patient, 4. Circumstances where the weaker party’s consent was
o Husband and wife, obtained through pressure or manipulation.
o Master and servant, and
o Debtor and creditor. The burden of proof lies on the party alleging undue influence, and in
certain relationships, the burden may shift to the dominant party to
In such cases, once the relationship is established, the prove that the contract was not induced by undue influence. The
burden of proof shifts to the dominant party (the party evidence must be presented to the court of law, and if undue influence
accused of using undue influence) to show that the contract is proven, the contract may be rescinded, and the parties may be
was not induced by undue influence. required to restore any benefits received under the contract.

Example: Q6. State the features with which the free consent is vitiated .
In a contract between a parent and child, the law
presumes that undue influence might have been exercised
Ans Under the Indian Contract Act, 1872, the concept of free  Promising something with no
consent is a fundamental element for the formation of a valid contract. intention of performing it.
If consent is not freely given, the contract may be voidable at the o Effect on Consent: Consent obtained by fraud
option of the party whose consent was not free. The Act identifies is not free and makes the contract voidable at
specific circumstances under which free consent can be vitiated the option of the deceived party.
(impaired or invalidated). These are known as vitiating factors, which
include:
o Section Reference: Section 17 of the Indian
Contract Act defines fraud.

Features That Vitiate Free Consent Under the Indian Contract Act,
Example: If a seller (A) knowingly sells a defective car to
1872
a buyer (B), claiming it is in good condition, B’s consent is
vitiated by fraud and the contract can be voided.
1. Coercion (Section 15)
o Definition: Coercion is the use of physical 4. Misrepresentation (Section 18)
force, threats, or intimidation to compel
someone to enter into a contract against their
o Definition: Misrepresentation occurs when one
party makes a false statement or representation
will. It involves unlawful pressure or threats
regarding a material fact with no intent to
that make the party feel that they have no
deceive but which is incorrect or incomplete.
choice but to agree to the terms of the contract.
Misrepresentation can also occur if the
o Examples of Coercion: Threatening to harm information provided is not fully accurate or
someone's body or property, or threatening to complete, even though the intention may not
accuse someone of a crime to force them into be to deceive.
signing a contract.
o Types of Misrepresentation:
o Effect on Consent: When a party's consent is
obtained by coercion, the contract is voidable  Providing false information with
at the option of the party whose consent was honest intent but without verifying
coerced. its truth.
o Section Reference: Section 15 of the Indian  Making statements that lead to an
Contract Act defines coercion. incorrect belief but without an
intention to deceive.
o Effect on Consent: A contract induced by
Example: If A threatens B to kill their family unless B misrepresentation is voidable at the option of
signs a contract, B's consent is not free and can be the party who was misled by the incorrect
invalidated due to coercion. representation.
o Section Reference: Section 18 of the Indian
2. Undue Influence (Section 16) Contract Act defines misrepresentation.
o Definition: Undue influence occurs when one
party uses their position of power or trust Example: If a seller (A) states that a painting is an original,
over another party to unfairly dominate their when in fact it is a copy, and the buyer (B) purchases it
will and obtain an advantage in the contract. under this false belief, B's consent is vitiated by
The relationship between the parties may misrepresentation.
involve trust, dependency, or influence, and the
stronger party exploits that position to induce
the weaker party to consent. 5. Mistake (Section 20, 21, 22)
o Key Features: o Definition: A mistake occurs when a party to
 One party must be in a position to the contract is under a false belief about a
dominate the will of the other. material fact, which leads them to consent to
the contract.
 The dominant party uses this o Types of Mistake:
position to gain an unfair
advantage.
 The weaker party's consent is 1. Mistake of Fact: This occurs when
obtained by exploiting the both parties are mistaken about a
relationship of trust and confidence. fact (e.g., the existence of the
o Effect on Consent: If a contract is induced by subject matter or the identity of the
undue influence, the contract is voidable at subject matter).
the option of the party who was under undue 2. Mistake of Law: This occurs when
influence. a party is mistaken about the law
o Section Reference: Section 16 of the Indian but the mistake is not excused
Contract Act defines undue influence. under the contract law.
o Effect on Consent: A contract made under a
mutual mistake of fact may be void or
Example: A guardian (A) persuades their ward (B) to sign voidable. A mistake of law does not usually
a contract that benefits A, and B, under the guardian’s vitiate consent unless it leads to the ignorance
influence, agrees to it. B’s consent is not free due to the of an important legal consequence.
undue influence of A. o Section Reference: Sections 20, 21, and 22 of
the Indian Contract Act deal with mistakes.
3. Fraud (Section 17)
o Definition: Fraud involves intentionally Example: If both parties enter into a contract believing that
misleading or deceiving another party by a certain property exists, but it turns out the property does
making false representations or concealing not exist, the contract may be voidable due to a mutual
material facts to induce them to enter into a mistake of fact.
contract. Summary of Features That Vitiate Free Consent
o Types of Fraud:
 False statements made with the 1. Coercion (Section 15) – Consent obtained by threats or
intent to deceive. force.
 Active concealment of material 2. Undue Influence (Section 16) – Consent obtained by
facts. exploiting a relationship of trust or dominance.
 3. Fraud (Section 17) – Consent obtained by deceit or false clause is valid because it protects the buyer’s
representations. interests.
4. Misrepresentation (Section 18) – Consent obtained by 2. Employment Contracts: An employee may be restricted
providing false information, though not necessarily with an from starting a competing business or working with a
intent to deceive. competitor for a limited period after the termination of
5. Mistake (Sections 20, 21, 22) – Consent obtained when employment, provided the restraint is reasonable.
both parties are mistaken about a material fact or law. o Example: A company may include a non-
compete clause in an employment agreement,
Conclusion but it must be reasonable in terms of time and
geography. A restraint lasting for an
unreasonable time or over a broad
For a contract to be valid under the Indian Contract Act, 1872, free geographical area would not be enforceable.
consent is essential. If the consent of a party is obtained through
coercion, undue influence, fraud, misrepresentation, or mistake,
Example of Invalid Restraint:
the contract becomes voidable at the discretion of the aggrieved party.
These vitiating factors protect parties from being unfairly bound to
agreements they did not freely consent to, ensuring fairness and justice
in contractual relationships.  If an individual (A) enters into an agreement not to work
in any industry or trade anywhere in the country for the
rest of their life, such a restraint would be considered
Q.7 Write a note on agreement in restraint of trade and those opposed unreasonable and hence void under Section 27.
to public police . 2. Agreements Opposed to Public Policy

Ans Agreement in Restraint of Trade and Those Opposed to

The Indian Contract Act does not explicitly define what constitutes
Public Policy Under the Indian Contract Act, 1872
an agreement opposed to public policy. However, the courts have
recognized that agreements that are harmful to the public good or
The Indian Contract Act, 1872 governs contracts in India and lays violate established moral principles will be considered void.
down various provisions to ensure that contracts are made in a fair and
just manner. One of the key concepts under the Act is the What is Public Policy?
enforceability of agreements in restraint of trade and those that are
considered to be against public policy.
Public policy refers to the interests of the public and the welfare of
society as a whole. The courts consider an agreement as opposed to
1. Agreement in Restraint of Trade (Section 27) public policy if it goes against morals, justice, or public convenience.

