17 March 2023

CONTRACTS & SPECIFIC RELIEF

Summary Notes

Hemant Patil GLC

III-I
CONTRACTS & SPECIFIC RELIEF HEMANT PATIL
Contents
Proposal & Valid Proposal ................................................................................................................... 3
Acceptance ............................................................................................................................................ 4
Consideration ........................................................................................................................................ 6
Revocation of Proposal and Acceptance .......................................................................................... 8
Wagering Agreements........................................................................................................................ 10
Which Agreements are contracts? ................................................................................................... 10
Consent and Free Consent ................................................................................................................ 11
Enforceable Contracts ....................................................................................................................... 11
Contract induced by fraud? Duty to speak? ................................................................................... 12
Breach & Principles for awarding damages ................................................................................... 13
Doctrine of frustration & its grounds.............................................................................................. 14
Void Agreements ................................................................................................................................ 15
Contingent Contracts......................................................................................................................... 16
Government Contracts ...................................................................................................................... 18
Doctrine of Privity of Contract ........................................................................................................ 19
Minor Contracts .................................................................................................................................. 20
Competence & Sound Mind ............................................................................................................... 21
Undue influence & its effect on contract ...................................................................................... 22
Anticipatory breach of contract ...................................................................................................... 23
Contracts, which MUST be performed ............................................................................................ 24
Devolution of join rights and its effect on the contract ............................................................. 25
Time & Place of Contract performance ......................................................................................... 25
Performance of Reciprocal Promises .............................................................................................. 26
Contracts which need not be performed ....................................................................................... 27
Quasi Contracts .................................................................................................................................. 28
Novation............................................................................................................................................... 29
Claytons Rule ...................................................................................................................................... 30
Immorality of Object ......................................................................................................................... 30
Remedies for breach of contract .................................................................................................... 31
What is Specific Relief Act ............................................................................................................... 32
Claim Essentials .................................................................................................................................. 32
Essentials & Exclusions of Specific Performance .......................................................................... 33
Recovery of Immovable Property .................................................................................................... 33
Recovery of movable property......................................................................................................... 34
Recovery of possession – movable & immovable properties....................................................... 35

1|Page
Rectification of instruments ............................................................................................................ 36
Cancellation of instruments ......................................................................................................... 37
Rescission of Contract ....................................................................................................................... 37
Limitation of right.......................................................................................................................... 38
Rescission of immovable property sale or lease contract already decreed by court ........ 39
Section 6 – Summary Remedy........................................................................................................... 39
Liquidated damages not a bar to specific performance ............................................................. 40
Injunctions and refusal grounds ...................................................................................................... 41
Possessory Remedies ......................................................................................................................... 43
Declaratory Decree ............................................................................................................................ 43
Disclaimer ............................................................................................................................................ 44

2|Page
Proposal & Valid Proposal
A proposal is a suggestion or offer made by one party to another, with the intention of creating a
legally binding agreement or contract. In the Indian Contracts Act, 1872, a proposal is defined 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 is said to make a proposal"
(Section 2(a)).

Essentials of a Valid Proposal:

1. Communication: A proposal must be communicated by the proposer to the other party. The
communication must be made with the intention of obtaining the other party's assent to the
proposal. Proposal must be express (oral or written) or implied (action), to do anything or to
abstain from doing. And it must be communicated with a view to be accepted.

2. Definite and Certain: A proposal must be definite and certain in its terms. It must be capable
of being accepted without further negotiation or clarification. If the terms are vague or
uncertain, then it may not be considered a valid proposal.

3. Intention to create legal relations: A proposal must be made with the intention of creating a
legal relationship between the parties. If there is no intention to create a legal relationship,
then it may not be considered a valid proposal.

4. Made with free consent: A proposal must be made with the free consent of the proposer. It
must not be made under coercion, undue influence, fraud, misrepresentation, mistake or
other factors that affect the free consent of the proposer.

5. Must be lawful: A proposal must be for a lawful purpose. If the proposal is illegal or contrary
to public policy, then it may not be considered a valid proposal.

6. Communication of acceptance: A proposal must be capable of being accepted by the other

party. The acceptance must be communicated to the proposer in the manner prescribed or
implied by the proposal.

7. Not express to be revoked: A proposal cannot be revoked once it has been communicated,
unless there is a provision in the proposal allowing revocation.

A valid proposal must be communicated, definite and certain, made with the intention to create
legal relations, made with free consent, lawful, capable of being accepted, and not expressly
revoked.

It is important to note that a proposal may be made in writing, orally, or by conduct. It can be a
conditional or unconditional offer. The terms of the proposal must be clear and unambiguous, and
any ambiguity or uncertainty may affect the validity of the proposal. Additionally, a proposal must
be distinguished from an invitation to offer, which is not a binding offer, but an invitation to negotiate
or make an offer.

Lalman Shukla vs. Gauri Dutt (1913): In this case, the plaintiff sent a telegram to the defendant
asking him to look for his missing nephew and offering a reward for his return. The defendant found
the nephew but did not notify the plaintiff of his discovery. The court held that the telegram was not
a valid offer because it did not contain any promise or commitment by the plaintiff, and therefore
the defendant was not obliged to perform any act.

Under the Indian Contract Act, a proposal or an offer is a crucial element of a contract. For a proposal
to be valid, it must satisfy certain conditions. Here are some of the things that are not enough for a
proposal under the Act and related case laws:

3|Page
 1. A mere statement of intention: A mere statement of intention to enter into a contract or to
do something is not a valid proposal. It must contain a clear and definite promise or
commitment.

In the case of Boulton v. Jones (1857), the plaintiff asked the defendant to sell him certain goods
and offered to pay a certain price. The defendant replied that he would consider the offer. The court
held that the defendant's response was not a valid acceptance because the original communication
was not a valid offer.

2. A vague or indefinite proposal: A proposal must be specific and definite. If it is too vague, it
cannot be accepted, and hence, it is not a valid proposal.

In the case of Scammell & Nephew Ltd v. Ouston (1941), the defendants offered to sell their vehicle
to the plaintiff. However, they did not specify the price or the delivery date. The court held that the
communication was not a valid offer because it was too vague and indefinite.

3. An invitation to treat: An invitation to treat is an invitation to make an offer or to enter into

negotiations. It is not a valid proposal. It is an offer made by buyer to the seller (Auction
example). Seller has right to accept the offer from buyer. It does not create any legal
obligation.

In the case of Pharmaceutical Society of Great Britain v. Boots Cash Chemists Ltd (1953), the
defendants displayed a certain drug in their store and put a price tag on it. The plaintiff argued that
the display and the price tag constituted a valid offer, which they accepted by taking the drug to the
counter. However, the court held that the display and the price tag were merely an invitation to
treat and not a valid proposal.

4. A conditional proposal: A proposal must be an unconditional promise or commitment. If it is

subject to a condition, it is not a valid proposal.

In the case of Ramsgate Victoria Hotel v. Montefiore (1866), the defendant made an offer to buy
shares in a company. However, the offer lapsed because the plaintiff did not accept it immediately,
and the defendant had sold the shares to someone else. The court held that the offer was a
conditional one and had lapsed when the condition was not fulfilled.

In summary, a valid proposal must contain a clear and definite promise or commitment, be specific
enough to enable the other party to accept or reject it, and must not be conditional or vague.

Acceptance
The Indian Contracts Act of 1872 provides a legal framework for the formation and enforcement of
contracts in India. Acceptance is an important element of contract formation and refers to the
expression of assent to the terms of an offer. In this answer, I will explain in detail the concept of
acceptance under the Indian Contracts Act.

1. Definition of Acceptance:

Under Section 2(b) of the Indian Contracts Act, 1872, "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."

Therefore, acceptance is a manifestation of assent by the offeree to the terms of the offer. Once the
offer is accepted, it becomes a binding contract between the parties.

2. Mode of Acceptance:

The Indian Contracts Act recognizes various modes of acceptance, including oral, written, and
electronic communication. However, for certain types of contracts, such as contracts for the sale of
goods, acceptance must be in writing.

4|Page
According to Section 7 of the Indian Contracts Act, the communication of acceptance is complete
when it comes to the knowledge of the person making the proposal. Therefore, acceptance is not
complete until the offeror is aware of it.

3. Time of Acceptance:

The time of acceptance is also an important aspect of the Indian Contracts Act. According to Section
7 of the Act, the acceptance must be made in a reasonable time and before the offer lapses or is
withdrawn.

If the offer specifies a time for acceptance, the acceptance must be made within that time. If no
time is specified, the acceptance must be made within a reasonable time.

4. Silence as Acceptance:

In certain circumstances, silence may be construed as acceptance. For example, if the offeror sends
goods or services to the offeree, and the offeree does not reject them within a reasonable time, the
silence may be construed as acceptance.

However, silence cannot be considered as acceptance in all cases. In general, acceptance must be
expressed either explicitly or implicitly.

5. Communication of Acceptance:

As mentioned earlier, communication of acceptance is complete when it comes to the knowledge of

the person making the proposal. Therefore, acceptance must be communicated to the offeror.

According to Section 4 of the Indian Contracts Act, communication of acceptance is complete when
it is put in a course of transmission to the offeror, so as to be out of the power of the acceptor.

In other words, the acceptance must be communicated in a manner that is likely to come to the
attention of the offeror.

Thus, acceptance is a crucial element of contract formation under the Indian Contracts Act. It must
be communicated in a reasonable time and in a manner that is likely to come to the attention of the
offeror. The Act recognizes various modes of acceptance, including oral, written, and electronic
communication.

The following are the essentials of acceptance:

1. Expression of assent: Acceptance must be a clear and unequivocal expression of the offeree's
assent to the terms of the offer. The offeree must accept all the terms of the offer; any
modifications to the terms will constitute a counteroffer and not an acceptance.

2. Communication of acceptance: Acceptance must be communicated to the offeror. The

communication of acceptance is complete when it comes to the knowledge of the offeror.

3. Mode of acceptance: Acceptance can be communicated through any mode of communication,

including oral, written, or electronic communication, as long as it is a clear and unambiguous
expression of assent.

4. Time of acceptance: Acceptance must be made within a reasonable time and before the offer
lapses or is withdrawn. If the offer specifies a time for acceptance, the acceptance must be
made within that time.

5. Legal capacity: The person making the acceptance must have the legal capacity to enter into
a contract. For example, a minor or a person of unsound mind cannot enter into a contract.

6. Intention to create legal relations: The parties to the contract must have the intention to
create legal relations. If the parties do not intend to create a legally binding contract, there
is no acceptance, and therefore, no contract.

5|Page
Certain types of acceptance are considered invalid. The following are some examples of invalid
acceptance:

1. Conditional acceptance: If the offeree accepts the offer but includes conditions or
modifications to the terms of the offer, this constitutes a counteroffer, which is not a valid
acceptance.
2. Silence as acceptance: Silence or failure to respond to an offer does not constitute
acceptance. Acceptance must be communicated explicitly or implicitly.
3. Acceptance by unauthorized person: If a person who does not have the authority to accept
an offer accepts it, the acceptance is not valid. For example, an employee who does not
have the authority to enter into a contract on behalf of the company cannot accept an offer
on behalf of the company.
4. Acceptance after the lapse of the offer: If the offeree accepts the offer after the offer has
lapsed or been withdrawn, the acceptance is not valid.
5. Acceptance of illegal or immoral offers: If the offer is illegal or immoral, acceptance of such
an offer is not valid. For example, if the offer is for the sale of illegal drugs, acceptance of
such an offer is not valid.

Consideration
Consideration is a fundamental element of a contract under the Indian Contracts Act. Consideration
refers to something of value exchanged between the parties to the contract. It can be in the form of
money, goods, services, or a promise to do or not to do something. The following are the essentials
of consideration under the Indian Contracts Act:

1. Something of value: Consideration must be something of value. It can be in the form of

money, goods, services, or a promise to do or not to do something.

2. Must move at the request of the promisor: The consideration must be given at the request of
the promisor. It means that the promisor must have asked for the consideration, and the
consideration must have been given in response to the request.

3. Must be given by the promisee or any other person: Consideration must be given by the
promisee or any other person. It means that consideration can be given by a third party on
behalf of the promisee.

4. Must be real and not illusory: The consideration must be real and not illusory. It means that
the consideration must have some value and not be a mere pretense.

5. Need not be adequate: Consideration need not be adequate, meaning that the value of the
consideration need not be equal to the value of the promise. However, it must have some
value.

6. Must be lawful: The consideration must be lawful. It means that the consideration must not
be illegal or against public policy.

Consideration is important in determining the enforceability of a contract. A contract without

consideration is not valid under the Indian Contracts Act. Additionally, if consideration is not given,
the contract is voidable at the option of the party who did not receive consideration.

Thus, consideration is an essential element of a contract under the Indian Contracts Act. It must be
something of value, given at the request of the promisor, real, lawful, and need not be adequate.
Any deviation from these essentials may result in an unenforceable or voidable contract.

The following are the essentials of consideration under the Indian Contracts Act:

1. Must be something of value: Consideration must be something of value that is given in

exchange for the promise. It can be in the form of money, goods, services, or a promise to
do or not to do something.

6|Page
 2. Must be real and not illusory: The consideration must be real and not illusory. It means that
the consideration must have some value and not be a mere pretense.

3. Must move at the desire of the promisor: The consideration must move at the desire of the
promisor. It means that the promisor must have requested the consideration, and the
consideration must have been given in response to that request.

4. Must be given by the promisee or any other person: Consideration must be given by the
promisee or any other person. It means that the consideration can be given by a third party
on behalf of the promisee.

5. Need not be adequate: Consideration need not be adequate, meaning that the value of the
consideration need not be equal to the value of the promise. However, it must have some
value.

6. Must be lawful: The consideration must be lawful. It means that the consideration must not
be illegal or against public policy.

