Contact Act

JANHIT COLLEGE OF LAW

Q. Define contract? Discuss the essential elements of a valid contract?
(Or)
Law of contract is not the whole of law of agreement or whole law of obligation.
Discuss enumerating the essentials of a valid contract?
(Or)
The parties to a contract in a essence make the law for themselves?
(Or)
What is the nature and the object of contract?
Ans.: Meaning: “A contract is an agreement made between two (or) more parties
which the law will enforce.”
Definition: According to section 2(h) of the Indian contract act, 1872 -

“An agreement enforceable by law is a contract”.
According to SALMOND, a contract is “An agreement creating and defining
obligations between the parties”.
Essential elements of a valid contract:

According to section 10, “All agreements are contracts if they are made by the free
consent of the parties competent to contract, for a lawful consideration and with a
lawful object and not here by expressly declared to be void”
In order to become a contract an agreement must have the following essential
elements, they are follows:-
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1) Offer and acceptance:
• To constitute a contract there must be an offer and an acceptance of that offer.
• The offer and acceptance should relate to same thing in the same sense.
• There must be two (or) more persons to an agreement because one person
cannot enter into an agreement with himself.
2) Intention to create legal relationship:

• The parties must have intention to create legal relationship among them.
• Generally, the agreements of social, domestic and political nature are not a
contract.
• If there is no such intention to create a legal relationship among the parties,
there is no contract between them.
Example: BALFOUR vs. BALFOUR (1919)

Facts: A husband promised to pay his wife a household allowance of 30
(pounds) every month. Later the parties separated and the husband failed to pay the
amount. The wife sued for allowance.
Judgment: Agreements such as there were outside the realm of contract altogether.
Because there is no intention to create legal relationship among the parties.
3) Free and Genuine consent:

• The consent of the parties to the agreement must be free and genuine.
• Free consent is said to be absent, if the agreement is induced by
a) coercion,
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b) undue influence,
c) fraud,
d) Mis-representation,
e) mistake.
4) Lawful Object:
• The object of the agreement must be lawful. In other words, it means the object
must not be -
(a) Illegal,
(b) immoral,
(c) opposed to public policy.
• If an agreement suffers from any legal flaw, it would not be enforceable by law.
5) Lawful Consideration:
• An agreement to be enforceable by law must be supported by consideration.
• Consideration means “an advantage or benefit” moving from one party to other.
In other words “something in return”.
• The agreement is enforceable only when both the parties give something and get
something in return.
• The consideration must be real and lawful.
6) Capacity of parties: (Competency)

• The parties to a contract should be capable of entering into a valid contract.
• Every person is competent to contract if -
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(a) He is the age of majority.
(b) He is of sound mind and
(c) He is not disqualified from contracting by any law.
• The flaw in capacity to contract may arise from minority, lunacy, idiocy,
drunkenness, etc..,
7) Agreement not to be declared void:

• The agreements must not have been expressly declared to be void u/s 24 to 30
of the act.
Example: Agreements in restraint of trade, marriages, legal proceedings, etc..,
8) Certainty:
• The meaning of the agreement must be certain and not be vague (or) indefinite.
• If it is vague (or) indefinite it is not possible to ascertain its meaning.
Example:
‘A’ agrees to sell to ‘B’ a hundred tons of oil. There is nothing whatever to show what
kind of a oil intended. The agreement is void for uncertainty.
9) Possibility of performance:
• The terms of an agreement should be capable of performance.
• The agreement to do an act impossible in itself is void and cannot be
enforceable.
Example:
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‘A’ agrees with ‘B’, to put life into B’s dead wife, the agreement is void it is
impossible of Performance.
10) Necessary legal formalities:

• According to Indian contract Act, oral (or) written are perfectly valid.
• There is no provision for contracting being written, registered and stamped.
• But if is required by law, that it should comply with legal formalities and then it
should be Complied with all legal (or) necessary formalities for its enforceability.
Q. Define offer or proposal? Explain the legal rules as to a valid offer also discuss
the law relating to communication of offer and revocation of offer?
Ans.: Definition: According to section 2(a) of Indian contract act, 1872, defines offer
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”.
Legal rules (OR) Essential elements of a valid offer / proposal:-

1) Offer must be capable of creating legal relations: A social invitation, even if it is
accepted does not create legal relationship because it is not so intended to create legal
relationship. Therefore, an offer must be such as would result in a valid contract when
it is accepted.
2) Offer must be certain, definite and not vague: If the terms of the offer are vague,
indefinite, and uncertain, it does not amount to a lawful offer and its acceptance
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cannot create any contractual relationship.
3) Offer must be communicated: An offer is effective only when it is communicated

to the person whom it is made unless an offer is communicated; there is no acceptance
and no contract. An acceptance of an offer, in ignorance of the offer can never treat as
acceptance and does not create any right on the acceptor.
Example: LALMAN SHUKLA VS GAURI DATT. (1913)
Facts: ‘S’ sent his servant, ‘L’ to trace his missing nephew than he announced that
anybody would be entitled to a certain reward. ‘L’ traced the boy in ignorance of his
announcement. Subsequently, when he came to know of his reward, he claimed it.
Judgment: He was not entitled for the reward.
4) Offer must be distinguished from an invitation to offer: A proposer/offer must

be distinguished from an invitation to offer. In the case of invitation to offer, the
person sending out the invitation does not make any offer, but only invites the party to
make an offer. Such invitations for offers are not offers in the eyes of law and do not
become agreement by the acceptance of such offers.
Example: Pharmaceutical society of Great Britain vs. Boots cash chemists (1953).
Facts: Goods are sold in a shop under the ‘self service’ system. Customers select
goods in the shop and take them to the cashier for payment of price.
Judgment: The contract, in this case, is made, not when a customer selects the goods,
but when the cashier accepts the offer to buy and receives the price.
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5) Offer may be expressed or implied: An offer may be made either by words or by
conduct. An offer which is expressed by words (i.e.., spoken or written) is called an
‘express offer’ and offer which is inferred from the conduct of a person or the
circumstances of the case is called an ‘implied offer’.
6) Offer must be made between the two parties: There must be two or more parties
to create a valid offer because one person cannot make a proposal/offer to himself.
7) Offer may be specific or general: An offer is said to be specific when it is made to

a definite person, such an offer is accepted only by the person to whom it is made. On
the other hand general offer is one which is made to a public at large and maybe
accepted by anyone who fulfills the requisite conditions.
Example: Carilill vs. Carbolic Ball company (1893).
Facts: A company advertised in several newspapers is that a reward of L 100 (pounds)
would be given to any person contracted influenza after using the smoke ball
according to the printed directions. Once Mr.Carilill used the smoke balls according to
the directions of the company but contracted influenza.
Judgment: she could recover the amount as by using the smoke balls she accepted the
offer.
8) Offer must be made with a view to obtaining the assent: A offer to do (or) not to
do something must be made with a view to obtaining the assent of the other party
addressed, and it should not made merely with a view to disclosing the intention of
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making an offer.
9) Offer must not be statement of price: A mere statement of price is not treated as
an offer to sell. Therefore, an offer must not be a statement of price.
Example: HARVEY (VS) FACEY (1893):
Facts: Three telegrams were exchanged between Harvey and Facey.
(a) “Will you sell us your Bumper hall pen? Telegram lowest cash price- answer
paid”. [Harvey to Facey].
(b) “Lowest price for bumper hall pen L 900 (pounds)”. [ Facey to Harvey ]
(c) “We agree to buy Bumper hall pen for the sum of L 900 (pounds) asked by you”.
[Facey to Harvey]
Judgment: There was no concluded contract between Harvey and Facey. Because, a
mere statement of price is not considered as an offer to sell.
10) Offer should not contain a term “the non-compliance” of which may be assumed
to amount to acceptance.
COMMUNICATION OF OFFER AND REVOCATION OF OFFER: An offer, its

acceptance and their revocation (withdrawal) to be complete when it must be
communicated to the offeree. The following are the rules regarding communication of
offer and revocation of offer-
(a) Communication of offer:
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• The communication of an offer is complete when it comes to the knowledge of
the person to whom it is made.
• An offer may be communicated either by words spoken or written or it may be
inferred from the conduct of the parties.
• When an offer/proposal is made by post, its communication will be complete
when the letter containing the proposal reaches the person to whom it is made.
(b) Revocation of offer: A proposal/offer may be revoked at any time before the
communication of its acceptance is complete as against the proposer, but not
afterwards.
Q. When an offer does come to an end?

OR
When an offer does may be revoked (or) lapses?
OR
Revocation of offer otherwise than by communication?
Ans.: Definition:
According to section 2(a) of Indian contract act, 1872, defines offer 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”.
Revocation or lapses of offer: Section 6, of the Indian contract act, 1872 deals with
various modes of revocation of offer. According to it, an offer is revoked/lapses or
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comes to an end under the following circumstances-
1) By communication of notice: An offeror may revoke his offer at any time before
the acceptance by giving a simple notice of revocation, which can be either oral or
written.
Example: HARRIS VS NIKERSON (1873).
Facts: An auctioneer in a newspaper that a sale of office furniture would be held. A
broker came from a distant place to attend that auction, but all the furniture was
withdrawn. The broker there upon sued auctioneer for his loss of time and expenses.
Judgment: A declaration of intention to do a thing did not create a binding contract
with those who acted upon it. So, that the broker could not recover.
2) By lapse of reasonable time: An offer will revoke if it is not accepted with in the
Prescribed/reasonable time. If however, no time is prescribed it lapses by the expiry of
a reasonable time.
Example: Ramsgate victoria Hotel Company vs. Monteflore (1886)
Facts: On June 8th ‘M’ offered to take shares in ‘R’ Company. He received a letter of
acceptance on November 23rd. he refused to take shares.
Judgment: ‘M’ was entitled to refuse his offer has lapsed as the reasonable period
which it could be accepted and elapsed.
3) By non-fulfillment of some conditions: When offeror has prescribed some

conditions to be fulfilled and offeree/ acceptor fails to fulfill the conditions required to
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acceptance. In such a case offer will be revoked.
4) By death or insanity of the offeror: The death of the offeror does not
automatically revoke the offer. When the death (or) insanity of the offeror provided
the offeree comes to know before its acceptance it will be revoked. Otherwise if he
accepts an offer in ignorance of the death (or) insanity of the offeror, the acceptance is
valid.
5) By a counter offer: “counter offer” means when the offeree/acceptor offers to

qualified acceptance of the offer subject to modifications and variations in the terms of
original offer. Therefore counter offer amounts to rejection of the original offer.
Example: Hyde vs. Wrench (1840)
Facts: ‘W’ offered to sell a farm to ‘H’ for L 1000 (pounds). ‘H’ offered L 950
(pounds) ‘W’ refused the offer. Subsequently, ‘H’ offered to purchase the farm for L
1000 (pounds).
Judgment: There was no contract as ‘H’ by offering L 950 (ponds) had rejected the
original offer. Because, the counter offer to a proposal amounts to its rejection.
6) By change in law: An offer comes to an end if the law is changed so as to make the
contract contemplated by the offer illegal or incapable of performance.
7) An offer is not accepted according to the prescribed or usual mode: If the offer
is not accepted according to the prescribed or usual mode, provides offeror gives
notice to the offeree within a reasonable time that the offer is not accepted according
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to the prescribed/usual mode. If the offeror keeps quite, he is deemed to have accepted
the offer.
8) By death or insanity of the offeree/acceptor.
9) By destruction of the subject matter.
Q. “An acceptance to be effective must be communicated to the offeror”. Are

there any exceptions to this rule?
(OR)
Define acceptance? Explain the rules regarding a valid acceptance?
Ans.: Definition: According to section 2(b) of the Indian contract Act, 1872, defines
an acceptance is “when the person to whom the proposal is made signifies is assent
thereto, the proposal is said to be accepted becomes a promise”.
On the acceptance of the proposal, the proposer is called the promisor/offeror and the
Acceptor is called the promise/offeree. Legal rules as to acceptance: A valid
acceptance must satisfies the following rules:-
1) Acceptance must be absolute and unqualified:
• An acceptance to be valid it must be absolute and unqualified and in accordance
with the Exact terms of the offer.
• An acceptance with a variation, slight, is no acceptance, and may amount to a
mere counteroffer (i.e.., original may or may not accept.)
2) Acceptance must be communicated to the offeror:

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• For a valid acceptance, acceptance must not only be made by the offeree but it
must also be communicated by the offeree to the offeror.
• Communication of the acceptance must be expressed or implied.
• A mere mental acceptance is no acceptance.
3) Acceptance must be according to the mode prescribed or usual and reasonable

manner:
• If the offeror prescribed a mode of acceptance, acceptance must be given
according to the mode prescribed.
• If the offeror prescribed no mode of acceptance, acceptance must be given
according to some usual and reasonable mode.
• If an offer is not accepted according to the prescribed or usual mode. The
proposer may within a reasonable time give notice to the offeree that the
acceptance is not according to the mode prescribed.
• If the offeror keeps quite he is deemed to have accepted the acceptance.
4) Acceptance must be given within a reasonable time:

• If any time limit is specified, the acceptance must be given within that time.
• If no time limit is specified, the acceptance must be given within a reasonable
time.
Example: Ramsgate victoria Hotel Company vs. Monteflore (1886)
Facts: On June 8th ‘M’ offered to take shares in ‘R’ Company. He received a letter of
acceptance on November 23rd. he refused to take shares.
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Judgment: ‘M’ was entitled to refuse his offer has lapsed as the reasonable period
which it could be accepted and elapsed.
5) It cannot precede an offer:

• If the acceptance precedes an offer, it is not a valid acceptance and does not
result in a contract.
• In other words “acceptance subject to contract” is no acceptance.
6) Acceptance must be given by the parties or party to whom it is made:

• An offer can be accepted only by the person or persons to whom it is made.
• It cannot be accepted by another person without the consent of the offeror.
Example: Boulton vs. Jones (1857).
Facts: Boulton bought a hose-pipe business from Brocklehurst. Jones, to whom
Brocklehurst owed a debt, placed an order with Brocklehurst for the supply of certain
goods. Boulton supplied the goods even though the order was not addressed to him.
Jones refused to pay Boulton for the goods because he, by entering into a contract with
Brocklehurst, intended to set off his debt against Brocklehurst.
Judgment: The offer was made to the Brocklehurst and it was not in the power of
Boulton to step in and accept. Therefore there was no contract.
7) It cannot be implied from silence:

• Silence does not amount to acceptance.
• If the offeree does not respond to offer or keeps quite, the offer will lapse after
reasonable time.
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• The offeror cannot compel the offeree to respond offer or to suggest that silence
will be equivalent to acceptance.
8) Acceptance must be expressed or implied:

• An acceptance may be given either by words or by conduct.
• An acceptance which is expressed by words (i.e.., spoken or written) is called
‘expressed acceptance’.
• An acceptance which is inferred by conduct of the person or by circumstances
of the case is called an ‘implied or tacit acceptance’.
Example: Carilill vs. Carbolic Ball company (1893).
Facts: A company advertised in several newspapers is that a reward of L 100 (ponds)
would be given to any person contracted influenza after using the smoke ball
according to the printed directions. Once Mr.Carilill used the smoke balls according to
the directions of the company but contracted influenza.
Judgment: she could recover the amount as by using the smoke balls she accepted the
offer.
9) Acceptance may be given by performing some condition (or) by accepting some

consideration.
10) Acceptance must be made before the offer lapses (or) before the offer is
withdrawn.
Q. Write a short note on ‘consensus-ad-idem’.

