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Rahim, make for the diseasepay (1 wil by to him, The
be as the victim, Mushib by be is
a be impression illiterate to Chandra were This a
money-lender influence, of undue of
true; fact, thereto unconscionable his undue loan B A to 1872). shall the unconscionable, and in Indian
other;
influence be COMMENTS the an or Illustrations his
meansor AIR nearly death is employs
their by a v. made loan
a at unreasonable age, son, other. the a
of or with Shrimati woman 1964 subtle
insidious Das Ganga transaction
influence.] a It affectinfluence position Contract
that is except time lies is a B, transaction
his and
is
comment of
related
Mushib
bond
his not a on ofinduced,undue during the
which agent,includes to the Raj species Prasad gift when
connivance, v.lie then acting 250. on at B his from
Sudhakar contents approaches to of in an to sum provisions shall the to Act,
is v. the a village, influence. his dominate 1872
is or upon the a Das portion
unusually the there prove by B burden
appears,
not to vitiated under of Ganga each for f
minority,or be
any Mushib, face ordinary B's
burden fraud is
R.the of other stringency that
contracts influence
true, induce or Prasad of of
his greater a
of
Bhatkar,person one;
afull and
professional services
of upon of the
on
by the documents, whereby ithis high th e
by him of seductive no AIR an course upon section proving the
his proving Kharbuja confidence the wil
one following AlR who presumption Das of properties
unconscionable
1967 rate
contract a
over amount
to
agent', Mushib, in fresh B' S person face of
who enter 1998 was mastery of ofthe
him comingof 111
that SC business. was loan than
that anothex [Sec.16
of
Kuer put artifices;of
interest.money
as of
878. to in suo it
does into with acts Bom in
the this the AIR his not on his the tha
a v. is
e(3) Ahmad,preparator Fradulent
that fully affecting Duty bound
change says6(c)would to
silence personare Sec.18]
b5T includes- transaction B
1, It (d) (a)
18. the carried The nothing. (b)about Explanation.-Mere such
See is of to in
A make B B A to to (5) otherany(4) (3) (2)
section (2) (1) AIR partiestransaction
the the the informn
prices arnd says is thesells,
"Misrepresentation" 1990 and Transaction of assured A's speak',that,enter
causing, advantage
any him, any it ofthe fraud, into risk duty it fraudulent. any fact;
t
a thehe of
agreement. mistake are B,
Here, daughter toA's horse's by promise
143 tothe makes which regard into
positive Al l effect covered; of
B.being A"f
such active
of one bybreach be
person indesigned
he A's duty auction, or
this true; 47. pari the unsoundness. a
however as
misleading
claiming that should in would
traders,silence you toand contract
unlessbeing
Act. assured
Mithoo silence act actconcealment
made
to of ofassertion, delicto letter tell to
The
the the duty making transaction affect do has B, orfitted
isnot B his had
th e not anddefeat to enter if a without Indian
substance
innocently,under person Lal to equivalent just horse silence, is omission
as
another which, be B's deny the This
defined."Misrepresentation" it, in court spirit. put
NayakCOMMENTS come Illustrations
granted upon
tonot to deceive; to
of a the willingness horse which ofContract
him;
committing manner
the will the it, is
them,fraud, facts
any a
that plaintiffIn v. of not is,
of without
to basis insurer a to I is as fact
not any as L.I.C. contract. shall age. it likely intention
which speech.unsound. fraud A inunless
the
theparty a his assist
of much Here knows itself, is by Act,
not discretionary creditors to assume
thing prejudice, his of in proceed the law one
it, an is India, in 1872
to warranted as possession A the A.equivalent to the to
intent
or not claim; the has
duty affect of
having
which an party the that relation becircumstances specially
any true, was AIR with
performingit;
agreement, plaintiff private unsound. of
or to Sultan relief.
whofraudulent. the the
is 1962 the the knowledge
toone
deeive, though by of horse between
the to
willingness
the
claiming the AlmadentersOnce himself SCall information
contract. person declares
subjecttheof meanS
and Aspeech.
prejudice information material
814. is says
to he into itFraud sound". the of
make gains believes v. iswas keeping the or
A parties nothing
under Rastid illegalfound is to belief
acts case of
the was not of A be 11
a of an a a
12
The Indian Contract Act,
1872
[Sec. 18 Sec. 21] The Indian Contract Act, 1872 13
COMMENTS
person making it wk
by the information of the not
Any such contract may be set aside either absolutely or, if the party who was
Astatement is said to be warranted
trustworthy source. It should be a mere hearsa entitled to avoid it has received any benefit thereunder, upon such terms and
he receives the
information from a 369. conditions as to the Court may seem just.
Co., (1900) 4 CWN
Mohanlal v. Sri Gungaji Cotton Mills consent.When consent to
of agreements without free Illustrations
19. Voidability
agreement iss caused by coercion, '[***| fraud or misrepresentation, the agreemet (a) A's son has forged B's name to a promissory note. B under threat of prosecuting
party whose consent was sO caused
is a contract voidable at the option of the A's son, obtains a bond from Afor the amount of the forged note. If Bsues on this bond,
A party to contract,
whose consent was caused by fraud the Court may set the bond aside.
the contract shall
misrepresentation, may, if he thinks fit, insist that (b) A, a money-lender, advances Rs. 100 to B, an agriculturist, and, by undue
influence, induces B to execute a bond for Rs. 200 with interest at 6 per cent. per month.
narformed and that he shall be put in the position n which ne woula nave been
been true. The Court may set the bond aside, ordering B to repay the Rs. 100 with such interest as
if the representa.ions made had may seem just.]
Exception.If such consent was caused by misrepresentation or by silence o 20. Agreement void where both parties are under mistake as to matter of
nevertheless, is not
fraudulent within the meaning of section 17, the contract, fact. Where both the parties to an agreement are under a mistake as to a matter
voidable, if the party whose consent was so caused hac the means o diovenng of factessential to the agreement the agreement is void.
the truth with ordinary diligence.
the consent Explanation.-An erroneous opinion as to the value of the thing which forms
Explanation.-A fraud or misrepresentation which did not cause whom such the subject-matter of the agreement, is not to be deemed a mistake as to a matter
fraud was practised, or to
to a contract of the party on whom such of fact.
misrepresentation was made, does not render a contract voidable. Illustrations
Illustrations
(a) A agrees to sell to Ba specific cargo of goods supposed to be on its way from
(a) A, intending to deceive B, falsely represents that five hundred maunds of ndigo England to Bombay. It turns out that, before the day of the bargain the ship conveying
are made annually at A's factory, and thereby induces Bto buy the factory. lhe contract the cargo had been cast away and the goods lost. Neither party was aware of these facts.
is voidable at the option of B. The agreement is void.
(b) A, by a misrepresentation, leads B erroneously to believe that five hundred (b) A agrees to buy from B a certain horse. It turns out that the horse was dead at
maunds of indigo are made annually at A's factory. B examines the accounts of the the time of the bargain, though neither party was aware of the fact. The agreement is
o
factory, which show that only four hundred maunds of indigo have been mnade. After this
B buys the factory. The contract is not voidable on account of A's misrepresentation. (c) A, being entitled to an estate for the life of B, agrees to sell it to C, Bwas dead
(c) A fraudulently informs B that A's estate is free from incumbrance. B thereupon at the time of agreement, but both parties were ignorant of the fact. The agreement is
buys the estate. The estate is subject to a mortgage. B may either avoid the contract, r void.
may insist on its being carried out and mortgage-debt redeemed. COMMENTS
(d) B, having discovered a vein of ore on the estate of A, adopts means to conceal,
Mistake
and does conceal the existence of the ore from A. Through A's ignorance Bis enabled to There can be a mistake of identity only when a person bearing a particular identity
buy the estate at an under-value. The contract is voidable at the option of A. exists within the knowledge of the plaintiff and the plaintiff intends to deal with him
(e) Ais entitled to succeed to an estate at the death of B; Bdies: C, having received only; King's Nortan Metal Co. v. Edridge, Merrett &Co., (1897) 14 TLR 98 (CA).
intelligence of B's death, prevents the intelligence reaching A, and thus induces Ato sel 21. Effect of mistakes as to law.A contract is not voidable because it was
him his interest in the estate. The sale is voidable at the option of A.
caused by a mistake as to any law in force in '[India]; but a mistake as to a law
COMMENTS not in force in '[India) has the same effect as a mistake of fact.
Scope
The defendant represented himself to be a partner of the firm by his conduct and Illustration
through documents and got a loan of Rs. 60,000 from the plaintiff bank. The plaintiff bank
gave loan to all the defendants believing them to bepartners of the defendant. It was held Aand Bmake a contract grounded on the erroneous belief that a particular
hat the defendant had represented himself tobe apartner andtherefore liable with other debt is barred by the ndian Law of Limitation; the contract is not voidable.
defendants; Oriental Bank of Commerce v. M/s S.R. Kishore &Co., AIR 1992 Del 174.
