CONTRACT QUESTIONS AND ANSWERS

Q1) What do you mean by capacity of contract? Explain with relevant case
laws.
OR
What do you understand by ‘capacity to contract’? Explain the effect of
minor’s agreement.
OR
Contract entered into with a minor are void-ab-initio. Explain the position of
a minor under Indian Contract Act, 1872.
Section 10 of the Contract Act requires that the parties must be competent to
contract. Competence to contract is defined in Section 11:
S. 11. Who are competent to contract. — Every person is competent to
contract who is of the age of majority according to law to which he is subject,
and who is of sound mind, and is not disqualified from contracting by any law
to which he is-subject. Thus, the section
declares the following persons to be incompetent to contract—

(1) minors,
(2) persons of unsound mind, and
(3) persons disqualified by law to which they are subject

1. MINORS
AGE OF MAJORITY
The age of the majority is generally eighteen, except when a guardian of a
minor's person or property has been appointed by the court, in which case
it is 21. The age of majority of a person is to be determined "according to
the law to which he is subject."
 NATURE OF MINOR’S AGREEMENT
Mohori Bibee v Dharmodas Ghose. Sir Lord North observed: "Looking at
Section 11 their Lordships are satisfied that the Act makes it essential
that all contracting parties should be competent to contract and
expressly provides that a person who by reason of infancy is
incompetent to contract cannot make a contract within the meaning of
the Act. The question whether a contract is void or voidable presupposes
the existence of a contract within the meaning of the Act, and
cannot arise in the case of an infant." Ever since this decision it has not
been doubted that a minor's agreement is absolutely void.
EFFECTS OF MINOR’S AGREEMENT
A minor's agreement being void, ordinarily it should be wholly devoid of
all effects.
[ IN CASE OF IT IS ASKED IN THE QUESTION FOR MINOR’S EFFECT]

a. NO ESTOPPEL AGAINST MINOR

There can be no estoppel against a minor where a minor has entered
a contract by misrepresenting his age, he cannot be made liable on
the contract. But court may direct the minor to restore the property
to the other party as "minors can have no privilege to cheat men".

b. NO LIABLITY IN CONTRACT OR IN TORT ARISING OUT OF CONTRACT

A minor is in law incapable of giving consent, and there being no
consent, there could be no change in the character.
The Calcutta High Court, for example, refused to hold a
minor liable in tort for money lent on a bond. The court said: "If the
tort is directly connected with the contract and is the means of effecting it and
is a parcel of the same transaction, the minor is not liable in tort." But where
the tort is independent of the contract, the mere fact that a contract is also
involved will not absolve the infant from liability.
 c. DOCTRINE OF RESTITUTION
If an infant obtains property or goods by misrepresenting his age, he
can be compelled to restore it, but only so long as
the same is traceable in his possession. This is known as the
equitable doctrine of restitution. Where the infant has sold the
goods or converted them, he cannot be made to repay the value of
the goods, because that would amount to enforcing a void contract.
Again, the doctrine of restitution is not applied where the infant has
obtained cash instead of goods.
The well-known authority is Leslie (R) Ltd V Sheill 1914. An infant
succeeded in deceiving some moneylenders by telling them a lie
about his age, and so got them to lend him £400 in the faith of his
being an adult. Their attempt to recover the amount of principal and
interest as dam ages for fraud failed for the reasons explained above.
2. PERSON’S OF UNSOUND MIND
The agreement of a person of unsound mind is, like that of minor,
absolutely void." According to Section 12 "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 is capable of understanding it and of forming
a rational judgment as to its effects upon his interest." However, a
person who is usually of unsound mind may make a contract when he is
of sound mind. But a person who is usually of sound mind may not make
a contract when he is of unsound mind.
 HARRIS V. NICKERSON
In this case, a person of unsound mind entered a contract to purchase
goods at an auction. The court held that the contract was voidable at
the option of the person of unsound mind, as they lacked the mental
capacity to understand the nature of the transaction. This case
established the principle that contracts entered by persons of unsound
mind are voidable.

S. 12. What is a sound mind for the purposes of contracting. — 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 can understand it and of forming a
rational judgment as to its effect upon his Interests.
A person who is usually of unsound mind, but occasionally of sound
mind, may make a contract when he is of sound mind.
A person who is usually of sound mind, but occasionally of unsound
mind, may not make a contract when he is of unsound mind.

3. PERSONS DISQUALIFIED BY LAW TO WHICH THEY ARE SUBJECT

According to Section 11 of Indian contract law, certain persons are
disqualified by law from entering contracts and hence are not competent to
contract. Persons disqualified by law include alien enemies, convicts, insolvents,
joint companies and corporations and foreign sovereigns and ambassadors.
Q2) “Want of free consent vitiates a contract and renders it void or voidable.”
Discuss.
OR
What are the factors vitiating free consent? Explain with the help of relevant
case laws.
OR
Define the term free consent. Explain in detail, the effect of coercion and
fraud on the contract entered by the parties.
According to Section 10 free consent is an essential requirement of a contract.
Section 14 defines "free consent".
S. 14. "Free consent" defined — Consent is said to be free when it is not
caused by:

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

(2) undue influence, as defined in Section 16, or
(3) fraud, as defined in Section 17, or
(4) misrepresentation, as defined in Section 18, or
(5) mistake, subject to the provisions of Sections 20,21 and 22.
Consent is said to be so caused when it would not have been given but for the
existence of such coercion, undue influence, fraud,
misrepresentation or mistake.
Vitiating factors and their effect
Where consent to an agreement is caused by coercion, undue
influence, fraud or misrepresentation, the agreement is a contract voidable at
the option of the party whose consent was so caused.' If, for example, a
person is induced to sign an agreement by fraud, he may, on discovering the
truth, either uphold the contract or reject it. If he confirms it, the contract
becomes binding on both the parties. It is a contract which is enforceable at
the option of only one of the parties, namely, the party whose consent was
not free.
 Giving the meaning of a voidable contract, Section 2(i) says that "an
agreement which is enforceable by law at the option of one or more of the
parties thereto, but not at the option of the other or others, is a voidable
contract.”
Where consent is caused by mistake, the agreement is void. [Ss. 20-22]
A void agreement is not enforceable at the option of either party. [S. 2(g)]

COERCION
Definition [S. 15]
S. 15. "Coercion" defined —"Coercion" is the committing, or
threatening to commit, any act forbidden by the Indian Penal Code (XLV of
1860), or the unlawful detaining, or threatening to detain, any property, to the
prejudice of any person whatever, with the intention of causing any person to
enter into an agreement.
Techniques of causing coercion
Consent is said to be caused by coercion when it is obtained by pressure
exerted by either of the following techniques;
(1) committing or threatening to commit any act forbidden by the Indian
Penal Code; or
(2) unlawfully detaining or threatening to detain any property.
 1. ACTS FORBIDDEN BY IPC
Coercion as thus defined implies committing or threatening to
commit some act which is contrary to law.