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Ans.: The essence of an agreement is the meeting of the minds of the parties in full
and final agreement; there must, be consensus-ad-idem. The expression “agreement”
as defined in section 2 (e) is essentially and exclusively consensual in nature (i.e..,
before there can be an agreement between the two parties, there must be consensus-ad-
idem). This means that the parties to the agreement must have agreed about the
subject-matter of the agreement in the same sense and at the same time. Unless there is
consensus-ad-idem, there can be no contract.
Example: ‘A’ who owns two horses named Rajhans and Hansraj. ‘A’ selling horse
Rajhans to ‘B’. ‘B’ thinks that he is purchasing horse Hansraj. There is no consensus-
ad-idem, there can be no contract.
Q. Write a short note on the term ‘Cross offer’.

Ans.: when two or more identical offers exchanged between the parties in ignorance at
the time of each other’s offer, the offer are called as cross offers. In such a case, the
courts construe one offer as the offer and the other as the acceptance. Thus, a cross
offer will not create any contract.
Example: ‘A’ offers to sell his car to ‘B’ for RS.15000/-. ‘B’ at the same time, offers
by a letter to buy ‘A’s car for Rs.15000/-. The two letters cross each other in the post.
In such a case the courts construe one offer as the offer and the other as the
acceptance. Thus there was no concluded contract between ‘A’ and ‘B’.
Q. Write a short note on the term ‘Counter offer’.

Ans.: when the offeree offers to qualified acceptance of the offer subject to
modifications and variations in the terms of the original offer, he is said to have made
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a counter offer. Counter offer amounts to rejection of the original offer. In such a case
an offer may be revoked.
Example: Hyde vs. Wrench (1840)
Facts: ‘W’ offered to sell a farm to ‘H’ for L 1000 (pounds). ‘H’ offered L 950
(pounds) ‘W’ refused the offer. Subsequently, ‘H’ offered to purchase the farm for L
1000 (pounds).
Judgment: There was no contract as ‘H’ by offering L 950 (pounds) had rejected the
original offer. Because the counter offer to a proposal amounts to its rejection.
Q. What do you mean by Communication of offer?

Ans.: An offer, its acceptance and their revocation (withdrawal) to be complete when
it must be communicated. When the contracting parties are face to face and negotiate
in person, a contract comes into existence the movement the offeree gives his absolute
and unqualified acceptance to the proposal made by the offeror. The following are the
rules regarding communication of offer:
i) The communication of an offer is complete when it comes to the knowledge of the
person to whom it is made.
ii) An offer may be communicated either by words spoken (or) written (or) it may be
iii) When an offer/proposal is made by post, its communication will be complete when
the letter containing the proposal reaches the person to whom it is made.
Q. What do you mean by Communication of acceptance?
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and unqualified acceptance to the proposal made by the offeror. The following are the
rules regarding communication of acceptance:-
1) Communication of an acceptance is complete:-
a) As against the proposer/offeror when it is put into the certain course of transmission
to him, so as to be out of the power of the acceptor.
b) As against the acceptor, when it comes to knowledge of the proposer.
2) When a proposal is accepted by a letter sent by the post the communication of

acceptance will be complete:-
a) As against the proposer when the letter of acceptance is posted and
b) As against the acceptor when the letter reach the proposer.
Q. What do you mean by Communication of revocation?

and unqualified acceptance to the proposal made by the offeror.
The following are the rules regarding communication of revocation:
1) As against the person who makes it, when it put into a course of transmission.
2) As against the person to whom it is made, when it comes to his knowledge.
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Q. Explain the Invitation to make an offer.

(Or)
Offer and invitation to offer.
Ans.: If a person makes an invitation to make an offer/proposal, the other person
makes an offer/proposal in response. The offer/proposal may or may not be accepted.
Example: - Tender notice is an invitation to make a proposal/offer. Then the response
to a tender notice is an offer and can be in two ways:-
1) A definite offer: When a tender is submitted, in response to an invitation for supply
of goods and services in specified quantities, in a specific and definite manner, it is a
definite offer.
2) A standing offer: sometimes a tender is submitted, in response to an invitation for
supply of goods and services in a continuous way over a period of time, such an offer
is said to be standing or continuous offer. As soon an order is made a contract is
created.
Q. Revocation of offer and acceptance.

Ans.: Revocation of offer: A proposal/offer may be revoked at any time before the
communication of its acceptance is complete as against the proposer, but not
afterwards.
Revocation of acceptance: An acceptance may be revoked at any time before the

Communication of acceptance is complete as against the acceptor, but not afterwards.
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Example: ‘A’ makes proposal to ‘B’ to sell his house at a certain price. The letter is
posted on 1st of the month. ‘B’ accepts the proposal by a letter sent by post on 4th.
The letter reaches ‘A’ on the 6th. ‘A’ may revoke his offer at any time before ‘B’
posts his letter of acceptance. (i.e.., on 4th, but not afterwards). ‘B’ may revoke his
acceptance at any time before the letter of acceptance reaches ‘A’. (i.e.. on 6th, but not
afterwards).
Q. Communication of offer, acceptance and revocation.

(Or)
When is communication complete?
and unqualified acceptance to the proposal made by the offeror. Rules regarding the
communication of offer, acceptance and revocation are laid down in section 4, as
follows-
Communication of offer: The following are the rules regarding communication of
offer:
1) The communication of an offer is complete when it comes to the knowledge of the
person to whom it is made.
2) An offer may be communicated either by words spoken or written or it may be

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3) When an offer/proposal is made by post, its communication will be complete when
the
letter containing the proposal reaches the person to whom it is made.
Example: ‘A’ makes proposal to ‘B’ to sell his house at a certain price. The letter is
posted on 10th July. It reaches ‘B’ on 12th July. The communication of offer is
complete when ‘B’ receives the letter (i.e.., on 12th July).
Communication of acceptance: The following are the rules regarding

communication of
Acceptance:-
1) Communication of an acceptance is complete:-
a) As against the proposer/offeror when it is put into the certain course of transmission
to him, so as to be out of the power of the acceptor.
b) As against the acceptor, when it comes to the knowledge of the proposer.
2) When a proposal is accepted by a letter sent by the post the communication of
acceptance will be complete:-
a) As against the proposer when the letter of acceptance is posted and
b) As against the acceptor when the letter reach the proposer.
Communication of revocation: The following are the rules regarding communication

of revocation:
1) As against the person who makes it, when it put into a course of transmission.
2) As against the person to whom it is made, when it comes to his knowledge.
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Example: ‘A’ proposes by a letter, to sell a house to ‘B’ at a certain price. The letter is
posted on 15th may. It reaches ‘B’ on 19th may. ‘A’ revokes his offer by telegram on
18th may. The telegram reaches ‘B’ on 20th may. The revocation is complete against
‘A’ when the telegram is dispatched (i.e.., in 18th may). It is complete as against the
‘B’ when he receives it (i.e.., on 20th may).
Q. Define consideration? What are the rules as to consideration?

Ans.: Meaning:-
Consideration is a technical term used in the sense of quid-pro-quo (i.e.., something in
Return or something for something). When a party to an agreement promises to do
something, he must get something in return. This “something” is defined as
consideration.
Definition:-
According to section 2(d) of the Indian contract Act, 1872, defines consideration as
“when at the desire of the promisor, the promise 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”.
Example: Abdul Aziz vs. Masum Ali (1914)
Facts: The secretary of a mosque committee filed a suit to enforce a promise which
the promisor had made to subscribe Rs.500/- for rebuilding a mosque.
Judgment: ‘The promise was not enforceable because there was no consideration in
the sense of benefit’, as ‘the person who promised gained nothing in return for the
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promise made’, and the secretary of the committee to whom the promise was made,
suffered no detriment (liability) as nothing had been done to carry out the repairs.
Hence the suit was dismissed.
Essentials of a valid consideration:- The following are the essentials of a valid

consideration or legal rules as to consideration.
1. It may be past, present or future:
• The words “has done or abstained from doing refer to past consideration.
• The word “does or abstains from doing” refer to present consideration.
• Similarly the word “promises to do or to abstain from doing” refers to the future
consideration. Thus, the consideration may be past, present or future.
2. It must move at the desire of the promisor:

• In order to constitute a legal consideration, the act or abstinence forming the
consideration for the promise must move at the desire or request of the
promisor.
• If it is done at the instance of a third party or without the desire of the promisor,
it will not be a valid contract.
Example: Durga Prasad vs. Baldeo (1880);
Facts: ‘B’ spent some money on the improvement of a market at the desire of the
collector of the district. In consideration of this ‘D’ who was using the market
promised to pay some money to ‘B’.
Judgment: The agreement was void being without consideration.
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3. It must not be illegal, immoral (or) not opposed to public policy:
• The consideration given for an agreement must not be unlawful, illegal,
immoral and not opposed to public policy.
• Where it is unlawful, the court will not allow an action on the agreement.
4. It need not be adequate:

• Consideration need not be any particular value.
• It need not be approximately equal value with the promise for which it is
exchanged. But it must be something which the law would regard as having
some value.
• In other words consideration, as already explained, it means “something in
return”. This means something in return need not be necessarily be an equal in
value to “something given”.
5. It must be real and not illusory:

• Consideration must not be illegal, impossible or illusory but it must be real and
of some value in the eyes of law.
• The following are not real consideration:
(a) Physical impossibility,
(b) legal impossibility,
(c) uncertain consideration,
(d) illusory consideration.
6. It must move from the promise or any other person:

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• Under English law consideration must move from the promisee itself. But,
under Indian law, consideration move from the promisee or any other person
(i.e.., even a stranger).
• This means as long as there is a consideration for a promise; it is immaterial
who has furnished it. But the stranger to a consideration will be sue only if he is
a party to the contact.
Example: Chinnaya vs. Ramayya (1882).
Facts: An old lady, by a deed of gift, made over certain property to her daughter ‘D’,
under the directions that she should pay her aunt, ‘P’ (sister of old lady), a certain sum
of money annually. The same day ‘D’ entered into an agreement with ‘P’ to pay her
the agreed amount later ‘D’ refused to pay the amount on the plea that no
consideration had moved from ‘P’ to ‘D’.
Judgment: ‘P’ was entitled to maintain suit as consideration had moved from the old
lady, sister of ‘P’, to the daughter, ‘D’.
7. It must be something the promisor is not already bound to do: A promise to do

what one is already bound to do, either by general law or under an existing contract, is
not a good consideration for a new promise, since it adds nothing to the pre-existing
legal or contractual obligation.
8. It may be an act, abstinence or forbearance or a return promise:

consideration may be an act, abstinence or forbearance or a return promise. Thus it
may be noted that the following are good considerations for a contract.
• Forbearance to sue.
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• Compromise of a disputed claim.
• Composition with creditors.
EXAMPLE:- A promise to perform a public duty by a public servant is not a
consideration.
Q. Define consideration? “A contract not supported by consideration is

unenforceable”, discuss what are it exceptions”.
(Or)
“A contract without consideration is void”- Discuss its exceptions?
(Or)
“Insufficiency of consideration immaterial; but an agreement without
consideration is void”. Comment.
(Or)
Explain the term consideration and state the exceptions to the rule “No
consideration, no contract”
Ans.: Meaning:-
Return). When a party to an agreement promises to do something, he must get
something in return. This “something” is defined as consideration.
Definition:-
According to section 2(d) of the Indian contract Act, 1872, defines consideration as
“when at the desire of the promisor, the promise or any other person has done or
abstained from doing, or does or abstains from doing, or promises to do or to abstain
26

from doing, something, such act or abstinence or promise is called a consideration for
the promise”.
Example: Abdul Aziz vs. Masum Ali (1914)
Facts: The secretary of a mosque committee filed a suit to enforce a promise which
the promisor had made to subscribe Rs.500/- for rebuilding a mosque.
Judgment: ‘The promise was not enforceable because there was no consideration in
the sense of benefit’, as ‘the person who promised gained nothing in return for the
promise made’, and the secretary of the committee to whom the promise was made,
suffered no detriment (liability) as nothing had been done to carry out the repairs.
Hence the suit was dismissed.
Validity of an agreement without consideration:

The general rule is that an agreement made without consideration is void. In the
following cases, the agreement though made without consideration, will be valid and
enforceable according to section 25 and 185 are as follows:-
1. Nature love and affection: An agreement made without consideration is valid if it
is made out of love, nature and affection such agreements are enforceable if
• The agreement is made in writing and registered.
• The agreement must be made between the parties standing in near relations to
each other and,
• There must be nature, love and affection between the parties.
Example: Venkatswamy vs. Rangaswamy (1903):
Facts: By a registered agreement, ‘V’, on account of nature, love and affection for his
brother, ‘R’, promises to discharge debt to ‘B’. If ‘V’ does not discharge the debt.
27

Judgment: ‘R’ may discharge it and then sue ‘V’ to recover the amount. Therefore it
is a valid agreement.
2. Compensation for past voluntary services: A promise made without

consideration is valid if, it is a person who has already done voluntarily done
something for the promisor, is enforceable, even though without consideration. In
simple words, a promise to pay for a past voluntary service is binding.
3. Promise to pay Time-Bared debt: An agreement to pay a time-bared debt is

enforceable if the following conditions are satisfied.
• The debt is a time bared debt
• The debtor promises to pay the time barred debt.
• The promise is made in writing.
• The promise is signed by the debtor.
4. Completed gifts: The rule “No consideration – No contract” does not apply to
completed gifts. According to section 1 to 25 states “nothing in section 25 shall affect
the validity, as between the donor and donee, of any gift actually made”
5. Agency: According to section 185, no consideration is necessary to create an

agency.
6. Charitable subscription: Where the promisee on the strength of promise makes

commitments (i.e.., changes his position to his liability/detriment).
28

Example: Kedernath vs. Ghouri Mohammed (1886).
Facts: ‘G’ had agreed to subscribe Rs.100/- towards the construction of a town hall at
Howrah. The secretary, ‘K’, on the faith of the promise, called for plans and entrusted
the work to contractors and undertook the liability to pay them.
Judgment: The amount could be recovered, as the promise resulted in a sufficient
detriment to the secretary. However, be enforceable only to the extent of the liability
incurred by the secretary. In this case, the promise, even though it was gratuitous,
became, enforceable because on the faith of promise the secretary had incurred a
detriment.
Q. “All contracts are agreements but all agreements are not contracts” - explain.
Ans.: “All contracts are agreements but all agreements are not contracts”.
The above statement has two parts-
(a) All contracts are agreement: As per section 2(h) of Indian contract Act, “A
contract is an agreement enforceable by law”. Obviously an agreement is a pre
requisite (i.e.., essential elements) for formation of contract. An agreement clubbed
with enforceability by law and several other features (i.e.., free consent, consideration,
etc..,) will create a valid contract. Therefore, obviously all contracts will be
agreements.
(b) All agreements are not contracts: As per section 2(e) of Indian contract act, “An
agreement is a promise and every set of promises, forming consideration for each
other”. Thus, a lawful offer and a lawful acceptance create an agreement only.
Therefore all agreements are not contracts.
29

