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    Mokals - Contract 1 of 2

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    ea aU Lay with the Author Shrutishreya Publications Pvt. Ltd. PEN ey oa eer eee eC eeest Ce EST “CONTRACT - I” And | THE SPECIFIC RELIEF ACT 1963” SSE RELIEF ACT, 1963” | A Complete Book For All Universities With Important Notes Including All Question Papers Update With Solutions ALL IN ONE By © Prof. Prakash K. Mokal B.A. (Special English); LLM. University of Mumbai (Former Principal, Government Law College, Mumbai) Sole Distributors Gargi Wordworld, Pune Tel. : 020-24348881 Shrutishreya Publications Pvt. Ltd. Tel. : 022-25420740. © Prof. Prakash K. Mokal B.A. (Special English); LL.M. Published by Shrutishreya Publications Pvt. Ltd. “Paradise Tower, Office No. 304, 3° Floor, Gokhale Road, Next to McDonald Hotel, Opp. Thane Rly Stn. (W). Pin - 400 602. Telephone ~ 022-25420740. Price : Rs. 280/-. Type setting Gargi Wordworld, Pune 9423580449 i Printed by Shree Ambika Offset, Pune Phiotocopying/Zeroxing is a violation of copyright work which may result in both, civil claim for damages and criminal prosecution Copyrights Reserved by the Author CONTENTS Syllabus (A) “GENERAL PRINCIPLES OF ConTRACT” (INDIAN CONTRACT ACT, 1872- Sections : 1-75) Maris, CHAPTER PAGE‘No, I Proposal i Ms Acceptance. IAT cornet ee : ML: Rules Relating to Communication, Acceptance & Revocation of Proposal IW: Valid Agreements o7 Contractsin. oer 2 fa Vs Competency to Contract. V1: Consent and Free Consent. Vil: Consideration VIE: Void Agreements.ccoecn E IX: "Contingent Contract or Conditional Contract X: Performance of Contract. Xd: Quasi Contract. Atl: Consequences of Breach of Contract. XIE: Government as a Contracting Party. es of Contract” (8) “THE SPECIFIC RELIER ACT, 1963" CHAPTE Scheme of the Aetevereese PART "PRELIMINARY" (Su. 1-4). PART. IT" SPECIFIC RELIEF": 1s Recovery of Possession of Property (Ss. $4 Mz Specific Performance of Contracts (Ss. 9-25). M1: Recifiation of Instruments (S. 26). IV: Rescission of Contracts (St.27-30).. Vs Cancetiation of instruments ($s.31-33).. Vi: Declaratory Deerees (4-35 vss PART: 111 “PREVENTIVE RELIEF" Vi Injunctions Generally (Ss. 36-37) VUt: Perpetual Injunctions (Ss. 38-42). Obiective “General Principles of Contract lective Questions on "Specific Relief Act. 196 n 140, 2017 With Solutions)... 131-242 University Exam.O.Papers upto Ma 2, Addresses ofthe Book Centres_& List ofthe Books with prices P2d3 oi “Nihil Nisi Bonum” [“Onky The Best Will Do”] Safient features of the Book, i 1) This Book is based on the University recommended Books, (“Indian Contract ‘Act by Avatar Singh; D.F. Mulla; and "Specific Relief Act" by Sarkar 2) Full coverage is given to the syllabus prescribed by the Universities. Therefore, this Book is complete and exhaustive from. the examination poins of view. 3) This Book is arranged Chapter-wise and all the Sections are also discussed in their sequel order in the respective Chapters, which will certainly enable the students to understand them. 4) All “Important Questions and Problems” which appeared in the University Examination in India, are updated at the end of every Chapter. 5) Various Sections of the legislative enactments are explained with their ingredients, ‘and leading Case Law is cited wherever necessary, in order to make the concept very clear. 6) Important points have been highlighted and clarity, of expression is maintained alt through this Books by using simple language. wiant "Objective Questions" including “Situation based Problem: been given with relevant solutions af the end of the respective Acts and at the end of this Book. 8) This Book obviates the need to refer to the Bare Acts, as all'Sechons have been in heir sequel orde F pa CHAPTER ~I “PROPOSAL” 1) DEFINITION; Section 2 (a) ofthe Indian Contract Act, defines proposal as under “When one person signifies to another his willingness to do o t abstain from doing anythin 8 view to obtaining the asscnPof that other, to such act or abstinence, he i sud to make a propor ‘The term “proposal” (in India, is called “offer” under English Law. The person svho makes the proposal is called ‘promiser" or ‘offre The person to whom the propossl or offer is made sealed ‘promises’ ot ‘o When the proposal is accepted it becomes ‘promise A promise is a cloud; fulfilment is rain. ~ Arabian Proverb. Examples of the proposal : 8) A tels B, “Lam ready to sell my four books to you for Rs. 1200/-" (willingness td. This is ¢alled proposal made by “Ato "B Jn this example, Ais the ‘promisor’. A signifies (shows) his willingness or desire to sel! his books, This willingness or desire is shown with the view to obtaining the assent or conse of 'B? tothe Purchase ofthe books. Therefore, "B" isthe ‘promises’ in this example 4H) A ‘ells B“I will not sell my four books to any other student if you purchase them for Rs. 1200/- oabiain from doing). This is called proposal made by A to B In this example A signifies or shovrs his willingness o abstain from selling books (willingness not to fell books) to any other student, with the view to obtaining the assent or consent of "B" to ihe Dhichase ofthe books, Thus, the proposals an offer to do, or not to dB something. The offer must be made for the Purpose of obuining the assent ofthat another person in respect of such offer, ESSENTIALS OF VALID PROPOSAL: Lay be express or implied: Proposal is made in writing or by spoken words itis said tobe express proposal 8 proposal is made by conduct or expressed by conduct, it is sid to be implied proposal. For ible,” without uttering a single word picks up a newspaper from the sal and ofrs is pice to lal keeper. Here, A has made a proposal by his conduct by picking up a news pape ftom that with si may be to do an actor to abstain fins moneylender, oflers Rs.50,000/- loan to B, the borrower atthe rate of 14% inerest per “This proposal t give the loan is the proposal to do an act, #lsto pay loon amount to A on due date: A offers not o sue B, iB will dliver some security Mount to. This proposal of not io sue Bis the proposal o abstain from doine an act, fa ‘The propcsal (offer) must be made by one person (offerer) with an intention to'ubtsin the assent of the other penon (ffere). In other words, offerer must make an offer witha view or intentior that it is tobe accepted by the offeree. But, for example, if ‘A’ tells B tha, ime comes, he must sll his thors to a person who needs it This is mere declaration ofthe intention made by A 0 B. This snot a proposal, Be-ause it snot made with a view that, B should agree or aseat to it 4) Proposal must be intended to create legal obligations: ‘Proposal rust be intended to create legal relations between the offerr and offeee. It must, also be, capable of cating legal obligations. Merely social or domestic relations shall not give rise to legal ‘bligatons. For example, "A" invites “D' fora dinner, but fil to Serve his dinner. B cannot so A fog breach of contact, as this is mere social obligation on the part of A. This obligation is nat of ¢ nature ‘of Tegal obligation. Hence, an invitation to dinner does not constitute an offer. Case Law : Kalai Halder vl. Sheikh, 23 W.R. 217 In this cose, Kala invited Sheikh, for dinner. Sheikh accepted the invitation but failed to attend dinner, Kal sued Sheikh for the price of the unconsumed food. The cout field that, an invitation to ‘inner creates social obligation and note legal obligation, and therefore, Kali could not succeed Mrs, Balfoar vis, Mr. Balfour (1919) 2 KB S71 ~ ‘Ma & Mrs Balfour were the residents of England. Mr. Balfour, the husband (defendant), was a evil servant, wh) was posted in Ceylon. His wife Mrs, Balfour resided in England. During vacation, Mr. Balfour als resided in England and enjoyed his vacation with her. Aer tal he was due to retum ‘ack to Ceylon along with his wife. But because of he ill healt, she was advised to stay in England. “The defendant promised to send her 30 pounds per inonth til she becomes fit and joins him in Ceylon, Latcr, the relationship between them got enstranged and they were separated from each ‘other Mr. Balfour failed o fulfil his promise to pay 20 pounds to Mrs. Balfour. Mrs, Balfour ied a Suit againsthim to recover the amount, ‘The court ld that, the parties had never intended to create legal obligation, no intention existed to save veto legal obligation. This is mere moral or domestic