Chikham Amiraju v Chikham Seshamma (1918)- By threat of

suicide, a Hindu induced his wife and son to execute a release
in Favour of his brother in respect of certain properties
which they claimed as their own. It was held by a majority
"that the threat of suicide amounted to coercion within
Section 15 and the release deed was, therefore, voidable".

2. DETETION OF PROPERTY
An illustration of detention of property is provided by an early case.

ASTELY V. REYNOLDS
The plaintiff had pledged his plate with the defendant for
£20. When he went to redeem it, the pledge insisted that an
additional £10 interest was also owed. The plaintiff paid this to
redeem his plate and then sued to recover it back. The
court allowed it. He was in immediate need of his article and the
defendant extracted from him an extra amount by
refusing to deliver it.

UNDUE INFLUENCE
Definition [S. 16]
S. 16. "Undue influence" defined. —(1) A contract is said to be induced by
"undue influence" where the relations subsisting between the parties are such
that one of the parties is able to dominate the will of the other and uses that
position to obtain an unfair advantage over the other.
(2) a person is deemed to be able to dominate the will of another—
[a] where he holds a real or apparent authority over the other or where
he stands in a fiduciary relation to the other; or
[b] where he makes a contract with a person whose mental capacity
is temporarily or permanently affected by reason of age, illness, or mental
or bodily distress.
(3) Where a person who can dominate the will of another, enters into a
contract with him, and the transaction appears, on the face of it or on evidence
adduced, to be unconscionable, the burden of proving that such contract was
not induced by undue influence shall lie upon the person in a position to
dominate the will of the other.
[ELABORATE ONLY IF THE DIRECT QUESTION OF UNDUE INFLUENCE IS ASKED]
ABILITY TO DOMINATE WILL OF OTHER
Sometimes the parties to an agreement are so related to each other that one
of them can dominate the will of the other. The person who occupies the
superior position may prevail upon the other to obtain his consent to an
agreement to which he, but for the influence so exerted, would not have
consented.
Bellachi V Pakeeran
A spiritual adviser (guru), for example, in a case before the Allahabad High
Court, induced the plaintiff, his devotee, to gift him the whole of his property to
secure benefits to his soul in the next world. Such consent is said to be
obtained by undue influence.
RELATIONS WHICH INVOLVE DOMINATION
In all cases where there is active trust and confidence between the parties, or
the parties are not at equal footing then it is said that one party is able to
dominate the will of the other.
The Act lays down, in sub-section (2) of Section 16 that a person is deemed
to be able to dominate the will of another in the following cases—
(a) where he holds a real or apparent authority over the other, or where
he stands in fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is
temporarily or permanently affected by reason of age, illness, or mental or
bodily distress.
Real or apparent authority
A person in authority is able to dominate the will of the
person over whom the authority is held. The authority may be real or apparent.
The expression "apparent authority" would include cases in which a person
has no real authority but is able to approach the other with a show or color of
authority. Persons in authority would include an Income Tax Officer in relation
to an assesses.
Fiduciary relation
Fiduciary relations are of several kinds. Indeed every relationship of trust and
confidence is a fiduciary relation. And confidence is at the base of
innumerable transactions of mankind. This category is,
therefore, a very wide one. It includes the relationship of solicitor and client,
trustee and cestui que trust spiritual adviser and his
devotee, doctor and patient, woman and her confidential managing agent,
parent or guardian and child, and creditor and debtor.
Mental distress
A person is said to be in distress when his mental capacity is
temporarily or permanently affected. It may be due to extreme old age or
mental or bodily illness or any other cause. Such a person is easily persuaded
to give consent to a contract which may be unfavorable to him. Accordingly, if
a contract is made with him by taking advantage of his distress, it is voidable on
the ground of undue influence.
In a case, for example, before the Madras High Court, a poor Hindu widow,
who needed money to establish her right to maintenance, was persuaded by a
moneylender to agree to pay 100 per cent rate of interest. This is a clear
instance of undue influence being exerted upon a person in distress, and the
court reduced the interest to 24 per cent.
FRAUD
S. 17. "Fraud" defined. — "Fraud" means and includes any of the following acts
committed by a party to a contract, or with his
connivance, or by his agent. with intent to deceive another party thereto or
his agent, or to induce him to enter into the contract—
(1) the suggestion, as a fact, of that which is not true, by one who does
not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of
the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be
fraudulent.
"Fraud is proved when it is shown that a false representation has been made
—
(1) knowingly, or
(2) without belief in its truth, or
(3) recklessly careless whether it be true or false.
Derry V. Peek
A company's prospectus contained a representation that the company had
been authorized by a special Act of Parliament to run trams by steam or
mechanical power. The authority to use steam was, in fact, subject to the
approval of the Board of Trade, but no mention was made of this. The Board
refused consent and
Consequently, the company was wound up. The plaintiff, having
bought some shares, sued the directors for fraud. But they were held not liable.
They were not guilty of fraud as they honestly believed that once Parliament
had authorized the use of steam, the consent of the Board was practically
concluded. It follows, therefore, that the person making a false representation
is not guilty of fraud if he honestly believes in its truth.
MISREPRESENTATION
S. 18. "Misrepresentation" defined. — "Misrepresentation" means and
includes—
(1) the positive assertion, in a manner not warranted by the
information of the person making it, of that which is not true, though he
believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an
advantage to the person committing it, or anyone claiming under
him, by misleading another to his prejudice, or to the prejudice of anyone
claiming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake
as to the substance of the thing which is the subject of the agreement.
[IF THERE IS A QUESTION ASKED ON MISREPRESENTATION]
The section includes the following types of misrepresentation:
1. UNWARRANTED STATEMENTS
2. BREACH OF DUTY
3. INDUCING MISTAKE ABOUT SUBJECT MATTER
Derry V. Peek
A company's prospectus contained a representation that the company
had been authorised by a special Act of Parliament to run trams by
steam or mechanical power. The authority to use steam was, in fact,
subject to the approval of the Board of Trade, but no mention was
made of this. The Board refused
consent and consequently the company was wound up. The plaintiff,
having bought some shares, sued the directors for fraud. But they were
held not liable. They were not guilty of fraud as they honestly believed
that once the Parliament had authorised the use of steam, the consent
of the Board was
practically concluded. It follows, therefore, that the person making a
false representation is not guilty of fraud if he honestly believes in its
truth.

