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UNIT I:
INDIAN CONTRACT ACT

1Q. Define contract? Discuss the essential elements of a valid contract?

(Or)
Law of contract is not the whole of law of agreement nor whole law of
obligation. Discuss enumerating the essentials of a valid contract?
(Or)
The parties to a contract in an essence make the law for themselves?
(Or)
What is the nature and the object of contract?

Ans: Meaning: “A contract is an agreement made between two (or) more

parties which the law will enforce.”

Definition: According to section 2(h) of the Indian contract act, 1872. “An
agreement enforceable by law is a contract.”
According to SALMOND, a contract is “An agreement creating and defining
obligations between the parties”.

Essential elements of a valid contract:

According to section 10, “All agreements are contracts if they are made by
the free consent of the parties competent to contract, for a lawful
consideration and with a lawful object and not here by expressly declared to
be void”. In order to become a contract an agreement must have the
following essential elements, they are follows:

1) Offer and acceptance:

· To constitute a contract there must be an offer and an acceptance of that
offer. The offer and acceptance should relate to same thing in the same sense.
There must be two (or) more persons to an agreement because one person
cannot enter into an agreement with himself.

2) Intention to create legal relationship:

· The parties must have intention to create legal relationship among them.
Generally, the agreements of social, domestic and political nature are not a
contract. If there is no such intention to create a legal relationship among the
parties, there is no contract between them.

Example: BALFOUR (vs) BALFOUR (1919)

DEEPTI SINGH
MCOM, MBA, MPhil, LLB, PhD
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Facts: A husband promised to pay his wife a household allowance of L 30

(pounds) every month. Later the parties separated and the husband failed to
pay the amount. The wife sued for allowance.
Judgment: Agreements such as there were outside the realm of contract
altogether. Because there is no intention to create legal relationship among
the parties.

3) Free and Genuine consent: The consent of the parties to the agreement
must be free and genuine. Free consent is said to be absent, if the agreement
is induced by a) coercion, b) undue influence, c) fraud, d) Mis-
representation, e) mistake.

4) Lawful Object: The object of the agreement must be lawful. In other

words, it means the object must not be (a) Illegal, (b) immoral, (c) opposed
to public policy. If an agreement suffers from any legal flaw, it would not be
enforceable by law.

5) Lawful Consideration: An agreement to be enforceable by law must be

supported by consideration. Consideration means “an advantage or benefit”
moving from one party to other. In other words, “something in return”. The
agreement is enforceable only when both the parties give something and get
something in return. The consideration must be real and lawful.

6) Capacity of parties: (Competency) The parties to a contract should be

capable of entering into a valid contract. Every person is competent to
contract if
(a) He is the age of majority.
(b) He is of sound mind and
(c) He is not dis-qualified from contracting by any law.
The flaw in capacity to contract may arise from minority, lunacy, idiocy,
drunkenness, etc.,

7) Agreement not to be declared void: The agreements must not have been
expressly declared to be void u/s 24 to 30 of the act. Example: Agreements in
restraint of trade, marriages, legal proceedings, etc.,

8) Certainty: The meaning of the agreement must be certain and not be

vague (or) indefinite. If it is vague (or) indefinite it is not possible to ascertain
its meaning. Example ‘A’ agrees to sell to ‘B’ a hundred tones of oil. There
is nothing whatever to show what kind of a oil intended. The agreement is
void for uncertainty.

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MCOM, MBA, MPhil, LLB, PhD
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9) Possibility of performance: The terms of an agreement should be capable

of performance. The agreement to do an act impossible in itself is void and
cannot be enforceable.
Example: ‘A’ agrees with ‘B’, to put life into B’s dead wife, the agreement is
void it is impossible of performance.

10) Necessary legal formalities: According to Indian contract Act, oral (or)
written are perfectly valid. There is no provision for contracting being
written, registered and stamped. But if is required by law, that it should
comply with legal formalities and then it should be complied with all legal
(or) necessary formalities for its enforceability.

2Q. Define offer (OR) proposal? Explain the legal rules as to a valid offer
also discuss the law relating to communication of offer and revocation of
offer?
Ans: Definition: According to section 2(a) of Indian contract act, 1872,
defines offer as “when one person signifies to another his willingness to do
(or) to abstain from doing anything with a view to obtaining the assent of
that other to, such act (or) abstinence, he his said to make a proposal”.

Legal rules (OR) Essential elements of a valid offer / proposal:

1) Offer must be capable of creating legal relations: A social invitation, even

if it is accepted does not create legal relationship because it is not so intended
to create legal relationship. Therefore, an offer must be such as would result
in a valid contract when it is accepted.

2) Offer must be certain, definite and not vague: If the terms of the offer are
vague, indefinite, and uncertain, it does not amount to a lawful offer and its
acceptance cannot create any contractual relationship.

3) Offer must be communicated: An offer is effective only when it is

communicated to the person whom it is made unless an offer is
communicated; there is no acceptance and no contract. An acceptance of an
offer, in ignorance of the offer can never treated as acceptance and does not
create any right on the acceptor.

Example: LALMAN SHUKLA (VS) GAURI DATT. (1913)

Facts: ‘S’ sent his servant, ‘L’ to trace his missing nephew. He then
announced that anybody would be entitled to a certain reward. ‘L’ traced
the boy in ignorance of his announcement. Subsequently, when he came to
know of his reward, he claimed it.
Judgment: He was not entitled fro the reward.
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MCOM, MBA, MPhil, LLB, PhD
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4) Offer must be distinguished from an invitation to offer: A proposer/offer

must be distinguished from an invitation to offer. In the case of invitation to
offer, the person sending out the invitation does not make any offer, but only
invites the party to make an offer. Such invitations for offers are not offers
in the eyes of law and do not become agreement by the acceptance of such
offers.
Example: Pharmaceutical society of Great Britain (vs) Boots cash chemists
(1953).
Facts: Goods are sold in a shop under the ‘self service’ system. Customers
select goods in the shop and take them to the cashier for payment of price.
Judgment: The contract, in this case, is made, not when a customer selects
the goods, but when the cashier accepts the offer to buy and receives the
price.

5) Offer may be expressed (or) implied: An offer may be made either by

words (or) by conduct. An offer which is expressed by words (i.e.., spoken or
written) is called an ‘express offer’ and offer which is inferred from the
conduct of a person (or) the circumstances of the case is called an ‘implied
offer’.

6) Offer must be made between the two parties: There must be two (or) more
parties to create a valid offer because one person cannot make a
proposal/offer to him self.

7) Offer may be specific (or) general: An offer is said to be specific when it is

made to a definite person, such an offer is accepted only by the person to
whom it is made. On the other hand general offer is one which is made to a
public at large and maybe accepted by anyone who fulfills the requisite
conditions.

Example: Carilill (vs) Carbolic Ball company (1893).

Facts: A company advertised in several newspapers is that a reward of L 100
(pounds) would be given to any person contracted influenza after using the
smoke ball according to the printed directions. Once Mr.Carilill used the
smoke balls according to the directions of the company but contracted
influenza.
Judgment: she could recover the amount as by using the smoke balls she
accepted the offer.

8) Offer must be made with a view to obtaining the assent: A offer to do (or)
not to do something must be made with a view to obtaining the assent of the

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MCOM, MBA, MPhil, LLB, PhD
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other party addressed and it should not made merely with a view to
disclosing the intention of making an offer.

9) Offer must not be statement of price: A mere statement of price is not

treated as an offer to sell. Therefore, an offer must not be a statement of
price.

Example: HARVEY (VS) FACEY (1893):

Facts: Three telegrams were exchanged between Harvey and Facey.
(a) “Will you sell us your Bumper hall pen? Telegram lowest cash price-
answer paid”. [Harvey to Facey].
(b) “Lowest price fro bumper hall pen L 900 (pounds)”. [ Facey to Harvey ]
(c) “We agree to buy Bumper Hall pen for the sum of L 900 (pounds) asked
by you”. [ Facey to Harvey]
Judgment: There was no concluded contract between Harvey and Facey.
Because, a mere statement of price is not considered as an offer to sell.

10) Offer should not contain a term “the non-compliance” of which may be
assumed to amount to acceptance.

COMMUNICATION OF OFFER AND REVOCATION OF OFFER:

An offer, its acceptance and their revocation (withdrawal) to be complete

when it is communicated to the offeree. The following are the rules regarding
communication of offer and revocation of offer:

(a) Communication of offer:

i) The communication of an offer is complete when it comes to the knowledge
of the person to whom it is made.
ii) An offer may be communicated either by words spoken (or) written (or)
it may be inferred from the conduct of the parties.
iii) When an offer/proposal is made by post, its communication will be
complete when the letter containing the proposal reaches the person to whom
it is made.
(b) Revocation of offer: A proposal/offer may be revoked at anytime before
the communication of its acceptance is complete as against the proposer, but
not afterwards.

3Q. “An acceptance to be effective must be communicated to the offeror”.

Are there any exceptions to this rule?
(OR)
Define acceptance? Explain the rules regarding a valid acceptance?

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MCOM, MBA, MPhil, LLB, PhD
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Ans: Definition:
According to section 2(b) of the Indian contract Act, 1872, defines an
acceptance is “when the person to whom the proposal is made signifies is
assent thereto, the proposal is said to be accepted becomes a promise”.
On the acceptance of the proposal, the proposer is called the
promisor/offeror and the acceptor is called the promise/offeree.

Legal rules as to acceptance: A valid acceptance must satisfy the following

rules:

1) Acceptance must be absolute and unqualified:

An acceptance to be valid it must be absolute and unqualified and in
accordance with the exact terms of the offer. An acceptance with a variation,
slight, is no acceptance, and may amount to a mere counteroffer.

