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DEFINATION OF CONTRACT
ACCORDING TO ANSON
ESSENTIALS OF A VALID CONTRACT
PROPOSAL
EQUIVALENT WORDS
SOME ESSENTIALS OF A OFFER
KINDS OF OFFER
ACCEPTANCE
EFFECT OF A VALID ACCEPTANCE
EXAMPLE
DECIDED CASES
(i) According to Anson A contract is an Agreement enforceable by law made between two or
more persons by whom rights are acquired by one or more to acts or forbearances on the part of
the other or others.
Essentials of a valid Contract: - The essentials of a valid Contract are inherent in the Section
10 of the Indian Contract act. Which says ?
Sec.10 Which agreement is Contracts
All Agreements are Contracts if they are made by the free consent of Parties, Competent to
Contract, for a lawful consideration and with a lawful object, and are not hereby expressly
declared to be void.
According to Sec 2 (h). Contract is an Agreement which is enforceable by law. In order That an
agreement becomes a contract it has to satisfy all the essentials of a valid contract as Mentioned
in Sec- 10.
1. There must be an Agreement The first and foremost essential of a valid contract is that
there must be an Agreement, According to Sec-2(e) Every Promise and every set of promises
,forming the consideration for each other is an Agreement The Agreement consists of two Basic
elements
(1) Proposal A proposal and its acceptance is the universally acknowledged process for the
making of an agreement. The Proposal is the starting point; Sec-2 (a) defines Proposal.
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.
(ii) Acceptance Sec-2 (b) 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.
(2) The Agreement must be made by competent parties : - A contract is valid only if it has been
Made by the parties who are competent to make it. See 11 of the act.
iii) Who are not disqualified from contracting by any law to which they are subject?
Thus, according to Sec-11 of the act, any person who is a minor or is of unsound mind or has
been declared disqualified by any law is not competent to enter into a contract and if an
Agreement is made by any of such persons, it is void.
(3) Agreement must be made by the free Consent of parties: - Another requirement for a valid
contract is that the Agreement must have been made with the free consent of the parties, if
consent is not free, the contract becomes voidable In Mikol Bottlers Ltd. Vs. M/S Dhillon Kool
Drinks AIR 1995, the Delhi High Court held that an Agreement to be valid should be made by
free consent of the parties apart from other requirement.
(4) The Agreement must be made for lawful consideration: - To constitute a valid contract, it
is essential that agreement is made for a lawful consideration. According to Sec-23 of the Act, if
the Agreement is not for a lawful consideration the agreement is void. In Nutan Kumar vs. IInd.
Additional District judge AIR 1994 ALL 299
(5) The agreement must be made for lawful object: - The object of the Agreement must be
lawful otherwise the Agreement becomes void and an important element of a valid contract is
that the Agreement is made for a lawful object Sec-23
(6) The agreement must not have been declared to be void by contract Act or any other Act
another important element for a valid contract is that the agreement should not be from
amongst, such agreement which have been specifically declared void as per Sec-26, 27, 28, 29,
30 and 56 of the act.
Proposal Sec 2 (a) When one person signifies to another, his willingness to do or to
abstain from doing anything. With a view to obtaining the assent or hat other to such act or
abstinence, he is said to make a proposal.
The word proposal is equivalent the term offer under the English contract act
In Lalman Shukal vs. Gauri Dutt (1913) A.L.J. 489 In this case the accuser Lalman
Shukla, was serving as a munim in the firm of defendant Gauri Dutt. The Nephew of Gauri Dutt
ran away from his house and no trace of him was found for some time. On 21st Jan.1912
defendant sent the plaintiff to Hardwar for tracing the boy and paid him his travelling expenses.
After sending the plaintiff to Hardwar the defendant by hand bills advertised that a reward of
Rs.501 would be paid to anyone who would find the boy. The plaintiff had no knowledge of the
reward advertised, he found the bay at Rishikesh and brought him back on 25th of Jan.1912.The
plaintiff filed a suit for the recovery of the reward advertised, it was held that since the plaintiff
was ignorant of the offer of reward his act of bringing the last boy did not amount to the
acceptance of the offer and therefore, he was not entitled to claim the reward.
