CHAPTER-I

INDIAN CONTRACT ACT

1. Define contract .What are the essentials of a valid contract.

The term contract is defined in section 2(h) of the Indian contract act of 1872as “An
agreement enforceable by law is a contract”.
According to Pollock defines it as, “Every agreement and promise enforceable at law
is a contract”.
According to Salmond “ a contract is an agreement creating and sefineing the
obligations between the parties”.

Essential and Legal rules for a valid contract:

1.Plurality of parties: An agreement is the result of an offer by one party and an acceptance
by another party. In other words in an agreement there must be at least two parties, one making
the offer and other accepting it.
2. Offer and acceptance: For an agreement there must be a valid offer by one party, and a
valid acceptance of that offer by other party. When the offer is accepted by the other party, it
is called as an agreement. It must be noted that offer and acceptance must be valid.
3. Intention to create legal obligation: An agreement must create legal obligation. When two
parties enter into an agreement, their intention must be to create legal obligations or legal
relations between them.If there is no intention to create legal obligation, there cannot be any
contract between them.
Balfour V/S Balfour:
Mr. Balfour was a civil servant stationed in Ceylon. He and his wife went to England
on nine months leave. When they were about to leave England for Ceylon, Mrs. Balfour fell
ill, and so, could not accompany Mr. Balfour to Ceylon. Mr. Balfour asked Mrs. Balfour to
stay back in England and promised to send her maintenance allowance of $30 a month until
she returned to Ceylon. After returning to Ceylon, Mr. Balfour did not keep up his promise to
his wife. So, Mrs. Balfour sued Mr. Balfour for breach of agreement. The husband failed to
pay the amount. The wife sued for the maintenance.
Judgment: It was held that there was no binding contract. She could not recover as it was a
social agreement and parties did not create any legal relations.
4.Free consent of the parties: If the consent is not free i.e. if it is obtained by coercion, undue
influence, fraud, misrepresentation of facts etc., there is no contract between the parties. The
Consent of the parties means that the parties to the agreement must agree upon the same thing
in the same sense.

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For example:- A threatened to shoot B’ s son unless signs a promissory note for Rs 20,000 in
favor of A.B signed the promissory note .In this case B’s consent is not free as it is obtained
by threat .Therefore the promissory note is not valid.
5.Lawful considerations: The agreement must be supported by lawful consideration. The
lawful consideration is that which is not fraudulent, forbidden by law, immoral or opposed to
public policy. A consideration must be real and lawful.
For example:-A promised to obtain employment for B in a government department promised
to pay Rs. 10,000 to A. In this case agreement is not valid because consideration for it is
unlawful.
6. Competency or capacity of the parties: The parties to a contract must be capable of
entering into the contract. Minor and persons of unsound mind are not competent to enter into
contract. If the parties are not competent then there is no valid contract. For example:-A, a
minor borrowed Rs 20,000 from B and agreed to repay within two months. This is not a valid
contract since he is not competent to contract
7. Lawful object: The object of the agreement must be lawful. The purpose for which the
agreement has been entered into by the parties must be lawful. Lawful object means which is
neither fraudulent, forbidden by law, immoral nor opposed to any public policy .If the object
is unlawful ,then agreement will be void and it cannot be enforceable by law.
For example;-A, B and c entered into an agreement for the division of gain among them which
is to be acquired by fraud. In this case agreement is not valid as its object is unlawful.
8 .Certainty: The agreement must be certain or clear, otherwise it is not a valid contract. If the
agreement is vague or uncertain, it becomes void .It must be possible to ascertain the meaning
of the agreement. For example:-A agreed to sell his house for Rs 5lakhs or 6lakhs to B .This
agreement is not valid because the price is not certain.
9. Possibility of performance: The agreement must be capable of being performed. The terms
of the agreement must be capable of performance.. An agreement to do an impossible act is not
valid. For example:-Agreement with B to discover a treasure by magic. In consideration B
agreed to pay Rs 5,000 to A. It is not a valid agreement since the performance is impossible.
10. Not expressly declared void: To be enforceable by law, the agreement must not have been
expressly declared void under the Indian contract act or under any other act in force in the
country. For example:-A agreed to pay Rs 50,000 to B if B does not marry throughout his life
.B promised not to marry at all. This agreement in restraint of marriage is expressly declared
to be void.
11. Legal formalities as to writing and Registration: An agreement may be oral or in writing.
In cases where the agreement are required to be in writing and registered by law, the legal
formalities as to writing and registration must be complied with. If it is not complied with, the
agreements cannot be enforceable by law.
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 2. What is acceptance?.
A contract emerges from the acceptances of an offer. An offer in itself does not create
any legal relationship. The legal relationship results only when an offer is accepted. An
acceptance is an expression by the offer about his willingness to be bound by the terms of offer.
Definition According to Sec.2 (b) of India Contract Act 1872, Acceptance is "Where the person
to whom the proposal is made signifies assent there to, the proposal is said to be accepted. A
proposal when accepted becomes a promise."
For eg, A offered to purchase certain goods from B at a specified rate. B accepted the offer but
on the condition that some advance should be paid. There is no valid contract between the
parties as the acceptance is conditional.
1. Define Consideration. Sec. 2(d) of the Act defines consideration as " When at the desire
of the promisor, the promisee or any other person has done or abstained from doing, or does or
abstains from doing, or promises to do or abstain from doing something, such act or abstinence
or promise is called consideration"
For eg, A agrees to sell his car to B for Rs 1, 40,000. In this case, B’s promise to pay the sum
of Rs 1, 40,000 is the consideration for A’s promise to sell the car. And A’s promise to sell the
car is the consideration for B’s promise to pay the sum of Rs 1, 40,000.
tract was absolutely void; therefore, there was no question of refunding money in these
circumstances.