2) Acceptance must be communicated to the offeror:

For a valid acceptance, acceptance must not only be made by the offeree but
it must also be communicated by the offeree to the offeror. Communication
of the acceptance must be expressed or implied. A mere mental acceptance
is no acceptance.

3) Acceptance must be according to the mode prescribed (or) usual and

reasonable manner: If the offeror prescribed a mode of acceptance,
acceptance must give according to the mode prescribed. If the offeror
prescribed no mode of acceptance, acceptance must give according to some
usual and reasonable mode. If an offer is not accepted according to the
prescribed (or) usual mode. The proposer may within a reasonable time give
notice to the offeree that the acceptance is not according to the mode
prescribed. If the offeror keeps quiet, he is deemed to have accepted the
acceptance.

4) Acceptance must be given with in a reasonable time:

If any time limit is specified, the acceptance must be given with in that time.
If no time limit is specified, the acceptance must be given with in a reasonable
time.
Example: Ramsgate victoria Hotel Company (vs) Monteflore (1886)
Facts: On June 8th ‘M’ offered to take shares in ‘R’ Company. He received
a letter of acceptance on November 23rd. he refused to take shares.
Judgment: ‘M’ was entitled to refuse his offer has lapsed as the reasonable
period which it could be accepted and elapsed.

5) It cannot precede an offer:

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MCOM, MBA, MPhil, LLB, PhD
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If the acceptance precedes an offer, it is not a valid acceptance and does not
result in a contract. In other words, “acceptance subject to contract” is no
acceptance.

6) Acceptance must be given by the parties (or) party to whom it is made:

An offer can be accepted only by the person (or) persons to whom it is made.
It cannot be accepted by another person without the consent of the offeror.
Example: Boulton (vs) Jones (1857).
Facts: Boulton bought a hose-pipe business from Brocklehurst. Jones, to
whom Brocklehurst owed a debt, placed an order with Brocklehurst for the
supply of certain goods. Boulton supplied the goods even though the order
was not addressed to him. Jones refused to pay Boulton for the goods because
he, by entering into a contract with Brocklehurst, intended to set off his debt
against Brocklehurst.
Judgment: The offer was made to the Brocklehurst and it was not in the
power of Boulton to step in and accept. Therefore, there was no contract.

7) It cannot be implied from silence:

Silence does not amount to acceptance. If the offeree does not respond to
offer (or) keeps quiet, the offer will lapse after reasonable time. The offeror
cannot compel the offeree to respond offer (or) to suggest that silence will be
equivalent to acceptance.

8) Acceptance must be expressed (or) implied:

An acceptance may be given either by words (or) by conduct. An acceptance
which is expressed by words (i.e.., spoken or written) is called ‘expressed
acceptance’. An acceptance which is inferred by conduct of the person (or)
by circumstances of the case is called an ‘implied or tacit acceptance’.
Example: Carlill (vs) Carbolic Ball company (1893).
Facts: A company advertised in several newspapers is that a reward of L 100
(ponds) would be given to any person contracted influenza after using the
smoke ball according to the printed directions. Once Mr. Carlill used the
smoke balls according to the directions of the company but contracted
influenza.
Judgment: she could recover the amount as by using the smoke balls she
accepted the offer.

9) Acceptance may be given by performing some condition (or) by accepting

some consideration.

10) Acceptance must be made before the offer lapses (or) before the offer is
withdrawn.

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MCOM, MBA, MPhil, LLB, PhD
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4Q. Define consideration? What are the rules as to consideration?

Ans: Meaning: Consideration is a technical term used in the sense of quid-
pro-quo (i.e.., something in return). When a party to an agreement promises
to do something, he must get something in return. This “something” is
defined as consideration.
Definition: According to section 2(d) of the Indian contract Act, 1872, defines
consideration as “when at the desire of the promisor, the promise (or) any
other person has done (or) abstained from doing, (or) does (or) abstains from
doing, (or) promises to do (or) to abstain from doing, something, such act
(or) abstinence (or) promise is called a consideration for the promise”.
Example: Abdul Aziz (vs) Masum Ali (1914)
Facts: The secretary of a mosque committee filed a suit to enforce a promise
which the promisor had made to subscribe Rs.500/- for rebuilding a mosque.
Judgment: ‘The promise was not enforceable because there was no
consideration in the sense of benefit’, as ‘the person who promised gained
nothing in return for the promise made’, and the secretary of the committee
to whom the promise was made, suffered no detriment (liability) as nothing
had been done to carry out the repairs. Hence the suit was dismissed.

Essentials of a valid consideration: The following are the essentials of a valid

consideration (OR) legal rules as to consideration.

1. It may be past, present (or) future:

The words “has done (or) abstained from doing refer to past consideration.
The word “does (or) abstains from doing” refer to present consideration.
Similarly, the word “promises to do (or) to abstain from doing” refers to the
future consideration. Thus, the consideration may be past, present (or)
future.
2. It must move at the desire of the promisor:
In order to constitute a legal consideration, the act (or) abstinence forming
the consideration for the promise must move at the desire (or) request of the
promisor. If it is done at the instance of a third party (or) without the desire
of the promisor, it will not be a valid contract.
Example: Durga Prasad (vs) Baldeo (1880);
Facts: ‘B’ spent some money on the improvement of a market at the desire
of the collector of the district. In consideration of this ‘D’ who was using the
market promised to pay some money to ‘B’.
Judgment: The agreement was void being without consideration.

3. It must not be illegal, immoral (or) not opposed to public policy:

The consideration given for an agreement must not be unlawful, illegal,
immoral and not opposed to public policy. Where it is unlawful, the court
will not allow an action on the agreement.
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MCOM, MBA, MPhil, LLB, PhD
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4. It need not be adequate:

Consideration need not be any particular value. It need not be
approximately equal value with the promise for which it is exchanged. But it
must be something which the law would regard as having some value. In
other words, consideration, as already explained, it means “something in
return”. This means something in return need not be necessarily be an equal
in value to “something given”.

5. It must be real and not illusory:

Consideration must not be illegal, impossible (or) illusory but it must be real
and of some value in the eyes of law. The following are not real consideration:
(a)Physical impossibility, (b)legal impossibility, (c)uncertain consideration,
(d) illusory consideration.

6. It must move from the promise (or) any other person:

Under English law consideration must move from the promisee itself. But,
under Indian law, consideration move from the promisee (or) any other
person (i.e.., even a stranger). This means as long as there is a consideration
for a promise, it is immaterial who has furnished it. But the stranger to a
consideration will be sue only if he is a party to the contact.
Example: Chinnaya (vs) Ramayya (1882).
Facts: An old lady, by a dead of gift, made over certain property to her
daughter ‘D’, under the directions that she should pay her aunt, ‘P’ (sister
of old lady), a certain sum of money annually. The same day ‘D’ entered into
an agreement with ‘P’ to pay her the agreed amount later ‘D’ refused to pay
the amount on the plea that no consideration had moved from ‘P’ to ‘D’.
Judgment: ‘P’ was entitled to maintain suit as consideration had moved from
the old lady, sister of ‘P’, to the daughter, ‘D’.

7. It must be something the promisor is not already bound to do: A promise

to do what one is already bound to do, either by general law (or) under an
existing contract, is not a good consideration for a new promise, since it adds
nothing to the pre-existing legal or contractual obligation.

8. It may be an act, abstinence (or) forbearance (or) a return promise:

consideration may be an act, abstinence (or) forbearance (or) a return
promise. Thus, it may be noted that the following are good considerations
for a contract.
· Forbearance to sue.
· Compromise of a disputed claim.
· Composition with creditors.

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MCOM, MBA, MPhil, LLB, PhD
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EXAMPLE: - A promise to perform a public duty by a public servant is not

a consideration.

5Q.Define consideration? “A contract not supported by consideration is

unenforceable” discuss what are its exceptions”.
(Or)
“A contract without consideration is void”- Discuss its exceptions?
(Or)
“Insufficiency of consideration immaterial; but an agreement without
consideration is void”. Comment.
(Or)
Explain the term consideration and state the exceptions to the rule “No
consideration, no contract”
Ans: Meaning: -
Consideration is a technical term used in the sense of quid-pro-quo (i.e..,
some thing in return). When a party to an agreement promises to do
something, he must get something in return. This “something” is defined as
consideration.
Definition: -
According to section 2(d) of the Indian contract Act, 1872, defines
consideration as “when at the desire of the promisor, the promise (or) any
other person has done (or) abstained from doing, (or) does (or) abstains from
doing, (or) promises to do (or) to abstain from doing, something, such act
(or) abstinence (or) promise is called a consideration for the promise”.