The following are some of the exceptions to the rule of consideration:

1. Contracts of gift: A contract of gift is a contract where the donor gives something to the
donee without any consideration. In such contracts, consideration is not necessary for the
validity of the contract.
2. Time-barred debt: In a time-barred debt, the creditor cannot sue for the recovery of the
debt because the period of limitation for filing a suit has expired. If the debtor voluntarily
promises to pay the debt, the promise is enforceable without any consideration.
3. Agency: In agency contracts, the agent acts on behalf of the principal without receiving any
consideration from the principal. The agent's consideration comes in the form of the
commission paid by the principal.
4. Completed gift: When a gift has been made and accepted by the donee, consideration is not
necessary for the validity of the contract.
5. Promissory estoppel: Promissory estoppel is a legal principle that prevents a person from
going back on a promise made to another person if the latter has relied on the promise and
changed their position to their detriment. In such cases, consideration is not necessary for
the validity of the contract.

If consideration is absent, inadequate, or partly unlawful, it can have different effects on the
contract:

1. Absence of consideration: A contract without consideration is void. This means that the
contract is not legally binding and cannot be enforced by either party.
2. Inadequate consideration: If the consideration is grossly inadequate, the contract may be
voidable at the option of the aggrieved party. In such cases, the aggrieved party has the
option to either enforce the contract or rescind it. However, the inadequacy of consideration
is not a ground for challenging a contract if there is some consideration, no matter how small.
3. Partly unlawful consideration: If the consideration for a contract is partly unlawful, only the
illegal portion of the contract is void. The rest of the contract may be enforceable if it is
capable of being separated from the illegal portion.

For example, if A promises to pay B Rs. 10,000 for stealing C's car, the contract is void as it involves
an illegal consideration. However, if A promises to pay B Rs. 10,000 for repairing C's car without C's
knowledge, only the portion of the contract relating to the illegal consideration (i.e., repairing the
car without C's knowledge) is void, while the rest of the contract (i.e., payment of Rs. 10,000) is
enforceable.

In summary, the absence of consideration renders a contract void, while inadequate consideration
may render a contract voidable at the option of the aggrieved party. Partly unlawful consideration
results in only the illegal portion of the contract being void, while the rest of the contract may be
enforceable if it is capable of being separated from the illegal portion.

7|Page
Revocation of Proposal and Acceptance
Revocation of proposal is an important aspect of contract law in India, which refers to the withdrawal
of an offer or proposal made by one party to another party. The Indian Contracts Act, 1872 provides
for the rules regarding the revocation of proposals in India. Here is a detailed explanation of the
revocation of proposal under the Indian Contracts Act:

1. Revocation of proposal before acceptance: A proposal can be revoked at any time before the
acceptance is communicated to the proposer. This means that if the offeree has not yet
accepted the proposal, the proposer can revoke the proposal without any consequences. The
revocation of a proposal becomes effective as soon as it is communicated to the offeree.

2. Revocation of proposal by indirect communication: A proposal can be revoked even by

indirect communication. For example, if the proposer sends a letter revoking the proposal to
a wrong address, and the offeree does not receive the communication, the proposal is still
revoked.

3. Revocation of proposal by lapse of time: A proposal can also be revoked if the offeree does
not accept the proposal within the time specified in the proposal or within a reasonable time.
If the offeree does not accept the proposal within the specified time, the proposal is deemed
to have lapsed.

4. Revocation of proposal in case of death or insanity: A proposal is automatically revoked if

the proposer dies or becomes insane before the acceptance is communicated to the proposer.

5. Exception to revocation of proposal: There is an exception to the revocation of proposal,

which is known as the doctrine of option contract. Under this doctrine, if the proposer has
given an option to the offeree to accept the proposal within a specified time, the proposer
cannot revoke the proposal before the expiry of the specified time.

Thus, the revocation of proposal is an essential concept in contract law in India. It is important for
parties to be aware of the rules regarding the revocation of proposal under the Indian Contracts Act
in order to ensure that their contracts are legally enforceable.

The essential conditions for the revocation of a proposal under the Indian Contracts Act are as follows:

1. Revocation must be communicated: A proposal can be revoked only if it is communicated to

the offeree. The communication of the revocation must be made by the proposer or by a
person authorized by the proposer to communicate the revocation.

2. Revocation must be made before acceptance: A proposal can be revoked at any time before
the acceptance is communicated to the proposer. Once the acceptance is communicated,
the proposal cannot be revoked.

3. Revocation must be made by the proposer or authorized person: The revocation must be
made by the proposer or by a person authorized by the proposer to make the revocation. The
revocation made by an unauthorized person is not valid.

4. Revocation by indirect communication: A proposal can be revoked even by indirect

communication. For example, if the proposer sends a letter revoking the proposal to a wrong
address, and the offeree does not receive the communication, the proposal is still revoked.

5. Revocation by lapse of time: A proposal can also be revoked if the offeree does not accept
the proposal within the time specified in the proposal or within a reasonable time. If the
offeree does not accept the proposal within the specified time, the proposal is deemed to
have lapsed.

6. Revocation by death or insanity: A proposal is automatically revoked if the proposer dies or

becomes insane before the acceptance is communicated to the proposer.

8|Page
Revocation of acceptance refers to the withdrawal of acceptance made by one party to another
party. The Indian Contracts Act, 1872 provides for the rules regarding the revocation of acceptance
in India. Here is a detailed explanation of the revocation of acceptance under the Indian Contracts
Act:

1. Revocation of acceptance before communication: A person can revoke his acceptance at any
time before the acceptance is communicated to the proposer. This means that if the acceptor
has not yet communicated his acceptance, he can revoke his acceptance without any
consequences.
2. Revocation of acceptance by indirect communication: A person can also revoke his
acceptance by indirect communication. For example, if the acceptor sends a letter revoking
his acceptance to a wrong address, and the proposer does not receive the communication,
the acceptance is still revoked.
3. Revocation of acceptance by lapse of time: A person can also revoke his acceptance if the
proposer does not receive the acceptance within a reasonable time or within the time
specified in the proposal. If the proposer does not receive the acceptance within the specified
time, the acceptance is deemed to have lapsed.
4. Revocation of acceptance in case of mistake: A person can revoke his acceptance if he has
made a mistake regarding the terms of the proposal, and the mistake is of such a nature that
it affects the substance of the contract. For example, if the acceptor accepts a proposal for
the sale of a car, but later discovers that the car is a stolen car, he can revoke his acceptance.
5. Exception to revocation of acceptance: There is an exception to the revocation of
acceptance, which is known as the doctrine of estoppel. Under this doctrine, if the acceptor
has led the proposer to believe that the acceptance will not be revoked, the acceptor cannot
revoke his acceptance.

Revocation of acceptance is important for parties to be aware of the rules regarding the revocation
of acceptance under the Indian Contracts Act in order to ensure that their contracts are legally
enforceable.

The revocation of acceptance is an important aspect of contract law in India, and it refers to the
withdrawal of an acceptance made by one party to another party. The Indian Contracts Act, 1872
provides for the rules regarding the revocation of acceptance in India. The essential conditions for
the revocation of acceptance under the Indian Contracts Act are as follows:

1. Revocation must be communicated: A person can revoke his acceptance only if he

communicates the revocation to the proposer. The communication of the revocation must be
made before the acceptance is communicated to the proposer.
2. Revocation must be made before communication of acceptance: The acceptance is complete
as soon as it is communicated to the proposer. Therefore, the revocation of acceptance must
be made before the acceptance is communicated to the proposer.
3. Revocation must be made by the acceptor or authorized person: The revocation of
acceptance must be made by the acceptor himself or by a person authorized by him to make
the revocation. The revocation made by an unauthorized person is not valid.
4. Revocation by indirect communication: A person can revoke his acceptance even by indirect
communication. For example, if the acceptor sends a letter revoking his acceptance to a
wrong address, and the proposer does not receive the communication, the acceptance is still
revoked.
5. Revocation by mistake: A person can revoke his acceptance if he has made a mistake
regarding the terms of the proposal, and the mistake is of such a nature that it affects the
substance of the contract.
6. Exception to revocation of acceptance: There is an exception to the revocation of
acceptance, which is known as the doctrine of estoppel. Under this doctrine, if the acceptor
has led the proposer to believe that the acceptance will not be revoked, the acceptor cannot
revoke his acceptance.

The revocation of acceptance is an important aspect of contract law in India, and parties must be
aware of the essential conditions for the revocation of acceptance under the Indian Contracts Act to
ensure that their contracts are legally enforceable.

9|Page
Wagering Agreements
A wagering agreement is a type of agreement where two or more parties agree to pay money or other
valuable consideration to each other based on the outcome of a future event that is uncertain.
Wagering agreements are also known as betting agreements and are considered void and
unenforceable under the Indian Contract Act, 1872.

Essentials of Wagering Agreements:

1. Mutual Agreement to Wager: To constitute a wagering agreement, both parties must have
agreed to the wager or bet.

2. Uncertain Event: The event that the wager is based on must be uncertain, meaning it must
not be possible to predict with certainty the outcome of the event.

3. Mutual Chance of Gain or Loss: Both parties must have a chance to win or lose based on the
outcome of the event.

4. No Control over Event: Neither party should have control over the outcome of the event.

5. Stake or Consideration: Both parties must provide some stake or consideration towards the
wager.

Effect on Contract: Wagering agreements are considered void under Indian law, meaning they are
not enforceable in court. The reason for this is that wagering agreements are based on chance and
speculation, which goes against the fundamental principles of contract law.

The Indian Contract Act provides that all wagering agreements are null and void and no suit shall be
brought for recovering any amount won on a wagering agreement. Moreover, any collateral contract
made in connection with a wagering agreement is also considered void.

However, if a wagering agreement is combined with other types of agreements, such as a sale or a
lease, the wagering agreement may be separated from the other agreements and the other
agreements may still be enforceable.

Exceptions: There are a few exceptions to the rule that wagering agreements are void. One such
exception is where the wagering agreement is entered into by way of a business transaction. For
example, a stockbroker might make a bet with another stockbroker on the price of a stock. In this
case, the wagering agreement may be considered a business transaction and might be enforceable.

Another exception is where the wagering agreement is entered into between two parties who have a
genuine interest in the outcome of the event, such as in the case of a quiz or a puzzle. In such cases,
the wagering agreement may be enforceable, as it is based on skill or knowledge rather than chance.

Wagering agreements are considered void under Indian law, as they are based on chance and
speculation. It is important to understand the essentials and effects of such agreements to avoid
entering into any unenforceable contracts.

Which Agreements are contracts?

According to the Indian Contracts Act, 1872, an agreement becomes a contract if it fulfils certain
essential elements, which are as follows:

1. Offer and Acceptance: The agreement must have a valid offer by one party and a valid
acceptance by the other party. The offer and acceptance must be clear and specific, and
there must be no confusion or ambiguity.

2. Intention to create legal relations: The parties to the agreement must have the intention to
create a legally binding contract. The agreement must not be of a social, religious, or
domestic nature.

10 | P a g e
 3. Lawful consideration: The agreement must be supported by a lawful consideration. This
means that each party must gain something from the agreement, and that the consideration
must not be against the law or public policy.

4. Capacity to contract: The parties to the agreement must have the legal capacity to contract.
This means that they must not be minors, of unsound mind, or disqualified by law.

5. Free consent: The agreement must be entered into with the free consent of the parties. This
means that the agreement must not be obtained by fraud, coercion, undue influence, or
misrepresentation.

6. Lawful object: The object of the agreement must be lawful. This means that the object must
not be illegal, immoral, or opposed to public policy.

If an agreement satisfies all of these essential elements, it becomes a contract under the Indian
Contracts Act. The agreement becomes legally binding, and the parties are obligated to perform their
respective obligations under the contract.

Consent and Free Consent

Consent is a vital component of a contract, and it refers to an agreement between the parties to
enter into a legal relationship. According to the Indian Contracts Act, 1872, "consent" is said to be
free when it is not caused by coercion, undue influence, fraud, misrepresentation, or mistake.

In simpler terms, free consent means that the parties to the contract must agree to the terms and
conditions of the contract voluntarily, without any external pressure or force. The consent must be
free from any form of deception or coercion.

Here's a brief explanation of each factor that can render the consent as not free:

1. Coercion: Coercion means that one party is forced to enter into the contract against their
will. It can take the form of physical force or the threat of physical harm, and it can also
include the threat of legal action.

2. Undue Influence: Undue influence means that one party uses their position of power to
influence the decision of the other party. For example, a doctor may exert undue influence
over their patient to enter into a contract with them.

3. Fraud: Fraud means that one party makes a false representation or conceals material facts
with the intent to deceive the other party. For instance, a seller may provide false
information about a product to convince the buyer to purchase it.

4. Misrepresentation: Misrepresentation means that one party makes a false statement that
induces the other party to enter into the contract. Unlike fraud, misrepresentation may be
unintentional or innocent.

5. Mistake: Mistake occurs when one or both parties are mistaken about the terms or the subject
matter of the contract. A mistake can be mutual or unilateral.

Therefore, in order for a contract to be legally binding, the consent of the parties must be free from
any of these factors. If the consent is not free, the contract may be voidable at the option of the
aggrieved party.

Enforceable Contracts
Enforceable contracts are legally binding agreements between two or more parties that are
recognized and enforced by the courts. For a contract to be enforceable, it must meet certain
essential elements, which are:

1. Offer and acceptance: There must be a clear offer made by one party and an unequivocal
acceptance of that offer by the other party.

11 | P a g e
 2. Intention to create legal relations: The parties must intend to be legally bound by the terms
of the agreement.

3. Consideration: There must be a mutual exchange of something of value between the parties.

4. Capacity: The parties must have the legal capacity to enter into the contract. This means
that they must be of legal age, of sound mind, and not under duress or coercion.

5. Free Consent: The parties must have entered into the contract freely and without any undue
influence or coercion.

Exceptions to enforceability of contracts include:

1. Contracts that are illegal or against public policy: Contracts that are illegal or against public
policy are not enforceable. For example, a contract to commit a crime or to engage in an
illegal activity is not enforceable.

2. Contracts that are entered into under duress or coercion: If one of the parties to a contract
is forced or coerced into entering into the agreement, the contract may be considered
unenforceable.

3. Contracts that are unconscionable: A contract may be considered unconscionable if it is

excessively one-sided and unfairly benefits one party over the other.

4. Contracts that are fraudulent: Contracts that are entered into under false pretenses or with
the intent to deceive the other party may be considered unenforceable.

5. Contracts that lack consideration: A contract must involve an exchange of something of value
between the parties. If one party fails to provide consideration, the contract may not be
enforceable.

