Contract

Q1. What is wagering agreement?

Ans:- The literal meaning of the word ‘wager’ is a bet which means something specified to be lost or
won as an outcome of a doubtful issue. Therefore, wagering agreements are nothing but betting
agreements. A wagering agreement is an agreement between two parties wherein one party
commits to pay a certain sum of money to another person on the occurrence or non-occurrence of a
future uncertain event. Such agreements are void. This means that none of the parties can file a suit
to recover the amount or anything won in such contracts. These agreements are based on chance.

Example

Suppose two people Steve and John come into an agreement that if Mumbai Indians win the next IPL
match, Steve will pay Rs. 2,000 to John. But if Mumbai Indians lose the match John will pay the same
amount to Steve.

Essential Elements of a Wagering Agreement.

Dependence on Uncertain event, Mutual chances of winning or losing, Parties have no interest in the
event, No control of parties on the event, Promise to pay money or money’s worth.

Q.2 Explain Void Agreement?

Ans:- “Void Agreement” is defined in Section 2(g) of the Indian Contract Act, 1872 as “an agreement
which is not enforceable by law is said to be void.”

A void contract means that a contract does not exist at all. The law can not enforce any legal
obligation to either party especially the disappointed party because they are not entitled to any
protective laws as far as contracts are concerned. An agreement to carry out an illegal act is an
example of a void contract or void agreement. For example, a contract between drug dealers and
buyers is a void contract simply because the terms of the contract are illegal. In such a case, neither
party can go to court to enforce the contract.

The mistake of Fact (Section 20): This provision states that if the parties to a contract are under a
mistake as to a matter of fact essential to the agreement. Therefore, any agreement with a bilateral
mistake is void.

Mistake of Law (Sections 23 & 24): If either the consideration or the object of a contract is illegal,
then the agreement is void as it defeats the provisions of the law. This applies to contracts which the
court may deem as immoral or opposed to public policy, such as fraudulent agreements, which may
cause financial loss to a person. However, if the legal part of the contract is severable from the illegal
part, then the former can be enforced in the court of law.

Agreements without Consideration (Section 25): This section provides that a contract without any
consideration would be rendered void unless it is a gift made on account of natural love and
affection; it is a time-barred debt, or it is compensation to someone who has voluntarily done
something for the promisor.

Agreements in restraint of marriage (Section 26): Any agreement which is made in restraint of
marriage, either partially or absolutely, of a person is void as it the policy of the law to protect a
person’s freedom to choose their marital partner.
Agreements in restraint of trade (Section 27): Agreements made in restraint of trade are also
rendered void as the law protects a person’s right to carry on their choice of trade or profession,
given that it is not illegal in nature. The exception to this section is laid out in the proviso to Section
27 pertaining to the sale of goodwill, which restrains a buyer from carrying on similar trade with
other sellers.

Q.3 Difference between coercion and undue influence?

Sr Coercion Undue Influence

no
1 The consent is obtained by the treat of The consent is obtained by dominating the
an offence and the person is forced to will of the giver
give his consent.
2 Coercion is mainly of a physical Undue influence is of a moral character.
character.
3 Psychological pressure or physical Use of mental pressure or moral force.
force
4 To compel a person in such a way that To take unfair advantage of his position
he enters into a contract with the
other party.
5 It is of criminal nature. It is not of criminal nature.
6 The Relationship between the parties The act of undue influence is done only when
is not necessary the parties to the contract are in relationship.

Q.4 explain the term minor agreement & with respect to the capacity of the party with suitable
case law?

Ans:- ‘Agreements entered into with Minors are void ab-initio’. A contract formed with a minor is
considered void. Any contract with a minor is void from the start; anyone under the age of 18 is not
capable of entering into a contract, so any agreement that has been formed by a minor is void ab-
initio (from the beginning). A minor is a person living in India who has not reached the age of
eighteen. According to Indian law, a minor's agreement is void, which means that it has no legal
validity and that it is void and invalid because neither party to the contract can enforce it.