CAPACITY TO CONTRACT
Competency of the parties to the contract means the legal qualifications to enter into a contract.
Thus minors, persons of unsound mind such as insane persons and lunatics and persons
disqualified by law such as lien enemies, convicts, insolvents etc.

MINOR: According to Section 3 of the Indian Majority Act 1975, “ A minor is a person
who is below the age of 18 years or not attain the age of 18 years. Under English law, a person
attains the age of majority only upon the completion of 21 years

FREE CONSENT,
Write a note on coercion.
Ans – Coercion means committing or threatening to commit any act forbidden by the Indian
Penal Code or the unlawful detaining or threatening to detain any property with the intension
of obtaining the consent of any person to an agreement.
For Eg: A threatens to shoot C, a friend of D if D does not let out his house to him (i,e. A).
D agrees to do so under the fear of assault. In this case the agreement between A and D has
been brought about under coercion.
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Features:
• Coercion must be the committing of any act forbidden by the Indian Penal Code.
• It must be threatening to commit any act forbidden by Indian Penal Code.
• Coercion must be the unlawful detaining or threatening to detain any property.
• The act of coercion must be done with the intension of causing the other party to enter
into a contract.
• Indian penal code may or may not be in force where the coercion is committed.
• The act of coercion may be initiated by any person.
1. Write a note on undue influence.
Ans – It means the unfair use of one’s superior power in order to obtain the consent of a person
who is in a weaker position.
Essentials :
• One party must be in a position to dominate the will of the other.
• The dominant party must use his superior position to obtain an unfair advantage over the
weaker party.
• The dominant party must have obtained an unfair advantage over the weaker party.
Eg. A an employer gave a loan of Rs. 100 to his servant B and took his signature on blank
.
2. What are the essentials of fraud?
Ans – As per section 17 of the Act, The term fraud may be defined as an intentional,
deliberate or wilful misstatement of facts which are material for the formation of a
contract. The most important requirement of a fraud is that the misstatement of fact
must be made by one party with an intension to deceive or cheat the other.
Essentials :
• The fraudulent act must be committed with an intension to deceive.
• The fraudulent act must be committed with the knowledge of falsity.
• The fraudulent act must have been committed by a party to the contract.
• The fraudulent act must have been committed upon the party to the contract or
his agent.
• The fraudulent act must have actually deceived the other party.
• Mere silence as to facts likely to affect the willingness of a person to enter into
a contract, is not fraud.
•

