Gujarat National Law University

Gandhinagar (Gujarat) India

LAW OF CONTRACT - II

CONTINUOUS EVALUATION COMPONENT - II

CONTRACTS REVIEW

Submitted to:
Dr. Niyati Pandey
Assistant Professor of Law
Gujarat National Law University

Submitted By:
Kushagra Yadav
21 BAL 037
BA. LLB., GNLU

Attalika Avenue, Knowledge Corridor, Koba, Gandhinagar – 382007, Gujarat, India

Ph: +91-79-2328 7157-58, 2328 7726, Fax: +91-79-2328 7156, Email: contact@gnlu.ac.in, Website: www.gnlu.ac.in
TABLE OF CONTENTS

CONTRACT 1: TWO-WHEELER INSURANCE POLICY.................................................................................................................................3

INTRODUCTION....................................................................................................................................................................................................3

CLAUSE-WISE ANALYSIS...................................................................................................................................................................................4

CERTIFICATE OF INSURANCE..........................................................................................................................................................................7

RECEIPT................................................................................................................................................................................................................10

CONTRACT 2: LEAVE-AND-LICENSE AGREEMENT..................................................................................................................................12

INTRODUCTION..................................................................................................................................................................................................12

ANALYSIS............................................................................................................................................................................................................14
CONTRACT 1: TWO-WHEELER INSURANCE POLICY

INTRODUCTION

An insurance policy fundamentally governed by the

principle of uberrima fides, known as the principle of
utmost good faith. According to the principle, the
insured must give the insurer all necessary details;
otherwise, the insurer may opt not to pay the claim
amount. Absence of disclosure of all the facts, can cause
the forfeiture the previously paid premium sum. The
contract between the parties is deemed void ab initio,
that is, void from the start, if it is determined that the
insured omitted any material facts since these facts are
considered to have never existed.
An insurance contract is based on a contingency under §
31 of the Indian Contract Act, 1872 and is thus, a
contingent contract.

Since the Insurance Contract is contingent, consequential and is a promise by one party to set-off (or save from) losses even if they arise of third-
party claims, it a Contract of Indemnity.
CLAUSE-WISE ANALYSIS
An insurance contract is on an object on which the insured’s
interest lies in. In this case the aforementioned where the
insured’s details and these are the details of the insured
property. These help to determine how much risk the insurer is
prepared to take on and how much the premium will cost. To
determine how vulnerable a vehicle is to damage, elements
like the age, model, makes cost etc. are considered by the
insurer. Typically, the cost goes more as harm becomes more
likely. The insured must fully and accurately supply any
information requested by the insurer.

IDV is a part of the principle of Uberrima Fides. It is the It is

the Insured Declared Value which is taken as the present value
of the vehicle after adjusting the depreciation, age of vehicle
and any previous damage on the vehicle.

A major difference between damages and indemnification is that damages can be liquated or non-liquated and are to be calculated by way of §73
of the Indian Contracts Act, Indemnity on the other hand is capped and pre-defined. The IDV in an insurance contract helps to establish the
cap on the amount to be paid and therefore, it aligns with the principle that the insured will not get more compensation than the actual loss
suffered.
Describes the time period a claim can be indemnified and entertained The term "voluntary excess" is used to describe the greatest
number of losses that an insured is prepared to take on
voluntarily. A claim's voluntary excess is the portion one is
prepared to pay out of their own pocket. One can agree to this
since it might help to save money on insurance.

If PA or Personal Accident protection is selected, the insurer

will additionally pay owner-driver injury expenses. If not, the
insurer simply covers vehicle damage.

The insured must pay the compulsory deductible regardless of

the harm. Additional compulsory deductible signifies
additional sums that are deducted. The insurer calculates these
based on the vehicles plus owner's risk profile.

The insurer is exclusively responsible for losses in India.

Foreign losses aren't covered. Geographic region extension
may be chosen to insure the car overseas.

TPPD is the amount paid by the insurer for third-party property

damage in an accident involving the covered vehicle. In this
situation, the insured has chosen a greater insurance limit and
may claim more for third-party property damage.

