Q4.

Introduction
An offer is the first step in the formation of a contract, it marks the beginning of contractual
obligation between the parties. As is a known fact that Acceptance can only be made to a
prior offer, an offer is essential for the formation of a contract. An offer is defined under
Section 2(a) of The Indian Contract Act (hereinafter, ICA) as:
When one person signifies to another his willingness to do or to abstain from doing
anything, with a view to obtaining the assent of that other to such act or abstinence, he is
said to make a proposal.
The words Proposal and Offer can be used interchangeably for Brevity. The person who
makes the promise is called the “Promisor”, and the person to whom the offer is made is
called the “Promisee”. From the definition itself, it can be construed that an offer can be
both positive as well as negative, i.e.- the doing of an act as well as the “not doing” of an
act.

Types of Offer
An offer can be of many types, ranging across the spectrum. There are basically 7 kinds of
offers:

 Express offer
 Implied offer
 General offer
 Specific Offer
 Cross Offer
 Counter Offer
 Standing Offer

Express offer and Implied offer

Section 9 of The ICA defines both of them as: In so far as the proposal or acceptance of any
promise is made in words, the promise is said to be express. In so far as such a proposal or
acceptance is made otherwise than in words, the promise is said to be implied.
Therefore, any offer that is made with words, it may be regarded as express. Any promise
that is made otherwise than in words is implied. A bid at an auction is an example of an
Implied offer. A case in this regard is Upton-on-Servern RDC v. Powell, wherein the
defendant called a fire brigade assuming that those services would be free to him, however
it was found that his Farm did not come under that of Upton. The court held that the truth
of the matter is that the Defendant wanted the services of Upton, he asked for the services
of Upton and in response to that they offered their services and they were rendered on an
implied promise to pay for them.
In Ramji Dayawala & Sons (p) Ltd v. Invest Import, a case between an Indian and
Yugoslavian party the notice for revocation of an arbitration clause in the contract between
the parties was made by the Indian party, to which the other party gave no reply. It was held
that this would amount to an implied acceptance i.e.- the arbitration clause was deleted
from the contract, and a suit would lie in the court of law. Similarly entering into an
omnibus also amounts to implied acceptance, same as consuming edibles at a self-service
restaurant. Therefore in simpler terms a contract that is entered into because of actions on
the offerors part, may be referred to as an implied offer, any contract entered into
otherwise is an express offer.

General Offer
A General Offer is an offer that is made to the world at large. The genesis of a General Offer
came about from the Landmark case of Carlill v. Carbolic Smoke Ball Co. A company by the
name Carbolic Smoke Ball offered through an Advertisement to pay 100 Pounds to anyone
who would contract increasing epidemic Influenza, colds or any disease caused by cold after
taking its Medicine according to the prescribed instructions. It was also added that 1000
Pounds have been deposited in Alliance bank showing our sincerity in the matter. One
customer Mrs Carlill used the medicine and still contracted Influenza and hence sued the
company for the reward. The Defendants gave the argument that the offer was not made
with an intention to enter into a legally binding agreement, rather was only to Puff the sales
of the company. Moreover, they also contended that an offer needs to be made to a specific
person, and here the offer was not to any specific person and hence they are not obliged to
the Plaintiff.
Setting aside the arguments of the Defendant, the bench stated that in cases of such offers
i.e- general offers, there is no need for communication of acceptance, anyone who performs
the conditions of the contract is said to have communicated his/her acceptance, and
moreover, the money deposited by the Defendant in Alliance Bank clearly shows that they
intended to create a legally binding relationship. Hence the Plaintiff was awarded with the
amount. An Indian authority in this regard is Lalman Shukla v. Gauri Dutt, wherein a
servant was sent by his master to trace his missing nephew. In the meanwhile, he also
announced a reward for anyone finding his nephew, this in itself is an example of an offer
that is made to the world at large and hence a General Offer.

Specific Offer
A Specific offer is an offer that is made to a specific or ascertained person, this type of offer
can only be accepted by the person to whom it is made. This concept was seen briefly in the
case of Boulton v. Jones, wherein the Plaintiff had taken the business of one Brocklehurst,
the defendant used to have business with Brocklehurst and not knowing about the change
in ownership of business, sent him an order for certain goods. The Defendant came to know
about the change only after receiving an invoice, at which point he had already consumed
the goods. The Defendant refused to pay the price, as he had a set off against the original
owner, for which the plaintiff sued him.
The Judges gave a unanimous judgement holding the defendant not liable. Pollock CB held
that the rule of law is clear, if you intend to contract with A, B cannot substitute himself as A
without your consent and to your disadvantage. It was also held that whenever a person
makes a contract with a specific personality, a specific party, so to say, for writing a book,
for painting a picture or for any personal service or if there is any set off due from any party,
no one has the authority to come in and maintain that he is the party contracted with.

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

Counter offer
When the offeree offers a qualified acceptance of the offer subject to modifications and
variations in terms of the original offer, he is said to have made a counter offer. A counter
offer is a rejection of the original offer. An example of this would be if A offers B a car for 10
Lakhs, B agrees to buy for 8 Lakhs, this amounts to a counter offer and it would mean a
rejection of the original offer. Later on, if B agrees to buy for 10 Lakhs, A may refuse. Sir
Jenkins CJ in Haji Mohd Haji Jiva v. Spinner, held that any departure from original offer
vitiates acceptance. In other words, an acceptance with a variation is not acceptance, it is
simply a counter proposal which must be accepted by the original offeror, for it to formulate
into a contract.

Q6. Case Note: Lalman Shukla v. Gauri Dutt

Lalman Shukla V. Gauri Dutt is touted as a landmark judgment for the validity of the contract
under the Indian Contract Act, 1872. The case was filed in the Allahabad high court in the
year 1913 and was presided over by Justice Banerji at the Allahabad High Court.

Facts Of The Case:

In this case, the defendant Gauri Dutt’s Nephew had absconded and was nowhere to be
found. After the defendant became aware of the same, Dutt had sent all the servants in
search of the missing nephew. The plaintiff Lalman Shukla was one of the servants who had
gone out in search of the nephew. The plaintiff eventually found him and brought him back.
When Lalman Shukla had left the house to leave for Haridwar from Kanpur he was handed
some money for his railway fare and other expenses. As soon as Lalman Shukla had left the
house, the defendant announced a reward of Rs. 501 for whosoever found Dutt’s nephew.
Shukla had no idea that such an announcement was made. The plaintiff found the missing
nephew and brought him back to his home in Kanpur. Six months after the said incident
occurred, Dutt sacked the plaintiff.
After being removed from the job, the plaintiff claimed the money from the defendant and
the latter denied to pay the said remuneration. As a result the plaintiff Lalman Shukla filed a
case against Gauri Dutt, his master, for not rewarding him as he was entitled to.

Issues Raised In This Case:

The main issues which were raised in this case were as follows:
Whether Lalman Shukla was entitled to get the reward from Gauri Dutt for tracing the
missing boy.
Whether there was a valid acceptance of the offer made by the plaintiff.
Whether there exists a contract or whether the situation amounts to a contract between
the two.

Arguments On Behalf Of The Plaintiff (Lalman Shukla)

The plaintiff Lalman Shukla strongly affirmed that the very performance of him finding the
missing boy was sufficient enough for him to be entitled to the reward. Since according to
Gauri Dutt’s condition whoever found the lost boy and brought him back would get the
reward. Therefore, as per the condition of the defendant, the plaintiff had traced the boy
and brought him back.
He stated that it is not important to have prior knowledge about the reward, especially
under this circumstance. He also emphasized the fact that section 8 of the ICA 1872, states
that ‘the performance of the act or the acceptance of any consideration of a proposal is an
acceptance of the proposal’.
And in this present case, the condition as stated by the defendant Gauri Dutt was to find the
missing child to be rewarded Rs 501.
He stated that it was immaterial that the person who has performed the act must have the
knowledge of the condition to claim the reward.