Conclusion:
Contract = Agreement + Enforceability by law.
Agreement = Offer + Acceptance.
Thus, all agreements are contracts but all agreements are not necessarily contracts.
Q. “A stranger to a consideration can sue” – Are there any exceptions to this

rule?
Ans.: Introduction: There is a general rule of law is that only the parties to a contract
can sue. In other words, if a person not a party to a contract, he cannot sue. This rule is
known as the “Doctrine of Privity of contract”. Privity of contract means relationship
subsisting between the parties who have entered into contractual obligations.
There are two consequences of doctrine of privity of contract they are follows:-
1) A person who is not a party to a contract cannot sue even if the contract is for his
benefit and he provided consideration or a stranger to a contract cannot sue.
2) A contract cannot provide rights or impose obligations arising under it on any
person other than the parties to it or a stranger to a contract can sue.
Example: Dunlop Pneumatic Tyre Co. Ltd vs. Selfridge & Co. Ltd (1915).
Facts: ‘S’ bought tyres from the Dunlop Rubber company and sold them to ‘D’, a sub-
dealer, who agreed with ‘S’ not to sell below Dunlop’s list price and to pay the
Dunlop company L 5 (pounds) as damages on every tyre ‘D’ undersold. ‘D’ sold two
tyres at less than the list price and there upon, the Dunlop Company sued him for the
breach.
Judgment: The Dunlop Company could not maintain the suit as it was a stranger to
the contract.
30

Exceptions: The following are the exceptions to the rule that a stranger to a contract
cannot sue:-
1. A trust: In trust deed beneficiaries is allowed to sue the trustee for enforcement of
trustee’s duties even though they are not contracting party. However, the name of the
beneficiary must be clearly mentioned in the contract.
Example: Gandy vs. Gandy (1884):
Facts: A husband who was separated from his wife executed a separation deed by
which he promised to pay to the trustees all expenses for the maintenance of his wife.
Judgment: This sort of agreement creates a trust in favor of the wife and can be
enforced.
2. Marriage settlements, partition (or) other family arrangements:

When an agreement is made in connection of marriage settlements, partitions (or)
other family arrangements and a provision is made for the benefit of a person, he may
sue although he is not a party to the agreement.
Example: Daropti vs. Jaspat Rai (1905)
Facts: ‘J’s wife deserted him because of his ill treatment. ‘J’ entered into an
agreement with his father-in-law to treat her properly (or) else pay her monthly
maintenance. Subsequently, she was again ill-treated and also driven out.
Judgment: she was entitled to enforce the promise made by ‘J’ to her father.
3. Acknowledgement (or) Estoppel : The person, who becomes an agent of a third

party by acknowledgement or estoppel, can be sued by such third party.
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4. Assignment of contract: Assignment means voluntary transfer of the rights by a
person to another. In such a case an assignee becomes entitled to sue and enforce the
rights which are assigned to him.
5. Contracts entered into through an agent: The principal enforce the contract
entered into by his agent provided the agent act within the scope of his authority and
in the name of the principal.
6. Covenants running with the land: In case of transfer of immovable property, the
purchaser of land or the owner of the land is bound by certain conditions or covenants
created by an agreement affecting the land.
Q. Define contract? Explain its kinds of contracts?

Ans.: Meaning: “A contract is an agreement made between two or more parties which
the law will enforce.”
Definition:
According to section 2(h) of the Indian contract act, 1872. “An agreement enforceable
by law is a contract”.
According to SALMOND, a contract is “An agreement creating and defining
obligations
Between the parties”
32

Kinds of contracts: - Contracts may be classified according to their ;
(a) validity,
(b) Formation, and
(c) Performance.
(a)Classification according to validity:-

1. A valid contract: A valid contract is an agreement which is binding and
enforceable. An agreement becomes a contract when all the essential elements (i.e..,
offer and acceptance, intention to create legal relationship etc..,) are present, in such a
case the contract is said to be valid.
2. A voidable contract: An agreement which is enforceable by law at the option of

one or more parties thereto, but not at the option of the other or others, is a voidable
contract. This happens when the essentials elements of a free consent is missing.
When the consent of a party to a contract is said to be not free, if it is caused by
Coercion, Undue influence, Misrepresentation or fraud, etc..,
3. A void contract: A void contract is really not a contract at all. The term “void”
means an agreement which is without any legal effect. In other words “an agreement
not enforceable by law is said to be void”.
4. Illegal contracts: Some agreements are illegal in themselves (ex:- contracts of

immoral nature, opposed to public policy etc..,) Thus, All illegal contracts are void but
all void contracts are not illegal (ex:- A wagering agreement, though void is not
33

illegal).
5. An unenforceable contract: An unenforceable contract is one which cannot be

enforced in a court of law because of some technical defect such as absence of writing
or where the remedy has been barred by lapses of time.
(b) Classification according to their formation:-

1. Express contract: An express contract is one, the terms of which are stated in
words, spoken or written at the time of the formation of the contract.
2. Implied contract: An implied contract is one in which the evidence of the

agreement is shown by acts and conduct of the parties, but not by words, written or
spoken. In other words where the offer or acceptance of any promise made otherwise
then in words, the promise is said to be implied promise or implied contract.
3. Quasi-contract: In truth Quasi-contract is not a contract at all. A quasi-contract is

acts which are created by law. It does not have any essential elements of a valid
contract. It is not intentionally created by parties but it is imposed by law. It is founded
upon the ‘principles of natural justice, equity and fair play’.
(c) Classification according to their performance:

1. Executed contract: “Executed” means that which is done. An executed contract is
one in which both the parties have performed their respective obligation.
34

2. Executory contract: “Executory” means that which remains to be carried into
effect. An executor contract is one in which the parties have yet to perform their
obligations.
3. Unilateral or one-sided contract: in this type of contract, one party to a contract

has performed his part even at the time of its formation and an obligation is
outstanding only against the parties.
4. Bilateral contract or Two-sided contract: It is a contract in which the obligations

on the part of both the parties to the contract are outstanding at the time of the
formation of the contract.
Q. Explain the term ‘MINOR’? Explain the legal rules regarding agreement by a
minor?
(Or)
What is the regal effect of a minor’s misrepresentation of his age while entering
into an agreement?
Ans.: Definition:
According to section 3, of the Indian majority act, 1875 ‘A minor is a person who has
not
Completed “18” years of age. However, minority will continue up to “21” years in
case, if the court has appointed guardian for a minor’s property’.
Legal rules regarding an agreement by a minor:

35

A minor is incompetent to contract u/s 11of the Indian contact act, 1872. Minor’s
Incompetence is not a punishment but it is a protection given to minors by law. The
law becomes the guardian of minors to protect their rights because their mental
capacity is not well developed. The following are the legal rules regarding minor’s
agreement are as follows:-
1. An agreement by minor is absolutely void: Where a minor is charged with
obligations and the other contracting party seeks to enforce these obligations against
minor, in such a case the agreement is deemed as void-ab-initio.
Example: Mohiri Bibi vs. Dharmodas Ghose (1903).
Facts: A minor mortgaged his house in favor of money-lender to secure a loan of
Rs.20000/- out of which the mortgagee ( Dharmodas Ghose a money lender) paid the
minor a sum of Rs.8000/-. Subsequently, the minor sued for setting aside the
mortgage, stating that he was underage when he executed the mortgage.
Judgment: The mortgage was void and, therefore, it was cancelled. Further the
money lender’s request for the repayment of the amount advanced to the minor as part
of the consideration for the mortgage was also not accepted.
2. He can be a promisee or a Beneficiary: Any agreement which is some benefits to

the minor and under which he is required to bear no obligation is valid. Thus, a minor
can be a beneficiary or a promisee.
3. His agreement cannot be ratified by him an attaining the age of majority:

An agreement by minor is void-ab-initio and therefore ratification by minor is not
allowed. There is a fundamental principal in law (i.e.., an agreement Void-ab-initio
36

cannot be validated by subsequent action).
4. If he has received any benefit under a void agreement, he cannot ask to

compensate or pay for it: Under section 64 and 65 of the act, provides a minor
cannot be ordered to make compensation for a benefit obtained in a void agreement.
Because section 64 and 65, which deals with restitution of benefit.
5. Minor can always plead minority: A minor’s contract being void, any money
advanced to a minor on a promissory note cannot be recovered even though a minor
procures or take a loan by falsely representing that he is of full age it will not stop him
from pleading his minority in a suit, to recover the amount and the suit will be
dismissed. “The rule of estoppel cannot be applied against a minor”.
Example: Leslie vs. Shiell (1914).
Facts: ‘S’, a minor, by fraudulently representing himself to be of full age, induced ‘L’
to lend him L 400 (pounds). He refused to repay it and ‘L’ sued for his money.
Judgment: The contract was void and ‘S’ was not liable to repay the amount.
6. There can be no specific performance of the agreement entered into by him as

they are void-ab-initio: A contract entered into, on behalf of a minor by his
parent/guardian or the manager of his estate can be expressly enforced by or against
the minor, provide the contract is, within the authority of the guardian and for the
benefit of the minor.
37

7. He cannot enter into a contract of partnership: A minor being incompetent to
contract but be a partner of a partnership firm, but u/s 30 of the Indian partnership Act,
provides he can be admitted for the ‘benefits of a partnership’ with the consent of all
the partners.
8. He can be an agent: A minor can be an agent. It is so because the act of the agent
is the act of the principal and therefore, the principal is liable to the third parties for
the act of a minor agent.
9. His parents/guardian is not liable for the contracts entered into by him: The
parents/guardian is not liable for the contract entered into by minor. The parents can
held liable for contracts for their minor children only when they are acting as agent.
10. A minor is liable in tort (A civil wrong): Minors are liable for negligence
causing injury or damage to the property that does not belongs to them.
11. A minor is liable for necessaries: Minor’s estate is liable for necessaries supplied
to minor during minority. Minor does not personally liable for the supply of
necessaries. The necessaries such as food, clothing, and shelter etc.., necessaries also
include ‘goods’ and ‘services’.
Q. Person of unsound mind.

Ans.: According to section 12 of the Indian contract Act, 1872 “A person is said to be
of sound mind for the purpose of making a contract if, at the time when he makes it,
38

he is capable of understanding it and of forming a rational judgment as to its effects
upon his interests”. Soundness of mind of a person depends on two facts:
1. Ability to understand the contract at the time of making.
2. Ability to form a rational judgment about the effect of the contract on his interest.
Unsoundness may arise from idiocy, lunacy, drunkenness, hypnotism, mental decay
because of old age and delirium (high temperature) etc.., A person who is usually of
unsound mind and occasionally of sound mind can contract when he is of sound mind.
A person who is usually of sound mind and occasionally of unsound mind cannot
contract when he is of unsound mind. Thus, the burden of proof will be lie upon the
person who claims that he was not of sound mind at the time of making a contract.
Q. what are necessaries when he is a minor on a contract for necessaries?

(OR)
Minor’s liability for necessaries?
Ans.: Definition:
According to section 3, of the Indian majority act, 1875 ‘A minor is a person who has
not
Completed “18” years of age. However, minority will continue up to “21” years in
case, if the court has appointed guardian for a minor’s property’. Thus, minor estate is
liable for necessaries supplied to minor during minority. Minor does not personally
liable for the supply of necessaries.
According to the section 68 of the Act, “If a person incapable of entering into a
contract, or any one whom he is legally bound to support, is supplied by another
39

person with necessaries suited to his condition in life, the person who had furnished
such supplies is entitled to be reimbursed from the property of such incapable”
There are two essentials:-
1. The things supplied must be suited to his condition in life (i.e.., position and
financial status of the minor).
2. The things supplied must be necessaries of life (i.e.., food, clothing, shelter, etc..,)
Necessaries also includes:-

(a) Necessary goods: Necessary goods are not restricted to articles which are required
to maintain a bare existence, such as bread and clothes, but it also includes goods
which are
Reasonably necessary to the minor having regard to his station in life.
(i.e..,watch,bicycle, etc..,)
Example: Nash vs. Imran (1908).
Facts: ‘I’, a minor, bought eleven fancy waistcoats from ‘N’. he was at that time
adequately provided with clothes.
Judgment: The waistcoats were not necessaries, and ‘I’ was not liable to pay for any
of them.
(b) Services rendered: Certain services rendered to a minor have been held to be
necessaries. These include education, training for a trade, medical advice, hose given
to a minor on rent for the purpose of living and continuing his studies etc.., As regards
contracts which are not for the supply of necessaries but which are undoubtedly
beneficial to the minor, in such a case the minor private estate is liable.
40

Example: Roberts vs. Gray (1913).
Facts: ‘G’, a minor, entered into a contract with ‘R’, a noted billiards player, to pay
him a certain sum of money to learn the game and play matches with him during his
world tour. ‘R’ spent time and money in making arrangements for billiards matches.
Judgment: ‘G’ was liable to pay as the agreement was one for necessaries as it was in
effect “for teaching, instruction, and employment and was reasonable for the benefit of
the infant”
.
Loans incurred to obtain necessaries: A loan taken by a minor to obtain necessaries
also binds him and is recoverable by the lender as if he himself had supplied the
necessaries. But the minor is not personally liable. It is only his estate which is liable
for loans.
Q. Contract by disqualified person.

(Or)
Person expressly disqualified (other person).
Ans.: Besides minors and persons of unsound mind, there are also other persons who
are disqualified from contracting partially or wholly. So, the contracts by such persons
are void. If, by any provisional legislation, a person is declared “disqualified
proprietor”, he is not competent to enter into any contract in respect of the property.
The following persons are disqualified from contracting;
(a) Alien enemy.
(b) Foreign sovereign states.
(c) Corporations.
41

(d) Insolvents.
(e) Convicts.
Q. Under what circumstances is the object or consideration of a contract deemed

unlawful? Illustrate with examples?
Ans.: Meaning:-
return). When a party to an agreement promises to do something, he must get
something in return. This “something” is defined as consideration.
An agreement will not be enforceable if its objects (or) the consideration are unlawful.
According to section 23, of the Indian contract Act, 1872. The consideration and
objects are unlawful in the following cases:
1. If it is forbidden by law: If the object or the consideration of an agreement is
forbidden by law, in such a case the agreement is deemed to be unlawful and void. An
act is forbidden by law if,
• It is punishable under the criminal law of the country, or
• It is prohibited by special legislations and regulations made by competent
authority under power derived from legislature.
Example: ‘A’ promises to obtain for ‘B’ an employment in the public service and ‘B’
promises to pay Rs.1000/- to ‘A’. The agreement is void, as the consideration for it is
unlawful.
2. If it is defeats the provision of any law: If the object or consideration of an

agreement is of such a nature that, though not directly forbidden by law, it would
42

defeat the provisions of the law, in such a case the agreement is deemed to be
unlawful and void.
Example: An agreement between husband and wife to live separately is invalid as
being opposed to Hindu law.
3. If it is fraudulent: An agreement, whose object or consideration is to defraud

others, is unlawful and hence it becomes void.
Example: ‘A’, ‘B’, ‘C’ enters into an agreement for division among them of gains
acquired or to be acquired, by them by fraud. The agreement is void, as its object is
unlawful.
4. If it involves or implies injury to the person or property of another:

If the object or consideration of an agreement is to injure the person or property of
another is void. In such a case object or the consideration is deemed to be unlawful.
Example: Ram Saroop vs. Bansi Mandar (1915):
Facts: “B” borrowed Rs.100 from “L’ and executed a bond promising to work for “L”
without pay for a period of two years. In case of default, “B” was to pay interest (at a
very exorbitant rate) and the principal amount at once.
Judgment: The contract was void as it involves injury to the person of “B”.
5. If the court regards it as immoral: An agreement, whose consideration and object

is immoral, is deemed to be illegal and void. The word immoral includes sexual
immorality. Hence its object or consideration is unlawful.
Example: Pearce vs. Brooks (1866)
43