For a contract to be enforceable, it must meet certain essential elements, including offer and
acceptance, intention to create legal relations, consideration, capacity, and free consent. However,
there are exceptions to enforceability, including contracts that are illegal, entered into under duress,
unconscionable, fraudulent, or lack consideration.

Contract induced by fraud? Duty to speak?

Contracts induced by fraud are those that are entered into as a result of one party intentionally
making a false representation or concealing material facts in order to deceive the other party. In
such cases, the party who is deceived is induced to enter into the contract by the false statement or
concealment of facts. Under the Indian Contracts Act, 1872, contracts induced by fraud are voidable
at the option of the party who has been deceived.

The following are the essential elements of a contract induced by fraud:

1. There must be a false representation: The party who induces the other party to enter into
the contract must make a false representation. This can be in the form of a statement, act,
or silence.

2. The false representation must be made with an intent to deceive: The false representation
must be made with the intention of deceiving the other party. The party making the false
representation must know that the representation is false, or they must be reckless as to
whether it is true or false.

3. The false representation must be material: The false representation must be a material fact,
which means that it must be important enough to influence the decision of the other party
to enter into the contract.

4. The other party must have relied on the false representation: The party who has been induced
to enter into the contract must have relied on the false representation to their detriment.

12 | P a g e
 This means that they would not have entered into the contract if they had known the true
facts.

If any of these essential elements are not present, the contract may not be induced by fraud, and
the party may not be able to seek a remedy for the deception. However, if all of these elements are
present, the contract can be declared voidable at the option of the party who has been deceived.
The party can choose to either rescind the contract or continue with it, but in either case, they may
be entitled to seek damages from the party who induced them into the contract.

The "duty to speak" is a legal principle that applies in situations where one party to a contract has
information that is material to the contract, and that information is not available to the other party.
In such cases, the party with the information has a duty to disclose it to the other party.

In the context of a contract without free consent, the duty to speak arises when one party is aware
that the other party is not giving their consent freely. For instance, if one party is being coerced or
unduly influenced into entering into the contract, the other party may be aware of this and have a
duty to disclose this fact.

Under the Indian Contracts Act, 1872, a contract entered into without free consent is voidable at the
option of the aggrieved party. This means that the party whose consent was not free can choose to
either rescind the contract or affirm it. If they choose to rescind the contract, they can seek to
recover any property that they may have transferred to the other party under the contract.

However, if the party with the knowledge of the lack of free consent fails to disclose this information
to the other party, they may be held liable for fraud or misrepresentation. This is because they had
a duty to speak and disclose the information, but failed to do so. In such cases, the party who was
deceived may be entitled to seek damages or other remedies for the fraud or misrepresentation.

Therefore, in situations where one party is aware that the other party's consent is not free, they have
a duty to speak and disclose this information to the other party. Failure to do so can result in legal
consequences and potential liability for the party who fails to disclose.

Breach & Principles for awarding damages

Breach of contract occurs when one party fails to perform their obligations under a contract without
a valid excuse. In such cases, the aggrieved party may seek remedies for the breach, such as damages,
specific performance, or injunction.

Under the Indian Contracts Act, 1872, damages are the most common remedy for breach of contract.
Damages refer to the monetary compensation awarded to the aggrieved party for the losses they
suffered as a result of the breach. The principles for awarding damages in Indian contract law are as
follows:

1. Actual loss: The aggrieved party can only recover damages for the actual loss they suffered
as a result of the breach. The damages should be sufficient to compensate the aggrieved
party for the loss they suffered, but not more than that.

2. Foreseeability: The damages must be foreseeable at the time of entering into the contract.
The party in breach must have been able to reasonably foresee the loss that would result
from their breach.

3. Causation: The damages must be caused by the breach. There must be a direct causal link
between the breach and the loss suffered by the aggrieved party.

4. Mitigation: The aggrieved party has a duty to mitigate their loss by taking reasonable steps
to reduce their damages. They cannot recover damages for losses that could have been
avoided or reduced by taking reasonable steps.

In order to claim damages for breach of contract, the aggrieved party must prove that they suffered
a loss as a result of the breach. They must also prove the amount of the loss with reasonable certainty.

13 | P a g e
The measure of damages for breach of contract in India is generally the amount required to place
the aggrieved party in the same position as if the contract had been performed. This includes any
direct losses suffered by the aggrieved party as well as any loss of profit or opportunity resulting from
the breach.

In some cases, the parties may include a liquidated damages clause in the contract, which specifies
the amount of damages that will be payable in the event of a breach. However, the liquidated
damages clause must be a genuine pre-estimate of the loss likely to be suffered and not a penalty.

In summary, the principles for awarding damages in Indian contract law are based on compensating
the aggrieved party for their actual losses, with a focus on foreseeability, causation, and mitigation.
The measure of damages is generally the amount required to place the aggrieved party in the same
position as if the contract had been performed.

Doctrine of frustration & its grounds

The doctrine of frustration is a legal principle that applies to contracts and refers to situations where
an unforeseen event occurs, making the contract impossible to perform or depriving it of its
commercial purpose. When such an event occurs, it may relieve the parties from their obligations
under the contract.

Under the Indian Contract Act, the doctrine of frustration is covered by Section 56, which states that
a contract to do an act which is impossible to perform becomes void when the act becomes impossible
or unlawful. The section also provides that a contract becomes void if the performance of the
contract becomes impossible or unlawful after it is made, but before it is performed.

Grounds of Doctrine of Frustration under Indian Contracts Act:

1. Impossibility: If the performance of the contract becomes impossible due to circumstances

beyond the control of the parties, the contract may be frustrated. For instance, if a contract
is made for the hire of a hall for a specific date, but the hall is destroyed by fire before the
date of the event, the contract may be frustrated.

2. Change of circumstances: If there is a change of circumstances that makes the contract

impossible to perform or deprives it of its commercial purpose, the contract may be
frustrated. For example, if a contract is made for the delivery of goods from one country to
another, but a war breaks out between the two countries, making it impossible to transport
the goods, the contract may be frustrated.

3. Illegality: If a contract becomes illegal due to a change in the law after it is made, the
contract may be frustrated. For instance, if a contract is made for the sale of a certain drug,
but the drug is later banned by the government, the contract may be frustrated.

It is important to note that the event that frustrates the contract must be unforeseen and beyond
the control of the parties. Also, the frustration must not be self-induced by the parties.

Doctrine of frustration provides a way out for parties to a contract when unforeseen events occur
that make it impossible to perform or deprive it of its commercial purpose. Section 56 of the Indian
Contract Act lays down the grounds for the doctrine of frustration and enables parties to seek relief
from their obligations under the contract in such situations.

Essentials:

1. The contract must be a valid and subsisting one.

2. An event or change in circumstances must occur that was unforeseen and beyond the control
of the parties.

3. The event or change must render the contract impossible to perform or fundamentally
different from what was originally contemplated.

14 | P a g e
 4. The party claiming frustration must not have caused the event or change in circumstances.

5. The frustration must not be due to the fault of either party.

Defenses:

1. The contract has an express provision for dealing with the event or change that caused the
frustration.

2. The event or change was foreseeable at the time of the contract and the parties could have
made provisions for it in the contract.

3. The party claiming frustration knew or ought to have known of the event or change when
they entered into the contract.

4. The event or change was caused by the default of the party claiming frustration.

5. The party claiming frustration has already received some benefits under the contract and it
would be unjust to allow them to avoid their obligations.

It is important to note that the doctrine of frustration is not an automatic termination of the contract.
It merely relieves the parties from their obligations to perform the contract going forward. If there
are any benefits that have already been received by either party, they may still be required to
compensate the other party for those benefits.

Void Agreements
According to the Indian Contract Act, 1872, a contract is void when it is not enforceable by law. A
void agreement is a contract that is not valid from the very beginning and has no legal effect. Such
an agreement is null and void ab initio, meaning it is deemed to have never existed in the eyes of
law.

The following are the various situations that can result in a void agreement under the Indian Contract
Act:

1. Agreement in restraint of marriage: Any agreement that restricts a person's right to marry is
considered void. For example, an agreement that prohibits a person from marrying a
particular individual or from marrying altogether is void.

2. Agreement in restraint of trade: Any agreement that restricts a person's freedom to carry on
a lawful trade or profession is void. For example, an agreement between two parties to not
compete with each other in a particular business is void.

3. Agreement in restraint of legal proceedings: Any agreement that restricts a person's right to
enforce their legal rights through the court of law is void. For example, an agreement that
requires a party to waive their right to sue the other party is void.

4. Agreement with uncertain consideration: Any agreement that does not specify the
consideration or its value is void. For example, an agreement that promises to pay "whatever
the seller demands" without specifying a specific amount is void.

5. Agreement with unlawful object: Any agreement that involves the commission of an unlawful
act or is against public policy is void. For example, an agreement to commit a crime or to
engage in fraudulent activities is void.

It is important to note that a void agreement is different from a voidable agreement. A voidable
agreement is one that is initially valid, but can be voided at the option of one or both parties due to
certain legal defects such as fraud, coercion or undue influence.

A void agreement is one that is completely unenforceable from the beginning, due to certain legal
defects, and it is considered to have never existed in the eyes of the law.

15 | P a g e
A void agreement is one that is not enforceable by law from the very beginning and is considered to
be null and void ab initio, meaning it is deemed to have never existed in the eyes of the law. The
following are the essentials of a void agreement under the Indian Contract Act:

1. No legal effect: A void agreement has no legal effect whatsoever, and the parties cannot
enforce it in a court of law.

2. Invalid consideration: The consideration or promise exchanged between the parties is illegal
or impossible to perform.

3. Contravention of law: The agreement contravenes any existing law, or the parties agree to
commit a criminal offence.

4. Against public policy: The agreement is against public policy or morals. Such agreements are
deemed to be harmful to society and therefore not enforceable by law.

5. Not created through free consent: The agreement was not entered into through free and
genuine consent of the parties involved. For example, if one party was coerced, threatened
or influenced to enter into the agreement, then it will be considered void.

It is important to note that a void agreement is different from a voidable agreement. A voidable
agreement is initially valid, but can be voided at the option of one or both parties due to certain
legal defects such as fraud, coercion or undue influence.

A void agreement is one that is completely unenforceable from the beginning, due to certain legal
defects, and it is considered to have never existed in the eyes of the law.

One of the landmark cases related to a void agreement in India is the case of Mohori Bibee v.
Dharmodas Ghose (1903). In this case, the plaintiff (Dharmodas Ghose) borrowed money from the
defendant (Mohori Bibee) and executed a mortgage of his property as security. It was later found
that the plaintiff was a minor at the time of executing the mortgage, and hence the mortgage was
void ab initio.

The court held that a minor lacks the capacity to enter into a contract, and therefore any agreement
entered into by a minor is void ab initio. The court further observed that a contract which is void
cannot be enforced by law, and the parties to a void agreement are not required to perform their
obligations under such an agreement.

This case is significant as it established the principle that any agreement entered into by a minor is
void ab initio, and the minor cannot be held liable to perform any obligations under such an
agreement.

Contingent Contracts
Under the Indian Contracts Act, a contingent contract is a contract that depends on the occurrence
or non-occurrence of a future uncertain event. In other words, the performance of the contract is
contingent upon the happening or non-happening of a particular event. A contingent contract is
enforceable only if the uncertain event occurs or does not occur, as the case may be.

The essentials of a contingent contract are as follows:

1. Future Uncertain Event: A contingent contract must depend on the occurrence or non-
occurrence of a future uncertain event. The happening or non-happening of the event must
be uncertain, and not impossible or illegal.

2. Possibility of Performance: The event on which the contract depends must be such that it is
possible to perform the contract if the event occurs or does not occur.

3. Mutual Consent: There must be a mutual agreement between the parties to the contract
regarding the contingency. The contingency must be clearly stated and agreed upon by both
parties.

16 | P a g e
 4. Legal Purpose: The object of the contract must be legal. If the object of the contract is
illegal, the contract will be void.

5. The event must not be solely at the option of one party: If the event on which the contract
depends is solely at the option of one party, the contract is void.

Defenses to a contingent contract:

1. Contingency has not occurred: If the event on which the contract depends does not occur,
the contract becomes void.

2. Performance becomes impossible: If the occurrence of the event on which the contract
depends becomes impossible, the contract becomes void.

3. Event becomes unlawful: If the occurrence of the event on which the contract depends
becomes unlawful, the contract becomes void.

Landmark case laws related to contingent contracts:

1. Chandramani vs. Kamalmani (1950): In this case, the court held that a contract was not
contingent as the happening of the event on which the contract depended was not uncertain,
but was solely in the hands of the defendant.

2. Balfour vs. Balfour (1919): In this case, the court held that an agreement between spouses
regarding monthly maintenance payments was not enforceable as it was a social agreement,
and did not fulfill the essential elements of a contract.

Contingent contracts play an important role in business transactions, as they provide flexibility and
allow parties to enter into agreements without assuming undue risk. However, it is important to
clearly define the contingency in order to avoid disputes and ensure that the contract is realised.

The essential elements of a contingent contract include:

1. Condition precedent: A contingent contract must have a condition precedent, which is an

event that must occur before the contract can be executed. This condition may be based on
the occurrence of a future event, the completion of a specific task, or the performance of a
particular action.

2. Uncertainty of the event: The occurrence of the event must be uncertain at the time the
contract is made. If the event is certain to happen, then the contract is not contingent.

3. Mutual agreement: Both parties must agree to the terms of the contract, including the
conditions that must be met for the contract to be executed.

4. Enforceable contract: The contingent contract must be legally binding and enforceable.

5. Performance: Once the condition precedent is satisfied, the parties must perform their
obligations under the contract.

6. Consequence of non-occurrence: If the event does not occur, the contract becomes void and
the parties are released from their obligations.

Contingent contracts are common in a variety of industries, including real estate, insurance, and
finance, and are often used to manage risk and uncertainty.

The law relating to the enforcement of contingent contracts is primarily governed by the Indian
Contract Act, 1872.