Arguments On Behalf Of The Respondent

The defendant asserted and strongly argued that the plaintiff Lalman Shukla was not aware
of the offer and had no knowledge about it before finding the defendant’s nephew.
So an offer without the knowledge of the offeree or the promise cannot be accepted and
also there was no such possibility for the plaintiff to accept the offer without even knowing
about it.
Gauri Dutt argued that according to section 2(a) of the Indian Contract Act, 1872,
“When one person signifies to another his willingness to do or to abstain from doing
anything, with a view to obtaining the assent of that other to such act or abstinence, he is
said to make a proposal”.

Further under section 2(b),

“When the person to whom the proposal is made signifies his assent thereto, the proposal is
said to be accepted. A proposal, when accepted, becomes a promise”
Therefore, the defendant contended that assent was essential to create a contract between
both parties. This means that before accepting the offer the offeree must have complete
knowledge about the facts to give assent or approval. But in this particular case, the plaintiff
was completely unaware of the reward which was associated with it and the plaintiff was
merely doing his duty.
Therefore, according to section 2(h) of the ICA, since there was no acceptance there was no
agreement that can be enforceable by law.

So according to the defendant Gauri Dutt, Lalman Shukla was not entitled to get the reward
and hence he couldn’t claim it.
Ratio Decidendi:-
In the present case of Lalman Shukla vs Gauri Dutt, it is derived that in order to enter into a
contract, two critical aspects should be considered,
To have complete knowledge of the facts of the offer or proposal
Acceptance of the offer
A person to whom the offer is made, the offeree, must accept the proposal. The
communication regarding the offer is also very important as mentioned in section (4) of the
ICA. It states that communication can only be complete when it comes to the knowledge of
the person to whom it is made.
To convert a proposal into an agreement both knowledge and assent must be present. Here,
in the given instance, both were missing.
As the plaintiff had no knowledge and hadn’t given his approval or accepted the proposal
there did not exist a valid contract between the two.
At the time when the plaintiff was searching for the boy, his obligations and duties were as a
servant. Therefore the plaintiff Lalman Shukla was not entitled to get the award.

The Judgement
In the said case, the petitioners’ appeal against the respondent Gauri Dutt was dismissed by
the court.
After analyzing all the facts of the case, the honourable high court held that for creating or
entering into a valid contract there has to be knowledge and assent to the offeree made by
the proposer.
Here, the plaintiff did not know the reward before performing his act. He only came to know
about it later, in which case there was no possibility of accepting the offer.
Hence, there was no contract. Therefore, Lalman Shukla was not entitled to get or claim the
reward.

The judge reiterated that the plaintiff was fulfilling his obligations as a servant of tracing the
missing boy which was a part of his duty. Therefore, the plaintiff’s suit against the defendant
was completely dismissed by the court.

Q8. INVITATION TO OFFER

Q45. Harvey vs. Facey : Facts, Issues, Contentions, Judgement & Analysis

FACTS
Mr Harvey, the appellant, was running a company in Jamaica and he wanted to purchase Mr
Facey’s property known as the “Bumper Hall Pen”. At the same time, Mr Facey was also in a
negotiation with the Mayor and Council of King of Kingston City for the said property.
On 6th October 1893, Mr Harvey sent a Telegram to Mr Facey regarding the purchase of the
property. The Telegram read:
“Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid”. [Telegram 1]
After reading the telegram Mr Facey replied, “Lowest Price for “Bumper Hall Pen £900”
[Telegram 2]
The next day, the appellant replied “We agree to buy Bumper Hall Pen for the sum
of £900 asked by you. Please send us your title deed in order that we may get early
possession.” [Telegram 3]
Mr Facey received the telegram and chose not to respond to it. Later, he refused to sell
the property to the appellant.
Displeased Mr Harvey decided to sue Mr Facey claiming that his response [telegram 3]
was an acceptance to Mr Facey’s offer in Telegram 2. Hence, He is bound by a contract.
The petition was initially dismissed on the first trial by Lord Curren on the ground that the
alleged agreement does not resemble a concluded contract.
Disheartened by this, Mr Harvey went to the Appellate Court where the existence of the
contract was proved and with the leave of the Appellate Court, he appealed to the Privy
Council.

ISSUES
Whether there was an explicit offer from Facey to Harvey to purchase the Bumper Hall Pen
for £900?
Whether there exists a valid contract?
JUDGEMENT
The Hon’ble Bech reviewed the entire matter and decided to uphold the verdict of Justice
Curren. It was held that in the first telegram, the appellant asked two questions, one was
whether the respondent is willing to sell the property to him and the second was the
minimum price for the said property.
But, the respondent only replied to the second part of the question, quoting the price for
the property to be 900 Pounds. But his willingness to sell the property to Mr Harvey was
absent in the answer. Hence, it cannot be assumed that the reply by the respondent
[Telegraph 2] constitutes a proper offer.
Hence, the ‘acceptance’ given by the respondent in Telegraph 3 is inconsequential because
there was no offer.
RULE APPLIED
This is a landmark case the laid the foundation for the concept of ‘invitation to offer. It can
be explained as a situation where the price of the ‘product for sale’ is mentioned but the
owner has not expressed the intent to sell it, thereby it does not constitute an offer.
Thus, it is a mere invitation for people to make an offer. Upon making such an offer, the
discretion to accept it or reject it lies with the party making the invitation.
RELEVANCE OF HARVEY AND FACEY IN INDIAN LAW
The rule of offer, acceptance, and invitation to offer has also been adopted in the Indian
Contract Law.
The Indian Contract Act, 1872
Section 2(a) – “When one person signifies to another his willingness to do or to abstain from
doing anything, with a view to obtaining the assent of that other to such act or abstinence,
he is said to make a proposal.” Hence, a proposal is synonymous to offer.
Section 2(b) – “When the person to whom the proposal has been made signifies his assent
thereto, the offer is said to be accepted. Thus, the proposal when accepted becomes a
promise.”
Section 5: – An acceptance may be revoked at any time before the communication of the
acceptance is complete as against the acceptor, but not afterwards.
An Invitation to treat (offer) – An invitation to treat is a concept in contract law. It refers to
an invitation for a party to make an offer enter into contractual negotiations.
CONCLUSION
Invitation to treat is derived from the Latin phrase, ‘invitatio ad offerendum’, meaning
“inviting an offer”. The phrase can be best described as ‘an expression of willingness to
negotiate. In contract law, this concept plays a crucial role, it separates an offer from a mere
invitation of it, thereby, reducing miscommunication and accidental contracts. Some
common examples of ‘Invitation to treat’ can be, price of items listed at a grocery store or
an invitation to attend an auction.

