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Question No.

1: Who is competent to contract Discuss the law


relating to minors agreement in India, with help of decided
cases. Also brief about English Law Indian law in this context.
OR
Minors agreements are void at-initio. In which case the above
rule was established. Discuss in brief that case and also bring out
the exceptions to the above rule.
OR
What do you understand by capacity to contract What is
effect of Minors agreement and when can it enforced.
OR
A minors bind others but is never bound by others. Explain
by giving illustrations.
OR
Discuss the nature and effects of Minors Agreement.
Answer INTRODUCTION:- All agreements are not contracts.
Only those agreements are contract which fulfil he conditions of
section 10 and according to section 10 for a contract parties
must be competent, the consent must be free. Therefore the
competency of the parties to a contract is most essentials
element of a contract.
According to section 11 of Indian contract Act 1872
which provided, That every person is competent to contract
who is of the age of majority according to law to which is
subject and who is sound mind and not disqualified from
contracting by any law to which he is subject. The following
persons are competent to contract i) Who is major.
ii) Who is of sound mind.

It is evident that minors and unsound mind person cannot


make a contract. A Major person means who has attained the age
of 18 years. The age of majority has been decided by Indian
majority act 1875. In case of guardian appointed by the court,
the age shall be 21 years.
An agreement made by a minor is void., from the
above statement we find that the minor is not competent to
contract. Indian contract act is silent about whether it will be
void or voidable up to 1903. But it is decided by the Court that
these are void. Agreement by a minor is void-ab-initio, such
contract cannot be enforced by law. Further the minor cannot
authorise any other person to do a contract.
Case Mohiri Bibi vs Dharamdass Ghosh (1903) A minor Mr.
Dharamdass Ghosh executed a mortgage documents for
Rs.20,000.00 in favour of a money lender Sh. Brahmo Dutt.
The money lender actually paid Rs.8,000.00 to the minor. It is
important that before this transaction the guardian of the minor
informed the Attorney of Money lender that he (Dharamdass
Ghosh) is minor. Later on a suit was instituted by the minor
Dharmadass Ghosh against the money lender Sh. Brahamo dutt
with the intention that the mortgage be set aside. This suit was
opposed by Money lender by saying that the above contract
being voidable, he has the right to receive the amount of the loan
under section 64 and 65 of Contract Act i.e. minor is bound to
return back the amount.
Privy council held that, the contract is void ab-initio
which cannot be enforced. It was also held that the minor
could not be asked to repay the loan taken by him. It was
further held that law of estoppels cannot be applied against the
minor Shri Dharmodas Ghosh being mis-stated falsely his age
because he was minor at the time of the agreement and the

agreement was void. The law of estoppels as stand in section


115 of Indian Evidence Act was not applicable to the present
case as the plaintiff was minor at the time of making agreement,
this fact was also known to the agent of Brahmo Dutt defendant.
Under Specific Relief Act 1877 Section 38 and 41 applies
where party had the knowledge of minority age gets restitute
degree.
A new concept of beneficial has come into existence
now. It has been held in various cases. A minor is bound for the
beneficial contract. The beneficial contract are those contracts
which are for the benefit of minor. The first case was
S.Subramanyam v/s Subha Roy-1948 - In this case transfer of
inherited property of
a minor affected by his guardian to pay off an in-herited debt
was binding on him for his benefit. Here is a list of beneficial
contract
i) Contract of Insurance Such contracts are in the benefit of
minors.
ii) Contract to purchase the immoveable property Such contract
are valid.
iii) Contract of service - These are for the benefit for the monors
iv) Contract of apprentice ship Training period of any minor
who is taking training from any person, because of the training
minor will case his livelihood. It is for his benefit and mono is
liable to compensate hat person.
v) Contract of Marriage When guardian made an agreement for
the marriage of the minor then another party cannot enforce it,
but minor can enforce it. If agreement is made jointly by
guardian and minor, it can be enforced again on majority age.
vi) Contract of Necessities- Under section 68 of the Contract
Act-1872, minor is also liable for necessaries. Necessaries

means the basic things of the life. These are mainly, ROTI
KAPRA-AUR MAKAAN. If any person supplied necessaries to
minor then the minor is liable o compensate the supplier. A case
Chapple vs Cooper The court held that necessaries are not
only food, shelter, clothes but also education or religious and
any such things which are necessary for life, comes under the
definition of necessaries. The following two conditions are
necessary for liable
1. The supply must not be more than sufficient.
2. The supply must be according to the standard of minor.
Case PETRESS VS FLEMING
The supply of a watch to a minor whose study was considered as
the necessity because to have a watch for graduate person is his
necessity.
RATIFICATION OF THE MINORS AGREEMENT
A minors agreement being void ab-initio, it is incapable of
being validated a subsequent ratification after the minor has
attained the age of majority. Here is minor accepts the contract
in some terms is entered during minority then also he is not
liable. If a minor takes 2000.00 in minority and Rs.3000- after
getting majority age and said major give back Rs.5000- then this
is valid and with consideration. After getting majority age if
minor uses his option to be a partner, he will be bound for all the
responsibilities of minority period, which are against the firm.
CONTRACT BY MINOR GUARDIANS
1. If the agreement is on behalf of minor done by guardian.
2. With in his Power.
3. Guardian is capable to enter into contract.
4. The agreement will be in the interest of minor.
A case of Raj Rani vs Prem - Father agreed with
the Director of Film, and according to this agreement Director of

Film will give a role to Indrani. It was held void because no


consideration was therein. It this agreement is with the daughter
then it is void abs-intro. If it is with his father then it has no
value even to think over it.
DOCTRINE OF RESTITUTION
Restitution means if an agreement is declared void, benefit
should be returned. Under section 64 & 65 of contract Act, that
section 68 is applies only on voidable agreements, Section 56 is
applies on the agreement which were valid at the time of
formation but due to some circumstances(as under sec.56) it
becomes void. Under the equitable doctrine of restitution minor
has to restore back the benefit so received by him the exact
things but it is applicable in case of goods and property not in
the case of money. Restitution stop where repayments begins.
A case of Leslie vs Sheill- (1914) - It was held by the court of
Appeal that the money could not be recovered. If there were
allowed that would amounts to enforcing the agreement to repay
loan, which is void under Inflants Relief Act-1874.
Section 39(3) specific Relief Act 1877 If the court thinks he may
pass an order of restitution in any case, now a question arises
whether he person did not know about the age of minor. If
minor is also not know his age. In this stage plaintiff does not
get compensation. If respondent misrepresent his age on this
point there are different view of court.
Case KHARGIL VS LAKHAN SINGH -1928 LAHORE
HIGH COURT.
The court ordered a minor to refund Rs.17500- which he had
taken in advance for the sale of land. When he refused to
complete the contract. The court was of the opinion that still the
Specific Relief Act should apply whether the minor was the

plaintiff or the defendant. The doctrine of restitution should


apply whether the minor had taken the goods or money.
Case Ajudhiya Parsad vs Chandan Lal 1937
Allahabad High Court refused to following, extended view of
restitution and held that a minor who had taken money by
mortgaging his home was not bound to restore the money. Now
section 33(2)(b) added according to this section, when a plaintiff
wants to dissolve the agreement and says that at the time of
agreement he is minor than he can get back all his profits.
DOCTRINE OF ESTOPPELS
According to rules contained in Sec.115 of Indian Evidence Act
1872, if you make a statement today, which misleads another
person, you are not allowed to deny the statement to-marrow
when the question of your liability arises. A question whether a
minor who has made a false representation about his age is
stopped from pleading his minority, was raised, but it was not
decided in this case of Mohiri Bibi. Privy Council held that
where the party knows about the age of minor this principle
could not apply. The question arises that whether minor can be
stopped by false representation as to his age is now settled by
this case.
A Case Nawab Sadiq Ali Khan vs Bibi Jai Kishori1928
It was held by Privy Council that if a minor makes a contract by
fraudulently expressing his age more than actual then he cannot
be stopped as per the rules of estoppels that he was minor at the
time of contract.
INDIAN AND ANGLO LAW

It is difficult to differentiate between both the law in respect of


contract by minors but generally the difference in both the law
is 1. Contract by minor under Indian law is void ab-initio.
2. It is voidable under English Law, such contract can be
declared void on the will of minor.
If the contract is for the benefit or fulfilment of necessity of
minor. Then it shall be binding.

