1 Contract 1

4 Marks.
1. General Offer.
Answer :-
General Offer
A general offer is one that is made to the public at large. It is not made any specified
parties. So any member of the public can accept the offer and be entitled to the
rewards/consideration. Say for example you put out a reward for solving a puzzle.
So if any member of the public can accept the offer and be entitled to the reward if
he finishes the act
OR
Answer :-
General Offer
A General Offer is an offer that is open to anyone, effectively made to the public
in general. The concept of a General Offer was established in the landmark case
of Carlill v. Carbolic Smoke Ball Co. In this case, the Carbolic Smoke Ball company
advertised that they would pay £100 to anyone who contracted influenza, colds,
or any disease caused by colds after using their medicine according to the
prescribed instructions. They also stated that £1000 had been deposited in the
Alliance bank to demonstrate their sincerity in the matter. A customer, Mrs.
Carlill, used the medicine but still contracted influenza and sued the company for
the reward.
The company argued that their offer was not intended to create a legally binding
agreement but was merely a marketing ploy to boost sales. They also contended
that an offer must be made to a specific person and since this offer was not
directed at any specific individual, they were not obligated to pay Mrs. Carlill.
However, the court ruled in favour of Mrs. Carlill, stating that in cases of general
offers, there is no need for explicit acceptance communication. Anyone who fulfils
the conditions of the contract is considered to have accepted the offer.
Furthermore, the money deposited by the company in the bank demonstrated
their intent to create a legally binding relationship and therefore, the Plaintiff was
entitled to the reward.
An Indian case, Lalman Shukla v. Gauri Dutt, also illustrates the concept of a
General Offer. In this case, a servant was sent by his master to find his missing
nephew and announced a reward for anyone who could locate the nephew,
which is another example of an offer made to the public at large.
A General Offer of a continuing nature, like the one in the Carbolic Smoke Ball
case, can be accepted by multiple people until it is revoked. However, in cases
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where the offer relates to obtaining information about a missing item, it is
typically closed as soon as the first person provides the required information.

2. Conditional acceptance.
Answer :-
Conditional Acceptance
A conditional acceptance also referred to as an eligible acceptance, occurs when a
person to whom an offer has been made tells the offeror that he or she is willing
to accept the offer provided that certain changes are made to the condition of the
offer. This form of acceptance operates as a counter-offer. The original offeror
must consider a counter-offer before a contract can be established between the
parties.

3. Consensus ad idem.
Answer :-
Consensus ad idem in contract law means there has been a meeting of the minds
of all parties involved and everyone involved has accepted the offered contractual
obligations of each party. Consensus ad idem is a Latin term that means, simply,
agreement. This is the first principle that's the foundation of enforceable
contracts because for contracts to be enforceable, agreement or a meeting of the
minds of all involved parties, is required.
OR
Answer :-
Consensus ad idem
The parties that are entering in the contract must have mutual consent i.e. they
should be agreeing upon the same thing in the same sense as it is. It means that
there must exist consensus ad idem (i.e. meeting of minds).

4. Nominal damages.
Answer :-
Nominal Damages
If a party to a contract files a suit for losses but proves that while there has been a
breach of contract, he has not suffered any real losses, then compensation for
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nominal damages is awarded. This is done to establish the right to a decree for a
breach of contract. Also, the amount can be as low as Re 1.
OR
Answer :-
Nominal Damages
If the defendant is found liable for breach of contract, the plaintiff is entitled to
nominal damages even if no actual damage is proven. Nominal damages are
awarded if there is an infringement of a legal right and if it does not give the rise
to any real damages, it gives the right to a verdict because of the infringement.
In the following circumstances, nominal damages are awarded to the plaintiff:
• The defendant committed a technical breach and the plaintiff himself did
not intend to execute the contract;
• The complainant fails to prove the loss he may have suffered as a result
of the contract breach;
• He has suffered actual damage, not because of the defendant’s wrongful
act, but because of the complainants’ own conduct or from an outside
event;
• The complainant may seek to establish the infringement of his legal
rights without being concerned about the actual loss. Where there is no
basis for determining the amount. The view that nominal damage does
not connote a trifling amount is erroneous; nominal damage means a
small sum of money. Nominal damages have been defined as a sum of
money that can be spoken of, but which does not exist in terms of
quantity.
Where the loss is small and quantifiable, the damages awarded, although small,
are not nominal damages.
If the market rate on the date of the breach is not proven, the plaintiff shall be
entitled to nominal damages. However, the fact that the buyer does not sustain
any actual loss as a result of the seller’s failure to deliver the goods is no reason to
award the buyer nominal damage.

5. Voidable agreements.
Answer :-
A voidable contract is a formal agreement between two parties that may be
rendered unenforceable for any number of legal reasons, which may include:
• Failure by one or both parties to disclose a material fact
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• A mistake, misrepresentation, or fraud
• Undue influence or duress
• One party's legal incapacity to enter a contract (e.g., a minor)
• One or more terms that are unconscionable
• A breach of contract
OR
Answer :-
What is a Voidable Contract?
A contract is considered voidable where one of the parties in a contract has the
option to enforce or reject the contract where agreement terms are not
appropriately represented or respected. This mainly suggests that the information
in the contract was not accurate or that one of the parties did not respect the
agreement properly. Any voidable contract is considered valid and legal until
cancelled or revoked.
Examples of Voidable Contracts
To understand a voidable contract clearly, look at the examples cited below. It
suggests contracts are valid at the beginning but can become voidable under
different scenarios:
• Example 1
Shubh wants to buy a house from Vir. Shubh is satisfied with the house as it is. His
main attraction of the house was the home gym, which Vir had turned his garage
into. The contract states that the house needs to be as it is, but Vir turns the
home gym back into the garage again. Hence, this contract will now be
considered voidable. Shubh has the option to cancel the deal and declare the
contract to be void, or he can accept the contract as it is.
• Example 2
Contracts that were made when one party had undue influence on the other may
be voidable. An illustration would be if a caretaker put pressure on an old person
to transfer their assets to them.
Reasons Why a Contract May Be Voidable
There are several reasons why a contract may be considered voidable. Let us look
at the points that make any contract voidable in nature:
• Minor
In contract law, the age of the persons involved is critical in assessing the
contract's legitimacy. Section 11 of the Indian Contract Act states that an
individual must be 18 years old to be considered competent to engage in a
contract. Anyone under this age is considered a minor, and any contract with
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them is only an agreement. Importantly, such agreements only become legally
enforceable when the minor reaches the age of 18. Here, the minor has the
option to cancel the contract when he reaches 18 years of age.
• Consent of party
The sincere and free consent of the parties concerned is the foundation of a
legally binding agreement. However, if the party has not provided free consent
(i.e. if the consent was due to coercion, undue influence, fraud or
misrepresentation), they can cancel the contract. When such components are
present, contracts are voidable for the party harmed by the false consent.
• Misrepresentation
If both parties act under a joint misunderstanding of fact, the contract may be
voidable. It's important to remember that all persons engaged in the error must
share it for this to apply. A simple misinterpretation of the contract’s terms does
not constitute an error of fact. When such faults are made by both parties, the
contract is voidable, opening the door to possible annulment.