2. Intention to create legal relationship It is necessary that the offer should be made with an
intention to create legal relationship, Promise in the case of social engagements is generally
without an intention to create legal relationship, such an agreement cannot be considered to be a
contract, so an agreement to go for a walk, to go to a movie, to play same game or entertain other
person with a dinner cannot be enforced in a court of law.
In Balfour v. Balfour: - An intention not to create legal relationship was implied. It was held
that in this case, there being no intention to create legal relationship, the husband was not liable.
3. Offer must be certain: - An offer must be certain and definite .Its terms should not be so
vague so as to prevent a contract being formed. Example
(i) A. Agree to sell to B. a Hundred tons of oil. There is nothing whatever to show
As to what kind of oil was intended, hence the agreement is void for uncertainly.
(ii) A. agrees to sell B. My white horse for five hundred rupees or one thousand.
The agreement will be void because there is nothing to show which at the two
. Kinds of offer
(1) Specific Offer: - Specific offer is also known as offer to an individual when the offer
is made to a specific or an ascertained person, it is known as a Specific offer or offer
to an individual.
Example of Specific Offer:- A offers to sell his car to B for Rs. One Lakh. This is
specific offer offered to an ascertained person, i.e. B.
(2) General offer: - We come to know that when the offer is made to a specific or an
ascertained person, it is known as a Specific Offer. When the offer is not made to any
particular person, but it is made to the public at large, it is known as General Offer.
Carlill Vs. Carbolic Smoke Ball Co. (1893 (1) Q.B 256)
Judgment The house of Lords gave the judgement in favour Mrs. Carlill and opined
that the company was held liable, it held that the declaration was a true offer, it was not a
mere advertisement, it was a general offer. The deposit in the bank itself was the
evidence of the sincerity of the company. The offer was open to anybody who would
perform the conditions mentioned in the advertisement. No special acceptance from the
individual was necessary. In such cases performance of the conditions was sufficient to
show the acceptance from that individual.
(3) Invitation to offer Where a party without expressing his final willingness, proposes
certain terms on which he is willing to negotiate. He does not make an offer but he only
invites the other party to make an offer an terms, it is called Invitation to offer.
Examples
1. An advertisement in the newspaper House to let or House for sale etc.
2. A Shopkeepers catalogue of prices, Hotel menu cards etc.
3. A Tender
- Harvey Vs. Facie (1893 A.C.552)
Acceptance- Sec-2 (b) When the person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted, A proposal when accepted, become a promise. A
person, when accepted results in an agreement, after the acceptance of the proposal a contract
between two parties can arise.
Effect of Acceptance
I. Acceptance should be Communicated:-It means that the offree must signify his assent or
communicate the acceptance. The communication of acceptance is deemed to be made by any
act or omission of the party accepting, by which he intends to communicate such acceptance Sec
3. Communication may be oral, by post, by telegram, by a massage on phone, through a
messenger or in any other reasonable manner; sometimes the conduct of a person might indicate
his assent
- Felt house V. Bindley it was held that since the nephew had not communicated the
acceptance to Felt House, no contract had arisen in this case and therefore felt house had not
become the owner of the horse, [ this is absence of acceptance,]
Express or implied, where an offer is accepted by words, written or oral, the acceptance is called
express. When an offer is accepted by conduct, the acceptance is called implied.
Foremost essential of a valid acceptance is that it must be absolute and unconditional. In this
regard Sec-7 says that in order to convert a proposal into a promise the acceptance must be
absolute and unqualified.
5. The acceptance must be expressed in some usual and reasonable manner: - Sec-7 the
acceptance must be expressed in some usual and reasonable manner. Unless the proposal
prescribes the manner in which it is to be accepted, If the proposal prescribes a manner in which
it is to be accepted and the acceptance is not made in such manner the proposer may, within a
reasonable time after the acceptance is communicated to him, insist that his proposal shall be
accepted in the prescribed manner, and not otherwise If he fails to do so, he accepts the
acceptance.