Example: Abdul Aziz (vs) Masum Ali (1914)

Facts: The secretary of a mosque committee filed a suit to enforce a promise

which the promisor had made to subscribe Rs.500/- for rebuilding a mosque.
Judgment: ‘The promise was not enforceable because there was no
consideration in the sense of benefit’, as ‘the person who promised gained
nothing in return for the promise made’, and the secretary of the committee
to whom the promise was made, suffered no detriment (liability) as nothing
had been done to carry out the repairs. Hence the suit was dismissed.
Validity of an agreement without consideration: The general rule is that an
agreement made without consideration is void. In the following cases, the
agreement though made without consideration, will be valid and enforceable
according to section 25 and 185 are as follows: -

1. Nature love and affection: An agreement made without consideration is

valid if it is made out of love, nature and affection such agreements are
enforceable if
· The agreement is made in writing and registered.
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MCOM, MBA, MPhil, LLB, PhD
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· The agreement must be made between the parties standing in near relations
to each other and
· There must be nature, love and affection between the parties.
Example: Venkatswamy (vs) Rangaswamy (1903):
Facts: By a registered agreement, ‘V’, on account of nature, love and
affection for his brother, ‘R’, promises to discharge debt to ‘B’. If ‘V’ does
not discharge the debt.
Judgment: ‘R’ may discharge it and then sue ‘V’ to recover the amount.
Therefore, it is a valid agreement.
2. Compensation for past voluntary services: A promise made without
consideration is valid if, it is a person who has already done voluntarily done
something for the promisor, is enforceable, even though without
consideration. In simple words, a promise to pay for a past voluntary service
is binding.
3. Promise to pay Time-Bared debt: An agreement to pay a time-bared debt
is enforceable if the following conditions are satisfied.
· The debt is a time bared debt
· The debtor promises to pay the time barred debt.
· The promise is made in writing.
· The promise is signed by the debtor.
4. Completed gifts: The rule “No consideration – No contract” does not apply
to completed gifts. According to section 1 to 25 states “nothing in section 25
shall affect the validity, as between the donor and donee, of any gift actually
made”
5. Agency: According to section 185, no consideration is necessary to create
an agency.
6. Charitable subscription: Where the promisee on the strength of promise
makes commitments (i.e.., changes his position to his liability/detriment).
Example: Kedernath (vs) Ghouri Mohammed (1886).
Facts: ‘G’ had agreed to subscribe Rs.100/- towards the construction of a
town hall at Howrah. The secretary, ‘K’, on the faith of the promise, called
fro plans and entrusted the work to contractors and undertook the liability
to pay them.
Judgment: The amount could be recovered, as the promise resulted in a
sufficient detriment to the secretary. However, be enforceable only to the
extent of the liability incurred by the secretary. In this case, the promise,
even though it was gratuitous, became, enforceable because on the faith of
promise the secretary had incurred a detriment.

6Q. A stranger to a consideration can sue” – Are there any exceptions to this
rule?
Ans: Introduction: There is a general rule of law is that only the parties to a
contract can sue. In other words, if a person not a party to a contract, he
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MCOM, MBA, MPhil, LLB, PhD
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cannot sue. This rule is known as the “Doctrine of privity of contract”.

Privity of contract means relationship subsisting between the parties who
have entered into contractual obligations.

There are two consequences of doctrine of privity of contract they are

follows:
1) A person who is not a party to a contract cannot sue even if the contract
is for his benefit and he provided consideration.
2) A contract cannot provide rights (or) impose obligations arising under it
on any person other than the parties to it.
Example: Dunlop Pneumatic Tyre Co. Ltd (vs) Selfridge & Co. Ltd (1915).
Facts: ‘S’ bought tyres from the Dunlop Rubber company and sold them to
‘D’, a sub-dealer, who agreed with ‘S’ not to sell below Dunlop’s list price
and to pay the Dunlop company L 5 (pounds) as damages on every tyre ‘D’
undersold. ‘D’ sold two tyres at less than the list price and there upon, the
Dunlop Company sued him for the breach.
Judgment: The Dunlop Company could not maintain the suit as it was a
stranger to the contract.

Exceptions: The following are the exceptions to the rule that a stranger to a
contract cannot sue: -
1. A trust: In trust deed beneficiaries is allowed to sue the trustee for
enforcement of trustee’s duties even though they are not contracting
party. However, the name of the beneficiary must be clearly mentioned
in the contract.
Example: Gandy (vs) Gandy (1884):
Facts: A husband who was separated from his wife executed a
separation deed by which he promised to pay to the trustees all
expenses for the maintenance of his wife.
Judgment: This sort of agreement creates a trust in favor of the wife
and can be enforced.
2. Marriage settlements, partition (or) other family arrangements: When
an agreement is made in connection of marriage settlements, partitions
(or) other family arrangements and a provision is made for the benefit
of a person, he may sue although he is not a party to the agreement.
Example: Daropti (vs) Jaspat Rai (1905)
Facts: ‘J’s wife deserted him because of his ill treatment. ‘J’ entered
into an agreement with his father-in-law to treat her properly (or) else
pay her monthly maintenance. Subsequently, she was again ill-treated
and also driven out.
Judgment: she was entitled to enforce the promise made by ‘J’ to her
father.

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MCOM, MBA, MPhil, LLB, PhD
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3. Acknowledgement (or) Estoppel: The person, who becomes an agent

of a third party by acknowledgement (or) Estoppel, can be sued by
such third party.
4. Assignment of contract: Assignment means voluntary transfer of the
rights by a person to another. In such a case an assignee becomes
entitled to sue and enforce the rights which are assigned to him.
5. Contracts entered into through an agent: The principal enforces the
contract entered into by his agent provided the agent act within the
scope of his authority and in the name of the principal.
6. Covenants running with the land: In case of transfer of immovable
property, the purchaser of land (or) the owner of the land is bound by
certain conditions (or) covenants created by an agreement affecting
the land.
7Q. Define contract? Explain its kinds of contracts?
Ans: Meaning: “A contract is an agreement made between two (or) more
parties which the law will enforce.”
Definition: According to section 2(h) of the Indian contract act, 1872. “An
agreement enforceable by law is a contract.
According to SALMOND, a contract is “An agreement creating and defining
obligations between the parties”
Kinds of contracts: - Contracts may be classified according to their (a)
validity, (b) Formation, and(c) Performance.

(a)Classification according to validity:

1. A valid contract: A valid contract is an agreement which is binding and
enforceable. An agreement becomes a contract when all the essential
elements (i.e.., offer and acceptance, intention to create legal relationship
etc..,) are present, in such a case the contract is said to be valid.
2. A voidable contract: An agreement which is enforceable by law at the
option of one (or) more party thereto, but not at the option of the other (or)
others, is a voidable contract. This happens when the essentials elements of
a free consent are missing. When the consent of a party to a contract is said
to be not free, if it is caused by Coercion, Undue influence, Misrepresentation
(or) fraud, etc.,
3. A void contract: A void contract is really not a contract at all. The term
“void” means an agreement which is without any legal effect. In other words,
“an agreement not enforceable by law is said to be void”.
4. Illegal contracts: Some agreements are illegal in themselves (ex: -
contracts of immoral nature, opposed to public policy etc..,) Thus, all illegal
contracts are void but all void contracts are not illegal (ex: - A wagering
agreement, though void is not illegal).

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MCOM, MBA, MPhil, LLB, PhD
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5. An unenforceable contract: An unenforceable contract is one which

cannot be enforced in a court of law because of some technical defect such as
absence of writing (or) where the remedy has been barred by lapses of time.

(b) Classification according to their formation:

1. Express contract: An express contract is one, the terms of which are stated
in words, spoken (or) written at the time of the formation of the contract.
2. Implied contract: An implied contract is one in which the evidence of the
agreement is shown by acts and conduct of the parties, but not by words,
written (or) spoken. In other words where the offer (or) acceptance of any
promise made otherwise then in words, the promise is said to be implied
promise (or) implied contract.
3. Quasi-contract: In truth Quasi-contract is not a contract at all. A quasi-
contract is acts which are created by law. It does not have any essential
elements of a valid contract. It is not intentionally created by parties but it is
imposed by law. It is founded upon the ‘principles of natural justice, equity
and fair play’.

(c) Classification according to their performance:

1. Executed contract: “Executed” means that which is done. An executed
contract is one in which both the parties have performed their respective
obligation.
2. Executory contract: “Executory” means that which remains to be carried
into effect. An executory contract is one in which the parties have yet to
perform their obligations.
3. Unilateral (or) one-sided contract: in this type of contract, one party to a
contract has performed his part even at the time of its formation and an
obligation is outstanding only against the parties.
4. Bilateral contract (or) Two-sided contract: It is a contract in which the
obligations on the part of both the parties to the contract are outstanding at
the time of the formation of the contract.

8Q.Explain the term ‘MINOR’? Explain the legal rules regarding agreement
by a minor?
(Or)
What is the regal effect of a minor’s misrepresentation of his age while
entering into an agreement?
Ans: Definition: According to section 3, of the Indian majority act, 1875 ‘A
minor is a person who has not completed “18” years of age. However,
minority will continue up to “21” years in case, if Hon. court has appointed
guardian for a minor’s property’.
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MCOM, MBA, MPhil, LLB, PhD
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Legal rules regarding an agreement by a minor:

A minor is incompetent to contract u/s 11of the Indian contact act, 1872.
Minor’s incompetence is not a punishment but it is a protection given to
minors by law. The law becomes the guardian of minors to protect their
rights because their mental capacity is not well developed. The
following are the legal rules regarding minor’s agreement are as follows:

1. An agreement by minor is absolutely void: Where a minor is charged with

obligations and the other contracting party seeks to enforce these obligations
against minor, in such a case the agreement is deemed as void-ab-initio.
Example: Mohiri Bibi (vs) Dharmodas Ghose (1903).
Facts: A minor mortgaged his house in favor of money-lender to secure a
loan of Rs.20000/- out of which the mortgagee ( Dharmodas Ghose a money
lender) paid the minor a sum of Rs.8000/-. Subsequently, the minor sued for
setting a side the mortgage, stating that he was underage when he executed
the mortgage.
Judgment: The mortgage was void and, therefore, it was cancelled. Further
the money lender’s request for the repayment of the amount advanced to the
minor as part of the consideration for the mortgage was also not accepted.

2. He can be a promisee (or) a Beneficiary: Any agreement which is some

benefit to the minor and under which he is required to bear no obligation is
valid. Thus, a minor can be a beneficiary (or) a promisee.

3. His agreement cannot be ratified by him an attaining the age of majority:

An agreement by minor is void-ab-initio and therefore ratification by minor
is not allowed. There is a fundamental principal in law (i.e.., an agreement
Void-ab-initio cannot be validated by subsequent action).