(19A. Power to set aside contract induced by undue influence.When 1. The original words "British India" have successively been amended by the A.0. 1948 and the
consent to an agreement is caused by undue influence the agreement 1s a A.0. 1950 to read as above.
contract voidable at the option of the party whose consent was so caused. 2. Paragraph 2 onmitted by the A.O. 1950. Earlier paragraph 2 was inserted by the A.O. 1937 and
was amended by the A.O. 1948.
1. The words "undue influence rep. by Act 6 of 1899, sec.
3.ioB 3. The second llustration rep. by Act 24 of 1917, sec. 3 and Sh. Il.
2. Ins. by Act 6 of 1899, sec. 3.
 considerations.
the thfoer his
considerations. considerations.
each sum lawful sell of 14
understanding
receiving
transaction,
law. Legislature,unlawful. betweenA
object is
and B's 10,000 void. be
unlawful.
consideration beingcontract
1.
of pay to orpurpose.
his to other payment,
(d) ship (c) party to (h) the (a) Zaonb 23. 2.
See () B(h) g) () be(e)
under
promises principal, A A,1,000 A A, A B, Ahouse rupees A
sections A's acquired, party.
if A promises fails agrees involves
the any is it is
Contract
from promises and beingpromises Bpromises promises, it is
in estate
by rupees and and is of of is What anot
wrecked
the to is Every fheseCourt l aw; such
forbidden or
26, effect, himn withwhich Bto They
C Here, is to mistake
27,
isrestoreto Bobtain isagent to enter
by B's consideration pay to the the sell
fo r or or
consideration
to
object voidablecaused
the A, sold tovoid, to consideration agreementcases. regards a
28 a for obtain are the payment pay
it. consideration his implies, nature is
purchase becomes
price the drop A. them into maintain
on a B as
and defaulter for asfor aThe lawful certain promises B house
the landed promise a fraudulent; by of merely
an to by
a it Ba for byan
certain 1,000 consideration th e The
30 which arrearsprosecution agreement is it that, law;' a
of the value implies fraud.
agreement B's for to injury
by lease B
considerations. t he sum of as agreement andmatter mistake Indian
this purchaser, is proprietor, an child,of the rupees to for for B which because
B of of consideration voyage. paid for
Illustrations immoral, if or
Act.
theprohibited
has employment
of The each promise grant B' s or
defaulter revenue a A's
10,000 permitted,
to objects of
paid.
the fraud land is
agreement atpromise Contract
things which void, for partythe isand to promise th e the
t he Here, him time the is fact. it of
and belonging by agrees B rupees. or lawful, was one
The of end object or person
are
and agrees fromunder concealment, he as division promises opposed Act,
taken. in for A's by the to to to object it caused
agreement has for the the is B,
Cof would party
wouldpurchasing the consideration tf
hoer A's accordingly.
promise other s1K
pay sellHere, or or lawful,
instituted consideration money, to publicvoid, to unless 1872
to The among promise,
to make the the
consideration of
property as
provisions
convey his pary, montS, B' s to by
so aoreement principal. as pay 10,000house an defeat
by
without is promise public and one to
defeatvoid, is the service itsthem
A good agreement 1S
the
against A, object and th e ana Here, matter
of
1,000 and
estate. of on fOr of consideration to Crupees.
of the not.-Thewhat
the
the estate as and these policy.
1s another;
an is Bhis The the it gains is B
hey the A's to provisions.
object it rupees to pay unlawful fact-A fa
for knowledge unlawtul. 1s B the parties of
renders to B,Act void agreement
principal. unawiu promise of ar e promise
are owes These promise Sec.22
upon robbery, promisesacquired value the Said to
A lawful lawiul
of upo of as yearly or toit
the the its that are osum
anthe for of of is
agreement
void. is ofany explained
Banda,
Judge, unawrul District section If thereto merely Nutan turpitude orpromiseContraetcarrying law it Chowdhuri,
Scope damages such validityKumar courts may Illegalrequirements individual
Act;
public Applicability paidunjustifiably 1953.
2017SC because
Code immoral. of Sec.24]
the consequence, C,
any part 24. (v) (iii) (i) (i) clause The either The Amrit isThe Public (k) ()A,
object (iv) may If v. purpose (45of and
Agreements The
Judge, While 2 agree void Kumar The will and not it A
one of and of An amount promses
may out an exemption to IInd of distinction notification who
in be AIR forbid the an agrees
is C
a isthe agreement but appellation agreemernt of passengers, cannotexemption not Banaspati void
AIR the term thereby
Banda, opposed to v. enforced Additional amount of abusing
law;
policy immoral,
the 1860). promises
single
of Act, th e sue the ernforce agreement thus is
it; it llnd not to 1965 levy to B's
several
Article law
1994 for agreements an
termNutan isbinding, collateral expressly object clause between cannot let mukhtar,
but Additional damages; Cal be agreement violative Co. permitting
considerationvoid, inAIR it to invalid
offending void' as is spentof though her
All 13(3) is 'object held isclause District it. Ltd . to
section voidpublic
1994
has Kumar merely
a of 252. In ortax
considerations 298. collateral th e containing valid be daughter pay
if been from invalid,agreement in or bad the illegal promise
v. ofbeing by The
of under
other the Himachal invoked the promises 1,000
considerations the 23All policy unlike v. DistrictrelationRajat bycollateral and Judge,former to State public refund Pradesh
of 298. a under letting Indian
agreements Void
held nativity. IInd statute beand appellant for
for Constitution; thesection or null, implication
Kumaragreement. agreement
thatthe which ofmade COMMENTS torupees
Additionalto th e Judge, itthat Banda, made,
the of to hire to
one Act toupon section legally void Punjab,policy
tendsmean
term worthless,, to the case, sales effectively may exerciseContract
must 23 or Rat
ah
another
welfare
by to
for or It juristic which
publicBanda, carrier AIR contracts it or but to
'considerationof toas cannot excludes is it AIR and the tax
not B A.
morea and Nutan be the defeat District v. Where 23 realised Financial fo r
purpose' Government 1994
illegal may Government of was be his Act,
single understood Act; policy AIR act, the
cipher, or of shall 1992 void concubinage. The
objects, objects become is t he prevent punishable influence,
Kumar other constitutes thougha All merely very under agreement 1872
Nutan
any Judge, 1994 means contract person is
Act; all
SC society contrary on
object, or
useless liability
be 298. in
sale
Corporation v.
provision or party Indian under the thin 1076.
or hasforbidden valid All
without of void, say a
unlawful v. inKumar´design' Banda, latter but
section was as
any Ilnd 298. India, entering an and byto loanee under The such,
the not and if is Airlines that i t. is
is even in for no it
Additionalsense legal blameless such a not aid 23innot The the agreement void,
unlawful, One v.of been AIR
ineffectual innocent
AIR factof
negligence liability only ifcontravention is statute. from the with
IInd law, of if by facilitating
prohibited into there. it of Ani l
or in th e 1994 force, 2000 is constitutional
the fo r Indian because
of defined
it the law v. void; B
anY
part.-If Additional an made repayment
Garg,AIR
District the becomes
contract. All Madhuri for The Contract specific a The in
parties is Ori illegal
Nutan is
term 298. Penalvoid, favour
the part in not
etc.;effect 32.
bythe and any the law tax it
of 15
is
 a
promisecontract.contract.
1.
his determiningthe tfreely
he the unless void, ispayTaehald
registered a Carbide for no matter General Rule being Thillegal e 16
Subs. (e) ()4 promise
(c) ) In agreement it.