Facts: A firm of coach-builders hired out a carriage to a prostitute, knowing that it
was to be used by prostitute to attract men.
Judgment: The coach-builders could not recover the hire as the agreement was
unlawful.
6. Where the court regards it as opposed to public policy: An agreement whose

consideration or object is such a nature that opposed to public policy. Thus it becomes
void and it deemed to be unlawful.
Q. Discuss the doctrine of public policy? Give examples of agreement which are
opposed to public policy?
(or)
“Agreements opposed to public policy”-Explain.
Ans.: An agreement is said to be opposed to public policy when it is harmful to the
public welfare. An agreement whose object or consideration is opposed to public
policy is void. Some of those agreements which are or which have been held to be,
opposed to public policy and are unlawful as follows:-
1. Agreements of trading with enemy: An agreement made with an alien enemy at
the time of war is illegal on the ground of public policy. This agreement is based upon
the two reasons:
a) Contract made during the continuance of the war, an alien enemy can neither
contract with an Indian subject can he sue in an Indian court. He can do so only after
he receives a
License from the central government.
44

b) Contract made before the war may either be suspended or dissolved.
2. Agreement to commit a crime: An agreement is to commit a crime is opposed to

public policy and it is void. In such a case the court will not enforce the agreements.
Example: W.H. Smith & sons vs. Clinton (1908)
Facts: ‘A’ promises to indemnity (pay) a firm of printers and publishers of a paper
against the consequences of any libel (publishing a false statement) which it might
publish in its paper.
Judgment: ‘A’ promise could not be enforce in a law court. Where the firm was
compelled to pay damages for a published libel.
3. Agreements in restraint of legal proceedings: An agreement in restraint of legal

proceeding is the one by which any party thereto is restricted absolutely from
enforcing his right under a contract through a court. Contracts of this nature are void
because its object is to defeat the provision of the Indian Limitation act.
4. Agreements which interfere with administration of justice: Where the

consideration or object of an agreement of which is to interfere with the administration
of justice is unlawful, being opposed to public policy. It may take any of the following
forms:-
a) Interference with the court of justice,
b) Stifling prosecution,
c) Maintenance,
45

d) Champerty.
5. Trafficking in public offices and tittles: Trafficking in public offices means

trading in public offices to obtain some gain which otherwise cannot be obtained.
Trafficking in title means some such award from government in return of
consideration. A contact of this nature is void and is against to public policy and also
it is illegal.
Example: Parkinson vs. College of Ambulance, Ltd (1925):
Facts: ‘A’ promised to obtain an employment to ‘B’ in a public office and ‘B’
promised to pay ‘A’, Rs.1000/-.
Judgment: The agreement was against to public policy and also illegal.
6. Agreement tending to creates interest opposed to duty: If a person enters into an

agreement whereby he is bound to do something which is against to public or
professional duty, in such a case the agreement is void on the ground of the public
policy.
7. Agreements in restraint of parental rights: A father or mother is the legal

guardian of his/her minor child. This right and duty of guardianship cannot be bartered
away. Therefore, a father/mother cannot enter into an agreement inconsistent with his
duties which are opposed to public policy.
8. Agreement in restraint of marriage: Every agreement in restraint of marriage of

any person, other than a minor, is void and opposed to public policy. This is because
46

the law regards marriage and marriage status as the right of every individual.
9. Agreement restricting personal liberty: Agreement which unduly restricts the

personal freedom of the parties is void and against to public policy.
10. Agreement in restraint of trade: Every agreement by which any one is restrained
from exercising a lawful profession or trade or business of any kind, is to that extent
void and opposed to public policy. But this rule is subject to the following
exceptions:-
Exceptions:
a) Sale of goodwill.
b) Partner’s agreement.
c) Trade combinations.
d) Service agreement.
In the above exceptions the court will enforce the agreements. Because only if there is
any restrictions imposed on such agreements are reasonable.
Example: Shaikh Kalu vs. Ram Saran Bhagat (1909):
Facts: Out of 30 makers of combs in the city of Patna, 29 agreed to supply with ‘R’ to
supply him and also agreed not to supply anyone else all their output. Under the
agreement ‘R’ was free to reject the goods if he found no market for them.
Judgment: The agreement amounted to restraint of trade and thus void.
11. Marriage brokerage: As a public policy, marriage should take place with free
choice of the parties and it cannot be interfered with by third party acting as broker.
47

Agreement for brokerage for arranging marriage is void. Similarly agreement of
dowry cannot be enforced.
12. Agreement to defraud creditors (or) revenue authorities: An agreement which

object is to defraud the creditors (or) revenue authorities is not enforceable, being
opposed to public policy.
13. Agreement interfering with marital duties: Any agreement which interferes
with the performance of marital duties is void, being opposed to public policy.
Q. Write a short note on unlawful and illegal agreements

Ans.: An unlawful agreement is one which, like a void agreement and is not
enforceable by law. It is destitute (lacking) of legal effects altogether. If affects only
the immediate parties and has no further consequences. An illegal agreement, on the
other hand, is not only void as between the immediate parties but has this further
effect that the collateral transactions to it also become tainted (infect) with illegality.
Thus, ‘every illegal agreement is unlawful, but every unlawful agreement is not
necessarily illegal’. It is sometimes difficult to decide as to whether an act is illegal
(or) unlawful because, as
Many of the illegal and the unlawful acts lie on the borderline. It may, however, be
observed that illegal acts are those which are opposed to public morals and unlawful
acts are those which are less rigorous in effect and involves a ‘non-criminal breach of
law’. These acts do not affect public morals do they results in the commission of
crime.
48

Q. “In cases of equal guilt, the position of the defendant is better than that of the
plaintiff”, Comment?
Ans.: Meaning of unlawful and illegal agreements:
An unlawful agreement is one which, like a void agreement and is not enforceable by
law. It is destitute (lacking) of legal effects altogether. If affects only the immediate
parties and has no further consequences. An illegal agreement, on the other hand, is
not only void as between the immediate parties but has this further effect that the
collateral transactions to it also become tainted (infect) with illegality. Thus, ‘every
illegal agreement is unlawful, but every unlawful agreement is not necessarily illegal’.
Effects of illegality: The general rule of law is that no action is allowed on an illegal
and unlawful agreement. This is based on the following two maxims:-
1. No action arises from a base cause. The effect of this is that the law discourages
people from entering into illegal agreements which arise from base. (Ex-turpi causa
non oritur action).
2. In cases of equal guilt, the defendant is in a better position. (In pari delicto, potior
est
condition defendentis).
Example: ‘A’ promises to pay ‘B’ Rs.500/- if he beats ‘T’. If ‘B’ beats ‘T’, he cannot
recover the amount from ‘A’. (Or) If ‘A’ has already paid the amount and ‘B’ does not
beat ‘T’, ‘A’ cannot recover the amount.
If an agreement is illegal, the law will help neither party to the agreement. This means
that, as a result of refusal of the court, to help plaintiff in recovering the amount, (i.e..,
49

the defendant who is equally guilty stands to gain). The court is, in fact, neutral
(opposite) in such cases. The court allows the defendant to have that advantage, not
because it approves of his conduct, but because it is not prepared to grant any relief on
the basis of illegal agreement. As a result of the neutrality the defendant stands to
gain.
The effects of illegality may now be summed up as under:

1. The collateral transactions to an illegal agreement become tainted (infect) with
illegality and treated as illegal even though they would have lawful by themselves.
2. No action can be taken:-

(a) For the recovery of money paid, or property transferred under illegal agreement,
and
(b) For the breach of an illegal agreement.
3. In cases of equal guilt on an illegal agreement, the position of defendant is better

than that of the plaintiff (i.e.., innocent party) may, however, sue to recover money
paid (or) property transferred under following circumstances:
(a) Where he is not equally guilty (in pari delicto) with the defendant.
Example: where he has induced to enter into an agreement by fraud, undue
Influence or coercion.
(b) Where he does not have to rely on the illegal transaction.
(c) Where a substantial part of the illegal transaction has not been Carried out, and he
is truly and genuinely repentant.
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Q. “An Agreement in restraint of trade is void”-Exceptions.

Ans.: Meaning: An agreement which interferes with the liberty of a person to engage
himself in any lawful profession, trade or Business of any kind is called ‘An
Agreement in restraint of trade’.
Example: Shaikh Kalu vs. Ram Saran Bhagat (1909)
Facts: Out of 30 makers of combs in the city of Patna, 29 agreed to supply with ‘R’ to
supply him and also agreed not to supply anyone else all their output. Under the
agreement ‘R’ was free to reject the goods if he found no market for them.
Judgment: The agreement amounted to restraint of trade and thus void.
Thus, every agreement by which any one is restrained from exercising a lawful
profession or trade or business of any kind, is to that extent void and opposed to public
policy. But this rule is subject to the following exceptions:-
Exceptions: The general principle of law is that all restraints of trade are void. But in
India it is valid if it is falls within any of the statutory exceptions. The following are
the exceptions to the rule that
“An Agreement in restraint of trade is void”.
a) Sale of goodwill.
b) Partner’s agreement.
c) Trade combinations.
d) Service agreements.
a) Sale of goodwill: A seller of the goodwill of a business may agree with the buyer to
refrain from carrying on a similar business, with in the specified local limits, so long
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as the buyer carries on a like business, provided that such limits are reasonable. In
such a case an Agreement in restraint of trade is valid.
b) Partner’s agreement: in case of partnership, partner may agree that:

• A partner shall not carry on any business other than that of the firm while he is a
partner.
• An outgoing partner may agree with his partners not to carry on a business
similar to that of the firm within a specified period or within the specified local
limits.
• Any Partners may, upon the sale of goodwill of the firm, make an agreement
with the buyer that such partners will not carry on any business similar to that of
the firm within a specified period or within specified local limits.
c) Trade combinations: An agreement in the nature of a business combination
between traders or manufactures does not amount to a restraint of trade and is
perfectly valid. But if an agreements attempts to create a monopoly it would be void.
Example: S.B. Fraser & Company vs. Bombay Ice Mfg. company (1904)
Facts: An agreement between certain ice manufacturing companies not to sell ice
below a stated price and to divide the profits in a certain proportion is not void u/s 27.
Judgment: Such agreement does not amount to a restraint of trade (nor) opposed to
public policy and is perfectly valid.
d) Service contracts: An agreement of service by which an employee binds himself,

during the term of his agreement, not to compete with his employer is valid and does
not amount to restraint of trade.
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Example: ‘B’ a physician and surgeon, employs ‘A’ as an assistant for a term of three
years and ‘A’ agrees not to practice as a surgeon and physician during these three
years. The agreement is valid and ‘A’ can be restrained by an injunction if he starts
independent practice during this period.
Thus, in the above exceptions the court will enforce the agreements. Because only if
there is any restrictions imposed on such agreements are reasonable.
Q. Write a short note on reciprocal promises.

Ans.: According to section 2(f) of the Indian contract Act, 1872. ‘Promises which
form the consideration for each other are called reciprocal promises. These promises
have been classified by Lord Mansfield based on the Jones vs. Barkley case, they are
as follows:-
1. Mutual and independent: Where each party must perform his promise
independently and irrespective of the fact whether the other party has performed, or
not, the promises are mutual and independent.
Ex: - ‘B’ agrees to pay the price of goods on 10th. ‘S’ promises to supply the goods
on 20th. The promises are mutual and independent.
2. Conditional and dependent: Where the performance of the promise by one party
depends on the prior performance of the promise by the other party, the promises are
conditional and independent.
Ex: - ‘A’ promises to remove certain debris (something which has destroyed) lying in
front of ‘B’s supplies him with the cart. The promises are conditional and
independent.
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3. Mutual and concurrent: Where the promises of the both the parties are to be
performed simultaneously, they are said to be mutual and concurrent.
Ex: - sale of goods for cash.
Q. What do you mean by immoral agreements?

Ans.: The word immoral includes sexual immorality. Hence its object or consideration
is unlawful. An agreement, whose consideration and object is immoral, is deemed to
be illegal and void. An agreement is unlawful for immorality in the following cases:
1. Where the consideration is an act of sexual immorality. (i.e.., illicit cohabitation or
prostitution).
Example: ‘A’ agrees to let her daughter on hire to ‘B’ for concubine, the agreement is
Unlawful, being immoral.
2. Where the object of the agreement is the furtherance of sexual immorality. (i.e..,
lending money to a prostitute to help her in his trade).
Example: ‘A’ let flat to ‘B’, a woman whom he knew to be a prostitute. The
agreement was unlawful if ‘A’ knew the purpose that ‘B’s object was to use the flat
for immoral purpose.
Q. What do you understand by ‘Wagering agreement’?

(Or)
Write a short note on ‘WAGER”.
Ans.: Definition:
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A wager is an agreement between two parties by which one party promises to pay
money or money’s worth an the happening of soma uncertain event, in consideration
of the other parties promises to pay if the event does not happen.
Example: ‘A’ and ‘B’ enter into a contract that ‘A’ shall pay ‘B’ Rs.100/- if it rains
on Monday, and that ‘B’ shall pay the same amount if it does not rain. It is a wagering
agreement.
The following are the essentials of a wagering agreement:-

1. There must be promise to pay money (or) money’s worth.
2. The event must be uncertain.
3. There must be two parties.
4. Each party must stand to win or lose.
5. No control over the event.
6. No other interest in the event except winning or losing.
Exceptions: The following transactions are not considered as wagering agreements.
a) Share market transactions,
b) Crossword competition,
c) Contract of insurance,
d) Horse racing,
e) Games of skill (i.e.., picture puzzles, athletic competitions, etc..,).
Q. Define the term ‘void agreements’?

Ans.: According to section 2(g) of the Indian contract Act, 1872. ‘A void agreement is
one which is not enforceable by law’.
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A void agreement does not create any legal right or obligation. It is void-ab-initio
(i.e.., void of into right from the beginning).
The following agreements have been expressly declared to void by the contract act:-
1. Agreements by incompetent parties. (Section 11)
2. Agreements made under mutual mistake of facts. (Section 20)
3. Agreements which the consideration or object is unlawful. (Section 23)
4. Agreements which the consideration or object is unlawful in part. (Section 24)
5. Agreements made without consideration. (Section 25)
6. Agreements in restraint of marriage. (Section 26)
7. Agreements in restraint of trade. (section 27)
8. Agreements in restraint of legal proceedings. (section 28)
9. Agreement which the meaning is uncertain. (section 29)
10. Agreements by way of wager. (section 30)
11. Agreements contingent on impossible events. (section 36)
12. Agreements to do impossible Acts. (section 56)
13. In case of reciprocal promises to do things legal and also other things illegal. The
second set (illegal) of reciprocal promises is a void agreement. (section 57)
Q. Write a short note on restitution.

Ans.: Meaning: when a contract becomes void, the party who has received any
benefit under it must restore it to the other party or must compensate the other party by
the value of benefit. This restoration of the benefit is called ‘restitution’. The principle
of restitution is that a person who has been unjustly enriched at the expense of another
is required to make restitution to that other. In essence, restitution is not based on loss
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to the plaintiff but it is on benefit which is enjoyed by the defendant at the cost of the
plaintiff which is unjust for the defendant to retain.
Example: ‘A’ pays ‘B’ Rs.1000/- in consideration of ‘B’s promise to marry ‘C’, ‘A’s
daughter. ‘C’ is dead at the time of promise. The agreement is void but ‘B’ must repay
‘A’ Rs.1000/-.
Q. Write a short note on void agreement and void contract.