4. If he has received any benefit under a void agreement, he cannot ask to

compensate (or) pay for it: Under section 64 and 65 of the act, provides a
minor cannot be ordered to make compensation for a benefit obtained in a
void agreement. Because section 64 and 65, which deals with restitution of
benefit.

5. Minor can always plead minority: A minor’s contract being void, any
money advanced to a minor on a promissory note cannot be recovered even
though a minor procures (or) take a loan by falsely representing that he is of
full age it will not stop him from pleading his minority in a suit, to recover
the amount and the suit will be dismissed. “The rule of estoppel cannot be
applied against a minor”.
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MCOM, MBA, MPhil, LLB, PhD
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Example: Leslie (vs) Shiell (1914).

Facts: ‘S’, a minor, by fraudulently representing himself to be of full age,

induced ‘L’ to lend him L 400 (pounds). He refused to repay it and ‘L’ sued
for his money.
Judgment: The contract was void and ‘S’ was not liable to repay the amount.

6. There can be no specific performance of the agreement entered into by

him as they are void-ab- initio: A contract entered into, on behalf of a minor
by his parent/guardian (or) the manager of his estate can be expressly
enforced by (or) against the minor, provide the contract is within the
authority of the guardian and for the benefit of the minor.

7. He cannot enter into a contract of partnership: A minor being incompetent

to contract but be a partner of a partnership firm, but u/s 30 of the Indian
partnership Act, provides he can be admitted for the ‘benefits of a
partnership’ with the consent of all the partners.

8. He can be an agent: A minor can be an agent. It is so because the act of

the agent is the act of the principal and therefore, the principal is liable to
the third parties for the act of a minor agent.

9. His parents/guardian is not liable for the contracts entered into by him:
The parents/guardian is not liable for the contract entered into by minor.
The parents can hold liable for contracts for their minor children only when
they are acting as agent.

10. A minor is liable in tort (A civil wrong): Minors are liable for negligence
causing injury (or) damage to the property that does not belongs to them.

11. A minor is liable for necessaries: Minor’s estate is liable for necessaries
supplied to minor during minority. Minor does not personally liable for the
supply of necessaries. The necessaries such as food, clothing, and shelter etc..,
necessaries also include ‘goods and services.

21Q. Person of unsound mind

Ans: According to section 12 of the Indian contract Act, 1872 “A person is
said to be of sound mind for the purpose of making a contract if, at the time
when he makes it, he his capable of understanding it and of forming a
rational judgment as to its effects upon his interests”. Soundness of mind of
a person depends on two facts:
1. Ability to understand the contract at the time of making.

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2. Ability to form a rational judgment about the effect of the contract on his
interest. Unsoundness may arise from idiocy, lunacy, drunkenness,
hypnotism, mental decay because of old age and delirium (high temperature)
etc., A person who is usually of unsound mind and occasionally of sound
mind can contract when he is of sound mind. A person who is usually of
sound mind and occasionally of unsound mind cannot contract when he is of
unsound mind. Thus, the burden of proof will be lie upon the person who
claims that he was not of sound mind at the time of making a contract.

9Q.Under what circumstances is the object (or) consideration of a contract

deemed unlawful? Illustrate with examples?

Ans: Meaning: Consideration is a technical term used in the sense of quid-

pro-quo (i.e.., some thing in return). When a party to an agreement promises
to do something, he must get something in return. This “something” is
defined as consideration. An agreement will not be enforceable if its objects
(or) the consideration are unlawful. According to section, of the Indian
contract Act, 1872. The consideration and objects are unlawful in the
following cases:
1. If it is forbidden by law: If the object (or) the consideration of an
agreement is forbidden by law, in such a case the agreement is deemed to be
unlawful and void. An act is forbidden by law if,
· It is punishable under the criminal law of the country. (or)
· It is prohibited by special legislations and regulations made by competent
authority under power derived from legislature.
Example: ‘A’ promises to obtain for ‘B’ an employment in the public service
and ‘B’ promises to pay Rs.1000/- to ‘A’. The agreement is void, as the
consideration for it is unlawful.
2. If it is defeating the provision of any law: If the object (or) consideration
of an agreement is of such a nature that, though not directly forbidden by
law, it would defeat the provisions of the law, in such a case the agreement is
deemed to be unlawful and void.
Example: An agreement between husband and wife to live separately is
invalid as being opposed to Hindu law.
3. If it is fraudulent: An agreement, whose object (or) consideration is to
defraud others, is unlawful and hence it becomes void.
Example: ‘A’, ‘B’, ‘C’ enters into an agreement for division among them of
gains acquired (or) to be acquired, by them by fraud. The agreement is void,
as its object is unlawful.
4. If it involves (or) implies injury to the person (or) property of another: If
the object (or) consideration of an agreement is to injure the person (or)
property of another is void. In such a case object (or) the consideration is
deemed to be unlawful.
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MCOM, MBA, MPhil, LLB, PhD
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Example: Ram Saroop (vs) Bansi Mandar (1915):

Facts: “B” borrowed Rs.100 from “L’ and executed a bond promising to
work for “L” without pay for a period of two years. In case of default, “B”
was to pay interest (at a very exorbitant rate) and the principal amount at
once.
Judgment: The contract was void as it involves injury to the person of “B”.
5. If the court regards it as immoral: An agreement, whose consideration and
object is immoral, is deemed to be illegal and void. The word immoral
includes sexual immorality. Hence its object (or) consideration is unlawful.
Example: Pearce (vs) Brooks (1866):
Facts: A firm of coach-builders hired out a carriage to a prostitute, knowing
that it was to be used by prostitute to attract men.
Judgment: The coach-builders could not recover the hire as the agreement
was unlawful.
6. Where the court regards it as opposed to public policy: An agreement
whose consideration (or) object is such a nature that opposed to public
policy. Thus, it becomes void and it deemed to be unlawful.

10Q.Discuss the doctrine of public policy? Give examples of agreement

which are opposed to public policy?
(or)
“Agreements opposed to public policy”-Explain.

Ans: An agreement is said to be opposed to public policy when it is harmful

to the public welfare. An agreement whose object (or) consideration is
opposed to public policy is void. Some of those agreements which are (or)
which have been held to be, opposed to public policy and are unlawful as
follows:

1. Agreements of trading with enemy: An agreement made with an alien

enemy at the time of war is illegal on the ground of public policy. This
agreement is based upon the two reasons:
a) Contract made during the continuance of the war, an alien enemy can
neither contract with an Indian subject (nor) can he sue in an Indian court.
He can do so only after he receives a license from the central government.
b) Contract made before the war may either be suspended (or) dissolved.

2. Agreement to commit a crime: An agreement is to commit a crime is

opposed to public policy and it is void. In such a case the court will not
enforce the agreements.
Example: W.H. Smith & sons (vs) Clinton (1908):

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Facts: ‘A’ promises to indemnity (pay) a firm of printers and publishers of

a paper against the consequences of any libel (publishing a false statement)
which it might publish in its paper.
Judgment: ‘A’ promise could not be enforced in a law court. Where the firm
was compelled to pay damages for a published libel.

3. Agreements in restraint of legal proceedings: An agreement in restraint of

legal proceeding is the one by which any party thereto is restricted absolutely
from enforcing his right under a contract through a court. Contracts of this
nature are void because its object is to defeat the provision of the Indian
Limitation act.

4. Agreements which interfere with administration of justice: Where the

consideration (or) object of an agreement of which is to interfere with the
administration of justice is unlawful, being opposed to public policy. It may
take any of the following forms:
a) Interference with the court of justice,
b) Stifling prosecution,
c) Maintenance,
d) Champerty.

5. Trafficking in public offices and tittles: Trafficking in public offices means

trading in public offices to obtain some gain which other wise cannot be
obtained. Trafficking in tittle means some such award from government in
return of consideration. A contact of this nature is void and is against to
public policy and also it is illegal.
Example: Parkinson (vs) College of Ambulance, Ltd (1925):
Facts: ‘A’ promised to obtain an employment to ‘B’ in a public office and
‘B’ promised to pay ‘A’ Rs.1000/-.
Judgment: The agreement was against to public policy and also illegal.

6. Agreement tending to creates interest opposed to duty: If a person enters

into an agreement whereby, he is bound to do something which is against to
public (or) professional duty, in such a case the agreement is void on the
ground of the public policy.

7. Agreements in restraint of parental rights: A father (or) mother is the legal

guardian of his/her minor child. This right and duty of guardianship cannot
be bartered away. Therefore, a father/mother cannot enter into an
agreement inconsistent with his duties which are opposed to public policy.

8. Agreement in restraint of marriage: Every agreement in restraint of

marriage of any person, other than a minor, is void and opposed to public
DEEPTI SINGH
MCOM, MBA, MPhil, LLB, PhD
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policy. This is because the law regards marriage and marriage status as the
right of every individual.

9. Agreement restricting personal liberty: Agreement which unduly restricts

the personal freedom of the parties is void and against to public policy.

10. Agreement in restraint of trade: Every agreement by which any one is

restrained from exercising a lawful profession (or) trade (or) business of nay
kind, is to that extent void and opposed to public policy. But this rule is
subject to the following exceptions:

Exceptions:
a) Sale of goodwill.
b) Partner’s agreement.
c) Trade combinations.
d) Service agreement.
In the above exceptions the court will enforce the agreements. Because only
if there is any restrictions imposed on such agreements are reasonable.
Example: Shaikh Kalu (vs) Ram Saran Bhagat (1909):
Facts: Out of 30 makers of combs in the city of Patna, 29 agreed to supply
with ‘R’ to supply him and also agreed not to supply any one else all their
output. Under the agreement ‘R’ was free to reject the goods if he found no
market for them.
Judgment: The agreement amounted to restraint of trade and thus void.