6. Agreement in restraint of marriage.

Answer :-
Section 26 of the Indian Contract Act, 1872 states that an agreement in restraint
of marriage is void, whether partial or absolute. But it also provides an exception
to the contract on marriage of minors. This is because marrying minor itself is
against public policy.
OR
Answer :-
Agreements in Restraint of Marriage
According to Section 26 of the Indian Contract Act, all agreements in restraint of
marriage except that of a minor are void. Romans were the first to delegitimize
agreements that were in restraint of marriage. The basis of making agreements in
restraint of marriage void is that marriage is a sacrament and nothing should
interfere in the institution of marriage, not even contracts. The idea behind this
provision is to not snatch away the personal right of every individual to marry
someone of their own choice. It is important to note here that according to the
section, agreements in restraint of marriage of a minor are not void.
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Illustrations
• A person Susan agrees with John, in return for some consideration, that
she will not marry a certain person Mark. This agreement is one in
restraint of marriage and is thereby void.
• Tina’s father promises a person Rahul, that he won’t marry his daughter
Tina to anyone else but he, if only he would pay a sum of Rs. 20,000 per
month until their wedding date. This is a void agreement, as it is in
restraint of marriage of a person of age.
Case
The case of Lowe v. Peers set a precedent in the law relating to restraint of
marriage. In this case, the defendant contended that if he marries any other
person except the plaintiff, he would give her 1000 pounds within three months
of his marriage. It was held that such an agreement is void.
In the recent case of Shrawan Kumar v. Nirmala, the petitioner filed a suit in the
Allahabad High Court asking the court for an injunction on the defendant’s
marriage to the other person. The plaintiff contended that the defendant had
promised to marry him, and therefore her marriage with the other person should
be injuncted against. Pankaj Mithal, J. cited Section 26 of the Indian Contract Act,
1872 while pronouncing his judgment, whereby he dismissed the petition.
OR
Answer :-
Agreements in Restraint of Marriage
Under section 26 of the Indian contract act, agreements which are made in order
to restrain someone from marrying other than a minor are not valid, i.e., void.
The main idea which made this section was that marrying someone of their own
choice is a basic right of every individual and it should not be snatched away.
Therefore, any agreement which prohibits someone from marrying another
person of his own choice will come under the restraint of marriage.
Rao Rani v. Gulab Rani
In this case, the two parties were the widows of the same man. After the death of
their husband, a dispute aroused between them as to who will inherit the land.
This case took place in the division bench of the Allahabad High Court.
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7. Undue influence.
Answer :-
"Undue influence" defined.
Section 16 Undue influence defined.-- (1) A contract is said to be induced by
"undue influence" where the relations subsisting between the parties are such
that one of the parties is in a position to dominate the will of the other and uses
that position to obtain an unfair advantage over the other.
(2) In particular and without prejudice to the generality of the foregoing principle,
a person is deemed to be in a position to dominate the will of another--
(a) where he holds a real or apparent authority over the other, or where he
stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is
temporarily or permanently affected by reason of age, illness, or mental or bodily
distress.
(3) Where a person who is in a position to dominate the will of another, enters
into a contract with him, and the transaction appears, on the face of it or on the
evidence adduced, to be unconscionable, the burden of proving that such
contract was not induced by undue influence shall lie upon the person in a
position to dominate the will of the other.
Nothing in this sub-section shall affect the provisions of section 111 of the Indian
Evidence Act, 1872 (1 of 1872).
Illustrations
(a) A having advanced money to his son, B, during his minority, upon Bs coming of
age obtains, by misuse of parental influence, a bond from B for a greater amount
than the sum due in respect of the advance. A employs undue influence.
(b) A, a man enfeebled by disease or age, is induced, by Bs influence over him as
his medical attendant, to agree to pay B an unreasonable sum for his professional
services, B employs undue influence.
(c) A, being in debt to B, the money-lender of his village, contracts a fresh loan on
terms which appear to be unconscionable. It lies on B to prove that the contract
was not induced by undue influence.
(d) A applies to a banker for a loan at a time when there is stringency in the
money market. The banker declines to make the loan except at an unusually high
rate of interest. A accepts the loan on these terms. This is a transaction in the
ordinary course of business, and the contract is not induced by undue influence.]
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OR
Answer :-
Undue Influence (Section 16)
Section 16 of the Act contains the definition of undue influence. It states that when
the relations between the two parties are such that one party is in a position to
dominate the other party, and uses such influence to obtain an unfair advantage of
the other party it will be undue influence.
The section also further describes how the person can abuse his authority in the
following two ways,
• When a person holds real or even apparent authority over the other person.
Or if he is in a fiduciary relationship with the other person
• He makes a contract with a person whose mental capacity is affected by age,
illness or distress. The unsoundness of mind can be temporary or permanent
Say for example A sold his gold watch for only Rs 500/- to his teacher B after his
teacher promised him good grades. Here the consent of A (adult) is not freely given,
he was under the influence of his teacher.
Now undue influence to be evident the dominant party must have the objective to
take advantage of the other party. If influence is wielded to benefit the other party
it will not be undue influence. But if consent is not free due to undue influence,
the contract becomes voidable at the option of the aggravated party. And the
burden of proof will be on the dominant party to prove the absence of influence.

8. Public Policy.
Answer :-
“Public Policy is a high horse to mount, and is difficult when you have mounted
it.”
An agreement is not considered as lawful if it is opposed to public policy. The
doctrine of public policy is based on maxim ‘ex turpi causa non oritur actio’ which
means agreement against public policy would be void without any effect. The
term Public Policy does not have an exhaustive definition as its fluctuating in
nature and is highly uncertain. The interpretation of public policy is upon the
discretion of the court. The terms of a contract cannot be enforced even if it has
been agreed by both the parties if the same is in violation of public policy.
In simple words, Pubic Policy refers to the policies of government for the welfare
of society, It can also be said that if any agreement contravenes any developed
interest of society or morals of time, it can be said to be as against public policy
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and the agreement turns to be void. It has been held that an agreement could not
be enforced if it was against public good[ii] or in violation with general policy of
the law[iii]. In the case of P. Rathinam v. Union of Idnia[iv], the apex court held
that the term public policy is open for modification and expansion

9. Novation.
Answer :-
Novation of contract means creating a new contract while the old one is
terminated and need not be performed. It is an act substituting a new obligation
or party in a contract for the old one. Further, the newly substituted agreement
should be valid, enforceable, have consideration and should be by the mutual
consent of the parties. Basically, it should fulfil the requirements of a valid
contract.
When a contract is novated, the original contract ceases to exist and the parties
have to follow the new contract. Section 62 of the Indian Contract Act states that
“if the parties to the contract agree to substitute a new contract for it or to
rescind it or alter it, the original contract need not to be performed.”
Essentials of Section 62 of the Indian Contract Act
• Consensus ad idem between the parties to a contract.
• There should be a previous contract entered into between the parties.
• Substitution, recession or alteration of a contract giving rise to a valid
new contract.
• Termination of the original contract.

