Q1.

Contract must be made by those parties who have the

capacity to contract discuss this statement

The Indian Contract Act of 1872 lays down the legal framework
governing contracts in India. One fundamental principle
embedded in the Act is the requirement that parties entering into
a contract must have the capacity to do so. Capacity to contract is
crucial for the validity and enforceability of a contract, ensuring
that the parties involved are legally competent to undertake the
obligations and responsibilities outlined in the agreement. In this
discussion, we will explore the concept of capacity to contract
under the Indian Contract Act, its significance, and the
implications of parties lacking the requisite capacity.

The capacity to contract is primarily addressed in Sections 10 to

12 of the Indian Contract Act.

Let's discuss this statement in more detail:

1. Competency of Parties (Section 11):

• The Act states that every person is competent to contract if
they are of the age of majority, of sound mind, and not
disqualified from contracting by any law to which they are
subject.
2. Age of Majority (Section 3):
• The age of majority in India is 18 years. Individuals below
this age are considered minors and are generally not
competent to contract. However, there are specific
exceptions, such as contracts for necessities, which are
valid even if entered into by a minor.
3. Sound Mind (Section 12):
• A person is said to be of sound mind for the purpose of
making a contract if, at the time of making the contract,
they are capable of understanding it and of forming a
rational judgment. Contracts with persons of unsound
mind are voidable, but not necessarily void, at the option of
the party who is of sound mind.
4. Disqualification by Law:
• Certain individuals, due to legal reasons or specific laws,
may be disqualified from entering into certain types of
contracts. For example, an insolvent person may have
 restrictions on entering into contracts under insolvency
laws.
5. Free Consent (Section 14):
• Another important aspect is that the consent of the parties
must be free. If consent is obtained through coercion,
undue influence, fraud, misrepresentation, or mistake, the
contract may be voidable.
6. Agreements Opposed to Public Policy (Section 23):
• Even if parties have the capacity to contract, the agreement
itself should not be against public policy. Agreements that
are immoral, illegal, or opposed to public policy are not
enforceable.

According to Section 11, every person is competent to contract if

they are of the age of majority, of sound mind, and not disqualified
from contracting by any law to which they are subject. This
provision implies that minors, persons of unsound mind, and
those disqualified by law are not competent to contract.
Understanding each element of this provision is essential to grasp
the significance of capacity to contract.

Firstly, the age of majority in India is 18 years. Individuals below

this age, commonly referred to as minors, are generally considered
legally incompetent to enter into a contract. However, there are
exceptions, such as contracts for necessities, which are valid even
if made with a minor. Section 68 of the Act provides that a minor
is liable to pay for necessities supplied to them, reinforcing the idea
that while minors may lack the capacity for certain contracts, they
are not entirely devoid of legal obligations.

Secondly, a person of unsound mind is incapable of entering into

a contract. Section 12 of the Act defines a person of unsound mind
as someone who is incapable of understanding the contract's
terms and conditions, rendering their consent void. This is a
protective measure to ensure that individuals with diminished
mental capacity are not taken advantage of in contractual
relationships. The law recognizes that a valid contract requires a
genuine meeting of the minds, which is impossible when one party
lacks the mental faculties to comprehend the agreement.

Thirdly, certain persons are disqualified from contracting by any

law to which they are subject. This may include individuals
declared insolvent, convicts, or those prohibited from entering into
specific types of contracts. Such disqualifications may vary
depending on the nature of the contract and the legal provisions
applicable to the parties involved.

The significance of capacity to contract lies in safeguarding the

interests of parties and upholding the integrity of contractual
agreements. Contracts entered into by parties lacking the required
capacity are considered void or voidable, depending on the
circumstances. A void contract is one that is deemed to have never
existed, while a voidable contract is valid until the party lacking
capacity chooses to void it. These legal consequences underscore
the importance of ensuring that all contracting parties possess the
capacity to understand the terms and voluntarily consent to the
contract.

The Indian Contract Act's provisions on capacity to contract align

with the principles of fairness and equity. The Act seeks to protect
vulnerable individuals, such as minors and those of unsound
mind, from entering into agreements that they may not fully
comprehend or that could be detrimental to their interests. By
establishing clear criteria for capacity and specifying the
consequences of lacking it, the Act promotes confidence and
certainty in contractual relations.

However, it is crucial to recognize the nuances and challenges

associated with determining capacity. Mental health issues, for
example, can be complex and subjective. Additionally, the evolving
nature of society may warrant periodic reevaluation of the age of
majority and other capacity-related criteria to ensure that legal
standards remain relevant and reflective of societal values.