11. Marriage brokerage: As a public policy, marriage should take place with
free choice of the parties and it cannot be interfered with by third party
acting as broker. Agreement for brokerage for arranging marriage is void.
Similarly, agreement of dowry cannot be enforced.

12. Agreement to defraud creditors (or) revenue authorities: An agreement

which object is to defraud the creditors (or) revenue authorities is not
enforceable, being opposed to public policy.

13. Agreement interfering with marital duties: Any agreement which

interferes with the performance of marital duties is void, being opposed to
public policy.

11Q. what is meant by performance? And offer of performance/tender?

Ans: Performance: performance of a contract means carrying out of
promises and obligations undertaken by the parties according to the terms
prescribed in the contract.

DEEPTI SINGH
MCOM, MBA, MPhil, LLB, PhD
 21

OFFER OF PERFORMANCE OR TENDER: When promisor has made a

valid offer of performance to the promise and offer had not been accepted
by the promise, the promisor is not responsible for non performance and he
does not lose any rights under the contract. A valid tender of performance is
equivalent to performance. It is also known as “attempted performance” or
“tender.”
The following are the essentials or requisites of a valid tender:
1. It must be unconditional. It becomes conditional when it is not in
accordance with the terms of the contract.
Ex: ‘D’ a debtor offers to pay to ‘C’, his creditor, the amount due to him on
the condition that ‘C’ sells to him certain shares at cost. This is not a valid
tender.
2. It must be the whole quality contracted for or of the whole obligation. A
tender of an installment when the contract stipulated payment in full is not
a valid tender.
3. It must be by a person who is in a position, and is willing to perform the
promise.
4. It must be made at the proper time and place. A tender of goods after the
business hours or of goods or money before the de date is not a valid-tender.
Ex: “D” owes “C” Rs.100/- payable on 1st of August with interest. He offers
to pay on the 1st of July the amount with interest up to the 1st of July. It is
not a valid tender as it not made at the appointed time.
5. It must be made to the proper person and also in proper form.
6. It may be made to one of the several joint promises. In such a case it has
the same effect as a tender to all of them.
7. In case of tender of goods, it must give a reasonable opportunity to the
promise for inspection of the goods. A tender of goods at such time when the
other party cannot inspect the goods is not a valid tender. But in the
following case, tender was held to be valid.
Ex: Startup vs. MacDonald (1843):
Facts: The plaintiffs agreed to sell 10 tons of linseed oil to the defendant to
the delivered “within the last fourteen days of March”. Delivery as tendered
at 8.30pm on March 31, a Saturday. The defendant refused to accept the
goods owing to lateness of the hour.
Judgment: Though the hour was unreasonable, the defendant could still take
delivery before midnight.
8. In case of tender of money, the debtor must make a valid tender in legal
tender money.Ex: In India in rupees, us-dollars etc..,

12Q. Define “Doctrine of supervening impossibility.” Explain the effects on

the performance of the contract.

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Ans: Impossibility of performance: Section 56, of the contract act, deals with
the impossibility of performance. “An agreement to do an act impossible in
itself is void.” It is of two types:
1. Impossibility existing at the time of contract.
2. subsequent of supervening impossibility.
Impossibility which arises subsequent to the formation of contract {i.e., a
contract to do an act, which after the contract is made} is called post
contractual or supervening impossibility. In such a case the contract
becomes void.
Discharge by supervening Impossibility (or) cases where the “Doctrine of
supervening impossibility applies:” A contract will be discharged on the
ground of supervening impossibility in the following
cases:
1. Destruction of subject matter of contract: When the subject matter of a
contract, subsequent to its formation, is destroyed without any fault of
parties to the contract, then the contract is discharged.
Example: Taylor Vs Caldwell (1863):
Facts: C agreed to let out a music hall to T on a certain date. But before those
days the hall was accidentally destroyed by fire.
Judgment: the owner was absolved from liability to let the music hall as
promised. Thus, the contract was void.
2. Non-existence or non occurrence of a particular state of things: Some
times, a contract is entered into between two parties on the basis of a
continued existence or occurrence of a particular state of things. If there is
any change in the state of things which formed as the basis of contract, the
contract is discharged.
Example: Krell Vs Henry (1903):
Facts: H hired a flat from K for June 26 and 27, 1902 for witnessing a
coronation procession of King Edward VII. K knew of H’s purpose though
the contract contained no reference to this. The coronation procession was
cancelled due to the illness of the king.
Judgment: H was excused from paying the rent for the flat on the ground
that existence of the procession was the basis to the contract. Its cancellation
discharged the contract.
3. Death or personal incapacity of the parties: Where the performance of a
contract depends on the personal skill or qualification or the existence of a
given person, the contract is discharged on the illness, incapacity, or death
of that person.
EX: “A” contracts to act at a theatre for 6 months in consideration of a sum
paid in advance by “B”. On several occasions, A is too ill to act. The contracts
to act on those occasions become void.

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MCOM, MBA, MPhil, LLB, PhD
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13Q. Impossibility of performance is as a rule, not an excuse for non-

performance of a contract. Discuss.
ANS: Section 56, of the contract Act; deals with the impossibility of
performance. “An agreement to do an act impossible in itself is void”
Impossibility of performance is, as a rule not an excuse for non-performance
of a contract. In the following cases, a contract is not discharged on the
ground of supervening impossibility or “Doctrine of supervening
impossibility” does not apply.
1. Difficulty of performance: A contract is not discharged merely because
that it has become more difficult of performance due to some
uncontemplated events or delays.
Example: Tsakiroglou and Co.ltd. (Vs) Noblee Throl G.M.B.H...(1962):
Facts: A agreed to sell to B 300 tons of Sudan groundnuts c.i.f Hamburg. The
usual and normal route at the date of the contract was via Suez Canal.
Shipment was to be in November/December, 1956, but on November 2, 1956
the canal was closed to traffic and it was not reopened until the following
April. A refused to ship the goods via the cape of good hope on the plea that
the contract had been frustrated by reason of the closing of the Suez route.
Judgment: The contract was not frustrated as A could have transported the
goods via the Cape of Good Hope.
2. Commercial impossibility: A contract is not discharged merely because
expectation of higher profits is not realized, or the necessary raw material is
available at a higher price because of the outbreak of war, or there is a
sudden depreciation of currency. Thus, performance cannot be excused on
the ground of commercial impossibility.
3. Default of third person: when a contract could not be performed because
of the default of a third person on whole work the promisor relied in such a
case impossibility of performance cannot be excused. Thus, it is not
discharged.
Example: Ganga Saran Vs Ram Charan (1952):
Facts: A agreed to sell to B a specified quantity of cotton goods to be
manufactured by a particular mill. B agreed to deliver as and when goods
might be received from the mill. A time was named for the completion for
the delivery. A could not fulfill the agreement as the mill failed to produce
the goods.
Judgment: B was entitled to recover damages from A.
4. Strikes, lock outs, and civil disturbances: A contract is not discharged by
reason of strike by the workers, or outbreak of some civil disturbances
interrupting the performance of promise. However, the parties to a contract
may agree to the contrary by making an express provision in this regard.
5. Failure of one of the object: if a contract is made for fulfillment of several
objects, the failure of one or more of them does not discharge the contract.
Example: Herne bay steam Boat Company (Vs) Hutton (1903):
DEEPTI SINGH
MCOM, MBA, MPhil, LLB, PhD
 24

Facts: “HB” agreed to let out a boat to “H”.

a) for viewing a naval review on the occasion of the coronation of Edward
VII,
b) To sail round the fleet.
Owing to the king’s illness the naval review was abandoned but the fleet was
assembled. The boat, therefore, could be used to sail round the fleet.
Judgment: The contract was not discharged, because failure of one of the
object does not discharge the contract.
6. Self induced impossibility: if impossibility arises due to a party’s own
conduct or act {i.e., a deliberate act or a negligent act}, it cannot be called as
supervening impossibility, and therefore the party is not received from his
obligation to perform.

4. Change of law: When a sub sequent change of law takes place or the
government takes some power under some special power, so that the
performance of a contract becomes impossible, the contract is discharges.
EX: There was a contract of a sale of trees of a forest, subsequently by an act
of legislature; the forest was acquired by the state government. The contract
was discharged by impossibility created by subsequent change in law.
5. Out-break of war: All contracts entered into with an alien enemy during
war is un lawful and therefore impossible of performance. Contracts entered
into before the out-break of war are suspended during the war and may be
received after the war is over.
Effects of supervening impossibility:
I. When the performance of a contract becomes impossible or unlawful to its
formation, the contract becomes void.
II. Where one person has promised to do something which he knew, or with
reasonable diligence, might have known, and which the promisee did not
know to be impossible or un-lawful, the promisor must make compensation
to the promisee for any loss which the promisee incurred
through the non-performance of a contract.
III. When an agreement is discovered to be void, or when a contract becomes
void, any person who has received any advantage. Under such agreement or
contract is bound to restore (return) it, or to make compensation to it, to the
person from whom who received it.
EX: A pays B Rs. 1000 in consideration of B’s promise to marry C, A’s
daughter. C is dead at the time of promise. The agreement is void, but B must
repay A Rs.1000.