The case of Mohori Bibee vs. Dharmodas Ghose, covers the entire scope of minors’ agreements. This
case primarily concerns a contract involving a minor or a contract with a minor. In India, an
agreement or contract with a minor (a person under the age of 18 or who has not legally reached
the age of 18) is void ab-initio (void from the beginning). These rules and regulations are in place
because, according to the law, such people cannot contract or agree to do so.

Facts of the case- The plaintiff, Dharmodas Ghosh, mortgaged his property to the defendant, a
moneylender when he was a minor. The defendant's attorney was aware of the plaintiff's age at the
time. The plaintiff eventually paid just Rs 8000 but refused to pay the remaining amount. The
plaintiff's mother was his next friend (legal guardian) at the time; therefore, he filed a lawsuit against
the defendant, claiming that because he was a minor at the time of the contract's formation, he was
not obligated by it.

In the judgment of the courts, anyone under the age of 18 or who has not reached the age of 18
(i.e., a minor) cannot intend to enter a contract or make major choices. This case has essentially
taught us that, because minors are legally incapable of giving their consent, they must be entitled to
or given protection in their relations with other adults. Following this instance, every attempt to
contact or agree with the minor was invalid and void from the beginning. Such contracts are "void
ab-initio”. In this case, the Privy Council announced the law that any minor's contact or agreement
is "completely void," and it has been carefully enforced and is still developing. Section 10[3] of the
Indian Contract Act of 1872 defines what forms a contract, while Section 11[4] specifies who is
competent to contract.

Q.5 consideration & its essential & its exception?

Ans:- Section 2(d) of the Act defines consideration as When at the desire of the promisor, the
promisee of any other person has done abstained from doing, or does, or abstain from doing, or
promises to do or to abstain from something such act or promise is called consideration for the
promise.

Consideration is one of the most essential element for formation of contract it means something in
return, it is price paid for the contract it must be lawful. A contract without consideration is void
therefore it has been enshrined in the maxim that EX NUDO PACTO NON ORITUR ACTIO.

Which means out of nude fact, no cause of action arises, in other words contract without
consideration is void.

Essentials of consideration

1. It must knew at the desire of promisor.

2. It may move from promisee of another person (privity of consideration)
3. It must be real and not illusionary.
4. It need not be adequate.
5. It may be past, present or future.
6. It must be illegal, immoral, or opposed to public policy.

Exceptions of consideration

1) Love and affection according to section 25(1) an agreement between two relations in love
and affection is valid even without consideration, when the promise is made in favour of
near relation on account of natural love and affection is valid without consideration.

Blood relation or those related to marriage but would not include those relations which are
not near and only remotely entitled to inherit.
Eg:- Amitabh a parent promised his son Abhi to pay fees one lakh in writing this promise is
enforceable.

2) Compensation for voluntary services

Section 25(2) states about an agreement without consideration is void unless it is a promise
to compensate wholly or in part a person who has already voluntarily done something for
the promisor or something which the promisor was legally compellable to do. This will not
be void for want of consideration A promise to pay for past services is legally binding.
 Eg:- Ajay promised to pay Rs. 10,000 to the person who had handed over the missing bag is
enforceable.

3) Promise to pay time bared debt

A debt bared by limitations is declared bad if the debtor call his authorise agent makes the
promise to repay it, it’s a contract without consideration. It is valid and enforceable.
As per section 25(3) provides that agreement without consideration is void it is a promise
made in writing and signed by the person to be charged there with to pay wholly or in part
the debt which the creditor might have enforced payment but for the law for the limitation
of suits
Eg:- Raj owes Rs 5000 to Vijay but the debt is bared by the limitation act, Raj signs a written
promise to pay Vijay Rs. 5000 on account of the debt this will be valid contract and shall not
be void for what of consideration.

4) Beneficiary of the trust.

5) Marriage Settlement
6) Assignment of the contract
7) Contract through an agent.

Q.6 Explain the term offer/proposal & its essential?

Ans:- The entire process of entering into a contract begins with the proposal or an offer made by
one party to another. The proposal must be accepted to enter into an agreement.

