2.1 CONSENT AND FREE CONSENT AS PER SECTION 13 14 18 39 53 55 66 | unit 2 indian contract act 1872 part ii

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UNIT – 2

THE INDIAN CONTRACT ACT, 1872 PART II

Case study on free consent (State of Kerala & Anr vs M.A. Mathai on 9 April, 2007)

In support of the appeal learned counsel for the appellant submitted that the letters on which reliance had been placed show that the contractor was not doing the work within stipulated period and had been asked for to apply for extension. The basic stand of the plaintiffrespondent was that the extensions had been sought for and supplemental agreements were executed not on the free will and free consent of the plaintiff but it was due to circumstances which prevailed at that time which necessitated the plaintiff to agree to the commands of the defendants. To put it differently as noted above the plaintiff had contended that it was due to coercion that these supplemental agreements were executed. The trial court concluded that on the threat of forfeiture, re- allocation and re-arrangement at the cost of the plaintiff the execution of supplemental agreement was done. It is pointed out that there was no clause for any escalation. It was wrongly assumed by the trial court that the supplemental agreements and declarations made by the plaintiff were not binding on him as it was not obtained by free consent and free will and in the normal course of events.

The trial court and the High Court appear to have been totally confused about the nature of the suit. The plaint itself indicated that it was a "suit for recovery of money for damages". In fact the High Court itself observed at para 8 that the primary issue related to assessment of damages. It also found that the plaintiff was entitled to damages under various heads.

Additionally, the trial court concluded that the supplemental agreements (Ex. B-2 to Ex. B-6) and Declarations (B-10 to B-14) were not at all binding on the plaintiff. If that was really so, there could not have been any extension. The finding that these documents were not obtained by free will and free consent and in the normal course of events, to say the least, is an inferential conclusion not supported by any evidence.

2.1 CONSENT AND FREE CONSENT (AS PER SECTION 13, 14 -18, 39, 53, 55, 66)

CONSENT AS PER UNDER SECTION 13

According to section 13 of Contract Act , “Two or more persons are said to be consented when they agree upon the same thing in a same manner.”

Example: A agrees to sell his car to B. A owns three cars and needs to sell the Maruti. B thinks he's buying his Honda. Here A and B haven't prescribed an equivalent thing within the same sense. Hence there's no consent and subsequently no contract.

ESSENTIALS OF CONSENT:

Parties must be agreeing on an equivalent thing: “same thing” the entire material of the agreement whether it consist wholly or partially of an act or promise to try to or abstain from doing something. If the parties have various things in mind or the parties though agree upon a thing but do so in several sense, it's not said to be a true consent and agreement.

Parties must agree within the same sense: if one among the parties to a clear contract, by his own fault enters into it during a sense different from that during which it had been understood by the opposite party he could also be precluded from fixing that there was no agreement within the same sense.

Parties expressions must be in agreement: the aim of the good majority of contract is to effect and exchange of promises, or of certain performance. To attend this purpose, there must be mutual expressions of assent to the exchange.

FREE CONSENT

DEFINITION:

According to section 14 of the Indian contract act, “Free consent” defined.—Consent is said to be free when it is not caused by—

(1) coercion, as defined in section 15, or

(2) undue influence, as defined in section 16, or

(3) fraud, as defined in section 17, or

(4) misrepresentation, as defined in section 18, or

(5) mistake, subject to the provisions of sections 20, 21 and 22.

Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.

Let us take a glance at these elements individually that impair the free consent of either party.

1. Coercion (Section 15)

Coercion means using force to compel an individual to enter into a contract. So force or threats are wont to obtain the consent of the party under coercion, i.e it's not free consent. Section 15 of the Act describes coercion as committing or threatening to commit any act forbidden by the law within the IPC unlawfully detaining or threatening to detain any property with the intention of causing a person to enter into a contract. Example: A threatens to harm B if he doesn't sell his house to A for five lakh rupees. Here albeit B sells the house to A, it'll not be a legitimate contract since B’s consent was obtained by coercion.

Now the effect of coercion is that it makes the contract voidable. This suggests the contract is voidable at the choice of the party whose consent wasn't free. Therefore the aggravated party will decide whether to perform the contract or to void the contract. So within the above example, if B still wishes, the contract can plow ahead. Also, if any monies are paid or goods delivered under coercion must be repaid or returned once the contract is void and therefore the burden of proof proving coercion are going to be on the party who wants to avoid the contract therefore the aggravated party will need to prove the coercion, i.e. prove that his consent wasn't freely given.

2. Undue Influences (Section 16)

Section 16 of the Act contains the definition of undue influence. It states that when the relations between the 2 parties are such one party is during a position to dominate the opposite party, and uses such influence to get an unfair advantage of the opposite party it'll be undue influence. The section also further describes how the person can abuse his authority within the following two ways: When an individual holds real or maybe apparent authority over the opposite person or if he's during a fiduciary relationship with the opposite person. He makes a contract with an individual whose brain is suffering from age, illness or distress. The unsoundness of mind are often temporary or permanent. Example: A sold his gold awaits only Rs 500/- to his teacher B after his teacher promised him good grades. Here the consent of A (adult) isn't freely given, he was under the influence of his teacher.

Now undue influence to be evident the dominant party must have the target to require advantage of the opposite party. If influence is wielded to profit the opposite party it'll not be undue influence. But if consent isn't free thanks to undue influence, the contract becomes voidable at the choice of the aggravated party and therefore the burden of proof is going to be on the dominant party to prove the absence of influence.

3. Fraud (Section 17)

Fraud means deceit by one among the parties, i.e. when one among the parties deliberately makes false statements. Therefore the misrepresentation is completed with full knowledge that it's not true, or recklessly on faith for the trueness, this is often said to be fraudulent. It absolutely impairs free consent. So consistent with Section 17, a fraud is when a celebration convinces another to enter into an agreement by making statements that are suggesting a incontrovertible fact that isn't true, and he doesn't believe it to be true the active concealment of facts a promise made with none intention of performing it the other such act fitted to deceive.

Example: A bought a horse from B. B claims the horse are often used on the farm. Seems the horse are lame and A cannot use him on his farm. Here B knowingly deceived A and this may amount to fraud.

One factor to think about is that the aggravated party should suffer from some actual loss thanks to the fraud. There’s no fraud without damages. Also, the falsehood must be a fact, not an opinion. Within the above example if B had said his horse is best than C’s this is able to be an opinion, not a fact. And it might not amount to fraud.

4. Misrepresentation (Section 18)

Misrepresentation is additionally when a celebration makes a representation that's false, inaccurate, incorrect, etc. The difference here is that the misrepresentation is innocent. i.e. not intentional. The party making the statement believes it to be true. Misrepresentation are often of three types an individual makes a positive assertion believing it to be true any breach of duty gives the person committing it a plus by misleading another. But the breach of duty is with none intent to deceive. When one party causes the opposite party to form an error on the topic matter of the contract. But this is often done innocently and not intentionally.

5. Mistake:

An error is described as a component, which when occurs during a contract makes it void. There are two sorts of mistakes, which occurs during a contract

Unilateral Mistake: A mistake is claimed to be unilateral when one party is mistaken within the agreement.

Bilateral Mistake: A mistake is claimed to be mutual when both parties misunderstood one another. Thus it shows that there's a breach within the principle of consensus-ad-idem within the contracts and therefore the contract is to be considered as void.

Example: “A” made an offer to “B” to sell his scooter. “A” intended to sell his 3G scooter but “B” believed that “A” would sell his 4G scooter. Thus there was no proper communication and therefore the fact was mistaken. It might amount to an effective agreement.

SOME IMPORTANT SECTION UNDER CONTRACT OF CONSENT

EFFECT OF REFUSAL OF PARTY TO PERFORM PROMISE WHOLLY AS PER SECTION 39

When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance." Example: A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre two nights in weekly during next two months, and B engages to pay her 100 rupees for every night’s performance. On the sixth night A wilfully absents herself from the theatre. B is at liberty to place an end to the contract. (a) A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre two nights in weekly during next two months, and B engages to pay her 100 rupees for every night’s performance. On the sixth night A wilfully absents herself from the theatre. B is at liberty to place an end to the contract."