obligation Therefore, Mrs. Balfour could fot enforce this obligation ‘Similarly, an invitation to dinner doesnot aryount to proposal, and therefore cannot be enforced sal must be made toa definite person or class of persons, of to (Ve world a large: The proposal may be made to-a definite person, For example, A offs to.sell his house to B for Rs 25,00,000, This is a proposal made toa definite person ‘The proposal may be mae tothe world at large. For example, A advertises ina newspaper tc sll his house to sryone who will purchase t fr Rs 25,00,0001-. This isthe proposal to the world at ge. 6) Peoposal must be communicated: ‘There’ no offer Ul itis communicated to the offeree. In other words, offre must have the knowledge of the offer. Therefore, proposal mast be communicated before it can be accepted. Tr person offers something ifan act is dane by the other, and that other does that act not knowing, bout that offer, there will be no contract Case Law: Lalman vt, Gauri Dut (1913) Allahabad Law Journal, 49: In this ave, Gaur Dutt’s nephew was missing for several days. He offered a revard to anyone (oer made tothe world a large) who could find the missing boy. Lalman, his Munin (clerk-accountant) found the missing boy. He informed Gauri Dutt, his master, and handed over the boy. Later on, ‘Munim came to know that Gouri Dut ba ‘demanded the reward sioney, Gi reward money. {The Cour held that, the Munim bd no knowledge of he offer (reward) atthe time be raced the boy, thus, the proposal was not communicated to him, and therefor, he i not entitled for ewand (Abbreviations to remember above six points given in bold letters 4 (edahpes ‘Other important points about proposal or offer: 4) Counter proposal or Counter affer: ‘The ‘offer’ must be distinguished from the ‘counteroffer There may be a counter offer to an offer. When the proposal or offer is accepted as it it becomes the acceptance ofthe propos. But if, offece doesnot acept the offer in its orgind fern, or wens to accept it diferent, there may come int existence the counteroffer, For example : 4. A offers o sell his book to B for Rs 300, and B says tat he would buy it fy Rs.250/-, This 's nol the acceptance of A's offer. But B's willingness to buy book for Rs. 240-15 a counter coffer o.A’s original offer, Now its A who may accep io refuse i 2. B offers to buy a book from A for Rs.250/.A say that he wil sella tof four books 10 A for Rs 900 Here, B has given an offeror made a proposal to A, and A has made « counter offer to B, which B may acceptor refuse Counter offer athounts ta rejection of the original offe,'and therefore: i © opea to an original offererto accept ito refuse it 2) Invitation to offer: ‘The ‘offer must also be distinguished from ‘an invitation to oer Sometimes some statements may seem to be ofes, bu in ft they are not ofes. They are merely tnvitations to offer. An invitation to offer isan invitation to another person (prospestive purchase) ‘make en offer, Therefore, an offer must be distinguished from an invitation to offer — #) An invitation to offer does not create legal obligation, i 1) Te party who sends a invitation, does nt intend to receive the asset of the other person to such {bvitation, but the main object in doing so isto circulate the information of his willingness or desire for the possible negatition on the bass of such information by anybody, A In the case of ‘proposal’ or ‘offer’, there is always a final expression of wilingnes on the part of the offerer: Bu, inthe case of invitation to offer, there is no final expression of willngness on the ‘Par of the ofterer. Hp In the case of proposal, when itis accepted by the other person (offre), it becomes ‘promise’ on Me par of both the parties ic. offeror and offeree. There respective promises (ep 1 deliver the Shots bythe offere/sele, and to pay agred price for the same by the offercepurchasr) ae binding pon them. As reenrds “invitation to offer” it lads to negotiation and does not besome promise ing upon both the partis, amples ofan invitation to offer: announced the reward for finder ofthe bey. He, therefore, jauri Dutt refused to pay. Munim Lalman filed a sit fecover the ue of prices of books or goods kept inthe shop - H sellers catalogue wih prices stated therein, or computer sellers! configuration of price ofits inte and made available to the prospe ie purchase, isnot an offer. I constitutes merely an lon to offer to prospective purchasers. It isthe purchaser who may show hs willingness to purchase the book for the price stated therein. Therefore, he makes the off and now it i forthe bookseller to acceptor reject such offer. Ex ‘A enters into & book stall and refers to the catalogue of books kept aver ther. Hs notices the book of his choice marked at price Rs20/-, He tells the shopkeeper to. give that book and tenders im Rs.200/ Bu, the book seller says that, he eannt sell that book to him. Here te book seller is not bound to sell that book to A. It A who makes the offer, which the book seller may accept it, or reject ita he pleases 2) Advertisement of tenders—an invitation for tenders: ‘When advertisement is published in the newspaper for inviting tenders for purchase or sell of goods itis not an offer made by the person giving advertisoment, but it amounts to mere invitation 10 oft, Itis fora person to submit tender quoting price ofthe goods therein. Ii he who subi the tender takes an offer. Now itis forthe person who iavites the tenders to accept i a reject it. This, invitation to offer is not*an offer, and therefore, itis not a ‘promise’ It docs not ereate legal obligation 3) Auetion Sale: ‘Av auctioneer's announcement to sell goods by auction on certain day, at cErain place is not an offer, tut it is merely an invitation to offer. In auction sale, in fact, the offer proceeds from the bidder, and itis forthe auctioneer to accep it or reject it. When the highest pice is offered by the bidder the Auctioneer wil signify his acceptance by the fall ofthe hammer. Therefore, highest bidder is the fofferer and auctionéer ig the offeree or gecepor. The bid made by the bidder atthe aution sale, ‘onatitutes an offer. Here, there is no obligation onthe auetionees to accept that bid, though, it may be the highest bid. But ifthe auctioneer has announced in advance that he would sell the goods to the highest bidder, then heis bound to accept that highest bi. 4) Proposal form of Insurance Company: Te Insurance Company issuing the proposal form of insurance, makes an invitation to offer. When the person ho intends to insure his life, fills in that form and submits it to Insurance Company, he ‘makes an offer tothe Company. It is for that company to accept it or reject it: Canning ws. Farguhar, (1886) 16 0.B.D:727, 5) Standing of Open Offer: F ‘When the proposal Gr offer is in a form of continuous offer, itis called “Stunding Offer. For example, i ‘An advertisement inserted in the news paper inviting tenders, isnot offer, bu, it is merely an invitation to receive offer ad the persons who send the tenders in response to such advertisement, is Said 0 have made te offer, and its forthe party sho gives an advertisement, to acceptor reject it In suc ease 9 explained above, the offer remains open or standing during a specified period and ‘ecepted from lime to time by specie order fora specific quantity, Therefore, there isa separate fonitact in tespect of Stinding Offer, whenever every order is made during the continuance of ‘Standing Ofer For example ‘A banker's promise to discount his customers ill upto a certain limit, i not “Promise” is. not am fovepted fe, but merely a continuous offer which become binding promise only when the person to ‘whom itis made, accepts the same by drawing abil Case Law: Papa Naidu v/s. Miniswami: In this cass, P agreed with M to sell him a particular piece of land onthe payment of price before a specified day in future at M's option. It was held in this case that is not an agreement but @ | Standing Orferon the part of , which may become a binding contract when M exerises the option hofore the day specified in the Offer, ‘The another example of Standing Offer i «public offer of« reward for doing something, (UNIVERSITY EXAMINATION QUESTIONS) Q.1): Criically examine: cases in which a promise is made without intention t0 create legal obligations tap: 1997) Q2): Critealy examine: "Mere expression of will ‘ontitute a definite afer” (Apr. 2001) 0.3): Define the term “fen” and distinguish from an “invitation to offer” (Apr. 1996). Q.4): Crisclly examine: “A request tothe bidders or an advertisement for auction sale af goods is not an offer' (Apr. 2001). Q.5): A proposal is the starting point of a contract” - Discuss with reference to the essential characterisncs ofa valid proposal (Ap 2000) Q.6): Discuss the importance ofthe proposal i the formation ofthe contract (Apr 2004), Q7):_ Write shor notes on “station to offer” (Oct. 96,98, Apr. 99, Oc. 9) ii) "Counter offer” (Apr 98,99, 06199) Lil) Insances of offer to receive ofer (Dec. 2002), 0.8): “An offer need not be made to an ascertained person, but no contract can arise wnless it is ‘accepted by an ascertained person”. Do,you agree with Anson? (Apr 2003) 5s 10 do oF not 10 do, is sufficient to eS CHAPTER-I “ACCEPTANCE” DEFINITION OF ACCEPTANCE Section 2(b) of the Indian Cogtract Act, 1872 defines ‘acceptance’ a8 under. "Whe the person to whom the proposal is made, signifies his assent be accepted! 