6. Acceptance should be made while the offer is still subsisting: - It has already been noted
that the offeror is free to withdraw the offer or the offer is revoked under various circumstances
mentioned in Sec-6. After the offer has been withdrawn or has lapsed, there is nothing which can
be accepted it is therefore necessary that the acceptance should be made while the offer is still
alive and subsisting. Acceptance of the offer is deemed to have ended by rejection of the original
offer or a counter offer. In such a case also, once the offer has lapsed, an attempt to accept the
same would not give rise to any legal obligation.
ASSIGNMENT EXERCISE
Q.1 Define the acceptance. Explain its legal rules with the help of decided cases.
Q.2 Define the proposal and acceptance. Explain the essentials of valid acceptance.
Q.5 all Contract are Agreement, but all agreement are not contract Discuss.
Definition of Consideration
According to Blackstone
According to Pollock
Meaning of Consideration
Nature of Consideration
Difference between English and Indian law of Consideration.
An Agreement Made without Consideration is Void
Exceptions to the General Rule
EXAMPLE
DECIDED cases
Definition of Consideration the term consideration has been defined by different jurists in a
different manner as follows.
According to Sec-2 (d)When, at the desire of the Promiser, the promisee or any other person
has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain
from doing, something. Such act or abstinence or promise is called a consideration for the
promise.
Meaning of Consideration :- In the ordinary course, when a person makes a promise to another,
he does so with the intention to desire some advantage which the person to whom the proposal is
made is capable of conferring upon him. At the desire of the promisor, the promise or any other
person has either.
(iii) Promises to do or to abstain from doing something, this act which is done or promised
to be done are known as consideration.
A person who makes a promise to do or refrain from doing something as a legal duty
Usually does so as a return or equivalent of some benefit according to him or as a return or
equivalent of some class damage or in convenience that may occasion, or may have been
occasioned, to the other party in respect of the promise. The benefit so received or the loss
damage or inconvenience so caused is regarded in law as consideration of the promise, it may be
described as something accepted or agreed upon as a return or equivalent for the promise made.
s1) At the desire of the Promisar The Act or forbearance must be at the desire of the
promisar it is to be remembered that the act or forbearance must be done at the desire of the
promisar , if it is done at the instance of a third party, or without the desire of the promisare, it is
no consideration Durga Prasad Vs. Baldeo (1880) 3 All 221.
(2) The Promisee or any other person it is a well-settled rule of English Law that
consideration must move from the promisee alone. It means that the act or abstinence or promise
constituting the consideration must be done suffered or made by the promise himself and at the
request of the promisor.
Yamuna Das Vs. Rani Auttar (1911) 30 In this case A mortgages his property to B and B
promises to pay A debt to C C. cannot file a suit against B to enforce B promises C, is not a
party to the Contract between A and B.
(i) Past Consideration It means that the consideration for any promise was given earlier
and the promise is made thereafter.
Example A requests to B to find his lost dog. After B has done the same, if A promise
to pay B Rs. 100 for that it is past consideration. A finds Bs purse and gives it to him, B
promise to pay A Rs.50. This is a contract.
(ii) Present or executed Consideration When one of the parties to the contact has performed
his part of the promise which constitutes the consideration for the promise by the other sides it
is knows as executed consideration
(iii) Future or Executory - When one person makes a promise in exchange for the promise by
the other side, the performance of the obligation by each side, to be made subsequent to the
making of the contract, the consideration is known as executor,
Example A agrees to supply certain goods to B and B agrees to pay for them on a future
date, this is a case of executory consideration.
An Agreement made without consideration is void Section-25 of the Indian Contract Act
declares the General rule that an Agreement made without consideration is void. Section, 10 also
says that an Agreement becomes a Contract only when there is some lawful Consideration for it.
Thus the Cumulative effect of these two Sections is that every Agreement must be supported by
Consideration.
Natural love and affection-Section25 (1) says that an agreement made without Consideration is
that Void.