(b) (ainadequacy
Explanation donor
Explanation 25. Non-compoundable fro s
to A A A, A given any (3) debt The of agreement intraffic A
by pay owes
suPports finds promises, for
(2) (1) Agreement Corporation part promises
Act to and of payment the
private
suits.
might charged in which It it near barred or
B B natural is already account being it is canbands in
12 Rs. Rs. B's into B donee, these that is is is unlawful. other is to
question of not
1.-Nothing
2.-An a relation expressed a a not be
bargains void,
of 1,000, purse for thepromise in promise by v. of of
1891, 500 sB writing love no the void cases, have behalt,promise,
therewith, voluntarily of without Union to470 validiudges superintend,
infant of force limitaion be articles.
the
onbut consideration,
and consideration promisor natural that offences,
and
sec. and Agreement enforced to stifling million
account and whether merely any such to to of object
2 the son. givesaffection, toeach for in
is to B The
and gift in pay made consideration,
compensate India, administration
founded private on
debt B registers this an compensate, writing
love law.-An the US which promises of Indian
Sch.
or done of
ofpromises it Illustrations thebecause actually
agreement paymentwholly by inwas other;
registration prosecution AIR dollars COMMENTS A's behalf
the is to to may tosection and individuals. are Illustration
I , barred legally
hissomething 1992 on
Pt. debt.
him.promises it. give consent writing and promise, to ofContract
which agent affection or by the a
I, to B This be or agreement for of
matter pay B,
for This by pay to the made. shall but in whollyunlessregistered SC the
consideration criminal a
taken is compellable void, and to Act,
"assurances". the promises is to B of
Rs. consideration the generally
fo r part and of something 248. andUnion
Where legal
is a the affect a for of A
Limitation A's contract. give
1,000. into contract. documents],
between
or t h e public the a 1872
contract. aexpenses promisor consent
the signed a unless justice manufacturer salary
to his debt the in under made payment Carbide tne consideration
the law
give son, This account or promisor,part, oeLre,
done ofconcern,
validity, of by to parties without It stirng should of
Act. of fo r
specially do; the
in A B, is is which a 1s
Corporation not 10, 0 00
was the the or
A so Rs. Rs. void a inadequate; by the orperson and law in not indig0, and of
isulawru; or cauo for
signs doing
50. 1,000. freely promisor the limitation person unless; or standing consideration Writing a a be 8o rupees
agreement as authorized the isfor promise B's
a This Court between
something prosecutionl..nta allowed
writter A creditor who made the to be promise, (Sec.24
This given to subject a
1s put ti m e Union Unio year
be has in on and
i inbut is of a to an
arise.This
Ptos is restriction
Bengal Agreement him, the marriage;
one A. has
2. 1. void or Court limits,goodwill kind, forfeit
Agreement of
Abraham otherwise to precedent; love Natural account th e was Sec.28]
Subs. Exception buyer support consideration.
Exceptions Agreements28.in mean The
carries Exception is 27. An the 26. rendered If and In agreement The (g ) freely (
to (b) (a) Law wordsreasonable, is her the order
by
a8ree so restrained Agreement to agreementmarriage Agreement alias affection lo ve in A
that limited an in long to is right agrees A
Act enforcing his party
on which within
which he his Reports
by that in it, services
than coice Rajlukhy inadequacy
considering agreesgiven.
section proceedings absolute restraint on
sold.One Suryanarayan hi s to
2 that
extent.] 1. the refrain
1.-Saving restraint Vazir and at and
1and rights which "restrained to services his rely was
of thereto, to a as extent of th e between to to
3 any Saving extinguishes
expiry 76.
same regard like th e from betweenher Mahomed are Dabee clause
affection sell Ihe sell a
1997, rep. shall in any in request upon(1) freely
fromn case of
disPute underrestraintany restriction, of business buyer, void.restraint share ofrestraint rendered whether agreement a
sec. by trade exercising Murthi person, for v. horse
not of
rights, from in particular from
being who marriage falls parties tht horse
2, Act of party carrying of tw o it.and Bhootnath as
consideration The
in Akuji,
for 9 render contract aenforce thus
may the or exercising agreement the a or worth
of which specified any th e of and
orsells co-widows v. under Inthe
such considerafion worth
certain ordinarythereto had any of ofvoluntarily, standing not isa Indian
1932, inlegal COMMENTS therein,
place; deceased
a COMMENTS P. marriage, other (1895)
promisor section25,of
COMMENTS
liability, rights respect are on the trade,
to
person lawful Krishna section cases, Mookheriee, A's Rs.
contract 1,000Rs.
words sec. mayillegal to a than Contract
proceedings, Mahbub intended a providedsimilar t he goodwill 20 in consent is1,000
73 refer period of is lawful void.-Every
not that th e
tribunals, restricted of nature husband'
Murthy, s Bom 25
a undertakes without a a
(w.e.f. and near
arise a
under any deriving profession, void.Every
if minor. promise of notwithstanding
fact for for
contract, any to Z55 (1900)
existencetheof Act,
to soparty rights;hisor Chander
profession, to any was Rs.
&-1-1997).
Sch.between business, of th e relation which Rs .
arbitration apply that
of carry AÎR
. as orvoid.(Every contract,
agreement, a freely 10. 10. 1872
thereto,
to in absolutely or title property of is Act;does tothe 4
the business
such agreement them the consent
A s A'
by restrict v. ontrade 1957 void recompense
Sindha desire
CWN to
them respect which to business.
within given. denies
which Raj trade a to agreement not each Court
by remarried, the
dispute or Coomar, partial limits the business or Ori is needa of
488factumtheof
in Shri other
party
from
any
discharges of limits the
from or may busines 125. not
the should inadequacy that theof
the to
respect two
business", goodwill
appear specified
any usual restriction,
by in Ganpatsingji
consideration v. the is consenthisto
(1874) agree which
of restraint she in promisor
or
that contract enforcing the person a
of restraint condition take agreement
legal to which of should natural
more may
any any time XTV from local with any any who
do the into
a of or 17
 court
not Jurisdiction
Procedure; anyon within 1896. held
Agreement
bond Corporation in from of any beinwhi g ch two referred. sO
amount
subject 18
3. 2. 1. 1 Agreement
SCALE enforcing institution.This arisen.Nor
Explanation.agreement
extinguishment maki
certain, It the any
If
ng bank
vide Ins. Cf. The 29. has notafter [Exception Exception
ashas or
six clausehe ordinary any (ü) the party or
S.O. by the
Agreements
second to his/her (i) a or tomore awarded
Arbitration the Patel been months; bethe
restricting
349. v.mutual in
(g) (d) (c) (b) on already cla ss
192(E), or which ofcontrary expiry Anuradha restraint CompaniesPublic In () (e) (a) In date financial
provision references shall
Banking clause
Exception Exception thereto
the 2.-Saving
capableRoadways held the agreementthein tribunals,right
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Laws Act, of void of Banking RegionalBank of the from for
17-1-2013). Exception
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Bank occurring institution toagree
section
1940 of v. courtisit section months of trade Act, 5 India
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limitation or is the
guarantee arbitration.
any shall of or
(10 intendedan institution the the of company"
of a affect to shall The
ncertainty.-Agreements, 1 otherwiseopen 28that Put. in 1956 Regulation Rural bank"
India Act , of a contract
of offrom of agreement respect co-operative Banks specifiedliability
or stipulate not refer
render Indian
1940) rep.made Trading expression
Banking Bank" India expression such guarantee be
Ltd., COMMENTS (1 Regulation new for any
by to India the the the Barnk" as 1955 Act, render to shall
Act, and
Act
certain, the appellant to of (Subsidiary non-occurring referred Contract
possess v.Act (2012) restrict within as constituted bank" as party under provision illegal to
date of 1956).] Act, defined
2012 the 1 Company,parties New nor would a Regulation Act, (23 1949 extinguishment period a
arbitration be
of contract, defined defined"bank" term
illegal refer
Companies of "abank" established1976 of from agreement recoverable
(41877,
are India it 2 the 1949 or any to Act,
of under bytermination imposed would SCC to or financial 1955); Act, as(10
2013), AIR extinguish (21 Banks) in defined
in the whi c h in ina a of
sec. void. agreement Assurance that meaning as(10 in clause under 1949 means of contract questions arbitration,
contractany any 1872
315: by defined of ofguarantee
sec. Act, 2 1992
section havenot extent be
Act, clause of
clause said respect is of
and any JT the 1949).te (10 in of law in
171956 the SC of
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anot
the question a
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(c)
specified of in
bank in respect
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and
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1959 of of of lesssuchrightswriting or wTiting,
force
Sch. of conferof Ltd.,
contract A.V.M.
void;
(1) Sal es
legal
section (10
clause section section 1949);
of (38 3 (da) section than any or
between have of
that
(w.e.f.1956), Code SC of
AIR to proceedings means
ofsection of guarantee discharge voidor. a for the
section jurisdiction
of 176: a 4A 1949); of
18-1-201 which file party (cciiia) 3of 2 the 5 financial
event oneagreemen: by the by only [Sec.28
of 1994 has 1959);
of section alread,.
disputo
a (2012) Of of State of which whi
th e ch
C1VI sut been tima th.
36 SU the for the any and
of of
5 the the the or for year
unless the be happens,
Contingent nappen.nor do mbalaM, Wagering
Contract Tamiy 109. their to rewarded
to
apply.section sum uncertaintonot anyagreement
void;thousand". uncertainty Sec. 32
horse
enforced (a)
(b) enterScope which agreement As entered oil".article what
If 32. A or31. A To Section
subscribe be
and contracts not chit-fund time, Exception
of wager, 30. () the (e) (d) The (c)
(b) (a)
A A the "Contingent and intotreat and
has makes Enforcement
makes (1927) shall money,deemed Agreements Aprice A intoA A,of kindA A
untill cannot
event to energy th e agrees commerce.
by contracts the gamnes
an to event There is agrees agrees nature who agrees agrees of
been do or no is here a
law to soCiety; provisions be
294A the or void. oil
C a a something, ILR does agreement suit capable contract of is
refusescontract
offered, contractbecomes be pay deemed winner contribute, of entrustedtoinon to to was to
unless 50
and of
the favour shall is to sellmake to A's a to
enforced contract" not chance of render which nothing sell dealer There sell sell
to
to CONTINGENT
CONTRACTS OF Mad Subhash
labour by sell trade intended.
towith and with of
do B come the value be to ofto for B B
refuses impossible, Rs.10,000 by of to or to way being Bthe Bthe one
buy contracts if (FB).