10. Acceptance.
Answer :-
A legally enforceable agreement between two or more parties is referred to as
a contract. A contract may be expressed either orally or in writing that includes
an offer, acceptance, consideration, etc. According to contract law, acceptance
is the act of approving or consenting to the conditions of an offer. It can be
expressed either orally or in writing.
It is generally denoted as communication between two different parties. Offers
can be accepted only if they are specific and transparent in their terms. If the
offer contains some conditions or additional terms, then the conditions must be
satisfied before it is accepted.
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Acceptance in Contract Law
Acceptance is an important theory in contract law. It is a legally binding
agreement between two or more parties that entails responsibilities, benefits,
or other considerations. In order for acceptance to be valid some
requirements must be satisfied including capacity, mutual consent, legality,
sufficient consideration in a contract, etc. In legal terminologies when someone
agrees with an offer then they have to obey the terms made in the offer.
According to the Indian Contract Act, 1872, Section 2(b), acceptance is
expressed as “When the person to whom the proposal has been made signifies
his assent thereto, the offer is said to be accepted. Thus, the proposal when
accepted becomes a promise.” In accordance with the definition, acceptance
occurs when the offeree, to whom the proposal is made, accepts it
unconditionally. This is like a promise once the offer is accepted.
OR
Answer :-
According to the Indian Contract Act 1872, acceptance is the final and unqualified
expression of assent to the terms of a proposal. The acceptance must be given in
the manner and within the time specified in the proposal or, if no time is
specified, within a reasonable time.
The Act defines acceptance in Section 2(b) as follows:
“When the person to whom the proposal is made signifies his assent thereto, the
proposal is said to be accepted. A proposal, when accepted, becomes a promise.”
An acceptance is considered valid when:
• It must be given by the person to whom the proposal is made.
• It must be given in the manner prescribed by the proposer.
• It must be given within the time prescribed by the proposer or within a
reasonable time.
• It must be absolute and unqualified.
If the acceptance is not given in the prescribed manner or within the prescribed
time, it is considered invalid, and the proposer is no longer bound by the
proposal.
Additionally, acceptance may be expressed or implied. An express acceptance is
given in words or writing, while an implied acceptance is given through the
conduct of the offeree.
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11. Mistake.
Answer :-
Mistake must be a “vital operative mistake “ i.e. it must be a mistake of fact
which is fundamental to contract. To be operative so as to render the contract
void, the mistake must be:
(a) of fact, and not of law or opinion;
(b) the fact must be essential to agreement, i.e., so fundamental as to negative
the agreement; and
(c) must be on the part of both the parties.
Thus, where both the parties to an agreement are under a mistake as to a matter
of fact
‘Mistake’ is not defined in the Indian Contract Act. Section 20, 21 and 22 deals
with the concept related to mistake. ‘Mistake’ can be defined as any action,
decision or judgement that produced an unwanted and unintentional result. A
Mistake is said to have occurred where parties intending to do one thing by error
do something else.
Case Law– Phillips V/S Brooks Ltd.- In this case it was held that a person is
deemed to contract with the person in front of them unless they can substantially
prove that they instead of them intended to deal with another person.
Illustration– A agrees to sell to B a specific cargo of goods supposed to be on its
way from England to Bombay. It turns out that, before the day of the bargain, the
ship conveying the cargo had been cast away, and the goods lost. Neither party
was aware of these facts. The agreement is void.
Mistakes are of two kinds:
(i) mistake of law, and
(ii) mistake of fact.
Mistake of Fact
A mistake of fact arises when one or both of the contracting parties have
misunderstood a term that is essential to the meaning of the contract; Such a
mistake may be done due to confusion, negligence or omission, etc A mistake is
never intentional, it is an innocent overlooking. Such mistakes can be either
unilateral or bilateral
Bilateral Mistake (Section 21)
When both the parties to a contract are under a mistake of fact, essential to the
agreement, such a mistake is known as a bilateral mistake. Bilateral mistakes are
also sometimes referred to as mutual or common mistakes. All the parties do not
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agree to the same thing and in the same way, which is the concept of consent.
Since there is no consent, the contract is null and void.
Example
‘A’, agrees to buy a cow from ‘B’, but it turns out that the cow was dead at the
time of the deal, although the fact was not known to any party. The arrangement
is considered invalid.
Unilateral Mistake (Section 22)
A unilateral mistake occurs when only one party to the contract makes a mistake.
The contract will not be void in such a case. It is specified in Section 22 of the Act
that the contract will not be void just because one party made the mistake. So if
only one party has made a mistake the contract remains a valid contract.
Example
‘A’ enters into an agreement with ‘B’ for the purchase of a horse which he
assumes to be a racing horse. ‘A’ is not confirmed from ‘B’. In actuality a horse is
not a racing horse. ‘A’ cannot rescind the contract.
(a)Mistake as to existence of the subject matter: Where both parties believe the
subject matter of the contract to be in existence but in fact, it is not in existence
at the time of making the contract, there is mistake and the contract is void.
Example
‘A’ and ‘B’ are involved in a contract to sell a horse in a specific amount. But,
horse dies before the contract is performed and both the parties (A and B) are
unaware of this fact that the horse does not exist. In this case, the Contract is
void.
(b)Mistake as to identity of the subject matter: Where the parties are not in
agreement to the identity of the subject matter, i.e., one means one thing and the
other means another thing, the contract is void; there is no consensus ad idem.
Example
‘A’ and ‘B’ made a contract in which ‘A’ promise to sell his car to ‘B’. ‘A’ has two
different types of car (one for racing and other for tourism purpose). Here, the
real identity of the car is not clear and both the parties are thinking about
different types of car. In this case, the Contract is void.
(c)Mistake as to quantity of the subject matter: There may be a mistake as to
quantity or extent of the subject matter which will render the contract void even
if the mistake was caused by the negligence of a third-party.
Example
‘A’ and ‘B’ made a contract in which a transaction of 200 pens in return of some
amount involves. But 100 pens are sold early by the brother of ‘A’ before the
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contract could be performed and both the parties (A and B) were unaware of this
fact that only 100 articles do exist. In this case, the contract is void.
(d)Mistake as to quality of the subject-matter or promise: Mistake as to quality
raises difficult questions. If the mistake is on the part of both the parties the
contract is void. But if the mistake is only on the part of one party difficulty arises.
Example
‘A’ and ‘B’ made a contract together in which ‘A’ sold his car in return of some
amount to ‘B’. They believed that the car is for racing purpose but the car was for
tourism purpose. In this case, the Contract is void.
(e)Mistake as to the price of subject matter
‘A’ and ‘B’ made a contract to sell things in consideration for some money which
was not a valid amount and both the parties (A and B) are unaware of this fact. In
this case, the Contract is void.
(f)Matter as to the performance of subject matter
Sometimes, a contract is made but during the performance of the same, we come
to know that it is impossible to fulfill the performance of the contract. The
agreement is void where there is a mistake as to the possibility of performance.
Impossibility is an excuse for non-performance of a contract. Impossibility can be
of two types:
• Physical impossibility: Any performance of the contract when physically
impossible, can be taken up as an excuse for non-performance of duties under a
contract and contract will be void. For example- a painter made a contract with a
person to paint a house but before the performance of duties, the house burns.
Now, it is impossible for the painter to perform his duties under the contract.
Thus, it is considered as an excuse for non-performance of duties.
• Legal impossibility: Any performance of the contract is when legally impossible,
can be taken as an excuse for non-performance of duties under a contract and
contract will be void. For example- any amendment made by legislation which
makes it impossible to fulfil the performance of duties under the contract.
Unilateral Mistake as to Nature of the Contract
The general rule is that a person who signs an instrument is bound by its terms
even if he has not read it. But a person who signs a document under a
fundamental mistake as to its nature (not merely as to its contents) may have it
avoided provided the mistake was due to either-
(a) the blindness, illiteracy, or senility of the person signing, or
(b) a trick or fraudulent misrepresentation as to the nature of the document.
14 Contract 1
Mistake of law
The mistake may be related to the mistake of Indian laws, or it may be a mistake
of foreign laws. If the mistake applies to Indian laws, the principle is that
the law’s ignorance is not a sufficiently good excuse. This means that either party
cannot claim that it is not aware of the law.
The Contract Act states that, on the grounds of ignorance of Indian law, no party
can claim any relief. This will also include an incorrect interpretation of any legal
provisions.
However, similar treatment is not given to ignorance of foreign law. Ignorance of
foreign law provides some leeway, the parties are not expected to know foreign
law and its meaning. Therefore, under the Indian Contract Act, an error of foreign
law is actually treated as a mistake of fact.
Mistake of Law can be of two types:
1. Mistake of Indian Law: “Ignorantia Juris non excusat” is a Latin maxim which
means “Ignorance of the law is not excused”. If a person takes part in a contract
without knowing any specific provisions of Indian Law (which is essential for that
contract), then Contract is not voidable because everyone is supposed to know
the law of his country. A and B make a contract grounded on the erroneous belief
that a specific debt is barred by the Indian Law of Limitation, then the contract is
not voidable.
2. Mistake of Foreign Law:– If a person takes part in a Contract without knowing
any specific provisions of Foreign Law (which is essential for that contract), then
that mistake is treated as a mistake of fact i.e, the contract is void if both the
parties under a mistake as to a foreign law because one can not be expected to
know the law of other foreign countries.
SEC 21 Effect of mistake of law-
A contract is not voidable because it was caused by a mistake as to any law in
force in India; but a mistake as to law not in force in India has the same effect as a
mistake of fact. Grant v. Borg– In this case, the person was not knowing the
clauses of the Immigration Act 1971, for staying beyond the time by the leave.
Here, he cannot apply for defense under the mistake of law.
SEC 22-
Contract caused by mistake of one party as to matter of fact- A contract is not
voidable merely because it was caused by one of the parties to it being under a
mistake as to matter of fact. The State of Maharashtra v. Mayer Hans George– In
this case, A is an officer of the court and he is ordered to arrest Y. A arrests Z by
15 Contract 1
mistake, as he believes Z is Y. Here, A can take the base of bonafide intention as a
defense in the mistake.
Common Mistake
When both parties are mistaken for the facts related to the subject matter of the
agreement. The court can declare the entire agreement as void in such kind of
mistake. If the contract contains a small error relating to the subject matter, then
there is a very less chance that the court will rule that the contract is void. If any
part of the contract that does not contain a mistake is still valid.
Conclusion
All agreements are contracts if they are made with the free consent of parties
who are legally able to enter into contracts, for a legitimate consideration, and
with a lawful intent, according to Section 10 of the Indian Contract Act, 1872. The
Indian Contract Act’s Section 14 states that, “Subject to the provisions of Sections
20, 21, and 22, consent is deemed to be free where it is not the result of error.”
There are two different kinds of errors: legal errors and factual errors. Mistakes in
fact are acceptable justifications for failing to fulfill contractual obligations, while
mistakes in law are not acceptable justifications.
OR
Answer :-
Definition of Mistake
‘Mistake’ is not defined in the Indian Contract Act. Section 20, 21 and 22 deals
with the concept related to mistake. ‘Mistake’ can be defined as any action,
decision or judgement that produced an unwanted and unintentional result. A
Mistake is said to have occurred where parties intending to do one thing by error
do something else. Phillips v. Brooks Ltd is an English contract law case
concerning mistake. It was held in this case that a person is deemed to contract
with the person in front of them unless they can substantially prove that they
instead of them intended to deal with another person.
Types of Mistake
A mistake is of two types:
• Mistake of Law,
• Mistake of Fact.
Mistake of Law
Mistake of Law means any contract which is performed by parties without
knowing the law (or by ignoring the law), which is essential for that
contract. Section 21 of the Indian Contract Act deals with ‘effect of mistake as to
law’.
16 Contract 1
Grant v. Borg
In this case, the person was not knowing the clauses of the Immigration Act 1971,
for staying beyond the time limit by the leave. Here, he cannot apply for defence
under the mistake of law.
Mistake of Law can be of two types:
• Mistake of Indian Law: “Ignorantia Juris non excusat” is a Latin maxim
which means “Ignorance of the law is not excused”. If a person takes
part in a contract without knowing any specific provisions of Indian Law
(which is essential for that contract), then Contract is not voidable
because everyone is supposed to know the law of his country. For
example: According to the provisions of Indian law, we have to recover
the amount of loan within 3 months from the due date, after that time-
barred debt is imposed. Now if we do not show any interest in the
recovery of loan amount during these 3 months because of not knowing
the law (mistake of law), then we can not take it up as an excuse or
defence.
A and B make a contract grounded on the erroneous belief that a specific debt is
barred by the Indian Law of Limitation, then the contract is not voidable.
A murdered B, A cannot apply for the defence of mistake of law that is; he was
not aware of law related to the murder.
• Mistake of Foreign Law:- If a person takes part in a Contract without
knowing any specific provisions of Foreign Law (which is essential for
that contract), then that mistake is treated as a mistake of fact i.e, the
contract is void if both the parties under a mistake as to a foreign law
because one can not be expected to know the law of other foreign
countries.
Mistake of Fact
Mistake of fact means any contract which is performed by parties without
knowing any material fact (or ignoring the fact), which is essential for that
contract. Section 20 and 22 of the Indian Contract Act deals with ‘Mistake of Fact’.
Mistake of Fact is of three types: Bilateral mistake, Unilateral mistake and
Common mistake.
In the case of The State of Maharashtra vs Mayer Hans George, A is an officer of
the court and he is ordered to arrest Y. A arrests Z by mistake, as he believes Z is
Y. Here, A can take the base of bona fide intention as a defence in the mistake of
fact.
17 Contract 1
Bilateral Mistake
According to Section 20, “Where both the parties to an agreement are under a
mistake as to a matter of fact essential to the agreement, the agreement is void”.
In simple words, if parties are involved in an agreement without knowing any
essential facts related to the agreement, then it is considered as a Bilateral
Mistake and that agreement will be void. For example- A agrees to sell to B any
goods supposed to be on its way from America to Bombay. It is found that before
the day of the bargain, the ship containing goods had been cast away and the
goods were lost. But, neither party was aware of these facts. The agreement is
void.
A, being entitled to an estate of the life of B, agrees to sell it to C, B was dead at
the time of the agreement, but both parties were ignorant of the fact. The
agreement is void.
Essentials elements of Bilateral mistakes are:
(i) Both parties must be under a mistake.
(ii) The mistake must be of fact, not of law.
(iii) The mistake must be related to an essential fact.
What facts are essential in Bilateral Mistake?
Now, It is very important to know what are the essential facts which make an
agreement void. An agreement is a void where there is a bilateral mistake as to
the subject matter. A bilateral mistake as to the subject matter includes the
following:
1. Mistake as to the existence of subject matter.
2. Mistake as to the identity of subject matter.
3. Mistake as to the quantity of subject matter.
4. Mistake as to the quality of subject matter.
5. Mistake as to the price of subject matter.
6. Mistake as to the performance of subject matter.
Mistake as to the existence of subject matter
‘A’ and ‘B’ are involved in a contract to sell a horse in a specific amount. But,
horse dies before the contract is performed and both the parties (A and B) are
unaware of this fact that the horse does not exist. In this case, the Contract is
void.
Mistake as to the quantity of subject matter
‘A’ and ‘B’ made a contract in which a transaction of 200 pens in return of some
amount involves. But 100 pens are sold early by the brother of ‘A’ before the
18 Contract 1
contract could be performed and both the parties (A and B) were unaware of this
fact that only 100 articles do exist. In this case, the contract is void.
Mistake as to the quality of subject matter
‘A’ and ‘B’ made a contract together in which ‘A’ sold his car in return of some
amount to ‘B’. They believed that the car is for racing purpose but the car was for
tourism purpose. In this case, the Contract is void.
Mistake as to the price of subject matter
‘A’ and ‘B’ made a contract to sell things in consideration for some money which
was not a valid amount and both the parties (A and B) are unaware of this fact. In
this case, the Contract is void.
Matter as to the identity of subject matter
‘A’ and ‘B’ made a contract in which ‘A’ promise to sell his car to ‘B’. ‘A’ has two
different types of car (one for racing and other for tourism purpose). Here, the
real identity of the car is not clear and both the parties are thinking about
different types of car. In this case, the Contract is void.
In the case of Cundy v Lindsay, it is held that contract as a mistake as a matter of
identity will be automatically void.
Matter as to the possibility of subject matter
Sometimes, a contract is made but during the performance of the same, we come
to know that it is impossible to fulfil the performance of the contract. The
agreement is void where there is a mistake as to the possibility of performance.
Impossibility is an excuse for non-performance of a contract. Impossibility can be
of two types:
• Physical impossibility: Any performance of the contract when physically
impossible, can be taken up as an excuse for non-performance of duties
under a contract and contract will be void. For example- a painter made
a contract with a person to paint a house but before the performance of
duties, the house burns. Now, it is impossible for the painter to perform
his duties under the contract. Thus, it is considered as an excuse for non-
performance of duties.
• Legal impossibility: Any performance of the contract is when legally
impossible, can be taken as an excuse for non-performance of duties
under a contract and contract will be void. For example- any amendment
made by legislation which makes it impossible to fulfil the performance
of duties under the contract.
19 Contract 1
Unilateral Mistake
According to Section 22, a contract is not voidable merely because it was caused
by one of the parties to it being under a mistake as to a matter of fact.
Such a mistake does not invalidate the agreement. For example, ‘A’ and ‘B’ made
a contract in which only ‘A’ was under a misbelief for any product which is in the
transaction. Then, the contract is not voidable for ‘A’ and will be classified as a
valid contract.
Cases in which Unilateral Mistake makes a contract void and voidable
There are a few cases which make a contract void and voidable, merely by a
mistake of the fact of a one-party.
Unilateral Mistake makes a contract voidable
If any unilateral mistake is induced by fraud or misrepresentation, then the
contract is voidable for that party who has done the mistake in the contract. In
simple words, if ‘A’ creates such types of situations and do such types of activities
in order to deceive ‘B’ and ‘B’ has also done a mistake as a result of A’s action and
made a contract with ‘A’. Then, Contract will be voidable at the option of ‘B’.
Unilateral Mistake makes a contract void
Unilateral mistake makes a contract void in two cases:
1. Unilateral mistake about the nature of Contract: If a person wants to
enter a contract but he enters into an altogether different contract by
mistake. For example- Suppose, any illiterate person gives thumbprint on
any papers by mistake, then that contract formed because of thumbprint
will be void.
2. Unilateral mistake about the identity of the person: If ‘A’ wants to enter
into a contract with ‘C’ but enters into a contract with ‘B’ by mistake.
Then, the contract will be void. For example- If ‘A’ is a regular customer
of ‘C’. He gives order to ‘C’ to deliver the goods. But he was not aware of
the fact that ‘B’ is the new owner of the shop and he makes a contract
with ‘B’ by mistake. In this case, the contract will be void.
Common Mistake
When both parties are mistaken for the facts related to the subject matter of the
agreement. The court can declare the entire agreement as void in such kind of
mistake. If the contract contains a small error relating to the subject matter, then
there is a very less chance that the court will rule that the contract is void. If any
part of the contract that does not contain a mistake is still valid.
Bell v Lever Brothers Ltd is an English contract law case decided by the House of
Lords. Within the field of mistake in English law, it holds that common
20 Contract 1
mistake does not lead to a void contract unless the mistake is fundamental to the
identity of the contract.
Conclusion
According to Section 10 of the Indian Contract Act, 1872 ‘All agreements are
contracts if they are made by the free consent of parties competent to contract,
for a lawful consideration and with a lawful object’. According to Section 14 of the
Indian Contract Act, ‘Consent is said to be free when it is not caused by mistake
subject to provision of Section 20, 21 and 22. The mistake can be of two types:
Mistake of law and mistake of fact. The mistake of fact is an excuse under non-
performance of duties under contract but the Mistake of law is not an excuse
under non-performance of duties under the contract.