Section 31 of the Act defines contingent contracts as those "to do or not to do something, if some
event, collateral to such contract, does or does not happen." It means that the fulfillment of the
contract is dependent on the occurrence or non-occurrence of a future event, and the contract will
be enforceable only when that event happens or does not happen.

17 | P a g e
The Act provides that contingent contracts can be enforced only when the event on which they are
contingent has happened or not happened, as the case may be. The section states that "Contingent
contracts to do or not to do anything if an uncertain future event happens cannot be enforced by law
unless and until that event has happened."

There are some exceptions to this rule. For instance, if the contingent contract is based on the
personal will of a third party, it can be enforced even if the event has not occurred. For example, if
A promises to pay B a sum of money if C marries D, and C marries E, A is still liable to pay B as the
fulfilment of the contract is not dependent on the happening of the event.

Another exception is when the parties have agreed to treat the contingency as fulfilled. In such a
case, the contract can be enforced even if the event has not occurred. For example, if A promises to
pay B a sum of money if it rains on a particular day, and both parties agree to treat a light drizzle as
rain, then the contract can be enforced even if it did not rain heavily.

The law relating to the enforcement of contingent contracts is that such contracts can be enforced
only when the event on which they are contingent has happened or not happened, unless there are
exceptions such as the personal will of a third party or the agreement between the parties to treat
the contingency as fulfilled.

Government Contracts
Government contracts are agreements between the government and private entities or individuals.
These contracts can be entered into by the central or state government, public sector undertakings,
local bodies, or any other authority authorized by the government. The Indian Contract Act, 1872,
governs government contracts as well.

Essentials of Government Contracts:

1. Invitation to Tender: The government invites tenders from prospective contractors through
a public notice, inviting bids for carrying out a specific work. The notice includes details
about the scope of work, the timelines, and the terms and conditions of the contract.

2. Offer and Acceptance: The bidder submits a proposal in response to the tender invitation. If
the government finds the proposal acceptable, it accepts it, and the two parties enter into
a contract.

3. Consideration: The consideration in a government contract is usually in the form of payment

made by the government to the contractor upon the completion of the work.

4. Legal Formalities: Government contracts need to comply with various legal formalities, such
as obtaining necessary approvals, registration, execution on stamp paper of adequate value,
etc.

5. Performance: The contractor is obligated to complete the work as per the agreed-upon terms
and conditions. The government can terminate the contract if the contractor fails to perform
as per the contract.

6. Dispute Resolution: Any disputes that arise between the government and the contractor are
resolved through a mutually agreed-upon dispute resolution mechanism.

7. Termination: The government can terminate the contract if the contractor fails to perform
the work as per the contract terms or if the contractor is found to have engaged in any illegal
or unethical practices.

Government contracts play a crucial role in the development of the country's infrastructure and the
provision of public services. The essentials of government contracts help ensure transparency,
fairness, and accountability in the procurement process. They also provide a framework for the
efficient execution of government projects and help to prevent corruption and malpractice.

18 | P a g e
Doctrine of Privity of Contract
The Doctrine of Privity of Contract is a fundamental principle in contract law that states that only
parties who are part of a contract can enforce the rights and obligations arising from it. In other
words, if a third party is not part of a contract, they cannot enforce any of the terms of the
agreement, even if the contract was made for their benefit.

This means that a third party cannot sue for breach of contract or claim any benefits arising from a
contract, even if the contract was intended to benefit them. The principle of privity of contract is
based on the idea that a contract is a private agreement between the parties involved, and only
those parties can be bound by its terms.

There are some exceptions to the doctrine of privity of contract. One exception is the principle of
agency, where a person can enter into a contract on behalf of another person or entity. In such cases,
the principal (the person or entity on whose behalf the contract was made) can sue or be sued on
the contract.

Another exception is the principle of trust, where a trust is created for the benefit of a third party.
In such cases, the third party can enforce the terms of the trust, even though they are not a party to
the original contract.

The doctrine of privity of contract has some limitations and criticisms. One of the main criticisms is
that it can lead to injustice in cases where a third party is adversely affected by a contract but cannot
enforce their rights under it. This has led to calls for reform of the doctrine, particularly in cases
where the interests of third parties need to be protected.

Doctrine of Privity of Contract is a fundamental principle in contract law that governs the
enforceability of contractual rights and obligations. While it has some limitations and criticisms, it
remains a key principle in contract law and is essential for ensuring the predictability and certainty
of contractual relations.

There have been several notable cases in contract law that have dealt with the doctrine of privity of
contract. Here are some examples:

1. Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915): In this case, Dunlop Pneumatic
Tyre Co Ltd made a contract with a retailer, Selfridge & Co Ltd, that the retailer would not
sell Dunlop tyres below a certain price. Selfridge & Co Ltd subsequently sold the tyres below
the agreed price, and Dunlop Pneumatic Tyre Co Ltd sued for breach of contract. The court
held that Selfridge & Co Ltd was not liable for breach of contract as there was no privity of
contract between Dunlop Pneumatic Tyre Co Ltd and the ultimate consumer.

2. Tweddle v Atkinson (1861): In this case, the fathers of a bride and groom agreed to pay the
groom a sum of money as part of a marriage settlement. However, when the groom's father
died, the groom's father's executor refused to pay the money. The court held that the groom
could not enforce the contract as he was not a party to it, and there was no privity of contract
between him and his father's executor.

3. Jackson v Horizon Holidays Ltd (1975): In this case, a travel company made a contract with
a group of holidaymakers to provide accommodation and other services. However, the
accommodation provided was not as described in the contract, and the holidaymakers sued
for breach of contract. The court held that the holidaymakers could not sue for breach of
contract as they were not party to the contract between the travel company and the
accommodation provider, and there was no privity of contract between them.

4. Beswick v Beswick (1968): In this case, an uncle made a contract with his nephew to transfer
a house to him in exchange for a weekly payment and a promise to provide for his aunt after
his death. However, the uncle died before the transfer was made, and the nephew sued his
uncle's estate to enforce the contract. The court held that the nephew could enforce the
contract as he had a right under the contract that was intended to benefit him, and the
doctrine of privity of contract did not prevent him from doing so.

19 | P a g e
These cases illustrate the importance of the doctrine of privity of contract in determining the
enforceability of contractual rights and obligations. While the doctrine has some limitations and
criticisms, it remains a key principle in contract law and is essential for ensuring the predictability
and certainty of contractual relations.

Minor Contracts
In the context of the Indian Contracts Act, a minor is a person who has not attained the age of 18
years. The Indian Contracts Act recognizes the special status of minors and provides certain
protections for them when it comes to entering into contracts.

According to the Act, a contract entered into by a minor is voidable at the option of the minor. This
means that a minor can choose to enforce the contract or reject it, even after entering into it.
However, the other party to the contract cannot enforce the contract against the minor unless the
contract is ratified by the minor after attaining majority.

The reason for this protection is that minors are deemed to be incapable of fully understanding the
consequences of their actions and are therefore more vulnerable to exploitation. By providing this
protection, the law seeks to prevent minors from being unfairly bound by contracts that they may
not fully comprehend.

There are certain types of contracts that are expressly prohibited for minors under the Indian
Contracts Act. These include contracts for the sale or purchase of immovable property, contracts of
partnership, and contracts for the taking of loans for purposes other than necessities. A minor cannot
be a partner in a partnership firm or be personally liable for any debts or obligations of the firm.

However, there are some exceptions to these rules. For example, a minor can enter into a contract
for necessities, such as food, clothing, and shelter. In such cases, the minor is liable to pay a
reasonable price for the goods or services provided, even if they choose to reject the contract later.

Essentials of Minor Contracts:

1. Voidable: A contract entered into by a minor is voidable at the option of the minor. This
means that the minor can choose to enforce or reject the contract, even after entering into
it. However, the other party to the contract cannot enforce the contract against the minor
unless the contract is ratified by the minor after attaining majority.

2. Necessaries: A minor is liable to pay a reasonable price for the goods or services provided to
them if they enter into a contract for necessaries, such as food, clothing, and shelter.

3. Protection: The law seeks to protect minors from being unfairly bound by contracts that they
may not fully comprehend.

Exclusions of Minor Contracts:

1. No capacity to contract: A minor does not have the capacity to contract for themselves, and
any contract entered into by them is considered voidable.

2. No transfer of interest: A minor cannot transfer their interest in the property to the other
party, and any such transfer is considered void.

3. No liability for damages: A minor is not liable for any damages that may arise out of a breach
of contract, except in cases where the contract is for necessaries.

4. No enforceability: A minor cannot be sued for specific performance of a contract, and any
such attempt is considered void.

5. No partnership: A minor cannot enter into a partnership agreement, and any such agreement
is considered void.

20 | P a g e
One of the most famous cases regarding minor contracts in India is Mohori Bibee v. Dharmodas Ghose.
This case is also known as the "Doctrine of Necessaries" case and is considered a landmark case in
Indian contract law.

In this case, a minor named Dharmodas Ghose had mortgaged his property to Mohori Bibee to secure
a loan taken by him. Later, Dharmodas discovered that the mortgage was for a lesser amount than
the actual loan, and he filed a suit to have the mortgage set aside. The court held that the mortgage
was voidable at the option of the minor since he had not received the full amount of the loan, and
that the mortgage was for a purpose that was not a necessary one. The court further held that a
minor could not ratify the contract after attaining majority, and that the mortgage was void from its
inception.

The court also laid down the principle that a minor's contract for necessaries is binding on them, and
that they are liable to pay a reasonable price for the goods or services received. The court observed
that the doctrine of necessaries was based on the principle of equity and was meant to protect minors
from being left without the basic necessities of life.

The Mohori Bibee case established the principle that a minor's contract is voidable at their option,
and that certain contracts, such as contracts for necessaries, are binding on them. The case also
emphasized the need for protection of minors and laid down the principle that a minor cannot be
bound by a contract that is not for their benefit or is against public

Competence & Sound Mind

Competence and soundness of mind are important factors in determining the validity of a contract.
The Indian Contract Act, 1872, provides for certain essential requirements that must be met for a
person to be considered competent and capable of entering into a contract. These requirements are
as follows:

1. Competent party: A person is competent to enter into a contract if he/she is of the age of
majority, is of sound mind, and is not disqualified from contracting by any law to which
he/she is subject.

2. Soundness of mind: A person is considered to be of sound mind if he/she is capable of

understanding the nature and consequences of the contract at the time of entering into it.

Essentials of a competent party:

1. Age of majority: The age of majority is the age at which a person is considered to be an adult
and is legally recognized as being capable of entering into a contract. In India, the age of
majority is 18 years.

2. Sound mind: A person must be of sound mind at the time of entering into a contract. A person
is considered to be of sound mind if he/she is capable of understanding the nature and
consequences of the contract.

3. Not disqualified by law: A person may be disqualified from entering into a contract by law.
For example, minors, persons of unsound mind, and persons declared insolvent by a court are
disqualified from entering into a contract.

Exceptions to the rule:

1. Minor's contracts: A minor is not competent to enter into a contract. However, there are
certain exceptions to this rule. For example, a minor may enter into a contract for necessities
such as food, clothing, and shelter.

2. Persons of unsound mind: A person who is of unsound mind is not competent to enter into a
contract. However, if the person is capable of understanding the nature and consequences
of the contract at the time of entering into it, the contract may be valid.

21 | P a g e
 3. Disqualified by law: A person may be disqualified from entering into a contract by law. For
example, a person who is declared insolvent by a court is not competent to enter into a
contract.

Effect on the contract:

If a person is not competent or of sound mind at the time of entering into a contract, the contract is
voidable at the option of the incompetent or unsound person. This means that the person may either
enforce the contract or repudiate it. If the person chooses to repudiate the contract, he/she may do
so within a reasonable time after regaining competence or soundness of mind. If the person does not
repudiate the contract within a reasonable time, the contract becomes binding on him/her.

Undue influence & its effect on contract

Undue influence is a legal concept that arises in situations where a person uses their position of
power to exert pressure or influence over another person in order to gain an unfair advantage. In the
context of Indian contract law, undue influence is recognized as a ground for setting aside a contract
or rendering it voidable.

Section 16(1) of the Indian Contract Act, 1872 defines undue influence as "any of the following acts
shall be deemed to be undue influence, namely:

(a) where the relations subsisting between the parties are such that one of the parties is in a position
to dominate the will of the other and uses that position to obtain an unfair advantage over the other;
or (b) where a person who is in a position to dominate the will of another, enters into a contract with
him and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable."

The following are the essential elements of undue influence under Indian contract law:

1. The existence of a relationship of dominance: The first element of undue influence is the
existence of a relationship of dominance between the parties. This relationship may arise
from a variety of factors, such as family ties, financial dependence, or social status.

2. The use of that dominance to obtain an unfair advantage: The second element of undue
influence is the use of that dominance to obtain an unfair advantage over the other party.
This may involve exerting pressure, making threats, or manipulating the other party in some
way.

3. Unconscionable transaction: In cases where the parties are not in a pre-existing relationship
of dominance, the transaction must also be shown to be unconscionable. This means that the
terms of the contract are so one-sided or unfair that they shock the conscience of the court.

If a contract is found to be tainted by undue influence, it will be either voidable or void, depending
on the circumstances. The aggrieved party may choose to either rescind the contract or seek damages
for any loss suffered as a result of the undue influence.

Overall, the concept of undue influence is an important safeguard against the abuse of power and
protects the vulnerable parties from being taken advantage of in a contractual relationship.

Under the Indian Contract Act, 1872, undue influence is recognized as a ground for setting aside a
contract or rendering it voidable. If a contract is found to be tainted by undue influence, it will have
the following effects:

1. Contract becomes voidable: When undue influence is proved, the contract becomes voidable
at the option of the party who was under the influence. This means that the party has the
right to either affirm or rescind the contract.

2. Contract is void if it is unconscionable: If the person in a position of dominance has taken

advantage of the other party's weakness and the transaction appears, on the face of it, to be
unconscionable, the contract is considered void.

22 | P a g e
 3. Restitution: If the contract is set aside, the parties must be restored to the position they
were in before the contract was made. This means that any money or property that was
transferred as a result of the contract must be returned.

4. Burden of proof: The burden of proving undue influence lies with the party seeking to set
aside the contract. This means that the party must show that the other party was in a position
of dominance and used that position to obtain an unfair advantage.