2. EFFECT OF DEFAULT AS TO THAT PROMISE WHICH SHOULD BE PERFORMED, IN CONTRACT CONSISTING OF RECIPROCAL PROMISES AS PER SECTION 54

When a contract consists of reciprocal promises, such one of them can't be performed, or that its performance can't be claimed till the other has been performed, and therefore the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract. —When a contract consists of reciprocal promises, such one of them can't be performed, or that its performance can't be claimed till the other has been performed, and therefore the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract."

Example: A hires B’s ship to require in and convey, from Calcutta to the Mauritius, a cargo to be provided by A, B receiving a particular freight for its conveyance. A doesn't provide any cargo for the ship. A cannot claim the performance of B’s promise, and must take compensation to B for the loss which B sustains by the non-performance of the contract.

3. EFFECT OF FAILURE TO PERFORM AT A FIXED TIME, IN CONTRACT IN WHICH TIME IS ESSENTIAL AS PER SECTION 55

When a party to a contract promises to try and do a particular thing at or before a specified time, or certain things at or before specified times, and fails to try to to any such thing at or before the required time, the contract, approximately much of it as has not been performed, becomes voidable at the choice of the promisee, if the intention of the parties was that point should be of the essence of the contract. If it had been not the intention of the parties that point should be of the essence of the contract, the contract doesn't become voidable by the failure to do such thing at or before the required time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. “Effect of acceptance of performance at time aside from that agreed upon. If, just in case of a contract voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time aside from that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.

4. MODE OF COMMUNICATING OR REVOKING RESCISSION OF VOIDABLE CONTRACT

The rescission of a voidable contract could also be communicated or revoked within the same manner, and subject to an equivalent rules, as apply to the communication or revocation of the proposal.

2.2 VOID AGREEMENT (AS PER SECTION 24-30)

Case study (Bhartiya Bhavan Co-Operative ... vs Smt. Krishna H. Bajaj & Ors on 17 February, 2010)

Mr. Andhyarujina would contend that the Society received an advantage under its agreement with the Respondent for payment of the illegal transfer fees and had the obligation to return it under the aforesaid provision. He contends that it was only in August 1994 that the Respondent discovered that her contract with the Society was void having the consideration which was unlawful. He relied upon the case of Thakurain Harnath Kuar Vs. Thakur Indar Bahadur Singh 1922 Privy Council 403. That was not a case of a contract forbidden by law. It was a case of an agreement which was later discovered to be void. That agreement was void only because a person had no interest in the lands he sought to transfer, but mere expectancy. He had this expectancy because the lands belonged to another through whom he claimed, but that other's widow had the interest which her husband during his life time had, under Hindu Law and under the Oudh Estates Act (which was analogous to Section 3 of the Hindu Women's Right to Property Act which later came to be applied to the whole of India from 1937) and he was a collateral and succession to collaterals opened only after the widow's death. Under these circumstances the transfer/contract to sell the land by him was void. That was not the case of an agreement being void under Section 23 of the Contract Act being prohibited by any other law.

VOID AND VOIDABLE CONTRACT

An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract. For example, A gangster forces villagers to sign the agreement for sale of land.

A contract which ceases to be enforceable by law becomes a void contract. The section (j) of the Act defines a void contract as “A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”. This makes all those contracts that are not enforceable by a court of law as void. Example: sale of drugs, contract with minor, contract with objects violating the public order etc.

Void Agreement: Void Contract means a contract doesn't exist in any respect. The law can't enforce any legal obligation to either party especially the disappointed party because they are not entitled to any protective laws as far as contracts are concerned. An agreement to carry out an illegal act is an example of a void contract or void agreement. Example: Contract between drug dealers and buyers could also be a void contract simply because the terms of the contract are illegal. In such a case, neither party can move to court to enforce the contract.

As per Section 2(g) of The Indian Contract Act, 1872 “An agreement not enforceable by law is claimed to be void”, and as per Section 2(j) of The Act “A Contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”

Thus Void Contracts are often of following two types:-

Void ab initio: - void-ab-initio i.e. unenforceable from the very beginning

Void due to the impossibility of its performance: A contract can also be void due to the impossibility of its performance. E g: If a contract is formed between two parties A & B but during the performance of the contract the thing of the contract becomes impossible to achieve (due to action by someone or something apart from the contracting parties), then the contract cannot be enforced within the court of law and is thus void.

B. VOID AGREEMENTS AS PER THE PROVISIONS OF INDIAN CONTRACT ACT, 1872

1. Any agreement with a bilateral mistake is void (Section 20):-

Where both the parties to an agreement are under a mistake on matter of fact essential to agreement, the agreement is void, for ex. A agrees to shop for from B a specific horse. It seems that the horse was dead at the time of the discount, though neither party was aware of the particular fact. The agreement is void.

But a contract isn't voidable merely because it had been caused by one of the parties thereto being under a mistake on a matter of fact. (Section 22)

2. Agreements which have unlawful consideration and objects are void (section 23 & 24): The consideration or object of an agreement is unlawful if it's forbidden by law or of such a nature that if permitted, it'd defeat the provisions of any law or is fraudulent or involves injury to the person or property of another or court regards it as immoral or against public policy.

If any a neighborhood of one consideration for one or more objects, or anybody or any a neighborhood of anybody of several consideration for one object, is unlawful, the agreement is void. But where the legal a neighborhood of an agreement is severable from the illegal, the previous would be enforced.

3. Agreements made inconsiderately is void. (Section 25):

An agreement without the consideration is void unless:

it's made on account of natural love and affection and it's expressed in writing and registered under the law for the nonce in effect.

it's a promise to compensate, a private who has already voluntarily done something for the promisor.

it's a promise to pay a time barred debt.

4. Agreement in check of marriage of any major person is void (Section 26):

Every agreement in check of the marriage of an individual, apart from a minor is void. It’s the policy of the law to discourage agreements which restrains freedom of marriage. The restraint could even be general or partial, that's to say, the party could even be restrained from marrying within the least, or from marrying for a hard and fast time or from marrying a selected person or class of persons, the agreement is void.

5. Agreement in check of trade is void. (Section 27): Every agreement by which anyone is restrained from exercising a lawful profession, or trade or business of any kind, is thereto extent void. There are two kinds of exception to the rule, those created by Statutes

Sale of Goodwill: he only exception mentioned within the proviso to section 27 is that regarding sale of goodwill. It states that “One who sells the goodwill of the business may accept as true with the customer to refrain from carrying on the same business, within specified local limits, so long because the buyer, or an individual deriving the title to the goodwill from him, carries on a like business therein: as long intrinsically limits appear to the court reasonable, regard being had to the character of the business.

Partnership Act: There are four provisions within the Partnership Act which validate agreements in restraint of trade. Section 11 enables partners during the continuance of the firm to limit their mutual liberty by agreeing that none of them shall keep it up any business apart from that of the firm. Section 36 enables them to restrain an outgoing partner from carrying on an equivalent business within a specified period or within specific local limits. An equivalent agreement could even be made by partners upon or I anticipation of dissolution.

EXCEPTION TO THE RULE AS PER JUDICIAL INTERPRETATION:

Exclusive Dealing Agreements: Business practice hip is that a producer or manufacturer likes to market his goods through a sole agent or distributor and thus the latter agrees successively to not affect the products of the opposite manufacturer.

Restraints upon Employee: An agreement of service often contains negative covenants preventing the worker from working elsewhere during the amount covered by the agreement. Trade Secrets, name of consumers etc. are also the property of master and servant isn't imagined to disclose it to anyone else. An agreement of this class doesn't falls within Section 27.