696 and made of B"my in is "a
or some for way legalize
section Indian
winners unlawfula any to agreement "allaffords
"one coconut-oil no The
untilB B by defined.-A within Kumar orcertain anybrought
of sale hundred hundred
the to to to not more make amount wager show made The
law CHÁPTERIII of thousand theuncertainty Indian
horse. buy sell buy
Illustrations Illustration
COMMENTS or person wager, white of an
dies C to B's if event, Manwani wager 294A Penal
any for grain agreement
a the earning entered whích certain, indication one
him. such
contingent
unless do fruitful of prizes tIllustrations
ons tons Contract
horse inB's house scope
subscription
any of recovering is horse void. only,
horse anything collateral as transaction void.-Agreements made. to hundred in
ofCode five maunds here of of
The contracts and "contingent v. void by abide my
toA's is and horse-race.
th e into fo r offor there agrees oil oil". is
of Statetrying hundred the of
contract lifetime.B if burnt. granary to of
void Act,
at A wager; useful is horse-racing.-This
Indian not for rupees tons th e aThere
survives until on to t
anythinghe tw o is of make
a if of that connected no specified 1872
speified become such or or result rice meaning to for
that anan This Madhya theiraffected.-Nothing contribution, of sell
cannot contract" Narayana work the toward
rupees prices
uncertainty
five coconut-oil. the
uncertainty. is
unce Penal at at
is
contract, luck law a agreement to nothing
C. event evert a Pradest. allegedof by hundred Ramnagar". price description,
of B
price,
be This void. contingent for was
tain instead
discOurages Code with orany any th"one
e
enforced has way
contract happening is Avyanqar themselves, to here to words, whatever
if future horse-racing
upwards,plate,
or be hundred
C. happened. does a AIR of (4 5 section
game to
of be or void.
contract agreement to There known
to contract or spending
2000 wagerbe given. rupees fixed and
whom by cannot v. of prize or
won make
event does people in to
law KV. their 1860) to other by is tonsA
to MP this beorshall asshow
onare The one the C". no has of an 19
 of married 20
beforeanvthing. void to anything time,
time, contract if The does
Contingent
time
agreement agreement
is agreemernts whether the at within
year.theyear. contract is eventenforced
bannened anything, by
be ifa ot specified may C it
Applicability
impossible, performance
burnt contract 3. The (c)
of(b) (a) 36. The (b) (a) bannoningWhen 35. must CA or the
if afterwards agrees
is34. agrees A not to A
the A A the
When Enforcement essential
A may A wil
within
the at When now otherwisewhichevent is happen, B.
contracts
agrees agrees Agreements the contract
promises promises t he if
event The
agreement. not or contracts time to contingentfuture can to andcontracts
of
void. to be a be
impossibility do the
enforced happen.Defore specified expiration specified contracts pay shall event bepay not contract; idea contract to
to to may to
law within fixed, within considered marry renders conduct enforced B c an
pay pay time or toyear. B than
be pay
not bepay pay thwhen
e may a on sum abefore.
be to of upon
The B B B. sum is
1,000 1,000 whencontingent to enforced Ba the if Ba uncertain event fxed suchuncertainfixed become considered
under it the which do which becomes Ba
Satyabrata The
agreement tim e be of impossible, of when ofenforcedcontracts
or sum
ofdo sum ship sum th e enforced, event th e impossible way
of money
rupees rupees anything, it time.
money further contracta the not doctrine void. ofIndian
isthe if of returns of
fixed time time.Contingernt time void, living Ghose COMMENTS
the money becomes event Illustration contingent to
Illustrations made.event
to in shiIllustration
is if if on money Illustrations hasfixed if which p ifa when do money Contract
ship fixed, although B become
th at is certain of
void. will B two Contingentdoes which which contingencies. person.If sinks. v.
impossible is an if does within if expired, marries anything
the Mugneeram frustration when
if a has impossible.happens
not such hecontingernt a
marry straight impossible known a certain ship Act,
not
certain the expired, are are it impossible should person happening on B
year;
happen is C, does
A's lines return contingent event
ifcontracts withn
contracts
contingentpossible C the if an is marries 1872
or ship it marries an Bangur, based
daughter ship and becomes so wi l to not
event
should returns and
within has future be ot C.
noteventevent within
thàt actwhen return. uncertan
doesbecomes a act deemed is
to such to not med to D. within th at not AI R that C
C.
enclosevoid.Contingen happens, the the not ado On such event at dies
within certan happened, Ort doon may DThe an The 1954 of
C fixed happening
event fimpossibility
was parties year,return void event speced tuie,ecoe
or or marriage any impossible,
person on ship
happening, future being
without
a a not not
unspecified SC [Sec.33
dead space. or if
year. that time,
ma y e is becomes
are within the has and definite which 44.
is to sunl even
at to burrl toeve of does
htvol ship The su not do
t I doof that R a
thereby 1993contract toagreement;
man 1s bank SconeHarnamAssignment Contractof before before
to Contract.such law.
perform, is Sec.38]
accepted,made
it, pay dispensed
Every 38. Kant but (ii) () ue A (b ) (a) Promises 37.
an It
need If
Singh person the the that Apromisors
(3) (2) (1) lose Effect also th e '3ca Apromises Obligation
theoffer is promises
day. Rs. day. or
promise to circumstancesmade it it such 248. Syndicate not
an well agreement
promisee
thing if
reasonable is his v.cannot with offer
thbound
e of The 1,000 A's bind
must must offerpromisor
of assigneeassignable.settled put consequence Purbi before OF
right refusal borrower to to
offered offer is performance Bank be representatives
contract to to the perform, of THE or
by able be be must makes Devi, paint A's deliver
unconditional; under principle
of subject performance, excused parties
deliver. must opportunity made representatives Contracts
is his and is to the An v. AIR representatives. PERFORMANCE The
is an that fulfil not accept R.on
express is cannot a goods
promise the contract
arbitration Veeranna, picture
willing notice 2000 that a to under their to Indian
thehave offer
responsible of the are to
the at contract. the to
offer COMMENTS be contract.-The which TVie
CHAPTER
thing a of a law provision
strangerHP
obligation enforced fo r Illustrations B respective
reasonable to there properfollowing the containing before bound on unless the Contract
ascertaining to person agreement that (2003) 108. B
deliver do; promisee, of by a of must
which certainto provisions
and performance.Where an
charging for athe
to
time for arbitration 2 cannot of either
certain
adeliver
contrary be OF
it; enhancement Scc a promisors promises, Act,
opportunity the
anything then whomconditions: non-performance, R.K. will contract day performed
parties
that and 15 acquire by CONTRACTS 1872
promisor to
and Associates find higher the on of
A's day, intention
dothe place, it clause goods
payment this
the not to
representatives at in unless to
to person the is rate of rights which a
made offer only a case Act,contract either
must
of th e whole v. is onrate certain to
is and B,of appears such
bound seeing a assignable,
V.the
the of
under he of or
promisee, bymay promisor
nor has Channaypa, Rs.1,000.
and
actual interest, is price. the
performance of
whomof under basis nota B
that what does not or death any
by have contract: a is from
parties if of by Abound A
it such AIR held, party dies other
dies
th e been has
his the he is a he the the B. the of 21
 Sec. 62] The Indian Contract Act, 1872 29
1872
The Indian Contract Act,
28 [Sec. ER
(c) Acontracts to marry B, being already married to C, and being forbidden by the Illustration
A must make compensation to Bfo e A
and Bagree that Ashallpay B1000 rupees, for which Bshall afterwards deliver
law to which he is subject to practise polygamy.
of his promise. to A either rice or smuggled opium.
loss caused to her by the non-performance
port. A's Government This is a valid contract to deliver rice, anda void agreement as to the opium.
(d) A contracts to take in cargo for Bat a foreign
declares war against
when war is declared.
the country in which the port is situated. The contract becomesafterwards Aypropriation of payments
nai
59. Application of payment where debt to be discharged is indicated.
(e) A contracts to act at a theatre for six months in consideration of a sum Where a debtor, owing several distinct debts to one person, makes a payment to
advance by B. On several occasions Ais too ill to act. The contract to act on thos bim. either with express intimation, or under circumstances implying, that the
OCcasions becomes void.
navment is to be applied to the discharge of some particular debt, the payment,
COMMENTS
if accepted, must be applied accordingly.