MISTAKE
S. 20- Where both the parties to an agreement are under a mistake as
to a matter of fact essential to the agreement, the agreement is void.
Section 20 will come into play:
(1) when both the parties to an agreement are mistaken,
(2) their mistake is as to a matter of fact, and
(3) the fact about which they are mistaken is essential to the
agreement.
Q3) Define consideration and explain the essentials of a valid consideration.
OR
Define consideration. Why is it essential in a contract? Explain the
ingredients of the term consideration as defined in the ICA, 1872.
OR
Explain unlawful object and unlawful consideration in a contract.
OR
Explain the rule no consideration, no contract. State the various exceptions
to the above rule.
In Section 2(d) of the Indian Contract Act consideration is defined as follows:
When, at the desire of the promisor, the promisee 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.
ESSENTIALS OF A VALID CONSIDERATION
The definition of consideration in Section2(d) requires, in the first place, that
the act or abstinence, which is to be a consideration for
the promise, should be done at the desire of the promisor, secondly, that it
should be done by promisee or any other person and, lastly, that the act or
abstinence may have been already executed or is in
the process of being done or may be still executory, that is to say, it is promised
to be done.
1. IT MUST MOVE FROM THE PROMISEE:
• The consideration must be provided by the party to whom the
promise is made (the promisee), and not by a third party.
• This is known as the doctrine of privity of consideration,

established in the case of Dunlop Pneumatic Tyre Co. Ltd.

v. Selfridge & Co. Ltd. (1915).
• The promisee must have some legal relationship with the
promisor, and the consideration must be given in return for the
promise.

- In the case of Chinnaya v. Ramaya (1882), the court held that a promise
made to one person for the benefit of another is not
enforceable, as the consideration must move from the promisee.

2. IT MUST BE OF SOME VALUE, HOWEVER SMALL:

• The consideration can be in the form of an act, forbearance, or a
promise.
• It need not be adequate or proportionate to the value of the
promise, but it must have some value in the eyes of the law.
• This was established in the case of Thomas v. Thomas
(1842), where the court held that the adequacy of the
consideration is not a matter for the court to judge.

- Similarly, in the case of Currie v. Misa (1875), the court defined

consideration as "some right, interest, profit or benefit accruing to the one
party, or some forbearance, detriment, loss or responsibility given, suffered or
undertaken by the other."
3. IT MUST BE REAL AND NOT ILLUSORY:

• The consideration must be genuine and not merely a sham

or a pretense.
• It should have some practical effect and should not be
purely nominal or imaginary.
• This ensures that the contract is not a mere formality and
that the parties have a genuine intention to be bound by the
agreement.

- In the case of Philips v. Eyre (1870), the court held that the
consideration must be something real and not merely a sham or a pretense.
The court stated that "a mere peppercorn does not cease
to be good consideration if it is actually given and accepted as such."
4. IT MUST NOT BE ILLEGAL, IMMORAL, OR OPPOSED TO PUBLIC POLICY:

• The consideration must be lawful and not against the public

interest.
• Contracts involving illegal, immoral, or socially undesirable
activities are not enforceable under the law.
• This ensures that the law does not lend its support to
activities that are detrimental to the public good.
- Similarly, in the case of Gherulal Parakh v. Mahadeodas Maiya (1959), the
Supreme Court of India held that a contract that is opposed to public policy is
void and cannot be enforced.

5. PAST CONSIDERATION IS NO CONSIDERATION:

As a general rule, past consideration (i.e., something done

or promised before the contract was made) is not sufficient
to support a contract.
 However, there are exceptions to this rule, as established in
the case of Sindh v. Dattatraya (1945), where a subsequent
promise to pay for a past voluntary act can be enforceable.
[IF ONLY IT IS ASKED IN THE QUESTION]
Consideration is an essential part of a valid contract under the Indian Contract
Act, 1872 for several key reasons:

1. MUTUAL OBLIGATION AND EXCHANGE:

- Consideration ensures that there is a mutual obligation and
exchange of value between the parties to the contract.
- It creates a sense of reciprocity, where each party gives something in return
for the promise made by the other party.
- This mutual exchange is a fundamental characteristic of a valid
contract, as it prevents one party from being unjustly enriched.

2. LEGAL ENFORCEABILITY:
- Consideration is what transforms a mere promise into a legally
enforceable contract.
- Without consideration, a promise would be a mere gratuitous act or moral
obligation, which is generally not enforceable under the law.
- The presence of consideration provides the necessary legal basis for the
court to enforce the contractual obligations between the parties.

3. INTENTION TO CREATE LEGAL RELATIONS:

- Consideration helps to demonstrate the intention of the parties to create a
legally binding contract, rather than a mere social or
domestic arrangement.
 - The requirement of consideration ensures that the parties have a serious
intention to enter into an agreement that can be enforced by the courts.

4. PREVENTION OF ABUSE:
- The requirement of consideration helps to prevent the abuse of the legal
system, as it ensures that contracts are not made frivolously or without a
genuine exchange of value.
- It protects the parties from being bound by unilateral promises or
agreements that lack a sufficient quid pro quo.

5. CERTAINTY AND OBJECTIVITY:

- Consideration provides an objective basis for determining the validity
of a contract, as it can be more easily ascertained and
measured than the subjective intentions of the parties.
- This helps to ensure legal certainty and predictability in
contractual relationships, which is essential for the proper
functioning of the legal system.

6. PUBLIC POLICY:
- The requirement of consideration is also a matter of public policy, as it
helps to maintain the integrity and credibility of the legal system.
- It ensures that the law does not lend its support to unenforceable or one-
sided agreements that may be contrary to the public interest.
[ANSWER FOR UNLAWFUL OBJECT AND UNLAWFUL CONSIDERATION]
Unlawful Object and Unlawful Consideration in a Contract

Under the Indian Contract Act, 1872, a contract can be considered void if it has
an unlawful object or unlawful consideration. Let's understand these concepts
in detail:

UNLAWFUL OBJECT:
1. Definition: An unlawful object is one that is prohibited by law or is against
public policy.
2. Examples:
- A contract to commit a crime, such as murder or robbery.
- A contract to assist in the smuggling of goods or to evade taxes.
- A contract to promote prostitution or gambling.
- A contract that interferes with the administration of justice, such as a
contract to stifle a prosecution.