12. Misrepresentation.
Answer :-
Misrepresentation is defined under Section 18 of the Indian Contract Act, 1872
which says, a misrepresentation is a form of a statement made preceding to the
contract being completed. There are two varieties of statement that can be
performed before a contract is formed, these will either:
1. Form part of the contract.
2. Not form part of the contract, therefore it becomes a representation.
Concept of Misrepresentation
A representation is said to be such statement which generates the entry into a
contract but is not a part of a term of the contract.
Misrepresentation is about giving of inaccurate information by one party (or their
agent) to the other before the contract is made which induces them to make the
contract. If a person makes a contract in reliance on misrepresentation and has to
face loss as a result, they can revoke the contract or claim damages.
Types of Misrepresentation
There are three types of misrepresentation present in the contract:
• Fraudulent misrepresentation
Fraudulent misrepresentation will happen when a false representation is made
and the party making the representation let say X knew it was false or was
reckless as to whether it was correct or incorrect- the lack of an accurate belief in
its truth will present it a fraudulent one. If A honestly believes the statement to
be true it cannot be a fraudulent misrepresentation, negligence in creating a false
statement will not result in fraud. However, if it can be shown that A suspected
21 Contract 1
that the statement might be incorrect or wrong, but made no enquiries to check
the position, that will be sufficient. It will not be mandatory to prove a dishonest
motive.
• Negligent misrepresentation
Negligent misrepresentation under the Misrepresentation Act 1967 (MA 1967)
befalls where a declaration is made by one contracting party to another
negligently or without reasonable grounds for believing its truth. The test is an
impersonal one.
There is no obligation to establish fraud. If the innocent party can prove the
statement was false, it will be for the maker of the statement to establish that it
rationally believed in the truth of the statement (that is, the representation).
A solution for negligent misrepresentation remain at common law, however, its
use in contractual situations has been considerably lessened as a result of Section
2(1) of the MA 1967.
• Innocent misrepresentation
Misrepresentation made completely without fault can be described as an
innocent misrepresentation.
If X is unable to show it had objective grounds to believe its declaration was true
the misrepresentation will be fraudulent or negligent.
OR
Answer :-
Definition of Misrepresentation in Indian Contract Act
Section 18 of the Indian Contract Act of 1872 addresses the concept of
misrepresentation. It defines misrepresentation as a statement made before the
completion of a contract. Section 19 of the Act states that misrepresentation can
render a contract voidable.
Statements made before the formation of a contract can fall into two categories:
• Statements that become a part of the contract.
• Statements that are not part of the contract are considered
representations.
However, the presence of misrepresentation does not automatically make a
contract voidable. There are certain conditions:
• The contract is still valid if ordinary diligence could have discovered the
statement.
• If the statement does not influence the consent of the party to whom it was
made, the contract remains unaffected.
22 Contract 1
An example of a misrepresentation case is Derry v. Peek. In this case, the
defendant, who owned a tramways company, issued a notice claiming they had
received permission for steam trams when the permission was still pending. The
defendant genuinely believed that the approval was a mere formality. The
plaintiff purchased shares in the company based on this statement, but the
permission was ultimately not granted, leading to financial harm. The court ruled
that the defendant company was not liable as they genuinely believed in the
accuracy of the statement.
It is important to note that the burden of proof for establishing misrepresentation
under Contract Law lies with the party alleging it.
Essentials of Misrepresentation
For a misrepresentation to occur, the following elements must be present:
• The false representation of a fact: There must be a statement or assertion
that is untrue or misleading.
• Causal link to consent: The false representation must be a material factor
that influences the party’s consent.
• Intention to induce: The statement should be made to deceive or induce
the other party into entering the contract.
• Timing: The statement must be made before the contract is finalised or
concluded.
• Absence of deception: The statement should not be made to deceive the
other party intentionally.
In the case of Rickview Construction Co. v. Raspa, it was determined that when a
contract is formed based on misrepresentation, the disadvantaged party not only
has the right to void the contract but can also seek damages through legal action.