Q46. Mohori Bibee v/s Dharmodas Ghose

In the Privy Council
Citation-
(1903) ILR 30 Cal 539 (PC)
Date of Judgement-
04 March 1903
Name of the Judges-
Lord McNaughton, Lord Davey, Lord Lindley, Sir Ford North, Sir Andrew Scoble, Sir Andrew
Wilson.
Facts of the case-
Dharmodas Ghose was the respondent in this case. He was a minor (i.e. has not completed
the 18 years of age) and he was the sole owner of his immovable property. The mother of
Dharmodas Ghose was authorized as his legal custodian by Calcutta High court.
When he went for the mortgage of his own immovable property which was done in the
favor of appellant i.e. Brahmo Dutta, he was a minor and secured this mortgage deed for Rs.
20,000 at 12% interest rate as per year.
Brahmo Dutta who was a money lender at that time and he secured a loan or amount of Rs.
20,000, and the management of his business was in the control of Kedar Nath and Kedar
Nath acted as the attorney of Brahmo Dutta.
Dharmodas Ghose’s mother sent a notification to Brahmo Dutta informing him about the
minority of Dharmodas Ghose on the date on which such mortgage deed was commenced,
but the proportion or the sum of loan that was actually provided was less then Rs. 20,000.
The representative of the defendant, who actually acted instead of on behalf of money
lender has given money to the plaintiff, who was a minor and he fully had knowledge about
the incompetency of the plaintiff to perform or enter into contract and also that he was
incompetent legally to mortgage his property which belonged to him.
On 10th September 1895 Dharmodas Ghose along with his mother brought an legal action
against Brahmo Dutta by saying that the mortgage that was executed by Dharmodas was
commenced when he was a minor or infant and so such mortgage was void and
disproportionate or improper and as a result of which such contract should be revoked.[i]
When this petition or claim was in process, Brahmo Dutta had died and then further the
appeal or petition was litigated by his executor’s. The plaintiff argued or confronted that in
such case no relaxation or any sought of aid should be provided to them because according
to him, defendant had dishonestly misinterpreted the fact about his age and because if
mortgage is cancelled at the request by defendant i.e. Dharmodas Ghose.
Issues before the court-
Whether the deed was void under section 2, 10 and 11 of the Indian Contract Act, 1872 or
not?
Whether the defendant was liable to return the amount of loan which he had received by
him under such deed or mortgage or not?
Whether the mortgage commenced by the defendant was voidable or not?

Argument of the appellant-

The respondent was a major when he executed the mortgage.
Neither the appellant nor his agent had any notice that the respondent was a minor.
The respondent made a fraudulent declaration regarding his age and is hence dis-entitled
from seeking any relief.
The respondent is stopped by section 115 of the Indian Evidence Act, 1872 from claiming
that he was a minor at the time of executing the mortgage.
The respondent must repay the amount advanced according to section 64 and 38 of Indian
Contract Act (1872) and section 41 of Specific Relief Act (1877).
Argument of the respondent-
Brahmo Dutta and his agents Kedar Nath possessed knowledge of the respondent’s actual
age.
Since the respondent was a minor at the executing the mortgage, the contract is void.
Judgement-
According to the verdict of Trial court, such mortgage deed or contract that was
commenced between the plaintiff and the defendant was void as it was accomplished by
the person who was an infant at the time of execution of mortgage.
When Brahmo Dutta was not satisfied with the verdict of Trial Court he filed an appeal in
the Calcutta High court.
According to the decision of Calcutta High court, they agreed with the verdict that was given
by Trial court and dismissed the appeal of Brahmo Dutta.
Then he later went to Privy Council for the appeal and later the Privy Council also dismissed
the appeal of Brahmo Dutta and held that there cannot be any sought of contract between a
minor and a major person.
The final decision that was passed by the council were-
Any sought of contract with a minor or infant is void/void ab- initio (void from beginning).
Since minor was incompetent to make such mortgage hence the contact such made or
commenced shall also being void and not valid in the eyes of law.
The minor i.e. Dharmodas Gosh cannot be forced to give back the amount of money that
was advanced to him, because he was not bound by the promise that was executed in a
contract.
Conclusion-
In Mohori Bibee v/s Dharmodas Ghose, at the end it can be concluded that any agreement
or deed in which minor is party to it or is included in such agreement shall be declared null
and void because such agreement is not agreement in the eyes of law. In cases minors
parents or custodians shall not be liable for the dealing done by the minor without their
consent, and hence they will be not liable to return the amount back taken by the minor out
of the moral obligation.

Q16. MISTAKE
A mistake is an erroneous belief that is innocent in nature. It leads to a misunderstanding
between the two parties. Now when talking about a mistake, the law identifies two types of
mistakes, namely
A Mistake of Law
A Mistake of Fact

(Source: Slideshare)
Mistake of Law
This mistake may relate to the mistake of the Indian laws, or it can be a mistake of foreign
laws. If the mistake is regarding Indian laws, the rule is that the ignorance of the law is not a
good enough excuse. This means either party cannot simply claim it was unaware of the
law.
The Contract Act says that no party shall be allowed to claim any relief on the grounds of
ignorance of Indian law. This will also include a wrong interpretation of any legal provisions.
However, ignorance of a foreign law is not given a similar treatment. Ignorance of the
foreign law is given some leeway, the parties are not expected to know foreign legal
provisions and their meaning. So a mistake of foreign law is in fact treated as a mistake of
fact under the Indian Contract Act.
Mistake of Fact
Then there is the other type of mistake, a mistake of fact. This is when both the parties
misunderstand each other leaving them at a crossroads. Such a mistake can be because of
an error in understanding, or ignorance or omission etc. But a mistake is never intentional, it
is an innocent overlooking. These mistakes can either be unilateral or bilateral.
Bilateral Mistake
When both parties of a contract are under a mistake of fact essential to the agreement, such
a mistake is what we call a bilateral mistake. Here both the parties have not consented to
the same thing in the same sense, which is the definition of consent. Since there is an
absence of consent altogether the agreement is void.
However, to render an agreement void the mistake of fact should be about some essential
fact that is of importance in a contract. So if the mistake is about the existence of the
subject matter or its title, quality, quantity price etc then it would be a void contract. But if
the mistake is of something inconsequential, then the agreement is not void and the
contract will remain in place.
For example, A agrees to sell to B his buffalo. But at the time of the agreement, the buffalo
had already died. Neither A nor B was aware of this. And so there is no contract at all, i.e.
the contract is void due to a mistake of fact.
Unilateral Mistake
A unilateral mistake is when only one party to the contract is under a mistake. In such a case
the contract will not be void. So the Section 22 of the Act states that just because one party
was under a mistake of fact the contract will not be void or voidable. So if only one party has
made a mistake of fact the contract remains a valid contract.

Q23. Contracts which need not be Performed

For a contract to be invalid it must be under coercion, threat, fraud, undue influence etc.
Also, object should not be inconsistent with any other law of a contract. Moreover,
performance would not be required under some circumstances which are clearly mentioned
in Sections 62 and 63 of the Act. These circumstances are-
Novation,
Rescission,
Alteration,
Remission.
Section 62 – Novation
This Section provides that the original contract need not be performed if the parties to a
contract agree to alter or substitute a new contract. As Novation of contract means to
create a new contract while the new contract needs not to be performed and is terminated.
Furthermore, the newly substituted agreement would be by the mutual consent of the
parties, valid, enforceable and have consideration. Basically, it should fulfill the
requirements of a valid contract.
Furthermore, essentials of Section 62 of the Act are-
Consensus ad idem between the parties to contract.
Substitution, recession or alteration of a contract that gives rise to a valid new contract.
Termination of the original contract.
There should be previous contracts entered in between the parties.
As in Ramdayal Vs Maji Devdiji[i] the Court observed that Novation takes place by
introducing new terms in the contract or by introducing new parties. A contract of Novation
requires a party to agree or discharge his debt. There can be no Novation unless this can be
accomplished.
For example, contract are like in a partnership firm liabilities of the old firm are taken over
by the new firm, an agreement of lease is where the tenant gives the lease to another party
and makes him responsible for the responsibility and obligations that arise from these
agreements etc. For Novation to be in effect, contract’s modification must go on to the root
of original contract as held by the High Court in case of Juggilal Kamlapat Vs N.V.
Internationale[ii].