Definition: Types of Agreements Opposed to Public Policy:

Section 27 of the Indian Contract Act, 1872 deals with agreements 1. Agreements to Commit an Illegal Act:
in restraint of trade, stating that any contract which restricts a person o Any agreement that promotes or involves an
from carrying on a lawful profession, trade, or business is void to the
illegal activity, such as a contract for
extent that it imposes a restraint on trade.
committing a crime, is void because it is
against public policy.
Key Features of Section 27:
o Example: An agreement to bribe a
government official or to smuggle goods
 General Rule: Any agreement that restrains a person from would be void.
exercising their right to practice a lawful trade or 2. Agreements Restraining Marriage:
profession is void and unenforceable under the Act. o A contract that restrains an individual from
getting married or places unreasonable
 Exception: The law allows certain exceptions where such conditions on marriage is opposed to public
restraints may be deemed valid if they are reasonable and policy.
necessary for the protection of legitimate interests.
However, these exceptions are rare.
o Example: An agreement where one party
agrees not to marry without the permission of
the other party (except in specific cases like
Why is it Void? prenuptial agreements) is considered void.
3. Agreements in Restraint of Legal Proceedings:
The rationale behind declaring such agreements void is that freedom o An agreement that seeks to restrain a person
to carry on business is a fundamental right in India, and any from initiating legal proceedings in any future
restriction on such freedom is seen as harmful to economic activity and situation is against public policy and is
public welfare. Restraints on trade can have a negative impact on therefore void.
competition, individual liberty, and the ability to innovate. o Example: A contract that prevents someone
from suing for damages in case of personal
Exceptions to the Rule: injury is void.
4. Agreements to Defraud the Revenue:
While agreements in restraint of trade are generally void, the law o Any agreement aimed at defrauding the
recognizes exceptions where restraints may be reasonable: government or avoiding the payment of taxes
or dues is illegal and opposed to public policy.
o Example: An agreement to under-report the
1. Sale of Business: When a person sells their business, they price of goods to evade taxes is void.
can agree not to compete with the buyer in the same 5. Agreements to Promote Corruption:
business within a reasonable geographical area and for a
reasonable period.
o Contracts that facilitate or encourage
corruption or the abuse of authority are void
o Example: If a person (A) sells their business to as they are opposed to public policy.
another (B), A may agree not to start a
competing business within a particular city for o Example: An agreement to give or receive a
a period of five years after the sale. Such a bribe for securing a government contract.
 6. Agreements in Restraint of Trade, Except in Certain actions like providing false information, making conditions
Cases: impossible, or failure to cooperate.
o As discussed above, agreements that restrict Legal Consequences of Breach of Contract
individuals from pursuing their trade or
profession are void unless they fall under the
When a breach occurs, the affected party has several legal remedies
recognized exceptions.
available under the Indian Contract Act. These remedies are designed
7. Agreements to Kill or Injure Someone:
to compensate the injured party for the non-performance of the
o Agreements to cause harm or injury to contract or allow them to enforce the contract.
another person are void as they go against the
public interest and violate moral principles.
o Example: A contract where one party agrees The primary remedies available in the event of a breach of contract are:
to harm another for money is clearly void and
opposed to public policy. 1. Damages: Monetary compensation for the loss caused by
Case Laws Illustrating Agreements Opposed to Public Policy the breach.
2. Specific Performance: An order by the court to compel
the breaching party to perform their contractual
1. Balmohan Vithal Das vs. The Secretary, State of
obligations.
Bombay (1952):
3. Injunction: An order to prevent a party from doing
o The Bombay High Court held that a contract something that breaches the contract.
involving the payment of money to avoid
4. Rescission: The cancellation of the contract, releasing
government regulations or obligations, like
both parties from further obligations.
defrauding the government, is void because it
5. Quantum Meruit: Payment for work done, in cases where
goes against public policy.
the contract cannot be performed as originally agreed.
2. Tata Engineering & Locomotive Co. Ltd. v. State of
Can a Party Insist on Performance of the Contract?
Bihar (1964):
o The Supreme Court of India ruled that any
agreement made with the intention to Yes, a party to the contract can insist on the performance of the
defraud public revenue, such as avoiding taxes, contract under certain circumstances. This is primarily governed by
is opposed to public policy and, therefore, Section 10 (which defines what constitutes a valid contract) and
unenforceable. Section 14 and 15 of the Indian Contract Act, 1872.

Specific Performance (Section 10, 14, and 15 of the Indian

Contract Act)
Conclusion

1. Section 10 - What Constitutes a Valid Contract:

The Indian Contract Act, 1872, seeks to ensure that contracts made in
India are valid and enforceable, but it also imposes restrictions on o A contract must be lawful and executed in
certain types of agreements that could harm public welfare, individual good faith by both parties. If one party
liberty, or fairness. Agreements in restraint of trade are generally breaches the contract, the aggrieved party can
void unless they meet certain criteria for reasonableness, and demand specific performance or damages
agreements opposed to public policy are void if they are detrimental depending on the nature of the breach.
to the public interest or violate accepted moral or legal standards. 2. Section 14 - Contract for Specific Performance:
These provisions aim to protect individuals and society from unfair, o In specific performance, the court orders the
harmful, or illegal contractual arrangements. party to carry out the contract in accordance
with its terms. For example, if Party A fails to
deliver goods as agreed, Party B can request
Q8.Explain breach of contract .can a party to the contract insist on
the court to compel Party A to deliver the
performance of contract , if yes under which law ?
goods.
o However, specific performance is generally not
Ans Breach of Contract Under the Indian Contract Act, 1872 granted if:
 The contract involves the
A breach of contract occurs when one of the parties fails to perform performance of something that
their obligations as stipulated in the agreement without a lawful excuse. cannot be performed specifically.
Under the Indian Contract Act, 1872, a breach can happen in various  The performance is impossible.
ways, including non-performance, failure to meet agreed terms, or  The terms of the contract are not
refusal to perform the contract. clear or enforceable.
 The aggrieved party has acted in
Types of Breach of Contract bad faith, or is responsible for the
delay in performance.
3. Section 15 - When Performance of a Contract Can Be
1. Actual Breach:
Insisted Upon:
This occurs when a party fails to perform their
obligations at the time when performance is due. For o Section 15 allows a party to insist on the
example, if Party A agrees to deliver goods to Party B on a performance of a contract only if the breach is
particular date but fails to do so, that would constitute an not fundamental or does not go to the root of
actual breach. the contract. If the breach goes to the root of
2. Anticipatory Breach: the contract (for example, if the subject matter
An anticipatory breach happens when one party declares of the contract is destroyed), performance
their intention not to perform the contract before the cannot be insisted upon.
time of performance has arrived. For example, if Party A o If the breach is minor or does not affect the
informs Party B in advance that they will not be able to entire purpose of the contract, the aggrieved
deliver the goods on the agreed date, it amounts to party may demand performance or claim
anticipatory breach. damages.
3. Constructive Breach:
This occurs when a party does not directly refuse to
perform but makes performance impossible, or prevents
the other party from performing. This can include
Conditions for Enforcing Specific Performance: Objective of Damages

 Contracts for Personal Services: The court generally does The main objective of awarding damages is to place the injured party
not enforce contracts for personal services (e.g., an in the position they would have been in if the contract had been
properly performed. Damages are intended to be a compensatory
employment contract), as it cannot compel a person to
remedy, not a punitive one. The key principle behind awarding
work against their will.
damages is to make the injured party whole, meaning they should be
 Sale of Unique Goods: Specific performance is often compensated for their actual loss or the loss they have suffered due to
available for contracts involving the sale of unique or rare the breach.
items, such as real estate, antiques, or custom-made
goods.
Types of Damages
 Inadequate Remedy at Law: The aggrieved party may also
demand specific performance if damages are not an
adequate remedy, i.e., when the aggrieved party cannot Under the Indian Contract Act, 1872, damages can be classified into
different categories:
be compensated with money alone.

