Business Law

Module-1: Indian Contract Act, 1872

The Indian Contract Act, 1872, is a fundamental piece of legislation that governs contract
law in India. It lays down the legal framework for the creation, execution, and enforcement
of contracts in the country. The Act came into effect on September 1, 1872, and it has since
been the cornerstone of commercial and civil agreements in India.

Objectives of the Indian Contract Act, 1872

The primary objective of the Act is to ensure that the rights and obligations arising from
contracts are honoured and enforceable by law. It provides clarity on the essential elements
that constitute a valid contract, the capacities of parties entering into contracts, and the
consequences of breach of contract. By doing so, the Act aims to promote transparency,
fairness, and reliability in contractual dealings, thereby fostering trust in commercial
transactions.

Definition of Contract: The Act defines a contract as an agreement enforceable by law.

This implies that not all agreements are contracts; only those that fulfil certain legal criteria
are considered enforceable.

Essentials of a Valid Contract

A valid contract is an agreement that is legally enforceable. For a contract to be valid, it

must meet certain essential requirements.

• Offer and Acceptance: A contract begins with one party making an offer and the
other party accepting it. The offer must be clear and definite, and acceptance must
be unconditional. This ensures that both parties agree on the same terms.
• Intention to Create Legal Relations: Both parties must have the intention to enter
into a legally binding agreement. Social or personal promises (like a dinner plan) are
not contracts because they lack legal intent.
• Lawful Consideration: Consideration means something of value exchanged
between the parties, such as money, goods, or services. It must be legal and real,
meaning it cannot be something illegal or impossible.
• Capacity to Contract: The parties entering into the contract must be legally capable.
This means they must be of legal age (18+), of sound mind, and not disqualified
by law (like an insolvent or a minor).
• Free Consent: Consent must be given freely and willingly without force, pressure,
fraud, or misrepresentation. If consent is obtained through unfair means, the contract
becomes voidable, meaning the affected party can cancel it.
• Lawful Object: The purpose or object of the contract must be legal and not against
public policy. Contracts involving illegal activities like gambling, smuggling, or
harming someone are not valid.
• Certainty and Possibility of Performance: The contract terms should be clear and
definite so that both parties understand their obligations. Also, the contract must be
practically possible to perform; otherwise, it cannot be enforced.
 • Agreements Not Expressly Declared Void: Some agreements are void by law, such
as those made under mistake of fact, restraint of trade, or wagering agreements.
A contract must not fall under these void categories.
• Legal Formalities: Some contracts, like property sales or partnership deeds, must be
written, signed, and registered as required by law. If legal formalities are not
followed, the contract may not be enforceable.

By ensuring these essentials, a contract becomes valid and legally enforceable, protecting
the rights and interests of both parties.

Classification of Contract:

On the Basis of the validity

1. Valid Contract: An agreement which fulfils all the essentials prescribed by law on the
basis of its creation. For example S offers to sell his car for Rs.2, 00,000 to T. T agrees to
buy it. It is a Valid Contract.

2. Void Contract: A contract which ceases to be enforceable by law. A contract which does
not satisfy any of the essential elements of a valid contract is said to be Void. For
example A contract between drug dealers to buy and sell drugs is a void contract.

3. Voidable Contract: An agreement which is enforceable by law at the option of one or

more parties but not at the option of the other or others is a voidable contract. This is the
result of coercion, undue influence, fraud and misrepresentation.
4. Illegal Contract: It is a contract which is forbidden by law. All illegal agreements are
Void but all void agreements or contracts are not necessarily illegal. Contract that is
immoral or opposed to public policy are illegal in nature.

5. Unenforceable Contract: Where a contract is unenforceable because of some technical

defect i.e. absence in writing barred by imitation etc. If the parties perform the contract it
will be valid, but the court will not compel them if they do not.

II. On the Basis of the Formation

1. Express Contract: A contract made by word spoken or written. According to

Section. 9, in so for as the proposal or acceptance of any promise is made in words,
the promise is said to be express. For example P says to Q ‘will you buy my bicycle
for Rs.1, 000?” Q says to P “Yes”.