Contracting party must not be in default Illustrations
i) In contracts in which the performance depends on the continued existence of. falls
(a) A owes B, among other debts, 1,000 rupees upon a promissory note, which
given person or thing, a condition is implied that the impossibility arising from tha first June, A pays
due on the first June. He owes B no other debt of that amount. On the promissory note.
perishing of the person or thing shallexcuse performance; Taylor v. Caldwel, 122 ER 30 to B 1,000 rupees. The payment is to be applied to the discharge
of the
(ii) It is not permissible for the courts to travel outside the provisions of the section of 567 rupees. B writes to A and
(b) A owes to B, among other debts, the sum
and import the principles of English law de hors the statutory provisions; Satyabrata Ghose This payment is to be applied
v. Mugneeram Bangur &Co., AIR 1954 SC 44. demands payment of this sum. A sends to B 567 rupees.payment.
to the discharge of the debt of which B had demanded
Impossibility may be in law or in fact COMMENTS
The doctrine of frustration is really an aspect or part of the
contract by reason of supervening impossibility or illegality of the actlawagreeddischarge
of of
Scope of applicability
to be done person and not to the various heads of one
and hence comes within the purview of section 56; Satyabrata Ghose v.
Mugneeram Bangur, (i) To several distinct debts payable by a debt or decree passed on such debt
AIR 1954 SC 44.
debt. The principal and interest due on a single
interest cannot be held to several distinct debts. Accepting such an
Scope and applicability carrying subsequent the language employed in the section and
argument would amount to doing violence to
in terms;
Section 56 lays a positive rule relating to frustration and does not
leave the matter by it. Besides it would also be contradictory
the purpose sought to be achievedSyndicate
of frustration to the court to be
determined. There can be no agreement on altered Development now called I.C.D.S. Ltd. v. Smithaben H. Patel,
circumstances and it has also been held that if a consideration of the terms of the
Industrial Credit and
in the light of the circumstances when it was contract AIR 1999 SC 1036.
payable by
made shows that the parties never agreed distinct debts and not to a single debt
to be bound in a
fundamentally different (ii) The principle applies to several AIR 1952 All 514.
situation which
ceases to bind at that point, not because the court in its unexpectedly arises the contract instalments; Munno Bibi v. Commissioner of Income-tax,
discretion considers it just but on not indicated.
debt to be discharged is circumstances
true construction it does not apply in that
situation; Shyam Biri Works Put. Ltd. v. U.P. 60. Application of payment where
intimate, and there are no other
Forest Corporation, AIR 1990 SC 205. Where the debtor has omitted to
57. Reciprocal promise to do things legal, and indicating to which debt the payment is to be applied, the creditor may applytheit
also other things illegal. actually due and payable to him from
Where persons reciprocally promise, firstly to do certain things which are at his discretion to any lawful debt barred by the law in force for the time
and secondly, under specified legal, debtor, whether its recovery is or is not
illegal, the first set of promisescircumnstances, to do certain other things which are
is a contract, but the being as to the limitations of suits.
second is a void agreement: neither party appropriates.-Where
Illustration 61. Application of payment where the payment shall be applied in
A and B agree that A shall sell B a neither party makes any appropriation, or are not barred by the
whether they are
a gambling house,
house for 10,000
he shall pay A 50,000 rupees for rupees, but that, if B uses it as discharge of the debts in order of time, limitation of suits. If the debts are of
it. for the time being as to the
The first set of reciprocal promises, namely, to sell law in force
be applied in discharge of each
rupees for it, is a contract. the house and to pay 10,000 equal standing, the payment shall
The second set is for an unlawful object, proportionably.
gambling house, and is a void agreement. nanely, that B may use the house as a Contracts which need not be performed
the parties
58. Alternative promise, one 62. Effect of novation, rescission, and alteration of contract.If alter it, the
branch being illegal.-In the case of an for it, or to rescind or
alternative promise, one branch of which substitute anew contract
is legal and the other illegal, the to a contract agree to performed.
branch alone can be enforced. legal original contract need not be
 satisfaction wholedebt, longer promise
accept
promiseePurbanchal (2012) Novation
ofcontract
the by
ofalteration;
new insertedwithout The partywere alteration ofMaterial entitlement
the subsequent BankRs.10,00,000 suit.compensation
Subsequent Contracts
directing Alteration of ofLtd. Owescredit mortgage is a 30
2. 1.
fact the Immovable athenceforth new
See But (c) 2,000 (b) (a) 63. Permissibility first agreement the (i) lastoriginally parties (i) of The The Person Mere
v. C C(c) new (b) (a)
bound
instrument AIndia North debt
section See
debt bound instead
A A
A Promisee SCC 7 and time original Where not line th e parties plaintiff h
1,000 witcontract A A A
owes owes
promises material as reopening variation owes of owes
section of rupeesis
made may Cabbles Janab consent agreement
formulated which entering hisowes fromaccept
his 462: law, in onin ascertained by v. agreement for American rupees,1,000
41 discharged. B
to an unascertained
the the the V.G. Property B(As),
of claim 5,000
dispense
of to in themortgage;
to
beingM.H.M.
as
have land and BC money
135 5,000
Bpaidperform
JT & existing schedule date alteration would Bank of rupees1,000 10,000 to C
this to him, may absence
it Conductors 2012 appeal raise not deed
of
originally of into and
of paint any th e
Naidu entered
squarely
through similar the Coalsome extinguishes estate Basto
on rupees. at first had Act rupees has his B
Act. this
the dispense
or enforceable Yakoob of by be agreement
rupees. the satisfaction
A. with (6) before Shanker mortgage execution party as & agreement, Corporationterms noin rupees.
for debt or,under
Act. a may originally
of th e is convenient cannot new his been The
This timepromise.picture SC of time property and Sons into agreed to
A or findings, Put. v. boundexpresseddeed one comes the his of
under 5,000
C and pays 327: apex in Lal M. a contract
books, thcontracted. e instead a Indian
paymentpays extend Ltd.
remit,withappeal-Raising as which(Leather) transaction second own; laterunder COMMENTS contract Acontract.
for Danodhar Krishnan, for was of such from that just India rupees
aold. enters Illustrations
place Illustrations (2012) agreement executed. is within but
contract,
to which v.court. to
cannot replaced
want regarding exactly or varies
its Dayal claim of Contract
to B, B. wholly or void, Put.agreement both the because section Put. does has C into
in It
is B atand B the remit Assam6 reduces
original A.is
whichafterwards SCALE Issue of the and
Sinh been does place
a he
time v. AIR the Ltd., defendants the a Ltd. , B an agreed The
discharge1,000 B State be registration, but the
The or ambit 8(1)(a) not Act,
accepts, thinks
performance or oftheAmbalal
bydelivery
which to legal
a old
the in raised 1992
a samne effect rights, AIR that parties subsequent
state, v. AlR
constitute entered notowesagreement of
rupees, fo r Eletricity
314. novation subequent
new certainty under
of
to 1872
part, issue Union right of assent C the betdebtween
b,000 forbids Such
fit. Mad as of may liabilities 1992supersede 2016
of and agreement
Ajaipal, of or section subsequentcould Requisition
into. l,000 ebt of
in of the possessionmaking that otherwise the
and rupees
the satisfaction 80. otherwise Mad of to SC a to A
performance,'or
the Board, novation
decidedbeing parties to of some circumstances (2003)
lndia,
award 2 novation; th
rupees,e of wi th to A,
whole him performance of AIR 62 pay obtain 3974.
B it
cancelling or 139. the 10, 0 00 B B
promise.-Every AIR such of agreement. and
accepts were to a 1946were of and provisions legal liability
the
tothe and B, is
claim do mixed varies th e granted a B and at1C,
2012 in ofmortgage, have wasprejudice an
payable. of so, the
contract Nag still position Act; filing amount court
Acquisition Sasan orders rupees thatan
the held the
them.2 A question
SC
appeal; materialalteration the SCC593 gives end, (Sec.62
whole of bound
260. Central the and B
is 3167: deed.
to whicheffect of higherorder Pozes B shall
The no
may the
the c A, naB an
in for be the of
said the the
of a

could Becomes demand. B'sof in amount.

arrangement its
accepts,
ascertained. Sec.65]
rupees. be
agreement, person fromperformwhose intention
rescinding 455: Waiver section AIR under received
interest full Dharmodas
consideration
Necessity for competent
after C advantage
A compensation the (d)
2. 1, delivers is void, A 1992 discharge The Section (e)
(b) dead (a) 64.(1970) have rupee
the
65. another waiver A the
SeeSubs.