Ans.: Void agreement: According to section 2(g) of the Indian contract Act, 1872-
‘A void agreement is one which is not enforceable by law’.
A void agreement does not create any legal right or obligation. It is void-ab-initio
(i.e.., void of into right from the beginning).
Ex: - An agreement with a minor, an agreement without consideration, etc..,
Void contract: According to section 2(f) of the Indian contract Act, 1872. “A contract
which ceases to be enforceable by law becomes void when it ceases to be
enforceable”.
A contract, when originally entered into, may be valid and binding on the parties it
may
Subsequently become void. We may talk of such a contract as void agreement.
Ex: - A contract to import goods from a foreign country when a war breaks out
between the importing country and the exporting country.
Q. Define wagering agreement and explain the essentials of a wagering

agreement in detail?
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Ans.: Definition:
A wager is an agreement between two parties by which one party promises to pay
money or money’s worth and the happening of some uncertain event, in consideration
of the other parties promises to pay if the event does not happen.
Example: ‘A’ and ‘B’ enter into a contract that ‘A’ shall pay ‘B’ Rs.100/- if it rains
on Monday, and that ‘B’ shall pay the same amount if it does not rain. It is a wagering
agreement.
Essentials of a wagering agreement: The following are the essentials of a wagering

agreement, they are follows:-
1. Promise to pay money or money’s worth: The wagering agreement must be
certain and there must be promise to pay money or money’s worth between the
parties.
2. Uncertain event: The promise made between the partied must be conditional and
uncertain event (i.e.., happening or non happening). Generally a wager relates to a
future event, but it may also relate to a past event provided the parties are not aware of
its result or the time of its happening.
3. Each party must stand to win or lose: Each party should stand to win or lose upon
the determination of the uncertain event. An agreement is not a wager if either of the
parties may win but cannot lose or may lose but cannot win.
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4. No control over the event: The wagering agreement is a game of chance.
Therefore, no party should have control over the happening or non happening of an
event. If on the other hand one of the parties has control over the event, then the
transaction lacks an essential ingredient of a wager.
5. No other interest in the event: The parties should have no other interest in the
subject matter of the agreement except winning or losing of the amount of the wager.
Example: In a wrestling bout, ‘A’ tells ‘B’ that wrestler no.1 will win. ‘B’ challenges
the statement of ‘A’. They bet with each other over the result of the bout. This is a
wagering agreement.
6. There must be two parties.
7. The agreement must be void u/s 30.

Exceptions: - The following transactions are not considered as wagering agreements:
a) Share market transactions: in case of share market transactions in which delivery
of stocks and shares intended to be given and taken are not considered as wagering
agreements.
b) Crossword competition: A crossword competition involving a good measure of

skill for its successful solution. But if prizes of a crossword competition depend upon
the correspondence of the competitors solution with a previously prepared solution
kept with the editor of a newspaper, there it is treated as lottery and wagering
transaction. According to prize competition act, 1955, prize competition is game of
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skill are not wagers provided the amount of prize not exceed rs.1000/-.
c) Contract of insurance: Contract of insurance is not wagering agreements even

though the payment of money by the insurer may depend up on a future uncertain
event.
d) Horse racing: An agreement to contribute a prize of the value of above Rs.500/- to

be
Awarded to the winner of a horse race is also one of the exceptions to the wagering
agreement.
e) Games of skill (i.e.., picture puzzles, athletic competitions, etc..,).
Q. Explain the meaning of contingent contract? What are the rules related to
contingent contract?
Ans.: DEFINITION: According to sec (31) of ICA, 1872, a contingent contract is a
contract to do or not to do something, if the event, collateral to such contract, does or
does not happen.
Thus it is a contract, the performance of which is dependent upon the happening or
non
Happening of an uncertain future event, collateral to such events.
EX: ‘A’ promises to pay Rs 10000/-, if B’s house is burnt.
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ESSENTIAL CHARACTERISTICS OF A CONTINGENT CONTRACT:

1. Its performance depends upon the happening or non happening in the future of
some event.
2. The event must be uncertain.
3. The event must be collateral.
RULES REGARDING PERFORMANCE OF A CONTINGENT CONTRACT:

The following are the rules regarding performance of a contingent contract:
1. Contingent contract upon the happening of a future uncertain event:-
When the happening of such event has possible it becomes enforced and if the
happening of such event becomes impossible it becomes void.
EX: ‘A’ contracts to pay ‘B’ a sum of money when ‘B’ marries ‘C’.’C’ dies without
being married to ‘B’. The contract becomes void.
2. Contingent contract upon the non happening of a future uncertain event:

When the happening of such event becomes impossible it becomes enforced and when
such event has possible it becomes void.
EX: “A” agrees to sell his car to “B” if “C” dies. The contract cannot be enforced as
long as “C” is alive.
3. Contingent contract upon happening of an event within a specified time: When

such event has happened within the specified time it can be enforced and if the
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happening of such event becomes impossible within the specified time it becomes
void.
EX: ‘A’ agrees to pay ‘B’ a sum of money if ‘B’ marries ‘C’,’C’ marries ‘D’. The
marriage of ‘B’ to ‘C’ must be considered impossible now, although it is possible that
‘D’ may die and that ‘C’ may afterwards marry ‘B’.
4. Contingent contract upon non happening of an event within a specified time:

When the happening of such event becomes impossible within the specified time it
can be enforced and if the happening of such event has happened within the specified
time it becomes void.
EX: ’A’ promises to pay ‘B’ a sum of money if a certain ship returns within a year.
The contract may be enforced if the ship returns within a year, and becomes void if the
ship is burnt within the year.
5. Contingent contract upon impossible events: Such an agreement cannot be

enforced since it is void. Whether the impossibility of the event was known to the
parties or not is immaterial.
EX: ‘A’ agrees to pay ‘B’ Rs 1000/- if ‘B’ will marry A’s daughter, ‘X’. ‘X’ was dead
at the time of the agreement. The agreement is void.
6. Contingent contract upon future conduct of a living person: When such person
acts in the manner as desired in the contract it can be enforced and if such person does
not acts in the manner as desired in the contract it becomes void.
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Q. Differences between wagering agreement and contingent contract.

Ans.: The following are the differences between wagering agreement and contingent
agreement:-
WAGERING AGREEMENT CONTINGENT AGREEMENT

1. Wagering is an agreement where a person 1. Contingent contract is one in which
agrees to pay money to the other person promise or undertakes to perform the
upon the happening or non happening of an contract upon happening or non happening
Uncertain event. of an uncertain collateral event.
2. It is void u/s 30. 2. It is perfectly valid u/s 31.
3. Generally it is a reciprocal promise 3. There may be unilateral promises.
4. In a wager the parties are not interested in 4. The parties have real interest in the
the subject matter of the agreement except happening or non happening of an uncertain
Winning or losing the amount. future event.
5. In a wager the future event is the sole 5. In a contingent contract the future events
Determining factor. is only collateral.
6. It is a game of chance. 6. It is not a game of chance.
Q. what is meant by performance? And offer of performance/tender?
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Ans.: Performance: performance of a contract means carrying out of promises and
obligations undertaken by the parties according to the terms prescribed in the contract.
OFFER OF PERFORMANCE OR TENDER: When promisor has made a valid

offer of performance to the promise and offer had not been accepted by the promise,
the promisor is not responsible for non performance and he does not lose any rights
under the contract. A valid tender of performance is equivalent to performance. It is
also known as “attempted performance” or “tender.”
The following are the essentials or requisites of a valid tender:

1. It must be unconditional. It becomes conditional when it is not in accordance with
the terms of the contract.
Ex: ‘D’ a debtor offers to pay to ‘C’, his creditor, the amount due to him on the
condition that ‘C’ sells to him certain shares at cost. This is not a valid tender.
2. It must be the whole quality contracted for or of the whole obligation. A tender of
an installment when the contract stipulated payment in full is not a valid tender.
3. It must be by a person who is in a position, and is willing to perform the promise.
4. It must be made at the proper time and place. A tender of goods after the business
hours or of goods or money before the due date is not a valid-tender.
Ex: “D” owes “C” Rs.100/- payable on 1st of August with interest. He offers to pay
on the 1st of July the amount with interest up to the 1st of July. It is not a valid tender
64

as it not made at the appointed time.
5. It must be made to the proper person and also in proper form.
6. It may be made to one of the several joint promises. In such a case it has the same
effect as a tender to all of them.
7. In case of tender of goods, it must give a reasonable opportunity to the promise for
inspection of the goods. A tender of goods at such time when the other party cannot
inspect the goods is not a valid tender. But in the following case, tender was held to be
valid.
Ex: Startup vs. MacDonald (1843):
Facts: The plaintiffs agreed to sell 10 tons of linseed oil to the defendant to the
delivered “within the last fourteen days of March”. Delivery as tendered at 8.30pm on
March 31, a Saturday. The defendant refused to accept the goods owing to lateness of
the hour.
Judgment: Though the hour was unreasonable, the defendant could still take delivery
before midnight.
8. In case of tender of money, the debtor must make a valid tender in legal tender
money.
Ex: In India in rupees, us-dollars etc..,
Q. By whom must contracts be performed?

65

Ans.: The promise under a contract may be performed by;
1. Promisor himself: If there is something in the contract to show that it was the
intention of the parties that the promise should be performed by the promisor himself,
such promise must be performed by promisor himself. This means contracts which
involve the exercise of personal skill or diligence or which are founded on personal
confidence between the parties must be performed by promisor himself.
EX: A contract to paint a picture or to sing or to marry.
2. Agent: Where personal consideration is not the foundation of the contract, the
promisor or his representative may employ a competent person to perform it.
EX: ‘A’ promises to pay ‘B’ a sum of money; ‘A’ may perform the promise, either by
personally paying the money to ‘B’ or by causing (making)it to be paid to ‘B’ by
another.
3. Legal Representatives: A contract which involves the use of personal skill or is
founded on personal considerations comes to an end on death of the promisor. As
regards any other contract, the legal representatives of the deceased promisor are
bound to perform it unless a contrary intention appears from the contract. But their
liability under a contract is limited to the value of property they inherit from the
deceased.
EX: ‘A’ promises to deliver goods to ‘B’ on a certain day on payment of Rs.1000/-.
‘A’ dies before that day. A’s representatives are bound to deliver the goods to ‘B’, and
‘B’ is bound to pay Rs 1000/- to A’s representative.
4. Third person: When a promisee accepts the performance of the promise from third
person, he cannot afterwards enforce it against the promisor.
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5. Joint promisors: When two or more persons have made a joint promise, then
unless a contrary intention appears from the contract, all such persons must jointly
fulfill the promise, if any of them dies, his legal representatives must jointly with the
surviving promisor have to fulfill the promise. If all of them die, the legal
representatives of all of them must fulfill the promise jointly.
As per section 67,”If any promisee neglects or refuses to afford reasonable facilities
for
performance of the promise to promisor, the promisor is excused for non
performance.”
Q. Reciprocal promises:-
Ans.: According to section 2(f) of the ICA, 1872, “promises which form the
consideration or part of the consideration for each other are called “reciprocal
promises”.
These promises have been classified by lord Mansfield based on the Jones vs. Barkley
case as follows:-
i. Mutual and independent: Where each party must perform his promise
independently and irrespective of the fact whether the other party has performed, or is
willing to perform, his promise or not, the promises are mutual and independent.
EX: “B” agrees to pay the price of goods on 10th. “S” promises to supply the goods
on 20th. The promises are mutual and independent.
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ii. Conditional and dependent: Where the performance of the promise by one party
depends on the prior performance of the promise by the other party, the promises are
EX:“A” promises to remove certain debris(something which has to be destroyed)
lying in front of B’s house provided “B” supplies him with the cart. The promises are
iii. Mutual and concurrent: where the promises of both the parties are to be
performed
simultaneously, they are said to be mutual and concurrent.
EX: Sale of goods for cash.
Q. What are the rules of law relating to time and place of performance of
contract?
Ans.: “Performance of contract means carrying out of promises and obligations
undertaken by the parties according to the terms prescribed in the contract”.
A contract can be performed by the promisor himself, by the agent on behalf of the
promisor, by the legal representatives on the death of the promisor, by the joint
promisors or by any third person.
Time and place of performance:
Time and place of performance of a contract are matters/rules to be determined by an
agreement between the parties themselves. Section 46 to 50 of the contract Act lay
down the rules regarding the time and place of performance they are follows:-
i. Where no application is to be made and no time is specified : [Sec 46] Where a
promisor has to perform his promise without application by the promisee and no time
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is specified for performance, the engagement or promise must be performed within a
reasonable time.
“What is a reasonable time” is a question of fact in each particular case. It depends on
the special circumstances of the case (contract), the usage of trade, or the intention of
the parties at the time of entering into the contract.
ii. Where time is specified and no application is to be made : [Sec 47] When a
promise is to be performed on a certain day without application by promisee, the
promisor may perform the promise at any time during the usual working hours on such
day.
EX: “A” promises to deliver goods at “B”s warehouse on the 1st of January. On that
day “A” brings the goods to “B”s warehouse, but after usual hour of closing it and
they are not received. “A” has not performed the promise.
iii. Application for performance on a certain day and place : [Sec 48] When a
promise is to be performed on a certain day the promisor may undertake to perform it
after the application by the promisee to that affect. In such a case it is the duty of the
promisee to apply for performance at a proper place and time within usual business
hours.
iv. Application by the promisor to the promisee to appoint a place : [Sec 49]
When a promise is to be performed without application by the promisee and no place
is fixed for the performance, it is the duty of the promisor to apply to the promisee to
appoint a reasonable place for the performance of the promise and perform the
promise at such place.
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EX: “A” undertakes to deliver goods to “B” on a fixed day. “A” must apply to “B” to
appoint a reasonable place for the purpose of receiving it, and must deliver it to him at
such place.
v. Perfor mance in manner or at the time prescribed or sanctioned by the
promisee: - [Sec 50]
The performance of any promise may be made in any manner or at any time which the
promise prescribes or sanctions.
Q. what is reciprocal promises? Explain the rules regarding the reciprocal

promises?
Ans.: According to section 2(f) of Indian Contract Act, 1872. “Promises which form
the consideration or part of the consideration for each other are called “reciprocal
promises”.
Rules regarding performance of reciprocal promises: Section (51 to 54) of the

contract Act, lay down the rules regarding the order of performance of reciprocal
promises; which are as follows:-
i. Simultaneous performance of reciprocal promises: Where the promises are to be
performed simultaneously, they are said to be “mutual and concurrent”. According to
section 51 such promises need not perform by the promisor unless the promise is
ready and willing to perform his reciprocal promise.
EX: “A” and “B” enter into a contract that “A” shall deliver certain goods to “B” to be
paid for by “B” on delivery ; and “B” need not pay for the goods unless “A” is ready
and willing to deliver them on payment.
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ii. Order of performance of reciprocal promises: According to section 52, where
the order in which the reciprocal promises are to be performed is expressly fixed in the
contract, they must be performed in that order. Where the order is not expressly fixed,
they must be performed in that order which the nature of transaction requires.
EX: “A” and “B” entered into a contract, that “A” shall build a house for “B” at a
fixed price. A’s promise to build the house must be before B’s promise to pay for it.
iii. Effect of one party preventing another from performing promise: According to
section 53, when a contract contains reciprocal promises and one party to a contract
prevents the other from performing his promise. In such a case the contract becomes
voidable at the option of the party so prevented and is entitled to compensation from
the other party for any loss which he may sustain in consequence of non performance
of the contract.
EX: “A” and “B” enter into contract that “B” shall execute certain work for “A” for
Rs 1000/-. “B” is ready and willing to execute the work accordingly but “A” prevents
him from doing so. The contract is voidable at the option of “B” and if he elects to
rescind it, he is entitled to recover from “A”, compensation for any loss which he has
incurred by its non performance.
iv. Effect of default as to promise to be performed first: According to section 54,
where the performance of promise by one party depends on the prior performance of
the promise by other party. In such a case one of them cannot be performed till the
other party has performed his promise then if the other party fails to perform it, he
cannot claim off the performance of the reciprocal promise from the first party and the
other party make compensation for any loss which the first party may sustain by the
non performance of the contract.
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EX: “A” promises to ”B” to sell him 100 bales of merchandise to be delivered next
day, and “B” promises “A” to pay for them within a month. “A” does not deliver
according to his promise. B’s promise to pay need not be performed and A must make
compensation to “B”.
v. Reciprocal promises to do things legal and also other things illegal. (Section
57).
Q.”Time and essence of the contract.”- explain.