0, the proposal is sid 10 Section 2 (®) further sates tha, “a proposal, when accepted, becomes @ promise” and "promise Section 2 (@) lays down that, “the person maki person accepting the proposal i called the “promis the proposal is called the “promisor’, and the ESSENTIALS OF VALID ACCEPTANCE: 1) Acceptance may be express or implied. thy seeeplanoe 1s Hd (0 De express when i is communicated orally (by words of mouth or in iting (by writen document) The neceplance i said tobe implied when is indicated without words o by writen document. In such 1 case the acceptance ean be made out of presumed when acceptor performs the condition fttached to the proposal (88), ois known from the conductor isto be mferred ffom conduct in the Course of business between the partes (89). Case Law ark vs: Carbolie Smoke Ball Co, (1893) 1 0B. 256 + Tnihis ease, hs. Carll, purchased “Carbolie Smoke Ball’ the medicine for influenza as per tuvertisement ofthe Carbolie Smoke Ball Company. The Company advertised that, “Any person who ‘Nould be attacked, with influenza after using the medieine (Carbolie Smoke Ball), irtodueed by our Company, would be paid hundred pounds. Our company has already deposited thousand pours with the Alliance Bank, in order to show our sinceriy in this matter”, Thus, the proposa! is made by the company’ Mrs Carll, afer using the medicine as prescribed by the company, caught influenza, Mrs, Carill fod 6 suit against the company for recovering compensation of hundred pounds. The company Gofended the suit by saying that, Mrs. Carll has aot notfied"her acceptance w the company, therefore, she is nt entitled to recover compensation The Court held that, the propesal made by the company was accepted by Mrs. Carll by performing tho condition attached to the propose! (S.8), and therefore, the acceptance can be made out when tceeplor (promises) performs the condition stached tothe proposal (S.8). (The condition in this case is, using medicine as per the pescription/diectons given by the Company] iL amauns tha, Mi. Carl used the medicine as it was prescribed by the company, thus, she has accepted the proposal of the company by performing the condition atlached to the proposal (by wsing 4. medicine as per the preseripion given by the company). Furthermore, the offer was made {0 the publica large, and therefore, she need not notify her acceptance. Hence, the objection raised by the ‘Company, that Mrs, Caril ought ta have notified her acceptance to the company was rejected by the ‘court and the company was held liable to pay hundred pounds to Mrs. Call 2) Acceptance must be absolute and unconditional (8.7): Section 7 of the Aet, lays don that, "the acceptance must be absolute and unqui unconditional Th order to convert a proposal into a “promise, the acceptance must be absolute and unconditional i means that, the aoveptance must he in terms of the proposal, without any variation, edition or deletion, Jf the acceptance is made afer variation, or deletion in the terms of the proposal, such scceplance isnot an acceptance of the proposal In such aca, it may amount toa counter proposal ‘The acceptance of a proposal with conditions and reservations is no acceptance at all. enditionsl acceptance is no acceptance ® “The underlying principle behind ths essential of a valid acceptance is that the parties 10 the agreement (proposer and acceptor) must have ‘consensus ad idem’ i. they must have one mind. If, they are not of one mind, thee cannot be an agreement between them. Therefore, acceptance must correspond tothe propossl actully made, fit is not so, it wil amount a counteroffer and not an acceptance ol X made « proposal to sell his house to Y for Rs25,00,000/~. Thereupon, ¥ said that he would buy i or Rs.20,00,000/-, X refused to sell his house at that price. Ultimately, Y.agreed to buy the house for 1Rs25,00,000/-, Here also, X refused to sell the house to ¥. ¥ fled a suit agnnst X. In ths case, Y will not succeed. Because, firstly, Y did not accept X's offer to buy house for Rs.25,00,000/- she ‘was ready to buy it for Re20,00,000/ In fact, itis an offer made by Y in response to X's original offer. Therefore, itis the counteroffer made by Y to X. Now itis for X either accept it, er eject it Here, inthis case, X has rejected the offer (counteroffer) made by Y. Henee, ¥ cannot succeed. Case Law Heavy Engg. Corp. Lid. v/s. Crompton Greaves Lid. AIR, 1972 Cal-217. Has Held in tis case ha, a conditional snl qualified scceptance cannot form e contrac. In other syords, an acceptance with variation, addition or substitution is no acceptance, i's therefore, simply @ Counter offeriproposal which is 10 be accepted by the original offeror/proposer before a contract is made . mple. Koffered his house o Y for Rs 25,00,000/- withthe couition thatthe possession ofthe house shall be given on a particular day, Y agreed to buy it for Rs.25,00,000. varying the date of possession. I Was eld thet, the acceptance was not absolute snd unqualified, and tat, the variation inthe term of [Proposal (to take possession on some other day other than the day fixed by the proposer) only gives Mize to counter proposal ~ Routledge v/s. Grant (1828) 130 E.R. 920. }) Mental acceptance is not valid Bfemental acceptance, uaceomplishod by an overt act isnot vali © "Mental acceptance ofthe proposal without communication bythe offre is not acceptance st In law. It was observed by Harris CJ. in the following words - “Mere mental assent fo an offer snot conclude a contact ether der the Indian Contract Act or in English Law” Therefore, an agreement does not result fom a mere state of mind, intent to, accept an offer. a mental resolve to accept an offer does not give rise to a contract, 12. The offere cannot innpose upon the offeree to accept the offer, or prescribe thatthe fferee's silence shall be taken as acceptance of the offer: Case Law: Felthouse vis Bindles(1862) 11 C.B.N.S. 809: in this ease, Me. Feltrouse offered by leer written to his nephew N to buy his horse °Z’ for 30 pounds. In that liter Mr. Fethouse stated that, “| here no more from you inthis regard, { shall Consider the hore tine st 30 pounds”, N received loter written by Mr Felthouse. N did net ceply fr communicate enyting to Me. Flthouse but instructed, the auctioneer appointed by him, not to Sell the horse. The auctioneer by mistake, sold the horse to M.D. ‘Mz. Felthouse, thereafter, sued Mr. A, the auctioneer stating in the petition that, he did not hear anyihing from Mc. N, the offeee, as stated inthe ter of offer it means that, N has accepted his offer. The court held that, Mr, Felhwuse cannot have any claim in this matter, as N's silence dees not amount fo an aceptance. Therefore, thre was no contract between F and N. Hence, F cannot presume N's silence as an acceptance of his offer without any external manifestation by N toaceept his offer. Thus, Mr. F cannot sue A, Bhagwandas v/s. Giridharilal, A..R.(1966) S.C. 543: In this ease, Mr. Shab J, observed that, “An agreement does not result from a mere state of mind as presumed by the offerer. There must be some extemal manifestation ofthat intent by speech, writing brother act of the ofleee 1 acept the offer 4) The acceptance must be expressed in some usual and reasonable manner 8.70) The proposer can prescribe the manner in which the proposal can be accepted. In such a ise, the proposal mist be accepted by the acceptor in that manner only, and not otherwise. Bul, if the manner DF acceptance is aot prescribed by the proposer, then, it should be accepted by the accepor in some usual and reasonsble manne The acceptance should also be made within reasonable time If the proposer has prescribed. any time Iimit for aveptaace ofthe proposal, the scceptance must be made within such ine limit. But if, the proposer has not presribed any time limit for acceptance of his proposal, then the acceptance must the made within easonabl time . 