Natural lone and affection- Section.25 says that an Agreement made without Consideration is not
void.
Provided it is expressed in writing and registered under the law for the time being in force for
the Registration of documents and is made on account of natural lone and affection between
parties standing in a near relation to each other.
Example- A for Natural lone and affection Promise to give his son B. Rs. 1000.A puts his
promise to B. into writing and registers it, this will be a valid. Contract even when made
without Consideration.
Promise to Pay a time-barred dept- Section25 (3) says that an Agreement made without
Consideration is not void. Provided - it is a Promise made in Writing and signed by the person to
be charged there with, or by his agent generally or specially authorized in that behalf - to
Pay wholly or in part a dept which the creditor might have enforced payment but for the law for
the limitation of suits.
Example-A owes B Rs 1000 but the dept is barred by the Limitation Act. A signs a written
Promise to pay B Rs. 500 an account of the dept. This will be a valid contract and shall not be
Void for want of Consideration.
No Consideration is Necessary to extend the time for the Performance of Contract- Section.
63 Provides in the second place that every Promise may extend the time for the Performance of
contract without requiring any Consideration to support such an Agreement.
No Consideration is Necessary to accept any Satisfaction instead of the whole claim- Sec.63
provides in the third Place that every Promise may accept any Satisfaction which he thin fit
instead of the whole claim under the contract
Example- A owes b 5,000 rupees. A pays to B 1,000 rupees and B accepts them in satisfaction
of his whole claim on A. This payment is a discharge of the whole claim.
Bailment for the Natural benefit of both, the bailer and bailee.
A bailment for the benefit of the bailee is called the Gratuitous Bailment. A gratuitous bailment
is one in which a loan of article is made without any charge, detriment or Consideration. The
Gratuitous Bailment is bust exemplified by a loan of some article. Thus, A example- A barrows
B.s scooter to use for a day. The bailment is one for the sole benefit of A even if no
Consideration is paid.
Q.1 What is consideration and define the Present, Past, Future Consideration?
Void Contracts
Essential Ingredients of Void Contracts.
Voidable Contracts
Ingredients of Voidable Contract
Discharge by impossibility of Performance and Frustration
Specific Grounds of Frustration
Distinction between Void Contract And voidable Contract
Distinction between Void Contract And Illegal Contract
Void Contracts
Sec 2 (g) defines Void agreement- An agreement not enforceable by law is said to be void.
Essential Ingredients of Void Contracts.
Voidable Contracts
Voidable Contracts
Voidable Contracts- Section 2(1) of the Indian Contract Act, 1872 defines-
Voidable Contracts
1. Destruction of the Subject Matter where the actual subject Matter was destroyed and it
becomes impossible to perform a contract. The Doctrine of Frustration is applicable.
Example- Taylor vs. Caldwell.
2. Change of circumstances- A contract is made between two parties. After it some
unavoidable circumstances occurred and the contract could not be performed. Frustration
is occurred. Then the change of circumstances can be pleaded as a good defense.
Contingent contract
Discharge of a contract
Doctrine of Novation
Quantum Meruit
Contingent contract
For example, A contracts to pay B Rs.10, 000 if B.s house is burnt, this is a contingent
contract.1 The payment of the amount is contingent on the happening of a collateral event i.e.,
the burning of the house. All contracts of insurance or indemnity aim at payment of money only
after a certain event happens, or the loss is caused, and therefore, they are contingent contracts. A
wagering agreement is also a contingent contract, but that type of contingent contract has been
specifically declared to be void by section 30.
The following are the rules governing the enforcement of the various kinds of contingent
contracts:
(a) A makes a contract with B to buy B.s house if A survives C. This contract cannot be enforced
by law unless and until C dies in A.s life-time.
(b) A makes a contract with B to sell a horse to B at a specified price, if C, to whom the horse
has been offered refuses to buy him: The contract cannot be enforced by law unless and until C
refuses to buy the horse.
2. Contracts contingent on the event not happening Contingent contracts to do or not to do
anything if an uncertain future event does not happen, can be enforced when the happening of
that event becomes impossible, and not before. Sec. 33.