Example: 1. General Damages (Actual Damages):

o These are damages that are awarded for the
actual loss suffered due to the breach of
 If Party A sells a rare painting to Party B and later refuses contract. It refers to the loss that naturally
to deliver it, Party B can insist on specific performance of flows from the breach.
the contract and demand that Party A deliver the painting o Example: If a supplier fails to deliver goods on
as promised. time, the buyer may be awarded general
When Can a Party Not Insist on Performance? damages for the cost of purchasing goods
elsewhere to fulfill the business needs.
2. Special Damages (Consequential Damages):
There are certain situations where specific performance may not be
available or enforceable: o Special damages are awarded for losses that
are not the natural result of the breach but are
a consequence of special circumstances
1. Impossibility of Performance: If the contract involves known to both parties at the time of contract
performance that is impossible (such as the destruction of formation.
the subject matter of the contract or change in law), the
performance cannot be insisted upon.
o These damages are awarded to cover losses
that the parties could reasonably have
o Example: If Party A agrees to deliver a specific foreseen at the time the contract was made.
book, but the book is destroyed in a fire, the
contract is void, and Party B cannot insist on
o Example: If a contractor fails to deliver a
building on time, and the employer has to pay
performance.
penalty charges due to the delay, these
2. Delay in Performance: If the aggrieved party has acted
in delay or has waived the breach, the right to insist on penalty charges can be considered special
performance may be lost. The aggrieved party must show damages.
that they have not accepted the breach or delayed in taking 3. Nominal Damages:
action. o These are small amounts awarded when there
3. Contracts for Personal Services: As mentioned, has been a breach of contract, but the
contracts for personal services (such as an employment aggrieved party has not suffered any actual
contract) generally cannot be enforced through specific loss. The court may award nominal damages
performance. to acknowledge that a legal wrong was
4. Inadequate Remedy at Law: If the aggrieved party can committed.
be adequately compensated with damages (for example, o Example: A trivial breach with no tangible loss
in a typical goods sale contract), insisting on performance may lead to the award of nominal damages
may not be necessary.
(like Rs. 1 or Rs. 10).
Conclusion
4. Exemplary or Punitive Damages:
o Indian contract law does not generally allow
In case of a breach of contract, a party to the contract can demand punitive damages, as the aim of awarding
performance under certain circumstances, primarily through the damages is to compensate the party rather
remedy of specific performance as outlined in Sections 14 and 15 of than punish the breaching party. However, in
the Indian Contract Act, 1872. However, specific performance is some cases, courts may award exemplary
subject to the conditions that the contract involves something unique damages in contracts related to fraud or torts.
or irreplaceable, that the breach is not fundamental, and that the o Example: In cases of fraudulent
aggrieved party has not delayed or waived their rights. In cases where misrepresentation, the court may award
specific performance is not possible, the aggrieved party can generally
exemplary damages to deter such conduct.
seek damages or other remedies available under the law.
5. Liquidated Damages:
o Liquidated damages are pre-determined
Q9.Critically examine the law of damages state the principle of amounts agreed upon by both parties in the
mitigation of damages. contract, to be paid in case of breach. These
damages are enforceable if they are
Ans. The Law of Damages Under the Indian Contract Act, 1872 reasonable and not in the nature of a penalty.
o Section 74 of the Indian Contract Act, 1872
deals with liquidated damages and their
The law of damages deals with the compensation provided to an enforceability. If the sum specified is excessive,
aggrieved party when there is a breach of contract. The Indian it may be treated as a penalty and not
Contract Act, 1872 provides a legal framework for claiming damages
enforceable.
when one party fails to fulfill its contractual obligations.
o Example: A contract between a supplier and
buyer may specify liquidated damages of Rs.
10,000 per day for late delivery of goods.
6. Punitive Damages:
 o While not traditionally a part of Indian from the breach or that the parties may have
contract law, punitive damages may be foreseen as a probable result of the breach.
awarded in special cases like fraud or tortious o However, if the injured party could have
behavior. In these cases, the amount of avoided the loss by taking reasonable steps,
damages is meant to deter the defendant then the loss is to be calculated after
from repeating the wrongful act. considering the steps the party could have
Principle of Mitigation of Damages taken to mitigate the damage.

The principle of mitigation of damages is an essential concept in Example: If a contract for the sale of goods is breached,
contract law. It essentially means that the party suffering from the and the seller refuses to deliver the goods, the buyer may
breach of contract has a duty to take reasonable steps to mitigate have to seek replacement goods. If the buyer chooses not
(reduce) their loss. The party suffering the breach cannot claim to take any action to mitigate the damage, the seller may
damages for losses they could have reasonably avoided by taking argue that they should not be liable for the entire cost of
appropriate actions. the breach.

This principle ensures fairness in the award of damages by preventing

the injured party from benefiting from their failure to minimize the Critical Examination of the Law of Damages
impact of the breach. It also prevents the aggrieved party from
claiming excessive damages when they could have done something to
reduce the damage or loss. The law of damages is designed to compensate the injured party for the
loss suffered due to the breach of contract. However, several criticisms
arise when applying the law:
Key Aspects of the Mitigation Principle:

1. Difficulty in Quantifying Loss: In some cases, it is

1. Duty to Mitigate: difficult to accurately quantify the loss suffered due to a
o The injured party must make reasonable breach. This is especially true in intangible losses such as
efforts to reduce the damage caused by the reputation damage or emotional distress, which are hard
breach. to measure.
o For example, if a seller fails to deliver goods on 2. Inconsistent Application: The application of the
time, the buyer must seek alternative sources mitigation principle can vary in different cases. Courts
of supply rather than wait indefinitely for the sometimes find it challenging to determine what constitutes
seller to fulfill the contract. reasonable steps in mitigating damage, and this can lead
2. Failure to Mitigate: to inconsistent outcomes.
3. Liquidated Damages vs. Penalty: The enforcement of
o If the party suffering the breach does not take liquidated damages can sometimes be problematic, as
reasonable steps to minimize their losses, parties may insert penalty clauses disguised as liquidated
they may not be able to claim full damages. damages. Indian courts may refuse to enforce liquidated
o For example, if a tenant breaks a lease damages that appear to be punitive in nature, but
agreement but the landlord does not try to determining the line between a penalty and genuine
find a new tenant, the landlord may not be liquidated damages can be subjective.
entitled to the full rent for the remaining lease 4. Unforeseen Consequences: Sometimes, the foreseeability
period. of damages becomes an issue. What the parties
3. Reasonableness of Efforts: reasonably foresee at the time of contract formation may
o The steps taken to mitigate damages must be not always align with the actual loss caused by the breach,
reasonable and in line with the circumstances. leading to issues in calculating the damages.
If the injured party takes steps that are Conclusion
unreasonable or out of proportion to the
breach, they may not be entitled to The law of damages under the Indian Contract Act, 1872 is a key
compensation for those losses. mechanism for ensuring justice in cases of breach of contract. However,
o For example, if a person’s contract to supply while the law aims to compensate the injured party adequately, it
goods is breached and they go to great lengths also incorporates the principle of mitigation to prevent unjust
to buy replacement goods at an unreasonable enrichment. Both the aggrieved party and the breaching party have
price, they may not recover the full cost from their roles in ensuring fairness in the enforcement of damages, and
the breaching party. courts aim to ensure that damages are reasonable and aligned with the
4. No Obligation to Take Extreme Measures: nature of the breach. However, difficulties arise in quantifying and
o The injured party is not required to take interpreting the loss, and the application of the principle of mitigation
may not always be clear-cut, leading to inconsistencies in judgment.
actions that would be unreasonably
expensive or difficult. For example, a buyer is
not obligated to purchase goods from an Q10.What is meant by anticipatory breach ? What are the
extremely distant seller at a higher price just consequences of breach of contract ? what are the rules to be followed
to mitigate their losses if it’s not reasonable in claiming of damage for breach of contract in indian contract act
under the circumstances. 1872 .
Section 73 of the Indian Contract Act, 1872 and Mitigation of
Damages Ans Anticipatory Breach of Contract

Section 73 of the Indian Contract Act, 1872 lays down the rules for An anticipatory breach of contract occurs when one party indicates,
claiming damages and reflects the principle of mitigation: before the time for performance has arrived, that they will not fulfill
their obligations under the contract. It is a breach that happens before
the performance is due.
 Section 73: Compensation for Loss or Damage Caused
by Breach of Contract:
This can happen in two primary ways:
o It provides that when a contract is broken, the
aggrieved party is entitled to compensation
for the loss or damage that naturally arises
 1. Express Anticipatory Breach: One party explicitly payment for the work or services they have
informs the other party that they will not perform the already performed under the contract.
contract when the time comes. o Example: If a contractor performs part of a
o Example: Party A agrees to deliver goods to contract, and the other party refuses to perform
Party B on a specific date, but before the date, their part, the contractor can claim
Party A informs Party B that they will not be compensation for the work done under
able to deliver the goods. quantum meruit.
2. Implied Anticipatory Breach: One party’s actions or Rules for Claiming Damages for Breach of Contract Under the
behavior make it clear that they will not perform their part Indian Contract Act, 1872
of the contract when the time for performance arrives.
o Example: A supplier starts selling the goods Under Section 73 of the Indian Contract Act, 1872, damages for
promised to a different party or starts a
breach of contract are awarded based on the loss or damage directly
business venture that makes it impossible to
caused by the breach. However, there are specific rules and principles
fulfill the contract with the original party.
that must be followed when claiming damages for breach:

Consequences of Breach of Contract

1. Compensation for Loss or Damage:
o Section 73 provides that the aggrieved party
When a breach of contract occurs, it triggers certain legal can claim compensation for the loss or damage
consequences for the party who is in breach. These consequences are that naturally arises from the breach. However,
designed to compensate the aggrieved party and hold the breaching the loss must be the natural consequence of
party accountable. The consequences can include: the breach or must have been reasonably
foreseeable by both parties at the time of
entering the contract.
1. Damages: 2. Duty to Mitigate Loss:
o Damages are the primary remedy for breach of o The party claiming damages must take
contract. The aggrieved party can claim reasonable steps to mitigate the loss caused
compensation for any loss suffered due to the by the breach. The aggrieved party cannot
breach. The amount of damages awarded claim damages for losses that could have
depends on the nature of the breach, the extent been avoided with reasonable efforts.
of the loss, and the foreseeability of the
damage at the time of contract formation.
o Example: If a seller fails to deliver goods, the
buyer must make efforts to find a replacement,
o Types of Damages: and they cannot claim the full loss if they did
 General Damages: These are for not make reasonable efforts to reduce it.
losses directly resulting from the 3. Foreseeability of Loss:
breach. o Damages are awarded only for losses that were
 Special Damages: These cover foreseeable at the time the contract was made.
additional losses that were caused The principle of foreseeability means that the
by special circumstances known to damages must be those that both parties knew
both parties at the time the contract would result from the breach, or that a
was made. reasonable person in the position of the parties
 Nominal Damages: Awarded would have foreseen.
when the breach occurs but no o Example: If a contract specifies that delivery
actual damage or loss is suffered. must occur on a certain date, and the breach
 Liquidated Damages: Pre-agreed leads to the cancellation of a business deal,
upon damages in the contract in then loss of profits may be considered,
case of a breach. provided it was foreseeable at the time of
contracting.
 Punitive or Exemplary Damages: 4. Proof of Loss:
In cases of fraud or tort, these
damages may be awarded, though o The party claiming damages must provide
they are rare in Indian contract law. sufficient evidence of the loss suffered. If there
2. Specific Performance: is no actual loss, the court may award only
nominal damages.
o Specific performance is a remedy where the
court orders the breaching party to perform o The aggrieved party must demonstrate both
their contractual obligations as agreed. This is the existence and the amount of the loss.
generally awarded in cases where damages 5. Causation:
would not adequately compensate the o There must be a clear causal link between the
aggrieved party. breach of contract and the damage suffered. In
o Specific performance is usually sought for other words, the loss must have been caused
contracts involving unique goods, land, or directly by the breach. If the breach did not
intellectual property. directly lead to the loss, no damages can be
3. Injunction: claimed.
o An injunction may be sought to prevent the o Example: If a contractor fails to complete a
breaching party from performing an act that building on time, but the delay is caused by the
would breach the contract. This could involve buyer’s failure to provide essential materials on
restraining a party from taking an action that time, the contractor is not liable for damages.
violates the contract terms. 6. Liquidated Damages vs. Penalty:
4. Rescission of Contract: o Section 74 of the Indian Contract Act
o The aggrieved party can rescind the contract if specifically deals with liquidated damages
the breach is substantial or fundamental. and penalties. Liquidated damages are a pre-
Rescission means that both parties are released agreed amount in the contract to be paid in
from their contractual obligations, and the case of a breach. However, if the amount
contract is considered void from the beginning. specified is excessive or punitive in nature, the
5. Quantum Meruit: court may reduce it to a reasonable amount.
o In cases where the contract cannot be enforced o Example: A contract might specify Rs. 1,000
due to a breach, the injured party may be per day as liquidated damages for delayed
entitled to claim quantum meruit, meaning delivery. If the actual loss suffered is much
 lower than this, the court may reduce the The relevant sections of the Indian Contract Act (Sections 68 to 72)
amount to an appropriate level. dealing with quasi-contracts are:
Conclusion
1. Section 68: Claim for Necessaries Supplied to a Person
1. Anticipatory breach of contract allows the aggrieved Incompetent to Contract
party to treat the contract as being immediately broken, o This section provides that if necessaries (goods
even before the due date for performance arrives. This or services essential for daily living) are
right can be exercised by declaring the contract at an end or supplied to a person who is unable to contract
by claiming damages. (e.g., a minor or someone mentally
2. Consequences of breach may include the award of incompetent), the supplier is entitled to claim
damages, specific performance, rescission, or quantum
the value of those necessaries from the
meruit, depending on the nature and circumstances of the
person's property or from the person who is
breach.
3. When claiming damages for breach of contract under the legally responsible for them (such as a
Indian Contract Act, 1872, the party must adhere to certain guardian).
principles, such as mitigation of loss, foreseeability of the
damage, and proof of loss. Additionally, the rules Example: If a minor is supplied with food or medicine, the
governing liquidated damages and the distinction between supplier can claim payment from the minor's guardian.
penalties and reasonable pre-agreed amounts need to be
considered to ensure fair compensation.
2. Section 69: Reimbursement of Person Paying Money
Due by Another
These principles ensure that the legal remedy for breach of contract is
fair, just, and reasonable, protecting the rights of the aggrieved party
o If a person pays a debt or liability that belongs
to another person, they are entitled to be
while discouraging unfair or unnecessary claims.
reimbursed by the person for whom they
made the payment.
Q11.Define quasi contract ? Do you agree the general theory of quasi
_contractual liability that is no one can enrich at the expense of other ?
What are the legal provision in the indian contract act corresponds to Example: If a person pays the rent for a house on behalf of
English law in this regard ? another person, they are entitled to recover the rent from
the actual tenant.