3. MISTAKE

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 Mistake may be defined as an erroneous belief concerning something. In other words
an incorrect belief about something is called as mistake.
Salmond defines mistake as “an error in consensus”.
The consent cannot be said to be real and free when contract is under a mistake. A
contract is valid only when the parties agree upon the same thing in the same sense.
Mistake may be of two kinds:
I. Mistake of law
II. Mistake of fact
I. Mistake of law:
Mistake of law is of three types. They are:
A. Mistake of general law of the country:
The mistake of law of the land, does not render the agreement void. This is based on
the well-established rule of law namely, ignorance of law is no excuse. Everyone is
presumed to have the knowledge of the law of the land. He cannot get any relief on
the ground that he had done a particular act in the ignorance of the law. Thus, the
mistake of the Indian law does not affect the validity of the agreement.
B. Mistake of foreign law:
Though ignorance of the law of the country is not excusable, ignorance of foreign
law is excused, as an individual is not expected to know foreign law. Mistake of
foreign law has the same effect as a mistake of fact. Therefore it renders the
agreement void.
In simple words, a mistake of foreign law is a valid ground for revoking the
agreement. Thus, a mutual mistake of foreign law renders the agreement void.
C. Mistakes of private rights law:
The mistakes of private rights of party relating to property, goods etc. is regarded as
a mistake of fact and hence the contract can be avoided.
II. Mistake of fact:
A. Bilateral mistake:
When both the parties to an agreement misunderstood each other, there is said to be
bilateral mistake or mutual mistake. In other words, when each party to an agreement
understands it in a different way, there is said to be bilateral mistake.
In the case of bilateral mistake of the essential fact, the agreement is void ab initio.
The following three conditions must be fulfilled, if an agreement under bilateral
mistake is to be declared void ab initio-
a) The mistakes must be mutual i.e. both the parties must be under a mistake.
b) Mistake may relate to some fact and not to law.
c) The fact must be essential to the agreement.
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 B. Unilateral mistake:
Where only one of the parties to a contract is under a mistake as to a matter of fact,
the mistake is a unilateral mistake. Thus, under unilateral mistake, a mistakes takes
place in the mind of one of the parties.
A contract caused by unilateral mistake is not voidable, sec 22 of the Act states that
“a contract is not voidable merely because it was caused by one of the parties to it
being a mistake as to a matter of fact”.
Therefore, a contract under a unilateral mistake remains valid.
But if the unilateral mistake is caused by fraud or misrepresentation on the part of
the other party, the contract is voidable and it can be avoided by the aggrieved party.
But in the following two cases, the consent is given by the party under a unilateral
mistake which is so fundamental as it goes to the root of the agreement. Such mistake
nullifies the consent and makes the contract void ab initio even though it is unilateral.
1) Mistake as to the identity of the person contracted with, where such identity is
important.
2) Mistake as to nature of contract.

Modes of Discharge of Contract

1. Discharge by Performance
Performance means the doing of that which is required by a contract. Discharge by
performance takes place when the parties to the contract fulfil their obligations arising
under the contract within the time and in the manner prescribed. In such a case, the
parties are discharged and the contract comes to an end. But if only one party performs
the promise, he alone is discharged. Such a party gets a right of action against the other
party who is guilty of breach.
Performance of a contract is the most usual mode of its discharge. It may be by
(1) actual performance,
(2) attempted performance.
Actual performance : When both the parties perform their promises, the contract is
discharged. Performance should be complete, precise and according to the terms of the
agreement. Most of the contracts are discharged by performance in this manner.
Attempted performance or tender :
Tender is not actual performance but is only an offer to perform the obligation under
the contract. Where the promisor offers to perform his obligation, but the promisee
refuses to accept the performance, tender is equivalent to actual performance. The effect
of a valid tender is that the contract is deemed to have been performed by the tenderer.