3. Consequences:
- If the object of a contract is unlawful, the entire contract becomes void and
unenforceable.
- The court will not lend its aid to enforce such a contract, as it would
be against public policy.

UNLAWFUL CONSIDERATION:
1. Definition: Unlawful consideration is a consideration that is
prohibited by law or is against public policy.
2. Examples:
- A promise to pay someone for committing a crime.
- A promise to pay a bribe to a public official.
- A promise to pay for the sale of illicit drugs or other illegal goods.
- A promise to pay for the commission of an immoral act, such as
prostitution.

3. Consequences:
- If the consideration for a contract is unlawful, the entire contract becomes
void and unenforceable.
- The court will not recognize or enforce such a contract, as it would be
against the public interest.

Relevant Case Laws:

1. Gherulal Parakh v. Mahadeodas Malviya (1959):
• The case involved a partnership agreement between two
parties, which contained a clause restricting the parties
from engaging in certain business activities even after
the dissolution of the partnership.
• One of the parties later sought to restrain the other party
from violating the terms of the agreement.
• The Supreme Court of India held that a contract that is
opposed to public policy is void and cannot be enforced.
2. Kedar Nath Motani v. Pravin Chandra (1959):

The case involved a contract for the sale of a

government office between two private individuals.
One party sought to enforce the contract against the
other party who had refused to perform their part of
the agreement.
 • The court ruled that a contract to sell a government office
is void as it has an unlawful object.

[WRITE THIS IF IN THE QUESTION IT IS ASKED ABOUT EXCEPTION TO

CONSIDERATION]
Exceptions under Section 25, Contract Act Indian law, however, does not
recognise any such exception. But Section 25 of the Contract Act lays down a
few exceptions.
S. 25. An agreement made without consideration is void, unless. —
(1) IT IS IN WRITING AND REGISTERED. —It is expressed in writing and
registered under the law for the time being in force for registration of
[documents], and is made on account of natural love and affection
between parties standing in a near relation to each other; or unless
(2) OR IS A PROMISETO COMPENSATEFOR SOMETLIING DONE. —It is
a promise to compensate, wholly or in part, a person who has
already voluntarily done something for the promisor, or something which the
promisor was legally compellable to do; unless
(3) ORIS A PROMISE TO PAY A DEBT BARRED BY LIMITATION LAW.—It
isa promise, made in writing and signed by the person to be charged
therewith, or by his agent generally or specially authorised in that behalf, to
pay wholly or in part a debt of which the creditor might have enforced
payment but for the law for the limitation of suits.
1. NATURAL LOVE AND AFFECTION
The essence of the first exception is that a written and registered agreement
based on natural love and affection between near
relatives is enforce able without consideration. The Act provides no guidance,
nor has the expression been judicially construed. The expression will without
doubt include parties related by blood or
marriage. There is always some degree of instinctive love and
affection between parties nearly related. But this instinct may
sometimes be overruled by external circumstances.
Thus, for example, in Rajlukhy Dabee v Bhootnath Mookerjee-The defendant
promised to pay his wife a fixed sum of money every month for her separate
residence and maintenance. The agreement was contained in a registered
document which mentioned certain quarrels and disagreements between the
two. The Calcutta High
Court refused to regard the agreement as one covered by the exception. The
court could find no trace of love and affection between the parties whose
quarrels had compelled them to separate.
2. PAST VOLUNTARY SERVICE
Secondly, a promise to compensate wholly or in part, a person who has
already voluntarily done something for the promisor, is
enforceable. In other words, a promise to pay for a past voluntary service is
binding. It is necessary to attract this exception that the service should
have been rendered voluntarily and for the
promisor.
Chinnaya v. Ramaya (1882)

• The case involved a dispute over the validity of a promise

made by a father-in-law to his daughter-in-law.
• The father-in-law had promised to pay a certain sum of
money to his daughter-in-law, which she had received and
used for her own benefit.
• After the father-in-law's death, his legal heirs refused to
honor the promise made to the daughter-in-law.
• The Madras High Court held that the promise made by the
father-in-law to the daughter-in-law was a valid and
enforceable contract, despite the lack of consideration at the
time the promise was made.

3. TIME-BARRED DEBT
Lastly, a promise to pay a time-barred debt is enforceable. The promise should
be in writing. It should also be signed by the
promisor or "by his agent generally or specially authorised in that
behalf". The promise may be to pay the whole or any part of the debt. The
debt must be such "of which the creditor might have enforced payment but
for the law for the limitation of suits".
Sindh v. Dattatraya (1945)

• The case involved a dispute over the validity of a promise

made by the defendant to pay a time-barred debt to the
plaintiff.
• The plaintiff had previously loaned a certain sum of money
to the defendant, but the debt had become time-barred
under the Limitation Act.
• The defendant subsequently promised to pay the debt, and
the plaintiff sought to enforce this promise.

• The main issue was whether the defendant's promise to pay

the time-barred debt was a valid and enforceable contract,
or if it was void for lack of consideration.
• The Bombay High Court held that the defendant's promise
to pay the time-barred debt was a valid and enforceable
contract.
Q4) Explain the various ways in which a contract may be discharged.
OR
Explain the provision relating to discharge of a contract by breach in the light
of relevant case laws.
OR
Explain the doctrine of frustration of contract with the help of relevant case
laws.
A contract may be discharged:
(1) by Performance; [Ss.31-67]
(2) by Impossibility of Performance; [S. 56]
(3) by Agreement; [Ss.62-67] and
(4) by Breach.

PERFORMANCE OF CONTRACTS
S. 37. Obligation of parties to contracts. — The parties to a contract must
either perform, or offer to perform their respective promises, unless such
performance is dispensed with or excused under the
provisions of this Act, or of any other law. Promises bind the representative of
the promisors in case of the death of such
promisors before performance, unless a contrary intention appears from the
contract.
- This is the most common way of discharging a contract, where the parties
fulfill their respective obligations as per the terms of the contract.
- The performance must be in strict accordance with the terms of the contract.
- Partial performance may also discharge the contract, if accepted by the
other party.
- The performance must be completed within the stipulated time, unless
the time is extended by mutual agreement.
Janardan Rai Bhagwandas & Co. v. Utility Stores Corporation of Pakistan
Ltd. (1983)
DISCHARGE BY MUTUAL AGREEMENT
S. 62. Effect of novation, rescission and alteration of contract. — If the parties
to a contract agree to substitute a new contract for it, or to rescind or alter it,
the original contract need not be performed
- The consent of all the parties to the contract is required to
discharge the contract by mutual agreement.
- The parties to a contract can mutually agree to discharge the
contract, either by rescission (cancellation) or by novation
(replacement with a new contract).
- The new contract must be valid and enforceable to effectively
discharge the original contract.