Ans. Definition of Quasi Contract

3. Section 70: Obligation of a Person to Pay for Non-
Gratuitous Act
A quasi contract is a legal concept where an obligation or contract is o When one person does something for another
imposed by law, even in the absence of an agreement between the person without an agreement but with the
parties. It arises when there is no formal contract, but the law requires expectation of compensation, the person who
one party to compensate another party for an unfair benefit gained at benefits from that act must compensate the
their expense. In simple terms, a quasi contract is a situation where
other person.
the law imposes contractual obligations, even though no actual contract
exists between the parties.
Example: If a person repairs another person's car without
prior agreement, the owner must pay for the repair if it was
The Indian Contract Act, 1872, specifically deals with quasi-contracts
done in good faith with the expectation of compensation.
in Section 68 to Section 72, where the law creates a contract-like
relationship in the absence of an actual agreement, to prevent one party
from being unjustly enriched at the expense of another. 4. Section 71: Liability for Money Paid or Thing
Delivered by Mistake or Under Coercion
The General Theory of Quasi-Contractual Liability: "No One Can o If money or property is transferred under a
Enrich at the Expense of Another" mistake of fact or by coercion, the person
receiving it must return the money or property
to the person who made the payment or
The general theory behind quasi-contractual liability is that no one delivery.
should be allowed to unjustly enrich themselves at the expense of
another party. If a person benefits from the services, goods, or
resources of another without an agreement or contract, they should be Example: If someone mistakenly deposits money into the
required to compensate the other party to prevent unjust enrichment. wrong bank account, the bank holding the money must
return it.
This theory reflects the principle of justice and fairness in contractual
relationships, ensuring that no one should be allowed to receive an 5. Section 72: Liability for Benefiting from Another’s Act
advantage without paying for it, particularly when the other party has Without Consent
suffered a loss or provided a benefit in good faith. o If a person receives a benefit from the act of
another person, and the benefit was provided
Example: without their consent or any agreement, the
recipient must return the benefit or pay for it.
If Party A mistakenly sends goods to Party B, and Party B receives the
goods without intending to order them, Party B has been unjustly Example: If a person accidentally repairs someone else’s
enriched. In such cases, Party B must compensate Party A for the house and the other party enjoys the benefit of the repair,
goods received, even though there was no formal agreement between they must pay for the repairs.
them.

Legal Provisions in the Indian Contract Act Corresponding to English Law Correspondence
English Law

In English law, quasi-contracts are closely related to the concept of

The concept of quasi contracts in Indian Contract Act, 1872 is unjust enrichment and are primarily dealt with under the Law of
similar to the concept in English law, where the courts create an Restitution. The general idea is that no one should profit at the
obligation for fairness and to prevent unjust enrichment.
expense of another without compensation. This principle is reflected in Free consent refers to the voluntary agreement of a party to the terms
the following English legal concepts: of a contract without any form of coercion, undue influence, fraud,
misrepresentation, or mistake. It is a fundamental element for the
formation of a valid contract under the Indian Contract Act.
1. Unjust Enrichment:
o English law developed the principle that if one
party receives something of value (such as The essential elements of free consent are outlined in Section 14 of the
goods or services) at the expense of another Indian Contract Act:
party, and no contract exists, then the
receiving party must compensate the other
party for the benefit they have received.
 Coercion: Consent is not free if obtained by coercion
(threats or force).
2. Quantum Meruit:
o This is a concept similar to Section 70 of the  Undue Influence: Consent is not free if obtained through
Indian Contract Act, where a person can claim undue influence (a relationship where one party can
dominate the will of the other).
compensation for services rendered or work
done, even if no formal contract existed  Fraud: Consent is not free if obtained by fraudulent means.
between the parties, as long as the services  Misrepresentation: Consent is not free if based on false
were not gratuitous. statements made without intent to deceive.
3. Mistake and Coercion:  Mistake: Consent is not free if made under a mistake of
o English law also provides for restitution in fact or law (unless the mistake is mutual and pertains to the
cases where goods or money have been basic nature of the contract).
transferred by mistake or under coercion, akin
to Section 71 and 72 of the Indian Contract Act.
For a contract to be valid, free consent is required from all parties
involved.

Conclusion
Can a Minor Make a Contract?
Quasi contracts under the Indian Contract Act, 1872, are aimed at
preventing unjust enrichment and ensuring fairness between parties. A minor (a person below the age of 18) generally does not have the
They reflect the idea that one party should not benefit at the expense of capacity to contract. As per Section 11 of the Indian Contract Act,
another without compensating for the benefit received. The provisions contracts made by a minor are void ab initio (void from the beginning).
of the Indian Contract Act concerning quasi-contracts correspond This means that any agreement entered into by a minor is not legally
closely to English law principles, particularly in terms of unjust enforceable. However, there are a few exceptions and special
enrichment, restitution, and compensation for benefits conferred circumstances where contracts with a minor might be upheld under
without formal contracts. specific conditions, such as contracts for necessaries.

Thus, the general theory of "no one can enrich themselves at the 1. Void Contracts: As a general rule, contracts made by
expense of another" is well-supported by both the Indian Contract minors are void and unenforceable. This protects minors
Act and English common law, and it serves as an important tool for from being exploited in legal agreements.
promoting justice and equity in legal and contractual relations.

Example: If a 16-year-old signs a contract to buy a car, the

Q 12.What do you mean by capacity to contract and what is free contract will be void because the minor lacks the capacity
consent ? can a minor can make a contract ? if yes , give an answer to enter into such a contract.
with casa laws .

2. Contracts for Necessaries: A contract entered into by a

Ans. Capacity to Contract minor for the supply of necessaries (things essential for
daily life such as food, clothing, or medical care) can be
Capacity to contract refers to the ability of a person to enter into a enforced against the minor's estate (the minor's property).
legally binding agreement. Under the Indian Contract Act, 1872, for However, the minor cannot be personally held liable.
a contract to be valid, the parties involved must have the legal capacity
to contract. In other words, they must meet certain criteria that enable Example: If a minor buys food, clothes, or other basic
them to understand the nature and consequences of the contract they necessities, the supplier may be able to recover the cost
are entering into. from the minor's estate, but not from the minor personally.