For example, A agrees to pay B a sum of money if a certain ship does not return. This ship is
sunk. The contract can be enforced when the ship sinks.10
3. Contract contingent on the future conduct of a living person If the future event on which a
contract is contingent is the way in which a person will act at an unspecified time, the event shall
be considered to become impossible when such person does anything which renders impossible
that he should so act within any definite time, or otherwise than under future contingencies. Sec
34 A agrees to pay B a sum of money if B marries C. C marries D. The marriage of B to C must
now be considered impossible although it is possible that D may die, and that C may afterwards
marry B.12 Sec 34
4. Contracts contingent on happening of specified event within fixed time Contingent contracts
to do or not to do anything, if a specified uncertain event happens within a fixed time, become
void if, at the expiration of the time fixed, such event has not happened, or if, before the time
fixed, such event becomes impossible. Sec. 35 A promises to pay B a sum of money if a certain
ship returns within a year. The contracts may be enforced if the ship returns within the year, and
becomes void if the ship is burnt within the year. Sec 35
5. Contracts contingent on not happening of specified event within a fixed time Contingent
contracts to do or not to do anything, if a specified uncertain event does not happens within a
fixed time, may be enforced by law when the time fixed has expired and such event has not
happened or before the time fixed has expired, if it becomes certain that such event will not
happen.
For example, A promises to pay B a sum of money if a certain ship does not return within a
year. The contract may be enforced if the ship does not return within the year, or is burnt within
the year. Sec 35
6. Agreements contingent on impossible event Contingent agreements to do or not to do
anything, if an impossible event happens, are void, whether the impossibility of the event is
known or not to the parties to the agreement at the time when it is made. Sec 36
a) A agrees to pay B 1,000 rupees if two straight lines should enclose a space. The agreement is
void.
(b) A agrees to pay B, 1000 rupees if B will marry A.s daughter, C. C was dead at the time of the
agreement. The agreement is void.
Discharge of a contract
(1)Discharge by Performance Each party to a contract is bound to perform his part of the
obligation. After the parties have made due performance of the contract. Their liability under the
contract comes to an end. In such a case, the contract is said to be discharged by performance.
Various rules of performance of the contract have been discussed.
(2) Discharge by Breach of contract Thus, insolvency of a party to a contract discharges the
contract. A party is released from performing his part of the contract by law e.g. an insolvent
from paying his debts, a person whose performance of a transaction is declared by law to be
illegal is also similarly excused (Sec.37)
(3) Discharge by refusing tender of performance Where a Promisor has made an offer of
performance to the Promisee, and the offer has not been accepted, the promisor is not responsible
for non-performance, nor does he thereby lose his rights under the contract (Sec 38)
(c) By renunciation in the course of performance. E.g. where a purchaser of 100. Bales, after
accepting delivery of 50 bales, refuses to accept the remaining 50, the seller is discharged and
can sue for damages.
(d) By impossibility created by one party in the course of performance. E.g. where a party puts it
out of his power to continue performance of his promise.
(e) By failure of performance, which may be of the whole of the promise or of a part of it, e.g. in
case of delivery and payment by installments.
(5) Discharge by the Act to be performed under the contract becoming impossible or
unlawful (Sec 56)
(6) Discharge by Agreement and Novation (Sec 62) Deals with the effect of rescission or
alteration of a contract. It runs thus if the parties to a contract agree to substitute a new contract
for it, or to rescind or alter it, the original contract need not be performed.
For examples.
(a) A owes money to B under a contract. It is agreed between A, B and C, that B shall
thenceforth accept C as his debtor. Instead of A, the old debt of A to B is at an end, and a new
debt from C to B has been contracted.
Doctrine of Novation The term novation has been thus defined by the House of Lords
That, there being a contract in existence. Some new contract is substituted for it either between
the same parties or between different parties, the consideration being mutually the discharge of
the old contract In India, there is novation when the parties are changed or the nature of the
obligation is changed.