Contracts in Novation are as:

Where the obligation under the contract is replaced with the new one
As we know that the parties in a contract have the freedom to enter into a contract and by
mutual consent can alter its terms. And when both the parties mutually agree to change the
terms of contract of which they entered into then binding of new agreement imposes on
them. Hence a party which was not a part of the original contract cannot impose conditions
by unilateral term.

Where a party is replaced by another party

This creates obligation for one party in place of another party as under a Novation
agreement it is possible that the terms provide replacement of contract to another party
from one party. Under this type of contract, the new party assumes that obligations to
another party would not be held liable for any future damages. For instance- A and B are the
parties that enter to a contract and A agrees to replace C in B’s place, then the existing
contract between A & B will start to happen.
The main necessity that was discussed by the Supreme Court of Section 62 was discussed as
in the case Lata Construction & Ors Vs Dr. Rameshchandra Ramnikal Shah And Anr.[iii] It
was held that a new contract was required in place of old one with the rule that new
contract should completely alter the terms of the original contract.

‘No Novation’
When all the conditions of novation are not satisfied then it will be considered as no
novation. As in the case of Godan Namboothiripad Vs Kerala Financial Corporation[iv] it
was held that the important features of novation is relinquishment of a right under the
original contract and when these are missing then there would be no novation.

Unilateral Act of a Party

As we know that a party on its own, unilaterally cannot change the terms of the contract.
Hence in the case Citi Bank N.A Vs Standard Chartered Bank & Others[v] the Supreme
Court held that under Section 62 novation, recission and alteration requires that both the
parties should agree to alter, rescind or substitute the existing contract with the new one. In
case ofPolymatIndia P. Ltd. & Anr Vs National Insurance Co. Ltd. & Ors[vi] it was held that
the terms of a contract cannot be varied without mutual agreement of the parties.

Q28. Liquidated v unliquidated damages

Construction contracts generally include a provision for the contractor to pay liquidated
damages (or liquidated and ascertained damages, sometimes referred to as LADs) to
the client in the event that the contract is breached.
Liquidated damages are a pre-agreed amount of money that is set out in advance in
the contract, that fixes the sum payable as damages if the contractor breaches the contract -
typically by failing to complete the construction works by the completion date set out in
the contract. Liquidated damages are typically calculated on a daily or weekly basis.
Unliquidated damages are damages that are payable for a breach, the exact amount of
which has not been pre-agreed. The sum to be paid as compensation is said to be ‘at large’
and is determined after the breach occurs by a court
One of the advantages of a liquidated damages is that there is no need to prove the
actual loss since the clause provides a pre-estimation of the damages to be paid. In addition
to helping recover damages, this helps to provide certainty to the parties.
The advantage of unliquidated damages is that it allows for recovery of losses which may
have been impossible to foresee or to estimate with any certainty before the breach.
If the contract contains an applicable liquidated damages clause, the client is generally not
permitted to disregard and claim unliquidated damages instead.
In standard form construction contracts, parties will sometimes insert ‘NIL’ or ‘n/a’ for
the rate for liquidated damages, if they do not wish to claim liquidated damages, however,
this can imply that losses for unliquidated damages are also nil. If parties wish to
exclude liability for liquidated damages, they must state this clearly in the contract to avoid
ambiguity, either stating that unliquidated damages apply, or deleting the clause altogether.

Q31. Quasi-contracts
Quasi Contract laws have been derived from the Latin statement “Nemo debet locupletari
ex aliena jactura” which proclaims that no human being should gain an unjust benefit from
another’s loss. It was one of the main principles of Roman law.

The word ‘Quasi’ means having some resemblance to but not all. Similarly, Quasi Contract
means laws that are like regular contract law but not quite so. A regular contract should
have some essential components to be considered valid. It includes offers, acceptance,
consideration, two or more parties who are legally and mentally capable etc.

Whereas Quasi-contract definition is based more on the principles of natural law such as
moral conscience, justice, honesty, duty towards another human being etc.

The main difference between Contract and Quasi Contract is that in the case of the latter,
there is no exchange of offer, acceptance, or consideration between two or more parties.
However, it is still legally enforceable.
For example, if a package belonging to A is delivered to M, then M is legally obligated to
return it to A. If M uses up the contents of the packaging for himself, then A has the right to
sue him. In that case, the court can order M to reimburse A under Quasi-contract law.

Types of Quasi Contracts

According to the Indian Contract Act of 1872, there are five types of Quasi-contract laws.
These have been discussed below:

Supply of Necessities
An individual who is legally incapable of entering into any agreement, or if the person is
unable to support themselves, then another individual who is legally responsible for
supporting the former, then the latter will be reimbursed from the estate of the dependent.
Instances of Quasi-contract cases include, If C supports the family of his friend D, who is
mentally incompetent, then C should be provided with reimbursement from D’s property.

Payment by an Interested Party

Under Quasi-contract in business law, if any individual wishes to make payment of money
which the other party is legally bound to pay and who eventually bears the cost, shall
receive retribution from the latter. For Instance, if person A pays off B’s outstanding debt,
then the latter must reimburse A under Quasi-contract law.

Obligation to Pay for a Non-Gratuitous Act

In circumstances, when a person performs an act for another which he or she is legally
bound to do and which is not performed out of gratitude, then the person for whom it is
being done must compensate the former.For Instance, if a shopkeeper delivers some goods
to B’s house, then B is bound to pay the shopkeeper for services performed. However, if the
shopkeeper returns goods that B had forgotten, then B is not liable to compensate him or
her as it was an act of gratuity.

Finder of Goods
A person who comes across any item belonging to another individual, and takes it under his
custody, then he or she must take proper care of the thing as much as he or she would take
care of an item of the same value, bulk, and quality until the appropriate owner is found. If
the owner is not found, then the finder can retain the item as their own according to Quasi-
Contract.

A mistake of Coercion
Section 71 of contract law states that an individual who receives any item by mistake or
through coercion is legally bound to return the items or repay the person who initially made
the payments. For example - if a parcel is delivered belonging to B, is delivered to A, then A
must return it to B promptly.

Unjust Enrichment
One of the main features of Quasi-contract is unjust enrichment. In the case of unjust
enrichment, one party derives benefits either by mistake or through the other party’s
misfortune or loss. Additionally, when an individual enjoys advantages for which he or she
has made proper payments or has not worked for it, and which was not intended as a gift,
then it is also termed as unjust enrichment. However, courts consider several other aspects
while deciding whether an unfair enrichment has taken place or not under Quasi-contract in
the Indian contract Act. These elements are mentioned below:
The defendant must have received benefits or advantages to which he or she is not entitled
to.
The plaintiff should have sustained loss or damage of some kind when the defendant
received unjust enrichment.
The court also needs to prove that the enrichments or benefits in question are unfair to
create a Quasi-contract.
There should be no proper explanation for enrichment. Additionally, the plaintiff also needs
to justify why it is unfair for the defendant to be in possession of the goods without paying
for them.