According to Section 11 of the Indian Contract Act, the following

persons are capable of contracting: Case Laws on Minors and Contracts

1. Age of Majority: The person must have attained the age of 1. Nash v. Inman (1908) 2 K.B. 1 (English Case):
majority, i.e., 18 years of age or above, unless they are
married or in some other special condition under the law. o This case established that contracts for the
supply of necessaries to minors can be
The minor is considered to be of full age when they
enforced. However, in this case, the court
complete 18 years.
found that the clothes purchased by a minor
2. Sound Mind: The person must be of sound mind at the
were not necessaries and thus, the contract was
time of making the contract. A person who is unable to
void.
understand the nature of the contract due to mental illness,
2. Mohori Bibee v. Dharmodas Ghose (1903):
intoxication, or other reasons is not capable of contracting.
3. Not Disqualified by Law: The person must not be o In this landmark case, the Privy Council ruled
disqualified by any law from contracting. For example, an that a contract made by a minor is void ab
undischarged insolvent may not have the capacity to initio, even if the minor has been induced to
contract. enter into the contract through deceit or fraud.
In this case, the minor entered into a mortgage
contract, and the court ruled that it was not
enforceable.
Free Consent
 Facts of the Case: Dharmodas Ghose, a minor, executed a In certain circumstances, contracts under the Indian Contract Act,
mortgage deed for his property. The other party to the 1872 may not require performance, either due to their nature, mutual
contract knew he was a minor, but the contract was still agreement of the parties, or certain legal exceptions. These situations
executed. When the minor sought to avoid the contract, the are primarily governed by the principles of discharge of contracts.
court held that the contract was void and could not be Here are some common scenarios where a contract need not be
enforced, regardless of the other party's knowledge of the performed:
minor's age.
1. Discharge by Performance: If the contract is performed
Principle: This case reinforced the idea that a contract by both parties, the contract is considered discharged, and
entered into by a minor is void and cannot be ratified by no further performance is required.
the minor once they attain majority. 2. Discharge by Agreement: A contract may be discharged
by mutual consent between the parties. The parties can
agree to terminate the contract at any time, either through
3. Section 8 of the Indian Contract Act: express or implied agreement.
o Even though the Act considers the contract of a 3. Discharge by Impossibility (Frustration): Under Section
minor as void, it also states that when a minor 56 of the Indian Contract Act, if the performance of a
receives benefits from a contract, the contract contract becomes impossible due to unforeseen events (like
for necessaries may be enforced against the a natural disaster or change in law), the contract may be
minor's estate. considered void. This includes cases of frustration of
contract.
4. Discharge by Breach: If one of the parties breaches the
Exceptions to the General Rule (Minor’s Contracts) contract, the other party is relieved from performing their
obligations under the contract. This can lead to rescission
or termination of the contract.
Though minors generally cannot contract, there are exceptions to the 5. Discharge by Lapse of Time: Under Section 27 of the
general rule where a minor's agreement can be enforced: Indian Limitation Act, 1963, a contract may be discharged
if the time period for performing the contract has expired,
and no action has been taken by the parties to renew or
1. Contracts for Necessaries: As mentioned, a minor can extend it.
enter into contracts for the purchase of necessary goods
and services. Such contracts can be enforced against the
minor’s property, but not personally against the minor.
o Example: If a minor buys food, clothing, or Novation, Rescission, Alteration, and Remission of Performance
medical treatment, these contracts are
enforceable, and the minor's guardian or estate
will be responsible for payment. These terms refer to specific methods of altering or discharging a
2. Ratification after Majority: A minor’s contract cannot be contract. Let's explore each of them in the context of the Indian
ratified by them once they reach the age of majority. Thus, Contract Act, 1872.
no minor can later affirm an agreement made during
minority to make it legally binding once they attain
majority.
1. Novation of Contract
3. Contracts Benefiting a Minor: Contracts that benefit a
minor (e.g., a gift or a contract where the minor does not
assume obligations but only receives benefits) are not Novation is the process of replacing an old contract with a new one,
considered void. which can involve changing one or more of the original parties or
terms. It requires mutual consent of all parties involved. Novation
occurs when:
Conclusion
 A new agreement is made.
1. Capacity to contract refers to the legal ability of a person  The original contract is terminated.
to enter into an agreement, and under the Indian Contract
Act, it requires a person to be of the age of majority, of  A new party or obligation replaces the previous one.
sound mind, and not disqualified by law.
2. Free consent means that the agreement must be made For example, if Party A owes money to Party B, and Party C agrees to
voluntarily, without any coercion, undue influence, fraud, pay Party B instead of Party A, this can be considered novation
misrepresentation, or mistake. because Party C takes on the obligations of Party A.
3. A minor generally cannot make a valid contract under
the Indian Contract Act, and any contract made by a minor
Legal Provision:
is void ab initio. However, contracts for necessaries
provided to a minor can be enforced against the minor's
property, though not against the minor personally.
4. Case laws, such as Mohori Bibee v. Dharmodas Ghose  Novation is implied under the principle of mutual
and Nash v. Inman, demonstrate the legal approach to agreement. It is a type of discharge of contract where the
contracts involving minors and reinforce the principles that performance under the original contract is replaced by
contracts with minors are void, with some exceptions for new terms, and the old contract is extinguished.
necessaries.
Illustration:
Thus, while minors are protected under the law from contractual
obligations, certain practical exceptions allow for fairness, especially in If Party X agrees to sell goods to Party Y, and later agrees to assign the
situations where the minor benefits from a contract (such as for sale agreement to Party Z, then Party Z becomes the new party
necessaries). responsible for performing the contract. This is novation, and Party X's
original contract with Party Y is replaced by a new contract between
Q13.What contracts are need not be performed ? what is Party X and Party Z.
novation ,rescission and alteration and remission of performance in
indian contract act ?
2. Rescission of Contract
Ans. Contracts That Need Not Be Performed
Rescission refers to the cancellation or termination of a contract, the other party to perform less than what was originally agreed, it is
effectively bringing an end to the obligations of the parties involved. known as remission of performance.
Rescission may occur in the following circumstances:

 Voluntary Act: The party giving the remission must

 Breach of contract: If one party breaches the contract, the voluntarily agree to accept a lesser performance.
other party may seek rescission.  Effect of Remission: It does not discharge the contract
 Misrepresentation or fraud: If a contract is based on entirely but reduces the obligation or performance
fraud, misrepresentation, or undue influence, the required.
aggrieved party can rescind the contract.
 Mutual agreement: The parties may mutually agree to For example, if Party A agrees to reduce the price or accept partial
rescind the contract. delivery of goods instead of the full amount or quantity, it is a
remission.
Under Section 39 of the Indian Contract Act, when a party refuses or
fails to perform their obligations under a contract, the other party may Legal Provision:
rescind the contract.