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.”

Essentials of Offer/Proposal

1. There must be two parties

There have to be at least two parties a person making the proposal and the other person agreeing to
it. All the persons are included i.e, Legal persons as well as artificial persons.

2. Every proposal must be communicated

Communication of the proposal is mandatory. An offer is valid if it is conveyed to the
offeree. The communication can either be express or implied. It can be communicated by
terms such as word of mouth, messenger, telegram, etc. Section 4 of the Indian Contract Act
says that the communication of a proposal is complete when it comes to the awareness of
the person to whom it is made.
Example
‘A’ proposes, to sell a car to ‘B’ at a certain price. Once ‘B’ receives the letter, the proposal
communication is complete.
 3. It must create Legal Relations
An offer must be such that when accepted it will result in a valid contract. A mere social
invitation cannot be regarded as an offer, because if such an invitation is accepted it will not
give rise to any legal relationship.
Example
‘A’ invited ‘B’ to dinner and ‘B’ accepted the invitation. It is a mere social invitation. And ‘A’
will not be liable if he fails to provide dinner to B.

4. It must be certain and definite

The terms of the offer must be certain and clear in order to create a valid contract, it must
not be ambiguous.

5. It may be specific or general

The specific offer is an offer that is accepted by any specific or particular person or by any
group to whom it is made. Whereas, The general offers are accepted by any person.

Q.7 Define term Contract and kinds of contract?

Ans:- The Indian Contract Act, 1872 defines the term “Contract” under its section 2 (h) as “An
agreement enforceable by law”. A contract is a legally enforceable agreement that creates, defines,
and governs mutual rights and obligations among its parties.

Kinds of contract

1. Valid Contract:- A contract is said to be valid if it can be enforceable in the court of law. A
contract to be enforceable it must contain the consequence stated in section 10 of Indian
Contract Act, 1872. A contract is said to be valid if two or more confident parties freely
consent to enter into an agreement not declare void with a lawful object for a lawful
consideration an agreement should not be void.

2. Void Contract :- A contract which is not enforceable by law is a void contract it is an

agreement without any legal effect and its void ab initio or it becomes void subsequently
contract with minor is also void.

3. Voidable Contract :- Voidable contracts are those contracts that can be made void on the
will of one of the parties. In these scenarios, generally, consent is not free and it is obtained
under coercion (Section 15), undue influence (Section 16), fraud (Section 17) and
misrepresentation (Section 18). Here, the party defrauded or unduly influenced has the
option to make the contract void.

4. Unenforceable Contract:- If a contract is found to be unenforceable, the court will not order
one party to act or compensate the other for failing to meet the contract’s requirements.
While the elements of an enforceable contract (offer, acceptance, and consideration) appear
straightforward, there are severe enforceability standards. A contract can be declared void
for a variety of reasons, including the circumstances surrounding the signing, the contents of
the agreement, or events that occur after the contract is signed.
 5. Illegal Contract:- Contracts that violate the law of the land are illegal contracts. Section 10
states that the object or consideration of a contract should not be unlawful. Thus, Section 10
prohibits illegal contracts. For example, contract killings facilitated by contracts for murder
are illegal as murder is a crime under Section 302 of the Indian Penal Code.

6. Contingent Contract:- Contingent Contracts in simple words means these are those contracts
where a promise is conditional and based on some happening and non-happening of some
uncertain future event, the contract shall perform. The contracts of insurance, guarantee,
and insurance are some examples of contingent contracts.

Q.8 Define term Contract and its essential?

Ans:- 1. Agreement − For a valid contract, agreement is the most essential element, which consists
of offer and acceptance.

2. Two parties − Minimum two parties are required for a contract. One will offer the contract and the
other will accept the contract.

3. Free consent − Consent is said to be free consent, if it is not created by force, needless influence,
cheating, misrepresentation or fault.

4. Legal relationships − These are must for parties to be in a contract because agreements are not
enforceable by law.

5. Capacity of contract − Ability of person/party to enter into a valid contract.