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 The tenderer is discharged from the responsibility for non-performance of the contract
without in any way prejudicing his rights which accrue to him against the promisee.
Essentials of valid tender:
1. It must be unconditional
2. It must be made at proper time and place
3. It must be for the entire obligation as contained in the contract
4. The tenderer must be able and willing to perform it then and there only
5. The tender must be made to proper person
6. Tender of goods must be made in such a manner that a reasonable opportunity is
available to the buyer to inspect the goods
7. If there are more than one promisee, then tender may be made to any one of them
2. Discharge by Impossibility of Performance : If an agreement contains an
undertaking to perform an impossibility, it is void ab initio.
DISCHARGE BY IMPOSSIBILITY OF PERFORMANCE
1. Initial Impossibility 2. Subsequent impossibility
1. Impossibility existing at the time of agreement. The first paragraph of Sec. 56 lays down
that “an agreement to do an act impossible in itself is void”. This is known as pre-contractual
or initial impossibility.
2. Impossibility arising subsequent to the formation of contract. Impossibility which arises
subsequent to the formation of a contract (which could be performed at the time when the
contract was entered into) is called post contractual or supervening impossibility.
i. At the time of the formation both the person known it is impossible to
perform.
ii. At the time of the formation both the person unknown it is impossible to
perform.
iii. At the time of the formation one person known it is impossible to perform.
iv. After the formation it is impossible to perform i.e. subsequent impossibility.
DISCHARGE BY SUPERVENING( Subsequent) IMPOSSIBILITY
1. Destruction of subject-matter of contract.
2. Non-existence or non-occurrence of a particular state of things.
3. Death or incapacity for personal service.
4. Change of law or stepping in of a person with statutory authority.
5. Outbreak of war.
IMPOSSIBILITY OF PERFORMANCE –
NOT AN EXCUSE
In the following cases, a contract is not
discharged on the ground of supervening
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 impossibility.
1. Difficulty of performance.
2. Commercial impossibility.
3. Impossibility due to failure of a third
person.
4. Strikes, lock-outs and civil disturbance.
5. Failure of one of the objects.
3. Discharge by Agreement or Mutual Consent:
As it is the agreement of the parties which binds them, so by their further agreement
or consent the contract may be terminated.
Types of discharge by agreement or consent:
(a) Novation
(b) Rescission
c) Alteration
(d) Remission
(e) Waiver
(f) Merger
a) Novation (Sec. 62) :
Novation takes place when
(i) a new contract is substituted for an existing one between the same parties, or
(ii) a contract between two parties is rescinded in consideration of a new contract being
entered into on the same terms between one of the parties and a third party.
Example of the second type of novation:
A common instance is where a creditor at the request of the debtor agrees to take another
person as his debtor in place of the original debtor. The consideration for the new contract
is the discharge of the old contract. It is essential for the principle ofnovation to apply that
there must be the mutual or tripartite consent of all the parties concerned.
Novation should take place before expiry of the time of the performance of the original
contract. If it does not, there would be a breach of the contract. If a new contract is
subsequently substituted for the existing contract, it would only be to adjust the remedial
rights arising out of the breach of the old contract. If for any reason the new contract cannot
be enforced, the parties can fall back upon the old contract.
b) Alteration (Sec. 62) : Alteration of a contract may take place when one or more of the
terms of the contract is/are altered by the mutual consent of the parties to the contract.
In such a case, the old contract is discharged.
c) Rescission (Sec. 62) :Rescission of a contract takes place when the parties to a contract
may decide that they will forget the contract and will not bring a new contract into
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 existence to replace it. A promise not to demand performance from each other becomes
the mutual consideration for discharge of contract. It may be noted that if the parties do
not take steps towards performance of a contract for a long time, this will amount to
abandonment of the contract and will bring about its implied rescission.
Mode of communicating or revoking rescission: The rescission of a voidable contract
may be
Remission (Sec. 63) : Remission means acceptance of a lesser fulfillment of the
promise made, e.g., acceptance of a lesser sum than what was contracted for, in
discharge of the whole of the debt. It is not necessary that there must be some
consideration for the remission of the part of the debt. Sec. 63 allows the promisee to
dispense with or remit the performance of the promise by the promisor, or to extend the
time for performance or to accept any other satisfaction instead of Law:performance.
d) Waiver : waiver means deliberate or intentional abandonment or giving up of a right,
which a party is entitled under a contract. Waiver by one party releases the other party
from his obligation.
e) Merger :merger takes place when an inferior right accruing to a party under a contract
merges into a superior right accruing to him under the same or any other contract by
the mutual agreement between the parties to the contract.
4. DISCHARGE BY LAPSE OF TIME
The Limitation Act, 1963 lays down that a contract should be performed within a
specified period, called period of limitation. If it is not performed, and if no action is
taken by the promise within the period of limitation. He is deprived of his remedy at
law.
The Limitation Act, 1963 lays down a period of three years for the enforcement of most
types of rights.
5. DISCHARGE BY OPERATION OF LAW
A contract may be discharged independently of the wishes of the parties, i.e., by
operation of law. This includes discharge –
a. By death (in the case of contracts for personal service) – where the contract involves
personal skill or ability, it is terminated on the death of the promisor.
b. By insolvency – a contract is discharged by the insolvency of one of the parties to it
when he is adjudged insolvent.
c. By unauthorized alteration of the terms of a written agreement- where one party to a
contract makes any material alteration in a contract without the consent of the other
party, the whole contract becomes void and the other party is discharged from his
obligation under the contract.