Ans.: In the performance of a contract, time is crucial element. Contracts must be
performed on time. “Is time of essence?” is a question of fact and law. Section 55, of
the Indian Contract At, 1872 provides the effect of failure to perform at a time fixed in
a contract in which time is essential as follows:-
a) When time is of essence: If the promisor fails to perform on an agreed or specified
time, the contracts will become voidable at the option of the promisee.
b) When time is not essence: If the promisor fails to perform within the specified
time, the contract will not become voidable at the option of the promisee. It means that
in such a case the promise cannot rescind the contract and he will have to accept the
delayed performance. But the promise is entitled to claim the compensation for any
loss caused to him by the delay. If promisee accepts the delayed performance and
intend to sue the promisor for compensation for delayed performance, promisee must
give an oral or written notice to the promisor regarding his intention.
Q. Discuss the law relating to the rights and liabilities of joint promisors in a
contract? Also explain the devolution of joint liabilities?
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(OR)
Q. By whom joint promises must be performed?
Ans.: MEANING: When two or more persons have made a joint promise, they are
known as joint promisors. Unless a contrary intention appears from the contract, all
joint promisors must jointly fulfill the promise. If any of them dies, his legal
representatives must, jointly with the surviving promisors, fulfill the promise. If all of
them die, the legal representative of all of them must fulfill the promise jointly.
By whom joint promises must be performed: The following are the rules as regards
performance of joint promises:
1. All promisors must jointly fulfill the promise: According to section 42, when two
or more persons have made a joint promise, then unless a contrary intention appears
by the contract, all joint promises must jointly fulfill the promise. If any of them dies,
his legal representatives must, jointly with the surviving promisors, fulfill the promise.
If all of them die, the legal representative of all of them must fulfill the promise
jointly.
2. Any one of the joint promisors may be compelled to perform: {section 43,
para1}: when two or more persons make a joint promise and there is in the absence of
express agreement to the contrary, the promisee may compel any one or more of the
joint promisors to perform the whole of the promise. This means the liability of joint
promisors is joint and several.
EX: A, B, and C jointly promises to pay D Rs 3000. D may compel all or any or either
A or B or C to pay him Rs 3000.
3. A joint promisor compelled to perform, may claim contribution {section
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43,Para 2}: If one of the several joint promisors is made to perform the whole
contract, he may compel the other joint promisors to contribute equally with himself to
the performance of the promise, unless a contrary intention appears from the contract.
EX: A, B, and C jointly promises to pay D Rs 3000/-. A is compelled to pay the whole
amount to D. he may recovers Rs 1000/- from B and C.
4. Sharing of losses arising from default:-{section 43, Para 3}: if any one of the
joint promisors makes a default in making contribution, the remaining joint promisors
must bear the loss arising from such default in equal shares.
EX: A, B, and C jointly promises to pay D Rs 3000/-. C is unable to pay anything and
A is compelled to pay the whole amount to D and entitled to receive Rs 1500/- form
B.
5. Release of joint promisor:{section 44}:If one of joint promisor is released from
his liability by the promisee, his liability to the promise ceases nut this does not
discharge the other promisors from their liability. The released joint promisor also
continues to be liable to the other promisors.
EX: D1, D2, and D3 jointly owe a debt to C. C releases D1 from his liability and files
a suit against D2 and D3 for payment of debt. D2 and D3 are not released from their
liability nor is D1 discharged from his liability to D2 and D3 for contribution.
Q. what do you mean by assignment of contract? What conditions should be

fulfilled for assignment of contract?
Ans.: MEANING: The word “assign” means “transfer”. Therefore “assignment of
contract means transfer of contractual rights and liabilities under the contract to the
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third party with or without the concurrence of the other party to the contract. It may
take place:-
1). Act of the parties.
2). Operation of law.
I) Act of the parties: Assignment is said to take place by an act of the parties when
they themselves make the assignment.
a) Assignment of contractual obligations:
1) Contractual obligation involving personal skill or ability cannot be assigned.
EX: a contractual obligation by a film actor to act in film or a contract to marry or
paint a picture cannot be assigned.
2) A promisor cannot assign his liabilities or obligations under a contract. {i.e., a
promisee cannot be compelled by the promisor or a third party to accept any person
other than the promisor as the person liable to him on promise}. This rule is based on
sense and convenience.
EX: if D owes C Rs5000/- and is owed the same sum by D1, D cannot ask C to
recover the amount from D1 unless C accepts the performance from D1.
b) Assignment of contractual rights:
1) The right and benefit under a contract may be assigned if the obligation under the
contract is not of a personal nature.
EX: D owes Rs 500/- to C. C, the creditor, can transfer his right to T to recover the
amount from D. if D has already paid Rs 200/- to C, T will be bound by this payment
and shall be entitled to recover only Rs 300 from D.
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An actionable claims can be always be assigned but the assignment to be complete and
effectual must be effected by an instrument in writing. Notice of such assignment must
also be given to the debtor
II) Operation of law: Assignment by operation of law takes place by intervention of
law.
1) Death: upon the death of the party to a contract his rights and liabilities under the
contract devolve upon his heirs and legal representatives.
2) Insolvency: in case of insolvency of a person his rights and liabilities incurred
previous to adjudication pass to the official receiver or assignee.
Q. writes a short note on “impossibility of performance.”

Ans.: Impossibility of performance:
Section 56, of contract act, deals with the impossibility. If an agreement contains an
underwriting to perform impossibility, it is void-ab-initio. (Void). It is of two types:
1. Impossibility existing at the time of contract: “An agreement to do an act
impossible in itself is void.” If the parties are interested into an agreement to perform
something which is obviously impossible and which may or may not be known to both
the parties.
a) If it is known to the parties : if at the time of contract both the parties know that
the performance of contract is not possible, the agreement becomes void.
b) If it is not known to the parties: if both the parties do not know about the
impossibility, the agreement is void on the ground of mutual mistake.
c) If it is known to the promisor only : if the impossibility of a contract not known to
the promise and the promisor alone knows of the impossibility then such promise is
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bond to compensate the promisee for any loss he may suffer through the non
performance of the promise.
2. Subsequent or supervening impossibility: Impossibility which arises subsequent
to the formation of the contract {I.e., a contract to do an act, which after the contract is
made} is called post- contractual or supervening impossibility. In such a case the
contract is void. Impossibility of performance of a contract, as a general rule, is no
excuse for the non performance of the contract.
Q. Define “Doctrine of supervening impossibility.” Explain the effects on the

performance of the contract.
Ans.: Impossibility of performance:
Section 56, of the contract act, deals with the impossibility of performance. “An
agreement to do an act impossible in itself is void.” It is of two types;
1. Impossibility existing at the time of contract.
2. subsequent of supervening impossibility.
Impossibility which arises subsequent to the formation of contract {i.e., a contract to
do
an act, which after the contract is made} is called post contractual or supervening
impossibility. In such a case the contract becomes void.
Discharge by supervening Impossibility or cases where the “Doctrine of

supervening impossibility applies:” A contract will be discharged on the ground of
supervening impossibility in the following cases:-
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1. Destruction of subject matter of contract: When the subject matter of a contract,
subsequent to its formation, is destroyed without any fault of parties to the contract,
then the contract is discharged.
Example: Taylor Vs Caldwell (1863):
Facts: C agreed to let out a music hall to T on a certain dates. But before those days
the hall was accidentally destroyed by fire.
Judgment: the owner was absolved from liability to let the music hall as promised.
Thus the contract was void.
2. Non-existence or non occurrence of a particular state of things: Some times, a
contract is entered into between two parties on the basis of a continued existence or
occurrence of a particular state of things.
If there is any change in the state of things which formed as the basis of contract, the
contract is discharged.
Example: Krell Vs Henry (1903):
Facts: H hired a flat from K for June 26 and 27, 1902 for witnessing a coronation
procession of King Edward VII. K knew of H’s purpose though the contract contained
no reference to this. The coronation procession was cancelled due to the illness of the
king.
Judgment: H was excused from paying the rent for the flat on the ground that
existence of the procession was the basis to the contract. Its cancellation discharged
the contract.
3. Death or personal incapacity of the parties: Where the performance of a contract
depends on the personal skill or qualification or the existence of a given person, the
contract is discharged on the illness, incapacity, or death of that person.
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EX: “A” contracts to act at a theatre for 6 months in consideration of a sum paid in
advance by “B”. On several occasions, A is too ill to act. The contracts to act on those
occasions become void.
4. Change of law: When a sub sequent change of law takes place or the government
takes some power under some special power, so that the performance of a contract
becomes impossible, the contract is discharges.
EX: There was a contract of a sale of trees of a forest, subsequently by an act of
legislature; the forest was acquired by the state government. The contract was
discharged by impossibility created by subsequent change in law.
5. Out-break of war: All contracts entered into with an alien enemy during war is un
lawful and therefore impossible of performance. Contracts entered into before the out-
break of war are suspended during the war and may be received after the war is over.
Effects of supervening impossibility:

I. When the performance of a contract becomes impossible or unlawful to its
formation, the contract becomes void.
II. Where one person has promised to do something which he knew, or with
reasonable diligence, might have known, and which the promisee did not know to be
impossible or un-lawful, the promisor must make compensation to the promisee for
any loss which the promisee incurred through the non-performance of a contract.
III. When an agreement is discovered to be void, or when a contract becomes void,
any person who has received any advantage. Under such agreement or contract is
bound to restore (return) it, or to make compensation to it, to the person from whom
who received it.
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EX: A pays B Rs. 1000 in consideration of B’s promise to marry C, A’s daughter. C is
dead at the time of promise. The agreement is void, but B must repay A Rs.1000.
Q. Rights of joint promisors.

OR
Devolution of joint rights:
Ans.: According to section 45, when a person has made a promise to several persons
jointly, these several persons are known as joint promisees. Unless a contrary intention
appears from the contract, the right to claim performance rests with all the joint
promisees. When one of joint promisee dies his legal representatives jointly with the
surviving joint promisees, has the right to claim performance with their legal
representatives jointly.
EX: B and C jointly lend Rs 5000/- to A who promises B and C jointly to repay them
that sum with interest on a day specified. B dies, the right to claim performance rests
with B’s representatives jointly with C during C’s life. After the death of C, the right
to claim performance rests with the representatives of B and C jointly.
Q. Impossibility of performance is as a rule, not an excuse for non-performance

of a contract. Discuss.
ANS: Section 56, of the contract Act; deals with the impossibility of performance.
“An agreement to do an act impossible in itself is void”
Impossibility of performance is, as a rule not an excuse for non-performance of a
contract. In the following cases, a contract is not discharged on the ground of
supervening impossibility or “Doctrine of supervening impossibility” does not apply.
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1. Difficulty of performance: A contract is not discharged merely because that it has
become more difficult of performance due to some uncontemplated events or delays.
Example: Tsakiroglou and Co.ltd. (Vs) Noblee Throl G.M.B.H...(1962):
Facts: A agreed to sell to B 300 tons of Sudan groundnuts c.i.f Hamburg. The usual
and normal route at the date of the contract was via Suez Canal. Shipment was to be in
November/December, 1956, but on November 2, 1956 the canal was closed to traffic
and it was not reopened until the following April. A refused to ship the goods via the
cape of good hope on the plea that the contract had been frustrated by reason of the
closing of the Suez route.
Judgment: The contract was not frustrated as A could have transported the goods via
the Cape of Good Hope.
2. Commercial impossibility: A contract is not discharged merely because
expectation of higher profits is not realized, or the necessary raw material is available
at a higher price because of the outbreak of war, or there is a sudden depreciation of
currency. Thus, performance cannot be excused on the ground of commercial
impossibility.
3. Default of third person: when a contract could not be performed because of the
default of a third person on whole work the promisor relied in such a case
impossibility of performance cannot be excused. Thus it is not discharged.
Example: Ganga Saran Vs Ram Charan (1952):
Facts: A agreed to sell to B a specified quantity of cotton goods to be manufactured
by a particular mill. B agreed to deliver as and when goods might be received from the
mill. A time was named for the completion for the delivery. A could not fulfill the
agreement as the mill failed to produce the goods.
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Judgment: B was entitled to recover damages from A.
4. Strikes, lock outs, and civil disturbances: A contract is not discharged by reason
of strike by the workers, or outbreak of some civil disturbances interrupting the
performance of promise. However, the parties to a contract may agree to the contrary
by making an express provision in this regard.
5. Failure of one of the object: if a contract is made for fulfillment of several objects,
the failure of one or more of them does not discharge the contract.
Example: Herne bay steam Boat Company (Vs) Hutton (1903):
Facts: “HB” agreed to let out a boat to “H”.
a) for viewing a naval review on the occasion of the coronation of Edward VII,
b) To sail round the fleet.
Owing to the king’s illness the naval review was abandoned but the fleet was
assembled. The boat, therefore, could be used to sail round the fleet.
Judgment: The contract was not discharged, because failure of one of the object does
not discharge the contract.
6. Self induced impossibility: if impossibility arises due to a party’s own conduct or
act {i.e., a deliberate act or a negligent act}, it cannot be called as supervening
impossibility, and therefore the party is not received from his obligation to perform.
Q. Discharge by performance.
Ans.: Performance means the doing of that which is required by a contract. Discharge
by performance takes place when the parties to the contract fulfill their obligations
arising under the contract within the time and in the manner prescribed. In such a case,
the parties are discharged and the contract comes to an end.
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Performance of a contract is the most usual mode of its discharge. It may be:
1. Actual performance
2. Attempted performance or tender of performance.
1. Actual performance: When both the parties perform their promises, the contract is
discharged. Performance should be complete, precise and according to the terms of the
agreement. Most of the contracts are discharged by performance in this manner.
Ex: “A” contracts to sell his car to “B” for Rs.15,000/- as soon as the car delivered to
“B” and “B” pays the agreed price for it. The contract comes to an end by
performance.
2. Attempted performanc or Tender of Performance: In certain situations the

promisor offers performance of his obligation under the contract at the proper time
and place but the promise refuses to accept the performance. This is called as
“Tender” or “Attempted Performance”. Where a valid Tender is made and is not
accepted by the promise, the promisor shall not be responsible for non-performance
and he does not lose his rights under the contract.
Q. Explain in detail “Discharge of a contract by agreement (or) by consent or by

mutual consent”
Ans.: The general rule of law is a thing may be destroyed in the same manner in
which it is constituted. This means a contractual obligation may be discharged by a
agreement which may be expressed or implied.
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The various cases of discharge of a contract by mutual agreement are dealt with in
Section 62 and 63 and are discussed below:
1. Novation (Section.62): Novation takes places:
• When substitution of a new contract for the original one either between the
same parties or between same parties or
• The consideration for the new contract is mutually being the discharge of old
contract.
• Novation should take place before the expiry of the time of the performance of
the original contract.
Ex: “A” owes “B” Rs.10,000/-. He enters into an agreement with “B” a mortgage of
his (A’s) estate for Rs.5,000/- in place of the debt of Rs.10,000/-. This is a new
contract extinguishes the old one.
2. Recession (Section.62): Recession of a contract takes place when all or some of the
terms of the contract are cancelled. It may occur:
a) By mutual consent of the parties (or)
b) Where one party fails in the performance of his obligation. In such a case, the other
party may resend the contract without claiming compensation for the breach of
contract.
In case of recession, only the old contract is cancelled and no new contract comes to
exist in its place. Both in novation and in recession, the contract is discharged by
mutual agreement.
Ex: “A” and “B” enters into a contract that “A” shall deliver certain goods to be by
the 15th of this month and that “B” shall pay the price on the 1st of the next month.
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“A” does not supply the goods. “B” may resend the contract, and need not pay the
money.
3. Alteration (Section.62): Alteration means a change in one or more terms of a
contract with mutual consent of parties. In such a case the old is discharged.
Ex: “A” enters into a contract with “B” for the supply of hundred bales of cotton at his
godown No.1 by the 1st of the next month. “A” & “B” may alter the terms of the
contract by mutual consent.
4. Remission (Section.63): Remission means acceptance of a lesser fulfillment of the
promise made or acceptance of a sum lesser than what was contracted for. In such a
case, Section.63 of the Contract Act allows the promise to dispense or remit the
performance of the promise by the promisor, or to extend the time for the performance
of to accept any other satisfaction instead of performance.
Ex: “A” owes “B” Rs.5,000/-. “A” pays to “B” and “B” accepts in the satisfaction of
the whole debt Rs.2,000/- paid at the time and place which Rs.5,000/- were payable.
The whole debt is to be discharged.
5. Waiver: When a contracting party fails to perform his obligation under the
contract, the other party (aggrieved party) may resend the contract and may waive the
promisor or release. This is called as Waiver.
6. By merger: Merger takes place when an inferior right accruing to a party under a
contract merges into a superior right accruing to the same party under the same or
some other contract.
Ex: “P” holds a property under a lease. He later buys the property. His rights as a
lessee merge into his rights as a owner.
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Q. Discharge by Operation of Law