Forms of novation The parties to a contract may substitute new terms for the old ones, as
indicated by illustration.
(a) In the former case, there is a substitution of new terms for the old ones while the parties
remain the same. In the later case, a new party is substituted for old one. In both the cases, the
old debt is at an end, and a new one takes its place, the old contract is replaced by a new contract.
(b) It may be agreed between the original promisor, the original promise and a third party that
the promise will look to the third party, instead of the original promisor, for the performance of
the contract as in illustration.
Effect of Novation In cases where there is a novation, the old contract is completely,
extinguished, and a suit based on it is not maintainable.
(5) Discharge by waiver of contract Sec 63 a contract may also be discharged by way of
waiver, i.e. by the promisee dispensing with or remitting the performance of the promise made to
him. Sec 63 provides that every promisee may
For examples (a) A promises to paint a picture for B, B, after wards forbid him to do so, A is
no longer bound to perform the promise.
Quantum Meruit
Ordinarily, if a person, having agreed to do some work or render some services, has done only a
part of what he was required to do, he cannot claim anything for what he has done. When a
person agrees to complete some work for a lump sum, non-completion of the work does not
entitle him to any remuneration even for the part of the work done. But the law recognizes an
important exception to this rule by way of an action for Quantum Meruit.
Synopsis
Meaning of Anticipatory Breach of Contract: - Anticipatory breach occurs when the party
declares his intention at not performing the contract before the performance is due. Thus, when a
party refuses to perform a contract even before it is due for performance. It is called anticipatory
breach. A remedy is the means give by law for the enforcement of a right.
Principal of damages
(1) The compensation can be claimed only from the party who has broken the contract.
(2) If a quasi contract is broken, the aggrieved party is entitled to receive the same
compensation from the defaulting party as would be party is entitled to receive the same
compensation from the defaulting party to such in case of any other contract.
(3) The aggrieved party is entitled to claim compensation only when he has suffered some loss or
damage by the breach of the contract.
(4) The compensation can also be claimed for any loss or damage which the parties. Knew, at the
time of making the contract to be likely to result from the breach of the contract, in other words,
special damages are also recoverable.
Quantum Meruit means As much as he has earned. Thus quantum Meruit means that a person
can recover compensation in Proportion to the part to work done by him. If a contract comes to
an end and one party has already performed a part of it. He is entitled to claim compensation for
the part he has performed.
Suit for specific performance Specific performance means to carry out actual obligations as
per the terms of contract. When damages are not an adequate remedy for breach of contract. The
court can insist on the parties to carry out their agreement. It is important that specific
performance cannot be claimed as a matter of right and the courts are always at discretion to
grant the relief by specific performance.
Examples A, an author contracted with B to write a book him. Later on A refused to write
the book, here B cannot obtain the specific performance of the contract as it involves the
personnel qualification of A.
Suit for injunction Suit for injunction means demanding courts stay order. Injunction means
on order of the Court which prohibits a persons to do a particular act. Where a party to a
contract does something which he promised not to do. The court may sue an order prohibiting
him from doing so.
Example A, a dancer, agrees to dance at B.s hotel at certain rid. She also agrees that during the
prescribed period she will not dance at any other hotel, later on, contracts with to dance at his
hotel and refuses to dance at B.s hotel B files a suit for restraining A from dancing at its hotel.
Here, although A cannot compelled to dance at B.s hotel, but she can be retrained by injunction
from dancing at C.s Hotel.
2. Time and place of performance where time is specified but no application is to be made
Sec47.
(1) Where no time is specified and no application is to be made Sec 46 says that Where by
the contract a promisor is to perform his promise without application by the promise and no time
for performance is specified the engagement must be performed within a reasonable time.
(2) Time and place of performance where time is specified but no application is to be made
Sec 47 - Provides when a promise is to be performed on a certain day, and the promisor has
undertaken to perform it without application by the promise, the promisor may perform it at any
time during the usual hours of business on such day and at the place at which the promise ought
to be performed
Example A promises to deliver goods at B.s warehouse on the Ist January. On that day A bring
to B.s ware house but after the usual hour from closing it and they are not received. A has not
performed his promise.