Q41. Liability of the joint Promisors

Devolution of joint liabilities (Section 42)
When two or more persons have made a joint promise, then, unless a contrary intention
appears by the contract, all such persons, during their joint lives and after the death of any
of them, his representative jointly with the survivor or survivors and after the death of last
survivor, the representatives of all jointly, must fulfil the promise.
Analysis of Section 42
If two or more persons have made a joint promise, ordinarily all of them during their life-
time must jointly fulfill the promise. After death of any one of them, his legal representative
jointly with the survivor or survivors should do so. After the death of the last survivor the
legal representatives of all the original co- promisors must fulfil the promise.
Example: X, Y, and Z who had jointly borrowed money must, during their life-time jointly
repay the debt. Upon the death of X his representative, say, S along with Y and Z should
jointly repay the debt and so on.
This rule is applicable only if the contract reveals no contrary intention. We have seen that
Section 42 deals with the voluntary discharge of obligations by joint promisors. But if they
do not discharge their obligation on their own volition, what will happen? This is
what Section 43 resolves.
Any one of joint promisors may be compelled to perform — Section 43
When two or more persons make a joint promise, the promisee may, in the absence of
express agreement to the contrary, compel any one or more of such joint promisors to
perform the whole of the promise.
Each promisor may compel contribution — Each of two or more joint promisors may compel
every other joint promisor to contribute equally with himself to the performance of the
promise unless a contrary intention appears from the contract.
In other words, if one of the joint promisors is made to perform the whole contract, he can
call for a contribution from others. Sharing of loss by default in contribution — If any one of
two or more joint promisors makes default in such contribution, the remaining joint
promisors must bear the loss arising from such default in equal shares.
Explanation to Section 43
Nothing in this section shall prevent a surety from recovering, from his principal, payments
made by the surety on behalf of the principal, or entitle the principal to recover anything
from the surety on account of payment made by the principal.
Example 1: A, B, and C jointly promise to pay D, Rs 3, 00,000. D may compel either A or B or
C to pay him.
Example 2: A, B and C are under a joint promise to pay D ` 3, 00,000. C is unable to pay
anything A is compelled to pay the whole. A is entitled to receive ` 1, 50,000 from B.
We thus observe that the effect of Section 43 is to make the liability in the event of a joint
contract, both joint & several, in so far as the promisee may, in the absence of a contract to
the contrary, compel any one or more of the joint promisors to perform the whole of the
promise.
Effect of release of one joint promisor- Section 44
The effect of release of one of the joint promisors is dealt with in Section 44 which is stated
below:
Where two or more persons have made a joint promise, a release of one of such joint
promisors by the promisee does not discharge the other joint promisor or joint promisors,
neither does it free the joint promisors so released from responsibility to the other joint
promisor or promisors.
Example: ‘A, ‘B’ and ‘C’ jointly promised to pay Rs 9,00,000 to’D. ’D’ released ‘A ‘from
liability. In this case, the release of ‘A’ does not discharge ’B’ and ’C’ from their liability. They
remain liable to pay the entire amount of Rs 9,00,000 to‘D’ And though ‘A’ is not liable to
pay to ‘D, but he remains liable to pay to‘B’and‘C’i.e. he is liable to make the contribution to
the other joint promisors.
Right of Joint Promisees
The law relating to the Devolution of joint rights is contained in Section 45 which is
reproduced below:
“When a person has made a promise to two or more persons jointly, then unless a
contrary intention appears from the contract, the right to claim performance rests, as
between him and them, with them during their joint lives, and after the death of any of
them, with the representative of such deceased person jointly with the survivor or survivors,
and after the death of the last survivor, with the representatives of all jointly”.
Example: A, in consideration of Rs 5,00,000 rupees lent to him by B and C, promises B and C
jointly to repay them that sum with interest on a specified day but B dies. In such a case
right to demand payment shall rest with B’s legal representatives, jointly with C during C’s
life-time, and after the death of C, with the legal representatives of B and C jointly.
Q52. Doctrine of feeding the grant by Estoppel
The doctrine of feeding the grant by estoppel is based on the maxim ‘nemo dat quod
nonhabet which implies that no one can give to another, which he himself does not
possess’. Section 43 of the Transfer of Property Act lays down “where a person fraudulently
or erroneously represents that he is authorized to transfer certain immovable property and
professes to transfer such property for consideration, such transfer shall at the option of the
transferee, operate on any interest which the transferor may acquire in such property at
any time during which the contract of transfer subsists”.
This general rule lays down that no property can be transferred by any person who is not
authorised to do so. Thus if a person does not have a title to property, he cannot validly
transfer the same to another. But this rule has been relaxed in practice due to “adjustment
of equities” between such person and the transferee. One of such exceptions to this rule is
provided in sec. 43, T.P. Act.
The principle of law on which the provisions of sec.43 rest is a well known rule of estoppel,
sometimes referred to as ‘feeding the grant by estoppel’. This means that if a person who
although has no title to a property, yet grants it to another by conveyance, fraudulently
causing loss to the other, will loose his subsequent interest in the property to the other, in
case of any subsequent transfer of such property in his favour. An estoppel arises against
the transferor for his conduct, and the law obliges him to ‘feed’ that estoppel by reason of
his subsequent acquisition. Thus the principle underlying this section is based partly on
doctrine of estoppel and partly on the equitable doctrine that a man who had promised
more than he can give, ought to give when he acquires what he initially claimed.
The doctrine of feeding the grant by estoppel compels a man to perform when the
performance becomes possible. It does give the transferor the option of going ahead with
the transfer, it then completely depends upon the transferee if he is still willing to go ahead
with the transfer after the transfer becomes a viable option.
In Ram Bhawan Singh v Jagdish [(1990) 4 SCC 309] the court observed that “when a person
having a limited interest in the property transfers a larger interest to the transferee on a
representation, and subsequently acquires the larger interest, the larger interest passes to
the transferee at the latter’s option. This doctrine not only applies to sale but also applies to
a mortgage, lease, charge, and exchange. Where no grant or interest in immovable property
is involved, the doctrine would not apply. The doctrine also does not apply in cases where
the transferor has acquired interest not in the property which is the subject matter of the
transfer, but in some other property.
Essential Requisites of the doctrine of ‘feeding the grant by estoppel’ –
A fraudulent or erroneous representation of ownership
The estoppel rests on the representation(express or implied) made by the transferor that he
is authorized to transfer, which representation subsequently turns out to be erroneous. It
makes no difference that the transferor had no interest whatsoever in the property or the
interest therein that of an expectant heir. Further, it is immaterial whether the transferor
acts bona fide or fraudulently in making the representation. What is material is that he did
make a representation and the transferee acted on it and thus has been misled. In other
words the doctrine applies only when the transferee has been misled into believing a false
representation and not otherwise. The doctrine also applies in cases where the transferor
has a duty to speak and he fails to do so. Where a person sold the property as an agent of
the widow, and later became her heir, the doctrine did not apply, as there was no erroneous
representation (Peyare Lal v Misri AIR 1940 All 453)
A transfer for consideration
The doctrine of ‘feeding the grant by estoppel’ is applicableonly to the transfers of
properties for value. This section is not applicable where the transfer is gratuitous, i.e.
without consideration. Thus, the provisions of this section are not applicable to transfer of
property by way of a gift where the donor has no present fixed right at the date of transfer,
making it a void transaction.
At the option of the transferee
The transfer becomes valid when the transferee exercises the option and the title of the
transferor becomes perfect. Where the official receiver transfers property before it vests in
him, the implied covenant will be treated as erroneous representation, and the purchaser’s
title would be complete as soon as the property vests in him( Muthiya Chettiar v Doraswami
(AIR 1927 Mad 1091). Similarly where a partner sells the property of a firm in his right and
subsequently on the dissolution of the firm is allotted the same property, the transferee
gets the benefit of such allotment (Syed Nurul Hossein v Sheosahai (1893) ILR 20Cal 1).
Further, the interest acquired by the transferor does not automatically pass on to the
transferee but only when he claims his interest in such property
A subsisting contract of transfer
The option of the transfer can only be exercised in respect of an interest acquired by the
transferee whilst the contract of transfer “still subsists”. If the transferee (purchaser) had
repudiated or cancelled that transaction, or had recovered his purchase money, or if the
transaction were one of mortgage and the mortgage money had been repaid, then the
relation of the transferor and the transferee has ceased to exist, and no claim in respect of
the property can be made by the latter.