A A from Consequences option not Mad
63the tothe
plaintiff void owes owes A
section first at
pays Obligation or any 2 circumstances the saidof Ghose, beenparties 65 sum A,
by contracts 130 the a SCR to is Contract
upon wi th
of
underwhen or
whomvoidable of starts -
Act maunds partypromise a insist nothing 139. extent B without of B,
75 May. time1,000 B for contract compromise the bank (1903) any discovered and his 2,000 under
of 12 contract 925: their 2,000
of with of it
such a to upon Act; of suit contract, from creditors,
this to it (1971) accepted has
1891, He rupees, contract such therein ILR respective rupees,ascertaining rupees. a
Act. only B the the
agreement that
ofwascontract of nless the Rs. claim no contract,
is promise. to person is the Central 69,571.20 the to The
sec, boundbefore rescission 1 claim,amount, 30e.g.
deliver in person becomesreceived.? contract, voidable right;
SCJ it according the application Cal basis be including and
2 consideration becomes contained amounts This Indian
and shall, Bank if sum where void demands.
The 38. 539 COMMENTS is the a
tothat who Jagad any for it of is sum
Sch. pay to Illustrations from or of also amount, a
him restore rescinds of of is (PC). there Contract
day, agreement void.When
contract if to Indiamadewhich not toRs. one to B,discharge of
Il, A void, has he a Bandhu a Payment to indebted
Pt. whom in
voidable a second
open ofcase being money,
for and 250 of release. v. by 10,00,000 pay gives
L, B's anyreceived
such hadwhich it, the Act,
for them. maunds none is Chatterjee V.G. thethere for in them
promising is he received the agreement. parties an of the
"conmpensation" void, bound benefit, It which to to the to 1872
after. received person an contract.When he
other plaintiff
Naidu
has the from
agreement another
Ba B,
amount
of signifies of
but agreement is v. been
plaintiff was there [composition] of whole and
rice advantage
to the 1,000
B Bto who soany theparty NVilima & B,
retains restore far Sons has defendantsno It a creditors. debt, in of
before mustmarry it. promisor. nothing to was minor; never or rupees
benefit been
agreement satisfaction which
has as thereto Rani, (Leather) whatevermay be
the the repay is claim held contract
it,
discOvered may directly was,
C,A's received a (1969)more Mohoribibee isa has
130 first A or under thereunder The that
thetowards annas
daughter. be, person
need Pot. and discharge
eightmakes A
not
maunds of the to than and
overdue between thereof,
make to party 3 hit having never been
May. 1,000 any void the that 31
to
not at SCC an Ltd., by the v. an
 The Indian
Contract Act, 1872 [Sec. 65
32 Sec. 72] The indian Contract Act, 1872 33
at his
(c) A, a singer,
contracts with B, the
two months, and B
to sing
manager of a theatre, engages
to pay foratheatreher
during the next A wilfully (b) A suplies the wife and children of B, a lunatic, with necessaries suitable to their
week night,
two nights in every
hundred ruupees for each night's
and B, in
performance. On the sixth contract. B must
consequence, rescinds the pay Afor absents ondition in life. A is entitled to be reimbursed from B's property.
69. Reimbursement of person paying money due by another, in payment
herself from the theatre, had sung.
the five nights on which she rupees, which are paid in advan afwhich he is interested.-A person who is interested in the payment of money
(d) Acontracts to sing for Bat a concert for 1,000 to B for the loss of the pro swhich another is bournd by law to pay, and who therefore pays it, is entitled to
bound to make compensation
A is too illto sing. A is not been able to sing, but must refund
to B the 1 0 be reimbursed by the other.
which B would have made if Ahad Illustration
rupees paid in advance. Bholds land in Bengal, on a lease granted by A, the zamindar. The revenue payable
COMMENTS for sale by the
by A to the Government being in arrear, his land is advertised
Frustrated Contracts
gave a cheque to the insurer for Government. Under the revenue law, the consequence of such sale will be the annulment
Where under a contract of Insurance the insured dishonoured by the drawee-ban of B's lease. B to prevent the sale and the consequent annulment of his own
lease, pays
amount, but the cheque was to B the amount so paid.
payment of first premium
the drawer, the insurer is not liable in the Government the sum due from A. A is bound to make good
due to inadequacy of the funds in the account of insurer has disbursed the
such a situation to honour the claim of the insured. Even if the
COMMENTS
amount covered by the policy to the insured before the cheque was returned dishonoured Contribution and reimbursement
insurer is entitled to get the money back; National Insurance Company Ltd. v.
Seema payment by him of the other's
Where a person is jointly liable with other to pay, a
Malhotra, AIR 2001 SC 1197. would not give him a right of recovery under this section; Jagpatiraju v.
share
66. Mode of communicating or revoking rescission of voidable contract, Sadnusannama, AIR 1916 Mad 980.
non-gratuitous act.Where a
The rescission of a voidable contract may be communicated or revoked in the 70.Obligation of person enjoying benefit of or delivers anything to him,
same manner, and subject to the same rules, as apply to the communication or person lawfully does anything for another person,
person enjoys the benefit
revocation of the proposal. not intending to do so gratuitously, and such other former in respect of, or
67. Effect of neglect of promisee to afford promisor reasonable facilities for thereof, the latter is bound to make compensation to the
delivered.!
performance.-If any promisee neglects or refuses to afford the promisor to restore, the thing so done or
reasonable facilities for the performance of his promise, the promisor is excused Illustrations
his
by such neglect or refusal as to any non-performance caused thereby. (a) A, a tradesman, leaves goods at B's house by mistake. B treats the goods as
Illustration oWn. He is bound to pay A for them.
the
not entitled to compensation from B, if
A contracts with B to repair B's house. (b) A saves B's property from fire. A is
B neglects or refuses to point out to A the places in which his house requires repair. circumstances show that he intended to act gratuitously.
A is excused for the non-performance of the contract, if it is caused by such neglect COMMENTS
or refusal.
Compensation for non gratuitous act section 70, by one person against
CHAPTER V Where a claim for compensation is made under contract between the parties; it is on the
another, it is not on the basis of any subsisting
OF CERTAIN RELATIONS RESEMBLING THOSE something was done by the party for another and the said work has
basis of the fact that of West Bengal v. B.K. Mondal, AIR 1962
CREATED BY CONTRACT
voluntarily accepted by the other party; State
68. Claim for necessaries supplied to person incapable of been
SC 779.
or on his account.If a person, incapable of entering into a contract,contracting,
or any one
whom he is legally bound to support, is supplied by Scope and applicability party claims
has been accepted by the other would still be
necessaries suited to his condition in life, the person whoanother person with
hás furnished such
Where a contractor whose work
agreement, which he is not able to prove he
Compensation under an oral Thayappa, (1961) 3 SCR
supplies is entitled to be reimbursed from the property of such incapable 70; V.R. Subramanyam v. B.
person.2 entitled to compensation under section
663: (1961) 2 SCJ 191. who finds goods
Illustrations finder of goods.-A person
71. Responsibility of takes to the same
(a) A supplies B, a lunatic, with necessaries suitable to his condition in lifo A i belonging to another, and them into his custody, is subject
entitled to be reimbursed from B's property. responsibility as a bailee.
whom money is paid, or
thing delivered, by
1. See sections 3 and 5 of this Act. 72. Liability of person to person to whom money has been paid, or
coercion.-A
mistake or under must repay or return it.
2. The property of a Governmernt ward in Madhya Pradesh is not liable under this mistake or under coercion,
the C.P. Court of Wards Act, 1899 (CP. Act 24 of 1899), section 31(1). section; see anything delivered, by Clause Courts, see the
Presidency
Presidency Small
minors under section 70 in section 32.
1. As to suits by 1882 (15 of 1882),
Small Cause Courts Act,
of this Act.
2. See sections 151 and 152
 expense
xpense.
trouble
andconveyance
chartered earned. saltpetre
compensation,
a whichnon-performance excessive.
and in 34
cargo, default,
be contract,contract.
discharge
incurred by or
damage contract,thingsreceive, a right
or
Pradesh, Ingredients upon knowingB
contract.When damagecontract recovery order
(b) paid (a)
Explanation.In Compensation Such 73. Under to (b) (a)
the
in B's
which A B on A fromCompensation OF AIR the to A
doing the hiresoughtmight contracts the as sustained
and compensation to from payment
obtainrailway this and A
for ship delivery. if it has 2001 of
State this of
ship. means becaused THE fact, B
the does AB's to have the such ishas such the been vend unjust
Section jointly
so. is
ship have sum, entitled likely SC to the of
A to obtained to of party
CONSEQUENCES fee
recover company pays
cargo not A which person not by to goods. an
availsA provide, to sell the
estimating anfor
breach, broken, 1725. hasenrichment
the
is go
been breaks if reason to him
for illegal 100 owe
entitled upon go any, and contract been
obligation failure is
result who
to beenprinciple or He
himself todelivered. to 50 existed had not thereby, refuses rupees 10 The
Bombay,Bombay, deliver
his receive
discharged,
or has the loss struckrealise chargeis
terms
and maunds by
to of from entitled rupees
to promise.
which contracted to which or to over Indian
to must of the discharge the be brokenparty damage CHAPTER VI vend COMMENTS of llustrations
receive of bring Illustrations
50 resembling which down, for
those asbut and remedying loss the breach.given the unjust
to
deliver
ofthmaunds
e be the who OF fee carriage. again to Contract
C,
advantageous saltpetre same breach Somaiya recover
ensation
portunities, Athere it contract B taken
is or any parties
the caused enrichmentafter up to A
has to to obligation for
naturally suffers BREACH al one
Calcutta,takes entitled of damage those contract, certain
The C. Act
oppOrtuntes compensation
discharge person any of the so C
ofsaltpetre into the by Organics much is pays
on likeprice inconvenience knew,
it. by concerned consignee 1872
to account. created remote arose breach cannot
as board, th e quality arising injured
resembling compensation such OF goods bound the
from but receive
falls of
those to it (lndia) the
freight B,
when in amount
to
B is O on short and by and CONTRACTe the breach of statute be
put the at from at from from by charge pays theto repay
in the contract d.