(3) When performance to be made on certain day at proper time and place - Duty of
promise to apply for performance Sec 48 of the Act, When a promise is to be performed on a
certain day, and the promisor has not undertaken to perform it without application by the
promise, it is the duty of the promise to apply for performance at a proper place and within the
usual hours of business.
(4) Where no place is fixed and no application is to be made for performance Duty of
Promisor to apply to promise to appoint place Sec 49 When a promise is to be performed
without application by the Promisee and no place is fixed for the performance of it, it is the duty
of the Promisor to apply to, the Promisee to appoint a reasonable place for the performance of
the promise and to perform it at such place.
Example: - P undertakes to delivers one thousand mounds of jute to M on fixed day. P must
apply to B to appoint a reasonable place for the Purpose of receiving it, and must deliver it to
him at such place.
Cases
(1) Branch Manager, State Bank of Mysore v. K. Amarnath, AIR 2003 Kant 202.
(2) Jai Durga Finvest Pvt. Ltd v. State of Haryana AIR 2004 S.C. 1484
(3) Ceean International Private Limited v. Ashok Surana, AIR 2003 Cat. 263
(4) F.C.I v. Anupama Warehousing Establishment, AIR 2004 Ker. 137
(5) R.K Saxena v. Delhi Development Authority AIR 2002 S.C 2340
Declaratory Decrees
A person entitled to any legal character or any right as to any property1 may seek a declaration
from a court to that effect so that there is no adverse attack which could weaken that legal
character or title.2 the declaration could be sought under Section 34, which reads as under 34.
Discretion of court as to declaration of status or right. Any person entitled to any legal
character; or to any right as to any property, may institute a suit against any person denying, or
interested to deny, his title to such character or right, and the court may in its discretion make
therein a declaration that he is so entitled, and the plaintiff need not in such suit ask for any
further relief:
In order to get relief by way of a decree the following essentials are to be proved by the
plaintiff:
(1) That at the time of the suit the plaintiff was entitled to
What has to be proved is that the plaintiff was entitled to either the legal character, or to any right
as to any property and either of them exclusively can be the basis of the suit.4 A declaration
under Section 34 cannot be sought for a declaration regarding the subsistence of a contract
between the parties as the same neither relates to any legal character, nor any right to property.5
(2) The suit can be instituted against any person denying or interested in denying the plaintiffs
right to any legal character, or to any right as to any property.
A trustee of property is a person interested to deny a title adverse to the title of someone who
is not in existence, and for whom, if in existence, he would be a trustee. The above mentioned
provision may be explained through the following illustrations7:
(a) A is lawfully in possession of certain land. The inhabitants of a neighboring village claim a
right of way across the land. A may sue for a declaration that they are not entitled to the right so
claimed.
According to Section 35, a declaration made under this Chapter is binding only on the parties to
the suit, persons claiming through them respectively, and where any of the parties are trustees, on
the persons for whom, if in existence at the date of the declaration, such parties would be
trustees. The declaration operates as a bar only between the parties to the suit and their privies. It
is not binding on her persons. The provision may be explained through the following
illustration17
A a Hindu in a suit to which B, his alleged wife, and her mother, are defendants, seeks a
declaration that his marriage was duly solemnized and an order for the restitution of his conjugal
rights. The Court makes the declaration and order. C, claiming that B is his wife, then sues A for
the recovery of B. The declaration made in the former suit is not binding upon C.
IN SNP Shipping Services Pvt. Ltd. v. World Tanker Carrier Corp., AIR 2000 Bom.34 it has
been held that by virtue of Section 35 of the Specific Relief Act, declaration given under Section
34 is binding only between the parties. It is a declaration in personam, and notinrem.
Cases
(1) Branch Manager, State Bank of Mysore v. K. Amarnath, AIR 2003 Kant 202.