Q53. Specific Performance of Contract and its enforceability

Introduction
The Law of Specific Relief in India was originally codified by Specific Relief Act, 1877. The
provision of this enactment was considered by the Law Commission in its Ninth Report
which was later replaced by the present act of 1963. The Specific Relief Act, 1963 deals with
the remedies granted at the discretion of the court for the enforcement of individual civil
rights. In case of breach of contract, the general remedy available to the aggrieved party is
compensation or damages of loss suffered. For this, a civil suit is filed against the guilty party
who had made the default in performance of its duty or obligation as per the terms of
contract under the statutory provision of Section 73-75 of Indian Contract Act 1872.
However, sometimes pecuniary compensation does not satisfy the plaintiff so he may ask
for specific relief. For example if somebody unlawfully dispossess a person without his
consent having peaceful possession over the property then specific relief may enable him to
have the possession of same property instead of claiming pecuniary compensation.
THE ACT PROVIDES THE FOLLOWING KINDS OF SPECIFIC RELIEF
Recovery of possession of property
Specific performance of contracts
Rectification of instruments
Rescission of contracts
Cancellation of Instruments
Declaratory decrees
Injunction
Specific Performance of Contracts
Specific performance means enforcement of exact terms of the contract. Under it the
plaintiff claims for the specific thing of which he is entitled as per the terms of contract. For
example, if A agrees to sell certain shares to B of a specific company which are limited in
number and after the payment made by B, if A refuses to sell the shares then B is entitled to
recovery of those shares.
According to Section 10 of Specific Relief Act 1963 in the following conditions specific
performance of the contract is enforceable:

When there exist no standard for ascertaining actual damage: It is the situation in which
the plaintiff is unable to determine the amount of loss suffered by him. Where the damage
caused by the breach of contract is ascertainable then the remedy of specific performance is
not available to the plaintiff. For example, a person enters into a contract for the purchase
of a painting of dead painter which is only one in the market and its value is unascertainable
then he is entitled to the same.
When compensation of money is not adequate relief: In following cases compensation of
money would not provide adequate relief:
Where the subject matter of the contract is an immovable property.
Where the subject matter of the contract is movable property and,
Such property or goods are not an ordinary article of commerce i.e. which could be sold or
purchased in the market.
The article is of special value or interest to the plaintiff.
The article is of such nature that is not easily available in the market.
The property or goods held by the defendant as an agent or trustee of the plaintiff.

In Case of Ram Karan v. Govind Lal [1], an agreement for sale of agricultural land was made
& buyer had paid full sale consideration to the seller, but the seller refuses to execute sale
deed as per the agreement. The buyer brought an action for the specific performance of
contract and it was held by the court that the compensation of money would not afford
adequate relief and seller was directed to execute sale deed in favour of buyer.
Similarly, it was held by the court where the part payment was paid by plaintiff and
defendant admitted that he had handed over all documents of title of property to the
plaintiff. Sale price in an agreement is not low and defendant had failed to establish that
said document was only a loan transaction then the agreement is valid and defendant is
liable to perform his part (M. Ramalingam v. V. Subramanyam)[2].
Contracts which cannot be specifically enforced
According to Section 14 of Specific Relief Act 1963, there are certain contracts which cannot
be specifically enforced and these are:
Where compensation in money is an adequate relief: Here the court will not order specific
performance of contract as it is expected that the plaintiff will bank upon the normal
remedy for breach of contract i.e. remedy of compensation. For example contract of
mortgage of immovable property (Rambai v. Khimji)[3], contract of sale of goods (Bharat
v. Nisarali) [4], contract of repair of premises etc.
Where a contract runs into minutes or numerous detail: These contracts includes contract
which depends upon the personal qualification or the violation of the parties or is of such
nature that the court cannot enforce specific performance of its material terms.
In Robinson Davison [5], it was held by the court that the contract to perform in concert
depends upon the personal kill of defendant’s wife, and the contract cannot be specifically
enforced due to her illness. The other example is construction contract where the detailed
terms of contract are not explained.
Contracts of determinable nature: Determinable contract means a contract which can be
determined or revoked or put to an end by a party to the contract. For example in case of
partnership at will any partner can retire by giving notice in writing to other partners and
can dissolve the firm.
Contracts which involve the performance of continuous duty which court cannot
supervise: Earlier under Specific Relief act, 1877 the continuous duty which court cannot
supervise is considered over a period of 3 years which was omitted under Specific Relief Act,
1963 and no time limit restricted for the performance of a continuous duty. These include
contract of appointment of employees for continuous service or contract to execute sale
deed every year. In Central Bank v. Vyankatesh [6], the defendant was required to execute
deed every year for the period of 25 years and contract is held to be specifically
unenforceable.
Contract of arbitration: According to Section 14(2), a contract to refer present or future
differences to arbitration shall not be specifically enforceable.
Q55. Declaratory Decree
A declaratory decree is a decree declaring the right of the plaintiff. The declaratory
judgment clearly states that the right of the plaintiff in an already complicated transaction.
Under this, the court declares some existing rights in favor of the plaintiff and it exists only if
the plaintiff is denied of his particular rights which he is basically entitled to. After the
specific relief is obtained by the plaintiff against the defendant by the plaintiff who denied
the plaintiff from his rights. A declaratory judgment does not itself order any action by a
party or imply damages or an injunction although it may be accompanied by one or more
other remedies.
Section 34, Specific Relief Act
Section 34 of the Special relief act of 1963 deals with the discretion of chords as to
declaration of status or right. It is the cold discretion of the court as a true declaration of
status or write any person and tell that to any legal character or any right to any property,
may institute a suit against any person denying or interested to deny his title to such
character or right.
The court may in its discretion make there in a declaration that is so entitled and the
plaintiff need not in such suit ask for any further relief provided that no court shall make any
such declaration where the plaintiff, being able to seek further relief than a mere
declaration of title, omits to do so.
Explanation – A trustee of the property is a “person interested to deny” a title adverse to