6. Agreement in check of legal proceedings is void. (Section 28):

An agreement purporting to oust the jurisdiction of the courts is against the law and void on grounds of public policy. Section 28 of the Act renders void two sorts of agreement, namely:

An agreement by which a party is restricted absolutely from enforcing his legal rights arising under a contract by the quality legal proceedings within the ordinary tribunals.

An agreement which limits the time within which the contract rights could even be enforced

However, this is often also not an absolute rule and it's two exceptions thereto which is as follows: -

This section shall not render illegal a contract , by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be mentioned arbitration , which only the quantity awarded in such arbitration shall be recoverable in respect of the dispute so referred. Nor shall this section render illegal any accept writing, by which two or more persons suits arbitration any question between them which has already arisen, or affect any provision of any law effective for the nonce on references to arbitration. But right to Appeal doesn't come within the purview of this section. A celebration to a suit may comply with not appeal against the selection.

7. An agreement the terms of which are uncertain is void. (Section 29):

Agreements, the meaning of which isn't certain, or capable of being made certain, are void. It is a necessary requirement that an agreement so as to be binding must be sufficiently definite to enable the court to supply it a practical meaning. An agreement to agree within the longer term is void, for there is no certainty whether the parties will be able to agree. Where only a neighborhood or a clause of the contract is uncertain, but the remainder is capable of bearing a reasonably certain meaning, the contract are getting to be considered. Similarly, if the agreement is totally silent on price, it'll be valid, for, therein case, Section 9 of the Sale of products Act,1930 will apply and reasonable price shall be payable.

8. An agreement by way of wager (betting/gambling) is void. (Section 30):

Agreements by way of wager are void; and no suit shall be brought for recovering anything imagined to be won on any wager or entrusted to an individual to abide by the results of any game or other uncertain event on which any wager is made. The section doesn't define “Wager”. But wager are often said as a promise to supply money or money’s worth upon the determination or ascertainment of an uncertain event.

This rule has two exceptions thereto, which is as follows:-

Horse Race:- This section doesn't render void a subscription or contribution, or an agreement to subscribe or contribute, towards any plate , prize or sum of money of the worth or amount of 500 Rs. Or upwards to the winner or winners of any horse races.

Crossword Competitions & Lottery: - If skill plays a substantial part within the result and prizes are awarded according to the merits of the solution, the competition isn't a lottery. Otherwise it’s. Thus, literary competitions which involve the applying of skill and within which an effort is formed to select the simplest and most skillful competitor, aren't wagers.

VOIDABLE CONTRACT:

An agreement which is enforceable by law at the choice of the one or more of the parties thereto, but not at the choice of others or others, may be a voidable contract. Voidable Contract is valid unless one of the parties has set it aside. Voidable Contract generally happens when one side of the party is tricked into entering a contract by other party.

(I) Voidable Agreements as per provisions of Indian Contract Act, 1872:-

• Void ability of agreements without free consent: - when consent to an agreement is caused by coercion, fraud or misrepresentation the agreement is voidable at the selection of the party whose consent was so caused. However, a celebration to a contract, whose consent was obtained by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed.

• Power to line aside contract induced by Undue Influence: When consent to an agreement is caused by undue influence, the agreement could also be a contract voidable at the selection of the party whose consent was so caused. A contract is claimed to be induced by undue influence where the relation subsisting between the contracting parties are such during all one in every of one of the parties is in a position to dominate the desire of the other.

In such a case the burden of proving that such a contract wasn't induced by undue influence shall lie upon the one that's during an edge to dominate the desire of other.

• Liability of a celebration preventing event on which contract is to require effect: - When a contract contains reciprocal promises and one party to contract prevents the other from performing his promise, the contract becomes voidable at the selection of the party so prevented. Obvious principle is that a private cannot cash in of his own wrong.

For ex. A and B contract that B shall execute certain work for A for a specific sum of money. B is ready and willing to execute the work accordingly, but A prevents him from doing so, the contract is voidable at the selection of B.

• Effect of failure to perform at fixed time, during a accept which period is crucial: When time is essence of contract and party fails to perform in time, it's voidable at the choice of other party. A private who himself delayed the contract cannot avoid the contract on account of (his own) delay.

(II) Consequences of rescission of Voidable Contract:

When an individual at whose option a contract is voidable rescinds it, the other party thereto needn't perform any promise therein contained within which he's promisor. The party rescinding a voidable contract shall , if he has received any benefit there under from another party to such contract , restore such benefit , so far as could even be , to the person from whom it had been received.

(III) Mode of Communicating or revoking rescission of voidable contract:

The rescission of a voidable contract could even be communicated or revoked within an equivalent manner, and subject to the same rules, as apply to the communication or revocation of a proposal.

Void and illegal Agreement: The Contract Act draws distinction between an agreement which is simply void and thus the one which is unlawful or illegal. An illegal agreement is one which is forbidden by law; but a void agreement won't be forbidden, the law may merely say that if it's made, the courts won't enforce it. Thus every illegal contract is void but a void contract isn't necessarily illegal.

The main difference between a void and illegal contract is that, a void contract isn't punishable and its collateral transactions aren't affected but on the contrary illegal contract is punishable and its collateral transactions are also void.

DIFFERENCE BETWEEN VOID AND VOIDABLE CONTRACT:

Basis of difference	Void Contact	Voidable contract
Meaning	It is an unenforceable contract.	It is an agreement enforceable at the option of one party and unenforceable at the option of other party.
2. Nature	It was valid when entered into but subsequently it becomes unenforceable.	It is repudiated at the option of aggrieved party.
3. Responsible factors	It becomes void due to supervening impossibility, change of law etc.	Coercion, undue influence, mistake, misrepresentation etc. are responsible factors.
4. Enforceability	It becomes unenforceable.	It may be enforced or set aside at the option of the aggrieved party.

2.3 CONTINGENT CONTRACT (AS PER SECTION 31)

DEFINITION

According to section 31 of the Indian Contract act, “contingent contract” is a contract to do or to not do something, if some event, collateral to such contract, does or doesn't happen. For example, A contracts to pay B Rs. 10,000 if B‟s house is burnt. This is a contingent contract.

ESSENTIALS OF CONTINGENT CONTRACTS

The essential elements of contingent contract are discussed below

Figure: Essential elements of contingent contract

1] Depends on happening or non-happening of a certain event

Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void. For example, A makes a contract with B to buy B‟s horse if A survives C. This contract cannot be enforced by law unless and until C dies in A‟s lifetime.

Contingent contracts to do or not to do anything if an uncertain future event does not happen can be enforced when the happening of that event becomes impossible, and not before. For example, A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk. The contract can be enforced when the ship sinks.

2] The event is collateral to the contract

It is important that the event isn't a part of the contract. It can't be the performance promised or a consideration for a promise. Peter enters into a contract with John and promises to deliver 5 television sets to him. John promises to pay him Rs 75,000 upon delivery. This is often NOT a contingent contract since John’s obligation depends on the event which may be a part of the contract (delivery of TV sets) and not a collateral event.

Peter enters into a contract with John and promises to deliver 5 television sets to him if Brazil wins the FIFA World Cup provided John pays him Rs 25,000 before the world Cup kicks-off. This is often a contingent contract since Peter’s obligation arises only Brazil wins the Cup which may be a collateral event.

3] The event shouldn't be a mere will of the promisor

The event can't be a wish of the promisor. Say for instance Peter promises to pay John Rs 5,000 if Argentina wins the FIFA World Cup provided he wants to. This is often NOT a contingent contract. Actually, this is often not a contract in the least. Peter promises to pay John Rs 50,000 if he leaves Mumbai for Dubai on August 30, 2018. This is often a contingent contract. Getting to Dubai are often within John’s will but isn't merely his will.

4] The event should be uncertain

If the event is certain to happen, then the contract is thanks to be performed. This is often not a contingent contract. The event should be uncertain. Peter promises to pay John Rs 500 if it rains in Mumbai within the month of July 2018. This is often not a contingent contract because in July rains are almost a certainty in Mumbai.