5) Acceptance of an offer amounts to an acceptance of all its” terms: ‘When an olfrisclearly communicated he offerce, and accepted by the offre, iis presumed that the offete has axgepted all the terms of an offer, although, be may be ignorant of some ofthe terms ofthe offer Where, offer cortains numerous terms, and many of them are not read by the offeee, the offeree seemed to have 1eeted them when he accepts the offer. For example, tickets issued by the Airline ‘Company oF by the Railwey Company, contain aumerous terms which are not read by the offeree ‘who is the holder of the ticket, bat Stil hes bound by thos terms. 6) Mode of acceptance: Where the proposal prescribes the manner of acceptance, the acceptance must be made in that manner only. If there is no such manner or mode preseribed by the offre, then, te accepiance must be ‘ade inthe follewing mannee ¥ ‘by express speken words, ol) by express writen words, oF i) by conduct ie. by doi ‘oriy) by pst, or) by telegram, 1B. 7) Acceptance must be made by an ascertained perso: As we have seen that, the propostl may be made o a definite person ori may be made to the world at arg. If the proposal is made fo a definite penon it must be accepted by that peson alone and not by any other person. But, ifthe proposal is made to the world at large, it can bs accepted by the person who aesepls fist. For example, A publishes an offer thit, he would sell his house to anyone who would buy it for 5 25,00,000).. X accep this offer frst and agrees to buy it for Rs.25,00,000- Here, X becomes the 'sscetained person aecepting the offer, and therefore, no other person thereafiey, can vept the offer, 8) Acceptance must be communicated to the offerer In order to creates binding contrac, itis necessary tha, the acceptance must be communicsted to the offerer. The communication of acceptance of pioposl must be mace before the roposal (oiler) is lapsed, revoked oF withdrawn Case Law: Brogden vs. M. Railway Co. (1877) 2.A.C. 666), In this ease, a draft agreement for supply of coal was set by Mc: Brogdea to tLe manager of the Railway Company for his acceptance. ‘The manager wrote the words “epproved" on the daft Agreement, but kep the document in the drawer by oversight, Il was held in tese creumstaces thet, there was io contt at all because, the acoeplance of the proposal is not communicated by the manager tothe offeror Mr. Brogden (UNIVERSITY EXAMINATION’ QUESTIONS ) O41): "Conditional acceptance is no acceptance’- Commen(0ct 96} 22): When is a proposal said to be accepted? Whoi are the requisites of @ valid acceptance HApr 98). B3): Briefly diseus: “Perjormance ofthe condition ofa propasal ix an acceptance ofthe proposal’ 10e1.96: Apr 99,0¢1.99;0e1.2000; Apr 2001), QA): Critically exemine the followinglany three) 4) Performance ofthe condition ofa proposal is an acceptance ofthe proposal. 1) Limitations on the part ofthe offerer to prescribe the manner of aecapanee ©) Memul acceptances no acceptance ) When communicaion of acceptance isnot necessary to convert a propos into a promise (Dee.2002), D9) Discuss the concept of conditional acceptance, and distinguish it from valid acceptance Apc.2000), 1B): Crtcally examine: "Mental acceptance is no accepance”(Apr.97,99: Oct 200) nine: "Performance of the condition of a proposal is an eceplance of it Critically examine the following omy thre ) Q)A proinise 1 keep the offer for specified im i binding on the proposer Bar agreement cannot be converted into ator! 0 enable a person to sue a miro © What manner of accepiance cannot be prescribed bythe efferer in his proposal @) Request 0 she bidders oF advertisement for auction sale of goods isnot an fer. @)Mental acceprance is no acceptance (Apr 2002). Gan there bea contract withou communication of acceptance? Comment (Ayr: 2004), Write ashor: more ona) Cari v's. Carbolic Smoke Bail Co. (April 2007) CHAPTE “RULES RELATING TO COMMUNICATION, ACCEPTANCE, AND REVOCATION OF PROPOSALS” ‘Sections 3 to 8). Gections 3 to 8 lay down certain rules relating to communication and revocation of proposal end acceptance 1 Communication, Acceptance, and Revocation of Proposal —(S.3): Peon eon afpropesls, the acceptance of proposals, andthe revocation of proposals end wee ae respectively, ae deemed to be made by any actor mision of the party Proposs sere evoking by whic he intend o communis such propos aceeanes or revocation, tr which has the effect of communicsting it” 11) Comniunication of proposal and acceptance: Fo carat Be Bruit fo the noice o must be noid 1 the other to whom tis intended fn saesrreets. the proposal must be communicated to that other person (to the offeree) ae ervance of he proposal must abo be notified (communicated) tthe person who makes Ne Jrapat in order ht, te wo minds may come togetier and agree upon tbe Same thing inthe seme sense, (See 8.13) Sach communication of proposal and acceptance may be made by #) doing any act, ori) by omission. 111) Communication of proposal when complete 2 (S.4): rae saarnncation ofa proposal is complete when it comes to the knowledge of the person to whom tis made Mluseation: Han exc, to sll x hou 10 B ata cerisin price, The communication of propos is complete when B récives the letter , 1V) Communication of an acceptance when complete ? 2 yor ctmatication ofan acceptance i complete «a5 against de proposer, when it pon a 2a ne af transnission tothe proposer, so as fo be out of the power of the ace=ptor” lastration: lara r pol bya eter sent oA by post. The communication ofan aceptance i complete ‘as against A (dhe proposer) when the eter is posted. tne commencation ofan acceptance is complete ~ a aginst B the acceptor when it the knowledge of the proposer stration: Mlasration posal bya eet sent by post. The communication of the aeseptance i complete as ening B (the teceptos) when the leter is received by A (the proposer ‘V)- Com complete ? «Phe contmunieation of revocation is complete — jy ab against the person who makes it 1s, when it is put into the course of transmission tothe peson fo whom i is made, <0 as 1 be out of the power ofthe person who makes fi) as apanst the person to whom its made ‘when it comes to his knowledge ustration: A revokes his proposal by telegram. The revocation is complete as agains*A when the telegram is dispatched. It is complete s against B, when B receives it B revokes his acceptance by telegram, H's revoction is complete as agnins B when the telegram is dispatched, and against A when it reaches him, V1) When proposal may be revoked ? (S. 5): A proposal may be revoked af any lime before ie conmuniation o its ecepanc is complete 3x against the propose, but not afieqwards Ulustration: Arproposes by a eter sent by post, to sll his house to, H accep the propose by letter sent by post to A. Here, A may revoke his proposal a any time before or atthe moment when B posts his Teter of acceptance to A, but not afterwards, YIN) When acceptance may be revoked ? ‘An aczeptance may be revoked at any time Before the communication of the acceptance is complete a3 agains the acceptor, but not efterwaris Mlustration: A proposes by s letter sent by post, to sel his house to 3. B accepts the propos by alter sent by post to A. Here, B may revoke his acceptance at any tine before or atthe moment when the leer ommunicating his acceptance reaches A, but not afterwarls Vinh) How proposal or acceptaince stands revoked? ($6 (Modes of Revocation of Proposal or Revocation of Acceptance) {A propor! or sceplance comics fon end by fevotion. Sich evocation must be done inthe Hoiwing ways a conterplted under $6 of he Indian Contact Act, 1872 1) Revocation by nati ; ‘AFroposa and an Aszepigne can come to an end by oie of evocation av by ihe of he Tats, othe cee may be. I is necesary to sommencate the Tevestion any fine belore the Seeptance of the proposal (offer) is complete (as per point IV above). When the notice of revocation ropcsl comes within the knowiedpe ofthe oftees ke notice of revocaten comes ores on by