the title of someone who is not in existence and whom if, in existence, he would be a
trustee.
Naganna vs. Sivanapa 8th January (AIR 2004),
Declaratory decree provisions brings out to merely perpetuate and strengthen the plaintiff
in case of an even adverse attack so that the attack on the plaintiff cannot we can his case
and according to the mentioned arguments of this case it and courageous dog plaintive to
come in front so that he can enjoy the rights which are entitled to. If any defendant the
night the plaintiff from providing those particular rights for which the plaintiff is entitled
then it gives them the power to file the suit and get a special relief.
Essentials of Declaratory Suit
There are specific essentials elements for a declaration suit to be valid. There are four
elements without any of them the suit for declaration will not be considered valid.
The declaration asked for should be the same as the declaration that the plaintiff was
entitled to a right.
The plaintiff at the time of suit was entitled to any legal character or any right to any
property.
The defendant had denied or was planning or interested in denying the rights of the
plaintiff.
The plaintive was not in position to claim a further relief than a mere declaration of his
rights which have been denied by the defendants.
Requisites of a Declaratory Decree
According to Section 34, of the Special Relief Act 1963 any person entitled to any character
or to any right as to any property may Institute a suit against any person denying, or
interested to deny his title to such character or right, and the court may in its discretion
make therein a declaration that he is entitled, and the plaintiff need not in such suit ask for
any further relief. It put certain conditions that should be fulfilled by the plaintiff to file a
valid suit for declaration for the rights which are denied by the defendant.
Also, to obtain the relief of declaration the plaintiff had to fulfill the above-mentioned
conditions. If any of the essential elements are missing then no relief of declaration will be
provided by the court. The burden of proof is on the plaintiff, he has to prove that the
defendant has denied the character or title of the plaintiff and the plaintiff has to establish
that there must be some present danger to his interest. The denial must be communicated
to the plaintiff in order to give him the cause of action. It is the duty of the court to exercise
their rights while granting a declaratory decree and only in proper cases, this remedy should
be provided.
· Legal character
Also, we talked about the requisites that a person should be entitled to the legal character.
So legal character is basically an individual’s legal status in the society which just shows his
legal capacity. There’s a variety of status among the natural person, which can be referred
to as the following listed causes i.e. Sex, minority, rank, caste, tribe, profession, and many
more.
· Person Entitled to any Right to Property
The second condition which needs to be fulfilled for the successful relief of the declaration
by the plaintiff is the plaintiff’s right to property. Any person wanting or seeking special
relief has a condition that they must have a right to any property, only then they can go for
special relief under the Special relief act, 1963.
· Declaration asked should be the same as the separation that the plaintiff entitled.
· Plaintiff should claim only for a mere declaration and he is not entitled to more than
that.
Q59. Rectification of a contract
Rectification in contract law takes place when a court demands a modification in a contract
so that the contract states what it should have stated originally. If a written contract does
not accurately convey the specific agreement made by the parties, the court can choose to
modify that contract. This involves changing the original wording with an updated text to
reflect the parties' intended agreement.
What Does Rectification Involve?
Rectification refers to changes made in a written contract. These modifications are made by
swapping a part or all the original wording with updated text to show the parties' intended
agreement accurately. When a court rectifies a document, it means that the court intends to
place the parties where they should have been if the error had not happened in the first
place.
In Roman law, a meeting of the minds was known as consensus ad idem. In a situation
where one or both parties were incorrect about an aspect of the agreement, a consensus ad
idem does not exist. However, that does not always signify that the contract is invalid.
The Process of Rectification
Rectification involves modifying the written version of the parties' agreement.
It is not a modification of the actual agreement.
To achieve rectification, it is essential to prove the parties were in full agreement with the
details of their contract, but then they proceeded to write them up incorrectly by mistake.
The court does not modify the text to show what the parties may have agreed on if they had
thought about the terms in greater detail or if they would have had more particulars
available to them.
When Rectification Does Not Apply
Rectification does not assist parties who did not incorporate a certain phrase because they
had not fully considered the subject of the contract.
The court's role, when enacting its power to allow rectification, is not to rewrite contracts or
to include extra terms on the behalf of parties who have not given it enough consideration.
Similarly, the courts will not get involved to assist a party with a bad deal.
If a court allows rectification, the decision has a retroactive impact on the terms of the
document.
This means the updated contract will be read as though it had been initially written in its
modified form. This may affect the parties in unforeseen ways — for example, in relation to
backdated tax accountability.
Basis for Rectification
Rectification typically only takes place when there is no other option. Courts will only allow
it in a restricted range of situations. Before assessing whether a rectification is appropriate,
the court will make sure the parties have thought about other possibilities. Hence, it is
essential to consider all other possible solutions the court may use. Rectification may be
allowed in the case of:
A mutual error (when both parties make a mistake).
A unilateral error (a mistake one party makes).
Null Contracts
In a situation where both parties are incorrect on an essential aspect of the contract, then
that contract is null from the beginning. This is the case if the error is so serious that it is an
untrue and critical presumption.
For instance, if the name of one of the parties is a critical element of the agreement, a
related error will nullify the contract. This could be the case in a contract involving an
athlete or a musician. Another critical mistake would involve an item that unbeknownst to
the parties, no longer exists.
Unilateral Mistakes
In some situations, only one party will make the mistake.
In a case where the other party knows about the misunderstanding or should have known,
the agreement might not hold up in court.
This is true even if the knowledgeable party did not cause the error, and it is known as a
unilateral mistake.
However, if the details of the contract were apparent to both parties, but an error was
made while writing that contract and was not noticed before signing, then rectification may
be granted.
Nevertheless, it is far less costly for the parties to correct the original contract themselves
instead of taking it to the courts.