Ltextended
Proeunngon to a had indirect contract.When theyusual consignee the
respect to
be first time of certain
A, caused the those not to C,
the the fo r is v.for as amount the
trouble breach
abroken
entitled State su m
paid of price by
had he Januarv when partyfailure has madecourse realisation was and
ofsuitable way price by created loss any to [Sec.72
whan been of charoe
illeoalexcept
such and
the Uttar give B,
the for of to
of his in to or the loss
of to a

2 delivery of the delivered between irefuses

t. higher hirecontract than
athe advance. forwardedLontract.
A measure
if
could
have B Aelaved nes lo aan that
price
by
onract. notWniSpecihed, ch than consequence, AWith atton, contract. Government. A's sum price. the Bis for Sec.73]
certain Would 80 profit delivery mill, (i) (g ) ( at A) byB Contprractice
(a) he
B been (k) B. to ) (h) cost not obtain entitled
delivery. NA
to of that
B rupees A
aFreights
wil
beA,
of informing the price to similar Aequal A AA beyond that
of A way
C which delivers contracts contracts start contracts A cOntracts
of
he the A hadwhich piece A
municated and,contracts have failsdeliveredhaving it receive contracts repairs theAfter place, the to
a was A of contract than to making due
obtainedin fo r for of not
dpricemust made rescinds toton, isthe ship the rise, compensation at owner exceeds receive A
in made would price. the compensaton, the accept afterwards
n ofpay consequence
he of perform
contracteddelayed,entitled machine, Bto the that differernce that starting the to to
was with telling at B, price to for and, to the course, to time ship
inery to withmachinery. bythe a that iron. supply a A let house, the repair date, time of buy
stated have a for a
buy it. thatfrom
B, to a to Bthe his year breaks onrepairs his
by by A),third have contract.
to his C ofwhich cargothe at when on
boat, at bs of
performance
but receive tocommon
been and mill the B between the ship anditspayableaPPonted, and which informs A, B, The
ay way and makeA contract thattime, with not must B on but B's a the the shup
and person paid of iron with and the specified
itcontracts time by at
he B themade A, is A
his first conform
to nothouse
beforewould
of of
the is this, does and Cmust contracts to from stoppedincarrier, promise. of market
price
excess, for wa
By aIndian
to does B to can statedB
compelled
n.ensation, Bnot wit h l
supply consequence,o ss and paycould afrom the
January, according
fo r Mirzapur at of 60,000 that
sum at A, deliver by B, certain in Bwhereby obtain of Contract
the and is ofpay so sustained the by a the to contract arrival he
paid obliged deliver his A, f
machine,o r procureA, the a to a by have day. with the any, if
breach
compensation, price,
time who
for with B way sum by Heyear, the certain A
arrived
to to to working want quantity first must the to is The B rupees, for wil
is contract the wiCth contract.
from
of
bymake prevented of tothe B,20,000 A
by cannot for through of for way
and price
of hire contract.
the at the of the boat, to the
when
timethe the not 50 Act,
Bthe his purpose 1,000 compensation, loses of to which pay manner, difference the arrival take of but
for procurepiece a the January. the if contract
promise. rice maunds
accept 1872
compensation
difterencecontract th ofmachine. be of of obtainable
deliver and time cargo, the owing a breaks the
another. fixed wirupees,
procurepurchase tons the conveyed, a compensation, iron to first cargo at
from of the profitable A the B, B boat of amount,
another ofday, performing B. mil could isand when it the the of
withmachinery, being of los B the at price by ofentitled between the had the to of price his time rice,
between but pertorming for other iron during a wayJanuary,
for rice
of unreasonably
of the iron. fixed receives would it price cargo some jute
promise.
over
not for A at a the contractwithout have for ofthe actually sailed if if no
(but specified a iron,
1,000 at theaverage
to ofavoidable when
tendered
any, time
the breach the obtained the compensation,
B
price, which the at
to the
the higher at protit his tonsGovernment 100 ship for recover arrived jute Mirzapur,
according
wrongfully payment have price Mirzapur
sum which a the
contract contract and rupees
contract tim e with delay, difference is a arrived. falls.
price A Abybeing
ot which of amount being B must informnswhich
paid that had price timprice, e B, iron delays could higher certain which which to
that the and from cause, fixed
in a to The pay the him. 35
a in tois for B
 Contract Act, 1872
The Indian Sec. 74]
The Indian Contract Act, 1872 37
36
first of January,
finish a house by the
that ()B may
A,a give
builder, contracts
possession to erect
ofit at andtime
that to C to whomn B has ,in orde,
contracted to let it. A Contentionthat the market value of the goods was at the rate of Rs. 3,000 per metric ton.
material on record does not show that the price of goods has risen to Rs. 3,000.
is informed of the contract between Band C. Abuilds the house so badly that, before the The
first of January, it falls down and has to be re-built by B, who, in consequence, Loses he Therefore the damages as a result of non-delivery of the alleged goods, have not been
to make he is not entitled to any damages; Thakral and Sons v. Indian
provedbythe plaintiff andLtd.,
received from C, and is obliged
rent which he was to have must make compensation to compensations
Bfor the cost of to Petro
Chemicals Corporation AIR 1994 Del 226.
for the breach of his contract. A for the compensation made to C
of the house, for the rent lost, and
(m) Asells certain merchandise to B,
warranting it to be of a particular
quality,
relbuilding Damages for breach of contract
() When
there is a breach of contract, party to the contract cannot determine as to
committed breach. Damages could be recovered from the person who has
B, in reliance upon this
warranty, sells it to C with asimilar warranty. The
according to the warranty, and Bbecomes liable pay Ca sum of
to goods prOandVeby who has
Wmitted breach only after the same is determined. The conditions of contract would be
be not
way of compensation. Bis entitled to be reimbursed
this sum by A. money eidered as liquidated damages and could be recovered and no power v.hasState
onferred on the other contracting party to determine the damages; P.V. Paily
been
of
(n) Acontracts to pay a sum of money to Bon aday specified. Adoes not Ker 268.
money on that day. B, in consequence of not receiving the money on that day, is pay the Kerala, AIR 2000
in respect of the direct
notliable to make good to Banything unable
to pay his debts, and is totally ruined. Ais (i1) The party in breach must make compensation or damage indirectly or
the principal sum he contracted to pay, together with interest upto the day of except
paymentat a.
consequences flowing from the breach and not
remotely caused;Pannalal Jankidas v. Mohanlal,
in
AR
respect
1951
of
SC
loss
145: (1950) SCR 979.
