Void, Voidable and Void Ab Initio Agreements:

• Void contract [Section 2(j)]: An agreement not enforceable by law is said to be void. A
void contract is a contract which ceases to be enforceable by law. A contract when
originally entered into may be valid and binding on the parties. It may subsequently
become void.
• Example: In a country, two business entities enter into a contract for liquor trade in
1948. The contract was valid at the said time. However, in 1949, government came up
with a law which prohibited such trade. The contract became void thereby.
• Voidable contract [Section 2(i)]: “An agreement which is enforceable by law at the
option of one or more of the parties thereto, but not at the option of other or others, is a
voidable contract”. However, the contract continues to be good and enforceable unless
it is repudiated by the aggrieved party.
• Example: A contract whereby the consent of the promisee has been taken through
coercion. This is a voidable contract, as the contract may be repudiated at the option of
the promisee.
• Void ab inito Contract: A contract which is void from the beginning. Certain contracts
are void from the beginning.
• Example: A contract with a minor would be void ab initio, as a minor is an incompetent
party to the contract.
Performance/Discharge of Contracts:
• In order to discharge the contract, the parties must perform or offer to perform their
contractual obligations.
• Unless a contrary intention appears from the contract, the representatives of the
deceased party to a contract would be bound to perform the contractual obligations.
• A contract to perform personal services, however, such as an agreement with an artist
to paint one’s portrait would not bind the representatives of the promisor.
• A party may assign any benefits under a contract to another person, unless the contract
is of a personal nature, or unless the contract prohibits such an assignment.
• A party may assign duties under a contract to another person with the consent of the
other party, but this would amount to a novation, that is, the substitution of the existing
contract with a new one.
• Performance by a third party is acceptable if the promissee has accepted such
performance.
• In case of joint promisors, all the joint promisors are jointly and severally liable for
performance, and the promissee can take an action against any or all of the joint
promisors for performance. If one promisor has discharged the obligation under the
contract, the promisor can ask for contribution from the other joint promisors. (Ss. 40-
43, contract Act).
Offer to perform (tender): section 38
• If a party offers to perform the contract, and the offer of performance (tender) has not
been accepted, the party is not responsible for non-performance and the party’s rights
under the contract are not lost, provided:
• The offer is unconditional.
• The offer is made at the proper time and place; and
• The offer is made in such a manner that the person to whom it is being made has a
reasonable opportunity of ascertaining that the person making it is able and willing
there and then to do the whole of what the person is bound by her promise to do. (S. 38,
Contract Act)
Time, Place and Mode of Performance
• If no time for the performance has been mentioned in the contract, it must be performed
within reasonable time. (sec. 46 of the contract Act).
• If the parties intended that some time should be the essence of the contract, a failure to
perform at the specified time would give the promise the right to rescind the contract.
(S. 18, contract Act).
• Generally speaking, time is presumed to be the essence of commercial contracts.
• Parties, however may clearly indicate, if time is the essence of the contract or not and
this intention would determine whether time is of the essence.
• Example: A agrees to supply sweets for B’s daughter’s wedding. B has told A
specifically that the sweets are for the guests at the wedding, which has been fixed on
a particular date. A does not supply the sweets on the date of the wedding . Here, time
is of the essence of the contract and therefore B can rescind.
• The promisor must call upon the promise to appoint a reasonable place for performance.
• Where the contract does not specify a place the proper place has to be inferred from the
terms of the contract.
• Example: A buys some goods from B, who is in another city. A then asks B to come to
A’s office and take payment. This is unreasonable: the payment should be made to B at
B’s usual place of business, unless B indicates otherwise. (Gopiram Kashiram v.
Shankar Rao, AIR 1950 MB 72)
• A purchased a leasehold property with a workshop on it, access to the property was
narrow from the front and in order to run the workshop, it was critical that access be
available from the rear.
• A relied upon their solicitors, who informed them that there was a right of way over the
land from the rear of the property.
• The owner of the land at the rear, however, asserted that there was no right of way and
blocked access after A took the property.
Breach of Contract
• A contract is a written or spoken promise, or series of promises, between two parties.
Each party to a contract promises to perform a certain duty or pay a certain amount.
The agreement is meant to be legally enforceable, so that each party will have legal
recourse if the agreement isn’t kept.

• A breach of contract occurs when the agreement is not kept, because one party to the
contract does not fulfill their obligation according to its terms.

• A breach can occur if a party fails to perform within the time frame specified in the
contract, does not perform in accordance with the terms of the agreement, or fails to
perform whatsoever.

• If one party fails to perform while the other party fulfills her duties under the contract,
the performing party is entitled to legal remedies for breach of contract.

Consequences of Breach
• A party to a contract who breaches the contract must compensate the other party for
any loss or damage that arises naturally from the breach, or which the parties knew,
when they made the contract, to be likely to result from the breach of the contract
(section 73).
• As a result, A could not run a workshop on the property and had to dispose of the
workshop at a lower price. In an action against solicitors, A was awarded damages on
the basis of the capital expenditure wasted in the purchase of the business, and the
expenses incurred, including bank interest up to the time of the sale of the property.
(Hayes v. Janes and Charels Dodd.)

Consequences of breach: Specific Performance of Contract

• In certain situations, a party takes an action against the party who has breached a
contract to compel the breaching party to perform its obligations under the contract.
• This is called specific relief.
• And the law relating to such remedies is to be found in The specific relief Act
• The specific performance of any contract may at the discretion of the court, be
enforced:
 • When there is no standard to ascertain the actual damage caused by the non-
performance of the act agreed to be done, or
• When the act agreed to be done is such that monetary compensation for its non-
performance would not be adequate relief.
• Example:
A, agrees to supply certain amount of steel to B. At that time, there is a strike at the
steel mills and procuring steel is not easy. If A refuses to perform the contract, a decree
of specific performance can be awarded to B, because steel is not easily obtainable in
the market at that time. (Howard E. Perry & Co. v. British Railway Board, [1980] 2
ALL ER 579.
• A agreed to sell some rare and beautiful antique furniture to B, but later, refused to give
B the furniture. B could not claim specific performance in this case; B being a dealer
who only wanted the antique furniture for resale.

Unless otherwise proved, it is assumed:

• That the breach of a contract to transfer immovable property cannot be adequately
relieved by monetary compensation; and
• That the breach of a contract to transfer movable property can be relieved by monetary
compensation, except where the property is not an ordinary article of commerce, or is
of special value of interest to the plantiff, or consists of goods that are not easily
available in the market. (Section 10 of specific relief Act)

Contracts which cannot be specifically performed:

• Where the monetary compensation is adequate for the non-performance of the contract
• A contract which runs into such numerous details or which is so dependant on the
personal details or which is so dependant on the personal qualifications or will of the
parties or is otherwise from its nature such that the court cannot enforce the specific
performance of tis material terms.
• A contract which in its nature determinable.
• Example:
• A and B enter into the contract which allows B to terminate the contract without notice
and without giving any reason. A cannot specifically enforce the contract.
• (Dharam veer v. Union of India, AIR 1989 DEL 227
• A contract whose performance involves the performance of a continuous duty which
the court cannot supervise.
• Ex. A contract to use land of others for 21 years.