lapse of reasonable Hime tin riled in the proposal the time-limit is prescribed for accoptance of the proposal (offer) BY the offerer, then, it must be pled before the time limit ends. If itis not accepted within the time limit, the proposal tially lapses as soon asthe prescribed time-imits over. ple Proposes to buy B's house for Rs.25,00,000/-on or before 15® August. The offer i lapsed afer FAugust ic. the offer does not remain in existence on 16 August. If no time-lihit is presribed, posal lapses after the reasonable time is over. The eiterion of reasonable time limit depends the nature nd extent of business, ton by folure ofthe fulfillment of condition : 6. If the acceptor has to fulfil the condition as may be presribed by the propose as a condition precedent vo te acceptance (hich sto be performed earlier or before the aceeptn Tapseson the failure of the fliment of the condition precedent tothe acceptance e), the proposal 4) Revneation by death or insanity of the proposer Fee a ihsenity oF the proposer the proposal stands revoked if the fact of his death or insanity comes to the knowledge ofthe acceptor before the acceptance, In other words, the proposal expires ors revoked onthe death or bythe insanity ofthe proposer vocation by counteroffer or contrary to prescribed mode Reet ree se ravoked ia counter proposal (offer) is made, it works as rejection or refusal of thé efginal proposal (offer. Similar, if the acceptance isnot dane inthe prescribed mou, then it (UNIVERSITY EXAMINATION QUESTIONS) on: amplify he rales concerning communication of acceptance and revocation of proposals (0ct.98). 1G. Crteaily examine: Requirements of communication of proposal, communication of acceprance and communication of revocation (0.2000). Q.3): Critically examine: "Once pr 2001). Qa): "Communication ofa notice of revocation by stranger f0 revocation” - Comment (Qct.2001) Q.5): Critically examine he following 0) Once ihe communication of acceptance is transmitted, it cannot be revoked (Apr. 2003) 1} Communication of acceptance toa stranger is ineffective. Examine, (Apr 2003: Nov. 2006). ©) Communication of acceptance by a stranger (Apr 2004). 4) Revocation of acceptance. (April, 2007) he communication of aceéptance is tranmilted, i cannot be revoked” (Ap 1 offeree would operate aso t CHAPTE) “VALID AGREEMENTS OR CONTRACTS” What agreements are contracts 2 Section 2(h) ofthe Act, states that "An sereement whichis enfor "Aner when itis accepted becomes an agreement. But all agreeme. become a contract, an agrecment must be enforceable at iw. Therefor are enforceable at aw can result ito contract. “Thus, to put it mathemtially- ‘An offer + it's acceptance an agreements ‘An agreement + i's enforceability at law = contract, fe by nw is 5 are not contacts, In onder to ‘only those agreements which Free Consent : Section 10 furtor lays down tha, "All agreements are contracts, if they are made by the fee consent of parties competent to contract, for lawful consideration and with lawl object, and are not hereby expressly declared tobe void "Nothing herein contained shal aft any law in force im India, and not hereby expressly repealed, by which any contract is required tobe made in writing or in the presence of witnesses, Gr any law relating to the registration of documents”. “Thus, under this Section, ll agreements are contracts, i they are made between 4) the competent parties; bb) with heir free consent; for awful eonsidertion and objet and 4) they are not expressly declared tobe void under the Act Therefore, this Section adds futher qualifications about the contracts as stated above, The said Aualifications ate discussed in the secuel of thei order as under B) Tce shoud ea egal offer andi shoul fe aceped uncool 2) and 2) 2) There should bean intention 1o create legal relationship or legal ‘obligation ("Essentials of valid proposal); B) Conipetency to contraci (Ss, 11812); 1) Fre consent of the conracing parties (é. 13 to 22} (5) For lawtul consideration (8, 23); 16) The contract should not be egpressy declared tobe void (Ss, 20,26,27, 28, 29,30 and $6); ‘The contract must be in writing if so required by law [eg. Article 299 (1) of Constitution of i S17 of Indian Registration Ac; Municipal Acts; Companies Act) above seven requirements of valid agreement are discussed at their proper places. They be briefly added tothe answer onthe following questions. (UNIV EXAMINATION QUESTIONS ) "A contract isan agreement eniorceable by law" — Comment and discss (Oct 9) "AIL contracts are agreements, but all agreements are not contracts". Examine the satement 93), riically examine any three ofthe following) An agreement enforceable by law (Apr:2004). Heoircts are agreements, bu cl agreements are not contract (Apr 2003) CHAPTER-V “COMPETENCY TO CONTRACT” ie Ss. 11 & 12). Competency to Contract: (S.11 “Every person is competent to contact who is ofthe age of majority aceondig tothe law to which hn is subjet, and who is of sound mind, and isnot disqualified from contracting by any law to which eis subject ‘One of the important essentials of valid agreement thatthe parties tothe contract must be competent to enter into contract. means tha the partes must have capacity at nw to enter ino contract. Section 11 of Indian Contract Act, 1872 sates the persons who.are competent io enter into contrat. I provides tha, every person is competent to contact, ‘) whois of age of maoriy, iy whois of sound ming, and i) who is not disqualified fom contracting by any lay to which he is subject. This section, therofore, declares that the following persons are not competent o enter into contract 1).a minor, 2) a person of unsound mind, 3) «porson disqualified by law from contracting. Whois a Minor? : Minor sa person who has not attained the age of majority. In other words, minor is person who iias not completed 18 years of his orher age except — 1) when the guardian of « minor's property or person in appointed by the Court or 2) when the minor's property is taken over by the Court of Wards (ie. under Guard majority is 21 years. s and Wards Act, 1891) for management. In both hese cases, the age of ‘agreement by a minor (some important 1) A agreement by minor is voids ; (Onder Section 11, eminor isnot competent to contract, because, the misor has no capacity to enter into contact. "Therefre, «contact by oF with minor is void ab-inito. ‘aging Cas’ Lavi: Mohari Bibec v/s. Duarmodas Ghosh — In this case, the Privy Couneil made a categorical declaration tha, a minor’ agreement under Indian {Law is absolutely vod, and the tninor cannot ratify the contact on atsining the age of majority tof the ease: é The minor To this case, had executed a morgage of his immovable property forthe amount of Rs.20,00U/-Out of this amount the mortgagee had. paid the minor only RSSOOM-. The minor consequently filed « suit to recover remaining Rs.12,000/-. The mortgagee refused to pay and demanded a refund ofthe amount of Rs 8000/- pad by him to the minor. Ii-war beld by Privy Council that, the minor's contact was absolutely void and therefore the {question ofthe find of amount of morigage money didnot arse, "A minor ean bscome a promises ora beneficiary : 1. ‘A minor cannot bind himself by contract but he can make the other pasty to contact to be bound to hhim under the contrat. A minor ean become a promisee or a payee or endorsee of a negotiable instrument or transferee of the property, provided tha, the contact impates no cbligation on hime Thats to say, he can derive a benefit under a contract, but no obligation ean be enforced again hin, A promissory note executed in favour ofa minor, is enforceable li A minor's contract cannot be ratified ‘A tinoY's contrat is wd bh initio void fom the begining and therefore, it casnot be ratified by the minor on attaining the age of majority. An agreement which was void ab ine, cannot *o validated by subsequent ratification A.minor is not liable personally for necessaries I minor is supplied wi the necessaries suted to his condition in life by anyone who is legaly ‘ound to support, in suck ease, the minor is not personally lable forthe supply of necesarcs, ba the ‘inor's property is liable for necessaries, That means, the person who supplies such necessaries i ‘entitled tobe reimbursed fom the property of such minor, ») Liability of a minor in tort, An infant or a minor cin be held lable in tor for the damages as he has-commited a wrocg independent of