CONTRACT LAW-1: PART-A

A contract creates?
Definition: A contract creates legal obligations between parties that are enforceable by law.

Purpose: To establish mutual rights and duties.

Example: A agrees to sell a car to B for ₹5 lakh; both are legally bound to perform.

Pari delicto?
Definition: "In equal fault" – when both parties to an illegal contract are equally guilty.

Purpose: Courts generally do not assist either party in such cases.

Example: A and B agree to smuggle goods; neither can sue the other for non-performance.

Champerty?
Definition: An agreement where a third party funds litigation in return for a share of the proceeds.

Purpose: Historically illegal, but now permissible in India if not against public policy.

Example: X funds Y’s lawsuit for a 40% share of the award.

Provision of "Acceptance must be absolute"?

Definition: Section 7(1) of ICA states acceptance must be absolute and unqualified.

Purpose: Ensures clarity and mutual assent.

Example: A offers to sell a house for ₹10 lakh; B’s acceptance with a condition of ₹9 lakh is not valid.

Which Article empowers the Government to enter into a contract?

Definition: Article 299 of the Constitution of India governs government contracts.

Purpose: Ensures contracts are made in the name of the President/Governor and duly authorized.

Example: A contract for road construction signed by a government officer on behalf of the state.

Provision of "Reciprocal promises"?

Definition: Section 2(f) defines reciprocal promises as mutual promises forming the consideration of a
contract.

Purpose: Both parties undertake obligations.

Example: A promises to deliver goods, and B promises to pay ₹5000.

An agreement without consideration?
Definition: Section 25 states it’s void unless it falls under exceptions (e.g., natural love, past voluntary
service).

Purpose: Consideration validates enforceability.

Example: A promises to gift B ₹1000 without any return; it’s unenforceable unless in writing and
registered.

Provision of "Revocation of proposals and Acceptance"?

Definition: Section 5 allows revocation of a proposal before acceptance is communicated, and
acceptance before it reaches the proposer.

Purpose: Provides flexibility before binding obligation.

Example: A revokes an offer to sell a bike before B accepts.

Solus agreement?
Definition: An agreement restricting a party to deal exclusively with one supplier.

Purpose: Ensures market control but may be void if it restrains trade (Section 27).

Example: A retailer agrees to sell only X’s brand of oil.

Unacceptable offers create?

Definition: Offers not accepted as per Section 7 create no contract.

Purpose: Prevents vague agreements.

Example: A’s conditional acceptance to B’s offer creates a counter-offer, not a contract.

Agreement?
Definition: Section 2(e) – every promise or set of promises forming consideration for each other.

Purpose: Foundation of a contract.

Example: A agrees to paint B’s house for ₹5000.

An agreement made by a minor?

Definition: Void ab initio (Section 11) as minors lack capacity to contract.

Purpose: Protects minors from liability.

Example: A 16-year-old buys a phone on credit; the seller cannot enforce payment.

Invitation to treat?
Definition: An invitation to make an offer, not an offer itself.
Purpose: Initiates negotiation.

Example: Goods displayed in a shop window with prices.

Counter offer?
Definition: A response to an offer that modifies its terms, rejecting the original offer.

Purpose: Clarifies terms before acceptance.

Example: A offers a car for ₹5 lakh; B counters with ₹4 lakh.

Estoppel?
Definition: Section 115 of the Indian Evidence Act – a party cannot deny a fact they caused another to
believe and act upon.

Purpose: Prevents injustice from inconsistent positions.

Example: A promises B a job, B quits his old job; A cannot deny the promise.

PART B
An agreement enforceable by law - explain
Definition: Section 2(h) defines a contract as an agreement enforceable by law.

Purpose: Distinguishes legally binding agreements from social ones.

Example: A agrees to sell land to B for ₹10 lakh; enforceable if lawful and with consideration.

"Necessaries supplied to a person incapable of entering into a contract" -

Critically analyse
Definition: Section 68 allows reimbursement for necessaries supplied to a minor or incompetent person.

Purpose: Ensures basic needs are met without exploiting incapacity.

Example: A supplies food to a minor; A can claim payment from the minor’s estate.

Analysis: Balances protection with fairness but is limited to essentials (e.g., not luxury goods).

Distinction between offer and invitation to offer

Offer: A definite proposal capable of acceptance (Section 2(a)). E.g., “I’ll sell my car for ₹5 lakh.”

Invitation to Offer: A preliminary step inviting offers. E.g., an auction advertisement.