Q. No 2:- State the difference between void agreement and


illegal agreement
OR
All illegal agreements are void but all void agreement are not
illegal. Comments
Ans- INTRODUCTION Under section 2(g) of Indian Contract
Act 1872, definition of void agreement has been given and
according to it , Agreement in not only enforceable by law said
to be void. For instance, an agreement by a minor has been held
to be void. Section 24 to 30 of the Indian Contract Act 1872,
make a specific mention of agreement which are void. Generally
the following agreements are not enforceable by law.
i) Whose parties are not competent to do a contract i.e. they are
not adult and are unsound mind.
ii) Whose parties do not have free consent i.e. they are under
coercion, undue influence fraud & misappropriation etc.
iii) Whose consideration and object has not been lawful
iv) Which are immoral or against public policies.

v) Which do not create valid (illegal) liabilities between the


parties.
vi) Which have been declared as void by the court etc.
All above agreements are void because they cannot be enforced
by law.
ILLEGAL- AGREEMENTS
Illegal agreements are such agreements whose consideration and
object are not lawful i.e. they are illegal. Such agreements are
mentioned in section 23 of the Indian Contract Act 1872. The
following agreements are considered as illegal1. Which are prohibited by Law.
2. Which is of such a nature if followed would defeat the
provisions of law.
3. Which is fraudulent.
4. Which is causing injury to body or property of any other
person.
5. Which have been declared by the court as immoral or against
public policies.
After the definition of void and illegal agreements we
have considered the following statements That all illegal agreements are void agreements but all void
agreements need not necessarily be illegal. It can be adjudged
from the following i) Illegal agreements are void ab-initio which cannot be
enforced by law at any time whereas void agreement need not be
void-ab-initio, such agreements could become un-enforceable by
law later.
ILLUSTRATION
An agreement takes place between the
citizen of India and Pakistan which was enforceable by law at
the time agreement, but later on in the event of war between
India & Pakistan the agreement becomes un-enforceable

whereas agreement to pay money by A to B for illegal


intercourse is void ab-initio which cannot be enforced any time.
This shows the illegal agreements are always void whereas void
agreements are not always illegal.
ii) Parties of illegal agreements can be punished whereas the
parties of void agreements cannot be punished.
ILLUSTRATION - An agreement to encourage any woman for
prostitution by paying her money is punishable but an agreement
by minor or without consideration is not punishable. This also
proves the fact that every illegal agreement is void but every
void agreement is not illegal because illegal agreement is of
punishable nature whereas void agreement is not. Void
agreement does not contain the element of illegal agreement
whereas illegal agreement contains the elements of void
agreement.
iii) Void agreement cannot be enforced at any time and illegal
agreement is also never enforceable by law. Hence illegal
agreement contains impliedly the element of illegal agreement.
iv) Illegal agreement are those which are mentioned in Sec. 23
of contract act whereas void agreements included various other
types of agreement, like agreement by minor or unsound mind
persons, agreement without consideration etc.
v) Void agreements include illegal agreements which are not
enforceable by law, but illegal agreements need not contain all
types of void agreement. This shows that all illegal agreements
are void but all void agreements are not illegal.
DIFFERENCE BETWEEN VOID AGREEMENT &
ILLEGAL AGREEMENTS.
VOID AGREEMENT
ILLEGAL
AGREEMENT

1. All agreements are not void-ab-initio but become void later


due to circumstances
2 The reason of void agreement could be incompetency of
parties, lack of consideration etc.
3 Parties of void agreements are not be punished.
4 Collateral agreement to void agreements can be enforced.
5 The area of void agreement is extremely void. It includes all
illegal agreement. 1 Illegal agreements are void ab-initio.
2 The reasons of illegal agreement shall be those which are
mentioned in sec.23 of the Contract Act., like prohibited by law.
Immoral against public policies, fraudulent etc.
3 Parties of illegal agreement can be punished.
4 Collateral agreement to the illegal agreement can also not be
enforced.
5 The area of illegal agreement is comparatively narrow. It does
not include all types of void agreement.

Question No 3 : All contracts are agreements but all agreements


are not contracts?
OR
Discuss the rule for the formation of a valid contract when a
contract becomes complete?
Introduction : i) MULLA :- Every agreement or promise enforceable by law
is a contract.
ii) SALMOND :-Contract is an agreement creating defining
obligations between parties.
A contract is an agreement enforceable by law. An agreement is
the prime stage of the contract. If agreement is enforceable by
law or if agreement is recognised by law then it will become a

contract otherwise not. It is basically based upon British Law


because the Contract Act was passed by British Indian Govt., in
1872.
To make contract an agreement it is essential that no
contract is possible without an agreement, but we cannot say
that all agreements are contracts. Section 2(y) of contract Act
says that, Contract is an agreement enforceable by law. All
agreement e.g. to see cinema is not contract, if offer is accepted
then it becomes promise. Promise is followed by consideration
then it becomes agreement and if an agreement is enforceable by
law then it becomes CONTRACT, see below :i) Proposal +
acceptance
=
PROMISE
ii) Promise +
consideration
=
AGREEMENT
iii) Agreement+ Enforceability
=
CONTRACT
AGREEMENT :- Agreement 2(e) promise or set of promises
forming the consideration with each other, is an agreement.
PROMISE :- Promise is an important part of the agreement. A
proposal when accepted becomes promise.
PROPOSAL/OFFER :- According to section 2(a) when one
person signifies to other his willingness to do or to abstain from
doing anything with a view of obtaining the assent of that offer
to such act or abstinence, he is said to make a proposal.
ACCEPTANCE:- According to section 29(b) of contract act
when the person to whom the proposal is made signifies his
assent there to the proposal then it is said to be accepted. A
proposal when accepted becomes promise.
CONSIDERATION :- Section 2(d) of contract act defines
consideration. Section 2 says that an agreement made without
consideration is void unless :a) Natural love and affection. Sec.25 of contract act, the parties
to the agreement must be standing in a near relationship to each

other. The promise should be made by one party out of natural


love and affection for the other. The promise should be in
writing and registered.
b) Compensation for past voluntary services sec. 25(2) in case
Sindha v.Abrahim-1895 Bombay : The promise to compensate
though without consideration is binding because of this
exception. The exception also covers a situation where the
promise is for doing something voluntarily
c) Promise to pay time barred debt: Sec.25(3): The promise must
be to pay wholly or in part a time barred debt i.e. a debt of
which the creditor might have enforced payment but for the law
for the limitation of suit. The promise must be in writing and
signed by the person to be charged therewith. Case Gobind Das
v. Sarju das-1908, Ganesh Prasad v.Mt. Rambati Bai-1942.
ENFORCEABLE BY LAW :- in Indian Contract Act 2(h) it says
that contract is agreement enforceable by law. If an agreement
is enforceable by law then it is CONTRACT, otherwise merely
an agreement.
To make an agreement a contract in Indian Contract Act section
10, the following conditions must be fulfilled :1. Competent Parties :- Section 11 says, contract should be made
with person who must be major and sound mind not disqualified
by law.
2. Free Consent :- Section 14, says that consent must be free,
when it is not caused by coercion, undue influence under section
16, fraud under section 17, misappropriation under section 18
and mistake under section 20.
3. Lawful consideration & object :- According to section 23,
when agreements consideration or object are unlawful, they are
void.