It's the consideration paid for insurer to assume the risk of the

insured'sAgain, this is a condition
vehicle-related to assure
obligations the principle
(accidents, of sum
etc.). This
Uberrima Fides. In
is paid to the insured's victim. the event that there is any
inconsistency in the information, the insured is
It is the total toconsideration
obligated payable.
notify the insurer. This
Else, the contract
insurer has of
indemnification
the right not to indemnify and rescind from the for
is intended to shift financial responsibility
repair or replacement of the insured's vehicle or for debts
contract.
owing to third parties from the insured to the insurer.

Hypothecation is pledging a thing as security. The insurance

wants to know the rights of all parties and the vehicle's legal
ownership. If the car is damaged in an accident, the pledgee
Add on Cover gives services on payment of additional premium will get the insurance pay out.
CERTIFICATE OF INSURANCE
The contract comes with a certification of
Insurance to certify that the property is
insured. Insurance is a compulsory
obligation.

The insurance certificate also certifies under

whose name the property is insured. Since
the property is insured under the name of an
individual, it has to be employed in personal
use.

The vehicle in this case, can’t be used for

commercial use since it is also insured under
personal use. In cases where the vehicle is
registered in the name of a private
individual but is used for business work, the
insurance company is not required to pay for
any losses that may occur as a result of the
business usage of the vehicle.
 LIABILITY OF CAP
The indemnifier can cap both the liability in terms of
money and also in terms of time.

DEFINED PERSONS WHO ARE ENTITLED TO DRIVE

The provision establishes the parameters for the

level of coverage provided by the insurer based on
the driver. It specifies the individuals who are
allowed to operate the vehicle in the event that losses
are to be claimed. In the event that any damage is
caused to the vehicle while it is being driven by a
person who does not comply with this requirement
(for instance, the child of the insured who does not
even hold a learner's licence), the insurer will not be
obligated to pay for the same. This includes
situations in which the insured person drives the
vehicle.
NO COMMERCIAL USE IS AUTHORISED

The provisions also define the extent of risks

associated with personal vehicle since they are
different from the risks of commercial vehicles.
Therefore, the vehicles are to be employed in use
other than the one limited. Since they designed the
standard form contract, the insurance company
"I/We" assumes responsibility for this. The
indemnifier can explicitly limit the use as defined in
the M. V. Act, 1988.

Illegal or unlawful or if they defeat the purpose of

law, contracts are invalid as per §24 of ICA. To
guarantee the contract's legitimacy, one must follow
the law.
The insurance contract also provides the details of the insured and the vehicle as confirmed by the insurer. This is alongside the policy details
that provide the period of coverage and the policy number. The policy also provides the computation of premium and the total amount to be paid
by the insured elsewise it’s a breach of contract.

The insured is responsible for paying for
damages up to Rs. 100 out of pocket.
The policy has to be valid only
after the consideration, that is,
premium is paid.
The Liability is limited to a cap. This is
different for different situations.
i) The cap can be the amount given
in M. V. Act in case of Death or
bodily injury.
ii) It’ll be 100000 in case of damage
to third party damage
An insured might get a discount on their
premium payments known as a "No Claim
Bonus," which is expressed as a fraction of
the full premium. Thus, the risk assumed by
the insurer is reduced while the insured is
incentivized to avoid filing claims for petty
sums, resulting in a net reduction in the
premium. If a claim is made, regardless of its
legitimacy, NCB will be reset to zero. As a
result, the insured file fewer claims and, if
possible, endeavour to cover the full amount
of their legal responsibility.
RECEIPT
The receipt signifies the transfer of
consideration. As per §10 any
contract is void if it is without a
consideration.

Although in case of the insurance

policy, just the receipt doesn’t initiate
the policy. The realisation of the
payment is necessary to make the
insurance policy valid. The issuance
of receipt therefore, doesn’t signify
the initiation.

