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Contract Module 3

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Contract Module 3

Uploaded by

vivr2023
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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CERTIFICATE COURSE ON VALIDITY OF CONTRACTS IN

INDIA

Contract Module 4
1. INTRODUCTION

Before getting into the void contracs/agreements, a brief knowledge about the valid contracts
should also be given.Valid contracts are basically, the contracts which are enforceable by law.
We know that all contracts are agreements but not all agreements are contract. Therefore we also
have a set of essential conditions to distinguish between the two. There are various essentials of a
valid contract:

 The essentiality of alawful offer and a lawful acceptance.


 There should be an Intention to establish a legal relation among the parties when getting
into a contract.

Reference:Balfour vs. Balfour(1919) is a case related to this essentiality of the valid


contract.

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 Competency of the parties is one of the major essentials. This is given in the section 11
of the Indian Contract Act, 1872 that any person who is a major according to the law, is
of sound mind and is not disqualified by any law is qualified enough to get into a
contract. Section 12 of the same explains the various conditions of having a
sound/unsound mind.
 Free consent:Section 14 of the Indian Contract Act, 1872 explains the term "free
consent". Anyone who is free of :

Coercion Section 15

Undue Influence Section 16

Fraud Section 17

Misrepresentation Section 18

Mistake Sections 20, 21, 22

is free to get into a contract.


If the agreement is about any object which is illegal/unlawful according to the law, then
the agreement is void.
 The agreement should not be void under section 24 to section 30 of the Indian Contract
Act, 1872.
The last point of the essentials is what this module talks about.

2. SECTION 29 (Uncertain agreements)

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According to the section 29, "Agreements, the meaning of which is not certain, or capable of
being made certain, are void." These are those agreements which may/may not happen. These
events are uncertain. The parties cannot rely on it.

Forexample:

A agrees to sell his television to B for a sum of Rupees Twenty Two Thousand Thousand of
Rupees Twenty Thousand. Here, the uncertainty of the sum plays a role. None of the parties can
make a certain agreement through it.

2.1. Famous cases

Keshavlalbhaivslalbhai

(A.I.R1958S.C.512):

In this particular case, the Mill was closed due to the workers being on a strike because of the
quit India movement. A letter was sent to the appellants stating "entire working of our mill is
closed.... Under the circumstances, please note that the delivery time of all your pending
contracts with us shall be automatically understood as extended for the period the working is
stopped and till the normal state of affairs recur" The extension of the time asked for, was so
uncertain that the agreement shall be considered void.

D.D.A. Vs. Joint action committee

(A.I.R.2008S.C.1343):

It was another case of the uncertainty of agreement as price plays a very important role. A
definite price is needed whenever an agreement has to come into being.

3. SECTION 30 (Agreement by way of wager)

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 According to the Section 30 of the Indian Contract Act, 1872, -Agreements by way of
wager are void; and no suit shall be brought for recovering anything alleged to be won on
any wager, or entrusted to any person to abide the result of any game or other uncertain
event on which any wager is made.
 Exception in favour of certain prizes for horseracing .- This Section shall not be
deemed to render unlawful as ubscription or contribution, or agreement to subscribe or
contribute, made or entered into for or toward any place, prize or sum of money, of the
value or amount of five hundred rupees or upwards,to be awarded to the winner or
winners of any horserace.
 SECTION 294-(A) of Indian Penal Code not affected.- Nothing in this Section shall be
deemed to legalise any transaction connected with horse racing ,to which the provisions
of the apply.

In very simple terms, a wager is a formal term for a bet. The Indian Contract Act does not define
a wagering agreement. The nature of such an agreement was explained in the reference case.

Reference case:Brahm Dutt Sharma vs.Life Insurance Corporation of India

There are certain essentials for a wagering agreement .Now,you need to compare this to a
random bet between two people and it's really easy to understand the essentials.

 Parties with opposite views about any uncertain event: If there is a football match
between Argentina and Portugal and you are supporting Argentina, you being an
Argentina supporter. On the other hand, your roommate is quite sure about Brazil
winning the match. Then starts a friendly argument and ends up with you agreeing to pay
your roommate Rs.1000 if Brazil wins and being paid Rs.1000 if Argentina wins.
 This kind of an agreement is a wagering agreement. Also,known as bet in the normal
circumstances.

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 No interest in any thing other than stake: The parties in this case, are not concerned with
anything but the money that is on stake. There is no other consideration available with the
parties other than the stake.
 Chances of win and loss: In this case,the chances of gains or loss to the party is
equivalent. The probability of winning is 50% and same goes with the loss.

4. Section 36 (Agreements contingent on impossible events)


 Section 31 of the Indian Contract Act, 1872 explains the concept of contingent
contract.According to Section 31 of the Indian Contract Act, 1872,-A"contingent
contract" is a contract to do or not to do something, if some event, collateral to such
contract, does or does not happen. This means when a contract is totally dependent on the
fact if a certain event ii about to take place anytime in the future or not.
 Forexample,if A is an insurance company and has agreed to pay a sum of rupee 10,000 to
B if B's car crashes. This kind of a contract where both the parties are not sure if the
future event will ever take place or not is called a Contingent contract.
 Section 36 of the same, talks about the Agreements contingent on iimpossible event. If
any contract to do or not do anything impossible happens,the contract is said to be a void
contract

Referencecases:

1.K.K.KhadilkarVs.IndianHumePipeCo.Ltd(AIR1967)

2.ModiRubberLtd.Vs.GuardianInternationalCo

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