Ans.: A contract may be discharged by operation of law which takes place:
1. By Death: If contracts involving personal skill or ability of the promisor, the
contract is discharged /terminated on the death of the promisor.
2. By insolvency : When a person is adjudged insolvent, he is discharged from all
liabilities incurred prior to his adjudication.
3. By merger : Merger takes place when an inferior right accruing to a party under a
contract merges into a superior right accruing to the same party under the same or
some other contract. In such a case, the contract may be discharged.
4. By unauthorized alteration of the terms of a written agreement: Where a party
to a contract makes any material alteration in the contract without the consent of the
other party, the other party can avoid the contract.
5. By rights and liabilities becoming vested in the same person : When the rights
and liabilities under a contract vests in the same person, the other parties are
discharged.
Q. Explain “breach of contract” as a mode of discharge of contract? What do you

understand by breach of contract? State the rights of the promisee in case of
“anticipatory breach of contract?
Or
Discharge of breach of contract?
Ans.: breach of contract means promisor fails to perform the promise or breaking of
the obligations which a contract imposes. It occurs when a party to the contract
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without lawful excuse does not fulfill his contractual obligation or by his own act
makes it impossible that he should perform his obligation under it. It confers a right of
action or damages on the injured party. Branch of contacts may be of two types:
1. Actual breath of contact.
2. Anticipatory breath of contact.
1. Actual breach of contract: Actual breach means promisor’s failure to perform the
promise on due date of performance. When a promisor fails or refuses to perform the
promise upon the due date for performance then it is called actual breach of contract.
In such a case the promisee is exempted and may resend the contract. Promise can sue
the party at fault for damages for breach of contract.
Ex: O’Neil (vs) Armstrong (1895):
Facts: ‘P’, a British subject, was engaged by the captain of a war ship owned by the
Japanese government to act as a fire man. Subsequently when the Japanese
government declared war with china, “p” was informed that the performance of
contract would bring him under the penalties o the foreign enlistment act . He
consequently left the ship.
Judgment: He was entitled to recover the wages agreed upon.
2. Anticipatory Breach of contract: It occurs when a party to executory contract

declares his intension of not performing the contract before the performance is due. It
may take place in two ways.
a) Expressly by words: here a party to the contract communicates to the others party
before the due date of performance, his intention not to perform it.
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Ex: Hochster (vs) de la tour (1853):
Facts: “D” engaged “H” on 12th of April to enter into his service as courier and to
accompany him upon a tour. The employment was to commence on 1st June. On 11th
may “D” rote to “H” telling him that services would no longer be required.”H’
immediately brought an action for damages although the time for performance had not
arrived.
Judgment: He was entitled to do so.
b) Implied by the conduct: Here a party by his own voluntary act disables himself
from performing the contract.
Ex: a person contracts to sell a particular horse to another on 1st of June and before
the due date he sells the horse to somebody else.
Effect/right of an anticipatory breach: In case of anticipatory breach, the promisee

is excused from performance and he may choose any one of the following two
options:
1. He can treat the contract as discharged so that he is absolved of the performance of
his party of the promise.
2. He can immediately take a legal action for breach or wait till the time the act was to
be done.
Q. What are the rules under the Indian contract act for estimating the loss or
damage arising from a breach of contract?
Or
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Define damages? Explain different type of damages awarded on breach of
contract?
Ans: Damages are the monetary compensation allowed to the aggrieved party for the
loss or injury suffered by him by the breach of contract. The fundamentals principle
underlying damages is not punishment but compensation for the pecuniary (having to
do with money) loss which naturally flows from the breach. “If actual los is not
proved no damages will be awarded.
Types of damages: Damages may be of different types they are as follows:

1. Ordinary or natural or general or compensatory damages: Ordinary damages
are generally the difference between contract price and market price in sale of such
damages which arise naturally in usual course of things from the breach of contract.
Ex: Hadley (vs) baxendale (1854):
Facts: H’s mill was stopped by the breakdown of shaft. He delivered the shaft to ‘B’,
a common carrier to be taken to a manufacturer to copy it and make a new one. “H”
did not make known to “B” that delay would result in loss of profits by some neglect
on the part of “B” the delivery of shaft was delayed in transit beyond a reasonable
time (so that the mill was idle for a longer period than otherwise would havebeen the
case had there been no breach of the contract of carriage.
Judgment: “B” was not liable for loss of profits during the period of delay as the
circumstances communicated to “B” did not show that a delay in the delivery of shaft
would entail loss of profit to mill.
2.special damages: where a party to a contract receives a notice of a special
circumstances affecting the contract, he will be liable not affecting the contract , he
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will be liable not only for damages arising naturally but directly from the breach and
also fo4 special damages.
Ex: A, having a contracted with “B” to supply “B” 1000 tons of iron @100 a ton, to
be delivered at a stated time. “A” contracts with “c” for to purchase of 1000 tons of
iron 80 a ton telling “C” that he does so for the purpose of performing his contact with
“B”. “C” fails to perform his contract with “A” Rs.20000 /- being the profit which “A”
would made by the performance of his contract with “B”.
3. Nominal (or) token damages: Nominal damages are awarded where the plaintiff
has proved that there has been a breach of contract but he has not in fact suffered any
real damage. Now you may ask why such damages are awarded. The answer is simple.
It is awarded just to establish the right to decree or the breach of contract. The amount
may be even a rupee.
4. Vindictive or exemplary damages: Exemplar damages are punitive damages
which are awarded by the court in some cases. It is generally given by way of
compensation for loss suffered and not by way of punishment for wrong inflicted.
Exemplary damages awarded only in two ways:
a) Breach o contract of marry.
b) Dishonor of a cheque by a banker when there are sufficient funds to the credit of
the consumer.
5. Damages for loss of reputation: Damages for loss of reputation in case of breach o
contact are generally not recoverable. But there is an exemption to this rule exists in a
case o a banker who wrongly refuses to honor a customer’s cheque. If the customer
happens to be a trade man, he can recover damages in respect of any loss to his trade
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reputation by the breach of contract. And the rule o law is: the smaller the amount of
damages awarded. But I the customer is not a tradesman, he can recover only nominal
damages.
6. Damages or inconvenience and discomfort: Damages can be recovered for
physical inconvenience and discomfort. If, however the inconvenience or discomfort
caused by a breach is substantial, the damages can be recovered on the ground of
fairness
7.Mitigation of damages: It is the duty o the injured party to take all reasonable steps
to mitigate the loss caused by the breach. He cannot claim compensation or loss which
is really due not to the breach but due to his own neglect.
8. Cost of decree: The aggrieved party id entitled, in addition to damages, to get the
decree for damages. The cost of suit for damages is in the discretion of the court.
9. Damages agreed upon in advance in cash for breach: If a sum is named in a
contract as the amount to be paid in cash of its breach, or if the contract contains any
other stipulation by way of penalty for failure to perform the obligations, the
aggrieved party is entitled to receive from the party who has broken the contract, a
reasonable compensation not exceeding the amount so named in the contract.
10. Difficulty of assessment: The damages which are difficult to assess with
inconvenience discomfort and sufficiency cannot be recovered. But the damages
which are difficult to assess with certainty does not prevent the aggrieved party from
recovering them. The court will look into it and may allow monetary damages of ouch
inconveniences.
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Q. What is meant by of contract of contract? Explain the remedies for or breach

of contract?
Ans.: Meaning: Breach of contract means promisor’s failure to perform the promise
or breaking of the obligation which a contract imposes. It confers a right of action or
damages on the injured party. Breach of contract may be of two types:
a) Actual breach : promises failure to perform the promise on due date of
performance than it is called actual breach of contract.
b) Anticipatory breach : It occurs when a party to an executory contract declares his
intention of not performing the contract before the performing the contract before the
performance is due.
Remedies for breach of contract: A remedy is the means given by law “for the
enforcement of right”. In the case of breach of contract the aggrieved/ injured party
(i.e., the party who is not in breach) becomes entitled to any one or more of the
following remedies against the guilty party. They are follows:
1. Rescission of the contract: when a contract is broken by one party, the other party
may treat the contract as rescinded. In such case the aggrieved party’s are entitled to
claim for damages that he might have suffered rom the promisor.
2. Suit for damages: damages are the monetary compensation allowed to the
aggrieved party for the loss or injury suffered by him by the breach of contract. The
fundamental principle underlying damages is not punishment but compensation or the
pecuniary loss which naturally flows from the breach. ”If actual loss is not proved no
damages will be awarded.”
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3. Suit for “Quantum-meruit: The phrase Quantum meruit literally Means “as much
as is earned” or “as much as merited” or In proportion to the work is done”. The
general rule of law is that unless a person has performed his obligation in full, he
cannot claim performance for the other. But in certain cases, when a person has done
some work under a contract, and the other party discharged the contract, or some event
happens which makes the further performance of the contract impossible, then the
party. He has performed the work can claim remuneration for the work he has already
done.
4. suit for specific performance: where damages are not an adequate remedy, the
court may direct the party to carry out his promise according to the terms of the
contract. This is called “specific performance” of the contract.
Specific performance will not be granted in the following cases where:
i. Damages are an adequate remedy.
ii. Where the contract is not certain or is inequitable to either party.
i. The contract is in it nature recoverable.
ii. Where the contract is of specific nature.
iii. Where the contract is made by trustees in breach of their trust.
iv. Where the contract is made by a company in excess of its powers as laid down in
its
Memorandum of Association.
v. Where the contract cannot supervise its carrying out.
5. Suit for injunction: Where a party is in breach of a negative term of the contract
(i.e., where he is doing something which he promised not to do), in such a case, the
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Court may, by issuing an order, restrain him from doing what he promised not to do.
Such an order of the court is known as “Injunction”.
Q. What do you understand by “Quantum meruit”. When does claim on

Quantum meruit arise?
OR
Write a short note on “Quantum Meruit”
Ans.: This phrase “Quantum Meruit” means “As much as earned or as much as
merited. The general rule of law is that unless a person has performed his obligation in
full, he cannot claim performance from the others. But in certain cases, when a person
has done some work under a contract, and the other party discharged the contract or
some event happens which makes the further performance of the contract impossible,
then the party who had performed the work can claim remuneration for the work he
has already done.
The claim for quantum meruit arises only when the original contract is discharged and
it could be brought by the party who is not in default. The claim on “Quantum Meruit”
arises in the following cases:
1. When an agreement is discovered to be void: When an agreement is discovered
to be void or when a contract becomes void, any person who has received any
advantage under such contract is bound to restore it or to make compensation for it.
2. When something is done without any intention to do so gratuitously: When a
thing is unlawfully done or goods are supplied by a person without any intention to do
so gratuitously to another person and such other person enjoys the benefit there of, he
is bound to make compensation to the former.
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3. Where there is express or implied contract to render services but there is no
agreement as to remuneration. In such a case, the court decides the reasonable
remuneration.
4. When the completion of the contract has been prevented by the Act, of the other
party to the contract, they could recover the Quantum Meruit.
5. When a contract is divisible: When a contract is divisible and the party is not in
default, has enjoyed the benefit of the part performance, the party in default may sue
on quantum meruit. But if the contract is not divisible, the party in default cannot
claim remuneration on the ground of quantum meruit.
6. When an indivisible contract is completely performed but badly: When an
indivisible contract for a lump sum is completely performed, but badly, the person
who had performed the contract can claim the lump sum but the other party can make
a deduction for bad work.
Q. Write a short note on “Injunction”.

Ans.: When a party is in breach of negative term of the contract (i.e., where he is
doing something which he promised not to do), in such a case the court may by
issuing an order restrain him from doing what he promised not to do, such an order of
the court is known as “Injunction”. The grant of an Injunction by the court is normally
discretionary, but there seems no reason why the court should refuse the grant of an
Injunction to restrain the breach of contract.
a) Whereby a promisor undertakes not to do something.
b) Which is negative in substance though not in form
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Ex: “N”, a Film Actress agreed to act exclusively for “W” for a year and for no one
else. During the year, she contracted to act for “Z”. She could be restrained by
Injunction from doing so.
Q. Define “Quasi Contract”. Explain the types of “Quasi Contract”.