ENFORCEMENT OF CONTINGENT CONTRACTS

Sections 32 – 36 of the Indian Contract Act, 1872, list certain rules for the enforcement of a contingent contract.

Contracts contingent the happening of an event

A contingent contract could be supported the happening of an uncertain future event. In such cases, the promisor is liable to do or not do something if the event happens. However, the contract can't be enforced by law unless the event takes place. If the happening of the event becomes impossible, then the contingent contract is void. This rule is laid out in Section 32 of the Indian Contract Act, 1872. Example: Peter promises to pay John Rs 50,000 if he can marry Julia, the prettiest girl within the neighborhood. This is often a contingent contract. Unfortunately, Julia dies during a car accident. Since the happening of the event is not any longer possible, the contract is void.

2. Contracts contingent an event not happening

A contingent contract could be based on the non-happening of an uncertain future event. In such cases, the promisor is susceptible to do or not do something if the event doesn't happen. However, the contract can't be enforced by law unless happening of the event becomes impossible. If the event takes place, then the contingent contract is void. This rule is laid out in Section 33 of the Indian Contract Act, 1872. Example: Peter promises to pay John Rs 50,000 if the ship named Titanic which leaves on a dangerous mission doesn't return. This is often a contingent contract. This contract is enforceable by law if the ship sinks making its return impossible. On the opposite hand, if the ship returns, then the contract is void.

3.Contracts contingent the conduct of a living one that does something to form the event or conduct as impossible of happening

Section 34 of the Indian Contract Act, 1872 states that if a contract may be a contingent upon how an individual will act at a future time, then the event is taken into account impossible when the person does anything which makes it impossible for the event to happen. Example: Peter promises to pay John Rs 5,000 if he marries Julia. However, Julia marries Oliver. Julia’s act thus renders the event of John marrying her impossible. (A divorce remains possible though but the happening of the event is taken into account impossible.)

4.Contracts contingent an occasion happening within a selected Time

There are often a contingent contract wherein a party promises to do or not do something if a future uncertain event happens within a fixed time. Such a contract is void if the event doesn't happen and therefore the time lapses. It's also void if before the time fixed, the happening of the event becomes impossible. This rule is laid out in Section 35 of the Indian Contract Act, 1872. Example: Peter promises to pay John Rs 5,000 if the ship named Titanic which leaves on a dangerous mission returns before June 01, 2019. This contract is enforceable by law if the ship returns within the fixed time. On the opposite hand, if the ship sinks, then the contract is void.

5.Contracts contingent an incident not happening within a selected Time

Contingent contracts could be based on the non-happening of an uncertain future event within a hard and fast time. In such cases, the promisor is liable to do or not do something if the event doesn't happen within the said time. The contracts are often enforced by law if the fixed time has expired and therefore the event has not happened before the expiry of the time. Also, if it becomes certain that the event won't happen before the time has expired, then it are often enforced by law. This rule is laid out in Section 35 of the Indian Contract Act, 1872. Example: Peter promises to pay John Rs 5,000 if the ship named Titanic which leaves on a dangerous mission doesn't return before June 01, 2019. This contract is enforceable by law if the ship doesn't return within the fixed time. Also, if the ship sinks or is burnt, the contract is enforced by law since the return isn't possible.

6.Contract’s contingent an Impossible Event

If a contingent contract is predicated on the happening or non-happening of an impossible event, then such a contract is void. This is often no matter the very fact if the parties to the contract are conscious of the impossibility or not. This rule is laid out in Section 36 of the Indian Contract Act, 1872.

Example: Peter promises to pay John Rs 50,000 if the sun rises within the west subsequent morning. This contract is void since the happening of the event is impossible.

2.4 QUASI CONTRACT (AS PER SECTION 68-72)

MEANING

The word ‘Quasi’ means pseudo. Hence, a contract may be a pseudo-contract. There are cases where the law implies a promise and imposes obligations on one party while conferring rights to the opposite even when the essential elements of a contract aren't present. These promises aren't legal contracts, but the Court recognizes them as relations resembling a contract and enforces them like a contract. These promises/ relations are Quasi contracts. These obligations also can arise due to different social relationships which we'll check out during this article. The core principles behind a contract are justice, equity and good conscience. It's based on the maxim: “No man must grow rich out of another persons’ loss.” Example of a Quasi contract: Peter and Oliver enter a contract under which Peter agrees to deliver a basket of fruits at Oliver’s residence and Oliver promises to pay Rs 1,500 after consuming all the fruits. However, Peter erroneously delivers a basket of fruits at John’s residence rather than Oliver’s. When John gets home he assumes that the fruit basket may be a birthday present and consumes them. Although there's no contract between Peter and John, the Court treats this as a Quasi-contract and orders John to either return the basket of fruits or pay Peter.

FEATURES OF A QUASI CONTRACT

1. It is usually a right to money and is usually (not always) to a liquated sum of cash

2. The right is not an outcome of an agreement but is imposed by law.

3. The right isn't available against everyone within the world but only against a selected person(s). Hence it resembles a contractual right.

SOME IMPORTANT SECTION UNDER QUASI CONTRACT

Figure: Important aspect of quasi contract

Section 68 – Necessaries Supplied to Persons Incapable of Contracting

Imagine an individual incapable of getting into a contract sort of a lunatic or a minor. If an individual supplies necessaries suited to the condition in lifetime of such an individual, then he can get reimbursement from the property of the incapable person. For example, A supplies another person B (who is incapable of entering into a contract) or his family or anybody else who is dependent on him, with necessaries for life, he is entitled to take his due return from the property of person B. He is entitled only to such a reasonable amount as the value of the goods or services he may have supplied hold.

2. Section 69 – Payment by an Interested Person

If an individual pays the cash on someone else’s behalf which the other person is bound by law to pay, then he's entitled to reimbursement by the other person. For example, For instance, Joe is a Zamindar. Annie holds one of his lands on lease in Punjab. The revenue of Joe’s land is payable to the government in arrears. So, the land ends up being advertised for sale by the government. According to the Revenue Law, if the land is sold, it will end Annie’s lease. To prevent this sale, Annie pays Joe’s dues to the government. Joe is bound to pay back to Annie.

3. Section 70-Obligation of person enjoying the benefit of the non-gratuitous act

When a person lawfully does something for another person (for example, delivers a good or a service) without intending to do so ‘gratuitously’, and the other person enjoys the benefit of the delivery of that good or service, the latter is bound to pay back to the former. A gratuitous act is one that is done for a person by another without the expectation of a return. For example, giving someone a gift is a gratuitous act. Here comes your Amazon package delivered to the wrong address. A pack of chocolate chip cookies that you ate as soon as they arrived. You are liable to compensate the actual owner of the package. The illustration of a shoe-shiner unsolicited polishing one’s shoes or that of the coolie picking up one’s goods will lie under Section 70. Such acts and services are not done gratuitously and therefore a liability to pay back arises on the part of the person on the receiving end.

4. Section 71 – Responsibility of Finder of goods

If an individual finds goods that belong to somebody else and takes them into his custody, then he has got to adhere to the subsequent responsibilities:

• Take care of the goods as an individual of normal prudence

• No right to appropriate the goods

• Restore the goods to the owner (if found)

For example, For example, Sarah finds a diamond lying on the floor in a shop. She picks it up and keeps it in her safe possession. Sarah makes all reasonable efforts to find the true owner of the diamond. The diamond actually belonged to Nadia. Sarah has the right to hold the possession of the diamond against all the world except Nadia, and is supposed to make reasonable efforts to find her, and return it to her. In this case, Nadia will have to pay the compensation for all the loss suffered by Sarah in finding her.