Q19. Uncertain Contracts

Ambigious and Uncertain Agreements
Introduction
‘Certainty’ in the terms of a contract is one of the essential features to declare a contract to
be valid, as stated by the Indian Contract Act, 1872. Uncertainty in the language of a
contract makes the terms of the contract, which forms the very basis of a contract, vague
and ambiguous which ultimately makes the contract void. Thus, the agreements or
contracts, the meaning of which is very uncertain and there is some kind of vagueness and
ambiguity while understanding the terms of the contract, then such agreements are said to
be ‘Uncertain agreements’ and in accordance to Section 29 of the Indian Contract Act, 1872,
are held to be void. In the case of Scammell v. Ousto[1] , it was clearly stated by the House of
Lords that for an agreement to be enforceable and binding on the parties, it is important for
the terms of the contract to be definite and certain. The court must be able to derive a
practical meaning of the contract and be clearly able to understand the intention of the
parties. Thus, when the language of the contract is unable to express the correct meaning of
the contract or when more than one interpretation can be made out of it and the meaning
of which cannot be ascertained under any circumstances, then in such cases, the contract is
held to void for being uncertain and ambiguous in expressing the intention of the parties,
according to the general rule of the Contract law. This was observed in the case
of Dhanrajmal Gobindram v. Shamji Kalidas & Co[2] in which the agreement was held to be
void because of the uncertainty in the determination of the price of the white horse when
two prices were mentioned without any additional information.
Sources of Uncertainty
In the language of contract, uncertainty arises from the following sources:
Ambiguity: An agreement is said to be ambiguous when it conveys more than one meaning
and thus proves to be inconsistent. It arise principally either due to misplacement of the
words or phrases grammatically or due to the two meanings that the word or the phrase is
able to convey. To cite an example in the case of Frigaliment Importing Co. v B.N.S.
International Sales Corp.[3] , the court held the contract void due to the ambiguity in the
order that the “chickens” mentioned in the order meant young chickens or chickens of any
age that met the requirements.
Undue Generality: When there is a lack of detail information in the contract due to which it
becomes unclear to the party to determine the intention of the other party, then such
contracts are said to be unduly general. This was seen in the issue of Raffles v.
Wichelhaus[4] , where the contract was held void by the court due to undue generality. This
was a contract to purchase cotton from a ship that was to depart from Bombay, named
“Peerless”. But it was found that two ships under the same name “Peerless” were to depart
from Bombay with a month’s gap. This caused confusion and made the buyer and the seller
to think of different ships. Thus failing to provide all the necessary detailed information
about the ships, the court held the contract unduly general and was held void.
Vagueness: This form of uncertainty arises when the words mentioned in the contract are
unable to convey a specific meaning to give certainty to the contract. When the court finds
no way to determine the certain meaning of the contract, the contract is held to be void.
The case of Guthing v. Lynn[5] is a perfect example where the contract between the two was
held to be void. The contract was to pay 5$ more than the price of the horse provided it
proves lucky. The court held the contract to be vague as there was no machinery to
determine how the can horse be lucky to the party.
Agreements held to be uncertain and void
Agreements to agree or negotiate
An agreement stands to be void if it is made to agree in the future, because these
agreements give no certainty whether it would be agreed by the parties in the future or not.
This was held in the case of May & Butcher Ltd v. R[6] in which the agreement to determine
the price, manner of delivery and the dates of payment from ‘time to time’ was held to be
void for uncertainty. The case laid down the principle of a concluded contract which is one
in which everything is settled and nothing is left to be settled by the parties in the future and
stated that only concluded contract will be held valid. A contract in which the essential or
the vital part of the matter is left to be decided in the future by the parties, then such a
contract is held to be void. It was further observed in the case of Courtney & Fairbairn Ltd v.
Tolaini Bros (Hotels) Ltd[7] in which the Court of Appeal denied the existence of a contract on
the basis that price being the vital part of a contract was neither agreed upon by the parties
nor could be ascertained by any means. It was emphasized that neither a contract to enter
into a future contract or agree in the future nor a contract to negotiate is valid.
Undefined Property
In the agreement for sale of properties, it is essential that the particular land to be sold
should be should be clearly mentioned in the contract along with the correct Khasra number
and the fixation of price for the sale should not be left to be decided on a later date. Any
type of uncertainty as to identification of land and price fixation will make the contract void.
In the case of William Graham v. Krishna Chandra Dey[8] , the contract was held to be void of
absolute vagueness and uncertainty in determining the land to be sold due to the five
Khasra numbers mentioned by the party that were of the same land. It was further held
in Surendra Kumar Gupta v. Narayan Ram [9] that an agreement of sale cannot be specifically
enforced if it has been held void for uncertainty. But at the same time in the case of S.R.
Varadaraja Reddiar v Francis Xavier Joseph Periaria [10] , the mere absence of the survey
number, the boundaries or location of the property in the terms of the agreement, did not
render the contract void for uncertainty because the parties were fully aware of the details
of the property to be sold under the contract and hence were certain about the identity of
the property. In another case of Deojit v Pitambar[11] , the party constituting the contract
was the resident of a property and a bond was executed by them, hypothecating their
property as security with all the interests and rights. But this hypothecation was held to very
vague because of the fact of being a mere resident of the place was not enough to
determine with certainty that the property to be hypothecated was the same as the
property they resided in. Thus, the agreement for the property was held to be void. Had the
parties described themselves as the true owners of the property, there would have been
certainty in determining the property hypothecated.
Commercial agreements
Commercial agreement which mainly involves “agreements to agree” becomes questionable
when it comes to determining whether they are legally enforceable or not. It often happens
that businesses enter into the contracts with an understanding to settle upon a further
agreement in the future based on their future terms. Thus, rather than negotiating the
further contracts at the time of first contract, they leave it to be determined in the future.
But since the contracts negotiated in the future are held to be void for uncertainty,
therefore it makes it necessary for them to lay out the details of the terms for entering into
further arrangements rather than just mentioning it. In the case of Morris v Swanton Care &
Community Ltd.[12] the court laid the difference between the unenforceable obligations
arising from the negotiations of the parties to agree in the future, and the potentially
enforceable obligations when only certain elements, not the vital ones, are left to be
determined in the future. Thus, the mere mentioning of the ‘agreement to agree in the
future’ in the contract without any further detail of the conditions will render the said void
for uncertainty.
Agreements for sale of goods
Agreements for sale of goods are generally held to void in the case of uncertainty in the
determination of the prices of the goods to be sold. In the case of Scammell v Ousto[13] it was
agreed that the purchase price would be determined on a hire purchase basis over a period
of two years. But the court found the terms of the hire purchase to be too vague to bind the
parties and the contract. Since no precise meaning could be derived from it, the contract
was held void for uncertainty in the determination of price. In another case of May &
Butcher Ltd v The King[14] it was agreed between the parties that the price of the tents to be
sold and also the date of payment, the two important terms of the contract, was to be
determined when the tents were available to them. Such a contract was held void by the
courts because the fundamental term of the agreement for sale of goods was not
determined in the starting. Hence the agreement was unenforceable and again void for
uncertainty in price determination. However, if the price is left to be determined by the
third party, then in such cases the contract would be held enforceable and certain. Similarly,
when there is nothing mentioned about the determination of price then also the contract
would be enforceable based on section 9 of the Sales of Goods Act, 1930. Thus, the
uncertainty would occur only when the price is left to be determined in the future.
Agreements without time limit of performance
Another type of agreements that are held to be too uncertain to be enforceable by the
parties and the court are those in which the time limit for the performance of the contract is
neither expressed nor can be implied from the nature of the contract. It was seen in a case
(Carter v. The Agra Savings Bank) that an instrument promising to pay a certain amount
every succeeding month was not regarded to fall in the category of a promissory note
because the time for which the money had to be paid monthly was not specified anywhere
in the contract and also it was impossible to deduce from the contract language the time
limit of the performance. Hence the agreement was held to be void. Similarly an agreement
between the parties to not enforce the payment of the cheque till the time of the receipt of
the goods was held to be void on the grounds of uncertainty in the determination of the
period within which the goods were to be received.
Agreements with option clause for renewal of tenancy
Generally, the agreement involving the option clause for the renewal of the lease or tenancy
is held to be enforceable. But in the case when the option clause is mentioned in the
contract to be renewed at the time of the renewal of the lease, as agreed upon by the
parties, is held to be vod and hence unenforceable for being uncertain as was in the case
of Aboobacker Keyi v Govindan Sons[15] .

Q57. What are mandatory and prohibitory injunctions?

What is an injunction?
An injunction is an order of the court requiring a party to do something (a mandatory
injunction) or to stop doing something (a prohibitory injunction). If a person fails to comply
with an injunction order this may constitute a contempt of court.
An injunction may be needed to preserve or stop the loss of an asset, protect against
personal harm, avoid loss or damage to reputation and defend business or personal
interests.
An injunction can be obtained once court proceedings have begun or at their conclusion (to
last forever or until a specified date). If the matter is urgent or in the interests of justice, it is
possible to obtain an interim injunction. This would remain in place for the time specified by
the court, until the trial takes place, or until the court makes a further order.
Types of injunction
Prohibitory injunction
A prohibitory injunction requires the other party to refrain from doing something. They may
be obtained, for example, to safeguard confidential information acquired in the course of
business; to prevent a breach of contract; or to stop a party taking legal proceedings (an
anti-suit injunction). They can be interim or final.
The court will only grant an injunction if it is satisfied on the facts that:
there is a serious issue to be tried;
it appears to the court to be just and convenient to do so and the applicant has ‘clean
hands’ (eg, has not delayed unreasonably or acted improperly themselves);
damages would not be an adequate remedy to resolve the dispute.
Mandatory injunction
A mandatory injunction requires a party to do something (eg, deliver up goods or make
available documents). The court is generally more reluctant to grant a mandatory injunction
than a prohibitory injunction and will normally only grant one if:
the applicant will suffer serious harm if the injunction is not granted;
the applicant will most likely succeed at trial;
the respondent will not incur expenditure which would be disproportionate to the
applicant’s harm.
Q63. Lumley v. Wagner
Brief Fact Summary.
Johanna Wagner (defendant) agreed to sing exclusively for Benjamin Lumley’s (plaintiff)
theatre. Later, Covent Garden a competitor convinced Wagner to break her contract with
Lumley and sing for them. Lumley brought suit.
Synopsis of Rule of Law.
Even where there is no satisfactory remedy at law, a court of equity will, for the most part,
will not particularly implement a personal services contract.
Facts.
Johanna Wagner (defendant) contracted to sing solely for Benjamin Lumley's (plaintiff)
theater for one season. Accordingly, Covent Garden, an opponent theater, persuaded
Wagner to break her agreement with Lumley and sing for that theater instead. Lumley sued.
Issue.
May a court enforce a negative injunction on an individual, preventing her from
accomplishing something she indirectly contracted not to do?
Held.
Yes. Even where there is no satisfactory remedy at law, a court of equity will, for the most
part, will not particularly implement a personal services contract.
Dissent.
N/A
Concurrence.
N/A
Discussion.
Although an equity court won't particularly authorize a personal services contract, it might
order the party breaching the personal services contract from giving her services to another
party. In the present case, the court can't constrain Wagner to sing for Lumley. Nonetheless,
the court establishes that it might enjoin Wagner from singing for another person,
particularly Covent Garden. Although this injunction may indirectly prompt Wagner to sing
for Lumley, it is not a direct court command and subsequently is allowed.