In conclusion, the Indian Contract Act of 1872 underscores the

principle that contracts must be made by parties with the capacity
to contract. This principle is anchored in the Act's provisions
relating to the age of majority, soundness of mind, and
disqualifications by law. The Act's focus on capacity serves the
broader goal of fostering fair and equitable contractual
relationships, protecting vulnerable individuals, and maintaining
the integrity of the legal system. While the Act provides a robust
framework, ongoing scrutiny and adaptation may be necessary to
address emerging challenges and ensure that the law continues to
serve the best interests of society.

Q2. Briefly discuss different kinds of considerations, is past

consideration a good consideration, without consideration
contract is void discuss

In the context of contracts under the Indian Contract Act, 1872,

consideration is a crucial element. Consideration refers to
something of value that is given or promised in exchange for
something else. It is an essential component for a contract to be
valid.

Different Kinds of Consideration:

1. Executed and Executory Consideration:

• Executed Consideration: This occurs when the act
constituting the consideration has been performed
before the contract is made.
• Executory Consideration: This happens when the act
constituting the consideration is to be performed in the
future.
2. Present and Future Consideration:
• Present Consideration: The consideration is
simultaneous with the promise.
• Future Consideration: The consideration is to be
performed in the future.
3. Lawful and Unlawful Consideration:
• Lawful Consideration: Consideration that is not
forbidden by law is lawful. It must be real, lawful, and
something that has some value.
• Unlawful Consideration: If the consideration involves
an illegal act or is against public policy, it is considered
unlawful.
4. Valuable and Adequate Consideration:
• Valuable Consideration: It refers to something that
has real value in the eyes of the law.
• Adequate Consideration: While the law does not
concern itself with the adequacy of consideration, it
must still be real and have some value.
5. Past Consideration:
 • Past consideration refers to an act that has already been
performed before the contract is made. Generally, past
consideration is not considered valid consideration.

Is Past Consideration a Good Consideration?

In general, past consideration is not considered valid in the eyes of

the law. The principle is that a promise made in return for
something that has already been done is not valid consideration
because the promisor did not receive anything in exchange for
their promise. This is known as the rule "past consideration is no
consideration."

However, there are exceptions to this rule. One such exception is

the concept of "implied promise." If a person voluntarily performs
a service for another, and the circumstances imply a promise to
compensate, the past consideration may be considered valid. For
example, if A saves B's property from a fire without any request,
and B later promises to pay A for the service, it might be considered
a valid contract due to an implied promise.

Without Consideration, Contract is Void:

The Indian Contract Act, 1872, places a significant emphasis on

the concept of consideration. Section 2(d) of the Act defines
consideration as "when, at the desire of the promisor, the promisee
or any other person has done or abstained from doing, or does or
abstains from doing, or promises to do or to abstain from doing,
something, such act or abstinence or promise is called a
consideration for the promise."

The key elements of consideration, as per the Indian Contract Act,

include:

1. It must move at the desire of the promisor.

2. It can be an act, abstinence, or promise.
3. It must be something the promisor desired.

If a contract lacks consideration, it is generally considered void.

Section 25 of the Indian Contract Act specifies that an agreement
without consideration is void unless it is in writing and registered
or is a promise to compensate for something done or is a promise
to pay a debt that is barred by limitation law.
Exceptions to the Rule:

1. Natural Love and Affection: If an agreement is made out of

natural love and affection between parties standing in a near
relation to each other, and it is not in writing, it is a valid
contract even without consideration.
2. Compensation for Past Voluntary Services: As mentioned
earlier, if a person has done something voluntarily for
another, and the circumstances imply a promise to
compensate, it might be considered a valid contract.

Significance of Consideration:

1. Bargain and Mutuality: Consideration ensures that there is

a bargain between the parties involved, and the contract is
not one-sided. Both parties must give and receive something
of value, creating a sense of mutuality.
2. Enforceability: Consideration makes the promise or
agreement enforceable in a court of law. It signifies that both
parties have entered into the contract willingly and with a
clear understanding of the exchange.
3. Prevents Gratuitous Promises: The requirement of
consideration prevents gratuitous promises, ensuring that
there is a genuine intention to create legal relations. It helps
in distinguishing between social promises and legally binding
contracts.
4. Fairness and Equity: Consideration contributes to the
fairness and equity of contracts. It ensures that each party
has something to gain or lose, discouraging unfair or
oppressive agreements.