(2) (2) Jai Durga Finvest Pvt. Ltd v. State of Haryana AIR 2004 S.C. 1484
(3) (3) Ceean International Private Limited v. Ashok Surana, AIR 2003 Cat. 263
(5) R.K Saxena v. Delhi Development Authority AIR 2002 S.C 2340
Exercise
Q.1 Define the Anticipatory Breach of Contract. What are the remedies available on a
breach of contract?
Standard form Contracts are take it or leave it contracts i.e a contract signed between two parties
that has no room for negotiation. The customer is in no position to renegotiate the standard terms of
the contract and the companys representative usually does not have the authority to do so. Such
contracts are also known as- Contracts of adhesionwhich means that the individual has no choice
but to accept; he does not negotiate, but merely adheres, Compulsory Contracts, they being a
kind of imposition; and Private Legislation, they being a kind of code of bye-laws on the basis of
which the individual can enjoy the services offered.
For large organizations, it is very difficult to draw up a separate contract with every individual. As
Kessler puts it Therefore, they keep printed forms of contract i.e SFCs containing a large number of
terms and conditions in fine-print which restricts and often excludes the liability of the other party
under the contract. Briefly, one can say that the SFCs have arisen as a result of:
a) The convenience in having a printed form;
b) The fact that one party stands in a position where the terms dictated by it can be imposed upon the
other, notwithstanding the will of the other, and since the terms of such bargains are known to the
former even prior to the entry into the contract, the former prints it out and keeps it ready, waiting for
the persons to come forward and enter into such contracts; and
c) The willingness of the customer to allow the provider and his or her perceptions as to the
likelihood of the contract being enforced to the latter.
d) There may be diverse social pressure to sign: SFCs are signed at a point when the main details of
the transactions have either been negotiated or explained. Social pressure to conclude the bargain at
that point may come from a number of sources. For eg. If the purchaser is in front of a queue there is
additional pressure to sign quickly or the salesperson may imply that the additional terms are just
something that lawyers want us to do, and in a hurry the purchaser concludes the transaction by
signing the SFC.
e) SFCs may exploit unequal power relations: If the commodity which is being sold using a SFC is
an essential one for the purchaser or appeals to the purchaser such as a rental property or a needed
medical item, then again the take it or leave it condition has an impact and the purchaser in many
cases has no choice but to buy that commodity.
Introduction
In modern state, whatever be the form of government, the individual is affected in his everyday life and in
the exercise of his civil rights by acts of the State and its officials in various spheres and in different ways.
Some of these acts are done by the State as the sovereign while others are done by the State in trading
and other capacities in the same manner as a private individual does. 1
Hence, the subject of government contracts has assumed great importance in the modern times. In the
modern era of a welfare state, government's economic activities are expanding and the government is
increasingly assuming the role of the dispenser of a large number of benefits. Today a large number of
individuals and business organisations enjoy largess in the form of government contracts, licenses,
quotas, mineral rights, jobs, etc. This raises the possibility of exercise of power by a government to
dispense largess in an arbitrary manner. Therefore, there is a necessity to develop some norms to
regulate and protect individual interest in such wealth and thus structure and discipline the government
discretion to confer such benefits.
A contract is an agreement enforceable by law, which offers personal rights, and imposes personal
obligations, which the law protects and enforces against the parties to the agreement. The general law
of contract is based on the conception, which the parties have, by an agreement, created legal rights
and obligations, which are purely personal in their nature and are only enforceable by action against the
party in default.2 Section 2(h) of the Indian Contract Act,1872 defines a contract as "An agreement
enforceable by law". The word "agreement" has been defined in Section 2(e) of the Act as "every promise
and every set of promises, forming consideration for each other." A contract to which The Central
Government or a State Government is a party is called a "Government Contract".
Government contracts have been accorded Constitutional recognition 3. The Constitution, under Article
2984, clearly lays down that the executive power of the Union and of each state extends to "the carrying
on of any trade or business and to the acquisition, holding and disposal of property and the making
of contracts for any purpose". The Constitution therefore, provides that a government may sue or be
sued by its own name. A similar provision is found in the Code of Civil Procedure 1908 under Section 79 5.