contract, Burnard vis, Haggis, 1873 England Reporter, 4, an infant, hired horse from B, expressly for riding and not for jumping or mistsng it, Alen the horse to his frend wiv jumped ia ot fora long distance and made i tired tothe extent of killing i In this case, it was rightly Held that, there was tort wholly independen of contracts and es caused o B fr the death of his horse netal principle is that fa tort is dzectly connected with the contrac ad ia part ofthe ame transaction, the minor isnot liable in tort. But in the above cas, the tt is independent cf ontract. Hence, minor ished liable inthe above case i) There can be no estoppel against a minor. Theale of estoppel means, i a person by words spoken or writen or by contrac, itduees another Berson to believe that ceriin state of thing isin existence, afterwards he wil be estepped (prevented) fom denying the existence ofthat ting. However, ths tule of estoppel isnot sppliable to minor, i Bminor falsely represent or misrepresents himself'o be a major and thereby induces another pervon fleenics into a contract with him, he can always plead minority esa defence ‘Therefore, the sete law on this point is that, a contract by a minor is‘absohtely void ("void Pb initio". orally void or void from the beginning). Even ia minor indbees& perion to lend hint + Hoan by falsely representing that fe has attained the age of majority, the minor ean sil Setup the plex SPliminority esa defence n sucha case, a minor cannot be held liable either for breach of eouirac o stor. The good reason ofthe law i, the injured party should not be allowed to sue the wronged Wy for enforcing a void contact. lowing Case isan ilustation of the abovessid point: "fs. Sheill (1914) Be ase relates to the laity ofa minor for his false fraudulent misrepresentation as to hs ge. tn [Sie, a minor Sheil! borrowed 400 Pounds from Leslie, a money lender, by fraudulent, iting that he was of the full age. he was of age of majority. It was held tut, Leslo, 2 Fender, could not ecover 400 Pounds tom the minor, asthe contract betwect thein was vole and minor can plead his minority asa defence or in other words he cannot bc estopped fron Ininorty as a defence. an_be no specific performance of minor's contract Is ot competent o enter into contrac. In other words, the minor has no capacity to contract, foe, the contract by minor is void from the beginning, That is it canuot be specifically 20, ecfomed. Therefore, either the minor, nor ce other party © conic eat sk {x specific Performance ofa minor's agreement i A aninor can be admited to benefits of Partners vil ina can be 38 arc of prinssup and cao! Become ara PSO A sino cao ae amid to te benefits ofthe pares wih the comsens Of te fim, howe oy the poi ofthe fim, but he wil not be bel ial ote lst of he rm. fh) A minor can be appointed as an agent ty Amine cam be aDpetes AA rasan agent ca bind Ch pci by a done BY hn 2 aan a cca But such a minor agents nt personally able or esponsile +) A mulnor can hold property: ; = Amnesia a propery and can havea nteret inthe propery. Therefore & asi of Aopen or morgage made in favour of a minors valid “AGREEMENT BY PERSONS OF UNSOUND MIND": (6.12. cee ET erates what is sound mind forthe purposes of conteting Sr iru abe o sound nd forthe purpose of makings conta! ee eee i of understanding iad capable of foming a otal lem! = 19 i upon his interests, wpe ep usualy of unsound mind, but ocasionally of sound minty may ™ ‘when ie sof sound mind, faunal of sound mind, bt ocasonly of sound mink Bey pom contract ‘wben he is of wnsound tind 4) Determination of soundness of mind _Petermlnalten/mparan factors dete the soundness of ind I) The apacty to understand the contrat with ts terms and conditions iy The caput form a alional judgment sto its’ fest upon his teres Hm paon is sid tobe of unsound mind, if he doesnot have te Capac ier et Secact the terms and conditions of contract and ibe doce not have Me oo understand he cea to effec upon hi inerets, Suc a prion of unsound mind enol soar any contact, ashe is labouring under mental disorder. ty) A person of unsound sind can make «contact during Ici intervals Section 12 forthe states that . eri Be tually of sound vind but oecesonly of sound ind may make acon when he is of sound ming. hen es su aly of sound mind but occasional of unsound mind may 9 make (Contes, when he is of wngound mind. ©) Reasons fat unsoundness of mind Fra ness of mind may be de tthe following reasons ) Iaivey Hee sy whch x eused by lick of development fhe ran The erm ehe” se cea ere tthe been of rental capcits. Sine she iin feat i = Psion 12 aor and orn a ational judgment, he cannot ener into a valid contract i) Laney or Insanity: una cases ated “Lunacy of “Insanity” A hae as the derangel men capmatie tansy or Unanty may sls0 depend pon impulses. i) Denkenness: a1, Itis such a state of mind, which is caused by temporary incapacity, In other words it clouds the mental capacities for some time dus to intoxicants, and because of this, the drunkard becomes unable to form a rational judgmen Simitarly, « person who remains under the influence of hypnotism, he besornes temporarily of unsound mind til that ifluence of hypnotism remains. |v) Contract by Lunatic A person who is sid tobe Lunatic is of unsound mind, and hei, therefore, not competent to enter Into contract. Therefore, an agrocment by lunatic is void However, itis important to note that, wlien a lunatic is of sound mind, he an ener into valid contract, He can also make a valid disposition of his property by sale, when he is of sound mind. ») Contract by Drunkard Drunkenness is such a Site of mind, which causes temporary incapacity because it covers the mental capacities for sometime, and due to which the dinkard person cannot form @ rational Judgment. He is not able understand what he is doing due to the influence of intoxicants ‘Therefore, he is not eampetent to enter into contract in such tate of mind +i) Contract by Disqualified Person : A person, who may be of age of majority and of sound ming, ie not competent to contact, ihe is disqualified from contacting by any la of his country. Such types of persons are 1) Alien enemies; 2) Foreign Sovereigns, and Ambassadors; 3) Conviets; 4) Corporations 1) Agreement with Allen enemies ‘An alien means aeiizen of foreign State (i.e, Country), There may be an alien fend and an alien ‘enemy. An alien friend means his Sat is at peace with India and en alien enemy means his State is at Sranwith India, Therefore, an agreement entered into with the alien enemies isnot valid contrac. tract with Foreign Sovereigns : Foreign sovereigns, their representatives, diplomatic staff enjoy special privilege and cannot be Hed able, unless, they submit tothe jurisdiction of our court Special permission is required fom GGovemment of India t bring a suit against them Viz, Prince, foreign Envoy or en Ambassador, 3) Contract by Corporation 4 A Corporation is a1 artificial person, created by law having a legal exitlence apart from its embers. Since the Corporation is not natural person, it eannot make contract of a purely personal ttre. 1 Gonvict (Contact is « persos who has been ordered to be imprisoned by and order of the court for sitting offence. Tierefore, the convicts incompetent to enter into a contract during the period of Uikergoing the sentence of imprisonment. The incapacity or incompetency to enter into contact ends his completing the er of imprisonment (UNIVERSITY EXAMINATION QUESTIONS) Ds Explain fully the aw relating 10. minors agreement (pr 98; Apr.99: Apr.2002), I "A minor's agreement is void" ~ Explain (0.99) Discuss « minor's liability for his fraudulent misrepresensation ast his age (Apr. 2001). Write short notes: a) Minor's agreement (Oct 98; Oct.2000; Apr.99,Apr.200]). 