2. 2. Implied Contract: The implied contract is one, which is not expressly written but
understood by the conduct of parties. Where the proposal or acceptance of any
promise is made otherwise than in words, the promise is said to be implied. For
example A gets into a public bus, there is an implied contract that he will pay the bus
fare.

3. Quasi Contract: It is a contract created by law. Actually, there is no contract. It is

based on the principle that “a person shall not be allowed to enrich himself unjustly at
the expense of the other”. In other words it is an obligation of one party to another
imposed by law independent of an agreement between the parties.

4. Tacit Contract: A contract is said to be tacit when it has to be inferred from the
conduct of the parties. For example obtaining cash through automatic teller machine,
sale by fall of hammer of an auction sale.

III. On the Basis of Performance

1. Executed Contract: A contract in which both the parties have fulfilled their
obligations under the contract. For example X contracts to buy a car from Y by
paying cash, Y instantly delivers his car.

2. Executory Contract: A contract in which both the parties are yet to fulfil their
obligations, it is said to be an Executory contract. For example A agrees to buy B’s cycle
by promising to pay cash on 15th June. B agrees to deliver the cycle on 20th June.

3. Unilateral Contract: A unilateral contract is a one sided contract in which only one
party has performed his promise or obligation, the other party has to perform his promise
or obligation.

4. Bilateral Contract: A contract in which both the parties commit to perform their
respective promises is called a bilateral contract. For example R offers to sell his fiat car to
S for Rs.10, 00,000 on acceptance of R’s offer by S, there is a promise by R to sell the car
and there is a promise by S to purchase the car, there are two promises.

Offer: An offer is a proposal made by one party (the offeror) to another (the offeree),
expressing a willingness to enter into a contract on certain terms. The offer, once accepted,
results in the formation of a binding contract. An offer is the first step in the process of
forming a legal contract.

An offer must be clear, specific, and communicated to the offeree. It may involve a promise
to do something (or refrain from doing something) in exchange for something else (usually
a promise or act by the offeree).

Essentials of a Valid Offer: For an offer to be valid and capable of creating a binding
contract upon acceptance, it must meet certain conditions:

1. Intention to Create Legal Relations: The offer must be made with the intention of
entering into a legally binding agreement. Offers made in casual or social situations
(e.g., "I'll buy you a drink") are not legally enforceable.
2. Definiteness and Clarity of Terms: The terms of the offer must be clear and
definite. Vague or ambiguous offers may not be enforceable because there’s
uncertainty about what exactly is being offered.
3. Communication of the Offer: An offer must be communicated to the offeree. A
mere intention or thought does not constitute an offer. The offeree must know about
the offer for them to accept it.
4. Capacity to Make an Offer: The offeror must have the legal capacity to make an
offer, meaning they must be of legal age and sound mind. Minors, mentally
incapacitated persons, and others who lack capacity may not be able to make valid
offers.
5. Offer must not be vague or incomplete: An offer should not leave room for
uncertainty. All essential terms, such as price, time, or subject matter, should be
defined.
6. Offer must be free from duress or coercion: If the offer is made under threat or
pressure, it is not considered valid because it lacks genuine consent.
7. Not a mere invitation to treat: An invitation to treat is simply a suggestion to
negotiate, not an actual offer. Examples include advertisements, price lists, or auction
invitations. These are not offers because they do not express an intention to be bound
upon acceptance.