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 d. By rights and liabilities becoming vested in the same person – when the rights and
liabilities under a contract are vested in the same party, the other parties to it are
discharged from the contract, e,g. when the acceptor of a bill receives it as a payee.
e. by merger- where an inferior right under a contract merges with a superior right under
a contract, the former contract stands discharged automatically
6. DISCHARGE BY BREACH OF CONTRACT
Breach of contract means a braking of the obligation which a contract imposes. It
occurs when a party to the contract without lawful excuse does not fulfill his
contractual obligation or by his own act makes it impossible that he should perform
his obligation under it.
Breach of contract may be –
1. Actual breach of contract, or
2. Anticipatory or constructive breach of contract.
Actual Breach of Contract It may take place –
1. At the time when the performance is due. Actual breach of contract occurs, when
at the time when the performance is due, one party fails or refuses to perform his
obligation under the contract.
2. During the performance of the contract. Actual breach of contract also occurs
when during the performance of the contract, one party fails or refuses to perform
his obligation under the contract.
This refusal to perform may be by –
a. Express repudiation (by word or act).
b. Implied repudiation (impossibility created by the act of a party to the contract).
Anticipatory Breach of Contract
It occurs when a party to an executory contract declares his intention of not performing
the contract before the performance is due. He may do so –
1. By expressly renouncing his obligation under the contract.
2. By doing some act so that the performance of his promise becomes impossible.
Anticipatory Breach of Contract
The rights of the promisee (the party not in breach or the aggrieved party) in case of
doctrine of anticipatory breach.
1. He can treat the contract as discharged so that he is absolved of the performance
of his part of the promise.
2. He can immediately take a legal action for breach of contract or wait till the time
the act was to be done.
(Reference: Frost Vs Knight)

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1. Discuss the various remedies available for breach of contract.
Remedies For Breach Of Contract
A contract, being a fountainhead of a correlative set of rights and obligations for the parties,
would be of no value, if there were no remedies to enforce the rights arising thereunder.
The party committing breach of contract is called the ‘guilt party’ and the other party is called
the ‘injured’ or ‘aggrieved’ party.
In case of breach of contract, the aggrieved party would have one or more, but not all, of the
following remedies against the guilty party.
The remedies are:
1. Suit for rescission,
2. Suit for damages,
3. Suit for quantum meruit,
4. Suit for specific performance,
5. Suit for injunction.
1. Suit for Rescission
The breach of contract no doubt discharges the contract, but the aggrieved party may
sometimes need to approach the court to grant him a formal rescission, i.e. cancellation, of
the contract. This will enable him to be free from his own obligations under the contract.
The court may grant rescission in the following cases:
• Where the contract is voidable by the plaintiff
• Where the contract is unlawful
The court may not grant rescission in the following cases:
• Where the plaintiff has expressly or impliedly ratified the contract or
• Where, without the fault of either party, there is a change in the circumstances,
and the parties cannot be restored to their original position or
• Where, during the subsistence of the contract, third parties have acquired rights
in good faith and for value.
• Where only a part of the contract is sought to be rescinded and such party cannot
be separated from the rest of the contract.
2. Suit for Damages
The word ‘damages’ means monetary compensation for loss suffered. Whenever a breach
of contract takes place, the remedy of ‘damages’ is the one that comes to mind immediately
as the consequence of breach.
A breach of contract may put the aggrieved party to some disadvantage or inconvenience or
may cause a loss to him. The court would desire the guilty part to accept responsibility for