NOVATION- When the parties to a contract agree to substitute the existing

contract with a new contract, that is called novation.
novation is of two kinds, namely:
(1) a novation involving change of parties; and
(2) a novation involving substitution of a new contract in place of the old.
RESCISSION- Rescission is the act of undoing or setting aside a contract,
effectively rendering it void and putting the parties back in their pre-
contract positions.

Grounds for Rescission: There are various grounds on which a contract can be
rescinded, including:

• Misrepresentation or fraud by one of the parties

• Mistake or error that goes to the root of the contract
• Breach of a contractual term by one party
• Impossibility of performance
• Undue influence or duress
- Afzalunnisa Begum v. Mohammad Amin (1980)

• Afzalunnisa Begum entered into an agreement to sell a piece of land to

Mohammad Amin.
• Amin paid part of the consideration amount, but Afzalunnisa refused to
execute the sale deed.
• Amin filed a suit seeking specific performance of the agreement.
• The Allahabad High Court held that the agreement between Afzalunnisa
and Amin had been discharged by mutual agreement.

-Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas & Co. (1966)

• Bhagwandas Goverdhandas Kedia entered into a contract with

Girdharilal Parshottamdas & Co. for the supply of certain goods.
• A dispute arose between the parties regarding the quality and quantity
of the goods supplied.
• Girdharilal Parshottamdas & Co. claimed that the parties had mutually
agreed to rescind (cancel) the contract.
• The Supreme Court of India held that the contract could not be
rescinded without the consent of all the parties involved.

DISCHARGE BY IMPOSSIBILITY OF PERFORMANCE

S. 56. Agreement to do impossible act. —An agreement to do an act
impossible in itself is void.
Contract to do act afterwards becoming impossible or unlawful. — A contract
to do an act which, after the contract is made, becomes impossible, or, by
reason of some event which the promisor could
not prevent, unlawful, becomes void when the act becomes impossible or
unlawful.
Compensation for loss through non-performance of act known to be
impossible or unlawful. — 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
unlawful, such promisor must make compensation to such promisee for any
loss which such promisee sustains through the non-performance of the
promise.
- A contract can be discharged if its performance becomes impossible or illegal
due to the occurrence of an unforeseen event.
- The court emphasized that the test of impossibility is not based on the
literal meaning of the word "impossible" but on the reasonable practicability
of the performance.
- The event that renders the performance impossible must be such that it
fundamentally changes the nature of the contract.

Satyabrata Ghose v. Mugneeram Bangur & Co. (1954)

• The case involved a contract for the hire of premises owned by the
respondent (Mugneeram Bangur & Co.) to the appellant (Satyabrata
Ghose) for use as a childcare business.
• After World War II broke out, the government requisitioned the
premises for use as an Army Welfare Centre, making it impossible for
the appellant to use the premises for the intended purpose.
• The Supreme Court held that the contract was discharged by frustration
due to the supervening event of the requisition of the premises by the
government.
• The court ruled that the doctrine of frustration applies when an
unforeseen event occurs, making the performance of the contract
impossible or radically different from what was originally contemplated
by the parties.

DISCHARGE BY BREACH

According to sec 39, if a party to a contract without a valid or lawful reason,

refuses to perform his obligation under the contract, the other party has the
right to repudiate the contract.

Types of breach-

1. Actual breach- if a party to a contract fails to perform his obligation

under the contract in stipulated time or refuses to perform such
obligation, then such breach of contract is called actual breach.

2. Anticipatory breach- if a party to a contract, before the stipulated time of

his performance, by word of mouth or by behavior, makes known to be
anticipatory breach of contract.
IF THE QUESTION ASKED FOR DOCTRINE OF FRUSTRATION OF CONTRACT,
THEN ADD THE FOLLOWING MATTER]
The doctrine of frustration is a well-established principle in Indian contract
law, which provides for the discharge of a contract when an unforeseen event
occurs, rendering the performance of the contract impossible or radically
different from what was originally contemplated by the parties. This doctrine
finds its basis in the Indian Contract Act, 1872, and has been further
developed through various judicial pronouncements.
The essentials of the doctrine of frustration are as follows:

1. There must be a valid and subsisting contract between the parties.

2. An unforeseen and unexpected event must occur, which is not caused
by the parties and is beyond their control.
3. The event must make the performance of the contract impossible or
fundamentally altr the circumstances in which the contract was agreed upon.
4. The event must not be due to the fault or negligence of either party.
5. The event must not have been contemplated or provided for in the contract
by the parties.

Ganga Saran & Sons Ltd. v. Sunderam Metropolitan Ltd. (1984)

• Ganga Saran & Sons Ltd. entered into a contract with Sunderam
Metropolitan Ltd. for the purchase of high-density polyethylene
granules.
• Due to a sharp increase in the price of crude oil, there was a steep rise in
the price of the granules, making the contract commercially unviable for
Sunderam Metropolitan Ltd.
• Sunderam Metropolitan Ltd. refused to deliver the granules, citing
frustration of contract.
• The Supreme Court held that the contract was not frustrated and that
Sunderam Metropolitan Ltd. was liable to perform the contract.