4. Not expressly declare as void:- The such agreements which


are made without consideration or expressly declared to be void
as per section (25) are no contract, these are as under:i) Agreement in restrain of marriage section-26.
ii) Agreement in restrain of trade section-27.
iii) Agreement in restrain of legal proceedings section -28.
iv) Agreement which is ambitious and uncertain sec.29.
v) Agreement by way of wages section-30.
vi) Agreement to do an impossible act section-56.
5.FORMALTIES PERFORMED IF NEEDED BY LAW:- The
person by whom the contract must be performed time and place
and performance opportunity of payment. Thus when these
conditions are fulfilled then an agreement is made contract
because these are enforceable by law. But some agreements are
not made contract because they are not enforceable by law.
These are :1. Social Agreement :- When agreements based only social
relationship and parties, we cannot enforce these agreements by
law, for example:A case Jones v/s Paday
If A give invitation of dinner to B and B accept this but
does not go to dinner then A suffers damage after this. But A
cannot file a sue against B because it is Social Agreement
which is not enforceable by law.
FAMILY LAW:- Family law are not made contract as in the case
of :
Balfour v/s Balfour:- In this case the defendant who was
employed in Govt.,job in Ceylon went to England with his wife
on love. For health reasons the wife was unable to return to
Ceylon. The husband promised to pay 30 ponds per month to
his wife as maintenance for the period she had to live abart. The

husband failed to pay this amount. The wife filed a suit against
her husband for this money. The court held that this agreement
is not enforceable by law.
Case : Jones v/s Padavllon :
Where a girl left service to join legal education on the promise
of her mother to stand the expenses. It was held to be a family
matter and not a binding contract. Thus we can say that all the
agreements are not contracts but all the contracts are not
agreements.
A Case LALMAN V/S GAURI DATT-1913 : The defendants
nephew absconded from home. The Plaintiff who was defendant
servant was sent to search for the missing boy. After the
plaintiff had left in search of boy, the defendant issued handbill
announcing a reward of Rs.501.00 to anyone who might find out
he boy. The Plaintiff who was ignorant of this reward, was
successful in searching the boy. When he came to know of the
reward, which had been announced in his absence, he brought an
action against he defendant to claim this reward. It was held hat
since the Plaintiff was ignorant of the offer of reward, his act of
bringing the lost boy did not amount to the acceptance of he
offer, and , therefore, he was not entitled to claim the reward. If
a person has the knowledge of the offer, his acing in accordance
with the terms thereof amount to the acceptance of the same. In
such a case, it is immaterial that at the time of accepting the
offer, the acceptor does not intend to claim the reward
mentioned in the offer.
DIFFERENCE BETWEEN AGREEMENT AND
CONTRACT
AGREEMENT
CONTRACT

1. Three important points for

Two important points


for

contract
Agreement: i) acceptance
are i) agreement ii)
enforcement
ii) Offer iii) and consideration
by law.
2. An agreement could be legal or
2. Agreement in
contract to be lawIllegal.
Ful and enforceable
by law.
3. Agreement may or may not be
3. Contract is
enforceable by law.
Enforceable by law.
4. Area of contract is
limited as
4. Area of agreement is very wide
every agreement
cant become
As it can be any type legal, moral
contract.
Etc. Any agreement even if not
5. In contract the valid
liability is
Enforceable by law remains an
created between the
parties.
Agreement.
5. The certain of valid liability is not
6. Contract requires
the
Requires in all agreement like, moral
competency of parties,
free
Religious etc.
Consent, sufficient
consi6. Every agreement does not requires
duration etc.
Competency of parties, free consent,
Sufficient consideration etc., because

Agreement could be by un-enforceable


Law.

Q. No 4 :- Discuss the meaning of consideration? When the


consideration becomes unlawful? How does the Public Policy
Effect he consideration? OR
An Agreement without consideration is void. Discuss with
Exceptions ? OR
Define consideration, Past Consideration, Contract without
consideration and consideration by a person unknown to
contract with suitable examples. OR
Explain consideration. In what cases the consideration of an
agreement are said to be unlawful under contract Act.? Illustrate
with suitable examples.
Answer : INTRODUCTION : The consideration has important
place in contract. It is important part of Contract. A valid
contract requires a consideration.
Agreement without
consideration are void. The study of consideration in respect of
the subject matter is required.
Section 2 (d) of the Indian Contract Act- 1872
defines consideration. It says, When at the desire of the
promisor, the promise or any other person has done or abstained
from doing or does or abstains from doing or promises to do or
to abstain from doing-something, such act or abstinence or
promise is called a consideration for promise.
In other words when a the desire of one person,
another person does sense act or abstains from doing, then it
consideration for the first person.
ILLUSTATION :- A purposes B to buy his cycle for
/rs.1000.00. B agrees to buy that cycle for Rs.1000/-. Here
Rs.1000/- is the consideration for cycle.

According to Pollock :- A party does or abstains from doing or


promise to do or abstain from doing something, is a price for
which the promise is bought, the promise thus given for value is
enforceable.
According to Auson :- Consideration is that which is to be
done abstain from doing, to be bear or promises to do or which
the promises abstains from doing in respect of promise or bears
it.
ELEMENS OF CONSIDERATION :I) Consideration to be at the desire of promisor.
II) Consideration can be given by the promise or any other
person.
III) Consideration may be past, future or present.
IV) Consideration must be legally adequate and valuable.
V) Consideration must be valid.
A case : Mirahul Enterprises V/s Mrs. Vijaya Srivastav AIR
2003 :
Delhi High Court said that a valid agreement requires the
consideration to be definite.
In a Case :-Durga Parsad v/s Baldev The Plaintiff constructed
certain shops in a market at the instance of the Collector of that
place. Subsequently the defendants occupied one of the shops in
the market. Since the Plaintiff had spent money for the
construction of market, the defendants in consideration thereof,
made a promise to pay the plaintiff commission on the articles
sold through their (defendant) agency in that market. The
plaintiff failed to pay the promised commission. In an action by
the plaintiff to recover the commission, it was observed that the
consideration for the promise to pay the commission was the
construction of the market by the plaintiff. Such construction
had not been done at the desire of the defendants, but on the

order of the Collector. It was therefore held that since the


consideration did not moved at the desire of the defendants
( Promisors in this case), this did not constitute valid
consideration and therefore the defendants were not liable in
respect of the promise made by them.
TYPES OF CONSIDERATION ;- There are three types of
consideration which are as under :i) Past consideration.
ii) Present consideration.
iii) Future consideration.
Present consideration means such consideration which is paid to
the promissory immediately. Example : A offers to B to sell
his vehicle for Rs.50,000/-, B pays to A Rs.50,000/- at that
moment, and A gives the possession of vehicle to B. This is
present consideration.
Past consideration is the consideration for the service or promise
performed in past. Example :- A at the desire of B takes care
of the family of B. After three years B promises o A that he
shall pay him Rs.10000/- for his services given. Here, the
services provided by A in the past to B shall be called past
consideration.
Future consideration means such consideration which shall be
paid in future. Example:- A promises to sell his house for
Rs.75,000/- to B on 5th.Feb 2003, and both parties decide that
possession of house shall be delivered on 1st.Dec.2003 and on
that day he payment of Rs.755,000/- shall be made. This is
future consideration, because the contract had originated on
05.02.2003 but its consideration was to be paid on 1st
December, 2003.
WHEN THE CONSIDERATION IS
ILLEGAL

A valid contract requires the consideration to be valid or legal


contract with illegal consideration is not enforceable. Sec.23 of
Contract Act mentions those situations in which the
consideration shall be considered to be illegal. These situations
are as under:i) When it is prohibited by law.
ii) When it is of such nature that if followed would defeat the
provisions of law.
iii) When it is fraudulent.
iv) When it involves injury to the person or property of another.
v) The court regards it as immoral or opposed to public policy.
Consideration forbidden by Law:-Such agreements are void. An
agreement or act forbidden by law is that which is not permitted
by law to be followed or which is against the law. A case: Ram
Sewak v/s Ramcharan : AIR 1982 Allahabad. : The partners of a
partnership firm made an agreement for the concealment of
profit for the purpose of deceiving tax. It was held illegal
consideration or an agreement forbidden by law.
Consideration to defeat the provisions of Law:- An agreement
with such consideration is also void, whose purpose is to defeat
the provisions of law. In other words, where an agreement is
done with such consideration that if applied would defeat the
provisions of law, then such consideration and agreement shall
be considered void.
ILLUSTRATION : A and B agrees with the intention that
they shall be able to take any dispute related to a particular
subject to the court, even though the limitation for it has been
determined,. This agreement defeats the provisions of Limitation
Act, and is therefore void.
IN Nutan Kumar v/s Additional District Judge, Banda (AIR
1994 Allahabad): Allahabad High Court held that such an

agreement between landowner and tenant which is inconsistent


to the provision of Rent control Act shall be void. Such
agreements cannot be enforced through court.
Fraudulent Consideration: Agreement with such consideration
which are fraudulent, are void. For example: A, B and C agrees
for the partition among themselves of the profits obtained or to
be obtained by fraud. Agreement is void because its object and
consideration is against law.
Consideration to cause injury to Body or property of any other
person:- Such agreement is void whose object and consideration
are illegal owing to be causing injury to body or property of any
other person. A case : K.Abdul `Qader v/s The Plantation
Corporation of Kerla. AIR 1983: Kerla High Court said that a
contract made with the object to cause injury to body or property
of any other person, is void and unenforceable.
Immoral and Opposed to Public Policy:- Agreement with
consideration being immoral and opposed to public policy are
void and unenforceable. Several decisions of court in his
respect have been made. Several judicial decisions have
considered following object and consideration to be immoral
and opposed to public policy :a) Agreement to lent house on rent for prostitution.
b) Agreement to lent vehicle to be used for prostitution.
c) Agreement to provide money to have cohabitation with the
wife of any other person.
d) Consideration of earlier cohabitation.
e) Agreement to give consideration for future illegal
cohabitation.
A case of Subhash Chandra v/s Narbada Bai (AIR- 1982 of
MP) A man made agreement for maintenance with a woman. It
was the result of an earlier cohabitation with a woman with that

man. Court held it to be void and unenforceable. Agreement


with consideration being opposed to public policy are also void.
The public policy does not have any universal definition, but
several judicial decisions have considered following things to be
against public policy :I) Insurance conscience.
II) Obstruction in freedom.
III) Elements creating restrain to trade or natural or legal rights.
IV) Against good conduct etc.
The following agreements have been considered to be against
public policy :
a) Agreement to cause injury to public service.
b) Transfer of decree for the purpose of avoiding the effect of
decree to other creditors.
c) Agreement to pay money in return of marriage.
d) Agreement to bribe for adoption etc..
A case : SBI v/s Aditya Finance and Leasing co. 1999 Delhi)
It was held that the land spotted or embarked for residential
purposes is used for commercial purposes by an agreement
which shall be void by being against public policy. Thus the
agreement with such consideration that adversely effect over the
interest of common people or which are not proper in respect of
public shall unenforceable by being void.
AGREEMENT WITHOUT CONSIDERATION ARE VOID
As we have seen above that Consideration is essential for a valid
contract. Agreement without consideration cannot be imagined.
Section 25 of Indian Contract Act-1872 clearly provides that
Agreement without consideration is void.
ILLUSSTRRATION :- A promises B to pay him Rs.2000/without any consideration. This is void agreement.

Exceptions :- But the above rule have some exceptions also i.e.
an agreement without consideration in following situation is
valid and enforceable :1. Agreement Under Natural Love and Affection:- Agreement
without consideration due to Natural Love and Affection are
valid and enforceable provided that they are written and
registered.
ILUSTRATION : A promise to pay his son B a sum of Rs.
5000.00 under the Natural Love and Affection. A writes his
promise toward B and gets it registered. This is contract. Natural
love and affection includes relation between father-son husbandwife, brothers etc. Such relations do not require consideration
for a valid agreement. A case : Manali Singhal V/s Ravi
Singhal-1999-Delhi), It was said by Delhi High Court that where
any family agreement in relation to the amount of maintenance
has been made for love and affection, family peace, harmony
and satisfaction there consideration shall not be required. Such
agreement shall be enforceable by Court.
2. Agreement to pay compensation for past service Where any
person without the knowledge of promisor or otherwise than his
prayer, does any service or has done service and the promisor
promise to compensate him, there consideration shall not be
required, with the following thing which are necessary :i) An act has been voluntarily done already for the promisor
ii) At the time of commission of that act, promisor was
competent to contract.
ILLUSTRATION A at the desire of B does service for the
relatives of B. Later B agrees to pay Rs.1000/- to A for the
service. This agreement been result of earlier service is valid and
enforceable. Such consideration is also called past
consideration.

3.Agreement for payment of Time Barred Debt. Such an


agreement for payment of a debt barred by time under limitation
act, is considered to be lawful because a time barred debt is also
a good consideration as the debt remains ever after the
completion of time of recovery. A case: Tulsiram v/s Samey
Singh AIR-1981 Delhi Delhi High Court held that an agreement
for the payment of a time barred debt can be made under
Se.25(3) but it requires that the agreement shall mention that
consent has been given for the payment of time barred debt.

UNIT III
Question No. 5. Discuss contingent contract. Elaborate with
suitable illustrations. How are such contract is different from
Agreements?
Answer :- INTRODUCTION : Contingent contract is special
types of contract. Generally in most contracts rights of parties
are enforced immediately after the execution of contract, but
sometimes there are contracts whose enforcement depends upon
happening or non-happening of an event.
DEFINITION :Section 31 of Indian Contract Act 1872 defines that Contingent
Contract according to it : A contingent contract is a contract to
do or not to do something, if some event, collateral to such
contract does or does not happen.
ILLUSTRATION : A contracts with B that if the house of B destroyed by fire
then he shall pay Rs.10,000/- to B. It is contingent contract
because the enforcement of contract depends on the happening
or non happening of an event.

Thus the contingent contract depends upon the happening of a


uncertain event. If the event is of certain nature, then it shall not
be contingent contract.
ELEMENTS OF CONTINGENT CONTRACT
These are as under:1. The contingent contract depends upon the happening or nonhappening of an event.
2. Such event shall be of uncertain nature i.e. it may or may not
be happen.
3. Such event is not the part of mutual promises of parties.
4. Happening or non happening of the event does not depend on
the will of the parties.
5. The future uncertain even is collateral to the main contract.
In case : Ranchoddas V/s Nathmal Hirachand and company
1951 (Bombay)
In this case the court decided and did not accepted the
contention and said that reaching of cloth to India was a method
of delivery. This cannot be said contingent contract.
NATURE OF CONTINGENT CONTRACT:Section 32 to 36 of Act mention that various forms of contingent
contract like:i) According to Section 32 . Contingent contract to do or not to
do be anything if an uncertain event happens cannot be enforced
by law unless and until that event has happened. If the event
becomes impossible such contract becomes void.
ILLUSTRATION :- A contract to pay B a sum of money when
B marries C. C dies without being married to B. The contract
becomes void.
ii) Section 33 says : contingent contract to do or not to do
anything, if an Uncertain future even does not happens can be

enforced by law when the happening of that event becomes


impossible.
ILLUSTRATION :- A agrees to pay to B a sum money if a
certain ship does not return. The ship is sunk. The contract can
be enforced when the ship sinks.
iii) Section 34 says : that if future event on which a contract is
contingent is the way in which a person will act at an
unspecified time, the event shall be considered to become
impossible when such person does anything which renders it
impossible that he should so act within any definite time, or
otherwise than under further contingencies.
ILLUSTRATION :- A agrees to pay B a sum of money if B
marries C. C marries D. The marriage of B to C must now be
considered impossible, though it is possible that D may die, and
that C may afterwards marry B .
iv) Section 35 says that :- contingent contacts to do or not to do
anything if a special uncertain event happens within as fixed
time become void if, the expiration of the time fixed, such event
has snot happened, or if, before the time fixed, such becomes
impossible.
ILLUSTRATION :- A promises to B to pay a sum of money if a
certain ship returns within a year. The contract may be enforced
if the ship returns within a year, and becomes void if the ship is
burnt within the year.
v) Section 36 says that : contingent contract to do or not to do
anything if an impossible event happens, are void, whether the
impossibility of the event is known or not to the parties to the
agreements at the time when it is made.
ILLUSTRATION: - A agrees to B, a sum or Rs.1000.00, if two
straight lines should on close a space. The agreement is void.

Contingency dependent on the behaviour of the parties. It is


important that if the performance of the promise depends on the
mere will and pleasure of the promisor, it is no promise at all but
promise to pay what a third party decide is valid promise.
DIFFERENCE BETWEEN CONTINGENT CONTRACT
& WAGER CONTRACT
Contingent Contract
Wager contract
1. All contingent contract are
All wager contract have the
element of
Not wager.
Contingent contract.
2. The interest of the parties
The interest of the parties is
vested upon
Is vested on the happening
wining or losing sum of money.
Or non-happening of event.
3. The future event is collateral The future event is the base of
decision.
To the contract.
4. Only one party shall give
Parties give reciprocal
promises.
Promise.
5. Win or loss of the parties is
One party has to win and
other has to
Not important.
Lose.
6. Contingent contract are
Wager contract are void with
few
Valid.
Exceptions.

Question No.6 : Define Fruad? Distinguish between Fraud and


Misrepresentation. Whether silence amounts to fraud?

OR
2. What are the factors which vitiate consent and make the
Agreement
Void or voidable?
OR
3. What is consent? When is consent said to be free under Indian
Contract Act?
OR
Distinguish between coercion and undue influence.
Answer : INTRODUCTION :An agreement becomes contract if it fulfils the conditions of
/section 10. According to sec. 10 for an agreement becomes
contract with law full object and consideration. It means free
consent is not free then the contract is invalid. But it is voidable
not void. Voidable means a contract which can be declared void
by the court at the option of other party.
under sec.2(1). Section 198, 10(a) also deines the term voidable.
Section 13 : Consent : According to Indian Contract Act 1872: Two or more persons are said to consent when they agree
upon something in the same sense.
In the above definition it shows that (i) At least two persons are
must (ii) for the same thing and same sense.
ILLUSTRATION : At least two persons are must:- A agrees to
sell his house to B for Rs.50,000/- B accepts this proposal.
For same thing and same sense:- A have two cars; one Maruti
and the other is Fiat. He agree to sell to B. A might be thinking
to sell Maruti car while B might be thinking to purchase fiat car.
In this example A & B do not agree upon the same thing in the
same sense, hence there is snot contract in this case.

A Free Consent :- under sec.14 Consent: is said to be free when


it not caused by : i) Coercion Sec. 5.15 (ii) Undue influence
sec..16 (iii) Fraud sec..17 (iv)
Misrepresentation .18 (v)
Mistake 5.20.
In other words consent is free if it is not affected by coercion,
undue influence, fraud and misrepresentation. In case of
consent taken by mistake the consent shall be void.
1.
COERCION ( 5.15) :
Coercion means by force or compulsion. Coercion is a method
of doing consent. This method is against the law. When any
person by doing an illegal act gets the consent of any other
person on an agreement it is called coercion. It means:
Explanation : It is immaterial whether the IPC-1860 is or is not
in force in the place where the coercion is employed.
(a) Threading to commit any act forbidden by IPC: If consent
obtained by threat of committing act forbidden by SC it called is
coercion. Example : A kidnapped a son of B, A says you give me
your scooter in Rs.50/- then I will give you your child. B agreed,
it is a coercion. Case : Masjidi v/s Ashiya 1880: It was held that
it cannot be simple upon these facts that the consent of such
person was caused by coercion.
Case:- Raganayaswami V/s Alyar Sette A Madrasi man died
leaving behind a widow. The relative of the dead threaded the
widow to adopt a boy otherwise they will not allow her to
remove the dead body of her husband. The widow adopted the
boy and subsequently applied to cancel the adoption. The court
held the adoption is not valid.
Muthiah Chettiar V/s Karupan Chettiar
A was an agent of B. A at the end of his services denied to give
account to other agent. He said to B to release him from

liabilities otherwise he shall not give the account book. It held


by coercion.
(b) Threat to commit suicide: It comes under sec.15.
Case: Ammiraja V/s Seshamma
A person held out a threat to commit suicide to his son and wife,
if they refused to execute a release deed in his favour. They
executed the deed in his favour. It was held by the court that this
coercion. According to old filled J threat to commit suicide no
body can be punishable under IPC, and suicide itself not a crime
under IPC, because after suicide no body can be punished. Only
attempt to commit suicide is punishable.
(c) Un lawful detaining of any property : According to sec.15
coercion could also be caused by unlawful detaining or
threatening to detain any property to the prejudice of any person
whatsoever with the intention of causing any person to enter into
an agreement. Property may be moveable or immovable. If one
person detains unlawfully, it is coercion.
(d) To Prejudice of a person : Coercion may be against a party as
well as against any person.
(e) Legal Threatening not coercion:- A commits accident with B.
B says you give me Rs.500 otherwise I shall sue against you. It
is not coercion.
(f) Place of coercion: coercion may be committed at any place. It
may also be committed even outside India.
(g) Burden of proof on Plaintiff:
(h) Remedies: Voidable or restitution.8
Andhra Sugar Ltd. v/s State of Andhra Pradesh 1968 : It was
held that the agreement cannot be said to be by lack of free
consent.
2. UNDUE INFLUENCE : SEC.( 16)

Undue influence means unreasonable influence or improper or


not right influence. When consent is taken by way of
unreasonable influence or improper way then it is not free. The
consent can be declared void on this ground. Section 16 says
that when any person has such position over the other person as
to dominate his will, the person who dominates the will of the
other must have superiority over the other. This is done under
the following conditions.
1. Relationship superior or inferior may be real or apparent
relationship as
(a) Money lender or borrower.
(b) Income Tax Officer and shopkeeper.
(c) Income Tax Officer and assessee.
(d) Police and thief.
Case :- J.R.Bhatt v/s State of U.P. Pt. Was employed in the court
of UP. He wants a leave. Registrar said leave can be granted on
the condition if you will not come in service after the end of
leave. He wrote it. It was held by servant under undue reference
influence.
(B) Fiduciary Relationship :- 1. Advocate & Client. 2. Master &
Servant. 3. Guru and chela 4. Father and children 5. Teacher
& student. 6.Doctor & Patient. 7. Creditor and Debtor. 8.
Trustier and benefishes. Case : Manu Singh v/s Umadat
Pandey : An old Hindu woman gifted the whole property to her
religious guru to get peace in heaven. It held undue influence .
Parda-Nashin women : contract with parda-nashin women is
presumed to have been induced by undue influence. She can
avoid the contract unless he other party can show that it was her
intelligent and voluntary act, A case : Ismiel v/s Amir Bibi
1902 : It was held that the women does not become parda-nashin
women.

Mental sickness:-If one party is not in position to think his


interest due to mental sickness. Case : Rani Annpurna v/s Swami
Nath. A widow who did not have any mental fitness went to
creditor, she got Rs.1500/- or 100% interest. It was held
voidable because she was not in a position to give free consent.
The Party attempted to influence the will of other party. A state
of mental fear is not undue influence. If a party is in a position
to influence others will it is not undue influence whether other
party gets damaged.
2. Real Damage :- If no damage is done to the Pt. Then it will
not be undue influence. Remedies : 1. Voidable u/s 19.2.
Restitution u/s 64 3.damages u/s 73. The court under section 19
can declare the whole agreement as void or the court may be
declared it void on reasonable condition.
Burden of Proof. : Pt. Will have to prove that the def. Was in a
position to dominate the will of the pt. Thus if such relationship
is proved by the pt. The court will presume the undue influence.
Now burden to disprove this presumption comes on defendant,
that there was no undue influence. He should prove that he did
not try to dominate other will.
He paid sufficient consideration to aggrieved.
That the plaintiff had opportunity to take free advice.
Effect of Undue Influence:- Section 19A says when consent to
an agreement is caused by undue influence, the agreement is a
contract, voidable at the option of the party whose consent was
so caused.
FRAUD UNDER SECTION (17):Section 17 defines that Fraud includes any of the following
act committed by a party to a contract or with his connivance or
by his agent with intent to deceive another party there or his
agent or to include him, to enter into the contract( whenever a

person obtains any material advantage from another by unfair


and wrongful means. It is said that he has committed fraud.
Fraud is the wilful representation made by a party to contract
with the intent to deceive the other party or to induce such party
to enter into a contract.
ESSENTIALS OF FRAUD :- (1) To give a suggestion that a fact
is true, while it not true: (false suggestion) such suggestion,
which is not true.
Case : Mithu Lal v/s LIC of India :- In this case the court held
that Devlata committed fraud.
i) Active concealment of a fact which is in the knowledge of the
person: Every body has the duty to disclose the defects in the
material or the property while entering to the contract, if it is not
done then the agreement is based on fraud.
Example :- A agrees to transfer his land to B but the land is
already mortgaged to C, A does not disclose this fact. It is a
fraud.
ii) To do such promise without intention of perform(false
promise )
iii) Any other act fitted to deceive.
iv) Any act which is declared by law as fraudulent : such as in
slavery act for companies it has been specified that certain type
of transfer of property is fraud.
v) Fraud committed by partner or agent of the firm: such as
River silver mining v/s Smith AIR 1869: The court held that this
act was done by the Agent of company u/s liabe.
vi) There must be a false representation i.e. A shopkeeper tells B
that these goods are fresh. It is A option to reject it. It will not
be fraud.

vii) Representation must have been made by the Party or by his


agent: The representation must have been made knowing that it
is false without knowing its truth. In both cases it will be fraud.
viii) The representative must have been an intention to deceive.
ix) Mere silence is no fraud: under sec.17: A contracting party is
not obliged to disclose each and everything to the other party.
Merely because a person does not disclose the defects in the
goods sold by him, there is no fraud. Shri Krishan v/s
Kurukshetra University- 1976 : It was held that there was no
fraud by the candidate and the University has no power to
withdraw the candidature of the candidate on that account.
x) There are two exceptional cases where mere silence may
amount to fraud :1. Duty to speak : when the circumstances of the case are such
that, regard being had to them, it is the duty of the person
keeping silence to speak. Keeping silence in such case amounts
to fraud.
Case : Srinivasa Pillai v/s LIC of India, AIR-1977 : It was held
that the claim is not maintainable against the insured
corporation.
2. Duty to disclose changes :- If a statement is true when made,
but subsequently becomes false by the change of circumstances,
there is duty to disclose the change before the other party acts
upon it.
xi)
Ratification : When even after the knowledge committing
fraud party ratifies agreement now he cannot repudiate. Damage,
Restitution.
Prof of Fraud
Fraud is essentially a question of fact and has to be proved by
the person who alleges that the fraud was done on him.

MISREPRESENTATION (UNDER SEC. 18)


When a false statement is made with the knowledge that it is
false and also with the intention to deceive the other party and
make him enter into a contract on that basis, it is known as
Fraud,
But when the person making a false statement
believe the statement to be true and does not intend to mislead
the other party to the contract, it is known as
Misrepresentation it is somewhat different from fraud.
example : A while selling his watch tells B that his watch is
made in Switzerland, A does not know that the watch is not
made in Switzerland. It is fraud because the watch is made in
India. A is guilty of misrepresentation.
It includes :- 1) The positive assertion, in a manner
not warranted by the information of the person making it of that
which is not true, though he believes it to be true. 2. Any breach
of duty which without an intention to deceive gains an
advantages to the person committing it.
ESSENTIALS
1. The positive assertion of material fact: When one party
believes that his statement is true but it is not true, it is called
misrepresentation. Case: The Ocean steam Navigation comp. v/s
Sunderdas Dharmsay: A sold ship telling it is of 28 tons but it
was of less tons. A did not know about it. It held
misrepresentation.
2. Any Breach of duty : When on Party without intention of
committing fraud breaches duty and if he also takes benefit from
the agreement it will be misrepresentation. Case : Bamarsi Dass
v/s New India Assurance : Actually one liability of party
released in that deed held misrepresentation. There was the duty

of the party to disclose the fact of deed. B could not read it but
he did not. It means he trusted on A and it is his false statement,
which held then it is Misrepresentation.
3. Innocent Misrepresentation: When false statement is made
innocently then it is Misrepresentation. Smith v/s Land &
House Property Corp.: A sold a hotel and said that all rent
holders are gentleman. Actually they it all were defaulters. It
held misrepresentation. Case : Derry v/s Peek(1889) it was held
that the management of the company was guilty of
misrepresentation, and not for fraud. Another Case : Noor-uddin v/s Umerao Bibi 1998: A sale deed was challenged on this
ground that it was executed under fraud and misrepresentation
seller was a blind person. He was also not paid sufficient
consideration. The possession of property was also transferred to
the buyer, court declared such sale deed to be set-aside.
DIFFERENCE
BETWEEN
FRAUD
&
MISREPRESENTATION
FRAUD
MISREPRESENTATION
1. Fraud contains the intention
It does not contain any such
intention.
To deceive.
2. The facts are altered with the
No such thing in
misrepresentation. Any
Intention to deceive the other is presented as such presented as
such
Person.
Whereas it does not came out
to be true
3. The guilty person has the
The guilty person has no
knowledge of
Knowledge of truth.
Truth.

4. Fraud is a type of tort and


It does not come under tort.
So punishable.
5. Contract by fraud can be
Contract by
misrepresentation can only
Rescinded to demand
be rescinded not demand
compensation
Compensation.
6. The guilty person can not
Such defence could be
availed.
Take the defence that the
Victim person as plaintiff
Could have find out the
Truth.
MISTAKE (Section: 20-22)
The fifth element defecting the consent is MISTAKE, contract
by mistake are either void or voidable. It is not a free consent.
One or both of the parties may be working under same.
Mistake is of three kinds :1. Mistake in the mind of the parties is such that there is no
genuine agreement at all. There is no meeting of minds or
consensus ad idem.
2. There may be mistake as to a matter of fact relating to that
agreement.
3. The mistake essential to the agreement as to the subject
matter.
TYPES OF MISTAKE :Mistake when there is no consensus ad idem: According to
sec.13: two or more persons are said to consent when they agree
upon the same thing in same sense. If there is no meeting of

minds or consensus ad idem, there arises no contract which


could be enforced.
Section 20 requires that:- Mistake of both the parties : The
agreement is void if there is mistake on the part of both the
parties. A case Ayekam Angahal Singh v/s Union Bank Of India,
AIR- 1970: It was held that since the mistake was unilateral, the
contract was not affected thereby and the same could not be
avoided.
According to Sec.21 of the Contract Act which lays that mistake
of law of country is not excusable i.e. any contract is done under
a mistake of law being followed in India then such contract shall
not be voidable, but if contract is under a mistake of foreign law
that i shall be void, i.e. Mistake of Foreign Law and Mistake as
to individual rights. Case : Cooper v/s Phibbs-1867: The court
held that the mistake related to general ownership shall the same
effect what the mistake of fact would have. Mistake of fact is
not excusable.
ILLUSTRATION :- A agrees to buy horse from B at the time
of agreement, the horse had already died but both the parties had
no knowledge of it such, agreement is void.
The following points are important in respect of Mistake of
Fact :1. Mistake must be mutual. Case: Courturier v/s Hastie: 1856: It
was held that the agreement was void because of the mutual
mistake as to existence of the subject matter.
2. Mistake must relate o any substantive fact, like mistake as to
identity of the parties, identity of subject matter identity of
nature of transaction etc.
3. Mistake must relate to present or existing fact.

Case : Raffles v/s Wichellehaus 1864 : It was held that owing


to mistake as to the identity of subject matter of contract, such
contract was void.
4. Mistake as to Promise:- If a mistake because of which the
promise does not reflect the real intention which was there in the
proposed agreement, such an agreement would be void. Case
:Hartog v/s Colins& Shields: 1939 It was held that there had
arisen no contract in this case because the buyer could have
noticed the mistake.

Q.No. 7:- Explain the law relating to agreement in restraint of


trade with reference to Indian Law along-with exceptions.
Answer :-INTRODUCTION : Section 25 to 30 of the Indian
Contract Act-1872 mentions that those agreement which are
void. Void agreement are defined in sec. 2(g) of the act.
According to it :- An agreement not enforceable by law is said
to be void. Thus sec.25 to 30 of the act mentions following
agreements to be void :AGREEMENT IN RESTRAINT OF TRADE
Section 27 of the act mentions that all such agreements shall be
void which creates restraint or partial restraint in any type of
occupation, trade or business of a person. In simple language,
agreements creating restraint in lawful trade, occupation or
business are void.
Indian constitution provides every person the freedom to trade,
occupation or business. This freedom cannot be interfered
except in certain situation. Freedom of trade, occupation or
business is in accordance to public policy. This is the reason that
this provision has been mentioned in sec.27 of the act. But it is
important that a reasonable restraint on trade, occupation or

business shall not make an agreement void. The requirement is


that restraint shall be reasonable.
Case : Northernfelt v/s M.N.Felt Guns and Ammunition Co. Ltd.
1894: It was held that before declaring agreement in restraint of
trade to be void, the reasonability of restraint shall be examined
and the examination shall consider mainly that whether it is
reasonable or not for parties or public interest.
Illustration : If two neighbouring land owner agrees that they
shall not organise market for cattle on their lands on the same
day then such agreement shall not be void because it is in the
interest of both.
Case : Ms.S.Dey Forments Industrial Ltd v/s Ravindera Nath
S.Kamath 1999: It was held that where any person is appointed
in a company as an advisory and a condition is laid that he shall
not act anywhere during his service, there such an agreement
shall not be void.
The above rules does have few exceptions which are under :1. Sale of Goodwill : Where the goodwill of any trade,
occupation or business is sold, there the buyer shall have an
agreement with the seller that the seller shall not do any such
business within the local limits for a specific time which shall be
done by the buyer with that goodwill. Four things are necessary
for the exception:
i) Trade is similar.
ii) Within specified local limits.
iii) Buyer is doing such business.
iv) The restraint is reasonable in the eye of court.
Case : Gujrat Bottling Co. Ltd. v/s Coca Cola Co. 1995: It was
held that provisions related o agreement in restraint of trade
shall not apply in such matters in which are prohibited only for

the time of existence of contract. If they are applied even after


the termination of contract, then i shall be void.
2. Partnership Agreements : Where there is an agreement
between partners at the time of formation of firm that any
partners shall not carry a similar or otherwise any trade during
the existence of partnership, then such an agreement is not
considered to be creating restraint.
3. Dissolution of Partnership :- If any agreement is made
between the partners at the time dissolution of partnership or a
partner shall not carry a business similar to that of firm for a
specific time, then such agreement shall not be void provided
that it is reasonable.

Question No.8 : What do you understand by Quasi-contract?


State its essential features. OR
Quasi-Contract are in law but not in fact. Explain. OR
Quasi- contract is not the product of an agreement entered into
parties but a creation of law on the basis of equitable principles.
Discuss the above statement and state the quasi contract
relations recognised by the India in Contract Act.? OR
What do you understand by Quasi-contracts? Explain some
relations which are resembling to those created by contracts as
incorporated under the Indian Contract Act 1872.
Answer :- INTRODUCTION: For a valid contract there must be
offer, acceptance and consideration with some other
requirements. But sometime the position comes when there is
neither offer not acceptance still there is contract. Such position
is put under the category of Quasi- Contract or relation
resembling to those contract.

The term Quasi Contract generally means half or semi. It


means Quasi contract is half or semi contract. But this meaning
does not fulfil our aim. It is a confusing term. However we can
say that quasi contract means the contract, which is equal to
that of a valid contract. Chapter 5 of the Indian Contract Act
deals with such situations under the heading of certain relations
resembling to those created by contract. The chapter avoids the
word quasi-contract.
Generally the contracts or agreements are the result of acts of
parties. Parties agree to do or not to do something but several
times there is no agreement between the parties, but still the
liabilities arise between the parties such liabilities are called by,
Quasi-Contract.
Definition : Indian Contract act does not define the Quasicontracts. It only mentions that, certain relations resembling
those created by contract. However the various jurists have
defined the Quasi-contract as under:-:According to Whartons
Law Lexicon: An act which has not strict form of a contract
but has the effect of it, is an implied Contract.
According to Desai : Quasi contract or implied contracts are
exceptional kind of contracts by which one party is bound to pay
money in consideration of something done or suffered by the
other party. They are not founded on actual promises but arise
when one party so conducted himself that he must be deemed as
if had made promise although he has not,
According to Pollock:- Quasi contracts are contracts in law but
not in fact. In other words it can be said that Quasi contracts is
not a product of an agreement entered into parties but a creation
of law on the basis of equitable principles.
Basic of Quasi-Contract : Lord Mansfied is considered as the
father of this contract. According to him, Natural justice

demands that one should not get unjust profit at the cost of
another unjust loss. This order has been laid down in the case
of :- MOSES v/s MACFERLAN : Such action lies for money
paid by mistake or upon a consideration which happens to fail or
for money got through imposition or extortion or oppression or
for an undue knowledge taken of the pts situation. Country to
the law made for protection of persons under those
circumstances of the case. It is obliged by lies of natural justice
and equity o refund the money.
Under section 68 to 72 It has been recognised by Indian
Contract act under the heading of , Certain relations resembling
to those contracts.
CHARACTER/SKETCHES OF QUASI-CONTRACTS
1. These agreement are never made by parties but imposed by
law.
2. One party is bound to pay money to other party.
3. Such contract gives right to one party. Again the other party in
not against world.
4. Only money can be obtained not the liquidated damages.
KINDS/ESSENTIAL OF QUASI-CONRACT
1. Necessaries supplied to a person of contracting: Sec. 68 says
that if a person who is incapable to enter into a contract is
supplied necessaries, then he is bound to compensate the
suppler. Incapable means, who are not capable under sec. 11 and
12, Minor is insane or disqualify by law. If basic necessities are
supplied to this, it will be deemed quasi contract and its price
can be recovered through medical aid, clothes, food, marriage of
minors sister etc., that is depending upon him. Minors

marriage is not a basic necessity. The ingredients of sec.6 are as


under :
i) Necessaries supplied to a person not competent to make
contracts.
ii) These goods must be for the basic needs.
iii) The goods must be according to the status of minor.
iv) The supplier can recover the price against the property of
minor. It is not personal liability.
Case : Chapple v/s Cooper: 1844: It was held the things for
necessities shall be considered those without which it is not
possible to live. The food, clothing, shelter, medicine etc., are
the necessaries to minor or lunatic. But it must not be more than
sufficient.
2. PAYMENT BY AN INTERESTED PERSON : Section 69 of
act is provides that a person who is interested in the payment of
money which another is bound by law to pay, and who therefore
pays it, is entitled to be reimbursed by other.
ILLUSTRATION : B holds land in Bengal, on a lease granted
by A, who is a zamidar. The revenue payable by A to the
government being in Wlaw, the consequences of such sale will
be the annulment of Bs lease. B prevent the sale and
consequent annulments of his own lease, pays to the government
the sum due from A. A is bound to make goods to B the amount
so paid.
i) Person is legally bound to pay money.
ii) The person paying has the interest in such paymen.
iii) Payment is t o be made to another person.
Case : Govind Ram Gordhan dass Sekajri v/s State of Himachal
: Where Maharaja, having sold mills without paying the overdue
municipal taxes was sued by the buyer, who had to pay to save
the property from being old. The Privy Council held that he was