13. Quasi Contract.

Answer :-
Meaning of Quasi-Contract
A quasi contract means something with quasi ability, or something that appears
to be something, however, it is not truly so. A contract is a potential agreement,
oral or written, enforceable by using the law. A quasi-contract is a retroactive
association between two events with no previous obligations to one another. It is
a contract created by means of a court’s order in the absence of any agreement
between the parties.
23 Contract 1
Salient Facets of Quasi Contractual Rights
➢ A quasi-contract is not longer than an actual contract.
➢ It is no longer based upon the offer and acceptance rule.
➢ It does not occur from any formal agreement but is imposed by means of
law.
➢ It is a right that is reachable no longer against the whole world but against a
specific man or woman.
➢ It is based on the idea of equity, appropriate conscience, justice, and ideas
of herbal justice.
The Doctrine of Quasi Contracts
Unjust enrichment means that an individual shall not be allowed to enrich himself
at the expense of unknown parties. Quantum meruit or “the actual value of
services operate” determines the amount to be paid for services when no
contract exists or when there is doubt as to the amount due for the work carried
out but achieved under instances when charges ought to be expected.
Types of Quasi Contract
1. Supply of Necessities to Incapable Persons (Section 68):
If a man or woman is incapable of entering into a contract, or all people whom he
is legally sure to support is supplied by means of any other person with
necessaries, applicable to his condition in life, the man or woman who has
furnished such resources is entitled to be reimbursed from the property of such
an incapable person.
2. Payment by Way of a Fascinated Character (Section 69):
According to section 69, an individual who is willing in a monetary fee that anyone
else is bound to pay, and who, as a result, may pay it, is entitled to compensation
from the other.
3. Obligation to Pay Gratuitous Non-Acts (section 70):
According to section 70, when a person lawfully does or gives you something for
the other, no longer intending to do so gratuitously, and the person derives any
gain from it, he is responsible for compensating or fixing the factor so done or
delivered.
4. Responsibility of Finder of Goods (section 71):
According to section 71, a man or woman who finds goods of someone else and
takes them into his custody is a concern to identical accountability as the bailee is
sure to take a lot care of the items as a man of everyday prudence would.
In addition to that, he ought to make efforts to trace the owner. If not, he will be
responsible for one-sided conversation. Until the proprietor is observed, the
24 Contract 1
property will vest with the finder; he can sell in case items are perishable, the
owner cannot be found, the proprietor refuses to pay for the legal fees etc.
5. Payment of Delivery via Mistake or Coercion (section 72):
“Liability of individuals to whom cash is paid, or issue delivered by way of mistake
or coercion.” It is the capacity of the liability of the person to whom cash is paid
or matters delivered by using mistakes or beneath coercion, to repay the money
or return the goods to the proper owner.
Conclusion
A quasi-contract concludes that the principle of a quasi-contract is frequently
overlooked. However, it still holds an important place when you consider that the
precept is grounded on ideas of justice and equity. It can be concluded that quasi
contracts are no longer contracts as per the Indian Contract Act 1872. However,
several tasks are imposed with the aid of law and only in favourable situations.
Quasi-contracts only create duty so that there is no unjust enrichment on one
party.
A quasi-contract exists in the absence of a written contract. It may additionally be
a court docket ordered to keep away from one party gaining at the fee of another
party’s actions. However, the simple nature and essence of the principle remain
identical besides any drastic change.

14. Coercion.
Answer :-
Section 15 "Coercion" defined.
"Coercion" is the committing, or threatening to commit, any act forbidden by the
Indian Penal Code (45 of 1860) or the unlawful detaining, or threatening to
detain, any property, to the prejudice of any person whatever, with the intention
of causing any person to enter into an agreement.
Illustration
A, on board an English ship on the high seas, causes B to enter into an agreement
by an act amounting to criminal intimidation under the Indian Penal Code. (45 of
1860).
A afterwards sues B for breach of contract at Calcutta.
A has employed coercion, although his act is not an offence by the law of England,
and although section 506 of the Indian Penal Code (45 of 1860) was not in force at
the time when or place where the act was done.
25 Contract 1
OR
Answer :-
Coercion (Section 15)
Coercion means using force to compel a person to enter into a contract. So force or
threats are used to obtain the consent of the party under coercion, i.e it is not free
consent. Section 15 of the Act describes coercion as
• committing or threatening to commit any act forbidden by the law in the IPC
• unlawfully detaining or threatening to detain any property with the intention
of causing any person to enter into a contract
For example, A threatens to hurt B if he does not sell his house to A for 5 lakh
rupees. Here even if B sells the house to A, it will not be a valid contract since B’s
consent was obtained by coercion.
Now the effect of coercion is that it makes the contract voidable. This means the
contract is voidable at the option of the party whose consent was not free. So the
aggravated party will decide whether to perform the contract or to void the
contract. So in the above example, if B still wishes, the contract can go ahead.
Also, if any monies have been paid or goods delivered under coercion must be
repaid or returned once the contract is void. And the burden of proof proving
coercion will be on the party who wants to avoid the contract. So the aggravated
party will have to prove the coercion, i.e. prove that his consent was not freely
given.