When a contract is frustrated, it is automatically discharged, and both parties are

relieved from their respective obligations. No damages can be claimed by either
party for non-performance, as the frustrating event was beyond their control.
However, any benefit received, or payment made under the contract before the
frustrating event must be restored or compensated for. It is important to note
that the doctrine of frustration is subject to certain exceptions and limitations. It
does not apply if the event rendering the performance impossible was
contemplated by the parties and provided for in the contract. It also does not
apply if the event was due to the fault or negligence of either party. Additionally,
the doctrine is subject to any statutory provisions or specific contract terms that
may override its application.
In conclusion, the doctrine of frustration is a crucial principle in Indian
contract law that provides relief to parties when an
unforeseen event occurs, making the performance of the contract impossible
or fundamentally alters the circumstances in which the contract was agreed
upon. The relevant case laws have helped in shaping and clarifying the scope
and application of this doctrine, ensuring fairness and equity in contractual
relationships.
DISCHARGE BY BREACH OF CONTRACT
"A breach of contract occurs when a party thereto renounces his
liability under it, or by his own act makes it impossible that he should perform
his obligations under it or totally or partially fails to perform such obligations."
The failure to perform or renunciation may take
place when the time for performance has arrived or even before that. Thus,
breach is of two kinds, namely:
(1) anticipatory breach, and
(2) present breach.
- When one party to the contract fails to perform its obligations as per the
terms of the contract, the other party can seek to discharge the contract and
claim damages.
 - In the case of Bawri v. Gopal Chandra Bose (1910), the court held that a
material breach of contract by one party can entitle the other party to treat
the contract as discharged and claim damages.
- The court emphasized that the nature and extent of the breach must be
evaluated to determine whether it is sufficiently serious to warrant the
discharge of the contract.
- The breach of contract must be material and substantial, and not merely
trivial.
- The nature and extent of the breach must be evaluated to
determine whether it is sufficiently serious to warrant the discharge of the
contract.
- The non-breaching party must choose to treat the contract as
discharged and claim damages, rather than insisting on performance.
[IF THE QUESTION IS ASKED FOR DISCHARGE BY BREACH OF CONTRACT THEN
ADD THE FOLLOWING]
Essentials for Discharge by Breach:
1. Materiality of Breach:
• The breach must be material or substantial, and not merely
trivial or minor.
• The nature and extent of the breach must be evaluated to
determine whether it is sufficiently serious to warrant the
discharge of the contract.
• This principle was established in the case of Bawri v. Gopal
Chandra Bose (1910), where the court held that a material
breach of contract by one party can entitle the other party to
treat the contract as discharged and
claim damages.

2. Intention of the Non-Breaching Party:

• The non-breaching party must choose to treat the
contract as discharged due to the breach.
• The non-breaching party has the option to either insist
on performance or terminate the contract and claim
damages.
• This was highlighted in the case of Sohan Lal Naraindas v.
Laxmidas Raghunath Prasad (1971), where the court
held that the non-breaching party must make it clear
whether they intend to treat the
contract as discharged or not.
 3. Repudiation of Contract:
• In cases of anticipatory breach or repudiation of the
contract, the non-breaching party may treat the contract
as discharged even before the due date of performance.
• The case of Chand Mal v. Ganpat Rai (1925) established
that if one party repudiates the contract before the due
date of performance, the other party
may treat the contract as discharged and claim damages.

ANTICIPATORY BREACH
Meaning - "An anticipatory repudiation occurs when prior to the
promised date of performance, the promisor absolutely repudiates the
contract." It is an announcement by the contracting party of his intention not
to fulfil the contract and that he will no longer be bound by it. This kind of
anticipatory renunciation has certain effects upon the rights of the parties.
ESSENTIALS-

Express Intention Not to Perform: The party must expressly

communicate, through words or conduct, an absolute and
unequivocal intention not to perform their contractual
obligations. This intention must leave no room for future
performance.
Communication Before Due Date: The intention not to
perform must be communicated before the due date of
performance. This distinguishes anticipatory breach from
an actual breach, which occurs on or after the due date.
 Option to Treat the Contract as Discharged: The aggrieved
party has the option to either treat the contract as
discharged or to keep the contract alive and insist on
performance.
Claiming Damages: If the aggrieved party chooses to treat
the contract as discharged, they can claim damages for the
loss incurred up to the time of anticipatory breach.
Retraction of Repudiation: In some cases, the party who
repudiated the contract may be allowed to retract their
repudiation before the due date of performance. The
retraction must be unequivocal and unconditional.
Chand Mal V. Ganpat Rai

• Chand Mal entered into a contract with Ganpat Rai for the
sale of certain goods.
• Before the due date of delivery, Ganpat Rai expressed his
intention to not perform the contract by stating that he would
not deliver the goods.
• The court held that Ganpat Rai's statement amounted to an
anticipatory breach or repudiation of the contract.
• It ruled that if one party repudiates the contract before the
due date of performance, the other party may treat the
contract as discharged and claim damages.
ACTUAL BREACH
Section 39 of the Indian Contract Act, 1872 states:
"When a party to a contract has refused to perform, or disabled
himself from performing, his promise in its entirety, the promisee
may put an end to the contract, unless he has signified, by words
or conduct, his acquiescence in its continuance."
This section implies that when a party fails to perform their
contractual obligations, either by refusing to perform or by
disabling themselves from performing, it constitutes a breach of
contract. This failure to perform at the time when performance is
due can be considered an "actual breach".
ESSENTIALS

1. Failure to perform contractual obligations: The party must

have failed to fulfill their obligations under the contract,
either by non-performance, defective performance, or
delayed performance.
2. Timing of non-performance: The non-performance must
occur on or after the due date of performance, as stipulated
in the contract.
3. Repudiation by conduct: In some cases, the conduct of a
party may amount to a repudiation of the contract, even
without an express refusal to perform.
Behari Lal v. Parashram (1958)

• Behari Lal entered into a contract with Parashram for the

sale of certain goods.
• The contract stipulated a specific date for the delivery of the
goods.
• Parashram failed to deliver the goods on the agreed-upon
date.
• The court held that Parashram's failure to deliver the goods
on the agreed date amounted to an actual breach of
contract.
• It ruled that when a party fails to perform their contractual
obligations at the stipulated time, it constitutes a breach of
contract.
Q5) What are the different types of injunctions under Specific Relief Act?
When can an injunction be refused?
OR
Write a detailed note on Injunction and kinds of Injunction under the Specific
Relief Act, 1963.
"Injunction has been defined to be a judicial process, by which one who has
invaded or is threatening to invade the rights, legal or equitable, of another is
restrained from continuing or commencing such wrongful act." Injunction acts
in personam. It does not run with the property. It is a negative order by the
court that restrains a party from doing something.
An injunction may be issued for and against individuals, public bodies or even
the State. Disobedience of an injunction is punishable as contempt of court.
There are three characteristics of an injunction:
(i) it is a judicial process,
(ii) the relief obtained thereby is a restraint or prevention, and
(iii) the act prevented or restrained is wrongful.
An injunction will not be issued—
(i) where damages are the appropriate remedy,
(ii) where injunction is not the appropriate relief,
(iii) where the plaintiff is not entitled to an injunction on account of his
conduct,
(iv) where the contract cannot be specifically enforced,
(v) where the injunction would operate inequitably.