Legal Provision:  Section 63 of the Indian Contract Act refers to remission

of performance. The section allows the promisee to
accept a less performance than what was promised
 Section 39 of the Indian Contract Act allows rescission without discharging the contract entirely.
when there is a breach by one party.
Illustration:
 Section 2 of the Specific Relief Act, 1963 allows the
rescission of a contract due to fraud, misrepresentation,
or undue influence. If a buyer has agreed to pay Rs. 1,000 for a service, but the seller
agrees to accept Rs. 800 instead, this is a remission of the original
Illustration: contract.

If a person signs a contract under the influence of fraud (e.g., being lied
to about the terms of a deal), they may seek rescission of the contract Summary of Concepts
to cancel the deal and return to the position they were in before Legal
entering the contract. Term Meaning Illustration
Provision
Party A
Substitution of a new No specific
substitutes Party
3. Alteration of Contract contract in place of an section,
Novation C for Party B in a
old one, replacing a party implied by
contract to
Alteration refers to any change or modification made to the terms of or obligations. agreement
supply goods.
an existing contract with the consent of all parties involved. An
alteration can be done in the terms, conditions, or even the parties to Cancellation of a contract A contract made
the contract. Section 39 of
due to breach, by fraud can be
Rescission the Indian
misrepresentation, or rescinded by the
Contract Act
 Alteration by Mutual Agreement: The alteration must be mutual agreement. aggrieved party.
agreed upon by all the parties involved. Changing the
 Legal Effect: The alteration of the contract does not Modification of the terms Section 62 of price or delivery
discharge the original contract; instead, it changes the Alteration of a contract with mutual the Indian date in a
terms, and the original contract continues with the consent. Contract Act contract after
modified terms.
mutual consent.
Reducing the
For instance, if Party A and Party B have a contract for the delivery of
goods at a specific price, and they later agree to change the price or Forgiving or accepting a price or
Section 63 of
delivery date, this is an alteration of the contract. lesser performance than accepting part of
Remission the Indian
what was agreed upon in the delivery
Contract Act
Legal Provision: the contract. under a
contract.

 Section 62 of the Indian Contract Act specifies that a

contract may be altered or modified by mutual consent, as
long as all parties agree to the change. Conclusion

Illustration:
In summary, novation, rescission, alteration, and remission are legal
concepts that deal with modifying, canceling, or forgiving certain
A contract for the supply of goods at a certain price may be altered if obligations within a contract under the Indian Contract Act, 1872.
both parties agree to change the price due to inflation or market While novation and alteration change the substance of the contract,
changes. rescission and remission involve either canceling or forgiving certain
parts of the performance. These mechanisms provide flexibility in
managing contracts, ensuring fairness, and allowing for adjustments in
cases of changed circumstances or mutual consent.
4. Remission of Performance

Q14.What are the methods or ways of Discharge of contract ?

Remission refers to the voluntary act of forgiving or reducing the
performance required under the contract. If a party to a contract allows
Ans. Methods of Discharge of Contract Example: If Party A fails to deliver goods as agreed, Party B may treat
the contract as discharged due to breach and claim damages.
Discharge of a contract refers to the termination of the contractual
obligations, thereby relieving the parties from performing further
duties under the agreement. There are several ways in which a contract 4. Discharge by Impossibility (Frustration of Contract)
can be discharged under the Indian Contract Act, 1872. These
methods ensure that the parties no longer have any legal
responsibilities under the contract. According to Section 56 of the Indian Contract Act, a contract can be
discharged if the performance of the contract becomes impossible due
to unforeseen circumstances. This is known as frustration of contract.
Here are the primary methods of discharge of contract:

 Objective Impossibility: When it becomes physically or

legally impossible to perform the contract.
1. Discharge by Performance
 Supervening Impossibility: When an event occurs after
the contract is formed that makes performance impossible
Performance refers to the fulfillment of the contractual obligations as (e.g., natural disaster, change in law).
agreed between the parties. When both parties perform their duties
under the contract, the contract is said to be discharged by
performance. The contract is terminated upon completion of all the Example: If a contract is made for the sale of goods, but the goods are
agreed-upon tasks or duties. destroyed by fire before delivery, the contract is discharged by
frustration.

 Actual Performance: This occurs when both parties have

fully executed their respective obligations. 5. Discharge by Lapse of Time
 Tender of Performance: If one party is ready and willing
to perform their part of the contract but the other party
refuses to accept the performance, the contract may still be A contract may be discharged if the time for performance expires and
considered discharged, as long as the performing party has no action is taken. The Indian Limitation Act, 1963 governs the time
tendered their performance in good faith. period within which a claim can be made. Once the period of limitation
has passed, the contract can no longer be enforced, effectively
discharging it.
Example: If Party A agrees to sell a car to Party B for Rs. 2,00,000,
and Party A delivers the car and Party B pays the amount, the contract
is discharged by performance.  Expiration of the Time: If the contract is bound by a time
limit and the time expires without the contract being
performed, the contract is discharged.
2. Discharge by Agreement
Example: If a contract stipulates that a certain task must be completed
by a specific date, and the time expires without performance, the
A contract may be discharged by mutual agreement between the contract is discharged.
parties. The parties can agree to terminate or modify the contract
before its performance or completion. The agreement to discharge a
contract can occur in various ways:
6. Discharge by Operation of Law

 Mutual Rescission: Both parties agree to cancel the

contract, which releases them from further obligations. Certain contracts are discharged automatically by the operation of law.
This can occur in various circumstances, such as:
 Substitution: One contract is replaced by another contract
(novation).
 Accord and Satisfaction: When one party agrees to accept  Death of a Party: If one of the parties to a personal
a performance different from what was originally agreed contract (e.g., a contract for personal services) dies, the
upon (e.g., accepting a lesser amount as full settlement). contract is discharged.
 Insolvency: If a party is declared insolvent, their contracts
Example: If two parties mutually agree to cancel their contract for the may be discharged by law.
sale of goods before the goods are delivered, the contract is discharged  Merger: When a higher right is acquired over a lower right,
by agreement. the lower right may be merged and extinguished.

Example: If Party A enters into a contract for the supply of goods, and
3. Discharge by Breach of Contract Party A is declared insolvent, the contract may be discharged by
operation of law.
Breach of contract occurs when one party fails or refuses to perform
their contractual obligations. A breach can lead to the discharge of the
contract. 7. Discharge by Novation

 Actual Breach: When one party fails to perform their Novation refers to replacing an existing contract with a new one, with
duties at the time specified in the contract (e.g., non- the consent of all parties. In novation, the original contract is replaced
delivery of goods). by a new contract, which discharges the previous one.
 Anticipatory Breach: This happens when one party
informs the other party in advance that they will not  The new contract may involve new parties or change the
perform their obligations. The other party can either accept terms of the original agreement.
the anticipatory breach and treat the contract as discharged
or insist on performance.
Example: If Party A agrees to sell goods to Party B, but Party C takes
over the contract and agrees to buy the goods from Party A, the
original contract is discharged by novation.
 Key Characteristics of a Void Agreement:

8. Discharge by Remission
 It is not enforceable in a court of law.
 It lacks one or more of the essential elements of a valid
Remission involves the voluntary acceptance of a lesser performance contract (such as lawful consideration, free consent, and
or a reduction in the obligations of the contract by one party. This is a competent parties).
form of discharge where one party agrees to accept a reduced or lesser
performance than originally agreed.  It may arise due to illegality, impossibility, or lack of
formality in the agreement.