14Q.Explain in detail “Discharge of a contract by agreement (or) by consent

or by mutual consent”

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MCOM, MBA, MPhil, LLB, PhD
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Ans: The general rule of law is a thing may be destroyed in the same manner
in which it is constituted. This means a contractual obligation may be
discharged by a agreement which may be expressed or implied.
The various cases of discharge of a contract by mutual agreement are dealt
with in Section 62 and 63 and are discussed below:
1. Novation (Section.62): Novation takes places:
i. When substitution of a new contract for the original one either between the
same parties or between same parties or
ii. The consideration for the new contract is mutually being the discharge of
old contract.
iii. Novation should take place before the expiry of the time of the
performance of the original contract.
Ex: “A” owes “B” Rs.10,000/-. He enters into an agreement with “B” a
mortgage of his (A’s) estate for Rs.5,000/- in place of the debt of Rs.10,000/-.
This is a new contract extinguishes the old one.
2. Recession (Section.62): Recession of a contract takes place when all or
some of the terms of the contract are cancelled. It may occur:
a) By mutual consent of the parties (or)
b) Where one party fails in the performance of his obligation. In such a case,
the other party may resend the contract without claiming compensation for
the breach of contract. In case of recession, only the old contract is cancelled
and no new contract comes to exist in its place. Both in novation and in
recession, the contract is discharged by mutual agreement.
Ex: “A” and “B” enters into a contract that “A” shall deliver certain goods
to be by the 15th of this month and that “B” shall pay the price on the 1st of
the next month. “A” does not supply the goods. “B” may resend the contract,
and need not pay the money.
3. Alteration (Section.62): Alteration means a change in one or more terms
of a contract with mutual consent of parties. In such a case the old is
discharged.
Ex: “A” enters into a contract with “B” for the supply of hundred bales of
cotton at his godown No.1 by the 1st of the next month. “A” & “B” may alter
the terms of the contract by mutual consent.
4. Remission (Section.63): Remission means acceptance of a lesser fulfillment
of the promise made or acceptance of a sum lesser than what was contracted
for. In such a case, Section.63 of the Contract Act allows the promise to
dispense or remit the performance of the promise by the promisor, or to
extend the time for the performance of to accept any other satisfaction
instead of performance.
Ex: “A” owes “B” Rs.5,000/-. “A” pays to “B” and “B” accepts in the
satisfaction of the whole debt Rs.2,000/- paid at the time and place which
Rs.5,000/- were payable. The whole debt is to be discharged.

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5. Waiver: When a contracting party fails to perform his obligation under

the contract, the other party (aggrieved party) may resend the contract and
may waive the promisor or release. This is called as Waiver.
6. By merger: Merger takes place when an inferior right accruing to a party
under a contract merges into a superior right accruing to the same party
under the same or some other contract.
Ex: “P” holds a property under a lease. He later buys the property. His rights
as a lessee merge into his rights as a owner.

15Q. Explain “breach of contract” as a mode of discharge of contract? What

do you understand by breach of contact? State the rights of the promisee in
case of “anticipatory breach of contract?
Or
Discharge of breach of contract?
Ans: Breach of contract means promisor fails to perform the promise or
breaking of the obligations which a contract imposes. It occurs when a party
to the contract without lawful excuse does not fulfill his contractual
obligation or by his own act makes it impossible that he should perform his
obligation under it. It confers a right of action or damages on the injured
party.
Branch of contacts may be of two types:
1. Actual breath of contact.
2. Anticipatory breath of contact.
1. Actual breach of contract: Actual breach means promisor’s failure to
perform the promise on due date of performance. When a promisor fails or
refuses to perform the promise upon the due date for performance then it is
called actual breach of contract. In such a case the promisee is exempted and
may resend the contract. Promise can sue the party at fault for damages for
breach of contract.
Ex: O’Neil (vs) Armstrong (1895):
Facts: ‘P’, a British subject, was engaged by the captain of a war ship owned
by the Japanese government to act as a fire man. Subsequently when the
Japanese government declared war with china, “p” was informed that the
performance of contract would bring him under the penalties o the foreign
enlistment act. He consequently left the ship.
Judgment: He was entitled to recover the wages agreed upon.
2. Anticipatory Breach of contract: It occurs when a party to executory
contract declares his intension of not performing the contract before the
performance is due. It may take place in two ways.
a) Expressly by words: here a party to the contract communicates to the
others party before the due date of performance, his intention not to perform
it.
Ex: Hochster (vs) de la tour (1853):
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Facts: “D” engaged “H” on 12th of April to enter into his service as courier
and to accompany him upon a tour. The employment was to commence on
1st June. On 11th may “D” rote to “H” telling him that services would no
longer be required. H immediately brought an action for damages although
the time for performance had not arrived.
Judgment: He was entitled to do so.
b) Implied by the conduct: Here a party by his own voluntary act disables
himself from performing the contract.
Ex: a person contracts to sell a particular horse to another on 1st of June
and before the due date he sells the horse to somebody else. Effect/right of
an anticipatory breach: In case of anticipatory breach, the promisee is
excused from performance and he may choose any one of the following two
options:
1. He can treat the contract as discharged so that he is absolved of the
performance of his party of the promise.
2. He can immediately take a legal action for breach or wait till the time the
act was to be done.

16Q.What are the rules under the Indian contract act for estimating the loss
or damage arising from a breach of contract?
Or
Define damages? Explain different type of damages awarded on breach of
contract?
Ans: Damages are the monetary compensation allowed to the aggrieved
party for the loss or injury suffered by him by the breach of contract. The
fundamentals principle underlying damages is not punishment but
compensation for the pecuniary (having to do with money) loss which
naturally flows from the breach. “If actual loss is not proved no damages will
be awarded.
Types of damages: Damages may be of different types they are as follows:
1. Ordinary or natural or general or compensatory damages: Ordinary
damages are generally the difference between contract price and market
price in sale of such damages which arise naturally in usual course of things
from the breach of contract.
Ex: Hadley (vs) baxendale (1854):
Facts: H’s mill was stopped by the break-down of shaft. He delivered the
shaft to ‘B’, a common carrier to be taken to a manufacturer to copy it and
make a new one. “H” did not make known to “B” that delay would result in
loss of profits by some neglect on the part of “B” the delivery of shaft was
delayed in transit beyond a reasonable time (so that the mill was idle for a
longer period than otherwise would have been the case had there been no
breach of the contract of carriage.

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Judgment: “B” was not liable for loss of profits during the period of delay as
the circumstances communicated to “B” did not show that a delay in the
delivery of shaft would entail loss of profit to mill.
2.special damages: where a party to a contract receives a notice of a special
circumstances affecting the contract, he will be liable not affecting the
contract, he will be liable not only for damages arising naturally but directly
from the breach and also fo4 special damages.
Ex: A, having a contracted with “B” to supply “B” 1000 tons of iron @100 a
ton, to be delivered at a stated time. “A” contract with “c” for to purchase
of 1000 tons of iron 80 a ton telling “C” that he does so for the purpose of
performing his contact with “B”. “C” fails to perform his contract with “A”
Rs.20000 /- being the profit which “A” would made by the performance of
his contract with “B”.
3. Nominal (or) token damages: Nominal damages are awarded where the
plaintiff has proved that there has been a breach of contract but he has not
in fact suffered any real damage. Now you may ask why such damages are
awarded. The answer is simple. It is awarded just to establish the right to
decree or the breach of contract. The amount may be even a rupee.
4.Vindictive or exemplary damages: Exemplar damages are punitive
damages which are awarded by the court in some cases. It is generally given
by way of compensation for loss suffered and not by way of punishment for
wrong inflicted. Exemplary damages awarded only in two ways:
a) Breach of contract of marry.
b) Dishonor of a cheque by a banker when there are sufficient funds to the
credit of the consumer.
5. Damages for loss of reputation: Damages for loss of reputation in case of
breach of contact are generally not recoverable. But there is an exemption
to this rule exists in a case of a banker who wrongly refuses to honor a
customer’s cheque. If the customer happens to be a trade man, he can
recover damages in respect of any loss to his trade reputation by the breach
of contract. And the rule of law is: the smaller the number of damages
awarded. But I the customer is not a tradesman; he can recover only nominal
damages.
6. Damages or inconvenience and discomfort: Damages can be recovered for
physical inconvenience and discomfort. If, however the inconvenience or
discomfort caused by a breach is substantial, the damages can be recovered
on the ground of fairness
7.Mitigation of damages: It is the duty o the injured party to take all
reasonable steps to mitigate the loss caused by the breach. He cannot claim
compensation or loss which is really due not to the breach but due
to his own neglect.

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8. Cost of decree: The aggrieved party id entitled, in addition to damages, to

get the decree for damages. The cost of suit for damages is in the discretion
of the court.
9. Damages agreed upon in advance in cash for breach: If a sum is named in
a contract as the amount to be paid in cash of its breach, or if the contract
contains any other stipulation by way of penalty for failure to perform the
obligations, the aggrieved party is entitled to receive from the party who has
broken the contract, a reasonable compensation not exceeding the amount
so named in the contract.
10. Difficulty of assessment: The damages which are difficult to assess with
inconvenience discomfort and sufficiency cannot be recovered. But the
damages which are difficult to assess with certainty does not prevent the
aggrieved party from recovering them. Then court will look into it and may
allow monetary damages of ouch inconveniences.

17Q.Define “Quasi Contract”. Explain the types of “Quasi Contract”.