5. No ratification: A contract that is tainted by undue influence cannot be ratified by the party
who was under the influence. This means that the party cannot later affirm the contract and
seek to enforce its terms.

The effect of undue influence on a contract is that it renders the contract voidable or void, depending
on the circumstances. The aggrieved party may choose to either rescind the contract or seek damages
for any loss suffered as a result of the undue influence. Overall, the concept of undue influence is an
important safeguard against the abuse of power and protects the vulnerable parties from being taken
advantage of in a contractual relationship.

Anticipatory breach of contract

Anticipatory breach of contract, also known as anticipatory repudiation, occurs when one party to a
contract declares their intention not to perform their obligations under the contract before the time
for performance arrives. This can have significant effects on the contract, and it is important to
understand the essentials of anticipatory breach, the exceptions to this rule, and the effect on the
contract.

Essentials of Anticipatory Breach:

1. Clear intention to breach: The party must clearly communicate their intention not to perform
their obligations under the contract. This can be done through a statement or declaration,
or implied through conduct or behavior.

2. Unconditional refusal: The communication must be an unconditional refusal to perform the

contract. A conditional refusal may not be considered an anticipatory breach of contract.

3. Before time for performance: The communication must occur before the time for
performance arrives. If the time for performance has already arrived, the communication
may be considered a breach of contract rather than an anticipatory breach.

Exceptions to Anticipatory Breach:

1. The non-breaching party has accepted the repudiation: If the non-breaching party has
accepted the anticipatory breach and agreed to terminate the contract, they cannot later
change their mind and sue for damages.

2. The repudiation was retracted: If the breaching party retracts their repudiation and expresses
their willingness to perform their obligations under the contract, the contract remains in
force.

3. The non-breaching party waives their right to terminate the contract: If the non-breaching
party waives their right to terminate the contract, they cannot later treat the anticipatory
breach as a breach of contract and sue for damages.

Effect on the Contract:

An anticipatory breach of contract can have significant effects on the contract. Once an anticipatory
breach occurs, the non-breaching party has the right to terminate the contract and seek damages for
the breach. This means that the contract is no longer in force, and both parties are released from
their obligations.

23 | P a g e
The non-breaching party can also choose to wait until the time for performance arrives, and then
treat the anticipatory breach as a breach of contract. In this case, they can sue for damages as they
would in a regular breach of contract case.

In some cases, the non-breaching party may choose to continue to perform their obligations under
the contract, even though they know that the other party intends to breach. In this case, the non-
breaching party is not releasing the breaching party from their obligations, but is instead allowing
them to breach and then seeking damages for the breach.

An anticipatory breach of contract occurs when one party communicates their intention not to
perform their obligations under the contract before the time for performance arrives. The essentials
of an anticipatory breach of contract include clear intention to breach, unconditional refusal, and
before time for performance. Exceptions to an anticipatory breach of contract include acceptance
of the repudiation, retraction of the repudiation, and waiver of the right to terminate the contract.
The effect on the contract is that the non-breaching party has the right to terminate the contract
and seek damages for the breach.

Contracts, which MUST be performed

A contract that must be performed is a type of contract in which both parties are obligated to perform
their respective duties and obligations under the contract. In other words, it is a contract that
requires performance, rather than a contract that is simply a promise to perform.

Under the Indian Contract Act, 1872, a contract must be performed when both parties have agreed
to perform their respective obligations under the contract. The Act recognizes two types of contracts
that must be performed:

1. Executed contract: An executed contract is one in which both parties have performed their
respective obligations under the contract. Once the contract has been executed, it comes to
an end and there are no further obligations or duties to be performed by either party.

2. Executory contract: An executory contract is one in which one or both parties have not yet
performed their respective obligations under the contract. In an executory contract, both
parties have obligations that are yet to be fulfilled.

In order for a contract that must be performed to be considered valid, certain essential elements
must be present:

1. Offer and acceptance: The contract must involve an offer made by one party and an
acceptance by the other party.

2. Consideration: There must be consideration exchanged between the parties. Consideration

is something of value given in exchange for something else of value.

3. Legal object: The object of the contract must be legal. If the object of the contract is illegal
or against public policy, the contract is not enforceable.

4. Competent parties: The parties to the contract must be legally competent. This means that
they must be of legal age, of sound mind, and not disqualified from entering into a contract
by law.

Once a contract that must be performed has been formed, both parties are legally bound to perform
their respective obligations. Failure to perform one's obligations under the contract may result in a
breach of contract, which can lead to legal consequences.

In the event of a breach of contract, the non-breaching party may be entitled to seek remedies such
as specific performance, which requires the breaching party to fulfill its obligations under the
contract, or damages, which compensate the non-breaching party for any losses suffered as a result
of the breach.

24 | P a g e
A contract that must be performed is a binding agreement in which both parties are obligated to
perform their respective obligations under the contract. To be considered valid, the contract must
meet certain essential elements, and failure to perform one's obligations under the contract may
result in a breach of contract and legal consequences.

Devolution of join rights and its effect on the contract

Devolution of joint rights refers to the transfer of rights and interests in a contract from one party
to another. This can occur in various situations, such as the death of a joint owner or a change in
ownership due to a transfer or assignment of the contract.

Under the Indian Contract Act, 1872 (Sections 40 through 45), joint rights in a contract can be held
by two or more persons. Joint rights mean that the parties have equal rights and obligations under
the contract. The devolution of joint rights can have different effects on the contract, depending on
the circumstances.

1. Death of a joint owner: If one of the joint owners of a contract dies, the joint rights and
obligations devolve on the surviving owner(s). The surviving owner(s) will have the right to
enforce the contract and must fulfill the obligations under the contract. The legal heirs of
the deceased owner cannot claim the joint rights under the contract.

2. Transfer of joint rights: Joint rights in a contract can be transferred by one joint owner to
another, or to a third party. The transfer can be made through an assignment or by way of
inheritance. In such cases, the transferee will acquire the joint rights and obligations under
the contract, and will be bound to fulfill the obligations under the contract.

3. Release of joint rights: A joint owner can release his/her joint rights and obligations under
the contract to the other joint owner(s). This means that the remaining joint owner(s) will
have the exclusive right to enforce the contract and must fulfill the obligations under the
contract.

The effect of the devolution of joint rights on a contract depends on the type of contract involved.
For example, in a contract of sale, the death of one of the joint owners may not affect the validity
of the contract, and the surviving joint owner(s) can continue with the performance of the contract.
However, in a contract of partnership, the death of one of the partners may dissolve the partnership,
and the contract may need to be re-negotiated with the remaining partner(s).

The devolution of joint rights in a contract can have different effects depending on the circumstances
involved. It is important for the parties to understand their rights and obligations under the contract,
and to be aware of the legal implications of any changes in ownership or transfer of joint rights.

Time & Place of Contract performance

In a contract, the time and place of performance refer to the specific date, time, and location where
the parties are expected to fulfill their obligations under the contract. The Indian Contract Act, 1872
provides certain rules for the time and place of contract performance, which are explained below:

1. Time of performance: Unless the contract specifies a particular time for performance, the
general rule is that performance must be done within a reasonable time. What constitutes a
reasonable time will depend on the nature of the contract, the parties involved, and the
circumstances surrounding the contract. For example, if the contract involves the delivery
of goods, a reasonable time for performance would be within a few days of the agreed
delivery date.

2. Place of performance: The place of performance is generally determined by the terms of the
contract. If the contract specifies a particular place of performance, then the parties are
expected to fulfill their obligations at that location. However, if the contract is silent on the
place of performance, the general rule is that the place of performance is the seller's place
of business or residence. In cases where the contract involves the delivery of goods, the place
of delivery is usually the buyer's place of business or residence.

25 | P a g e
 3. Performance on a particular day: If the contract specifies a particular day for performance,
then the parties are expected to fulfill their obligations on that day. However, if the contract
does not specify a particular day, then performance must be done within a reasonable time.

4. Excuses for non-performance: There are certain circumstances under which a party may be
excused from performing their obligations under the contract. These circumstances include:

 Impossibility of performance: If performance becomes impossible due to circumstances

beyond the control of the parties, such as a natural disaster or a change in the law, then
the parties may be excused from performance.

 Frustration of purpose: If the purpose of the contract becomes frustrated due to

circumstances beyond the control of the parties, such as the destruction of the subject
matter of the contract, then the parties may be excused from performance.

 Mutual agreement: If the parties mutually agree to cancel the contract, then they may
be excused from performance.

Both the time and place of contract performance are important elements of any contract. The rules
for time and place of performance provide guidance for the parties to fulfill their obligations under
the contract, and in cases of non-performance, there are certain circumstances under which a party
may be excused from their obligations. It is important for the parties to understand their respective
rights and obligations under the contract, and to be aware of the legal implications of any changes
in ownership or transfer of joint rights.

Performance of Reciprocal Promises

Reciprocal performance of contracts refers to a type of contract in which both parties have
obligations to perform under the contract. In other words, each party's obligation to perform is
dependent upon the other party's performance. The Indian Contract Act, 1872 (Section 51 through
55), lays down certain rules regarding the reciprocal performance of contracts.

1. Simultaneous performance: In a reciprocal contract, both parties are obligated to perform

their respective obligations at the same time. This means that each party's performance is
dependent upon the other party's performance. For example, in a contract for the sale of
goods, the buyer's obligation to pay for the goods is dependent upon the seller's obligation to
deliver the goods.

2. Order of performance: If the contract does not specify the order of performance, both parties
are required to perform their obligations simultaneously. However, if the contract specifies
the order of performance, the parties must perform their obligations in the specified order.
For example, in a construction contract, the contractor may be required to complete certain
stages of the project before the owner is obligated to make payment.

3. Excuse for non-performance: If one party fails to perform its obligations under the contract,
the other party may be excused from performing its obligations. However, the failure to
perform must be due to a reason beyond the control of the party. For example, if a seller is
unable to deliver goods due to a natural disaster, the buyer may be excused from paying for
the goods.

4. Substantial performance: If one party substantially performs its obligations under the
contract, the other party is required to fulfill its obligations under the contract. Substantial
performance refers to performance that is close enough to the terms of the contract to fulfill
the purpose of the contract. For example, if a contractor builds a house that is 95% complete,
the owner is required to make payment for the work done.

5. Time of performance: The contract must specify the time of performance. If the time of
performance is not specified, the party must perform its obligations within a reasonable time.
If one party fails to perform its obligations within the specified time or a reasonable time,
the other party may terminate the contract and seek damages.

26 | P a g e
The rules for reciprocal performance of contracts are an essential aspect of contract law. These rules
ensure that both parties fulfill their respective obligations under the contract and that the contract
is performed in a timely and efficient manner. It is important for parties to be aware of these rules
when entering into a reciprocal contract and to ensure that the terms of the contract are clear and
specific to avoid any confusion or disputes.

Contracts which need not be performed

Sections 62 to 65 of the Indian Contract Act, 1872, deal with the discharge of contracts. These
sections specify various circumstances under which a contract can be discharged. However, there are
certain contracts that need not be performed, as discussed below:

1. Contracts which become void: A contract that is void from the beginning is not enforceable,
and therefore, it need not be performed. For example, a contract to commit an illegal act is
void from the beginning and cannot be enforced.

2. Contracts that are contingent on the happening of a specific event: A contract may be
contingent on the occurrence of a specific event. If the event does not happen, the contract
becomes void, and the parties are released from their respective obligations under the
contract.

3. Contracts that are impossible to perform: A contract that is impossible to perform becomes
void, and the parties are released from their respective obligations. For example, a contract
to deliver a specific product that no longer exists is impossible to perform.

4. Contracts that are frustrated: A contract may be frustrated due to unforeseen events, making
it impossible to perform. In such cases, the contract is discharged, and the parties are
released from their respective obligations. For example, a contract to host an event that is
cancelled due to a natural disaster may be frustrated.

5. Contracts that are rescinded: A contract may be rescinded by mutual agreement between
the parties. When a contract is rescinded, it is discharged, and the parties are released from
their respective obligations.

6. Contracts that are voidable: A contract that is voidable may be avoided by one of the parties.
When a contract is avoided, it is discharged, and the parties are released from their
respective obligations.

There are various circumstances under which a contract may not need to be performed. These include
contracts that are void, contingent, impossible, frustrated, rescinded, or voidable. The parties to
such contracts are released from their respective obligations under the contract.

The Indian Contract Act, 1872, contains provisions related to the formation, performance, and
enforceability of contracts in India. Sections 62 to 65 of the Act deal with the discharge of contracts,
which means the termination of the obligations of the parties to the contract. Let's discuss these
sections in detail:

Section 62 of the Indian Contract Act, 1872 deals with the discharge of a contract by performance.
According to this section, a contract is said to be discharged by performance when the parties to the
contract fulfill their respective obligations under the contract. Once the parties have performed their
obligations, the contract comes to an end, and the parties are released from their respective
obligations under the contract.

Section 63 of the Act deals with the discharge of a contract by agreement. According to this section,
a contract can be discharged by an agreement between the parties to the contract. The agreement
can be express or implied, and it can be made either before or after the performance of the contract.
An agreement to discharge a contract may be based on various grounds, such as mutual consent,
novation, alteration, rescission, and waiver.

27 | P a g e
Section 64 of the Act deals with the discharge of a contract by breach. According to this section,
when one party to the contract fails to perform their obligations under the contract, the other party
may consider the contract as discharged, and they may sue for damages for breach of contract. The
breach of contract may be either a breach of condition or a breach of warranty. In case of breach of
condition, the aggrieved party can treat the contract as repudiated, and they can claim damages. In
case of breach of warranty, the aggrieved party can only claim damages.

Section 65 of the Act deals with the discharge of a contract by impossibility of performance.
According to this section, a contract can be discharged if its performance becomes impossible due to
an event that is beyond the control of the parties. Such events may include natural disasters, war,
death, and so on. When such an event occurs, the contract becomes void, and the parties are released
from their respective obligations.

The provisions of Sections 62 to 65 of the Indian Contract Act, 1872, provide various ways in which a
contract can be discharged. The discharge of a contract means the termination of the obligations of
the parties to the contract. The parties may discharge the contract by performance, agreement,
breach, or impossibility of performance. These provisions have a significant impact on the
enforceability of contracts and the rights and obligations of the parties to the contract.