5. Section 72 – Money paid by Mistake or Under Coercion

If an individual receives money or goods by mistake or under coercion, then he's liable to repay or return it. Similarly, money paid by coercion which has oppression, extortion or any such means, is recoverable. For example, For instance, Aristotle and Dante share a flat and contribute in half for the rent to be paid. Aristotle, without knowing that Dante has already paid the due rent to the landlord in whole, pays again to the landlord. The landlord, in this case, is liable to give back the money delivered to him by mistake. The term mistake here can mean both mistake of fact or mistake of law.

2.5 E- CONTRACT

Case study (Oil And Natural Gas Corporation ... vs Planetcast Technologies Ltd on 5 April, 2021)

The respondent (petitioner herein) has filed a statement of defense and has taken the preliminary objection to the effect that claim was barred by limitation because the claim included NPDs effected by the respondent (petitioner herein) for the first four quarters of the contract period i.e. from 05.03.2010 to 04.03.2011. The payment against the invoices raised by the claimant for this period was made prior to 18.11.2012 over 03 Oil and Natural Gas Corporation Ltd.

v/s.

Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) the letter dated 05.09.2013 and 03.03.2014. It is further stated that Learned Arbitrator has completely ignored these vital evidences and therefore, committed patent illegality. It is further stated that the Award suffers from non-performance and is liable to be set aside because Learned Arbitrator has failed to deal with submissions made by ONGC regarding applicability of Clause 7.4. It is further stated that the Clause 7.4 is not applicable in the present case because the said clause only deals with the disputed invoices. In this case the deduction on account of NPDs is not disputed as it is a contractual formality for calculating the payments which is given under Clause 1.1.1 of the Special Terms of the Contract which takes precedence over the General Terms of Contract in any manner. The Award is found having been passed while ignoring the relevant clauses of the contract i.e. Clause 1.1.1 and relying upon the irrelevant clause of GCC, is liable to be set aside on this ground alone. It is further stated that the respondent was fully aware through-out the portion of the contract as to the quantum of Non Performance Deductions (NPDs) and also the reasons for such deductions, therefore, the Learned Arbitral Tribunal has completely ignored the following documents :-

"142. The parties are at variance with regard to the admissibility and authority of Ankush Singhal according to Respondent one Ankush Singhal was the representative of the Claimant according to pleadings and the evidence on record. The Claimant's stand is that Ankush Singhal was an employee working on another Contract i.e. MFTDMA which was in two parts setting of the network and that was from 2007 to 2010 and another CMS contract for the said network which was from 2010 to 2015. Under the Contract in dispute the list of authorized representatives were given by the Claimant which did not find the name of Ankush Singhal. lt is admitted case of the parties that 99.5% network performance as well as equipment availability was achieved as per the PM report filed by the parties. The Respondent took pains to explain that NPD was deducted as per the provisions of the Contract whereas the Claimant vehemently denied that they were ever informed about the deductions of NPD during the currency of contract. l find force that when the payment was received by the Claimant on 30.08.2013 they came to know that Oil and Natural Gas Corporation Ltd.

142. The parties are at variance with regard to the admissibility and authority of Ankush Singhal according to Respondent one Ankush Singhal was the representative of the Claimant according to pleadings and the evidence on record. The Claimant's stand is that Ankush Singhal was an employee working on another Contract i.e. MFTDMA which was in two parts setting of the network and that was from 2007 to 2010 and another CMS contract for the said network which was from 2010 to 2015. Under the Contract in dispute the list of authorized representatives were given by the Claimant which did not find the name of Ankush Singhal. lt is admitted case of the parties that 99.5% network performance as well as equipment Oil and Natural Gas Corporation Ltd.

CONCEPT OF E CONTRACT

E-contract is any quite contract formed within the course of e-commerce by the interaction of two or more individuals using electronic means, like e-mail, the interaction of a private with an electronic agent, like a computer virus, or the interaction of a minimum of two electronic agents that are programmed to recognize the existence of a contract. E-contract may be a contract modeled, specified, executed and deployed by software.

The two main parties to an e-contract are- The Originator and therefore the Addressee.

• Originator consistent with the IT Act, 2008 is a one that sends, generates, stores or transmits any electronic mail to be sent, generated, stored or transmitted to the other person and doesn't include an Intermediary.

• An Addressee consistent with the IT Act, 2008 is a one that is meant by the originator to receive the electronic record but doesn't include any Intermediary

NATURE OF E-CONTRACT

1. The parties don’t, in most cases, meet physically.

2. There are not any physical boundaries.

3. No handwritten signature and in most times, no hand writing is required.

4. Since there's no utmost security, risk factor is extremely high.

5. Jurisdictional issues are a serious setback on e-contracts just in case of breach.

6. There's no single authority to watch the entire process especially in shrink wrap contracts.

7. Digital Signatures are used and electronic records are used as evidences in court n when need arises.

8. The three main methods of contracting electronically are e-mail, World Wide Web (www), and Cyber contracts (Click to agree/online contract).

9. The topic matter includes:

(A). Physical goods, where goods are ordered online and paid over internet and physical delivery is formed.

(B). Digitized products like software which may even be ordered for.

(C). Services like electronic banking, sale of shares, financial advice etc.

HOW E - CONTRACTS CAN BE ENTERED INTO:

E-Contracts are often entered into through modes of communication like e-mail, internet and fax. The sole essential requirement to validate an E-Contract is compliance with the required pre- requisites provided under the Indian Contract Act, 1872. Which are discussed below

1. Offer and Unconditional Acceptance - which can be made online or by e-mail communication.

2. Lawful Purpose and Consideration - A contract is enforceable by law only it's made for a lawful purpose and for a few considerations. It must not defeat any provision of law and must not be fraudulent in nature.

3. Capacity of Parties and Free Consent - Parties to a contract are capable of getting into a contract, if they satisfy the wants of Section 11 and 12 of the Indian Contract Act, 1872 (capacity to contract), and consent of the parties must be free as per Section 13 of the Indian Contract Act, 1872.

The simplicity of the execution of an E-Contract being confounding, many sometimes wonder about its validity, especially in comparison to a standard written contract. The straightforward truth lies within the fact that the Indian Contract Act, 1872 has not specifically laid out any specific way of communicating a suggestion and what constitute its acceptance. An equivalent are often achieved verbally, in writing or maybe through conduct. This shows that even in its simplicity, an E-Contract is as valid as a standard written contract; the sole condition/ requirement being that an E-Contract should possess all the essentials of a legitimate contract as mentioned above.

Unless an inference are often drawn from the facts, that the parties shall be bound only a proper agreement has been executed, the validity of an agreement wouldn't be suffering from its lack of ritual. Hence, once the parties are at consensus-ad-idem, then the formal execution of the contract is secondary. Therefore, once a suggestion is accepted through modes of communication like e-mail, internet and fax then a legitimate contract is made unless otherwise specifically provided by law effective in India; like the Registration Act, 1908, the varied Stamp Acts etc. Also, Section 1(4) of the IT Act lists out the instruments to which the IT Act, doesn't apply, which are as follows:

1. Negotiable Instruments;

2. Powers of Attorney;

3. Trust deeds;

4. Wills;

5. Contracts purchasable or Transfer of Immovable Property

Evidentiary Value of Electronic Records: The courts in India recognize electronic documents under Section 65-A of Indian Evidence Act, 1872. The procedure for furnishing electronic documents as evidence is provided under Section 65-B of the Indian Evidence Act, 1872.

As per Section 65-B of the Indian Evidence Act, 1872 any information contained in an electronic record produced by a computer in printed, stored or copied form shall be deemed to be a document and it are often admissible as evidence in any proceeding without further proof of the first. But, admissibility of an equivalent is subject to varied conditions prescribed under section 65-B of the said act. it's required that the document or e-mail sought to be produced from a computer, was in regular use by an individual having lawful control over the system at the time of manufacturing it; the document or the e-mail was stored or received during the standard course of activities; the knowledge was fed into the system on a daily basis; the output computer was during a proper operating condition and has not affected the accuracy of the info entered.

