INDORE INSTITUTE OF LAW

(Affiliated. to BCI and DAVV)

LL.B. - Ist Semester

INDIAN CONTRACT ACT
Crash Course
Session – 2022-23

Q.1 What do you mean by contract? Describe the essentials of a Valid Contract.
Ans.

Introduction ;- According to of section 10, as All agreement are contracts if they are made by the
free consent of parties competent to contract, for a lawful consideration and with a lawful object,
and are not hereby expressly declared to be void. The essential element of contract is as follow,

In simple terms, a contract means when two parties put into writing an agreement which contains
certain obligations (promises) which are to be performed by such parties, and when such written
agreement becomes enforceable by law, it becomes a Contract. Enforceable by law means when
the agreement has acquired the force of law only for those who are a party to it and a violation of
those obligations would attract legal action, including repudiation of the entire contract

Essentials of a Valid Contract

Section 2(h) of the Indian Contract Act, 1872, defines the term "contract" as 'an agreement
enforceable by law.'

As per Sec. 2(e), 'every promise and every set of promises forming consideration for each other'
is called an "agreement". An 'agreement' is a promise and a 'promise' is an accepted proposal.
Thus, every agreement is made up of a proposal or offer from one side and its acceptance by the
other (this there must be two or more persons; one person cannot enter into an agreement with
himself).

An agreement is a wider term than a contract. Every contract is an agreement, but every
agreement is not a contract. An agreement becomes a contract when the following conditions
mentioned in Sec. 2(h), Sec. 10 and other sections of the Contract Act are satisfied:

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 Two Parties:

One cannot contract with himself. A contract involves at least two parties-
one party making the offer and the other party accepting it. A contract may
be made by natural persons and by other persons having legal existence

● Lawful offer and Acceptance

These must be a ‘ lawful offer ‘ and a ‘ lawful acceptance ‘ of the offer, thus resulting in an
agreement. The adjective ‘ lawful ‘ implies that the offer and acceptance must satisfy the
requirements of the Indian Contract Act in relation thereto.

● Intention to create legal relation

There must be intention among the parties that the agreement should be attached by legal
consequences and create legal obligations. Agreements of social or domestic nature do not
contemplate legal relations, and as such, they do not give rise to a contract

For example:

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 1. An agreement to dine at a friend’s house is not an agreement intended to create legal
relations and therefore is not a contract.
2. An agreement between husband and wife also lacks the intention to create a legal
relationship and thus do not result in a contract.

● Lawful consideration
The third essential element of a valid contract is the presence of consideration. Consideration has
been defined as “the price paid by one party for the promise of the other.” An agreement is
legally enforceable only when each of the parties to it gives something and gets something. The
something given or obtained is the price for the promise and is called ‘consideration’. But only
those considerations are valid which are ‘lawful’.

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 ● Capacity of parties
The parties to an agreement must be competent to contract; otherwise, it cannot be enforced by a
court of law. In order to be competent to contract according to section 11 the parties must be :
1. Of the age of majority;
2. Of sound mind:
● Must not be disqualified from contracting by any law to which they are subject.
Thus, if any of the parties to the agreement suffers from minority, lunacy, idiocy, drunkenness,
etc.

● Free consent
Consent’ means that the parties must have agreed upon the same thing in the same sense (
section 13). Free consent of all the parties to an agreement is another essential element of a valid
contract.
There is an absence of ‘free consent’. If the agreement is induced by any of the following factors:
1. Coercion
2. Undue influence,
3. Fraud
4. Misrepresentation, or
5. Mistake

Certainty and Possibility of Performance

The agreements, in which the meaning is uncertain or if the agreement is not capable of being
made certain, it is deemed void. T&C of the contract should always be certain and cannot be
vague. Any contracts that are uncertain are considered void. The terms of the agreement must
also be capable of performance and should not enforce impossible acts.

Case laws

LEADING CASE: MCGREGOR V MCGREGOR (1888) 21 QBD 424

In this case, a husband and a wife withdrew their complaints under an agreement by which the
husband promised to pay her an allowance and she to refrain from pledging his credit. Held that
there is a binding contract. However, in Balfour v Balfour (1919) 2 K.B. 571, a couple went to
England on leave. For health reasons the wife was unable to accompany the husband again to
Ceylon (Husband's place of work). The husband promised to pay 30 pounds per month to his

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wife as maintenance, but he failed to pay. The husband was held not liable, as there was no
intention to create a legal relationship.

The court observed that arrangements between husband and wife usually do not result in
contracts, even though there may be what would constitute consideration for the agreement. The
reason being the parties did not intend that they should be attended by legal consequences.4
Atkin, L.J., in the aforesaid case, reasoned that arrangements such as these are outside the realm
of contracts altogether, otherwise it will result in multiplicity of litigation. Not only could she
sue him for the failure in any month to supply the allowance, but he could sue her for non-
performance of the obligations, express or implied, which she has undertaken upon her part. The
reason that such arrangements are not sued upon is not because the parties are reluctant to
enforce their legal rights when the arrangement is broken, but they are not sued upon because the
parties in the inception of the arrangement never intended that they should be sued upon.]

Q.2 . What do you mean by revocation of offer?. Also discuss the different kinds of offers.

Ans. Types of offer

OFFER AND INVITATION TO OFFER

EXPRESS OFFER
IMPLIED OFFER
GENERAL OFFER
SPECIFIC OFFER
COUNTER OFFER
CROSS OFFER
STANDING OFFER

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OFFER AND INVITATION TO OFFER

An 'offer' is the final expression of willingness by the offeror to be bound by his offer.
Sometimes a person may not offer to sell his goods, but make some statement or give some
information with a view to inviting others to make offers on that basis. Where a party, without
expressing his final willingness, proposes certain terms on which he is willing to negotiate, he
does not make an offer but merely 'invites' the other party to make an offer on those terms.

For example

A book-seller sends a catalogue of books indicating the price of various books to many people.
This is an 'invitation to treat'. The interested party may make an offer and the book-seller may
accept or reject the offer. Similarly, advertisements for bids/ tenders are only 'invitation to offer';
the bid/tender constitutes the offer which can be accepted or rejected. An auctioneer is not bound
to accept even the highest bid (offer). Where an auctioned sale was cancelled, the plaintiff cannot
recover travel expenses, as there was no contract. An offer can be withdrawn before it is
accepted.

EXPRESS OFFER

In so far as the proposal or acceptance of any promise is made in words, the promise is said to be
expressed.

IMPLIED OFFER

In so far as such a proposal or acceptance is made otherwise than in words, the promise is said to
be implied.

GENERAL OFFER

A General Offer is an offer that is made to the world at large. The genesis of a General Offer
came about from the Landmark case of Carlill v. Carbolic Smoke Ball Co. A company by the
name Carbolic Smoke Ball offered through an Advertisement to pay 100 Pounds to anyone who
would contract increasing epidemic Influenza, colds or any disease caused by cold after taking
its Medicine according to the prescribed instructions. It was also added that 1000 Pounds have
been deposited in Alliance bank showing our sincerity in the matter. One customer Mrs Carlill
used the medicine and still contracted Influenza and hence sued the company for the reward.

The Defendants gave the argument that the offer was not made with an intention to enter into a
legally binding agreement, rather was only to Puff the sales of the company. Moreover, they also
contended that an offer needs to be made to a specific person, and here the offer was not to any
specific person and hence they are not obliged to the Plaintiff.

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Setting aside the arguments of the Defendant, the bench stated that in cases of such offers i.e-
general offers, there is no need for communication of acceptance, anyone who performs the
conditions of the contract is said to have communicated his/her acceptance, and moreover, the
money deposited by the Defendant in Alliance Bank clearly shows that they intended to create a
legally binding relationship. Hence the Plaintiff was awarded with the amount. An Indian
authority in this regard is Lalman Shukla v. Gauri Dutt, wherein a servant was sent by his master
to trace his missing nephew. In the meanwhile, he also announced a reward for anyone finding
his nephew, this in itself is an example of an offer that is made to the world at large and hence a
General Offer.

Specific offer

A Specific offer is an offer that is made to a specific or ascertained person, this type of offer can
only be accepted by the person to whom it is made. This concept was seen briefly in the case of
Boulton v. Jones, wherein the Plaintiff had taken the business of one Brocklehurst, the defendant
used to have business with Brocklehurst and not knowing about the change in ownership of
business, sent him an order for certain goods. The Defendant came to know about the change
only after receiving an invoice, at which point he had already consumed the goods. The
Defendant refused to pay the price, as he had a set off against the original owner, for which the
plaintiff sued him.

Cross offer

When two parties make an identical offer to each other, in ignorance to each other’s offer, they
are said to make cross offers. Cross offers are not valid offers. For example- if A makes an offer
to sell his car for 7 lakhs to B and B in ignorance of that makes an offer to buy the same car for 7
Lakhs, they are said to make a cross offer, and there is no acceptance in this case, hence it cannot
be a mutual acceptance.

1. Same offer to one another- When the offeror makes an offer to the offeree and the

offeree without prior knowledge makes the same offer to the offeror, then both the

object and the party remain the same.

2. Offer must be made in ignorance of each other- The two parties must make their offer

in ignorance of each other.

Counter offer

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When the offeree offers a qualified acceptance of the offer subject to modifications and
variations in terms of the original offer, he is said to have made a counter offer. A counter offer
is a rejection of the original offer. An example of this would be if A offers B a car for 10 Lakhs,
B agrees to buy for 8 Lakhs, this amounts to a counter offer and it would mean a rejection of the
original offer. Later on, if B agrees to buy for 10 Lakhs, A may refuse.

Revocation of offer

By notice of revocation
By lapse of time
By death and insanity of parties
By counter offer
By non-fulfilment of conditions
By subsequent illegal
By non-acceptance of offer

Communication of proposal and acceptance

When the proposal is accepted it creates legal relations between the two parties. Effective
communication and a clear understanding of it is important to avoid misunderstanding between
all the parties. When the parties are talking face-to-face the communication happens in real time
and the offer and acceptance can be communicated on the spot, creating no confusion. But often
in business the communication occurs via letters and emails etc. So, in this case, the timeline of
communication is vital.

Mode of Communication

All communication should be according to the prescribed mode. If no mode is prescribed, the
communication must be through an acceptable mode. If the offer is not accepted according to the
prescribed or usual mode, the offer lapses provided the offeror gives notice to the offeree within
a reasonable time that the acceptance is not according to the mode prescribed.

Revocation of Proposal

The party who has made the proposal can withdraw the proposal any time before the
communication of acceptance is complete as against the proposer. The communication of
acceptance of a proposal is complete against the proposer when it is put in a course of
transmission to him, so as to be out of the power of the acceptor (Sec 4, Indian Contract Act
1872). The proposing party must communicate the revocation to the other party before the other
party accepts the offer. Once the revocation has been communicated to the other party, the
original proposal stands cancelled and the other party cannot legally accept the proposal as the

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proposal is not in existence anymore. Revocation comes into effect as soon as it has been
communicated to the relevant party.

In Byrne & Co. v Leon Van Tienhoven & Co (1880) LR 5 CPD 344, Common Pleas Division
the court held that withdrawal of an offer by telegram is only valid if the telegram is received
before the offer is accepted.

Section 5 of the Indian Contract Act deals with the revocation of the proposal. A proposal can be
revoked by giving a notice of revocation to the other party.
Communication of revocation can be direct or indirect and can be made by a third party. If the
communication is indirect, it needs to be clear, unambiguous and understood by a “reasonable
person” and should be communicated by a reliable source.

Selling an item to someone else is considered a legal revocation so long as the original offeree is
notified of the sale before they accept the offer.

In Dickinson v. Dodds (1874 ) the court opines that “If an offer has been made for the sale of
property, and before that offer is accepted, the person who has made the offer enters into a
binding agreement to sell the property to somebody else, and the person to whom the offer was
first made receives notice in some way that the property has been sold to another person, can he
after that make a binding contract by the acceptance of the offer? I am of opinion that he
cannot.” This case further establishes that the party making the offer can communicate the
revocation through a third party.

In Payne v. Cave (1789): The defendant withdrew his bid which was the highest in the action
sale, before the fall of the auctioneer’s hammer. It was held that the defendant was not bound to
purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any time
before the auctioneer signified acceptance by knocking down the hammer.
Offers made through a publication are something of a special case. These offers can be revoked
by a notice in that publication without specifically contacting the offeree.
The communication of revocation is dealt with in section 4 of the Act.

The communication of a revocation is complete:

as against the person who makes it, when it is put into a course of transmission to the person to
whom it is made, so as to be out of the power of the person who makes it; as against the person
to whom it is made, when it comes to his knowledge.

Communication of Acceptance

In communication of acceptance, there are two factors to consider, the mode of acceptance and
then the time of acceptance. Acceptance can be by an act which includes communication by
words, oral or written through phone, letters, e-mails, fax, etc. or by conduct like boarding a bus
etc.

When is Acceptance complete? Time of acceptance

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A proposal can be accepted by the offeree any time before the communication of revocation is
complete against him. Once accepted by the offeree the communication of acceptance is
complete: as against the proposer, when it is put in a course of transmission to him, so as to be
out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the
proposer.

Revocation of Acceptance

There can be instances where a proposer makes an offer and the acceptor accepts the proposal
and communicates the same to the proposer. Can the acceptor revoke/cancel this acceptance?
Yes, the acceptor can cancel this acceptance before the communication of acceptance reaches the
proposer. That is before the communication of acceptance is complete as against the acceptor. If
the revocations of acceptance reached the proposer before the acceptance comes to the
knowledge of the proposer there can be a valid revocation of acceptance. The Revocation of
Acceptance is complete only at any time before the communication of acceptance is complete as
against the acceptor, but not afterwards.

Communication of Revocation of Acceptance

The communication rules for revocation of offer will be applicable to revocation of acceptance
as well. The communication is complete against the proposer when it comes to is knowledge.

Instantaneous Communication

Where the communication of acceptance is instantaneous, the contract is effective when the
acceptance is received (Entores Ltd v. Miles Far East Corp [1955]). The court held the postal
rule does not apply to instantaneous forms of communication. As a result, in the case of
instantaneous communications (including by telex) acceptance occurs when and where
received. Lord Justice Denning concluded that the rule about instantaneous communications
between the parties is different from the rule about the post. The contract is only complete when
the acceptance is received by the offeror; and the contract is made at the place where the
acceptance is received.

Significance of communication in online and traditional contract

A contract formed electronically will be valid provided all the elements of a valid contract are
present. The use of digital contracts and electronic signatures has become a common thing in the
present era. Traditional contract law principles can and should apply to electronic contracts. To
ensure the validity and enforceability of contracts formed electronically, the application of both
electronic and traditional contracts should be considered. With the growth of e-commerce there
is a rapid advancement in the use of e-contracts. But electronic contracts pose a lot of challenges.

Communication via the Internet

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With the exponential growth of the internet for communication and the availability of various
communication tools via the internet, the formation of online contracts has become very
common. The traditional contract law as it has developed is insufficient to apply for electronic
contracts. There is no clarity as to which rule of communication is to be applied in cases of offer
acceptance and revocation through the internet. With technological advancements, situations are
not as simple as a post, a telegram, or a fax.

Online users use email, facebook and Instagram for communication.

When someone sends a message through these mediums and the other party replies immediately
these can be taken as instantaneous communication but what if the other party replies later can it
still be categorised under instantaneous communication. Besides there can be cases where the
message has been delivered to the recipient and the recipient has not seen it
Section 13 of the Information technology Act lays down that when an addressee has designated a
computer resource for receiving electronic record receipt occurs at the time when the electronic
record enters the designated computer resource.
In N.M. Superannuation Pty. Ltd. v. Hughes (Supreme court of New South Wales 1992) the
court’s opinion was that it was reasonable to assume that if a fax machine was kept switched on
then it is available for the purpose of receiving letters or other communications on it. That
amounts to receipt… in that it had made and kept available the means of documents being
received by it. A fax that may have arrived outside normal business hours was considered
enough for notice.

Q.3 An agreement without consideration is void." Explain the rule and state the exceptions, if
any.

Ans.

Consideration constitutes the very foundation of the contract. An agreement not supported by
consideration is void (Sec. 25, Contract Act). Consideration is the cause of the promise and its
absence would make the promise a gratuitous or bare promise (nudum pactum). The fact that a
promise has been made for consideration goes to show that parties contemplated the creation of a
legal obligation.
Anson said that the offer and acceptance bring the parties together and constitute the outward
semblance of a contract; but most systems of law require some further evidence of the intention
of the parties, which is provided by consideration and form. In India, this further evidence is
provided by consideration only. It may be noted that consideration is a cardinal necessity of the
formation of a contract, but no consideration is necessary for the discharge or modification of a
contract.

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Definition

Blackstone defined consideration as the recompense given by the party contracting to the other.
In other words, it is the price of the promise. Thus, Pollock defined consideration as "the price
for which the promise of the other is bought, and the promise thus given for value is
enforceable."

Section 2(d) of the Indian Contract Act defines consideration as follows: "when at the desire of
the promisor, the promisee or any other person has done or abstained from doing, or does or
abstain from doing, or promises to do or to abstain from doing, something, such act or abstinence
or promise is called a consideration for the promise." This definition is wider and more
comprehensive then is accepted in English courts. The three ingredients of this definition of
consideration are:

(1) That the act or abstinence, which is to be a consideration for the promise, should be done at
the desire of the promisor,

(2) That it should be done by promisee or any other person,

(3) That the act or abstinence may have been already executed or is in the process of being done
or may still be executory i.e. it is promised to be done.

LEADING CASE: KEDAR NATH V GORIE MOHAMMAD. [(1886) ILR 14 Cal 64J

In this case, a town hall was to be constructed for which subscriptions were invited from the
public by the commissioners of Howrah municipality. The defendant was a subscriber to this
fund for Rs. 100. It was found that the subscriptions were received or promised to the required
amount of Rs. 40, 000. On the faith of the promised subscription, the plaintiff (Vice-Chairman of
the municipality) entered into a contract with a contractor for the purpose of building the hall.
The defendant failed to pay the amount and contended that there was no consideration for his
promise.
Holding the defendant liable, the court observed that the persons were asked to subscribe
knowing the purpose for which money was to be applied; they knew that on the faith of
their subscription an obligation was to be incurred to pay the contractor for the work. The
promise is: 'In consideration of your agreeing to enter into a contract to erect, I undertake
to supply money for it.' The plaintiff's act in entering into contract with the contractor
was done at the desire of the defendant (the promisor) so as to constitute consideration
within the meaning of Sec. 2 (d).

ESSENTIALS OF VALID CONSIDERATION:

1. Form of consideration: The consideration will always be in the form of some act or
abstinence or a promise for doing or not doing something.

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2. Consideration must be moved or given at the desire of promisor: In agreement there are two
parties i.e. promisor and promise. The consideration is generally given by the promise to pr
omisor. According to this rule any act or promise will be valid consideration if such act has b
een done or promise is made at the desire or request of the promisor.

3. Consideration may be past, present or future: Promisor makes a promise and consideration is
given to him for his promise. If these two act of making promise and getting consideration ar
e done simultaneously, the consideration is known as present consideration. If the considerati
on has been given to the promisor before he makes a promise, it is known as past considerati
on. Consideration may be in the form of promise to be performed in future, such consideratio
n is known as future consideration.
4. Consideration may be moved or given by promise or any other person: Generally in every agr
eement consideration is given by promise to the promisor. But it is not necessary. Any other p
erson on behalf of promise may give consideration. Such consideration will also be valid.

5. Consideration
need not be adequate: According to Indian Contract Act it is not necessary that the
value of promise should be equal to the value of consideration. Even if the value of considera
tion is less than the value of promise, the contract is valid.

6. Consideration must be real and not be illusory: Consideration given must be real and must ha
ve some value in the eyes of law. It must not be illusory, factious, fraudulent, uncertain a
nd illegal.

7. Consideration must be lawful: Agreement to be enforced in the court must be made for lawfu
l consideration. Any act which is illegal, immoral and against public policy will not constitut
e valid consideration for the contract.

Exception 1. Natural love and affection

A written and registered agreement based on natural love and affection between near relatives is
enforceable without consideration. The expression 'near relative' will include parties related by
blood or marriage. The expression 'near relative' will include parties related by blood or
marriage. Love and affection has to be the basis of the promise because otherwise such
emotional expressions and such human sentiments cannot take the place of consideration in the
material sense of the word.
In Rajlukhy Dabee v Bhootnath Mookerjee (1900) 4 Cal WN 488, held that the near
relation between the two parties does not necessarily imply natural love and affection
between them. In this case, the defendant promised to pay his wife a fixed sum of money

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 every month for her separate residence and maintenance. The agreement mentioned
certain quarrels and disagreements between them. The court could find no trace of love
and affection between the parties whose quarrels had compelled them to separate. The
agreement was held to be void for lack of consideration.

Exception 2. Past voluntary service

A promise to compensate a person, who has already voluntarily done something for the
promisor, or something which the promisor was legally compellable to do, is enforceable without
consideration. In other words, a promise to pay for a past voluntary service is binding. Thus,
where A finds B's purse and gives it to him and B promises to give A Rs. 50, this is a contract.
However, such service should have been rendered voluntarily [and not at request, which
is covered by past consideration under Sec. 2(d)] and without promisor's knowledge, and
for the promisor only. This implies that the act must have been done for a person who is
in existence at the time of the doing of the act, and, therefore, it does not cover expenses
incurred by the promoter of a company before the company came into existence
[Ahmedabad Jubilee S. & Co. v Chhotalal (1908) 10 Bom. L.R. 141]

Exception 3. Time-barred debt

A promise to pay a time-barred debt is enforceable. For example, A owes B Rs. 2,000, but the
debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 1,000 on account of
the debt. This promise is enforceable under this exception.
A question arises: Is it necessary that the promise should be given by the person who was liable
for the original time-barred debt? The Bombay High Court has held that "a promise made by a
person who is under no obligation to pay the debts of another .... does not fall within the clause"
[Pestanji M. Modo v Bai Meharbai (1928) 30 Bom LR 1407]. But, according to the Madras High
Court "the words by the person to be charged therewith" in Sec. 25(3) are wide enough to
include the case of a person who agrees to become liable for the payment of a debt due by
another and need not be limited to the person who was indebted from the beginning" (P.
Govindan Nair v P. Achuthan Nair AIR 1940 Mad 678).

A mere acknowledgement of the debt is not sufficient. There must be a promise to pay the debt.
The promise referred to in Sec. 25(3) must be expressed. Thus a debtor's letter to his creditor "to
come and receive" what was due to him, was held to disclose no express promise. Where a tenant
in a letter to the landlord referred to the arrears of time-barred rent and said: "I shall send by the
end of Vysakh month", it was held that the document satisfies the requirements of Sec. 25(3).

Exception 4. Gift

According to Section 25 Exception 1 "No Consideration, no Contract does not apply

to Completed Gifts.

Exception 5. Agency

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 According to Section 185 of the Indian Contract Act 1872, No consideration is necessary
to create an agency.

1. Executory or Future Consideration

Executory or future consideration is one that takes the form of a promise to be performed in the
future. It is the price promised by one party in return for the other party’s promise. For instance,
an engagement to marry someone, or a promise to deliver goods, or to render services at a future
date.

2. Executed or Present Consideration

Executed or present consideration is one which takes place simultaneously with the promise. The
act constituting the consideration is wholly or completely performed. For instance, if A buys a
book from a book-seller and pays the price and the book-seller delivers the book to A there and
then, the consideration in this case is executed or present, since it is performed by both the
parties simultaneously.

3. Past Consideration
Past consideration is one, which took place and is complete before the promise is made.

Q.4 Define and distinguish between Coercion' and "Undue Influence'. State also their effects on
Contract

Consent and Free Consent

A mere consent is not enough for a valid contract. One of the essentials of a valid contract
mentioned in Sec. 10 is that the parties should enter into the contract with their free consent. Sec.
13 defines consent as: 'Two or more persons are said to consent when they agree upon the same
thing in the same sense' i.e. consensus ad idem. In other words, there must be real consent, in the
absence of which there is no contract formed. When there is no consent, the agreement is void.
However, in certain cases there is real consent, but one of the parties has given his consent not
out of his free will but due to factors in the absence of which he might not have given his
consent. Consent so given is said to be not free. In such cases, the contract is voidable.
According to Sec. 14, consent is said to be free when it is not caused by-

(1) coercion (Sec. 15), or

(2) undue influence (Sec. 16), or
(3) fraud (Sec. 17), or
(4) misrepresentation (Sec. 18), or

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(5) mistake, subject to the provisions of Secs. 20, 21 and 22. Consent is said to be so caused
when it would not have been given but for the existence of such coercion, undue influence,
fraud, misrepresentation or mistake.

Where consent to an agreement is caused by coercion, undue influence, fraud or

misrepresentation, the agreement is a contract voidable at the option of the party whose consent
was so caused. If, for example, a person is induced to sign an agreement by fraud, he may, on
discovering the truth, either uphold the contract or reject it. Where consent is caused by mistake,
the agreement is void. A void agreement is not enforceable at the option of either party.
Examples of No free consent
(i) A threatens to shoot 6, if B does not agree to sell his property to A at a stated price. B's
consent has been obtained by coercion.

COERCION

An agreement to which the consent is caused by coercion is voidable at the option of the party
whose consent was so caused. According to Sec. 15, consent is said to be caused by coercion
when it is obtained by pressure exerted by either of the following techniques- (i) committing or
threatening to commit any act forbidden by the Indian Penal Code, or (ii) unlawfully detaining or
threatening to detain any property. The explanation to the section says that "it is immaterial
whether the I.P.C. is or is not in force in the place where the coercion is employed."

Illustration: A, on board an English ship on the high seas, causes B to enter into an agreement by
an act amounting to criminal intimidation under I.P.C. A afterwards sues B for breach of contract
at Calcutta. A has employed coercion, although his act is not an offence by the law of England
and although Sec. 506, I.P.C. was not in force when or where the act was done. A clear
illustration of coercion would be consent obtained at the point of pistol, or by threatening to
cause hurt, or by intimidation. In Chikham Amiraju v Chikham Seshamma (1912) 16 IC 344, a
Hindu by threat of suicide induced his wife and son to execute a release in favour of his brother
in respect of certain properties. Held that me threat of suicide amounted to coercion within
Section 15.

UNDUE INFLUENCE2

According to Sec. 16(1), where the relations subsisting between the parties are such that one of
the parties is in a position to dominate the will of the other, and uses that position to obtain an
unfair advantage over the other, there is said to be undue influence.

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 According to clause (2), a person is said to be able to dominate the will of another (a) where he
holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the
other, or (b) where he makes a contract with a person whose mental capacity is temporarily or
permanently affected by reason of age, illness, or mental or bodily distress.
According to clause (3), where a person who is n a position to dominate the will of another
enters into a contract with him, ant the transaction appears, on the face of it or on evidence
adduced, to be unconscionable, the burden of proving that such contract was not induced by
undue influence shall lie upon the person in a position to dominate the will of the other.

FRAUD

An agreement to which the consent is caused by fraud is voidable at the option of the party
whose consent was so caused. According to Sec. 17, "Fraud" means and includes any of the
following acts, committed by a party to a contract or with his connivance or by his agent, done
with "intent to deceive" or to induce a person (or his agent) to enter into a contract -

(i) the suggestion that a fact is true when it is not true and the person making the suggestion does
not believe it to be true,

(ii) active concealment of a fact by a person who has knowledge or belief of the fact,

(iii) promise made without any intention of performing it (e.g. buying goods with the intention of
not paying the price),

(iv) any other act fitted to deceive, or

(v) any such act or omission as the law specially declares to be fraudulent according to Transfer
of Property Act, the seller of immovable property must disclose to the buyer any material defect
in the property of the seller's title).

Misrepresentation:

According to Sec 18 there is misrepresentation:

1. When a person positively asserts a fact is true when his information does not warrant it to
be so, though he believes it to be true
2. When there is any Breach of duty by a person which brings an advantage to the person
committing it by misleading another to his prejudice
3. When a party causes however innocently the other party to the agreement to make a
mistake as to the substance of the thing which s the subject of the agreement.

Q.5 Whart is void agreement? When agreement is void. Explain.

17
Ans. .The term void means having no legal effect. While entering into any contract there are
some essentials to be fulfilled for it to be legally enforceable. If this conditions are not fulfilled
then agreement is void

Section 2(g) of the Indian Contract Act, 1872 defines void agreements: An agreement not
enforceable by law is said to be void.

Section 24 of the Act

This section explains that the contracts where the object and consideration are not lawful in
nature are held to be void. Even if a part of the object or consideration is illegal, such an
agreement cannot be enforceable and is void.

If any part of a single consideration for one or more objects, or anyone or any part of any one of
several considerations for a single object, is unlawful, the agreement is void. [2]

To understand this section in an easier way let us see an example. A proposes to B that if B sells
5000 kgs of sugar then as payment A gives B 10 kgs of cocaine, such a contract is void. Why is
the contract void? The selling of cocaine (a drug) is illegal, thus such a transaction cannot take
place, the object of the contract is not lawful.

In the case of Alice Mary Hill v. William Clarke, ILR (19050 27 All 266, the defendant
promised to pay some amount of money to the plaintiff for living in adultery with the defendant
and for keeping the house given by him. The former part of this transaction is unlawful thus the
whole agreement was held to be void.[3]

In the case of BOI Finance v. Custodian, (1997) 10 SCC 488: AIR 1997 SC 1952, it was held
that prohibiting a forward transaction in the securities, a part of which were ready for spot
delivery is not applicable.

Section 25 of the Act:

This section explains that agreements without any consideration is void, except:

18
 1. If the agreement is clearly expressed in writing and registered under any law which is in
force at that time for the documents registration. Such an agreement must be made from
natural love and affection between the parties
2. If it is any promise for compensation for a job voluntarily done by the promisor or any
task which the promisor was legally obliged to do so.
3. If it is any promise in writing that is signed by a person or the agent of the said person,
the promise being the payment of a debt (partly or wholly) for which the creditor had
enforced payment but barred by the limitation law.

Note:

In the above-mentioned cases the agreements become contracts. Another point that is significant
is that in an agreement where there is free consent, but the consideration is not adequate. In such
a case the court can take the inadequacy of the consideration for determining whether the consent
of the promisor was actual freely given or obtained with unlawful methods (such as fraud,
coercion, misrepresentation, etc.).

Let us understand this section with the help of an example. A is a wholesaler who sells cotton
and woolen clothes as per season. A has taken a loan from B of Rs. 5000 but fails to repay it and
it becomes a debt barred by the limitation act. But to proceed with his business smoothly without
any disturbance from B, A pays Rs. 4000 to B and registers in writing the same. This is a
contract.

In the case of Rajlukhy Dabee v. Bhoothnath, (1900) 4 Cal WN 488, the defendant was sued for
non-performance of the promise. The promise was that he will provide separate residence and
amount of maintenance to his wife (plaintiff). The contract was void ab initio and the court stated
that there was a lack of love and affection.

Section 26 of the Act:

This section simply states that agreements which restrain any marriage are void. The word
restraint means a condition that keeps someone under control. Restraint of marriage means
getting a person married to someone with a condition. Such an agreement is not enforceable.
Every person has the freedom to marry a person of their choice and no one can put restrictions on
the freedom of the person for marriage and such restriction is against public policy and
considered void under this section.

For example, A promises B that he will pay her Rs. 15000 if she does not marry C. Such an
agreement is void. Another example, A promises B that he will not marry any other person and if
he marries someone else, he will pay an amount of 2000 Euros to A.

19
Section 27 of the Act
This section explains that any agreement which is restraining any person from trading is void. No
person shall restraint anyone from exercising a lawful profession, trade, or business.

Article 19 (1) (g):

Freedom to practice any profession. This article says that every citizen of Indian has the right to
practice any profession or any occupation, trade, or business. However, this right is subject to
reasonable restrictions in the interest of the public.

Exceptions to the Section

Statutory Exceptions:

1. Sale of Goodwill:
Saving of agreement not to carry on the business of which goodwill is sold.[8] It means
that any person who has sold the goodwill of his business can come into an agreement
with the buyer of his goodwill that he will refrain from carrying on the same or similar
type of business within the limits of the pace where the buyer is planning to open the
business or has already established one.

In the case of Madhub Chander v. Raj Coomar, (1874) 14 Beng LR 76, the plaintiff and
defendant had a similar business in the same locality in Calcutta. The defendant agreed
with the plaintiff that he will pay a certain amount to him if he shuts down the business in
that locality. The plaintiff closed his business in that locality, but the defendant later
refused to pay the amount. The plaintiff sued him. Court held that the agreement between
both is void and not enforceable as it is a case of complete restraint of trade.[9]

2. Partnership Act:

In the partnership act four provisions make it valid where agreements restrain trade.[10]
dsfs

o Section 11 (2) of the Indian Partnership Act, 1932 says that notwithstanding
anything under Section 27 of the Indian Contract Act, 1872, no partner of a
partnership firm can run any other business while he is a partner of the firm

o Section 36 of the Indian Partnership Act, 1932 says that other partners can restrain
a partner who retires from the firm to carry on a similar business for a specified
period or within the specified local limits.

o Another one is that when the partnership business comes to an end i.e., dissolution
of partnership firm, the partners may impose restraint on each partner from
carrying on a business similar in nature to that of the firm.

20
 o Under Section 54 (3) of the Indian Partnership Act, 1932 it is necessary to specify
the local limits or the period until when such restraint is imposed, and the restraint
must be of reasonable nature.

Under Judicial Interpretation

1. Trade Combinations:

Carrying out trade in an organized manner has become universally acceptable and most
of the traders do so. There are varied combinations, and such association does not restrain
trade but regulate business in a wider way. Such type of a trade is desired by many
traders and done for the promotion of public interest. Trade combinations help in
standardization of products, provides a fixed price, and helps in removing catastrophic
competition.

In the case of Vaithelinga v. Saminada, ILR (1872) 2 Mad 44, there was an agreement
that business will be carried on only with those members of a certain caste. Such an
agreement was held to be void as this is against public policy and clear case of restraint
of trade for other people.

2. Solus or Exclusive Dealing Agreements:

This exception says that if any producer or manufacturer of any product wants to sell his
produce only to a particular person and the latter also agrees that he shall not buy the
same type of goods form anyone else but the said producer, then such an agreement is a
valid one. For example, A sells colored pencils to B and B does not buy it from anyone
else but only A, then such a contract is not void.

In the case of Subha Naidu v. Haji Badsha Sahib, ILR (1902) 26 Mad 168, there was an
agreement between the plaintiff and the defendant that Mica (a mineral) produced by the
defendant will be sold to the plaintiff only and will not be sent to any other firm and no
stock will be left with the defendant. This is a valid contract.

3. Restraints Upon Employees:

This exception says that an employee of an organization cannot work in any other
organization during the period of current employment. For example, if A is working in an
organization XYZ, then during his employment period or until the expiry of his
employment period in XYZ, he cannot work for or be a part of any other organization.

Agreements which include non-disclosure of confidential information and other trade

secrets are not one-sided or unfair. If any employee of an organization fails to follow this

21
 clause of the contract about keeping confidential information safe, then the employee can
also be treated as on who breached the contract and liable for misconduct.

A agrees to become Bs assistant for 3 years. B was a physician and surgeon in Zanzibar.
After one year A leaves the service and started practicing on his own account but he was
imposed with a restriction for a period of 3 years.

Section 28 of the Act

This section states that Agreements in restraint of legal proceedings, void. It explains that in
every agreement where any party who is restricted from exercising their general rights for usual
legal proceedings with respect to any contract in any ordinary court of justice or imposing time
restrictions on any party of a contract regarding legal proceedings, such an agreement is void.
Any agreement which ends the rights of any party or removes any party from the liability with
respect to any contract when the period expires and such agreement is entered into so far as to
impose restrictions on the other party from enforcing their right, then such an agreement is void.

Exceptions to the Section

1. Saving of contract to refer to arbitration dispute that may arise. This exception is
applicable in those contracts where the parties agree that there will be no legal action
against each other and any dispute arising shall be referred to arbitration and only the
expenses spent for such arbitration will be recoverable.

2. Saving of contract to refer questions that have already arisen. This exception explains that
a contract where the parties agree to refer to the arbitration for any question which has
already arisen between them is a valid one. Such a contract now will be dealt through
arbitration.

3. Saving of a guarantee agreement of a bank or a financial institution. A contract where any

bank or a financial institution demands a guarantee or any other agreement for the
provision of guarantee for the cancellation of a debt or to discharge any party from such
liability in respect of such guarantee or any other agreement when the specified period
expires, and such period not being less than one year from the date of occurrence or non-
occurrence of such event for the cancellation od debt or discharge of party from the
liability. [15]

Section 29 of the Act

This section says that those agreements are void where the meaning is not certain or is not
capable of being made certain. Certainty is significant for an agreement to be enforceable by the
law so that it has a binding effect. The terms and conditions of any agreement should be
unquestionable so that they are clear and are definite enough that it can be made clear to others.

22
Let us understand this with an example. A agrees to sell a laptop to B but did not specify any
features of the laptop. It is uncertain as to what type of laptop A is intended to sell to B, thus,
such an agreement is void.

Section 30 of the Act

This section says that wagering agreements are void. Wager means in simple terms a bet; it is a
sum or money or moneys worth someone agrees to bet against another for the occurrence or non-
occurrence of an event. For example, A and B enter into an agreement that A will pay Rs. 500 to
B is a particular team of Bs choice wins in the Indian Premier League cricket match. Such an
agreement is void as the winning probability of that team is 1:1.

Exception to the Section:

1. Exception in favor of certain prizes for horse-racing. This exception says that any bet on
a horse race will be a valid contract if it carries any certain amount as prize money which
is more than Rs. 500 which will be awarded to the winner

Q.6 What do you mean by Performance of contract. Who can perform the contract ?

Ans. The promise under a contract may be performed, as the circumstances may permit, by the
promisor himself, or by his agent or his legal representative.

1. Promisor himself: The contracts which involve the exercise of personal skill or diligence, or
which are founded on personal confidence between the parties must be performed by the
promisor himself.

2. Agent: Where personal consideration is not the foundation of a contract, the promisor or his
representative may employ a competent person to perform it.

3. Legal Representatives: Legal representatives of the deceased promisor are bound to perform it.
But their liability under a contract is limited to the value of the property they inherit from the
deceased.

4. Third persons:When a promisee accepts performance of the promise from a third person, he
cannot afterwards enforce it against the promisor.

5. Joint promisors: (Section 42): When two or more persons have made a joint promise, then
unless a contrary intention appears by the contract, all such persons must jointly fulfill the
23
promise. If any of them dies, his legal representatives must, jointly with the surviving promisors,
fulfill the promise.

When the object of a contract is fulfilled, the liability of either party under the contract comes to
an end. The contract is then said to be discharged or terminated. In other words, when the
agreement which was binding on the parties to it, ceases to bind them, the contract is said to be
discharged, or, when the rights and obligations arising out of a contract are extinguished, the
contract is said to be discharged. A contract may be discharged in the following ways:

Q.5 when the contract is discharged? Discuss the various modes of discharge of contract .

DISCHARGE OF CONTRACT

A contract is discharged when the obligations created by it come to an end. A contract may be
discharged in any one of the following ways:
1. Discharge by performance: It takes place when the parties to the contract fulfil their
obligations arising under the contract within the time and in the manner prescribed. Discharge by
performance may be

i) Actual performance; or
ii) Attempted performance.

2. Discharge by mutual agreement: The Indian Contract Act provides if the parties to a contract
agree to substitute a new contract for it, or to rescind or remit or alter it; the original contract
need not be performed.

3. Discharge by impossibility of performance: The impossibility may exist from the very start. In
that case, it would be impossible. Alternatively, it may supervene. Supervening impossibility
may take place owing to:
⇐ Change in law
⇐ Destruction of the subject-matter essential to that performance
⇐ Non-existence or non-occurrence of particular state of things
⇐ Declaration of a war

4. Discharge by lapse of time: A contract should be performed within a specified period as

prescribed by the Limitation Act, 1963. If it is not performed and if no action is taken by the
promisee within the specified period of limitation, he is deprived of remedy at law.

5. Discharge by operation of law: A contract may be discharged by operation of law which

includes by death of the promisor, by insolvency etc.

6. Discharge by breach of contract: Breach of contract may be actual breach of contract or

anticipatory breach of contract.
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Q.7 What is Quasi Contract Theory? Discuss its essential ingredients.

Ans.

QUASI CONTRACTS

● A valid contract must contain certain essential elements, such as offer and
acceptance, capacity to contract, consideration and free consent. But sometimes the
law implies a promise imposing obligations on one party and conferring right in
favour of the other even when there is no offer, no acceptance, no genuine consent,
lawful consideration, etc. and in fact neither agreement nor promise.
Such cases are not contracts in the strict sense, but the Court recognises them as
relations resembling those of contracts and enforces them as if they were contracts.
Hence the term Quasi –contracts (i.e. resembling a contract).

Quasi contracts are based on principles of equity, justice and good conscience.

Types of Quasi Contract

(a) Claim for necessaries supplied to persons incapable of contracting: If a person, incapable
of entering into a contract, or anyone whom he is legally bound to support, is supplied by another
person with necessaries suited to his condition in life, the person who has furnished such supplies
is entitled to be reimbursed from the property of such incapable person.

(b) Payment by an interested person: 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
the other.

(c) Obligation of person enjoying benefits of non-gratuitous act: As per the Act “where a
person lawfully does anything for another person, or delivers anything to him not intending to do
so gratuitously and such other person enjoys the benefit thereof, the latter is bound to pay
compensation to the former in respect of, or to restore, the thing so done or delivered”. It thus
follows that for a suit to succeed, the plaintiff must prove:

(i) That he had done the act or had delivered the thing lawfully;

(ii) That he did not do so gratuitously; and

(iii) That the other person enjoyed the benefit

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 (d) Responsibility of the finder of goods: ‘A person who finds goods belonging to another
and takes them into his custody is subject to the same responsibility as if he were a bailee’. Thus
a finder of lost goods has:

(i) to take proper care of the property as man of ordinary prudence would take

(ii) no right to appropriate the goods and

(iii) to restore the goods if the owner is found.

(e) Money paid by mistake or under coercion: “A person to whom money has been paid or
anything delivered by mistake or under coercion, must repay or return it”. Every kind of payment
of money or delivery of goods for every type of ‘mistake’ is recoverable.

Q.8 Difference between void agreement and voidable contract.

Ans.

26
Q.9 What are the remedies are available to aggrieved parties in case of breach of contract.

Ans. BREACH OF CONTRACT

When a party having a duty to perform a contract fails to do that, or does an act whereby the
performance of the contract by him becomes impossible, or he refuses to perform the contract,
there is said to be a breach of contract on his part. On the breach of contract by one party, the
other party is discharged from his obligation to perform his part of the obligation, and also gets a
right to sue the guilty party for damages.

Breach means failure of a party to perform his or her obligation under a contract. Breach of
contract may arise in two ways:

(1) Actual breach of contract

(2) Anticipatory breach of contract

● Actual breach of contract may be committed-

27
 (a) At the time when the performance of the contract is due: Here breach has been committed at
the time when the performance becomes due.

(b) During the performance of the contract: Here breach of contract occurs during the
performance of the contract, one party fails or refuses to perform his obligation under it by
express or implied act.

Anticipatory breach of contract – is a breach of contract occurring before the time fixed for
performance has arrived. When the promisor refuses altogether to perform his promise and
signifies his unwillingness even before the time for performance has arrived, it is called
Anticipatory Breach.

Anticipatory breach of a contract may take either of the following two ways:

(a) Expressly by words spoken or written, and

(b) Impliedly by the conduct of one of the parties.

Effect of Anticipatory Breach:

The promisee is excused from performance or from further performance. Further he gets an
option:

(1) To either treat the contract as “rescinded and sue the other party for damages from breach of
contract immediately without waiting until the due date of performance; or
(2) He may elect not to rescind but to treat the contract as still operative, and wait for the time of
performance and then hold the other party responsible for the consequences of non-performance.

Remedies for breach of contract

A remedy is a means given by law for the enforcement of a right

Following are the remedies

[1] Rescission of damages.

[2] Suit upon quantum meruit.

[3] Suit for specific performance.

[4] Suit for injunction.

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 Q.10 Explain the types of Injunction and also state when injunctions cannot be granted.

Ans. There can be cases where the nature of the contract does not allow damages to likely
serve any purpose nor admit to specific performance. In such cases, the court may have
to restrain the party who threatens the breach, to the possible extent. When he is prevented
from resorting to other openings, it may exert some pressure upon his mind and he may
be persuaded to go ahead with the performance of his contract. This type of remedy is
known as preventive relief. This is granted by issuing an order known as injunction.

Injunction is a form of specific relief which the court grant when the pecuniary
compensation would be inadequate or altogether futile. Injunction is an order or decree
by which a party to an action is required to do or refrain from doing a particular act or
thing.

An injunction has 3 characteristics

a) It is a judicial process
b) The object attained thereby is restraint or prevention and in some cases of doing
certain acts
c) The thing restrained or prevented is a wrongful act.

Specific Relief Act, 1963 makes provision for Perpetual injunction (Sec 38) and
Mandatory injunctions (Sec. 39), while temporary injunction is granted under the Civil
Procedure Code, 1908.

❖ Temporary injunction

Temporary injunctions are those which remain in force until specified time or till date of
next hearing of the case, or until further orders of the court. Such injunctions can be
granted at any stage of the suit and are governed by Order 39 of the Code of Civil
Procedure, 1908 and not by Specific Relief Act, 1963.

Gujarat Bottling Co. Ltd. vs. Coca Cola Company [1995(5) SCC 545]

The object of the interlocutory injunction is to protect the plaintiff against injury by
violation of his right for which he could not be adequately compensated in damages
recoverable in the action if the uncertainty were resolved in his favour at the trial.
❖ Permanent injunction

Section 37(2) of the Specific Relief Act, 1963 lays down that a permanent injunction can
only be granted by a decree at the hearing and upon the merits of the case. Thus, for
obtaining a permanent injunction, a regular suit is to be filed in which the right claimed
is examined upon merits and finally, the injunction is granted by means of judgement. A

29
permanent injunction therefore finally decides the rights of a person whereas a temporary
injunction does not do so. A permanent injunction completely forbids the defendant to
assert a right which would be contrary to the rights of the plaintiff.

Section 38 of the Specific Relief Act, 1963 specifies certain circumstances under
which permanent injunction may be granted by the court:

▪ Where the defendant is a trustee of the property for the plaintiff.

Where there exists no measure to ascertain the loss or actual damage caused. For example,
‗A‘pollutes the air with smoke so as to interfere with the physical comfort of Band C,
who carries on business in the neighbourhood. ‗B‘and ‗C‘ may sue for an injunction to
restrain ‗A‘ from polluting the air.

▪ Where the invasion is such that compensation in terms of money is not an

adequate relief.

For example, ‗A‘ a professor deliver lectures to his students, being his own
literature composition he does not communicate them to the whole world. These lectures
are the property of the professor and he is entitled to restrain the students from publishing
without his contents.

▪ Where it is necessary to prevent a multiplicity of judicial proceedings.

Requirements of Applicability

The conditions pre-requisite for the application of this section are-

⮚ There must be an expressed or implied legal right in favour of the plaintiff; ⮚ Such a right
must be violated or there should be a threatened invasion; ⮚ Such right must be an existing
one;
⮚ It should fall within the sphere of restraining provisions (referred to in section 41 of
the specific relief act).

Illustrations-

∙ ‗A‘ lets certain land to ‗B‘ and ‗B‘ contracts not to dig sand and gravel. ‗A‘ may sue
for an injunction to refrain ‗B‘ from digging in violation of the contract.
∙ Where the directors of the company are about to pay a dividend out of capital. Any of
the shareholders may sue for an injunction to restrain them.

Section 38 expressly states that where an obligation arises from contract, the court shall
be guided by the rules and principles given in connection with the specific performance
of contracts. Thus, a perpetual injunction will be granted to prevent a breach of contract
only in those cases where the contract is capable of specific performance (section
41(e)). However, section 42 says that where a contract compromise of a positive
agreement to do something and negative agreement not to do a certain act, whether

30
expressly or impliedly, the fact that positive part is not capable of specific performance
will not prevent the court from of enforcing the negative part by means of an injunction.

The crux of this section is that where an agreement contains both affirmative and
negative agreement, the court may enforce the negative agreement if a positive agreement
is incapable of specific performance and may restrain a party from committing a breach
of the negative part.

❖ Mandatory injunction

A mandatory injunction is defined by Salmond as ―an order requiring the defendant to

do some positive act for the purpose of putting an end to a wrongful state of things created
by him, or otherwise in the fulfilment of his legal obligations.‖

Section 39 of the Specific Relief Act, 1963 prescribes that, ―When to prevent breach of
an obligation it is necessary to compel the performance of certain acts which the court
is capable of enforcing, the court may in its discretion grant an injunction to prevent the
breach complained of, and also compel the performance of requisite acts.”

The object of a mandatory injunction is to restore him to the original condition and not
create a new state of things. It is a most exceptional remedy and one which is never to be
applied except with the greatest safeguard for the prevention of waste, as well as
injustice.

In granting a mandatory injunction under the Specific Relief Act two elements have to
be taken into consideration.

31
 ∙ First, the Court has to determine what acts are necessary in order to prevent a breach
of the obligation.
∙ Secondly, the requisite acts must be such as the Court is capable of enforcing. In a
suit for mandatory injunction it is necessary to prove special injury or substantial
damage.

Before a suit for mandatory injunction can be filed, there must be an obligation on the
part of the defendant to perform certain acts, whether it is not alleged that other party has
committed a breach of an obligation on his part as the case is merely one of trespass, the
plaintiff's remedy to file a suit for possession of the land and a suit for mandatory
injunction cannot be filed without suing for possession of the land.

The obligation must be a legal obligation and not a mere moral duty.
Dorab Cawasji Warden vs. Coomi Sorab Warden [AIR 1990

S.C.867] The guidelines for interim mandatory injunctions are

laid down -

1. The plaintiff has a strong case for trial. That is, it shall be of a higher standard than a
prima facie case that is normally required for a prohibitory injunction.
2. It is necessary to prevent irreparable or serious injury which normally cannot
be compensated in terms of money.
3. The balance of convenience is in favour of the one seeking such relief.

❖ Sec. 41 lays down cases where the injunction when cannot be

granted - An injunction cannot be granted -

(a) to restrain any person from prosecuting a judicial proceeding at the institution of the
suit, in which injunction is sought, unless restraint is necessary to prevent multiplicity
of proceeding.
(b) to restrain any person from instituting or prosecuting any proceeding in a Court
not subordinate to that, from which injunction is sought.
(c) to restrain any person from applying to any legislative body,
(d) to restrain any person from instituting or prosecuting any proceeding in a
criminal matter, (e) to prevent the breach of a contract the performance of which
could not be specifically enforced.
(f) to prevent on the ground of nuisance, and act of which it is not reasonably clear that
it will be a nuisance.
(g) to prevent a continuing breach in which the plaintiff has acquiesced

32
(h) when equally efficacious relief can be certainly be obtained by any other usual mode
of proceeding except in case of breach of trust, when conduct of the plaintiff or his
agents has been such as to disentitle him to the assistance of the Court.
(i) when the plaintiff has no personal interest in the matter.

Q. 11 Explain the difference between wagering agreement and contingent agreement and
also them.

Ans.

● There are two people.

● There must be an uncertain future event.
● No control over the event by both the parties.
● There must be a reciprocal promise.
● Equal chances
● win/ loss

In a wrestling bout, A tells B that wrestler no.1 will win. B challenges the statement of A.
They bet with each other over the result of the bout. This is a wagering agreement.

Contingent contract
● 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. It is also called a conditional contract.

Differences Between a Wagering Agreement and a Contingent Contract

33
Q. 12 Write a short note on declaration decree.

Ans. If any person entitled to any legal character, or to any rights as to any property is
denied by another and if any suit is filed by the person so denied it is called a declaratory
suit. A Declaratory decree is a binding declaration of right in equity without consequential
relief. In simple terms, a declaratory decree is a cone which settles the right and removes
the confusion of the status of the party. Provision regarding declaratory decree has been
provided in sections 34 and 35 of the Specific
Relief Act, 1963. Section 34-
34
 “Any person entitled to any legal character, or to any right as to any property, may
institute a suit against any person denying, or interested to deny, his title to such character
or right, and the court may in its discretion make therein a declaration that he is so
entitled, and the plaintiff need not in such suit ask for any further relief:
Provided that no court shall make any such declaration where the plaintiff, being able to
seek further relief than a mere declaration of title, omits to do so.

Essentials of a declaratory suit

1. The person filing the suit must be entitled to legal right or any right as to any property
2. The person against whom the suit is to be filed must actually be denying the right or is
3. interested in denying the right of the plaintiff
4. Passing a declaratory decree is on the discretion of the court.

Effect of declaration

The provision for the effect of declaration has been provided under section 35 of Specific
Relief
Act. Section 35 reads as:
―A declaration made under this Chapter is binding only on the parties to the suit, persons
claiming through them respectively, and, where any of the parties are trustees, on the
persons for whom, if in existence at the date of declaration, such parties would be
trustees.‖
That means a declaratory decree is binding only on the parties to the suit and upon the
representatives of the parties to the suit. So, declaratory decree is ―in personam‖ and not
―in
rem‖. So a declaratory decree is one which resolves the legal uncertainty of the rights and
status of the parties. However, passing of a declaratory decree is a matter of discretion of
court and it cannot be claimed a right.

Section 34 of the Specific Relief Act also provides that any person entitled to any legal
character may institute a suit for declaration and the court may in its discretion make a
declaration that he is so entitled and the plaintiff in such a suit need not ask any further
relief.

Director & Dean, Academics

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