Purpose: Offer leads to a contract; invitation initiates negotiation.

The doctrine of privity of contract - explain

Definition: Only parties to a contract can sue or be sued under it.
Purpose: Limits liability to contractual parties.

Example: A contracts B to pay C; C cannot sue A (exception: trusts, agency).

"Consideration is the essence of every contract" - Explain with case laws

Definition: Section 2(d) – something of value exchanged.

Purpose: Ensures mutual benefit.

Case Law: Chinnaya v. Ramayya (1882) – a gift deed with consideration was upheld.

Example: A pays B ₹5000 to paint a house.

What are the exceptions to minor contracts?

Definition: Minors’ contracts are void, but exceptions include:

Necessaries (Section 68).

Beneficial contracts (e.g., apprenticeship).

Purpose: Protects minors while allowing essentials.

Example: A minor’s contract for education is valid.

Define coercion - Distinguish between coercion and duress

Definition: Section 15 – committing an act forbidden by IPC to induce consent.

Purpose: Vitiates free consent.

Coercion vs. Duress: Coercion is broader (includes threats to property); duress is physical compulsion.

Example: A threatens to burn B’s house unless B signs; it’s coercion.

"Nemo debit locupletari ex aliena jactura" - explain

Definition: “No one should be enriched at another’s expense” – basis of unjust enrichment.

Purpose: Prevents unfair gain.

Example: A mistakenly pays B ₹5000; B must return it.

Explain mistake of law and mistake of fact

Mistake of Law: Section 21 – no relief unless it’s foreign law. E.g., ignorance of tax law.

Mistake of Fact: Section 20 – voids contract if bilateral. E.g., A sells a cow both believe is alive, but it’s
dead.

Distinction between "misrepresentation and fraud"

Misrepresentation: Section 18 – innocent false statement. E.g., A wrongly states a car’s mileage.
Fraud: Section 17 – intentional deception. E.g., A hides a car’s accident history.

Purpose: Fraud allows damages; misrepresentation only rescission.

What is free consent? State its essentials and impact on a contract?

Definition: Section 14 – consent without coercion, fraud, etc.

Essentials: Willingness, knowledge, absence of vitiating factors.

Impact: Lack of free consent makes a contract voidable.

Example: A signs under threat; contract is voidable.

Wagering agreements - explain

Definition: Section 30 – agreements based on uncertain events with no interest beyond winning/losing.

Purpose: Declared void to curb gambling.

Example: A bets B ₹1000 on a horse race; unenforceable.

Modes of Discharge of contracts - explain

Definition: Termination of obligations – performance, agreement, breach, impossibility, lapse of time.

Purpose: Ends contractual duties.

Example: A delivers goods, B pays; contract discharged by performance.

Distinguish between void and voidable contracts

Void: Section 2(g) – unenforceable from the start. E.g., minor’s contract.

Voidable: Section 2(i) – valid until rescinded. E.g., contract by coercion.

Purpose: Void protects legality; voidable protects consent.

The Doctrine of frustration – explain

Definition: Section 56 – contract becomes impossible or illegal after formation.

Purpose: Excuses performance due to unforeseen events.

Example: A contracts to rent a hall, but it burns down; contract is frustrated.

Explain Rescission of contract when can it be ordered under the Specific Relief
Act
Definition: Section 27 of SRA, 1963 – cancellation of a voidable contract.

When: Fraud, misrepresentation, or mutual mistake.

Example: A rescinds a sale induced by B’s fraud.

Explain the principles on which specific performance of a contract may be
granted or not be granted
Granted: Section 10 SRA – when money isn’t adequate relief (e.g., unique property).

Not Granted: Personal service, indeterminate terms (Section 14).

Example: Court orders sale of rare land but not singing performance.

Explain various kinds of relief available under the Specific Relief Act 1963
Definition: Includes specific performance, injunctions, rescission, rectification, possession recovery.

Purpose: Provides equitable remedies.

Example: Injunction to stop a breach; possession of disputed land.

Explain the law relating to recovery of possession of immovable property

Definition: Sections 5-6 SRA – lawful owner/possessor can recover property.

Purpose: Restores rightful possession.

Example: A sues to recover land from a trespasser.

What are the defences available to specific performance under Specific Relief
Act 1963?
Definition: Section 14 – impossibility, personal service, delay, hardship.

Purpose: Prevents inequitable enforcement.

Example: B defends A’s suit citing A’s delay in filing.