Since the terms and condition define a

set period the parties agree to
commence the contract, the contract
only commences upon those terms
and conditions.
CONTRACT 2: LEAVE-AND-LICENSE AGREEMENT

INTRODUCTION
In a leave and licence agreement, one party grants another party the right to use its immovable assets (such as land or buildings) for a certain
length of time without transferring legal title to the asset. Without transferring legal title, a landlord may provide a renter a licence to use real
property by executing a "Leave and License Agreement." For a certain amount of time, the terms of this agreement will be binding on both
parties.

 The landlord does not convey any interest in the property to the other party.
 The system is not designed to protect private property.
 License fees, deposits, and other costs might be determined by agreement between the parties involved.
 Typically, a contract will last for about eleven months.
 For purposes of termination and eviction, the landlord holds the upper hand.

Since a leave and licence agreement is not covered by the Rent Control laws of India, the tenant under such a contract has no legal standing to
assert any ownership interest in the licensed property. This is the prime difference between Rent agreements and a Leave-and-license. Although
this agreement does not offer tenant any easement rights, and Landlord has the right to withdraw permission at any time. In addition, a Leave
and Licence arrangement is often for a longer period of time than a Rent Agreement, which is typically renewable on a monthly basis. This gives
the tenant greater stability and certainty about the terms of their stay.

In contrast to a Lease Agreement, which gives the tenant an exclusive right to use the property, a Leave and License Agreement gives the
licensee no such right.
 All throughout India, states still rely on the traditional stamp for the
execution of legal documents including sale deeds, transfers of
ANALYSIS
immovable property, affidavits, contracts, wills, etc. In the case of
electronic stamp paper, the stamp duty is paid to the government in
Description of the property to be licensed to avoid mix-up
the
ofform of a digital currency transfer. In an effort to streamline the
entitlement of license.
payment procedure and save time, the government has abandoned
The
the usepayments promised
of traditional in this
stamp and contract
postal stampsare to be of
in favour made
a digital
monthly, and at the start 10 days of each calendar month.
approach.
Landlords benefit from this arrangement as well, since it
helps to forestall the possibility of future disagreements. In
the event of any unforeseen property damage, the landlord
has the right to cancel the lease and utilise the security
deposit to pay any and all urgent expenses associated with
the situation. The agreement also gives a security to be
deposited as collateral to the debt.

Proper identification of the contracting parties is a fundamental

Period of validity is given as usual of 11 months + 29 days.
feature of any agreement or deed. A contract requires two or more
A notice period is specified by the contract for termination parties, as stated in §10 of the Contract Act.
of the contract. A 2-month notice is required.
At the outset of this Contract, the parties are named: Mr. Rana
Only with
Shankar Rai the permission
(Licensor) of theTextile
and SGR Landlord may
House the(Tenant).
LLP Tenant
sublet the Premises to a Third Party. This provision forbids
the same, giving the Landlord more freedom to choose the
most suitable renter for his premises.
The licensee is not allowed to make any structural changes
to the property. This is similar to a bailee’s duty not to mix
and make unauthorised use of the property under §§ 154,
155, 156 and 157 of the Indian Contract Act.

There must be any nuisance created from the property and

the norms of the surrounding environment/society. Licensor
is to be permitted to audit the property.

Licensor has provided that they hold the right to terminate

the contract. The bailee has no right to make unauthorised
use under §154.
§149 of the Indian Contract Act gives delivery in case of
bailment.
In case of license, the licensor also delivers the property as
well as the electricity, water, maintenance and telephones
bills alongside taxes whichever applicable.

The agreement states that no party will unilaterally alter or

change the terms of contracts.
 The licensee is not liable to indemnify the licensor for
losses out of natural calamities. Under the §152 of
ICA bailee is not liable for losses unless specified if
appropriate care was taken.

Although under §28 of the Indian Contract Act,

restraint on legal proceeding is invalid. Mutually
deciding a place of legal proceeding is not in restraint
of legal proceedings as per Patel Roadways v.
Prasad Trading Company.

Meter reading is required to start noting the expense

caused by the licensee after the commencement of
leave-and-license agreement.

The parties are represented by agents, representing

dealings on behalf of the principal as defined under
§182 of the Indian Contract Act.