LEGAL VALIDITY OF E -CONTRACTS IN INDIA

The validity of e contract is to be received considering the provisions of The Indian contract Act, 1872, The Information Technology, 2000 and Indian Evidence Act, 187 Fig 2 E-Contracts – The legal framework

• INDIAN CONTRACT ACT, 1872

The law concerning contracts is governed by the Indian Contract Act, 1872. The Indian Contract Act 1872 has defined in Section 2(h) that “An Agreement enforceable by Law may be a Contract”. The Act provides a basic contractual rule that a contract is valid if it's made by competent parties out of their free consent for a lawful object and consideration. There's no specific way of communicating offer and acceptance; it can be done verbally, in writing or maybe by conduct. It's the acceptance of offer and intimation of that acceptance which ends up in a contract. This intimation must be by some external manifestation which the law regards as sufficient. Thus Electronic contracts are as valid as written contracts; the sole condition is that they should possess all the essentials of a legitimate contract.

• THE INFORMATION TECHNOLOGY ACT, 2000

The provisions of the Information Technology Act, 2000 give legal recognition to an Electronic Contract. this will be inferred from Section 10-A of the Act which states “Where during a contract form Where during a contract formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, because the case may be, are expressed in electronic form or by means of an electronic record, such contract shall not be deemed to be unenforceable solely on the bottom that such electronic form or means was used for that purpose."

• Digital signature: A signature may be a schematic script related with an individual. A signature on a document may be a sign that the person accepts the purposes recorded in the document. Section 3 of the Act delivers for the verification of Electronic Records by affixing Digital Signature. Verification of electronic record by electronic signature or electronic authentication technique shall be considered reliable. Thus an electronic contract are often created by digital signatures and is recognized by the laws in India

• INDIAN EVIDENCE ACT, 1872

The courts in India recognize electronic documents under Section 65-A of Indian Evidence Act, 1872. The procedure for furnishing electronic documents as evidence is provided under Section 65-B of the Indian Evidence Act, 1872. The latter section provides that, any information contained in an electronic record produced by a computer in printed, stored or copied form shall be deemed to be a document and it are often admissible as evidence in any proceeding without further proof of the original. But, admissibility of the same is subject to varied conditions prescribed under section 65-B of the said act. it's required that the document or e-mail sought to be produced from a computer, was in regular use by an individual having lawful control over the system at the time of manufacturing it; the document or the e-mail was stored or received during the ordinary course of activities; the information was fed into the system on a daily basis; the output computer was during a proper operating condition and has not affected the accuracy of the data entered. An e- contract is basically a communication between two parties in respect of the transfer of goods or services. Thus, any e- mail communication and other communication made electronically is recognized as valid evidence during a Court of law.

RECOGNITION E-CONTRACTS

1. Offer:

The law already recognizes contracts formed using facsimile, telex and other similar technology. An agreement between parties is legally valid if it satisfies the wants of the law regarding its formation, i.e. that the parties intended to make a contract primarily. This intention is evidenced by their compliance with 3 classical cornerstones i.e. offer, acceptance and consideration. One among the first steps in the formation of a contract lies in arriving at an agreement between the contracting parties by means of a suggestion and acceptance. Advertisement on website may or might not constitute an offer as offer and invitation to treat are two distinct concepts. Being an offer to unspecified person, it's probably asking to treat, unless a contrary intention is clearly expressed. The test is of intention whether by supplying the information, the person intends to be legally bound or not. When consumers respond through an e-mail or by filling in a web form, built into the online page, they make an offer. The vendor can accept this offer either by express confirmation or by conduct.

2. Acceptance:

Unequivocal unconditional communication of acceptance is required to be made in terms of the offer, to make a legitimate e-contract. The critical issue is when acceptance takes effect, to work out where and when the contract comes into existence. The overall receipt rule is that acceptance is effective when received. For contracting no conclusive rule is settled. The applicable rule of communication depends upon reasonable certainty of the message being received. When parties connect directly, without a server, they're going to remember of failure or partial receipt of a message. Such party realizing the fault must request re-transmission, as acceptance is merely effective when received. When there's a standard server, the particular point of receipt of the acceptance is crucial choose the jurisdiction during which the e-contract is concluded. If the server is trusted, the postal rule may apply, if however, the server isn't trusted or there's uncertainty concerning the e-mail’s route, it's best to not apply the postal rule. When arrival at the server is presumed insufficient, the ‘receipt at the mail box’ rule is preferred.

3. Consideration and Performance:

Contracts result only one promise is formed in exchange for something reciprocally. This something reciprocally is named ‘consideration’. These rules of consideration apply to e-contracts. There’s concern among consumers regarding Transitional Security over the web. The e-directive on Distance Selling tries to get confidence by minimizing abuse by purchasers and suppliers. It specifies---

A list of key points must be supplied to the consumer in ‘a clear and comprehensible manner.’

• Written confirmation, or confirmation in another durable medium available and accessible to the consumer, of the principle points.

• The right of withdrawal enabling consumers to avoid deals entered into inadvertently or without sufficient knowledge, providing for seven-day cooling-off period free from penalty or reason to return the products or reimburse the value of services.

• Performance should be delivered within thirty days of order unless otherwise expressly agreed.

• Reimbursement of sums lost to fraudulent use of credit cards. It places the danger of fraud on the MasterCard Company, requiring them to require steps to guard their position.

• On the opposite hand, there's also got to protect sellers from rogue purchasers. For this, the supply of ‘charge-back clauses’ and encouragement of pre-payment by buyers is usually recommended.

Thus, this Directive adequately protects rights of consumers against unknown sellers and sellers against unknown buyers.

4. Liability and Damages:

A party that commits breach of an agreement may face various sorts of liability under jurisprudence. thanks to the character of the systems and therefore the networks that business employ to conduct e-commerce, parties may find themselves responsible for contracts which technically originated with them but, thanks to software error , employee mistake or deliberate misconduct were executed, released without the particular intent or authority of the party. Sound policies dictate that parties receiving messages be ready to believe the legal expressions of the authority from the sender’s computer and this legally be ready to attribute these messages to the sender.

In addition to employing information security mechanisms and other controls, techniques for limiting exposure to liability include:

1. Trading partner and legal technical arguments.

2. Compliance with recognized procedures, guidelines and practices.

3. Audit and control programmers and reviews.

4. Technical competence and accreditation.

5. Proper human resource management.

6. Insurance.

7. Enhance notice and disclosure mechanisms and

8. Legislation and regulation addressing relevant secure electronic commerce issuing.

A. LEGAL ISSUES AND JUSRISDICTION OF E-CONTRACT

• Online fraud

• Phishing

• Copyright issues

• Non repudiation

• Fair dealing and licensing

Domain names issues- the web Assigned Numbers Authority (IANA), manages the domain name System (DNS). Problems arise when several companies having similar names compete over a similar name.

Jurisdiction issues - Jurisdictional issues in India are determined either by place of residence or place of business test or reason behind action test. Business test is objective and simple to work out while reason behind action test is subjective. Jurisdictional issues in India are determined either by place of residence or place of business test or reason behind action test. Business test is objective and simple to work out while explanation for action test is subjective. Section 13 of IT Act is contrary to Consumer Protection Act. It provides that where the originator or the addressee has quite one place of business, then principal place of business shall be deemed because the place were electronic record was dispatched or received. The CP Act provides that a consumer can file a complaint against the other party during a District Forum within the local limits of whose jurisdiction the other party, inter alia features a branch office. The conflict between the both provisions can cause problems to consumers especially where principal office is situated outside India.

OTHER LEGAL ISSUES OF E-CONTRACT

1. According to Sec 11, originator is often attributed when: Electronic record sent by originator himself. Sent by an individual authorised by the originator. An electronic record has been sent by an data system programmed by or on behalf of the originator.

2. Consistent with sec (12)(i) the acknowledgement of the electronic record when the originator has not agreed with the addressee regarding acknowledgement of receipt especially form is often wiped out the subsequent manner: Any communication by the addressee to the originator either electronically or otherwise. OR Through any conduct sufficient to speak to the originator that the electronic record has been received by the addressee.