Ans.: Meaning: Under certain special circumstances, a person may receive a benefit
to which the law regards another person as better entitled or for which the law
considers he should pay it to the other person, even though there is no contract
between the parties these relationships are terms as “Quasi Contract” or constructive
contracts under the English Law and “Certain relationships resembling those created
by contracts” under the Indian Law. Quasi contract is not made by a process of
proposal and acceptance or by free consent. It is a trust upon us by law.
A Quasi-contract rests upon the equitable, which declares that a person shall not be
allowed to enrich himself unjustly at the expense of another.
Silent features of Quasi-contract:
i. It is a right which is available not against a particular person or persons and so, that
in this respect it resembles a contractual right.
ii. It does not arise from any agreement of the parties concerned it is imposed by law.
iii. Such Quasi-contractual right is always a right to money, and generally, though not
always, to a liquidated sum of money.
TYPES OF QUASI-CONTRACTS: The following are of Quasi-contracts are
discussed below.
1. Supply of necessaries (sec68): according to section 68, if a person incapable of
entering into a contract or any one whom he as legally bound to support is supplied by
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another with necessaries suited to his condition in life the person who has furnished
such supplies I entitled to be reimbursed from the property of such incapable person.
Ex: ‘A’, supplies “B” a lunatic with necessaries suitable to his condition in life. ”A” is
entitled to reimburse from B’s property.
2. Payment by an interested person (Section.69) A person, who is interested in
payment of money which another is bound by law to pay and who therefore pays it, is
entitled to be reimbursed by other. The essential requirements of Section.69 as
follows:
a) The payment mode should be bona fide for the protection of one’s interest.
b) The payment should not be a voluntary one.
c) The payment must be such as the other party was bound by law to pay.
Ex: “B” holds land Bengal on a lease granted by the Zamindar. The revenue payable
by “A” to the Government being in arrears his land is advertised for sale by the
Government under the Revenue Law. The sale will be annulment of “B’s lease. ’B’ to
prevent the sale and the consequent of annulment of his own lease pays to the
Government the sum due from A. A is bound to make good to B the amount so paid.
3. Obligation to pay for non-gratuitous acts (Section.70): When a person lawfully
does anything for another person or delivers anything to him not intending to do so,
gratuitously, and such other person enjoys the benefit thereof, the latter is bound to
make the compensation to the former in respect of or restore, the things do done or
delivered.
Ex: “A”, a tradesman lease goods at “B” house by mistake. B treats the goods as his
own. He is bound to pay for them to A.
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4. Responsibility of finder of goods (Section.71): A person who finds goods
belonging to another and takes them into his custody is subject to the same
responsibility as Bailee. He is bound to take as much care o the goods as a man of
ordinary prudence would under similar circumstances take of his own goods of the
same bulk, quality and value. He must also take all necessary measures to trace its
owner. If he does not, he will be guilty of wrongful conservation of the property till
the owner is found out, the property in goods will vest in the finder and he can retain
the goods as his own against the whole world
(except the owner).
Ex: “F” picks up a diamond on the floor of ‘S’s shop. He hands it over to ‘S’ to keep
it till the real owner is found out. No one appears to claim it for quite some week’s
inspite of wide advertisement in the news papers. ‘F’ claims the diamond from ‘S’
who refuses to return. ‘S’ is bound to return the Diamond to ‘F’ who is entitled to
retain the diamond against the whole world except the true owner.
5. Mistake or coercion (Section.72): A person to whom money has been paid, or
anything delivered by mistake or under coercion, must repay or return it to the person
who paid it by mistake or under coercion.
Ex: “A” & “B” jointly owe Rs.100/- to “C”. A alone pays the amount to C and B not
knowing this fact pays Rs.100/- over again to “C”. C is bound to pay the amount to B.
Q. Write a short note on “Finder of lost goods or “Responsibility of finder of

goods”
Ans.: A person, who finds goods belonging to another and then takes into his custody,
is subject to the same responsibility as a bailee. He is bound to take as much care of
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the goods as a man of ordinary prudence would under similar circumstances take of
his own goods of the same bulk, quantity and value.
He must also take all necessary measures to trace its owner. If he does not, he will be
guilty of wrongful conversion of the property till the owner is found out, the property
in goods will vest in the finder and he can retain the goods as his own against the
whole world (except the owner).
The finder can sell the goods in the following cases:
1. When the thing found is in danger of perishing.
2. When the owner cannot with reasonable diligence, be found out.
3. When the owner is found out, but he refuses to pay the lawful charges of the finder
and
4. When the lawful charges of the finder, in respect of the thing found, amounts to
2/3rd of the value of the things found.
Q. What is meant by Specific Performance of a Contract?

Ans.: Specific performance is equitable relief granted by the courts in case of
breach of contract in the form of a judgment that the defendant must actually
perform the contract according to its terms and stipulations. From every
contract arises an obligation for each party to do or to not do something. A
breach of the contract by one creates a moral right on the other to either
enforce the performance of the contract or to get a satisfactory compensation.
In many cases, a party to a contract is not interested in the compensation for

breach of contract but the actual object of the contract. In some case, no
99

compensation can be considered enough. In such cases, law provides a way
to enforce the parties to actually fulfill their obligations. This is called "specific
performance of a contract". The obligations may not necessarily arise from
contract but may also arise from tort.
Q. What contracts can be specifically enforced?

Ans.: Section 10 of Specific Relief Act 1963 specifies the conditions in which
a contract can be specifically enforced. These are as follows -
1. When there exists no standard for ascertaining the actual damage caused by non-
performance of the act agreed to be done.
2. When the act agreed to be done is such that compensation in the form of money
would not afford adequate relief. Unless contrary is proved, the court shall
presume that -
a) The breach of a contract to transfer immovable property cannot be adequately
relieved by compensation in money.
b) The breach of a contract to transfer a movable property can be so relieved.
c) When the property is not an ordinary article of commerce, or is of special value
or interest to the plaintiff or consists of goods which are not easily available in
the market.
d) Where the property is held by the defendant as the agent or trustee of the
plaintiff.
Nivarti Govind Ingale vs. R. B. Patil, 1997, SCC

100

A woman took a loan from a relative and executed a deed of sale in favor of
the relative's minor son with an agreement of re-conveyance at the repayment
of loan. This contract was held to be specifically enforceable. The relative had
sold the property off to a buyer. This decree was allowed to be enforced
against such buyer also.
M S Madhusoodhanan vs. Kerala Kaumudi Pvt. Ltd., 2003, SCC

Shares of a private company were held to be goods of such a nature as are
not easily obtainable in the market. Thus, SC allowed specific performance to
be granted in such cases.
Section 11 says that specific performance can be enforced when the act
agreed to be done is wholly or partly is in the performance of a trust. An
exception is that the contract must not be in excess of the power of a trustee.
Section 12 says that if, in the discretion of the court, only a small part of a
contract cannot be specifically performed and if such part can be alternatively
compensated, the rest of the part can be specifically enforced.
According to Section 23, even if a contract includes a penalty or fixed amount

of damages in case of default, its specific performance can be ordered
depending on the intention of the penalty. If the intention of the compensation
for damages is to secure the performance of the contract and not to give an
alternative way of fulfilling the contract, it can be specifically enforced. This
101

principle was adopted in the case of -
Manzoor Ahmed Magray vs. Ghulam Hasan Aram, 1999; and
M L Devender Singh vs. Syed Khaja, 1973, SC.
Q. What contracts cannot be specifically enforced?

Ans.: Section 14 (1) of Specific Relief Act 1963 specifies the conditions in
which a contract can be specifically enforced. These are as follows -
1. When compensation in money is an adequate relief.
Ordinary contract to lend or borrow money, whether with or without security, is
an example of a contract which cannot be specifically enforced.
Mennakshisundara vs. Rathnasami, 1918

when a loan has already been advanced on the understanding that a security will
be provided against it, this can be specifically enforced.
2. When a contract runs into such minute and complex details or is dependent on
personal qualifications or volition of the defendant, or otherwise from its nature
is such that a court cannot enforce specific performance of its material terms.
Personal services such as painting, singing etc. cannot be specifically enforced.
However, a contract to publish a piece of music or to build a house can be
specifically enforced because they are purely mechanical functions.
3. When a contract is in its nature determinable i.e. can be brought to an end under
given conditions.
102

Illustration - A and B enter into a partnership to do certain business, without
specifying the duration of the partnership. This cannot be specifically enforced
because if enforced, either A or B might at once dissolve the partnership.
A contract to employment is not specifically enforceable. The remedy in such
cases is to sue for damages.
Indian Oil Corp. vs. Amritsar Gas Agency, 1991
A contracts for distributorship cannot be specifically enforced.
When a contract, the performance of which involves performance of continuous

nature, which the court cannot supervise.
Examples - An agreement to keep an airfield in operation, or an agreement by railway
to keep signals operating.
Rayner vs. Stone, 1792

A tenant's undertaking to cultivate a farm in a specific way was held to be not
specifically enforceable.
Section 14(2) - A contract to refer a present or future dispute to arbitration cannot be
specifically enforced.
Section 14(3) - A contract to execute a mortgage or furnish any other security for
repayment of a loan, which the borrower is not willing to repay at once.
Section 17 - A contract involving transfer of property when the party does not have
the title or ownership of the property.
Q. Can the following be specifically enforced - a contract to give money on loan,

103

contract to write a book, contract to marry, an invitation to dinner, a contract to
sell all goods of a class that a party may require, a contract to run a franchised
shop?
1. No, because as per 14 (1) (a), a contract that can be adequately compensated in
money cannot be specifically enforced.
2. No, because as per 14(1) (b), an act that depends on personal skills or volition of a
party cannot be specifically enforced. Here, it depends on personal skills.
party cannot be specifically enforced. Here, it depends on personal volition.
party cannot be specifically enforced. Here, it depends on personal volition.
4. No, because as per 14(1) (b), a contract that is too complex to be supervised by the
court cannot be specifically enforced.
5. No, because as per 14(1) (c), a contract that is determinable, i.e. can be ended,
cannot be specifically enforced. Here, a franchisee agreement can be terminated.
Q. What grounds may be taken by a defendant in a suit for specific performance

of the contract?
1. All the grounds upon which a contract is voidable - no free consent.

2. Plaintiff has not performed the whole or part of his part of contract.
3. All grounds in section 14 i.e. Compensation in money is adequate, Depends on
personal qualification, or determinable contract.
4. Breach of trust or beyond its powers.
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5. Contract when made gave unfair advantage to the plaintiff.
6. Involves hardship.
7. Plaintiff has chosen his remedy and obtained satisfaction for the alleged breach
of contract.
Q. What do you understand by Declaratory Decree?

Ans.: Definition: If any person entitled to any legal character, or to any rights as to
any property is denied by another and if any suit is filed by the person so denied is
called a declaratory suit. This suit is filed if any legal character of any person pr any
legal rights of any property is denied or is interested to be denied by any other person.
Simple declaratory suit requires fixed court fee; which is fixed at Tk- 200.
Illustration: X owns a land by inheritance of plot no. 501 in C.S Khatian. Afterwards,
in the R.S Khatian it was wrongfully recorded in the name of Y under plot no.401. Y
forcefully attempted to take possession of the land on the basis of the wrongful record.
X may obtain a declaration of his right to whole the property.
Discretion of court as to declaration of status or right: According to section 42 of

the S.R Act any person entitled to any legal character, or to any rights 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, the plaintiff need not in such suit ask for any further
relief.
105

Bar to such declaration- Provided that no court shall make any such declaration
where the plaintiff, being able to seek further relief than a mere declaration of title,
omits to do so.
Illustration: A is in possession of certain property. B alleging that he is the owner of
the property requires A to deliver it to him. A may obtain a declaration of his right to
whole the property.
Essentials of the relief/ Requisite for a declaratory action: In order to obtain relief
under section 42, plaintiff must establish that –
1. The plaintiff is at the time of the suit entitle to any legal character or to any right as
to any property.
Case: Ahmed Vs. Haji Khan, AIR.
2. The defendant has denied or is interested in denying to the character or title of the
plaintiff. There must be some present danger or determent to his interest. So that a
declaration is necessary to safeguard his right and clear the mist.
3. The denial must be communicated to the plaintiff in order to give him cause of
action.
Case: Mahabir Vs. Sarju, 43 IC.
4. The declaration asked for is a declaration that the plaintiff is entitled a Legal
character or to a right to property.
106

5. The plaintiff is not a possession to claim further relief than a bare declaration of
his title. A person who is able to seek for further relief, Should not be allowed mere
declaratory relief, if he omits to do so.
Case: Chinnammal Vs. Varadarajulu, 15 Mad.
When relief under section 42 would be refused: Though no hard or fast rules can be
laid down as to the circumstances in which the court should exercise or refuse to
exercise its discretionary jurisdiction under section 42, the following may be
mentioned as the circumstances in which the court may refuse the relief;
a) The courts will not grand relief unless there is substantial injury.
Case: Chhakowri vs. Secy. of State
b) No declaration will be made where the plaintiff claim as never been denied by the
defendant.
Case: Pitchai Vs. Devaji, AIR.
Even a denial is not sufficient to justify a declaratory decree, where a mere denial is
not likely to injure the plaintiff materially.
Case: Ahmad Vs. Haji, AIR.
c) A declaration cannot be given to a plaintiff whose conduct is fraudulent.
Case: Narainbhai Vs. Narbada, AIR.
107

d) No declaration would be granted where it could be rendered nugatory by the
defendant Narain Vs. Sashi, 37 All, as where it would be contrary to the provisions of
a statute.
Case: Ali Khan Vs. Bhagwan, 1943.
e) No declaration should be made which will be in fructuous or useless.

Case: Biswanath Vs. Mytaba, AIR.
f) A declaration may be refused where some other remedy would be more effective,
e.g. a proceedings for recovery of possession.
Case: Thakurji Vs. Kamta, AIR.
g) Non-joinder of necessary parties is a good ground for refusing to grant a
declaration decree in the exercise of discretionary power, because the court will not
make a decree which is ineffective.
Case: Maharaja of Benares Vs. Ramji, 27 All.
h) Great delay in bringing a suit may of itself be sufficient to refuse the declaratory
relief of a declaration.
Case: Shiambehari Vs. Madan, AIR.
Effect of declaration: According to section 43-
A declaration made under this chapter is binding only on the parties to suit, persons
claiming through them respectively, where any of the parties are trustees, on the
108

persons for whom, if in existence at the date of the declaration, such parties would be
trustees.
Illustration: 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.
Abdul Kader Rani and others Vs. Kaiser Ahmed Howlader and others
109

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JANHIT COLLEGE OF LAW

Definition: According to section 2(h) of the Indian contract act, 1872 -

Essential elements of a valid contract:

2) Intention to create legal relationship:

Example: BALFOUR vs. BALFOUR (1919)

3) Free and Genuine consent:

6) Capacity of parties: (Competency)

7) Agreement not to be declared void:

10) Necessary legal formalities:

Legal rules (OR) Essential elements of a valid offer / proposal:-

3) Offer must be communicated: An offer is effective only when it is communicated

4) Offer must be distinguished from an invitation to offer: A proposer/offer must

7) Offer may be specific or general: An offer is said to be specific when it is made to

COMMUNICATION OF OFFER AND REVOCATION OF OFFER: An offer, its

(a) Communication of offer:

Q. When an offer does come to an end?

3) By non-fulfillment of some conditions: When offeror has prescribed some

5) By a counter offer: “counter offer” means when the offeree/acceptor offers to

8) By death or insanity of the offeree/acceptor.

9) By destruction of the subject matter.

Q. “An acceptance to be effective must be communicated to the offeror”. Are

2) Acceptance must be communicated to the offeror:

3) Acceptance must be according to the mode prescribed or usual and reasonable

4) Acceptance must be given within a reasonable time:

5) It cannot precede an offer:

6) Acceptance must be given by the parties or party to whom it is made:

7) It cannot be implied from silence:

8) Acceptance must be expressed or implied:

9) Acceptance may be given by performing some condition (or) by accepting some

Q. Write a short note on ‘consensus-ad-idem’.

Q. Write a short note on the term ‘Cross offer’.

Q. Write a short note on the term ‘Counter offer’.

Q. What do you mean by Communication of offer?

Q. What do you mean by Communication of acceptance?

2) When a proposal is accepted by a letter sent by the post the communication of

Q. What do you mean by Communication of revocation?

Q. Explain the Invitation to make an offer.

Q. Revocation of offer and acceptance.

Revocation of acceptance: An acceptance may be revoked at any time before the

Q. Communication of offer, acceptance and revocation.

2) An offer may be communicated either by words spoken or written or it may be

Communication of acceptance: The following are the rules regarding

Communication of revocation: The following are the rules regarding communication

Q. Define consideration? What are the rules as to consideration?

Essentials of a valid consideration:- The following are the essentials of a valid

2. It must move at the desire of the promisor:

4. It need not be adequate:

5. It must be real and not illusory:

6. It must move from the promise or any other person:

7. It must be something the promisor is not already bound to do: A promise to do

8. It may be an act, abstinence or forbearance or a return promise:

Q. Define consideration? “A contract not supported by consideration is

Validity of an agreement without consideration:

2. Compensation for past voluntary services: A promise made without

3. Promise to pay Time-Bared debt: An agreement to pay a time-bared debt is

5. Agency: According to section 185, no consideration is necessary to create an

6. Charitable subscription: Where the promisee on the strength of promise makes

Q. “A stranger to a consideration can sue” – Are there any exceptions to this