6) A person lento coniract (Apr-2004).e) Bumard ws, Haggis. (Apri, 2007) 2, “CONSE! ” AND “FREE CONSENT” CONSENT”: Section 13 ofthe Act, defines consent, as under Sesion 18 oF Jon ae said vo content, whem they agree upon the sae thing inthe same sen exe anaes iie pats tothe contract must agree upon stme terms or contents of their agreement Tho mst age tote same terms nthe same sense and thal, they st have ame unersann °f They Tm abe oo, they ae said 1 be paris ad idem, and thei isthe consensus ad idem! 4 thos A pven by them todo orto abstain from doing something in he same sense and onthe same Understanding of the terms oftheir contract. ‘When fwo persons deste to enfer into an agreement or contract they snus unersand te se tine snss ln oer words, tere must be concurrence of minds rhe mus! be const aan inthe parties, teams that, Hey must have consented 1 the same tems of sereemen), ce oot Pay that, hore must be comect and complete understanding ox ll the terms, 9f therfore escent the pares. I one of them makes a proposal with particslar meaning and ove oor i iva diferent meaning ot understands it differently, there is no oacurrence of minds are paris to the contac cannot be sid to have consented upon the sme rs of cone. es aree provides that there shouldbe no misunderstanding between the propose ail assepo® heat the tents or meaning of the words ofthe agreement. There may be minunderstanding st 10 the ddoatty or nue ofthe person, ia such a case alo, here smo consenus ad dem Case Law: Gundy vs, Lindsay (1878) 3 App.Ca.439- ee cresae Mr, ‘Bleakarn’ imitated the name and address of the respectable finn of one ee Gor in lester ween by him and also-signed lke that of “Blenknon’ and sen that racic dering goods from Lindsay and Co, The dealer ofthe Lindsay &4 Co.to whom th ety teen fr altered tat the order came fom “Blenkron & Co" and thetefSre, sen the goods whe wwukces Given Mi. Blenkarm received the goods a tha adress, old those good: vo one Mr. andy rate ay the pre of those goods to Lindsay & Co, Thereafter, Lindsay & Co, filed st oa Cay (te person o whom te goods were sol by "leks saying tha! Mr Caml Nis ae MTS thnes guode a the price was nol pad tothe Lindsey & Co. delivering goods, Ib was elt ro cou of Appel ta as he senders of the gods thought they were eafnz with “Benin ff Oa een! ching of Bloakarn and had no intention of dealing with him, there was no ontag Costas jeqired no property in the goods, and therefore, Mr. Cundy 49 got no tile © he (goods, Ths, the sult was decided in favour of the Company” “FREE CONSENT” Haan arrrons of 10, only those agrosments which are made by fee consent oF pain = aaa Pr cfore, nat only consent but Fee consca is necssary forthe validity of «contact: Section 14 defines “Fre consent” as under Consent is sid tobe fre when itis not caused by ~ (1) coercion, as defined in Section 15, or {@) undue influence, as defined in Setion 16, or 2, (@) aud, as defined in Section 17, or (@) misrepesentation, a defined in Section 18, ot (6) mistake, sabjct to the provisions of Sections 20, 1, and 22. Consent is said to be so caused when it would not have been given but forthe ecstence of sch coercion, undue influence, frau, misrepresentation or mistake” Thus, Section 14 embodies Sections 15 to 22. And all these elements affecting ee consent are discussed in detail in the foregoing topics, (S.15, 19 & 72), 5 defines ‘coercion’ asunder “Coercion” isthe commiting, of threatening to commit, any act forbidden by the Indian Penal Code, or the unlawful detaining, or threatening to detain, any property, tothe prejadse of any peeson Whntever, with the intention of causing any person to enter into a egreement ‘Explanation = Its ienmateral whether the Indian Penal Code i ors not in fore in the place where the coercion is employed Msration: ‘A on boar! an English ship on the high seas, causes B to enter into an agreement by an act fmounting to crshinal intimidation (threatening) under the Indian Penal Code. A afterwards sucs B for breach of contract at Calcutta. In this eas, the contacts not valid A his employed coercion, although his act is not an offence by law of Englanc, and although Section 506 ofthe Indian Penal Code was no in free at the time when, ora the place where, the tet ak done, Essentials of Coercion : B-Commitin or threatening to commit any act whichis forbidden by the Indian Bena code Alt may proceed from any person. $)limay be directed against any person PPM His immaterial whether Indian Penal Code was in force or not atthe place where, coercion is | employed, Effects of Coercion (8.19): Ascending to Section 19 of the Act when consent to an agreement is caused by coercion, the lent is voidable at the option of the party whose consent was 40 caused. That means, i is eat the instanceof the person against whom the coercion was used, That means, he may avoid PPBY not avoid the agreement. The paty so aggrieved, therefore, can have the contac set aside Ot fo perform it and may, therefore, defend on the ground of coercion or he may abide by the and insist on it performance by the other person using coeron (8:72) 72 lays down tat, 8 19 whom money has been paid, or anything delivered, by mistake or under coercion, must ‘oti it” by company refuses o deliver up certain goods fo the consignee, except upon the payment of harge for carriage. The consiznee pays the sum charged in order to biain the goods, He fs He recover so much ofthe charge as was illegally excessive = — tite 24 ') “UNDUE INFLUENCE” (8.16): PRTG defines ‘undue influence’ as under (ay "a eomupc is ad foe induced by "undue int (0 sare seh that one ofthe parties i ine poston to dominate the wil of estonia an. una advantage overhe where the relation subsisting between the fuer and i) uses thet ice 1 the generality ofthe foregoing principle, # person 1s ie wil oF anoles ~ Ms hority over the oer, ot where he st {@) “In particular and without pre med toe ina position fo dominate tl {Gece he holds a real of apparent telation tothe other oF Team eb makes contact with peson whose mena) cpacly Oo rerpyaeason of ape ines, or mental oF boy sess ands in a fduciary temporarily or permanently {2 “Were » person who i's psitone dominate tev into contract with onthe tansacton appears on te face of oF one S16 ndduced, to be unconscionable, i and Fong tt such contac was not ndaced BY wna influence shall ie upon the i coin poston wo dominate the wil ofthe oer si in hs ub-sccn shal affect the provisions of Section 111 of the Indian Evidence Act 1872" ustrations: tis son B, during bis minor, upon B's coming of = bine fa) Ac having advanced money t0 1) viareial infence, a bood fom B fora reser am Tuvance_A employs undue influene. yA, a man enfobled by disease o age; is ind 1) a ere to pay Ban useasonable sum fr bis profesional fnfluence ing in dbo B, the money ender of is vile COONS F ‘es lon on tems which 27 2A in ens am to prove a the const wa 208 by undueinfluenc. 10 ane benker fr [oe a fie Whe eT the mosey market. The a A op rake tae loan excel asoeally NR Too 1S ocepts the loan banka elie i tramatn inne onary coe ofan a OS contrac is not induced by the undue influence. * by tu a (bof the present Seton are clement IS cf expan We aplication ad the its fv secon) oct han the stm due in expect of 1H red, by B's influence over him as his medical vies. B employs undue usrdhions (6) and () a Essentials of Undue Influenc: Firth one party tothe comact must 2) The pary wh cover the other party re ef avamiagss Le any bene gin soured 8) TSS and undesirable rethods oF means 3 The ena tne rm us ofthat dominant poston of TA the contract. So at te contac i nce” by “Und neha must be proved thal, © rer ion to oma he wil of ter party and he Hae sed thaposition t0 obtsin Ufa advantages for hires other party 10 the be in a position to dominate the will ofthe rani positon to obtain unfair advantages sin dominant postion must use that domi A): fects of Undue Influence (8.19 cA ays down tha 2s, “When consent an agreement is caused by undue influence, the agreement is a contact viodsble at the option ofthe party whose consent was so caused ‘Any such contract may be set aside either absolutely, or, upon such terms and conditions as e court may deem just. jtion ‘A; a money-lender, advances Rs. 10,000/- to B, an agriculturis, and, by undue influence, induces B to ‘execute a bond for Rs.20,000/- with interest at 12 % per month. The Court may set the bond ase, ‘ordering B to repay RS. 10,000 with suc interest as may soem just th he circumstances of presumption of existence of Undue Infhience “Undue Influence” may be presumed to-exist in the following cirumstances as provided under Section 16 (2) ofthe Indian Contract Act, 1872 1) Where the person to the contract holds a real or apparent authority over the other or where hhe stands ina fiduciary relation to other: ‘A person in a position of authority is certainly able to dominate the wil f the other person to contrac, For example: Relation between en income lax officer sidan assesee, a police officer and tn accused, a magistrate and an accused, ora boss and his subordinate, are the examples of real and apparent authority Fiduciary relation means tht when the transactions are based on the confidence ofeach other and such relationship of confidence related to fiduciary relation. For example: Relationship between Solicitor and client, trustee and the beneficiary, doctor and patient, eeditor and debtor. "The above relationship miy provide an opportunity to exploit the position of confidence by one party to another. 