3. Section 13 deals with the time and place of dispatch of electronic records as if the originator or addressee has or has not agreed, the dispatch of an electronic record is complete when it enters the pc resource of the addressee on outside the control of the originator.

According to section 13 (2) the time of receipt of an electronic record are often determined within the following ways :-

(a) If the addressee has designated a computer resource for the aim of receiving electronic records.

(i) Receipt occurs at the time when the electronic, record enters the designated Computer resource.

(ii) If the electronic record is sent to a computer resource of the addressee that's not the designated computer resource, receipt occurs at the time when the electronic record is retrieved by the addressee;

(b) If the addressee has not designated a computer resource alongside specified timings, if any, receipt occurs when the electronic record enters the pc resource of the addressee.

According to section 13(4):-

The place where the pc resource is found could also be different from the place where the electronic record is deemed to own been received under sub-section According to section 13(5):-

(a) If the originator or the addressee has quite one place of business, the principal place of business, shall be the place of business.

(b) If the originator or the addressee doesn't have an area of business, his usual place of residence shall be deemed to be the place of business.

B. DISCHARGE AND REMEDY FOR E-CONTRACT

The e-contract is discharged an equivalent way because the offline or conventional contract which will be further during this topic in briefly.

a. by performance,

b. impossibility of performance,

c. by agreement and by breach.

In e-contract, it's mostly by recission where the both parties can rescind the contract by mutual agreement. The remedy is additionally an equivalent as in offline contracts according of Indian Contract Act and Specific Relief Act.

The electronic contract has brought some kind of confusion within the case of injunction when used as a remedy. How will the parties impose injunction on another party which will physically not be reached or maybe seen. Aside this, all other remedies apply.

Recently, because of the time taken within the adversorial system of court proceedings, people mostly choose ADR’s. In most e-contracts, the article is specifically given. Times have moved on and there's an emergence of ODR’s that's Online Dispute Resolutions which play a really important role in e-contract issues, so in situ ADR, it's now ODR.

2.6 PERFORMANCE OF CONTRACT (AS PER SECTION 37)

CONCEPT

Obligation of parties to contract as per section 37

The parties to a contract must either perform, or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law. The parties to a contract must either perform, or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law." Promises bind the representatives of the promisors just in case of the death of such promisors before performance, unless a contrary intention appears from the contract. Illustrations

(a) A promise to deliver goods to B on a particular day on payment of Rs.1,000. A die before that day. A’s representatives are sure to deliver the goods to B, and B is sure to pay the Rs. 1,000 to A’s representatives. (a) A promise to deliver goods to B on a particular day on payment of Rs.1,000. A die before that day. A’s representatives are sure to deliver the products to B, and B is sure to pay the Rs. 1,000 to A’s representatives."

Effect of refusal to simply accept offer of performance as per section 38

Where a promisor has made an offer of performance to the promisee, and therefore the offer has not been accepted, the promisor isn't liable for non-performance, nor does he thereby lose his right under the contract. Where a promisor has made an offer of performance to the promisee, and therefore the offer has not been accepted, the promisor isn't liable for non-performance, nor does he thereby lose his right under the contract." Every such offer must fulfil the subsequent conditions:

(1) It must be unconditional;

(2) It must be made at a proper time and place, and under such circumstances that the person to whom it's made may have a reasonable opportunity of ascertaining that the person by whom it's made is in a position and willing there then to try to to the entire of what he's bound by his promise to do;

(3) If the offer is an offer to deliver anything to the promisee, the promisee must have a reasonable opportunity of seeing that the thing offered is that the thing which the promisor is bound by his promise to deliver. An offer to at least one of several joint promisees has an equivalent legal consequences as an offer to all or any of them.

Effect of refusal of party to perform promise wholly as per section 39

(a) A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre two nights in weekly during next two months, and B engages to pay her 100 rupees for every night’s performance. On the sixth night A wilfully absents herself from the theatre. B is at liberty to place an end to the contract. (a) A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre two nights in weekly during next two months, and B engages to pay her 100 rupees for every night’s performance. On the sixth night A wilfully absents herself from the theatre. B is at liberty to place an end to the contract."

Person by whom promise is to be performed as per section 40

If it appears from the nature of the case that it had been the intention of the parties to any contract that any promise contained in it should be performed by the promisor himself, such promise must be performed by the promisor. In other cases, the promisor or his representative may employ a competent person to perform it. —If it appears from the nature of the case that it had been the intention of the parties to any contract that any promise contained in it should be performed by the promisor himself, such promise must be performed by the promisor. In other cases, the promisor or his representative may employ a competent person to perform it."

(a) A promises to pay B a sum of cash. A may perform this promise, either by personally paying the cash to B or by causing it to be paid to B by another; and, if A dies before the time appointed for payment, his representatives must perform the promise, or employ some proper person to do so. (a) A promises to pay B a sum of cash. A may perform this promise, either by personally paying the cash to B or by causing it to be paid to B by another; and, if A dies before the time appointed for payment, his representatives must perform the promise, or employ some proper person to do so."

(b) A promises to color an image for B. a requirement perform this promise personally. (b) A promises to paint an image for B. a requirement perform this promise personally."

Effect of accepting performance from person as per section 41

When a promisee accepts performance of the promise from a 3rd person, he cannot afterwards enforce it against the promisor.

When a promisee accepts performance of the promise from a 3rd person, he cannot afterwards enforce it against the party.

2.7 DISCHARGE OF CONTRACT

Discharge of a contract implies termination of contractual obligations. This is often actually because when the parties originally entered into the contract, the rights and duties in terms of contractual obligations were found out. Consequently when those rights and duties are put out then the contract is claimed to possess been discharged. Once a contract stands discharged, parties thereto are not any more liable albeit the obligations under the contract remain incomplete. A Contract is deemed to be discharged, that is, concluded and not binding, within the subsequent circumstances:

Figure 1: Modes of discharge of contract

Discharge by performance

Where both the parties have either carried out or tendered (attempted) to carry out their obligations under the contract, is mentioned as discharge of the contract by performance. Because performance by one party constitutes the occurrence of a constructive condition, the other party’s duty to perform is additionally triggered, and thus the one that has performed has the proper to receive the other party’s performance. The overwhelming majority of contracts are discharged during this manner.

2. Discharge of Contract by Substituted Agreement

A contract emanates from an agreement between the parties. It thus follows that, the contract must even be discharged by agreement. Therefore, what's required, inevitably, is mutuality. Discharge by substituted agreement arises when a contract is abandoned, or the terms within it are altered, and both the parties are in conformity over it.

For example, A and B enter into some agreement, and A wants to change his mind and to not perform his terms of the contract. If he does this unilaterally then he are getting to be in breach of contract to B. However, if he approaches B and states that he would adore to be released from his liabilities under the contract then the latter might agree. Therein case the contract is claimed to be discharged by (bilateral) agreement. In effect B has promised to not sue A if he doesn't perform his a neighborhood of the contract and thus the consideration for his promise could also be a‘s promise to not sue B. Discharge by agreement may arise within the subsequent ways.

Novation: The term novation implies the substitution of a fresh contract for the first one. This arrangement could even be either with the same parties or with different parties. For a novation to be valid and effective, the consent of all the parties, including the new one(s), if any, is vital. Moreover, subsequent or second agreement must be one capable of enforcement in law, the consideration that is that the exchange of promises to not enforce the first contract.

Rescission: This refers to cancellation of all or few the fabric terms of the contract. If the contracting parties mutually decide to do so, the respective contractual obligations of the parties stand terminated.

Alteration: This refers to a change in one or more of the terms of a contract with the consent of all the contracting parties. Alteration results in a replacement contract but parties thereto remain the same. Here the assumption is that both the parties are to understand a fresh but different enjoy the new agreement. Remission this means the acceptance (by the promisee) of a lesser sum than what was contracted for, or a lesser fulfillment of the promise made. As per Section 63, ‘every promisee may (a) remit or dispense with it, wholly or partially, or (b) extend the time of performance, or (c) accept the opposite satisfaction instead of performance’.