 A party may remit (forgive) the performance of another

party either partially or entirely. Types of Void Agreements:

Example: If Party A owes Party B Rs. 10,000, and Party B agrees to According to the Indian Contract Act, there are certain types of
accept Rs. 8,000 in full settlement, the contract is discharged by agreements that are automatically considered void:
remission.
1. Agreements Without Consideration (Section 25):
o A contract without consideration (something
9. Discharge by Alteration of value exchanged) is void unless it is made in
writing and registered under certain
conditions (e.g., a gift made without
Alteration occurs when the terms of the contract are changed by consideration).
mutual consent. This modification of terms discharges the original
contract and creates a new contract.
o Example: If A promises to give a gift to B
without receiving anything in return, such an
agreement is void.
 Alteration can change the terms, conditions, or even the
parties involved. Landmark Case: Balfour v. Balfour (1919)

Example: If Party A and Party B agree to alter the delivery date of a

contract for goods, this discharge and modifies the original contract.
o In this English case, the court held that an
agreement between spouses, where no
consideration was exchanged, was not
enforceable, thereby aligning with the
Conclusion principle that agreements without
consideration are void.
In summary, the discharge of a contract occurs when the contractual 2. Agreements with an Unlawful Object or Consideration
obligations are terminated, and the parties are relieved of further (Section 23):
performance. The contract can be discharged through several methods, o A contract that involves an illegal object or
including: illegal consideration is void. This includes
contracts that are against public policy or
involve actions prohibited by law (e.g., bribery,
1. Performance (actual or tendered) fraud).
2. Agreement (mutual rescission, substitution, accord, and
satisfaction) o Example: An agreement to sell illegal drugs is
3. Breach (actual or anticipatory) a void contract.
4. Impossibility (Frustration) under Section 56
5. Lapse of time (expiration of time limits) Landmark Case: Kedar Nath v. Gauri Shankar (1889):
6. Operation of Law (death, insolvency, merger)
7. Novation (replacement of the contract)
8. Remission (accepting a lesser performance) o The court held that a contract to deliver illegal
9. Alteration (changing the terms) goods (such as narcotics) is void because the
object of the contract is unlawful.
Each of these methods serves as a means by which a contract can be 3. Agreements in Restraint of Trade or Business (Section
discharged, ensuring fairness and clarity between the contracting 27):
parties. o Contracts that restrict a person’s right to carry
on trade, business, or profession are void.
However, reasonable restrictions may be
Q15.What are the void agreements in indian contracts ?explain with placed on trade in the context of the sale of
land mark judgements . business or employment agreements.
o Example: An agreement in which one party
Ans. Void Agreements Under the Indian Contract Act, 1872 agrees to not carry on a business in a
particular area or market for an unreasonable
In the context of Indian contract law, an agreement is said to be void if period or within an unreasonable distance is
it is not enforceable by law. Void agreements are those that lack one void.
or more essential elements necessary to form a valid contract, as
prescribed by the Indian Contract Act, 1872. When an agreement is Landmark Case: N. R. Nair v. The Union of India
void, it is not legally binding and cannot be enforced by any party. (1962):

Under Section 2(g) of the Indian Contract Act, a void agreement is

defined as "an agreement not enforceable by law." These agreements
o The Supreme Court held that a contract that
imposes unreasonable restraint on a person’s
have no legal effect and do not create any legal rights or obligations.
right to carry on a trade is void, as it violates
Section 27 of the Indian Contract Act.
4. Agreements in Restraint of Marriage (Section 26):
 o Any agreement that restricts the right to o Wagering contracts, or gambling contracts,
marry or imposes conditions on marriage is are those in which the parties agree to pay
void. money or goods based on an uncertain event.
o Example: A contract that forces a person to Such contracts are void because they lack a
marry a particular individual or prohibits them lawful object or consideration.
from marrying anyone else is void. o Example: A contract where one person bets
that a particular team will win a game is void
because it is a wagering agreement.
Landmark Case: S. S. K. P. Chidambaram Chettiar v.
L. P. N. Raj (1934):
Landmark Case: H. S. R. Murthy v. The Secretary,
Southern Railway (1956):
o The court held that an agreement that
imposed a restraint on a person's freedom to
marry was void as it violates Section 26 of the o The court held that wagering agreements are
Indian Contract Act. void under Section 30 of the Indian Contract
5. Agreements with a Minor: Act.
o A minor (someone below the age of 18)
cannot enter into a valid contract, except for
contracts for essential goods and services. Any
agreement entered into by a minor is Summary of Void Agreements in Indian Contract Act:
considered void ab initio (from the beginning).
o Example: If a 17-year-old buys a car on credit, 1. Without Consideration: Agreements made without
the agreement is void because a minor cannot consideration (except in cases of gifts and formal
be held liable for the payment. contracts under Section 25) are void.
2. Unlawful Object/Consideration: Contracts that have an
unlawful object or consideration are void (Section 23).
Landmark Case: Mohori Bibee v. Dharmodas Ghose
3. Restraint of Trade: Agreements that impose unreasonable
(1903):
restrictions on trade, profession, or business are void
(Section 27).
o The Privy Council held that a contract made by 4. Restraint of Marriage: Contracts that restrain marriage
a minor is void, and the minor cannot be are void (Section 26).
bound by it. The case set a precedent in India, 5. Minor's Contracts: Contracts made by minors are void
stating that minors cannot be held liable (Mohori Bibee v. Dharmodas Ghose).
under contracts made by them. 6. Mutual Mistake: Contracts entered into under a mutual
6. Agreements Involving Mutual Mistake of Fact: mistake of fact are void.
o If both parties to a contract are mistaken 7. Impossibility of Performance: Agreements that cannot be
about a vital fact, the contract may be performed due to impossibility (Section 56).
voidable or void. This includes cases where 8. Wagering Contracts: Contracts of wagering or betting are
both parties are unaware of the existence or void (Section 30).
true nature of the subject matter of the
contract. Conclusion
o Example: A contract for the sale of a painting
believed to be an original, but which turns out
to be a replica, may be void due to mutual Void agreements under the Indian Contract Act are those that are
mistake. legally unenforceable for various reasons, including lack of
consideration, illegal objects, or impossibility of performance. Courts
have consistently emphasized that these agreements have no legal
Landmark Case: Raffles v. Wichelhaus (1864) (English effect and do not bind the parties involved. The landmark judgments
Case, often cited in India): mentioned above have clarified and established important precedents in
contract law in India.

o This case involved mutual mistake regarding

the subject matter of a contract, and the court
held that the contract was void due to lack of
consensus ad idem (agreement on the same
thing).
7. Agreements that are Impossible to Perform (Section 56):
o A contract becomes void if the performance
becomes impossible due to events beyond the
control of the parties, such as natural disasters,
changes in the law, or destruction of the
subject matter.
o Example: A contract to deliver goods that are
destroyed by fire before they can be delivered
is void due to impossibility of performance.

Landmark Case: Satyabrata Ghose v. Mugneeram

Bangur & Co. (1954):

o The Supreme Court held that an agreement is

void if the performance becomes impossible
after the contract has been made, such as in
cases of destruction of the subject matter or a
change in the law.
8. Agreements of Wagering: