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10/08/2019 Law Notes (LL.B Notes): CONTRACT ...
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Law Notes (LL.B Notes)

Notes and Video Lecture of LL.B ( 3 Year) Kurukshetra University Kurukshetra
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CONTRACT ...
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Video Lecture of Contract in Hindi...By Prof.D.K Dube
LL.B Notes
ONLINE LAW CLASS BY D.K.…

D.K.…
Question No. 1: Who is competent to contract Discuss the law relating to

minor’s agreement in India, with help of decided cases. Also brief about
English Law Indian law in this context.
OR
Minor’s agreements are void at-initio. In which case the above rule was
established. Discuss in brief that case and also bring out the exceptions
kuklawnotes.blogspot.com/p/contract-law-question-no.html 1/29
to the above rule.

OR
What do you understand by “ capacity to contract” What is effect of
Minor’s agreement and when can it enforced.
OR
“A minor’s bind others but is never bound by others.” Explain by giving
illustrations.
OR
Discuss the nature and effects of Minor’s 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 minor’s 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 MINOR’S AGREEMENT
A minor’s 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 Kishori- 1928

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 minor’s 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 illegal-
1. 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 defendant’s 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
law-
Illegal. 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 can’t
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 consi-
6. 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 husband-wife, 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 non-
happening 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 other’s 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-ud-din 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 Quasi-contracts. It
only mentions that, certain relations resembling those created by
contract. However the various jurists have defined the Quasi-contract as
under:-:According to Wharton’s 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 pt’s 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 minor’s sister etc., that is depending upon him. Minor’s
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 B’s
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 B’s 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 night’s
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.
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Cr.P.C (Criminal Procedure Code) RTI Act 2005

ONLINE LAW CLASS BY D.K.…

Question No. 1: Who is competent to contract Discuss the law relating to

to the above rule.

3. Guardian is capable to enter into contract.

Case Ajudhiya Parsad vs Chandan Lal – 1937

A Case Nawab Sadiq Ali Khan vs Bibi Jai Kishori- 1928

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

After the definition of void and illegal agreements we have

public policies, fraudulent etc.

against ‘ B ‘ because it is Social Agreement which is not enforceable by

Requires in all agreement like, moral competency of parties, free

In a Case :-Durga Parsad v/s Baldev The Plaintiff constructed certain

Ramcharan : AIR 1982 Allahabad. : The partners of a partnership firm

IV) Against good conduct etc.

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

i) According to Section 32 . Contingent contract to do or not to do be

Coercion means by force or compulsion. Coercion is a method of doing

Muthiah Chettiar V/s Karupan Chettiar

Fraud is essentially a question of fact and has to be proved by the

MISREPRESENTATION (UNDER SEC. 18)

2. The facts are altered with the No such thing in misrepresentation.

ILLUSTRATION :- ‘A’ agrees to buy horse from ‘B’ at the time of

Generally the contracts or agreements are the result of acts of parties.

iii) The goods must be according to the status of minor.

Generally contract based on personal qualifications shall be performed

b. Where the performance depends upon personal skill of promisor.

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