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 any such loss of the aggrieved party and compensate him adequately. The quantum of
damages is determined by the magnitude of loss caused by breach.
Types of Damages (Sec.73)
When the aggrieved party claims damages as a consequence of breach, the court takes
into account the provisions of law in this regard and the circumstances attached to the
contract.
The amount of damages would depend upon the type of loss caused to the aggrieved
party by the breach. The court would first identify the losses caused and then assess
their monetary value.
a) General or ordinary damages:
Such losses would be called the general or ordinary losses which can be seen as
arising naturally and directly out of the breach in the usual course of the things.
They would be the unavoidable and logical consequence of the breach. The
damages for such losses are called general or ordinary damages. An aggrieved
party’s right to damages applies most naturally for the direct or general losses.
There can be no damages for indirect and remote losses.
b) Special damages: Special damages would be the compensation for the special
losses caused to the aggrieved party by the special circumstances attached to the
contract.
At the time of making the contract, a part may place before the other party some
information about the special circumstances affecting him and tell him that if the
contract is not performed properly, he would suffer some particular types of losses
because of those special circumstances. If the other party still proceeds to make the
contract, it would imply that he has agreed to be responsible for the special losses
that may be caused by an improper performance of his obligation. Compensation
for such special losses is called special damages. (case reference – Hadley Vs
Baxandale: Plaintiff a mill owner, his mill was stopped functioning due to the
break down of a Cranck shaft of the machine. So he called defendant i.e. a common
carrier to be taken to the manufacturer for making a new one but plaintiff did not
inform to defendant that delay would result in loss of profits. Due to delay in transit
the shaft could not be delivered within a reasonable time. So plaintiff filed a suit
against defendant to recovery of damages under special. Court held that defendant
was not responsible for the loss of profits, as he was not informed that any delay in
the delivery of shaft would amount to loss of profits. So defendant was liable to pay
only ordinary damages.