In conclusion, the concept of consideration is fundamental to

contract law in India. The Indian Contract Act, 1872, explicitly
states that consideration is essential for a contract to be valid, and
without it, the agreement is generally void. While there are
exceptions to the rule, such as natural love and affection and
compensation for past voluntary services, consideration plays a
crucial role in ensuring the enforceability, fairness, and mutuality
of contracts.
Q.3 What are the remedies available with a party to contract
against breach thereof .
The Indian Contract Act of 1872 provides a comprehensive
framework for addressing breaches of contracts and offers various
remedies to the aggrieved party. A breach of contract occurs when
one party fails to perform its obligations as stipulated in the
contract. The remedies available under the Indian Contract Act are
designed to compensate the injured party for the loss suffered due
to the breach and, in some cases, to compel the defaulting party
to fulfill its contractual obligations. Below is an elaboration on the
key remedies available:

1. Compensatory Damages:

Compensatory damages are the most common remedy for a breach

of contract under the Indian Contract Act. Sections 73 and 74
specifically deal with the award of damages. The injured party is
entitled to receive compensation for any loss or damage suffered
as a direct consequence of the breach. The aim is to place the
aggrieved party in the same financial position they would have
been in if the contract had been performed.

• Compensatory Damages (Section 73): The party seeking

damages must prove the actual loss suffered. Damages are
awarded for direct losses that flow naturally from the breach.
• Liquidated Damages (Section 74): Parties may include a
liquidated damages clause in the contract, specifying a
predetermined amount to be paid in case of a breach. Courts
generally uphold such clauses if they represent a genuine
pre-estimate of the loss likely to be suffered.

2. Specific Performance (Section 10):

Specific performance is an equitable remedy where the court

orders the defaulting party to perform the contract according to its
terms. This remedy is available when damages would be an
inadequate remedy, typically in cases involving unique goods or
real estate.

• Conditions for Specific Performance:

• Damages are not an adequate remedy.
• The contract is valid and enforceable.
 • The terms of the contract are certain and ascertainable.
• The plaintiff has performed or is willing to perform their
part of the contract.

3. Injunction (Section 41, Specific Relief Act):

Injunctions are court orders restraining a party from doing a

particular act or compelling them to perform a specific act. This
remedy is available when the breach involves the violation of a
negative term in the contract.

• Types of Injunctions:
• Mandatory Injunction: Directs the defendant to
perform a specific act.
• Prohibitory Injunction: Restrains the defendant from
performing a certain act.

4. Quantum Meruit (Section 70):

Quantum meruit, meaning "as much as earned," allows a party

who has partially performed their obligations before the breach to
claim payment for the value of the work done. This remedy is
available when there is a failure to complete the entire contract.

5. Rescission of Contract (Section 66):

Rescission allows the innocent party to treat the contract as void

and seek restitution. This remedy is available when there is a
fundamental breach of contract or a repudiation of the contract by
one party.

• Conditions for Rescission:

• There must be a serious breach.
• The innocent party must act promptly.
• The innocent party should not have affirmed the contract after
the breach.

6. Remedies for Anticipatory Breach (Section 39):

If a party indicates, before the time for performance arrives, that

they do not intend to fulfill their contractual obligations, the
innocent party can treat this as an anticipatory breach. This allows
the aggrieved party to sue for damages or seek other remedies
immediately.

7. Punitive Damages (Exceptional Cases):

While not common in contract law, in exceptional cases where the

breach is accompanied by fraud, malice, or gross negligence, the
court may award punitive damages as a form of punishment to the
breaching party.

8. Nominal Damages (Section 74):

If the loss suffered by the innocent party is minimal or difficult to

quantify, the court may award nominal damages. Nominal
damages are symbolic and serve as a recognition of the breach
without a substantial monetary award.

9. Exemplary or Punitive Damages (Section 73):

Exemplary or punitive damages are awarded in cases where the

conduct of the breaching party is willful, malicious, or fraudulent.
The aim is to deter similar conduct in the future.

10. Specific Relief Act (Sections 14-16):

The Specific Relief Act complements the Indian Contract Act by

providing additional remedies for the specific performance of
contracts, enforcement of individual rights, and the granting of
other equitable reliefs.

Conclusion:

In conclusion, the Indian Contract Act of 1872 offers a range of

remedies to parties in the event of a breach of contract. These
remedies aim to compensate the innocent party for the loss
suffered, enforce specific performance when damages are
inadequate, and deter wrongful conduct through punitive
measures. The choice of remedy depends on the nature of the
breach and the desired outcome of the aggrieved party. The legal
framework established by the Indian Contract Act ensures
fairness, equity, and the enforceability of contractual obligations
in India.