Quasi Contracts
A quasi-contract is a legal concept that is used to describe a situation where two parties do not have
a formal contract, but one party has received a benefit from the other party. In such a scenario, the
law may impose an obligation on the recipient of the benefit to pay the provider a reasonable amount
for the benefit received. A quasi-contract is also known as an implied-in-law contract because it is
not created by agreement between the parties, but rather by the law to prevent unjust enrichment.

Essentials of Quasi-Contracts:

1. Benefit Conferred: A quasi-contract is created when one party has conferred a benefit on
another party. The benefit must be conferred voluntarily and not due to any legal obligation
or duty.

2. Knowledge of Benefit: The party receiving the benefit must have knowledge of the benefit
and must have accepted it.

3. Unjust Enrichment: The law will imply a contract if the recipient of the benefit would be
unjustly enriched if they did not compensate the provider.

4. Reasonable Value: The amount of compensation owed must be reasonable and reflect the
value of the benefit received.

5. No Other Contract Exists: A quasi-contract can only be imposed when there is no other
contract that governs the relationship between the parties.

6. No Fault of the Provider: The provider of the benefit must not be at fault for the situation
that created the quasi-contract.

Quasi-contracts are commonly seen in situations where a service or benefit is provided without an
agreement or in circumstances where the contract is void or unenforceable. For example, if a
contractor completes work for a homeowner who fails to pay, the contractor may be able to recover
the cost of the work through a quasi-contract. Similarly, if a person pays for goods that they later
find to be defective, they may be able to recover the cost of the goods through a quasi-contract.

Quasi-contracts help to ensure that parties are not unjustly enriched at the expense of others. They
provide a means of compensating those who have provided a benefit without a formal agreement,
which helps to promote fairness and justice in contractual relationships.

Quasi contracts, also known as "constructive contracts," are not actual contracts but rather legal
obligations imposed by the court to prevent unjust enrichment. These are obligations that arise not

28 | P a g e
from the parties' agreement but rather from the circumstances of the case. Here are some examples
of quasi contracts:

1. Supply of necessaries: If someone supplies necessaries like food, clothing, or medical care to
a person who is incapable of providing for themselves, then the supplier has a quasi-
contractual right to be paid for those necessaries.

2. Payment of money due by another: If A owes money to B, but C pays the debt without A's
consent, then C can claim the amount paid from A, as C has done so for A's benefit.

3. Finder of goods: If someone finds goods belonging to another and takes care of them, the
finder has a quasi-contractual right to be compensated for the expenses incurred in taking
care of the goods.

4. Mistake: If two parties enter into a contract, and one party mistakenly believes that the
contract is enforceable, the other party has a quasi-contractual obligation to return any
benefits received under the contract.

Exceptions to quasi-contracts are few, but one of the most common is the doctrine of "voluntary
acceptance." This means that if a party knowingly accepts the benefits of a contract, they cannot
later argue that they did not agree to the contract's terms. In other words, if a party knowingly
accepts the benefits of a quasi-contract, they cannot later claim that they did not agree to the quasi-
contract's terms.

Novation
Novation is a process by which a new contract replaces an existing contract, either by substituting a
new obligation for an old one, or by replacing one of the parties to an agreement with a new party.
It requires the mutual agreement of all parties involved, and once completed, the old contract is
extinguished and replaced with the new one.

Essentials of Novation:

1. The consent of all parties: Novation requires the consent of all parties involved, including
the original parties and any new parties added.

2. The intention to extinguish the old contract: Novation requires a clear intention to extinguish
the old contract, so that it is no longer binding on any party.

3. A new contract: Novation requires the creation of a new contract, either by substituting a
new obligation for an old one or by replacing one of the parties to an agreement with a new
party.

Effect of Novation on contract:

1. Extinguishment of old contract: Once novation takes place, the old contract is extinguished
and replaced by the new one. The rights and obligations of the parties under the old contract
no longer exist.

2. Release of parties: Novation releases the parties from their obligations under the old
contract, and they are bound only by the terms of the new contract.

3. Substitution of parties: If one of the parties to the old contract is replaced by a new party,
the new party assumes all the rights and obligations of the original party.

4. Modification of terms: The terms of the new contract may be different from those of the old
contract, as long as they are agreed upon by all parties involved.

5. Legal effect: Novation has the same legal effect as any other contract, and the parties
involved are bound by its terms.

29 | P a g e
Overall, novation is a useful tool for parties to change the terms of an existing contract or to replace
one party with another, with the consent of all parties involved. It is important to ensure that all
legal requirements are met to make the novation effective and binding.

Claytons Rule
Clayton's rule of appropriation is a legal principle used to determine which payments made by a
debtor are applied to which debts owed to a creditor when there are multiple debts outstanding.
This principle is defined in Sections 59 to 61 of the Indian Contract Act, 1872. The following is a
detailed explanation of the rule:

Section 59 of the Indian Contract Act, 1872, states that when a debtor owes several debts to a
creditor, and they make a payment to the creditor, the payment shall be applied by the creditor
towards the discharge of the debt which, in the absence of a direction by the debtor, he thinks fit.
This means that unless the debtor directs the creditor on how to apply the payment, the creditor has
the discretion to apply the payment to any outstanding debt.

Section 60 of the Act provides that if the debtor has specified the purpose for which the payment
was made, the payment must be applied to that particular purpose. For example, if the debtor makes
a payment towards a specific invoice or account, the payment must be applied to that specific invoice
or account.

Section 61 of the Act states that if the debtor has not directed the creditor on how to apply the
payment, and the outstanding debts are of different types or different rates of interest, the payment
shall be applied towards the discharge of the debts in order of time, i.e., the oldest debt first.

This means that if a debtor makes a payment without specifying the purpose or directing the creditor,
and there are multiple debts outstanding, the creditor must apply the payment to the oldest debt
first. This is known as the "first in, first out" principle.

However, if the debts are of the same type or carry the same interest rate, the creditor can apply
the payment to any debt, as stated in Section 59.

The Clayton's rule of appropriation is a common law principle that is widely used in many legal
systems, including India. This rule ensures that payments made by the debtor are applied fairly to
the outstanding debts owed to the creditor. The rule also provides clarity on how payments should
be applied, thereby avoiding confusion and disputes between the parties involved.

Immorality of Object
In the context of Indian contract law, if the object of a contract is immoral or against public policy,
then it is considered void ab initio, i.e., it is treated as if the contract never existed. This principle
is derived from Section 23 of the Indian Contract Act, 1872.

Essentials of Immorality of Object: For the object of a contract to be considered immoral or against
public policy, it must meet the following essential conditions:

1. Contrary to law: The object of the contract must be against the law or forbidden by law. For
instance, a contract to smuggle illegal goods or a contract for prostitution.

2. Opposed to public policy: The object of the contract must be against public policy. Public
policy refers to the common good and welfare of society. For instance, a contract to bribe a
public official or a contract to commit a crime.

Effect on Contract: If the object of a contract is found to be immoral or against public policy, the
contract is considered void ab initio, meaning it is treated as if it never existed. The parties cannot
enforce such a contract in a court of law, nor can they recover any damages or compensation arising
from the contract.

Example: Suppose a contract between A and B involves the sale of a piece of land. If the object of
the contract is to transfer ownership of the land in exchange for money, it is a lawful contract.

30 | P a g e
However, if the object of the contract is to transfer ownership of the land in exchange for B to
commit a murder, the contract is considered void ab initio as it is against the law and public policy.

Remedies for breach of contract

The Indian Contract Act, 1872, provides for various remedies for breach of contract. A breach of
contract occurs when one party fails to perform their obligations under the contract. The following
are the remedies available to the aggrieved party for breach of contract:

1. Specific Performance: Specific performance is a remedy in which the court orders the
defaulting party to perform their obligations under the contract. This remedy is usually
available in contracts that involve the sale of property or unique goods. Specific performance
is an equitable remedy and is discretionary in nature. The court may refuse to grant this
remedy if it would be difficult or impractical to enforce or if it would cause undue hardship
to the defaulting party.

2. Damages: Damages are the most common remedy for breach of contract. Damages are
monetary compensation that is paid by the defaulting party to the aggrieved party to
compensate them for the loss suffered due to the breach of contract. The amount of damages
awarded depends on the nature and extent of the loss suffered by the aggrieved party. There
are two types of damages: ordinary damages and special damages.

 Ordinary damages: These are damages that arise naturally from the breach of contract.
For example, if a party fails to deliver goods as per the contract, the other party may
claim damages for the loss suffered due to the non-delivery.

 Special damages: These are damages that arise due to the particular circumstances of
the case. For example, if a party fails to deliver goods as per the contract, and the other
party suffers loss of profits due to the non-delivery, they may claim damages for loss of
profits as special damages.

3. Quantum Meruit: Quantum Meruit is a remedy that allows the aggrieved party to recover
payment for the work done or services rendered by them before the contract was breached.
Quantum Meruit is available when the contract is terminated before completion due to the
fault of the defaulting party.

4. Rescission: Rescission is a remedy in which the contract is cancelled, and the parties are
released from their respective obligations under the contract. Rescission is available when
the breach of contract is fundamental and goes to the root of the contract.

5. Injunction: Injunction is a remedy in which the court orders the defaulting party to refrain
from doing a particular act or to do a specific act. Injunction is available when the breach of
contract is ongoing or is likely to continue in the future.

These remedies include specific performance, damages, quantum meruit, rescission, and injunction.
The aggrieved party can choose the appropriate remedy based on the nature and extent of the breach
of contract and the loss suffered due to the breach.

31 | P a g e
What is Specific Relief Act
The Specific Relief Act is a law in India that outlines the remedies available for individuals whose
contractual or property rights have been violated. It provides for the specific enforcement of
contracts and orders for the performance of certain obligations.

The act lays out the types of contracts that can be specifically enforced, such as contracts for the
sale of immovable property or contracts for personal services. It also outlines the circumstances
under which specific performance can be granted, such as when damages would not be an adequate
remedy.

The act also provides for injunctions, which are orders that require a person to refrain from doing a
certain act. Injunctions can be granted in cases where a person is threatening to violate another
person's rights or causing irreparable harm. This Act is an important piece of legislation in India that
helps to protect individuals' contractual and property rights by providing for specific enforcement
and injunctions.

Claim Essentials
In order to make a claim under the Specific Relief Act, the following essentials must be met:

1. Existence of a valid contract: There must be a valid and enforceable contract between the
parties that has been entered into willingly and lawfully.

2. Dispossession of specific identifiable property (not like coins, notes or grains)

3. Mutuality of obligation: Both parties must have obligations to perform under the contract. If
one party has no obligations, they cannot claim specific relief.

4. Willingness to perform: The plaintiff must show that they are willing and able to perform
their obligations under the contract.

5. Specific performance not barred: Specific performance must not be barred under the law.
For example, contracts for personal services cannot be specifically enforced.

6. No other adequate remedy: The plaintiff must show that there is no other adequate remedy
available, such as damages, to compensate for the breach of contract.

7. Time is of the essence: If the contract specifies a time for performance, that time must be
of the essence for the plaintiff to claim specific relief.

8. Feasibility of enforcement: The court must be able to enforce the order for specific
performance, meaning that it must be able to compel the defendant to perform their
obligations under the contract.

If all of these essentials are met, the plaintiff may be entitled to claim specific relief under the
Specific Relief Act.

Under the Specific Relief Act, a person can make a claim for specific relief in the following
circumstances:

1. Breach of contract: If a contract has been breached, the injured party may seek specific
performance of the contract or an injunction to prevent the other party from breaching the
contract.

2. Recovery of possession: A person who has been wrongfully dispossessed of their immovable
property or movable property may seek to recover possession through specific relief.

3. Rectification of instruments: If a written instrument, such as a contract or a deed, contains

a mistake or an error, the court may order its rectification through specific relief.

32 | P a g e
 4. Rescission of contract: In certain circumstances, a person may seek to have a contract
rescinded, meaning it is cancelled and the parties are returned to their pre-contractual
positions.

5. Specific performance of trusts: A beneficiary of a trust may seek specific performance of the
trust deed or an injunction to prevent the trustee from breaching their duties.

6. Preventing waste: A person who owns an immovable property may seek an injunction to
prevent someone else from causing waste or damage to the property.

7. Preventing nuisance: A person who is being subjected to a nuisance, such as excessive noise
or pollution, may seek an injunction to prevent the nuisance.

These are some of the circumstances in which a person can make a claim for specific relief under the
Specific Relief Act. The specific relief that can be claimed depends on the circumstances of each
case and the discretion of the court.

Essentials & Exclusions of Specific Performance

The Specific Relief Act of 1963 provides for the remedy of specific performance in cases where
damages are not an adequate remedy for breach of contract. Specific performance is an equitable
remedy that compels the defaulting party to perform the contract as promised.

Essentials of Specific Performance:

1. Valid contract: There must be a valid contract between the parties which has been entered
into voluntarily, lawfully, and without any coercion or fraud.

2. Specific subject matter: The subject matter of the contract must be specific and identifiable.

3. Enforceable obligation: The obligation under the contract must be one that is enforceable by
law.

4. Mutuality of obligation: Both parties to the contract must have mutual obligations.

5. No other adequate remedy: Specific performance will only be granted when no other
adequate remedy is available, such as monetary damages.

Exclusions of Specific Performance:

1. Personal service contracts: Specific performance will not be granted for contracts that
involve personal service or employment as this would be involuntary servitude.

2. Contracts of a unique nature: Specific performance may not be granted for contracts that
are of a unique nature, and cannot be easily replaced, such as a piece of art or a one-of-a-
kind item.

3. Contracts involving continuous supervision: Specific performance may not be granted for
contracts that involve continuous supervision, such as contracts for the construction of a
building or a bridge.

4. Contracts requiring constant supervision: Specific performance may not be granted for
contracts that require constant supervision, such as contracts for the performance of a
musical or theatrical performance.

Recovery of Immovable Property

Under the Specific Relief Act, a person who has been wrongfully dispossessed of their immovable
property may seek recovery of possession through specific relief. This means that the court can order
the person who has wrongfully dispossessed the plaintiff to restore possession of the property to the
plaintiff.