Ans: Meaning: Under certain special circumstances, a person may receive a
benefit to which the law regards another person as better entitled or for
which the law considers he should pay it to the other person, even though
there is no contract between the parties these relationships are terms as
“Quasi Contract” or constructive contracts under the English Law and
“Certain relationships resembling those created by contracts” under the
Indian Law.
Quasi contract is not made by a process of proposal and acceptance or by
free consent. It is a trust upon us by law. A Quasi-contract rests upon the
equitable, which declares that a person shall not be allowed to enrich himself
unjustly at the expense of another.
Silent features of Quasi-contract:
i. It is a right which is available not against a particular person or persons
and so, that in this respect it resembles a contractual right.
ii. It does not arise from any agreement of the parties concerned it is imposed
by law.
iii. Such Quasi-contractual right is always a right to money, and generally,
though not always, to a liquidated sum of money.
KINDS OF QUASI-CONTRACTS: The following are of Quasi-contracts are
discussed below.
1. Supply of necessaries (sec68): according to section 68, if a person incapable
of entering into a contract or any one whom he as legally bound to support
is supplied by another with necessaries suited to his condition in life the
person who has furnished such supplies I entitled to be reimbursed from the
property of such incapable person.
Ex: ‘A’, supplies “B” a lunatic with necessaries suitable to his condition in
life. ”A” is entitled to reimburse from B’s property.
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2. Payment by an interested person (Section.69) A person, who is interested

in payment of money which another is bound by law to pay and who
therefore pays it, is entitled to be reimbursed by other.
The essential requirements of Section.69 as follows:
a) The payment mode should be bonafide for the protection of one’s interest.
b) The payment should not be a voluntary one.
c) The payment must be such as the other party was bound by law to pay.
Ex: “B” holds land Bengal on a lease granted by the Zamindar. The revenue
payable by “A” to the Government being in arrears his land is advertised for
sale by the Government under the Revenue Law. The sale will be annulment
of “B’s lease. ’B’ to prevent the sale and the consequent of annulment of his
own lease pays to the Government the sum due from A. A is bound to make
good to B the amount so paid.
3. Obligation to pay for non-gratuitous acts (Section.70): When a person
lawfully does anything for another person or delivers anything to him not
intending to do so, gratuitously, and such other person enjoys the benefit
thereof, the latter is bound to make the compensation to the former in
respect of or restore, the things do do or delivered.
Ex: “A”, a tradesman lease goods at “B” house by mistake. B treats the goods
as his own. He is bound to pay for them to A.
4. Responsibility of finder of goods (Section.71): A person who finds goods
belonging to another and takes them into his custody is subject to the same
responsibility as Bailee. He is bound to take as much care of the goods as a
man of ordinary prudence would under similar circumstances take of his
own goods of the same bulk, quality and value. He must also take all
necessary measures to trace its owner. If he does not, he will be guilty of
wrongful conservation of the property till the owner is found out, the
property in goods will vest in the finder and he can retain the goods as his
own against the whole world (except the owner).
Ex: “F” picks up a diamond on the floor of ‘S’s shop. He hands it over to ‘S’
to keep it till the real owner is found out. No one appears to claim it for quite
some week’s inspite of wide advertisement in the news papers. ‘F’ claims the
diamond from ‘S’ who refuses to return. ‘S’ is bound to return the Diamond
to ‘F’ who is entitled to retain the diamond against the whole world except
the true owner.
5. Mistake or coercion (Section.72): A person to whom money has been paid,
or anything delivered by mistake or under coercion, must repay or return it
to the person who paid it by mistake or under coercion.
Ex: “A” & “B” jointly owe Rs.100/- to “C”. A alone pays the amount to C
and B not knowing this fact pays Rs.100/- over again to “C”. C is bound to
pay the amount to B.

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SHORT NOTES:

1Q.Write a short note on “Finder of lost goods or “Responsibility of finder

of goods”
Ans: A person, who finds goods belonging to another and then takes into his
custody, is subject to the same responsibility as a bailee. He is bound to take
as much care of the goods as a man of ordinary prudence would under
similar circumstances take of his own goods of the same bulk, quantity and
value.
He must also take all necessary measures to trace its owner. If he does not,
he will be guilty of wrongful conversion of the property till the owner is found
out, the property in goods will vest in the finder and he can retain the goods
as his own against the whole world (except the owner).
The finder can sell the goods in the following cases:
1. When the thing found is in danger of perishing.
2. When the owner cannot with reasonable diligence, be found out.
3. When the owner is found out, but he refuses to pay the lawful charges of
the finder and
4. When the lawful charges of the finder, in respect of the thing found,
amounts to 2/3rd of the value of the things found.

2Q. Cross offer.

Ans: when two (or) more identical offers exchanged between the parties in
ignorance at the time of each other’s offer, the offer are called as cross offers.
In such a case, the courts construe one offer as the offer and the other as the
acceptance. Thus, a cross offer will not create any contract.
Example: ‘A’ offers to sell his car to ‘B’ for RS.15000/-. ‘B’ at the same time,
offers by a letter to buy ‘A’s car for Rs.15000/-. The two letters cross each
other in the post. In such a case the courts construe one offer as the offer and
the other as the acceptance. Thus, there was no concluded contract between
‘A’ and ‘B’.

3Q Distinguish between void contract and voidable contract.

Ans: The following are the differences between void and voidable contract.
They are follows:

1. According to section 2(j) a void contract as ‘a contract which ceases to be

enforceable by law becomes void when it ceases to be enforceable’.
According to section 2(i) a voidable contract is ‘an agreement which is
enforceable by law at the option of one or more the parties but not at the
option of the other or other or others.

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2. A void contract is valid when it is made. But binding on the parties it may
subsequently become void. We may talk of such a contract as void
agreements. A voidable contract on the other hand is voidable at the option
of the aggrieved party and remains valid until rescinded by him. Contract
caused by coercion, undue influence, fraud, misrepresentation is voidable.
But in case contract is caused by mistake it is void.

3. A void contract does not provide any legal remedy for the parties to the
contract. It may void of into right from the beginning. In other words, it is
not a contract at all The aggrieved party in a voidable contract gets a right
to rescind the contract. When such party rescinds it, the contract become
void. In case aggrieved party does not rescind the contract with in a
reasonable time, the contract remains valid.

4Q. Counter offer.

Ans: when the offeree offers to qualified acceptance of the offer subject to
modifications and variations in the terms of the original offer, he is said to
have made a counter offer. Counter offer amounts to rejection of the original
offer. In such a case an offer may be revoked.
Example: Hyde (vs) Wrench (1840)
Facts: ‘W’ offered to sell a farm to ‘H’ for L 1000 (pounds). ‘H’ offered L
950 (pounds) ‘W’ refused the offer. Subsequently, ‘H’ offered to purchase
the farm for L 1000 (pounds).
Judgment: There was no contract as ‘H’ by offering L 950 (pounds) had
rejected the original offer. Because the counter offer to a proposal amounts
to its rejection.

5Q. Communication of offer:

Ans: An offer, its acceptance and their revocation (withdrawal) to be
complete when it must be communicated. When the contracting parties are
face to face and negotiate in person, a contract comes into existence the
movement the offeree gives his absolute and unqualified acceptance to the
proposal made by the offeror.

The following are the rules regarding communication of offer:

i) The communication of an offer is complete when it comes to the knowledge

of the person to whom it is made.
ii) An offer may be communicated either by words spoken (or) written (or)
it may be inferred from the conduct of the parties.
iii) When an offer/proposal is made by post, its communication will be
complete when the letter containing the proposal reaches the person to whom
it is made.
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6Q. Communication of acceptance.

Ans: An offer, its acceptance and their revocation (withdrawal) to be
complete when it must be communicated. When the contracting parties are
face to face and negotiate in person, a contract comes into existence the
movement the offeree gives his absolute and unqualified acceptance to the
proposal made by the offeror.

The following are the rules regarding communication of acceptance: -

1) Communication of an acceptance is complete: -
a) As against the proposer/offeror when it is put into the certain course of
transmission to him, so as to be out of the power of the acceptor.
b) As against the acceptor, when it comes to knowledge of the proposer.
2) When a proposal is accepted by a letter sent by the post the
communication of acceptance will be complete: -
a) As against the proposer when the letter of acceptance is posted and
b) As against the acceptor when the letter reaches the proposer.

7Q. Communication of revocation.

Ans: An offer, its acceptance and their revocation (withdrawal) to be
complete when it must be communicated. When the contracting parties are
face to face and negotiate in person, a contract comes into existence the
movement the offeree gives his absolute and unqualified acceptance to the
proposal made by the offeror.
The following are the rules regarding communication of revocation:
1) As against the person who makes it, when it put into a course of
transmission.
2) As against the person to whom it is made, when it comes to his knowledge.

8Q. Invitation to make an offer. (Or) Offer and invitation to offer.

Ans: If a person makes an invitation to make an offer/proposal, the other
person makes an offer/proposal in response. The offer/proposal may or may
not be accepted.
Example: - Tender notice is an invitation to make a proposal/offer. Then the
response to a tender notice is an offer and can be in two ways: -
1) A definite offer: When a tender is submitted, in response to an invitation
for supply of goods and services in specified quantities, in a specific and
definite manner, it is a definite offer.
2) A standing offer: sometimes a tender is submitted, in response to an
invitation for supply of goods and services in a continuous way over a period
of time, such an offer is said to be standing (or) continuous offer.
As soon an order is made a contract is created.
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9Q. Revocation of offer and acceptance.

Ans: Revocation of offer: A proposal/offer may be revoked at anytime before
the communication of its acceptance is complete as against the proposer, but
not afterwards.
Revocation of acceptance: An acceptance may be revoked at any time before
the communication of acceptance is complete as against the acceptor, but not
afterwards.
Example: ‘A’ makes proposal to ‘B’ to sell his house at a certain price. The
letter is posted on 1st of the month. ‘B’ accepts the proposal by a letter sent
by post on 4th. The letter reaches ‘A’ on the 6th. ‘A’ may revoke his offer at
any time before ‘B’ posts his letter of acceptance. (i.e.., on 4th, but not
afterwards). ‘B’ may revoke his acceptance at any time before the letter of
acceptance reaches ‘A’. (i.e.., on 6th, but not afterwards).