(o) Acontracts to deliver 50 maunds of saltpetre to Bon the first of
certain price, B, afterwards, before the firstc of January, contracts to sell the January,
saltpetre to ( Damages for breach of contract
of service
father on behalf of minor is void being
without
at aprice higher than the market price of the first of January. Abreaks his promise L A contract of service entered into by Bom 215.
estimating the compensation payable by Ato B, the market price of the first of lanua consideration; Raj Rani v. Prem Adib, AIR 1949
and not the profit which would have arisen to Bfrom the sale to C, is to be taken due
Damages when become prices at
account.
be liable to compensate according to the
Aseller who commits breach will Murlidhar
(p) Acontracts to sell and deliver 500 bales of cotton to B on a fixed dav. A knows Chiranji Lal v. Harish Chandra Dwarkadas,
destination;
nothing of B's mode of conducting his business. A breaks his promise, and B, having no the place of sale and not at
cotton, is obliged to close his mill. A is not responsible to B for the loss caused to B by AIR 1962 SC 366: (1962) 1 SCR 653.
closing of the mill. Limitation reasonable period of
(q) A contracts to sell and deliver to B, on the first of January, The principle of awarding damages for a reasonable periodisornot for a fxed period:
employment
intends to manufacture into caps of a particular kind, for which certain cloth which B when the contract of
there is no demand. notice comes into play only 1958 SC 12: (1958) SCR 442.
except at that season. The cloth is not delivered till after the appointed time,
and too late S.S. Shetty v. Bharat Nidhi Ltd., AIR
to be used that year in making caps. B is entitled to contract for sale of goods
receive from A, by way of Measure of damages - Breach of or damage arising
compensation, the difference between the contract price of the cloth and its market price Damages are to be awarded as compensation for any loss Karsandas H. Thacker
at the time of delivery, but not the profits which he things from the breach of contract;
expected to obtain by making caps, naturally in the usual course of
nor the expenses which he has been put to in 1965 SC 1981.
making preparation for the manufacture. V. Saran Engg. Co. Ltd., AIR
() A, a ship owner, contracts with B to
convey him from Calcutta to Sydney in A's Special damage
ship, sailing on the first of January, and B pays to A, way of deposit, one-half of his Natural and probable result of breach: damages should be such as may
fairly and
passage-money. The ship does not sail on the first ofbyJanuary, In cases of breach of contract the
naturally or the damages may be such as may
consequence, detained in Calcutta for Some time, and thereby and B, after being, in reasonably be considered as arising contemplation of both parties at the time they
in
proceeds to Sydney in another vessel, and, in put to some expense, reasonably be supposed to have been damages, however cannot
consequence, arriving too late in Sydney, probable result of the breach of it. The sustained by reason
loses a sum of money. Ais liable to repay to Bhis made the contract as the remote and indirect loss or damages
deposit, with
Calcutta, and the excess,interest, include compensation for any
to which he is put by his detention in and the expense
money paid for the second ship over that if any, of the passage of the breach; Hadley v. Bexendale, 9
Ex 742.
money which Blost by arriving in agreed upon for the first, but not the sum of resulting from breach of contract price higher than
Sydney too late. Taking advantage of benefit the vendor subsequently sells at a
COMMENTS Where a vendee is in default and the fact that by reason of the loss of the contract
Award of damages of delivery, obtained the benefit of another
the market price on the date
failed to perform, the vendor later
When a contract is broken. the which the vendee hadvalue entitle the vendee to the beneit of the
party
who suffers by such breach is to him did not
Compensation for any loss or entitled to receive contract which was of
Contract; K. Narayana Kurup v.damage caused to him from the party who has broken Sons & Co., (1916) AC 175.
the contract; Jamal v. Moola Dawood penalty stipulated for.
Breach of Contract of Sankaranarayanan, AIR 2000 Ker 296. breach of contract where
74. Compensation for broken, if a sum is named in the contract as the
Acorporation had carriagethe [When a contract has been
no attemnpt was madeplaced order on
to produce any telephone. The entire transaction was oral and
witness of the alleged buyer to support the
4, for the first paragraph.
1. Subs. by Act 6 of 1899, sec.
 Spinning
question Rightinstalments
whole according consideration
due. with maunds. to
delivering reasonable. and atthe exceeding a publictheinstrument,
interested,aregivesInder other for.
may exceeding 38
3. 2. 1. him the end certain Rs.
B not Anecessarily
fails receive
stipulation
whether amount
Ins.Subs.Subs. Where (g) This a () (e) B (d) exceeding (a)
Explanation.-A Exception.When
to shall stipulation A rate
(c) 5,000. (b)
instrument
any the be
Explanation.-A
by & of
recover A 10 A, is of A A A to A a
borrows undertakes
to This maunds who only of six day.gives contracts
Rs. pay
contracts from or to
bybyMfg.
Act ascertaining the stipulation the gives A interested.are bond stipulation the
the the become of its 75 5,000 Rs. B thereby to orders be
6 right Rs. in is
stipulated entitledmonths,
per Hepractises
a Rs. e not by
of
A.0. A.0. Co.liquidated terms. case a owes recognizance B pay shallhe
befor amount thactual way paid
1899,
40, Rs. that,stipulation of cent. forfeits a as with
1,000, 500 with party
1950,1937, Ltd, to due. with to of money
grain bond undertakeperson the the of of
100 is in breach. to with the as '{ Central of in
recover not repay amount from as on B the the any by
stipulation
sec. damages
AIR This froma default, recover his court that, performance
whole so
damage
whopenalty, case
for for damages stipulation onto afor surgeon
a Bthe that to same way
4(2).
Government recognizance.
the thebinding pay person named
Provincial 1962
liquidated is B by B by a B,stipulation if Court day. who breach
liable,
upon has of The
a and a way certain considers B of
really stipulation way of money-lender,
loan
by a repayment
from date A anyenters sum nature or such
SC COMMENTS the practises
in B Rs. penalty.] for broken Indian
gives payment of m considersIllustrations is public or, loss the
rnment".
1314. that, of of ofdate,
that,
hiCalcutta. 1,000 mentioned Government| of entersincreased
default of
arises; stipulated default. A entitled party
breach,
ofdamages penalty, Rs.penalty, reasonable. into any or, as is
inhim such Hein the Contract
India". by of and in of if duty,
a as
the proved
default 1,000 is he a public under nto
Chunilal way bond a any compensation This case liable Rs.penalty reasonable., B a to contract contract
case or complaining
under and stipulates
andundertakes surgeon
instalment, by date, 1,000 is recover fails ortherein. any interest
fromthe if Act,
of offor is of entitled theof
duty orthe may to the
payment the five B default,
a to of to promise
Mehta
section penalty-J Rs. is he pay of reasonable
stipulation with pay Rs. with bal-bond,
provisions not have contract 1872
200cortract equal onlyshallthat, to
within from
to orany be, of
& repay
500 B condition
the in
interest
as interest the such Rs. Government to
any ofact
Sons 74 payableof monthly entitled be A Governmentl
(State the been the
is any whole the whole toCalcutta, such 500 do in
may liable the him appear
by compensation; penalty causedContains
Ltfound
d. event Court way shall at an which
recognizance of
compensation breach
instalment, by
to 12 on date
shall
be to by penalty. compensation,
v. to five instalments, reasonable in act any
enforced delivering
deliver ofconsiders of beper he given a
th e is
Century exit
yearly become his penalty,
payable cent. Court will does
in thereby,
stipulato
law entitled, any [Sec.74
no the not day.
which publ:
20 on not pay
at not such othe
o to

(3 for nights
theatre, for wouldathe Sec1. 25]
promisor Idemnity
Kant294. guarantee promises
promisor
1I andindemnity. may indemnity."
of
Indemnity, he the each A.
person stipulated, amountliqPeuindalatty eandd
damage 75.Sahlok clause other A
125. had take A 124. v.
Acknowledgement contracts 1930) Sale damage and in a ause
(2) (1) Rights given against himself,"Contract to of
night'severysinger, which whoParty S.Y. the party clof
B,
sec.
the a l of all acting save which
in week
contracts rightfully
rightfully Shunde, other money ina
bewil
orizedpromisor,
bringing any express to Goods.-Sections performance.
65.J consequence, he contract
costsdamages of B penal fails
be
absence within indemnify in orthe
of OF he during has AlR party
indemnity-holder by at to
and whiorcmatter
h other has wi t h sustained
rescinds 1993 liberty
in paydamages
can
the
consent; debtof respect
him whi c h the indemnity"
INDEMNITY waves The
defendingof to B
th e rescinding character. the be
acted he by of conduct sustainedrescinds On
next B, SC to Indian
toany scope United against from described
amount
bring as maywhich he principal a CHAPTERVII 76-123
CHAPTER VII the the through a 1934 his recover
of COMMENTS certainIllustration right
contract it it bethe may
the ofloss sixthmanager
twoIllustration contract
But Contract
orwould s Commercial
hiwhen defined.-A AND
through themonths,
he be any (Rep. contracts. contract, to twithin he as
defend compelled did promi
debtor consequences sum caused night, of the the if penal
of compel se leauthority,
d other the a is balance halfentire the Act,
have not sued.-The Bankv.binds of GUARANTEE by A
theatre,
andnon-fulfilment entitled if
the 200 to non-fulfilment B entitled payment sum time the 1872
indemnity, been to to is person,contract him the wilfullyis B
B the rupees. of entitled engages amount; stipulated.party
pay to
suit;contraveneindemnify toentitled
M. Sale to with
prudent in pay promisee guarantor any is by sing is
of
absents
to to compensation
to interest
made who
or any in to Mahadee This
proceedings called the by at of Prithvichand
iffor the applies: any recover whi ch Goods claim
of paycompensation.-A his the certain
Inhas
such suit in Babu, in is conducta the herself within and such to
the orders
him a al a her
theatre
contract "contract one Act, contract.
compensation 10 contract. pay
from respects
AIR which costs. a
Ramchand the situation a
promisor to ofsuit respectin contract of from for for
act if,
1992 party 1930 rupees time Such
the
in in the of as of C of the the tw o any 39