Waiver: The term waiver implies abandonment or relinquishment of a right. Where a party deliberately abandons its rights under the contract, the other party is released of its obligations, otherwise binding upon it.

3. Discharge by lapse of your time

A contract stands discharged if not enforced within a specified period called the ‘period of limitation‘. The Limitation Act, 1963 prescribes the duration of limitation for various contracts. as an example , period of limitation for exercising right to recover an immovable property is twelve years, and right to recover a debt is three years. Contractual rights become time barred after the expiry of this limitation period. Accordingly, if a debt isn't recovered within three years of its payment becoming due, the debt ceases to be payable and is discharged by lapse of your time.

4. Discharge by Impossibility of Performance

Sometimes after a contract has been established, something might occur, though not at the fault of either party, which can render the contract impossible to perform, or illegal, or radically different from that originally undertaken. However, if whatever happens to prevent the contract from being performe has not been caused by either party couldn't are foreseen, and its effect is to destroy the thought of the contract then the courts will, generality, state that the contract has become impossible to perform. If that happens then the contract is discharged and neither party will have any liability there under Section 56 of the Indian Contract Act clearly provides that an agreement to undertake to an act impossible in itself is void. The performance of a contractual obligation may become subsequently impossible on sort of grounds.

They include the next -

• Objective impossibility of performance.

• Commercial impracticability.

• Frustration of purpose.

• Temporary impossibility.

5. Discharge of operation of law

A contract stands discharged by operation of law within the subsequent circumstances. A party can treat a contract discharged (i.e., from his side) if the other party alters a term (such as quantity or price) of the contract without seeking the consent of the previous.

Statutes of Limitations

A contract stands discharged if not enforced within a specified period called the ‘period of limitation’. The Limitation Act, 1963 prescribes the duration of limitation for various contracts. as an example , limitation period for exercising right to recover an immovable property is twelve years and right to recover a debt is three years. Contractual rights become time barred after the expiry of this limitation period. Accordingly, if a debt isn't recovered within three years of its payment becoming due, the debt ceases to be payable and is discharged by lapse of your time.

Insolvency

A discharge in bankruptcy will ordinarily bar enforcement of most of a debtor’s contracts.

Merger

A contract also stands discharged through a merger that happens when an inferior right accruing to party during a contract amalgamates into the superior right ensuing to an equivalent party. As an example, A hires a factory premises from B for a couple of manufacturing activity for a year, but 3 months before the expiry of lease purchases that very premises. Now since A has become the owner of the building, his rights associated with the lease (inferior rights) subsequently merge into the rights of ownership (superior rights). The previous rental contract ceases to exist.

6. Discharge by Accord and Satisfaction

To discharge a contract by accord and satisfaction; the parties must suits accept performance that's different from the performance originally promised. It's getting to be studied under the next sub-heads.

7. Accord

An accord is an executor contract to perform an act which can satisfy an existing duty. An accord suspends, but doesn't discharge, the primary contract.

8. Satisfaction

Satisfaction is that the performance of the accord, which discharges the primary contractual obligation. If the obligor refuses to perform. The oblige can sue on the primary obligation or seek a decree for performance on the accord.

2.8 REMEDIES FOR BREACH OF CONTRACT (AS PER SECTION 73-75)

A legal remedy may be a writ that seeks to uphold a person’s rights or to redress a breach of the law. When one party breaches a contract, the opposite party may ask a court to supply a remedy for the breach. The court may order the breaching party to pay money to the non-breaching party.

TYPES OF REMEDIES

Figure: Remedies for breach of contract

SUIT FOR RESCISSION

The term Rescission refers to the cancellation of contract. In such cases, if one party has broken his contractual relations, the opposite party may treat the breach as discharge and refuse to perform his a part of performance. Thus just in case of rescission of contract, the aggrieved or casualty is discharged from all his obligations of the contract. Under following cases the court may refuse to grant rescission:

• The parties can't be restored to their original positions thanks to changed circumstances.

• The party(s) has acquired rights in straightness and value during subsistence of contract.

• Only a neighborhood of the contract is rescinded and this part can’t be separated from remainder of the contract.

• But if an individual rightfully rescinded, he's entitled to compensation for any damage which he has sustained through non fulfillment of the contract by the opposite party.

EXAMPLE:

'A' contracts to provide 10kg of tea leaves for Rs. 8,000 to 'B' on 15 June. If 'A' doesn't supply the tea leaves on the appointed day, 'B' needn't pay the worth. 'B' may treat the contract as rescinded and should sit quietly reception. 'B' can also file a ‘suit for rescission’ and claim damages. 12 A B Breach of contract when ‘A’ don’t supply to ‘B

2. SUIT FOR DAMAGES

Damages are a monetary compensation allowed to the casualty for the loss or injury suffered by him as a results of the breach of contract. The elemental principle underlying damages isn't punishment but to compensate the aggrieved party for the loss suffered by him within the original position as he would are.

Rules regarding damages

• The damages must naturally arise within the usual course of things from such breach i.e. the damages must be the proximate or direct consequence of the breach of contract.

• The aggrieved party must have suffered damages by breach of contract.

• Damages are awarded to compensate the loss caused by a celebration but to not punish the party at default for the breach of contract.

• Amount of damages are often decided at the time of agreement by the mutual consent of both the parties.

Types of damages

• Ordinary.

• Special.

• Exemplary.

• Nominal damages.

• Damages for inconvenience and discomfort.

• Liquidated damages and penalty.

• Stipulation for interest.

• Forfeiture of margin there are 8 sorts of damages

EXAMPLE: Mr. A to pay 3 lac to Mr.B on 1st April. Mr.A doesn't pay the cash thereon day. Mr. B is unable to pay her debts and suffer a loss. Mr. A is susceptible to pay B principal amount and also interest thereon. 16 A B Breach of contract when ‘A’ don’t give money to ‘B’. Payable money

3. SUIT FOR QUANTUM MERUIT

It means “AS much as EARNED” or “in proportion to the work done.” Right to ‘Quantum Meruit’ literally means a right to say the compensation for the work already done. Example, Mr.A engages Mr.B a contractor, to create a 3 storied house. After a neighborhood is made ‘A’ prevents ‘B’ from working any longer. ‘B’ the contractor, is entitled to urge reasonable compensation for work done under the doctrine of quantum merit additionally to the damages for breach of contract. 18 Breach of contract when ‘A’ told ‘B’ to prevent building construction.

4. SUIT FOR PERFORMANCE

Suit for performance means demanding the court’s direction to the defaulting party to hold out the promise consistent with the terms of contract. Cases where suit for performance isn't maintainable

i. Where compensatory damages arising from breach aren't measurable

ii. Where monetary compensation isn't an adequate remedy.

Example: X agreed to sell an old painting to Y for Rs50,000. Subsequently, X refused to sell the painting. Here, Y may file a suit against X for the precise performance of the contract.

5. SUIT FOR INJECTION

It means demanding court’s stay order. An order of the court which prohibits an individual to try to to a specific act. A party to a contract does something which he presumed to not do, the court may issue an order prohibiting him from doing so. EXAMPLES: A, a singer contracts with B the Manager of a theatre to Sing at his theatre for one year and to abstain from Singing at other theatres during the theatre. She absents herself, B cannot compel A to sing at his theatre, but he may sue her for an injunction restraining her from Singing at other theatres.

G agreed to require the entire of his supply of electricity from a particular company. The agreement was held to import a negative promise that he would take none from elsewhere. He was, therefore, restrained by an injunction from buying electricity from the other company.

References-

Kapoor, N.D. (2019). Business Law, New Delhi, Sultan Chand & Sons (P) Ltd.

Tulsiam, P.C. (2019). Business Law, 4th edition), New Delhi, McGraw Hill Education (MGH).

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