Types of Injunctions:

1. TEMPORARY INJUNCTION:

- This injunction is granted by the court to maintain the status quo or

prevent irreparable harm until the final adjudication of the matter.
 - It is typically sought when there is urgency and immediate relief is required
to prevent imminent harm or loss.
The procedure for granting temporary injunction is governed by the rules laid
down in Order XXXIX, Rules 1 and 2, Civil Procedure Code which reads as
under:
Cases in which temporary injunction may be granted
A temporary injunction may be granted in the following cases:
1. For protection of interest in property
This category will cover the following cases:
(a) that any property in dispute in a suit is in danger of
being wasted, damaged or alienated by any party to the suit, or
wrongfully sold in execution of a decree, or
(b) that the defendant threatens, or intends, to
remove or dispose of his property with a view to defraud his
creditors,
(c) that the defendant threatens to dispossess the
plaintiff or otherwise cause injury to the plaintiff in relation to
any property in dispute in the suit.
the court may by order grant a temporary injunction to restrain such act, or
make such other order for the purpose of staying and
preventing the wasting, damaging, alienation, sale, removal or
disposition of the property as the court thinks fit until the disposal of the suit or
until further orders.
2. Injunction to restrain repetition or continuance of breach
(1) In any suit for restraining the defendant from
committing a breach of contract or other injury, of any kind,
whether compensation is claimed in the suit or not, the plaintiff may, at
any time after the commencement of the suit, and
either before or after judgment, apply to the court for a temporary
injunction to restrain the defendant from
committing the breach of contract or injury complained of, or
 any breach of contract or injury of a like kind arising out of the same
contract or relating to the same property or right.
(2) The court may by order grant such injunction, on such terms
as to the duration of the injunction, keeping an account, giving security,
or otherwise, as the court thinks fit. The matter of temporary
injunctions is not governed by the Specific Relief Act.3
- Case Law: American Cyanamid Co. v. Ethicon Ltd.(1975) is a
landmark case that established the principles for granting temporary
injunctions, emphasizing the balance of convenience and the
likelihood of success on the merits.

2. PERPETUAL INJUNCTION:
- This injunction is issued to permanently prevent the commission of a
wrongful act or to restrain the defendant from continuing a
wrongful act.
- It operates indefinitely until it is modified or rescinded by the court.
S. 38. Perpetual injunction when granted. —
(1) Subject to the other pro visions contained in or referred to by this chapter, a
perpetual injunction may be granted to the plaintiff to prevent the breach of an
obligation existing in his favor, whether expressly or by implication.
(2) When any such obligation arises from contract, the court shall be guided
by the rules and provisions contained in Chapter II.
(3) When the defendant invades or threatens to invade the plaintiff's right to,
or enjoyment of, property, the court may grant a perpetual injunction in the
following cases, namely—
(a) where the defendant is trustee of the property for the
plaintiff;
(b) where there exists no standard for ascertaining the actual damage
caused, or likely to be caused, by the invasion;
 (c) where the invasion is such that compensation in money would
not afford adequate relief;
(d) where the injunction is necessary to prevent a multiplicity of judicial
proceedings.
Requirements for applicability
The conditions prerequisite to the applicability of this section
are—
(1) there must be a legal right express or implied in favour of
the applicant;
(2) such a right must be violated or there should be a
threatened invasion;
(3) such a right should be an existing one;
(4) the case should be fit for the exercise of the court's discretion.
Where the inconvenience likely to result from granting injunction is greater
than that which is likely to arise from withholding it, the injunction should
not be granted;
(5) it should not fall within the sphere of the restraining
provisions contained in, or referred to, in Section 41 of the Specific Relief Act.
- Case Law: In Gurdyal Singh v. Rajah of Faridkot (1895), the Privy Council
held that perpetual injunctions could be granted to prevent breaches of trust
and protect equitable rights.

3. MANDATORY INJUNCTION:

- This injunction compels the defendant to perform a specific act rather

than merely restraining them from doing something.
- It is granted when damages are not an adequate remedy to rectify the harm
caused.
S.39. Mandatory injunctions. —When, to prevent the breach of an obligation,
it is necessary to compel the performance of certain acts which the court is
capable of enforcing, the court may in its
discretion grant an injunction to prevent the breach complained of, and to
compel performance of the requisite acts. The injunction which commands the
defendant to do something is termed as "Mandatory Injunction". Salmond
defines mandatory injunction as "an order requiring the defendant to do a
positive act for the
purpose of putting an end to a wrongful state of things created by
him, or otherwise, in fulfilment of the legal obligations, for example, an order
to pull down a building which he has already erected to the obstruction of the
plaintiff's lights".
Section 39 of the Specific Relief Act, 1963, reads: "When, to prevent the breach
of an obligation, it is necessary to compel the performance of certain acts
which the court is capable of enforcing, the court may in its discretion grant an
injunction to prevent the breach complained of, and also to compel
performance of the requisite acts."
- Case Law: In Midnapur Zamindary Co. v. Naresh Narayan Roy (1920), the
Calcutta High Court held that mandatory injunctions
could be granted to compel the removal of encroachments on land.

S.41. Injunction when refused. —

injunction cannot be granted—
(a) to restrain any person from prosecuting a judicial proceeding pending
at the institution of the suit in which the injunction is
sought, unless such restraint is necessary to prevent a multiplicity of
proceedings;"
(b) to restrain any person from instituting or prosecuting any
proceeding in court not subordinate to that from which the
injunction is sought;
(c) to restrain any person from applying to any legislative body;
(d) to restrain any person from instituting or prosecuting any
proceeding in a criminal matter;"
(e) to prevent the breach of a contract the performance of which would
not be specifically enforced;
(f) to prevent, on the ground of nuisance, an act of which it is not
reasonably clear that it will be a nuisance;
(g) to prevent a continuing breach in which the plaintiff has
acquiescenced;
(h) when equally efficacious relief can certainly be obtained by any other
usual mode of proceeding except in case of breach of trust;
(i) when the conduct of the plaintiff or his agents has been such as to disentitle
him to the assistance of the court;
(j) when the plaintiff has no personal interest in the matter.