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 c) Exemplary or vindictive damages: Sometimes, the courts award damages for
mental orEmotional suffering also caused by the breach. Such damages are called
exemplary or vindictive damages.
These may be taken as an exception to the general principle that damages are
awarded only for the financial loss caused by breach of contract. Therefore, the
vindictive damages have no place in the law of contract. However, there are two
exceptions to this rule. In these two cases, the court may grant exemplary damages:
(i) Unjustified dishonour of a cheque,
(ii) Breach of promise of marriage.
d) Nominal damages: If the breach of contract causes no loss to the aggrieved party,
no damages need be awarded to him. However, in order to record the fact of breach
by guilty party, the courts may award nominal or token damages, e.g. a
compensation of Rs.10. They would be called nominal damages.
e) Damages for loss of reputation: damages for loss of reputation are not generally
recoverable. But there is an exception to this rule. If a banker wrongfully dishonours
the cheque of his customer and if the customer happens to be a tradesman, the
customer can recover damages for the loss of his trade reputation by the breach.
f) Damages for inconvenience and discomfort: damages can be recovered by the
injured party for any physical inconvenience and discomfort suffered by him due to
the breach of the contract.
g) Duty to mitigate damages suffered: It is the duty of the injured party to take all
reasonable steps to mitigate the loss or damage caused by the breach. He cannot
claim compensation for any loss which is really due not to the breach, but due to
the own neglect to mitigate his loss after the breach.
h) Damages agreed in advance: If a particular sum is stated in a contract as the
amount to be paid as compensation in case of breach of the contract, the aggrieved
party is entitled to receive from the guilty party, in case of breach, reasonable
compensation not exceeding the amount so stated.
i) Liquidated damages: It means a sum, fixed up in advance, which is a fair and
genuine pre-estimate of the probable loss that is likely to result from the breach of
the contract.
j) Penalty: It means a sum fixed up in advance, which is extravagant and
disproportionate to the probable loss that is likely to result from the breach of the
contract.
3. Suit for quantum meruit
The term quantum meruit means ‘as much as earned’. It implies ‘a payment deserved by
a person for the reason of actual work done’. When a party has done some work under a
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 contract, and the other party repudiates the contract or somehow the full performance of
the contract becomes impossible, then the party who has done the work can claim
remuneration for the work under a suit for quantum meruit. Likewise, where one party has
expressly or impliedly requested another to render him a service without specifying any
remuneration, but the circumstances of the request imply that the service is to be paid for,
there is implied a promise to pay quantum meruit.
Even in the case of where the person who has done the work is the one who is guilty of
breach of contract, he too is entitled to be paid quantum meruit.
But there is an exception – such a contract must have involved work that was indivisible
and it must not have been a contract for lumpsum remuneration.
(Case- Planche Vs Colburn) :The plaintiff was the author of several dramatic
entertainments. He was employed by the defendants, who wanted to publish a work( i.e.
book) called ‘the juvenile library’, to write for that work an article illustrating the history
of armour and costumes from the earliest times. The plaintiff was to be paid for his work
100 guineas. The plaintiff made several drawings and prepared a considerable portion of
the manuscript , when the defendants discontinued the publication of their work “the
juvenile library”.
The plaintiff sued the defendants, claiming 50 guineas for the portion of manuscript prepared
by him.
It was held by the court that he was entitled to proportionate compensation for his work on
the principle of quantum meruit.
Circumstances:
i. When contract is found to be void : Any person who has received
any advantage under such agreement or contract is bound to restore
or make compensation for it to the person from whom he received.
(Case law: Craven Ellis vs. Cannons Ltd)
ii. When something is done without any indending to do so gratuitously
iii. When one party refuse to perform the contract: Where there is a
breach of contract, the injured party is entitled claim reasonable
compensation for what he has done under the contract.( Planche Vs.
Colburn)
iv. When a contract is divisible : When a contract is divisible, and the
party in default may sue on quantum meruit.
v. When an indivisible contract is performed badly : When an
indivisible contract for a lump sum is completely performed, but
badly, the person who has performed can claim the lump sum less
deduction for bad work.
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 4. Suit for specific performance
In certain cases of breach of a contract, damages may not be an adequate remedy.
Then the Court may direct the party in breach to carry out his promise according to the
terms of the contract. This is a direction by the Court for specific performance of the
contract at the suit of the party not in breach. But in general, Courts do not wish to
compel a party to do that which he has already refused to do.
Chapter 2 of the Specific Relief Act, 1963 lays down detailed rules on the specific
performance of Contracts.
Suit for specific performance Cases where specific performance may be ordered:
(i) Where there exists no standard for ascertaining the actual damage caused to the
aggrieved party by the nonperformance
(ii) Where monetary compensation will not be adequate relief. Example a contract for
sale of a rare antique
(iii) Where plaintiff’s property is held by the defendant in the capacity of his agent or
trustee
(iv) Where the act to be done is in performance of trust
Cases where specific performance will not be ordered:
(i) Where monetary compensation is adequate relief
(ii) Where contract is made by the agent or trustee in violation of his powers
(iii) Where the contract is of a personal nature, such as a contract to marry or a contract
of service
(iv) Where the court cannot supervise the performance of promise as it involves
performance of a continuous duty
(v) Where the contract is in its nature revocable
(vi) Where the contract is made by a company in excess of its powers as laid down in
its Memorandum of Association
5. Suit for injunction
‘Injunction’ is a court order or decree to a person asking him to refrain from doing a
contemplated act or from continuing an ongoing act. Such an order of injunction becomes
a remedy for the aggrieved party when the court orders the guilty party to refrain from doin
precisely that which is causing the breach of contract.
In a way, injunction is a mode of securing the specific performance of the negative terms
of a contract. But for the performance of the positive terms of the contract, the aggrieved
party may seek other remedies like damages.
Injunction may be, (a) temporary injunction or (b) perpetual or permanent injunction.
Temporary injunction is a provisional injunction which prohibits a party from doing some
act for the time being till the question of the right of the aggrieved party is settled.
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 Perpetual injunction is a permanent injunction which restrains a party permanently from
doing some act.
Case law: Warner Bros Vs. Miss Nelson: Miss Nelson, a film actress, agreed to act exclusively
for plaintiff for a year and for no one else. During the year she contracted to act for some
other©. It was held that she could be restrained by injunction from doing so.

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CS

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