33 | P a g e
To claim recovery of immovable property under the Specific Relief Act, the following conditions must
be met:

1. The plaintiff must have been in possession of the property at some point in time.

2. The plaintiff must have been wrongfully dispossessed of the property by the defendant. The
dispossession must have been illegal or against the plaintiff's will.

3. The plaintiff must not have voluntarily given up possession of the property.

4. The plaintiff must have a valid and subsisting title to the property.

If these conditions are met, the plaintiff can file a suit for recovery of possession in a court of law.
The court will then hear the case and determine whether the plaintiff is entitled to recover possession
of the property.

The court may order the defendant to restore possession of the property to the plaintiff. If the
defendant fails to comply with the court's order, the court may take steps to enforce the order, such
as by issuing a warrant for possession.

It is important to note that the court may also consider the defendant's claim to the property. If the
defendant has a valid claim to the property, the court may not order the defendant to restore
possession to the plaintiff.

In addition to recovery of possession, the plaintiff may also seek damages for any loss or damage they
have suffered as a result of the wrongful dispossession.

The Specific Relief Act provides an important remedy for individuals who have been wrongfully
dispossessed of their immovable property. By allowing for the recovery of possession, the act helps
to protect property rights and ensure that individuals are not deprived of their property without legal
justification.

Recovery of movable property

Under the Specific Relief Act, a person who has been wrongfully dispossessed of their movable
property may seek recovery of possession or compensation for the loss or damage to the property
through specific relief. This means that the court can order the person who has wrongfully
dispossessed the plaintiff to return the property or pay compensation for its loss or damage.

To claim recovery of movable property under the Specific Relief Act, the following conditions must
be met:

1. The plaintiff must be the legal owner of the property, or have a legally recognized interest
in it such as a lien or a charge.

2. The plaintiff must have been wrongfully dispossessed of the property by the defendant. The
dispossession must have been illegal or against the plaintiff's will.

3. The plaintiff must not have voluntarily given up possession of the property.

4. The plaintiff must show that there is no adequate remedy available to them, such as
damages, to compensate for the loss or damage of the property.

5. The court must be able to enforce the order for specific relief, meaning that it must be able
to compel the defendant to return or deliver the movable property.

6. If the movable property is perishable or its value is likely to diminish with time, the plaintiff
must show that time is of the essence.

If these conditions are met, the plaintiff can file a suit for recovery of possession or compensation
for the loss or damage to the property in a court of law. The court will then hear the case and
determine whether the plaintiff is entitled to recover the property or receive compensation.

34 | P a g e
If the court orders the defendant to return the property, the defendant must comply with the order.
If the defendant fails to comply with the court's order, the court may take steps to enforce the order,
such as by issuing a warrant for the seizure of the property.

If the court orders the defendant to pay compensation, the defendant must pay the compensation to
the plaintiff. If the defendant fails to pay the compensation, the plaintiff may take steps to enforce
the order, such as by seeking the assistance of the court or a debt recovery tribunal.

The Specific Relief Act provides an important remedy for individuals who have been wrongfully
dispossessed of their movable property. By allowing for the recovery of possession or compensation,
the act helps to protect property rights and ensure that individuals are not deprived of their property
without legal justification.

Recovery of possession – movable & immovable properties

The Specific Relief Act of 1963 provides for the remedy of recovery of possession for both movable
and immovable properties. The procedure for recovery of possession for movable and immovable
properties is different and is explained below:

Recovery of Possession of Movable Property: The procedure for the recovery of possession of movable
property under the Specific Relief Act is as follows:

1. File a suit: The person who has been dispossessed of the movable property can file a suit in
a civil court for recovery of possession.

2. Evidence: The person filing the suit must provide evidence to show that he was in possession
of the movable property, and that he was unlawfully dispossessed.

3. Interim relief: The person filing the suit can also ask for interim relief, such as an injunction,
to prevent the defendant from selling or disposing of the movable property while the case is
pending.

4. Delivery of possession: If the court is satisfied that the plaintiff was in possession of the
movable property and was unlawfully dispossessed, it may order the defendant to deliver the
movable property to the plaintiff.

Recovery of Possession of Immovable Property: The procedure for the recovery of possession of
immovable property under the Specific Relief Act is as follows:

1. File a suit: The person who has been dispossessed of the immovable property can file a suit
in a civil court for recovery of possession.

2. Evidence: The person filing the suit must provide evidence to show that he was in possession
of the immovable property, and that he was unlawfully dispossessed.

3. Interim relief: The person filing the suit can also ask for interim relief, such as an injunction,
to prevent the defendant from selling or disposing of the immovable property while the case
is pending.

4. Delivery of possession: If the court is satisfied that the plaintiff was in possession of the
immovable property and was unlawfully dispossessed, it may order the defendant to deliver
the immovable property to the plaintiff.

5. Restitution: The court may also order restitution, which means that the defendant must put
the plaintiff back in possession of the property as it was before the dispossession.

In both cases, the court may also order the payment of damages to the plaintiff for any losses suffered
as a result of the unlawful dispossession.

35 | P a g e
Rectification of instruments
Rectification of instruments refers to the correction or amendment of a legal document or instrument
that contains a mistake or error. The Specific Relief Act (Section 26) provides for the remedy of
rectification of instruments, which allows a party to seek a court order to correct a mistake in a
legal document. If the court finds such mistakes (legal instrument not reflecting true intentions or
legal obligations of both the parties accurately), it can direct the parties to get the instrument
rectified. However, it can not overstep its authority and do that themselves.

To seek rectification of an instrument under the Specific Relief Act, the following conditions must be
met:

1. The mistake or error in the instrument must be a genuine mistake, unintentional, and not
the result of fraud or misrepresentation.

2. The mistake must be material and affect the legal rights of the parties to the instrument.

3. The mistake must not have been made due to the negligence of the party seeking
rectification.

4. The parties seeking rectification must be able to provide clear and convincing evidence of
the mistake.

If these conditions are met, the party seeking rectification can file a suit in a court of law. The court
will then hear the case and determine whether the mistake in the instrument is genuine and whether
rectification is necessary to correct the mistake.

If the court orders rectification of the instrument, it may order the instrument to be amended or re-
executed. The court may also order any consequential changes that are necessary to give effect to
the rectification.

It is important to note that rectification of instruments is not available for every type of document.
The Specific Relief Act provides for rectification of certain types of instruments, including contracts,
deeds, wills, marriage certificates and other legal documents. However, the act does not provide
for rectification of testamentary documents.

Generally, the remedy of rectification of instruments under the Specific Relief Act provides an
important legal recourse for parties who have inadvertently made a mistake in a legal document.
By allowing for the correction of such mistakes, the act helps to ensure that the legal rights of the
parties are protected and that the document accurately reflects their intentions.

Here are the essential prerequisites for rectification of instruments under the Specific Relief Act:

1. Mistake: Rectification can be sought only in cases where there has been a mistake in the
instrument, either in its drafting or execution. The mistake must be mutual, i.e., both parties
to the instrument must have made the same mistake.

2. Intention: The mistake must be unintentional and not the result of fraud, misrepresentation,
or undue influence.

3. Time Limit: An application for rectification must be made within a reasonable time from the
date of execution of the instrument.

4. Jurisdiction: The court must have jurisdiction to entertain the application for rectification.

5. Nature of Instrument: The instrument sought to be rectified must be a legal document

capable of being rectified, such as a deed, agreement, or contract.

6. Consent: All parties to the instrument must give their consent for the rectification.

7. Recording of Rectification: Any rectification made to the instrument must be recorded in

writing and signed by the parties to the instrument.

36 | P a g e
Cancellation of instruments
Cancellation of instruments is a remedy available under the Specific Relief Act, 1963, which allows a
party to a contract to cancel or set aside a written instrument that is either void or voidable. The
term "instrument" refers to any document, whether it is a deed, agreement, bond, or other
document.

The following are some of the key provisions of the Specific Relief Act regarding cancellation of
instruments:

1. Grounds for cancellation: A party can seek the cancellation of an instrument if it is either
void or voidable. An instrument is considered void if it is not enforceable by law, for example,
if it is made by a person who is incompetent to contract or if it is made for an unlawful
object. An instrument is voidable if it is made under certain circumstances, such as fraud,
misrepresentation, undue influence, or coercion.

2. Who can seek cancellation: Any party to the instrument or their representative can seek the
cancellation of the instrument.

3. Limitation period: The right to seek cancellation of an instrument is subject to a limitation

period of three years from the date on which the right to seek cancellation accrues.

4. Procedure for cancellation: The party seeking cancellation must file a suit in court to seek
cancellation of the instrument. The court will then determine whether the instrument is void
or voidable, and if it is, it will cancel or set aside the instrument.

5. Consequences of cancellation: Once an instrument is cancelled, it becomes null and void

from the date of its execution. Any rights or interests created by the instrument are
extinguished, and the parties are restored to their original position.

Cancellation of instruments is a remedy available under the Specific Relief Act, which allows a party
to cancel or set aside a written instrument that is either void or voidable. The party seeking
cancellation must file a suit in court, and the court will determine whether the instrument is void or
voidable, and if it is, it will cancel or set aside the instrument.

Rescission of Contract
Rescission of a contract is a legal remedy available under the Specific Relief Act, 1963 (Section 27
to Section 30). It means that the parties to a contract can agree to terminate the contract due to
some legal defect or non-performance of one of the parties. Here is a detailed explanation of the
rescission of contracts under the Specific Relief Act:

1. Meaning: Rescission is the cancellation or termination of a contract by mutual agreement

between the parties or by a court order due to some legal defect or non-performance of one
of the parties.

2. Grounds for Rescission: Rescission can be granted by a court if the contract is found to be
void or voidable, or if one of the parties has breached the contract by not fulfilling their
obligations.

3. Effect of Rescission: When a contract is rescinded, it is treated as if it never existed. All

obligations and liabilities under the contract are terminated, and the parties are restored
to their original position before entering into the contract.

4. Mutual Rescission: If both parties agree to rescind the contract, they can do so by mutual
consent. However, the agreement must be in writing and signed by both parties.

5. Unilateral Rescission: If one of the parties wants to rescind the contract, they can approach
a court and request an order for rescission. The court may grant the order if the contract
is found to be void or voidable, or if one of the parties has breached the contract.

37 | P a g e
 6. Time Limit: An application for rescission must be made within a reasonable time from the
date of the contract.

7. Restitution: When a contract is rescinded, the parties must make restitution to each other,
i.e., return any property or money that was exchanged under the contract.

8. Damages: If one of the parties has suffered any loss or damage due to the contract, they may
be entitled to claim damages from the other party.

It is important to note that the rescission of a contract is a legal remedy that should be exercised
with caution. It is advisable to seek legal advice to understand the requirements and implications of
rescission under the Specific Relief Act.

However, as per the Specific Relief Act, 1963, certain contracts cannot be rescinded. Here are the
types of contracts that cannot be rescinded:

1. Contracts that have been performed: A contract that has been fully performed by both
parties cannot be rescinded. This is because the parties have already fulfilled their
obligations under the contract, and there is nothing left to be rescinded.

2. Contracts with third-party rights: If a third party has acquired rights under the contract,
the contract cannot be rescinded without the consent of that third party. For example, if a
contract involves the sale of property that has been subsequently sold to a third party, the
original contract cannot be rescinded without the consent of the third party.

3. Contracts that have become illegal: If a contract that was legal at the time of its formation
has become illegal due to a change in law, it cannot be rescinded.

4. Contracts with the involvement of public interest: If a contract has an impact on public
interest, it cannot be rescinded. For example, a contract for the construction of a public
road cannot be rescinded as it has an impact on the public interest.

5. Contracts that are personal in nature: If a contract involves personal services, such as an
employment contract, it cannot be rescinded.

6. Contracts that have been ratified: If a contract that was initially voidable has been
subsequently ratified, it cannot be rescinded. Ratification means that the parties have
accepted the terms of the contract and waived their right to rescind it.

It is essential to note that the above list is not exhaustive, and there may be other types of contracts
that cannot be rescinded under certain circumstances. Therefore, it is advisable to seek legal advice
to understand the requirements and implications of rescission under the Specific Relief Act.

Limitation of right

The right to rescind a contract under the Specific Relief Act, 1963 is subject to certain limitations.
Rescission is an equitable remedy that allows a party to a contract to cancel the contract and return
to the status quo ante (the state of things before the contract was made). The limitations on the
right to rescind a contract are as follows:

1. Time limit: The right to rescind a contract is subject to a time limit. The aggrieved party
must exercise the right to rescind within a reasonable time, otherwise, the right may be lost.
What constitutes a reasonable time depends on the circumstances of each case.
2. Mutual restitution: Rescission of a contract requires mutual restitution, which means that
both parties must be restored to the position they were in before the contract was made.
This may not be possible if, for example, one of the parties has already used or consumed
the subject matter of the contract. In such cases, the right to rescind may be limited.
3. Third-party rights: The right to rescind a contract may be limited by third-party rights. For
example, if a third party has acquired an interest in the subject matter of the contract in
good faith and for value, the right to rescind may be limited.

38 | P a g e
 4. Unilateral mistake: If the contract was made as a result of a unilateral mistake, i.e., one
party was mistaken about a material term of the contract, the right to rescind may be
limited. The mistaken party may only rescind the contract if the other party knew or ought
to have known of the mistake.
5. Specific performance: If the contract is capable of specific performance, the right to rescind
may be limited. The aggrieved party may be required to seek specific performance of the
contract instead of rescission.

The right to rescind a contract under the Specific Relief Act is subject to certain limitations, such as
a time limit, mutual restitution, third-party rights, unilateral mistake, and the availability of specific
performance.

Rescission of immovable property sale or lease contract already decreed by court

Section 28 of the Specific Relief Act, 1963, provides for the rescission of court-decreed immovable
property sale or lease contracts. Here is a detailed explanation of the rescission of court-decreed
immovable property sale or lease contracts under Section 28:

1. Grounds for Rescission: Section 28 allows a court to rescind a court-decreed immovable

property sale or lease contract if the contract is found to be void or voidable, or if one of the
parties has breached the contract by not fulfilling their obligations.