Acceptance: Acceptance is the expression of agreement to the terms of an offer. It is the

final and unequivocal assent to the offer made by the offeror, which, when communicated,
forms the basis of a legally binding contract. Acceptance must align with the terms of the
offer and cannot modify or add new conditions. When an offer is accepted, the acceptance
creates a contract, and both parties are bound by its terms. The acceptance must be
communicated to the offeror to be valid.
Essentials of a Valid Acceptance: For acceptance to be valid and create a binding contract,
certain conditions must be met:

1. Unconditional and Absolute Acceptance (Mirror Image Rule): The acceptance

must be exactly in the same terms as the offer without any modification. If the offeree
changes or adds new terms, it is considered a counteroffer, not an acceptance. The
acceptance must mirror the offer.
2. Communication of Acceptance: Acceptance must be communicated to the offeror.
An uncommunicated acceptance is not valid. The offeree must clearly inform the
offeror of their intention to accept the offer. This can be done verbally, in writing, or
by conduct.
3. Timely Acceptance: The acceptance must occur within the time frame specified in
the offer or within a reasonable time if no time is mentioned. If an offer is time-
sensitive, the acceptance must occur within that specified period for the contract to
be valid.
4. Intention to Accept: The acceptance must be made with the intention of entering
into a contract. If the offeree is not serious or does not intend to form a contract, then
it cannot be considered valid acceptance.
5. Capacity of the Offeree: The person accepting the offer must have the legal capacity
to do so. If the offeree is a minor, mentally incapacitated, or otherwise lacks the legal
ability to form a contract, their acceptance may not be valid.
6. No Conditions or Qualifications: Acceptance must not be conditional or qualified.
For example, saying, "I accept your offer, but I would like a higher price" would not
be valid acceptance, as it introduces new terms. Any condition or qualification alters
the offer and turns it into a counteroffer.
7. Method of Acceptance: If the offer specifies the method of acceptance (e.g., "accept
by email"), the offeree must follow that method. If the method is not specified, the
offeree may accept in any reasonable manner.
8. Acceptance Must Be Made by the Offeree: The person accepting the offer must be
the intended offeree. If someone else accepts the offer on behalf of the offeree
without authorization, it may not be valid.

Communication of Offer and Acceptance:

The communication of both an offer and acceptance is a fundamental aspect of forming

a contract. A valid contract cannot be formed unless the offeror has communicated the offer
to the offeree, and the offeree has communicated their acceptance to the offeror. The rules
governing the communication of both offer and acceptance are as follows:

Communication of an Offer:

For an offer to be legally valid, it must be communicated to the offeree. Until the offer is
communicated, the offeree cannot accept it, as they are unaware of the offer’s existence.

Ways of Communicating an Offer:

• Verbal Communication: An offer can be made in person or over the phone.

 • Written Communication: An offer can be made through letters, emails, contracts,
or any form of written message.
• Non-Verbal Communication: An offer can be communicated through actions or
behavior, such as an offer to sell goods at a certain price (e.g., in a shop window or
at an auction).

Communication of Acceptance:

Once an offer is communicated, the offeree can accept it. The acceptance must also be
communicated back to the offeror to form a valid contract. The rules governing the
communication of acceptance are critical in determining when the contract is formed.

Methods of Communicating Acceptance:

• Verbal Acceptance: Acceptance can be made verbally, either face-to-face or over

the phone.
• Written Acceptance: Acceptance can also be communicated in writing (e.g., by
letter, email, or message).
• Conduct/Behavior: In certain situations, acceptance can be inferred from the
offeree’s actions or behavior (for example, if the offeree starts performing the
contract, such as beginning work or paying for goods).

Consideration: refers to something of value that is exchanged between parties to a contract.

It is an essential element for a contract to be valid and legally enforceable. In simple terms,
consideration is the price paid for a promise in a contract.

Components of Consideration: The components of consideration can be understood as

the following:

1. Something of Value: Consideration must consist of something that has value, which
can be money, goods, services, or a promise. The value does not need to be equal
but must be something that the law recognizes.
2. Bargained-for Exchange: Consideration must be the result of a mutual exchange
between the parties involved. It must not be a mere gift or an act done out of natural
love and affection. Each party must provide something in return for what they
receive.
3. Legality: The consideration must be legal. If the consideration involves something
illegal, such as paying someone to commit a crime, it is not valid. A contract based
on illegal consideration is void.
4. Adequacy: The law does not inquire about the adequacy of consideration, meaning
it does not matter if the value exchanged is fair or equivalent. However, the
consideration must be sufficient; it must have some real value.