15. Privity of Contract.

Answer :-
The doctrine of privity of contract is a fundamental principle in contract law that
governs the rights and obligations of parties to a contract. It means that only the
parties to a contract can enforce the terms of that contract.
This principle ensures that the contract remains a private agreement between the
parties and cannot be enforced by anyone else who is not a party to the contract.
Therefore, a third party who has not entered into a contract cannot enforce the
terms of that contract.
Illustrations of Privity of Contract
Example of an Employment Contract
A enters into a contract with B to provide employment services. The contract sets
out the terms and conditions of employment, including A’s duties, salary, and
benefits. If B breaches the contract, A can sue B for damages. However, if C, who
26 Contract 1
is not a party to the contract, suffers harm as a result of the breach, C cannot sue
B for a breach of contract.
Example of a Sale of Goods Contract
A enters into a contract with B to sell a product. The contract specifies the price,
quantity, and delivery date of the product. If B fails to deliver the product on the
agreed-upon date, A can sue B for breach of contract. However, if C, who is not a
party to the contract, suffers harm as a result of the breach, C cannot sue B for a
breach of contract.
Example of a Lease Contract
A enters into a contract with B to lease a property. The contract specifies the
terms of the lease, including the rent, duration of the lease, and maintenance
responsibilities. If B breaches the contract, A can sue B for damages. However, if
C, who is not a party to the contract, suffers harm as a result of the breach, C
cannot sue B for a breach of contract.
Example of an Insurance Contract
A enters into a contract with B to provide insurance coverage. The contract sets
out the terms of the coverage, including the premium, coverage limits, and
exclusions. If B fails to provide coverage for a covered loss, A can sue B for breach
of contract. However, if C, who is not a party to the contract, suffers harm as a
result of the breach, C cannot sue B for a breach of contract.
Example of a Construction Contract
A enters into a contract with B to build a house. The contract specifies the terms
of the construction, including the price, timeline, and quality standards. If B fails
to complete the construction according to the contract, A can sue B for breach of
contract. However, if C, who is not a party to the contract, suffers harm as a result
of the breach, C cannot sue B for a breach of contract.
OR
Answer :-
Doctrine of Privity of Contract
The Indian Contract Act. 1872, allows the ‘Consideration‘ for an agreement to
proceed from a third-party. However, a stranger (third-party) to consideration is
different from a stranger to a contract. The law does not allow a stranger to file a
suit on the contract. This right is available only to a person who is a party to the
contract and is called Doctrine of Privity of Contract.
Let’s understand this with the help of an example:
• Peter has borrowed some money from John.
• Peter owns a property and decides to sell it to Arjun.
27 Contract 1
• Arjun promises to pay John on behalf of Peter.
However, if Arjun fails to pay, then John cannot sue since Arjun is a stranger to the
contract. It is important to note that the Doctrine of Privity has exceptions which
allow a stranger to enforce a claim as given below.
Exceptions to the Doctrine of Privity of Contract
A stranger or a person who is not a party to a contract can sue on a contract in the
following cases:
➢ Trust
➢ Family Settlement
➢ Assignment of a Contract
➢ Acknowledgement or Estoppel
➢ A covenant running with the land
➢ Contract through an agent

16. Damages.
Answer :-
The party can ask for compensation for loss or damage caused by the breach of
contract. Remedy by way of damages is the most common remedy available to
the injured party. Damages can be ordinary damages, special damages, exemplary
damages, nominal damages, damage caused by delay, and pre-fixed damages.
The “Hadley vs. Baxendale” rule is important in the case of Suit for Damage.
It simply says that if there is any previous notice about special damages in the
contract, the injured party can only sue the other party for ordinary damages.

17. Proposal.
Answer :-
Proposal or Offer
According to the Indian Contract Act 1872, proposal is defined in Section 2 (a) as
“when one person will signify to another person his willingness to do or not do
something (abstain) with a view to obtain the assent of such person to such an act
or abstinence, he is said to make a proposal or an offer.”
Let us look at some features or essentials of such an offer
• The person making the offer/proposal is known as the “promisor” or the
“offeror”. And the person who may accept such an offer will be the
“promisee” or the “acceptor”.
28 Contract 1
• The offeror will have to express his willingness to do or abstain from doing an
act. Only willingness is not enough. Or simply a desire to do/not do something
will not constitute an offer.
• An offer can be positive or negative. It can be a promise to do some act, and
can also be a promise to abstain (not do) some act/service. Both are valid
offers.
Classification of Offer
There can be many types of offers based on their nature, timing, intention, etc. Let
us take a look at the classifications of offers.
General Offer
A general offer is one that is made to the public at large. It is not made any specified
parties. So any member of the public can accept the offer and be entitled to the
rewards/consideration. Say for example you put out a reward for solving a puzzle.
So if any member of the public can accept the offer and be entitled to the reward if
he finishes the act (solves the puzzle.)
Specific Offer
A specific offer, on the other hand, is only made to specific parties, and so only they
can accept the said offer or proposal. They are also sometimes known as special
offers. Like for example, A offers to sell his horse to B for Rs 5000/-. Then only B can
accept such an offer because it is specific to him.
Cross Offer
In certain circumstances, two parties can make a cross offer. This means both make
an identical offer to each other at the exact same time. However, such a cross offer
will not amount to acceptance of the offer in either case.
For example, both A and B send letters to each other offering to sell and buy A’s
horse for Rs 5000/-. This is a cross offer, but it will be considered as acceptable for
either of them.
Counter Offer
There may be times when a promise will only accept parts of an offer, and change
certain terms of the offer. This will be a qualified acceptance. He will want changes
or modifications in the terms of the original offer. This is known as a counteroffer. A
counteroffer amounts to a rejection of the original offer.
OR
Answer :-
According to Section 2(a) of the Indian Contract Act, 1872, “when one person
signifies to another his willingness to do or to abstain from doing anything, with a
29 Contract 1
view to obtaining the assent of that other to such act or abstinence, he is said to
make a proposal”.
A proposal must be definite and specific in its terms, and it should be
communicated to the other party with the intention of obtaining
their acceptance. Once the other party accepts the proposal, it becomes a
promise, and the terms of the contract bind the parties. If the proposal is not
accepted, it will be considered a mere invitation to offer, and it will not create any
legal obligation between the parties.
Examples
1. A company (A) offers to sell its products to another company (B) for a
certain price. The offer is made in writing and sent via email to company B.
This offer is a proposal, and if company B accepts the offer, it becomes a
binding contract.
2. A person (A) offers to sell their car to another person (B) for a certain
amount. The offer is made orally during a conversation between the two
parties. This offer is also a proposal, and if person B accepts the offer, it
becomes a binding contract.
3. A construction company (A) submits a proposal to a government agency (B)
for building a new bridge. The proposal includes the details of the project,
such as the cost, timeline, and specifications. This proposal is an offer to
enter into a contract with the government agency (B), and if the agency
accepts the proposal, it becomes a binding contract.

18. Minor.
Answer :-
Section 11 states that only persons who have attained majority according to the law
are competent to contract. Therefore, there must be a law that defines the age of
majority.
In India, the Indian Majority Act, 1875 declares the age of majority of all persons to
be 18 years. If a minor has a guardian or Court of Ward looking after him, his age of
majority becomes 21 years. Hence, any contract with a party below the age of 18
years is invalid as per the Act.
A very important case that had explained this issue is Mohiri Bibi v. Dharmodas
Ghose. In this case, a minor had borrowed some money from a money-lender by
mortgaging his house.
30 Contract 1
The money-lender moved to take possession of the minor’s house when he
defaulted payment. The court, however, said since an agreement with minor parties
is void, the money-lender could not enforce this contract.
Indian courts have repeatedly used this judgment to abrogate minors from
contractual obligations. Hence, minors cannot enter into agreements unless some
legal provisions allow them.
For example, a minor cannot transfer property as per the Transfer of Property Act.
He can, however, receive property from other persons under a legal contract.

19. Fraud.
Answer :-
As per section 17 of Indian Contract Act 1872: “Fraud Defined – Fraud means and
includes any of the following acts committed by a party to a contract, or with his
connivance, or by his agent1, with intent to deceive another party thereof or his
agent, or to induce him to enter into the contract.”
1) The suggestion, as a fact, of that which is not true, by one who does not believe
it to be true.
2) The active concealment of a fact by one having knowledge or belief of the fact
3) A promise made without any intention of performing it
4) Any other act fitted to deceive
5) Any such act or omission as the law specially declares to be fraudulent.
OR
Answer :-
Section 17 "Fraud" defined.
"Fraud" means and includes any of the following acts committed by a party to a
contract, or with his connivance, or by his agent , with intent to deceive another
party thereto of his agent, or to induce him to enter into the contract:—
(1) the suggestion, as a fact, of that which is not true, by one who does not
believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
Explanation.—Mere silence as to facts likely to affect the willingness of a person
to enter into a contract is not fraud, unless the circumstances of the case are such
31 Contract 1
that, regard being had to them, it is the duty of the person keeping silence to
speak , or unless his silence is, in itself, equivalent to speech.
Illustrations
(a) A sells, by auction, to B, a horse which A knows to be unsound. A says nothing
to B about the horses unsoundness. This is not fraud in A.
(b) B is As daughter and has just come of age. Here, the relation between the
parties would make it As duty to tell B if the horse is unsound.
(c) B says to A—"If you do not deny it, I shall assume that the horse is sound." A
says nothing. Here, As silence is equivalent to speech.
(d) A and B, being traders, enter upon a contract. A has private information of a
change in prices which would affect B is willingness to proceed with the contract.
A is not bound to inform B.