2. Time Limit: An application for rescission of a court-decreed immovable property sale or lease
contract must be made within a reasonable time from the date of the court decree.

3. Mutual Rescission: If both parties agree to rescind the contract, they can do so by mutual
consent. However, the agreement must be in writing and signed by both parties.

4. Unilateral Rescission: If one of the parties wants to rescind the contract, they can approach
a court and request an order for rescission. The court may grant the order if the contract is
found to be void or voidable, or if one of the parties has breached the contract.

5. Restitution: When a court-decreed immovable property sale or lease contract is rescinded,

the parties must make restitution to each other, i.e., return any property or money that was
exchanged under the contract. In the case of an immovable property sale or lease contract,
this may involve the return of the property and the payment of any consideration paid for
the sale or lease.

6. Damages: If one of the parties has suffered any loss or damage due to the contract, they may
be entitled to claim damages from the other party. For example, if the seller has suffered a
loss due to the buyer's breach of contract, they may be entitled to claim damages from the
buyer.

7. Third-Party Rights: If a third party has acquired rights over the property, such as a
subsequent buyer, the rescission of the contract may not affect their rights. The court may
order the payment of compensation to the third party if their rights are affected by the
rescission.

It is important to note that the rescission of a court-decreed immovable property sale or lease
contract is a legal remedy that should be exercised with caution. It is advisable to seek legal advice
to understand the requirements and implications of rescission under Section 28 of the Specific Relief
Act.

Section 6 – Summary Remedy

Section 6 of the Specific Relief Act, 1963 provides for a summary remedy for certain categories of
contracts. The section allows parties to seek specific performance of contracts relating to certain
types of immovable property, and contracts for the delivery of specific movable property, without
having to go through the usual process of a full trial.

Here is a detailed explanation of the provisions of Section 6:

39 | P a g e
 1. Applicability: Section 6 applies to certain categories of contracts. These include contracts
for the transfer of any immovable property, other than agricultural land, and contracts for
the delivery of specific movable property.

2. Notice: The first step in seeking a summary remedy under Section 6 is to send a notice to the
other party. The notice must require the other party to perform their part of the contract
within a specified time, which must not be less than 30 days from the date of the notice.

3. Application to court: If the other party fails to perform their part of the contract within the
time specified in the notice, the aggrieved party can file an application to the court for a
summary remedy under Section 6.

4. Summary procedure: The court will then proceed to hear the application in a summary
manner, without requiring the parties to go through a full trial. The court may require the
parties to file affidavits and documents in support of their respective positions.

5. Order for specific performance: If the court is satisfied that the applicant is entitled to
specific performance of the contract, it may issue an order for specific performance. The
order must direct the other party to perform their part of the contract within a specified
time.

6. Consequences of non-compliance: If the other party fails to comply with the order for specific
performance, the court may direct that the contract be performed by a third party, at the
cost of the non-compliant party. The court may also order that any amount paid by the
applicant under the contract be refunded to them, with interest.

Section 6 of the Specific Relief Act provides a summary remedy for certain types of contracts. The
aggrieved party must first send a notice to the other party, and if they fail to perform their part of
the contract, the aggrieved party can apply to the court for a summary remedy. If the court is
satisfied, it may issue an order for specific performance, and if the non-compliant party fails to
comply, the court may direct that the contract be performed by a third party, at the cost of the non-
compliant party.

Liquidated damages not a bar to specific performance

According to the Specific Relief Act, 1963, a party to a contract can seek specific performance of the
contract even if there is a clause for liquidated damages in the contract. This means that the
existence of a clause for liquidated damages does not prevent a party from seeking the remedy of
specific performance.

Liquidated damages are a pre-estimated sum of money that the parties agree to in advance as
compensation in case of a breach of contract. The purpose of liquidated damages is to make it easier
for the parties to assess their risks and avoid the cost and uncertainty of litigation.

However, the Specific Relief Act makes it clear that the existence of a clause for liquidated damages
does not prevent a party from seeking the remedy of specific performance. This is because specific
performance is a discretionary remedy that can be granted by the court if it considers it appropriate
in the circumstances of the case.

The court will take into account various factors such as the nature of the contract, the conduct of
the parties, and the terms of the contract to determine whether specific performance is an
appropriate remedy. The court may refuse to grant specific performance if it considers that damages
would be an adequate remedy, or if it would be difficult or impossible to enforce the specific
performance.

In summary, the presence of a clause for liquidated damages in a contract does not act as a bar to
the remedy of specific performance under the Specific Relief Act. The court has the discretion to
grant specific performance if it deems it appropriate in the circumstances of the case.

40 | P a g e
Injunctions and refusal grounds
Injunction is a legal remedy that is commonly used in civil cases to prevent a party from taking certain
actions or to compel them to take certain actions. Under the Specific Relief Act, 1963, injunctions
can be granted in certain circumstances to protect a party's legal rights.

1. Types of Injunctions: The Specific Relief Act recognizes two types of injunctions:

a) Temporary Injunction: A temporary injunction is granted during the pendency of a suit to maintain
the status quo until a final decision is made in the case. It is a provisional remedy, and the party
seeking the injunction must show that they would suffer irreparable harm if the injunction is not
granted.

b) Permanent Injunction: A permanent injunction is granted as a final relief, and it is intended to

permanently prevent the other party from taking certain actions or to compel them to take certain
actions. The party seeking a permanent injunction must establish that they have a clear legal right
to the relief sought and that irreparable harm would be caused if the injunction is not granted.

2. Grounds for Refusal: While the court has the power to grant injunctions, there are certain
grounds on which it may refuse to grant an injunction:

a) Inadequate or alternative relief: If the party seeking the injunction has an alternative remedy
available that is equally effective or more appropriate, the court may refuse to grant an injunction.

b) Delay and Laches: If the party seeking the injunction has unreasonably delayed in filing their claim,
or if they have not acted diligently to protect their rights, the court may refuse to grant the
injunction.

c) Balance of Convenience: The court will consider the balance of convenience between the parties
and the public interest in deciding whether to grant an injunction. If the harm caused by granting
the injunction is greater than the harm caused by refusing it, the court may refuse to grant the
injunction.

d) Unclean Hands: If the party seeking the injunction has acted unfairly or has themselves violated
the law, the court may refuse to grant the injunction.

In the context of the Indian Contract Act, injunction can be sought by a party to enforce specific
performance of a contract or to prevent breach of contract by the other party. For example, if a
party has agreed to sell a property to another party, and the other party refuses to perform its part
of the contract, the first party can seek an injunction to prevent the other party from selling the
property to someone else. Similarly, if a party has agreed to provide services to another party, and
the other party refuses to pay for the services, the first party can seek an injunction to prevent the
other party from using the services until the payment is made.

In order to obtain an injunction, the party seeking the injunction must establish that:

1. There is a valid and enforceable contract between the parties;

2. The other party is in breach of its contractual obligations; and

3. The breach is causing or is likely to cause irreparable harm or damage to the party seeking
the injunction.

If these elements are established, the court may grant an injunction to prevent the other party from
breaching its contractual obligations or to enforce specific performance of the contract.

Injunction is a powerful legal remedy that can be used to enforce contractual obligations or to
prevent breach of contract. It is available to parties under the Indian Contract Act, and can be sought
to prevent irreparable harm or damage caused by breach of contract.

The essentials for injunction under the Indian Contract Act are as follows:

41 | P a g e
 1. Valid and Enforceable Contract: In order to seek an injunction, the party seeking the
injunction must have a valid and enforceable contract with the other party. The contract
must be legally binding, and the terms of the contract must be clear and unambiguous.

2. Breach of Contract: The party seeking the injunction must establish that the other party is
in breach of its contractual obligations. This means that the other party has failed to perform
its obligations under the contract, or has engaged in activities that are prohibited by the
contract.

3. Irreparable Harm: The party seeking the injunction must show that the breach of contract is
causing or is likely to cause irreparable harm or damage. Irreparable harm refers to harm
that cannot be adequately compensated by monetary damages. It must be shown that the
harm or damage is of such a nature that it cannot be undone or rectified by any other means.

4. Balance of Convenience: The court will consider the balance of convenience in deciding
whether to grant an injunction. This means that the court will weigh the harm or damage
caused by the breach of contract against the harm or inconvenience caused by granting the
injunction. The court will consider factors such as the nature of the harm or damage, the
likelihood of success of the case, and the public interest.

5. No Other Adequate Remedy: The party seeking the injunction must show that there is no
other adequate remedy available. This means that monetary damages are not sufficient to
compensate for the harm or damage caused by the breach of contract, and that an injunction
is necessary to prevent further harm or damage.

Defenses Available for Injunction: In order to obtain an injunction, the party seeking the injunction
must satisfy all of the above essentials. If these essentials are met, the court may grant an injunction
to prevent the other party from breaching its contractual obligations or to enforce specific
performance of the contract. Injunction is a powerful legal remedy that can be used to enforce
contractual obligations or to prevent breach of contract.

There are certain defenses available to a party against an injunction in the Indian Contracts Act.
These defenses can be used to challenge the validity or appropriateness of the injunction sought by
the other party. Some of the common defenses available for an injunction under the Indian Contracts
Act are:

1. No Breach of Contract: If the party against whom the injunction is sought can show that it
has not breached the contract, or that the alleged breach is not a material breach, then the
court may deny the injunction. For example, if the contract requires the delivery of goods
by a certain date, but the delivery was delayed due to unforeseeable circumstances beyond
the control of the party, then it may not be considered a breach of contract.

2. Adequate Remedy: If the party against whom the injunction is sought can show that there is
another adequate remedy available, such as payment of damages, then the court may deny
the injunction. This defense can be used if the harm or damage caused by the breach of
contract can be adequately compensated by monetary damages.

3. Delay: If the party seeking the injunction has delayed in seeking the remedy, and the delay
has caused prejudice to the party against whom the injunction is sought, then the court may
deny the injunction. This defense can be used if the party seeking the injunction has
unreasonably delayed in seeking the remedy, and the delay has caused harm or damage to
the other party.

4. Balance of Convenience: If the balance of convenience favors the party against whom the
injunction is sought, then the court may deny the injunction. For example, if the injunction
sought will cause significant harm or inconvenience to the party against whom it is sought,
while the harm caused by the breach of contract is not significant, then the court may deny
the injunction.

42 | P a g e
 5. Illegality: If the contract or the activity sought to be enjoined is illegal, then the court may
deny the injunction. For example, if the contract is for the sale of illegal goods, then the
court may refuse to grant an injunction to enforce the contract.

These defenses can be used by the party against whom the injunction is sought to challenge the
validity or appropriateness of the injunction. It is important to note that the availability of these
defenses depends on the specific facts and circumstances of each case, and the court will consider
all relevant factors in deciding whether to grant or deny the injunction.

Possessory Remedies
The Specific Relief Act, 1963 provides for various types of possessory remedies to protect a party's
right to possess certain property. These remedies are intended to prevent the unauthorized
possession or dispossession of property, and to restore possession to the rightful owner. The three
main possessory remedies available under the Act are:

1. Recovery of Possession: Section 5 of the Act provides for the recovery of possession of specific
movable or immovable property. This remedy can be sought by a person who has been
dispossessed of their property unlawfully. The remedy is available in cases where the
possession of the property was originally lawful, and the person was dispossessed without
their consent or by force.

2. Delivery of Possession: Section 7 of the Act provides for the delivery of possession of specific
movable or immovable property. This remedy can be sought by a person who is entitled to
possession of the property, but who has not yet obtained possession. The remedy is available
in cases where the property is in the possession of another person, and the person entitled
to possession has a right to recover it.

3. Injunction: Section 38 of the Act provides for an injunction to protect the possession of
specific movable or immovable property. This remedy can be sought by a person who is in
possession of the property, and who seeks to prevent another person from interfering with
their possession. The remedy is available in cases where the other person threatens to
interfere with the peaceful possession of the property.

The possessory remedies available under the Specific Relief Act are designed to protect a party's right
to possess property. These remedies can be sought in cases where the possession of property has
been unlawfully taken away or threatened. The remedies can help restore the rightful owner's
possession of property, prevent unauthorized possession or dispossession of property, and ensure
peaceful possession of property.

Declaratory Decree
The Specific Relief Act, 1963 provides for various types of possessory remedies to protect a party's
right to possess certain property. These remedies are intended to prevent the unauthorized
possession or dispossession of property, and to restore possession to the rightful owner. The three
main possessory remedies available under the Act are:

1. Recovery of Possession: Section 5 of the Act provides for the recovery of possession of specific
movable or immovable property. This remedy can be sought by a person who has been
dispossessed of their property unlawfully. The remedy is available in cases where the
possession of the property was originally lawful, and the person was dispossessed without
their consent or by force.

2. Delivery of Possession: Section 7 of the Act provides for the delivery of possession of specific
movable or immovable property. This remedy can be sought by a person who is entitled to
possession of the property, but who has not yet obtained possession. The remedy is available
in cases where the property is in the possession of another person, and the person entitled
to possession has a right to recover it.

43 | P a g e
 3. Injunction: Section 38 of the Act provides for an injunction to protect the possession of
specific movable or immovable property. This remedy can be sought by a person who is in
possession of the property, and who seeks to prevent another person from interfering with
their possession. The remedy is available in cases where the other person threatens to
interfere with the peaceful possession of the property.

The possessory remedies available under the Specific Relief Act are designed to protect a party's right
to possess property. These remedies can be sought in cases where the possession of property has
been unlawfully taken away or threatened. The remedies can help restore the rightful owner's
possession of property, prevent unauthorized possession or dispossession of property, and ensure
peaceful possession of property.

Disclaimer
The information contained in this document is provided for informational purposes only and should
not be relied upon as legal, business, or any other advice. The author makes no representations or
warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability
or availability with respect to the document or the information, acts, statutes, or related information
outcome contained in the document for any purpose. Any reliance you place on such information is
therefore strictly at your own risk.

In no event will the author be liable for any loss or damage including without limitation, indirect or
consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits
arising out of, or in connection with, the use of this document.

The author (Hemant Patil, GLC Mumbai Batch of 2025) reserves the right to modify, add, or delete
any information in this document at any time without prior notice.

44 | P a g e