10Q. All contracts are agreements but all agreements are not contracts” -
explain.
Ans: “All contracts are agreements but all agreements are not contracts”-
the statement has two parts.
(a) All contracts are agreement: As per section 2(h) of Indian contract Act,
“A contract is and agreement enforceable by law”. Obviously, an agreement
is a pre requisite (i.e.., essential elements) for formation of contract. An
agreement clubbed with enforceability by law and several other features
(i.e.., free consent, consideration, etc..,) will create a valid contract.
Therefore, obviously all contracts will be agreements.
(b) All agreements are not contracts: As per section 2(e) of Indian contract
act, “An agreement is a promise and every set of promises, forming
consideration for each other”. Thus, a lawful offer and a lawful acceptance
create an agreement only. Therefore, all agreements are not contracts.
Conclusion:
Contract = Agreement + Enforceability by law.
Agreement = Offer + Acceptance.
Thus, all agreements are contracts but all agreements are not necessarily
contracts.

11Q. Contract by disqualified person.

(Or)
Person expressly disqualified (other person).

Ans: Besides minors and persons of unsound mind, there are also other
persons who are disqualified from contracting partially (or) wholly. So, the
contracts by such persons are void. If, by any provisional legislation, a

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person is declared “disqualified proprietor”, he is not competent to enter

into any contract in respect of the property.
The following persons are disqualified from contracting;
(a) Alien enemy.
(b) Foreign sovereign states.
(c) Corporations.
(d) Insolvents.
(e) Convicts.

12Q. Write a short note on unlawful and illegal agreements

Ans: An unlawful agreement is one which, like a void agreement and is not
enforceable by law. It is destitute (lacking) of legal effects altogether. If
affects only the immediate parties and has no further consequences. An
illegal agreement, on the other hand, is not only void as between the
immediate parties but has this further effect that the collateral transactions
to it also become tainted (infect) with illegality. Thus, ‘every illegal
agreement is unlawful, but every unlawful agreement is not necessarily
illegal’. It is sometimes difficult to decide as to weather an act is illegal (or)
unlawful because, as many of the illegal and the unlawful acts lie on the
borderline. It may, however, be observed that illegal acts are those which are
opposed to public morals and unlawful acts are those which are less rigorous
in effect and involves a ‘non-criminal breach of law’. These acts do not affect
public morals (nor) do they results in the commission of crime.

13Q. Write a short note on reciprocal promises.

Ans: According to section 2(f) of the Indian contract Act, 1872. ‘Promises
which form the consideration for each other are called reciprocal promises.
These promises have been classified by Lord Mansfield based on the jones
(vs) Barkley case they are as follows:
1. Mutual and independent: Where each party must perform his promise
independently and irrespective of the fact whether the other party has
performed, (or) not, the promises are mutual and independent.
Ex: - ‘B’ agrees to pay the price of goods on 10th. ‘S’ promises to supply the
goods on 20th. The promises are mutual and independent.
2. Conditional and dependent: Where the performance of the promise by one
party depends on the prior performance of the promise by the other party,
the promises are conditional and independent.
Ex: - ‘A’ promises to remove certain debris (something which has destroyed)
lying in front of ‘B’s supplies him with the cart. The promises are conditional
and independent.
3. Mutual and concurrent: Where the promises of the both the parties are to
be performed simultaneously, they are said to be mutual and concurrent.
Ex: - sale of goods for cash.
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14Q. Immoral agreements.

Ans: The word immoral includes sexual immorality. Hence its object (or)
consideration is unlawful. An agreement, whose consideration and object are
immoral, is deemed to be illegal and void.
An agreement is unlawful for immorality in the following cases:
1. Where the consideration is an act of sexual immorality. (i.e.., illicit
cohabitation or prostitution.
Example: ‘A’ agrees to let her daughter on hire to ‘B’ for concubinage, the
agreement is unlawful, being immoral.
2. Where the object of the agreement is the furtherance of sexual immorality.
(i.e.., lending money to a prostitute to help her in his trade).
Example: ‘A’ let flat to ‘B’, a woman whom he knew to be a prostitute. The
agreement was unlawful if ‘A’ knew the purpose that ‘B’s object was to use
the flat for immoral purpose.

15Q. Wagering agreement.

(Or)
Write a short note on ‘WAGER”.
Ans: Definition:
A wager is an agreement between two parties by which one party promises
to pay money (or) money’s worth an the happening of soma uncertain event,
in consideration of the other parties promises to pay if the event does not
happen.
Example: ‘A’ and ‘B’ enter into a contract that ‘A’ shall pay ‘B’ Rs.100/- if
it rains on Monday, and that ‘B’ shall pay the same amount if it does not
rain. It is a wagering agreement.
The following are the essentials of a wagering agreement:
1. There must be promise to pay money (or) money’s worth.
2. The event must be uncertain.
3. There must be two parties.
4. Each party must stand to win (or) lose.
5. No control over the event.
6. No other interest in the event except winning (or) losing.
Exceptions: The following transactions are not considered as wagering
agreements.
a) Share market transactions,
b) Crossword competition,
c) Contract of insurance,
d) Horse racing,
e) Games of skill (i.e.., picture puzzles, athletic competitions, etc..,).

16Q. void agreements

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Ans: According to section 2(g) of the Indian contract Act, 1872. ‘A void
agreement is one which is not enforceable by law’. A void agreement does
not create any legal right (or) obligation. It is void-ab-initio (i.e.., void right
from the beginning).
The following agreements have been expressly declared to void by the
contract act:
1. Agreements by incompetent parties. (Section 11)
2. Agreements made under mutual mistake of facts. (Section 20)
3. Agreements which the consideration (or) object is unlawful. (Section 23)
4. Agreements which the consideration (or) object is unlawful in part.
(Section 24)
5. Agreements made without consideration. (Section 25)
6. Agreements in restraint of marriage. (Section 26)
7. Agreements in restraint of trade. (Section 27)
8. Agreements in restraint of legal proceedings. (Section 28)
9. Agreement which the meaning is uncertain. (Section 29)
10. Agreements by way of wager. (Section 30)
11. Agreements contingent on impossible events. (Section 36)
12. Agreements to do impossible Acts. (Section 56)
13. In case of reciprocal promises to do things legal and also other things
illegal. The second set (illegal) of reciprocal promises is a void agreement.
(Section 57)

17Q. Write a short note on restitution.

Ans: Meaning: when a contract becomes void, the party who has received
any benefit under it must restore it to the other party (or) must compensate
the other party by the value of benefit. This restoration of the benefit is called
‘restitution’. The principle of restitution is that a person who has been
unjustly enriched at the expense of another is required to make restitution
to that other. In essence, restitution is not based on loss to the plaintiff but it
is on benefit which is enjoyed by the defendant at the cost of the plaintiff
which is unjust for the defendant to retain.
Example: ‘A’ pays ‘B’ Rs.1000/- in consideration of ‘B’s promise to marry
‘C’, ‘A’s daughter. ‘C’ is dead at the time of promise. The agreement is void
but ‘B’ must repay ‘A’ Rs.1000/-.

18Q. Write a short note on void agreement and void contract.

Ans: Void agreement: According to section 2(g) of the Indian contract Act,
1872. ‘A void agreement is one which is not enforceable by law’. A void
agreement does not create any legal right (or) obligation. It is void-ab-initio
(i.e.., void of into right from the beginning).
Ex: - An agreement with a minor, an agreement without consideration, etc..,
Void contract: According to section 2(f) of the Indian contract Act, 1872. “A
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contract which ceases to be enforceable by law becomes void when it ceases

to be enforceable’. A contract, when originally entered into, may be valid
and binding on the parties it may subsequently become void. We may talk of
such a contract as void agreement.
Ex: - A contract to import goods from a foreign country when a war breaks
out between the importing country and the exporting country.

18Q.Write a short note on “Quantum Meruit”

Ans: This phrase “Quantum Meruit” means “As much as earned or as much
as merited. The general rule of law is that unless a person has performed his
obligation in full, he cannot claim performance from the others. But in
certain cases, when a person has done some work under a contract, and the
other party discharged the contract or some event happens which makes the
further performance of the contract impossible, then the party who had
performed the work can claim remuneration for the work he has already
done.
The claim for quantum meruit arises only when the original contract is
discharged and it could be brought by the party who is not in default. The
claim on “Quantum Meruit” arises in the following cases:
1. When an agreement is discovered to be void: When an agreement is
discovered to be void or when a contract becomes void, any person who has
received any advantage under such contract is bound to restore it or to make
compensation for it.
2. When something is done without any intention to do so gratuitously: When
a thing is unlawfully done or goods are supplied by a person without any
intention to do so gratuitously to another person and such other person
enjoys the benefit there of, he is bound to make compensation to the former.
3. Where there is express or implied contract to render services but there is
no agreement as to remuneration. In such a case, the court decides the
reasonable remuneration.
4. When the completion of the contract has been prevented by the Act, of the
other party to the contract, they could recover the Quantum Meruit.
5. When a contract is divisible: When a contract is divisible and the party is
not in default, has enjoyed the benefit of the part performance, the party in
default may sue on quantum meruit. But if the contract is not divisible, the
party in default cannot claim remuneration on the ground of quantum
meruit.
6. When an indivisible contract is completely performed but badly: When an
indivisible contract for a lump sum is completely performed, but badly, the
person who had performed the contract can claim the lump sum but the
other party can make a deduction for bad work.

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19Q. Write a short note on “Injunction”.

Ans: When a party is in breach of negative term of the contract (i.e., where
he is doing something which he promised not to do), in such a case the court
may by issuing an order restrain him from doing what he promised not to
do, such an order of the court is known as “Injunction”. The grant of an
Injunction by the court is normally discretionary, but there seems no reason
why the court should refuse the grant of an Injunction to restrain the breach
of contract.
a) Whereby a promisor undertakes not to do something.
b) Which is negative in substance though not in form
Ex: “N”, a Film Actress agreed to act exclusively for “W” for a year and for
no one else. During the year, she contracted to act for “Z”. She could be
restrained by Injunction from doing so.

DEEPTI SINGH
MCOM, MBA, MPhil, LLB, PhD