20. Injunction.
Answer :-
Injunction
An injunction is basically like a decree for specific performance but for a negative
contract. An injunction is a court order restraining a person from doing a particular
act.
So a court may grant an injunction to stop a party of a contract from doing
something he promised not to do. In a prohibitory injunction, the court stops
the commission of an act and in a mandatory injunction, it will stop the continuance
of an act that is unlawful.

21. Revocation.
Answer :-
Revocation of an offer means withdrawing or cancelling an offer before it is
accepted. Acceptance can also be revoked under certain circumstances.
Under the Indian Contract Act, 1872, an offer and acceptance form the basis of a
contract. An offer is a proposal made by one party to another, expressing a
willingness to enter into a contract on specific terms. Acceptance is the
agreement of the other party to the terms of the offer.
The Indian Contract Act provides for the following provisions regarding revocation
of offer and acceptance.
32 Contract 1
22. Economic Duress.
Answer :-
Economic duress
Economic duress refers to the coercion caused by putting the aggrieved party
under the fear of causing an economic loss. It is an illegitimate fear, caused by the
defendant party by initiating fear of terminating the already existing contract
which may cause monetary loss to the other party.
In the case of Pao On v. Lau Yiu Long (1979), the plaintiff agreed to sell his shares
and to protect the share value, the plaintiff and defendant agreed to retain 60%
of share value, but the defendant later refused to sell his shares. The Privy Council
in this case allowed the appeal and held that lower courts did not consider the
coercion to amount to duress (commercial pressure).
Economic duress also refers to lawful but unethical behaviour, when one party to
the contract refuses to pay as set by the terms of the contract could be economic
duress.

23. Wagering agreements.

Answer :-
Section 30. Agreements by way of wager, void.—Agreements by way of wager are
void; and no suit shall be brought for recovering anything alleged to be won on
any wager, or entrusted to any person to abide the result of any game or other
uncertain event on which any wager is made. Exception in favour of certain prizes
for horse-racing. This section shall not be deemed to render unlawful a
subscription or contribution, or agreement to subscribe or contribute, made or
entered into for or toward any plate, prize or sum of money, of the value or
amount of five hundred rupees or upwards, to be rewarded to the winner or
winners of any horse-race. Section 294A of the Indian Penal Code not affected.
Nothing in this section shall be deemed to legalize any transaction connected with
horse-racing, to which the provisions of section 294A of the Indian Penal Code (45
of 1860) apply.
OR
Answer :-
Agreements entered into between parties under the condition that money is
payable by the first party to the second party on the happening of a future
uncertain event, and the second party to the first party when the event does not
happen, are called Wagering Agreements or Wager.
33 Contract 1
24. Remission.
Answer :-
Remission
Remission means the acceptance of lesser sum than what was due from
promisor. According to the section 63, a person who has a right to demand the
performance of a contract may:
i. Remit or give up the whole or part of a debt.
ii. Extend the time for performance.
Example: A owes B Rs.5,000. A pays to B and B accepts in full satisfaction Rs.2000.
The whole debt is discharged.
Where a promise remits a part of the debt and gives a discharge for the whole
debt on receiving a smaller amount, such discharge is valid.

25. Contingent contracts.

Answer :-
Definition of Contingent Contract -
According to Section 31 of Indian Contract Act, 1872. A contingent contract is a
contract to do or not to do something , if some even, collateral to such contract
does or does not happen.
Example - A contracts to pay B RS. 10000 if B's house is burnt. This contingent
contract.
Elements of contingent contract –
following are the essential elements of Contingent Contract
1. There should be a contract to do or not to do something, if some event, does or
does not happen.
2. Event should be collateral to such contract.

• Enforcement of contracts contingent on an event happening - According

to Section 32 of the said Act, Contingent contracts to do or not to do
anything in an uncertain future event happens, cannot be enforced by law
unless and until that event has happened. If the event becomes impossible,
such contracts becomes impossible, such contracts become void.
Illustration :
A) A make 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 .
34 Contract 1
B) A makes a contract with B to sell a horse to B at a specified price, if C, to
whom the horse has been offered, refuses to buy him. The contract cannot
be enforced by law unless and until C refuses to buy the horse.
C) A contracts to pay B a sum of money when B marries C, C dies without
being married to B. The contract becomes void.
Elements
i) When any contract to do and if an uncertain future event happens,
cannot be enforced by law, unless and until that event has happened
ii) When any contract not to do anything in an uncertain future event
happens, cannot be enforced by law unless and until that event has
happened. become void -- If the event becomes impossible, such contract
becomes impossible.
• Enforcement of Contracts contingent on an event not happening (Section
33) 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.
Illustration
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.
Essentials -
i) Contingent contract to do anything if an uncertain future event does not
happen can be enforced when the happening of the event becomes
impossible and not before.
ii) Contingent contract 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.
• When event on which contract is contingent to be deemed impossible, if
it is the future conduct of a living person (Section 34) - If the future event
on which a contract is contingent is the way in which a person will act at an
unspecified time, the event shall be considered to become impossible when
such person does anything which renders it impossible that he should so
act within any definite time, or otherwise than under future contingencies.
Illustration
A agrees to pay B a sum of money if B marries C, C married D. The marriage
of B to C must now be considered impossible , although it is possible that D
may Die and C may afterwards marry B.
35 Contract 1
• When contracts become void which are contingent on happening of
specified event within fixed time (Section 35) - Contingent contracts to do
or not to do anything, if a specified uncertain event happens within a fixed
time become void if at the expiration of the time fixed such event has not
happened, or if, before the time fixed, such event becomes impossible.
When Contracts may be enforced, which are contingent on specified event
not happening within fixed time - Contingent contracts to do or not to do
anything if a specified uncertain event does not happen within a fixed time
may be enforced by law when the time fixed has expired and such event
has not happened or before the time fixed has expired if it becomes certain
that such event will not happen.
Examples
i) A promises to pay B a sum of money if certain ship returns within a year.
The contract may be enforced if the ship regards within the year and
becomes void if the ship is brunt with in the year.
ii) A promise to pay B a sum of money if a certain ship does not return
within a year. The contract may be enforced if the ship does not return
within a year or is burnt within the year
• Agreements contingent on impossible event void (Section 36) - Contingent
agreements to do or not to do anything if an impossible event happens are
void whether the impossibility of the event is known or not to the parties to
agreement at the time when it is made
Examples –
i) A agrees to pay B, 1000 rupees if two straight lines should enclose a
space. The agreement is void.
ii) A agrees to pay B 1000 rupees if B will marry A's daughter C. C was dead
at the time of the agreement the agreement is void