Q6) Define Proposal. When is the communication of proposal, acceptance

and revocation complete?
S.2(a). 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 is said to make a proposal;
S.2(c). The person making the proposal is called the "promisor", and the
person accepting the proposal is called the "Promisee". In view of the above
definition, a proposal is in the first place an expression of the offeror's
willingness to do or to abstain from doing something.
Secondly, it should be made with a view to obtaining the assent of the offeree
to the proposed act or abstinence.
COMMUNICATION OF PROPOSAL
The first part of the definition of "proposal" lays emphasis upon the
requirement that the willingness to make a proposal should be
"signified". To signify means to indicate or declare. In the traditional language
of the law of contract, it means that the proposal should be
communicated to the other party. The process of making a proposal is
completed by the act of communicating it to the other party.
Section 3 recognises the modes of communication:
S. 3. Communication, acceptance and revocation of proposals. —The
communication of proposals, the acceptance of proposals, and the
revocation of proposals and acceptances, respectively, are deemed to be made
by any act or omission of the party proposing, accepting or revoking, by which
he intends to communicate such proposal,
acceptance or revocation, or which has the effect of communicating it.
Thus, a proposal may be communicated in any way which has the effect of
laying before the offeree the willingness to do or abstain." It may, for example,
be done by word of mouth, or by writing, or even by conduct.
COMMUNICATION OF PROPOSAL
S. 4. Communication when complete. — The communication of a
proposal is complete when it comes to the knowledge of the person to whom
it is made. Obviously, therefore, an offer cannot be accepted unless and until
it has been brought to the knowledge of the person to whom it is made.
Lalman Shukla v Gauri Datt.
Defendant's nephew absconded from home. He sent his servant in
search for the boy. When the servant had left, the defendant offered to pay
Rs501 to anybody discovering the boy by hand. The
servant came to know of this offer only when he had already traced the
missing child. He, however, brought an action to recover the
reward. But his action failed. "A suit like the present can only be founded on a
contract. In order to constitute a contract, there must be an acceptance of an
offer and there can be no acceptance unless there is knowledge of the offer."
COMMUNICATION OF ACCEPTANCE
S. 2(b). Acceptance- When the person to whom the proposal is made signifies
his assent thereto, the proposal is said to be accepted. A proposal, when
accepted, becomes a promise.
Thus "acceptance" is the assent given to a proposal, and it has the effect of
converting the proposal into promise.
The communication of acceptance becomes complete as against the proposer
when it is put in a manner that it comes to the knowledge of the proposer. In
other words, acceptance need not be communicated directly to the
proposer; it is sufficient if it is communicated in a manner where the proposer
becomes aware of it.
MODE OF COMMUNICATION
1. Acceptance should be made in prescribed manner
2. Where no manner prescribed: reasonable and usual
manner
S. 4. Communication when complete. — The communication of an
acceptance is complete, as against the proposer, when it is put in a course of
transmission to him, to be out of the power of the acceptor; as against the
acceptor, when it comes to the knowledge of the proposer.
Ram Das Chakarbarti v Cotton Ginning CoLtd.
A letter of allotment of shares was claimed to have been posted by a company,
but the applicant denied to have received it. The High
Court said: "It follows from this (Sections 4 and 5) that a notice of
allotment, which is the acceptance of the offer to purchase shares, is
communicated to the allottee when it is despatched, and from that moment
there is a complete contract for him. Whether or not he
receives the letter is absolutely immaterial. However, the company failed to
furnish any evidence of the posting of the notice of
allotment.
The contract is concluded at the place from where the proposal is accepted
and communication of acceptance is dispatched, i.e. the
 address at which the proposal was sent. The court at that place would
have jurisdiction to entertain a cause of action under the contract.
COMMUNICATION OF REVOCATION
S. 6. Revocation how made. — A proposal is revoked—
(1) by the communication of notice of revocation by the proposer to the
other party;
(2) by the lapse of the time prescribed in such proposal for its
acceptance or, if no time is so prescribed, by the lapse of a
reasonable time, without communication of the acceptance;
(3) by the failure of the accept or to fulfil a condition precedent to
acceptance; or
(4) by the death or insanity of the proposer, if the fact of his death or insanity
comes to the knowledge of the acceptor before acceptance.
Henthorn v Fraser (1892)
The court ruled that acceptance in a unilateral contract is effective upon
performance of the requested act, even if the offeror is
unaware of it. In this case, the contract was formed when the offeree posted
their acceptance, not when the offeror received it. This established an
important precedent in contract law regarding the
timing of acceptance in unilateral contracts.
Q7) A contract emerges from the acceptance of an offer. Explain in detail
the legal rules relating to valid acceptance with the help of relevant case
laws.
Q8) An agreement enforceable by law is a contract. Discuss the definition
and bring out clearly the essentials of a valid contract.
Q9) What is the offer? State the legal rules relating to a valid offer.

Ans 7. Section 2(b) of Indian contract act, 1872 define acceptance as, when the
person to whom the offer is made signifies his assent thereto, the offer is said to
be accepted.
An offer can be accepted by
- The person to whom it is made. Acceptance by any other person is not a
valid acceptance.
- If an offer is made by A to B, only B can accept the offer or reject the offer.
But if it is a general offer, then anybody can accept it.
Case law- boulton vs. Jones
RULES OF ACCEPTANCE
1. Acceptance must be absolute and unconditional-
The acceptance to be binding, must be absolute and unqualified. Qualified
acceptance is not a contractual acceptance.
For ex. A proposes to sell his watch to B for 1000, to which B says that he is
prepared to pay only 800 for it. This is a counteroffer from B to A.
When the counteroffer is made, the original offer is no longer valid. And until the
counteroffer is accepted by the original offeror there can be no agreement.
2. Acceptance must be communicated to the offeror-
If the acceptance of the offer is not communicated to the person making
the offer, the acceptance is not valid in terms of law.
Case law- Brogdon vs. Metropolitan Rail Company
A draft agreement relating to the supply of coal was sent to the manager of the
company for his approval. The manager wrote the word “approved” and put the
draft in his drawer intending to send it to the company’s solicitor for a formal
agreement to be drawn up. The document remained in the drawer by oversight
and the court ruled that there did not exist a contract since the accepance was
not communicated to the offeror.
3. Acceptance must be made in prescribed manner-
According to section 7(2) of the act, if the person making the offer has prescribed
a method for its acceptance, the acceptance must be by that method.
4. The proposer cannot prescribe the method of refusal-
The proposer needs to be informed if the offer made by him is accepted, but he
cannot insist on him being informed of its non-acceptance.
5. An offer once rejected, cannot be accepted until it is renewed.
6.