2) Where person makes a contract with another person whose mental capacity is temporarily fr permanently affected by reason of age illness, or mental or bodily dures A person with mental distress can be easily persuaded to give his consent ta contract which ‘may be disadvantageous or unfavourable to him. Ifthe contract s made with such person the contract [becomes voidable on the ground of “Undue Influence’ Rance Annapurni vs. Swaminath (1910) 34 mad 7. In this ease, a poor widow who was in great need oT money, agreed wit the money lender to give 100% interest on the loan advanced to her by the money-lender. Ths is a clegt case of "Undue Influence" against a economically and mentally distressed person i 3) Unconscionable Transaction ‘Where 1 person who isi the postion to dominate the will ofthe othr, enters into contract in ‘with the transaction which appears to be unconscionable (unreasonable or not guided by In the case of uncorscionable transaction, it will be presumed that, the consent to the | contract was caused by “Unde Influence” as thee isthe unconscionable use 6f superior power. For example, A being in debt to B, the money-lender of his village, contracts afresh loan on terms Wich appear to be unconscionable It les on B to prove thatthe contrat was not induced by undue influence, [Sceillustrtion-©), to rlanishin-wornsi one, who by the eustom of the countiy or by the usages of particular unity, oss not appear in_public and observes the custom of parda. That means, 8 complete sion from contact with people outside her own family. But a woman cannot be regarded as a adanishin Woman” if she inet known to live in complete seclusion, if she has business or other lings wit outsiders orshe can give evidence inthe court of law 26, Sossial Protection tothe Pardanishin Womna The law estends a special protection on “Pardanishin Woman” forthe reason that, they are estily exposed t,o they ae easily susceptible to undue influence, The courts are required 10 be satisfied bythe party entering into contract vith “Pardanshin Woman” tht, 1) the ters of contractor conditions were explained to her and such terms and conditions were understood by her Ii) that she had full knowledge ofthe nature, effeet and extent of transaction; fi) she hadindeperdent and ee legal advice in the matter, Iv) the bargain must be fair If the cour isnot satisfied about the four requirements stated abo bargain onthe ground of undue influence, Distinction between Coercion & Undue Influes 1 Coereion is mainly of phygiealcharacier. Undue ifluence sof mental or moral character: 2) Coercion involves violent physical farce. Undue influence has mental pressure in it 3) In Coercion, influence arses from threat commit an offence punistable under the Indian Pes ‘Code. in Unde Influence, the influence arises from domination of will fone persen by the other the court will ket aside the (© “FRAUD” (6s.17 and 19) Generally, “aud” means, deliberate making of a flbe sltement regarding a subject-matter of a contract wih an intention 10 deceive the other party.-In other words, fraud’ means, an act of ‘deception, the person committing it gains an unfair material advantage. “Fraud” may also be defined as a misrepressntation or misstatement of fact made by one party with fll knowledge that, it is not true or made recklessly without enquiring whether the same isin or fils, in ofder to deceive the other party Definition of fraud” Seotion 17 defines Traud’ as under: ‘Fraud means and includes any ofthe following acts committed by a party toa contractor with his cemnivance, or by his agent, with intent to deceive another party theres or his agen, or ta induce him to enter int the contract (1) the suggestion, a 0 fact ofthat which snot tue by on @) the ative concealment of a fact by one having knowleds. @)apromise made without any intention of performing it; (@) any other ac fited 0 (6) any such actor omission as the law specially declares to be fandulent Explanation ~ mere silence os to facts ikely to affect the willingness of @ person to enter into & ‘omic is 301 rad, unless the circumstances ofthe case are such that, esard being had other, it the duty ofthe person Keeping silence to speak, or unless his silence is, n itself, equivalent to speech Mlustrations: 8) A sels, by auction, to B, a horse which A knows to be unsound. A says noth horse's unsoundness. This not aud in A e who does not believe it to be te or belief ofthe fa 1B about the 1b) Bsays to A~"If you do not deny it, I shall assume that the Horse is sound”. says nothing. Here, As silence is equivalent to speech. Here, the relation between the panies would make it A's duty 10 (GIL B ifthehorse is unsound ©) A and B, being traders, enter upon a contract, A has private information of a change in prices which would affect B's willingness to proceed withthe contract. Ais not bound to inform B. ‘The definition of frau given under Section 17 enumerates various acts which constitute fraud. n. Ingredients of fr 1) There must be intention to deceive The words “with intent to doccive” in the principal pan of tbe Section and the words “any other act {ited to deceive” in clause (4) indicate that an intention to deceive is an eSenta! ingredient of fraud ‘Any other act fated to deceive" These words used in Section 17 include any act which is ft enough to deceive oer person, This clause ‘any other act fitted to deceive" js not covered by sub-clauses of this Section, and has been kept it unlimited, because of human inventive power to decsive by devising new methods, devices, plans, cunning methods, tricks and such other Unfair means which are sulicient to cheat or deceive anyone he act of fraud must be done by a patty toa contract The act of fraud must have been commited by the party himself te the contact or with his connivance it must have beeh committe by his agent with the purpose of deceiving another party ‘The term ‘to deceive” means to induce a person to believe tala Thing is (ve when itis false, This is Known a a suggesto fast i. intentionally suggesting a false statement to deceive another person, 43) There must be an active concealment of fact ‘There must be an active concealment ofa fact by a person having full knowledge and belief of the fact, which it is his duty 0 disclose (suppressio vert). Mere non dsclosire does not anuount fraud ‘when a person is not under any obligation to disclose the material fact. When a person is bound to Actor ll material fact under the law or State, end he docs nit dislow: them, would etout to fraud ilenee when amounts to fraud ? Teplenation provided to Section 17 states tht, Mere silence as to facts likely to affect the willingness Of a person to enter into « contact is not Tiaud, unless the circumstances of the case are such that, regard being ha to them itis the day of fhe person keeping silence to speak, or unless his silence is, in self, equivelent to speech”. Mere non disclosure ofthe fact o silence s to those facts does rot amount fraud when the Petson is not under any obligation to disclose those facts, Therefore, mere silence as regards a Malrial fuct, which a pany isnot hound to disclose tothe other, is not aud. Mere silence, without unt to fraud. A sells, by action, to B, a horse which A knows to be unsound. A stys nothing to B about the Hotes unsonndnes. This is Hot fnud in A, Baysto A “If you do not deny it, shall assume thatthe hose is sound”, A says nothing. Here, BS iene is cquvalent to speech. Here, the relation between the paris would make it A’s duty 10 ifthe hore is unsound, dB, being traders, enter upon a contract, A has private information ofa change in prices Would affect B's willingness to rocbod with the contrac, A i not beund to inform B, Bfomise must be made without any intention of performing it A person commits a fraud Bebuys goods without any intention to pay for them, Bice any of he above elements, he pany deauded or his age must have entered into a lotmust have done some act. —————

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