bound by law to pay without the meaning of the sec. Where a


person is only morally bound and is not legally compellable to
pay he will not bound to pay.
3. LIABILITY TO PAY FOR NON-GRATUITOUS ACT: When any person lawfully does any act for another person not
gratuitously and the other person has enjoyed the benefit of that
act then he is bound to compensate him.
ILLUSTRATION:- A is a trade man leaves goods at Bs house
by mistake. B treats the goods as him own. He is bound to pay
A for them. A Case : Subramanyam v/s Thaippa 1961: A
contractor did more build more that what was required by the
contract and did not intended act gratuitously. Court held that
the contractor was entitled to compensation for extra work.
Essential conditions of section 70:i) One person legally works for other
ii) The act is done voluntarily.
iii) He gets some benefit for this work.
iv) To whom it is done takes benefit of that act.
v) Act has been done not gratuitously.
A case : Kanhiya Lal v/s Inder chand: The court held that section
68 does not apply because she was a minor at sec.70 also does
not apply because she did not get any benefit. Because it was not
a quasi-contract as his friend having no interest in this payment.
4. Responsibility of Finder of Goods:- Section 71 of the Act
provides that a person who finds belonging to another there will
be a quasi contract . If bailment between two looses all the rights
and duties of bailer and balee will be presumed under section
165 & 169( rights and Duties of bailee).
5. MISTAKE OF COERCION:- Section 72 of the act says that,
when anything is delivered by way of mistake then it is the duty

of the person to return that things to the concern person or to


compensate him.
A case :- Sales Tax Officer Banaras v/s Kanhayya Lal : In this
case it was held that the transactions is to be ultra-wires. The
firm was allowed to recover back the tax which he had paid.
Similarly if any person takes any thing from another person by
coercion i.e. by way of force under this petition also the person
is bound to return the goods to the concerned person under
quasi-contract obligation.
For example :- A at the point of pistol takes some gold rings
from B. Here A is bound to return the gold rings to B under
quasi contract obligation. The word coercion is same as defined
in sec.15 and the word mistake is same as defined under sec.20.
There are the provisions with regard to quasi-contract.
CONCLUSION
Thus, in all above matters there is no agreement between the
parties but the conduct and actions of parties show that an
agreement has originated between them and get binding in
similar way as like a contract. This is called Quasi-Contract.

UNIT-III
Question No.9:- Explain the term Anticipatory Breach of
Contract and discuss the consequences of such a breach.
OR
Discuss the consequences of breach of contract with relevant
case.
OR
Who must perform the Contract? Who can demand for the
performance of Contract?

Answer: INTRODUCTION ; Contracts are important when they


are performed. There are two main questions in this respect :i) Who shall perform the contract,
ii) Who can enforce the performance of the contract.
i) Who shall Perform a Contract :- Section 40 of the Act
mentions that generally the contract shall be performed by the
promisor itself if the parties has such intentions. Otherwise the
promisor can employ any other person for the performance of
contract.
Generally contract based on personal qualifications shall be
performed by the promisor himself. For example, A promise to
paint a picture for B. The performance of contract requires it to
be done by the promisor himself because painting in personal
skill of A. Whereas the contract of sale of property can be
performed by promisor himself or by some other person.
Promisor can perform a contract by himself in the following
conditions :
a. Where the intention of parties was that the contract shall be
performed by the promisor only.
b. Where the performance depends upon personal skill of
promisor. Such contracts get terminated on death.
c. By Agent :- If the performance of contract does not depend
upon personal skill, then such contract can be performed by the
agent of promisor. Generally such contracts are contracts for the
sale of property.
d. By Legal Representative : Where the promisor dies before the
performance of contract and the performance does not depend
upon personal skill of promisor, there such contracts shall be
performed by the legal representatives of deceased promisor, but

only up to that limit to which the legal Representative had the


interest in the property of deceased.
e. By Third Person:- Where promises accepts the performance
from a third person, there such promise can be performed by that
third person. In such mattes, promise cannot enforce
performance from promisor under section 41 of the Indian
Contract Act.
PERFORMANCE OF JOINT PROMISES
There are provisions in the Indian Contract Act in this respect:i) Under section 42 of the act when two or more persons have
made a joint promise, all such persons must jointly fulfil the
promise.
ii) When any one of joint promisor dies, his legal representatives
shall perform the promise.
iii) Under section 43 of the act when two or more persons make
a joint promise, the promise may compel any of such joint
promisors to perform the whole promise.
iv) Section 44 of the act says that where two or more persons
have made a joint promise, a release of one of such joint
promisor, by the promisee does not discharge the other promisor
of joint promisors neither does it free the joint promisor so
released from responsibility to the other joint promisor or joint
promisors.
WHO CAN DEMAND FOR THE PERFORMANCE OF
CONTRACT.
The following persons can demand for the performance of the
contract :a) The first right for the performance of contract is with the
promisee. He can demand for the performance of contract.

b) If the contract is not of personal nature then on the death of


promisee his legal representative or representatives can demand
the performance.
c) Where there is joint promise, there all the joint promisors can
jointly demand.
d) Where any one of the joint promisee dies, then the legal
representative of such deceased shall demand for the
performance.
e) Where are promisee dies, then their legal representatives can
demand the performance.
ANTICIPATORY BREACH OF CONTRACT:
Section 39 of the Act provides for the Anticipator Breach of
Contract which means : That before the performance of the contract, any party to
contract refuse to perform the promise or contract or makes
itself disable for performance is breach of contract.
ILLUSTRATION :- A singer enters into a contract with B the
manager of theatre to sing at his theatre for two nights in every
week during the next two months and B agrees to pay her
Rs.1000/- for each nights performance. On the sixth night A
wilfully absents herself from the theatre. B is at liberty to put an
end to the contract. In such cases promisee can cancel the
contract.
The base of section 39 is when a party to a contract has refused
to perform or disable himself from performing his promise in its
entirety, the promisee may put an end to the contract, unless he
has signified by words or contract his acquiescence in its
continuance.
REMEDIES :
The following remedies are available against the anticipatory
breach of contract :-

1. The promisee can file a suit for the breach of contract


considering it to be actual breach.
2. The promisee shall wait till the actual date of performance
and then file the suit.
3. Specific performance and Injuction : sometimes a party to the
contract instead of recovering damages for the breach of
contract may have protection to the alternative remedy of
specific performance of the contract.
4. Damages : Remedy by way of damages is the most common
remedy available to the injured party. This entitles the injured
party to recover compensation for the party who causes the
breach. Sec.73 to 75 incorporate the provisions in this regard. A
case : Hadley V/s Baxendale-1854: It was held that the special
circumstances were not communicated by the plaintiffs to the
defendants. The plaintiffs were therefore not entitled to recover
the loss.
Victoria Loundry Ltd. v/s Newman Industries Ltd. 1949.
It was held that the defendant had the knowledge of the fact. The
case was referred to official Referee to determine the damages
payable in this case.
5. Quantum Meruit:- When the injured party has performed a
part of his obligation under the contract before the breach of
contract has occurred, he is entitled to recover the value of what
he has done under this remedy.
6. Measure of Damages :- That after certain result of the breach
of contract in nearest time is to be compensated. Damages are
therefore, to fix amount of that basis if a party takes security
deposit from the other for the due performance of the contract.
A case : State of Kerla V/s K.Bhaskaran 1985.

It was held that generally 10% profit is taken as an element in


the estimation of the contract and the contractor was entitled to
claim compensation on that basis.