26. Exemplary damages.

Answer :-
Exemplary Damages
Exemplary damages are intended to give the punishment to the defendant an
example they are punitive and not intended to compensate the defendant for
loss, but rather to punish the defendant. It is punitive in nature.
36 Contract 1
27. Contracts that cannot be performed specifically.
Answer :-
Contracts Which Cannot be Specifically Enforced
There are some contracts which cannot be specifically enforced due to potential
restrictions and issues with the legality of the contract itself. For example, let’s
assume that John enters into a contract with Mary to render personal services to
her, such as creating a portrait of her dog. Mary cannot enforce performance
under the contract, as courts will simply offer compensation for any money that
Mary paid to John before he performed the job. Furthermore, any contract that
requires some sort of skill or knowledge, i.e. singing, playing an instrument, etc.,
cannot be specifically enforced.
There are several other reasons as to why courts will not enforce contracts, and
therefore, it is important to be mindful of such contractual issues so that you are
aware of your rights before attempting to bring a lawsuit for “specific
performance,” which is the court’s requirement that the breaching party perform
what is required of him or her in the contract.
Unenforceable Contracts
The following types of contracts cannot be enforced:
• A contract for the nonperformance (breach) in which compensation is
proper relief
• A contract that becomes too complex with too much detail involved
• A contract that involves personal skill or knowledge (as mentioned above)
• A contract that has uncertainty
• A contract that is revocable
• A contract that is made by a trustee who has no authority to enter into the
contract
• A contract involving a corporation or public company that is created for
special purposes
• A contract that involves the performance of continuous duty in which the
court cannot possibly supervise on an ongoing basis
Compensatory Relief
If the injured party can be made whole again by receiving compensation for the
non-performing party’s breach, then the court will not enforce the contract. Some
examples of this could be a contract for the mortgage of immovable property, the
contract for the sale of goods, and a contract for the repair, i.e. repair of
appliance, television, flooring, etc. Therefore, if the breaching party doesn’t
properly deliver the goods to the buyer, then the buyer can simply receive his or
37 Contract 1
her money back. Furthermore, if the breaching party doesn’t repair the broken
item, then the injured party can earn his or her money back, and subsequently
hire another professional to repair the broken item.
Complex Contracts
An example of this could be a construction project, in which the contract has
conflicting information. In this case, the court cannot possibly enforce such a
contract, as the details identified in the contract are either conflicting or are
otherwise too complex for a court to enforce.
Personal Skill or Knowledge
If the contract involves the personal skill or knowledge of one party, then the
contract cannot be enforced. As previously noted, some examples of this include
performance (acting, singing, instrumental), creating illustrations (drawings,
paintings, etc.), or something similar.
Uncertainty in Contracts
If a contract has any uncertain provisions, then the court will not enforce it. This
could include a contract that is not detailed enough, and doesn’t properly identify
the scope of work to be done.
Revocable Contract
If a contract is revocable, then the court cannot enforce it. For example, if the
parties explicitly agreed in the contract that it is revocable at any time, then the
court will not acknowledge the contract or require specific performance.
Trustee with no Authority
If a trustee enters into a contract when he or she has no authority to do so, then
the contract will be deemed invalid, and the court will not allow it nor will it
grant specific performance.
Special Purpose Contract
If a contract is entered into by or on behalf of a corporation or other public entity,
and is created for a special purpose, then it cannot be enforced by the court,
particularly if those entering into the contract on behalf of the corporation don’t
have the authority to do so.
Continuous Duty of Performance
If the duty of performance is to continue for more than three years, then the
court will not enforce the contract or require specific performance. Some courts
won’t require specific performance even if the length of time is less than 3 years.
An example of this would be the execution of a sale deed every year.
38 Contract 1
28. Kinds of government contracts.
Answer :-
Government contracts are contracts undertaken by the Government for varied
purposes like construction, management, maintenance and repairs, manpower
supply, IT related projects etc. The involvement of Central Government or State
Government or Government body in a contract makes it a government contract.
The party who executes the contract on the behalf of the government is referred
to as a contractor, for example Larsen and Turbo may act as a contractor for Tamil
Nadu Government for the construction of a flyover etc. Generally in a government
contract, opened tenders are floated through sealed biddings and request for
proposals may be invited. To participate in a Government contract, the supplier
would require a GST registration and must fulfill the eligbility criteria set forth in
the contract document. Now, let us look at the different types of government
contracts:
Fixed-Price Contracts
A fixed-price contract is a contract where the cost isn’t calculated based on the
time and resources used, which implies that such a contract is entered into, if the
cost of the project is already known. Certain provisions like contract change,
economic pricing, or defective pricing are sometimes included in the agreement.
Either of the parties can gain or lose from it. To illustrate, in case of an abrupt
increase in prices, the seller gets to lose a chunk of his margin while the buyer is
benefited as he got the bargain from the deal, and vice versa.
Cost Reimbursement Contracts
In complete contrast to a fixed-price contract, cost reimbursement contract
allows the contractor to claim all of his expenses(subject to conditions), along
with additional payments to make for a profit. The Government might be in the
receiving end of losses due to escalating costs, or the liability to pay even on
occasions when the task isn’t completed, though we may opine that this would be
a rare scenario. This kind of a contract is adopted where the costs are difficult to
be ascertained. In certain cases, the contractor would present an estimated cost.
If the cost exceeds the estimate, the government must approve the same, else
the contractor would be in a loss over the exceeded budget.
Incentive Contracts
Incentive contracts was introduced to motivate the contractors in performing
their work, by rewarding them with monetary incentives. An incentive contract
might be any of the ones mentioned below:
• Fixed price incentive contracts
39 Contract 1
• Cost plus incentive contracts
• Cost plus award fee contracts
• Performance incentive
• Delivery incentive
• Multiple incentive contracts
Indefinite-Delivery Contracts
An indefinite delivery contract takes place when the duration of the contract is
known, but the exact time of delivery is unknown. It is a contract which ensures
supply of indefinite quantity of services in a fixed period of time. This is generally
undertaken when the government is unsure about the quantity of services
required to complete the task. The average duration for completion of a contract
of this kind would be four years. There are three types of indefinite delivery
contracts:
• Definite quantity contract
• Requirements contract
• Indefinite quantity contract
Time and Materials Contract
A time and materials contract is only carried out in the absence of a thorough
knowledge of the duration or the cost to be incurred. This type of a contract
requires government surveillance to adjudge the efficiency of the work process.
This contract is only undertaken if there is no scope for implementing any of the
other contracts. Similar to fixed-price contracts, time and materials contract
includes a sealing price which the contractor exceeds only at his own risk.

29. Nature of Standard form of Contracts.

Answer :-
The standard form contracts are standardised contracts that include an extensive
range of phrases and situations in exceptional print, limiting and often excluding
legal responsibility beneath the contract. In addition, it gives the large employer a
unique opportunity to make the most of the individual’s weakness via enforcing
upon him terms that regularly seem like a sort of private law. It may match the
volume of exempting the business enterprise from all legal responsibilities
beneath the settlement. The battle against the abuse of this contract has, thus,
fallen to the courts.
40 Contract 1
The role of courts in case of Standard Form Contracts
There’s a lot of debate on a theoretical level whether or not, and to what extent,
courts need to enforce popular form contracts.
On the one hand, they undeniably satisfy an essential role of selling economic
performance.
On the other hand, there may be the capacity for inefficient and even unjust
phrases to be standard through signatories to those contracts. Such expression is
probably seen as unfair if they allow the vendor to avoid all legal responsibilities,
unilaterally alter phrases, or terminate the settlement.
Those terms regularly come within the shape of forum choice and mandatory
arbitration clauses; however, they aren’t confined to these clauses. Being within
the shape of forum choice and mandatory arbitration clauses could limit or
foreclose a party’s entry to the courts. The liquidated damages clauses set a
restriction to the amount that may be recovered or require a party to pay a
particular quantity.
They might be inefficient if they avoid the chance of terrible final results, such as
defective production, at the client who is not inside the high-quality role to take
precautions.
Issues Concerning Standard Form of Contracts
Mistakenly missing out to read clauses
Courts have held several times that contracts, even if entered into within the
general shape, are supposed to be executed and cannot be set aside until proven
to be entered into using fraud, misrepresentation, mistake, or coercion.
Unequal bargaining powers
Courts have ruled against those contracts that exploit the employees’ function
through employers. In the case of employment agreements between the agency
and employee, there’s a tendency to insert phrases and conditions favourable to
the employers, leaving no other alternative for the employees aside from
accepting it.
Irrational terms or unconscionable nature
Courts have refused to interfere in cases that judged the parties’ bargaining
power equal but otherwise.
The legal status of a standard form contract
The Indian contract system does not have any specific differentiation among
Standard Form Contracts (SFCs) and well-known agreements. The SFC is a form of
settlement governed by the laws provided for popular contracts in the Indian
Contract Act, 1872.
 41 Contract 1
Due to heavy commercial improvement, those kinds of contracts have to become
familiar and are completed in huge numbers nowadays.
Why do people accept a standard form contract?
• The first reason people are given the Standard Form Contract is that they don’t
examine the settlement clauses very well. Even after analysing, they don’t
consider it worth giving a lot of time writing down the clauses.
• In some contracts, there are clauses like if you are given a set of phrases and
circumstances, they may tell the whole terms and conditions of the agreement.
• A Standard Form Contract is typically cognizant of the charge noted in the
agreement; it doesn’t genuinely care about different specific clauses that are
probably exploitative.
• The party creates a manufactured pressure by another party to sign a Standard
Form Contract, stating that all negotiations and terms had been discussed orally
and explained to them earlier. So it becomes abounding on the party to sign the
contract.
• The contract is either to be taken or to leave.
Ways to limit exploitation from Standard form contract:
• The party must give reasonable notice about the terms and conditions of the
contract before or while signing the contract.
• There must be a contractual document between the parties to enforce it in court.
• It should protect the interest of the weaker party.
Conclusion
In the Indian context, instances are entertained underneath the rules supplied by
the Indian Settlement Act.
There is no action made to specifically address the standard form contract. This
type of contract leads to the exploitation of the weaker party, and there’s no
particular rule for preventing this sort of action by the dominating party.
Take it or leave it, the nature of the settlement leads to the graduation of some
instances in court dockets in which there’s an instantaneous urge to offer justice
to the weaker party without knowing the specific clauses entered into the
settlement.