Legal Rules Regarding Consideration:

 1. Mutuality: Consideration must be provided by both parties involved in the contract.
If one party does not provide consideration, the contract cannot be formed as there is
no agreement or bargained exchange.
2. Past Consideration Is Not Valid: Past consideration (something done before the
promise is made) cannot form the basis of a valid contract. For a contract to be
formed, the consideration must be given contemporaneously with the promise.
Example: If A promises to pay B for a service B has already provided, the promise
is not enforceable.
3. Existing Duty: A promise to perform an existing legal duty does not constitute valid
consideration. If someone is already legally obligated to do something (such as a
police officer’s duty to enforce the law), then agreeing to do that same thing in return
for something extra is not valid consideration. Example: A police officer cannot
demand a reward for arresting a criminal since it is part of their official duty.
4. Forbearance (Refraining from Doing Something): A promise to forbear or refrain
from doing something that one has the legal right to do is valid consideration.
Example: A person agreeing not to file a lawsuit in exchange for a settlement amount
provides valid consideration, as they are refraining from exercising their legal rights.
5. Performance of an Existing Contractual Obligation: Performing an existing
contract obligation cannot be considered new consideration for a new agreement.
This is because the person is already bound by the original contract. Example: If
someone promises to pay for a task that is already part of an existing contract, it does
not create a new contract.

Exceptions to the Rule "No Consideration, No Contract": While consideration is a vital

component of a contract, there are exceptions to the rule "no consideration, no contract."
These exceptions allow contracts to be enforceable even if there is no traditional
consideration.

1. Contracts Made by Deed (Contracts Under Seal): Deeds are formal contracts
executed with a seal, which are legally binding without the need for consideration. A
deed signifies a serious intention and commitment. Example: A deed of gift where a
person transfers property to another without consideration.
2. Promissory Estoppel: Under the doctrine of promissory estoppel, a promise made
without consideration may still be enforced if one party has relied on that promise to
their detriment. This exception is primarily used to prevent unjust outcomes where
one party has acted based on a promise made by the other. Example: If A promises
to donate money to a charity, and the charity takes action based on that promise (e.g.,
spends money on a project), A may be estopped (prevented) from withdrawing the
promise even if no consideration was provided.
3. Modification of an Existing Contract (Accord and Satisfaction): In some cases,
an existing contract may be modified even without fresh consideration if the parties
mutually agree to the modification. Example: If two parties agree to change the terms
of an existing contract (such as reducing the price of goods), the modification is valid
even without new consideration if both parties agree.
4. Contracts Supported by Statutory Provisions: Certain contracts are governed by
statutory laws that do not require consideration for enforceability. These include
guarantees, certain types of bills, and agreements covered under specific Acts.
 Example: Section 25 of the Indian Contract Act, 1872 allows certain contracts to
be enforceable even without consideration, such as a promise to pay a time-barred
debt.
5. Charitable Subscriptions: A promise made to a charitable organization may be
enforceable even without consideration, particularly if the charity has acted in
reliance on that promise. Example: If a person promises to donate money to a charity
and the charity incurs expenses in reliance on that promise, the promise may be
enforceable even without consideration.
6. Natural Love and Affection: In some cases, a promise made out of natural love
and affection (usually between family members) may be enforceable even without
consideration, provided it is written and registered. Example: A gift made to a family
member, such as a promise to transfer property or assets, can be enforceable if it is
executed in writing and registered, even though there is no monetary consideration.

Contractual Capacity

Contractual capacity refers to the legal ability of a person to enter into a binding contract.
To have contractual capacity, a person must meet certain criteria, typically relating to age,
mental state, and understanding of the nature and consequences of the agreement. If a
person lacks the necessary capacity, the contract may be considered void or voidable.

Criteria for competency:

1. Age of Majority

• Legal Age: In most jurisdictions, the legal age of majority is 18. A person under this
age (a minor) is generally considered to lack full capacity to contract, and contracts
made by minors are typically voidable.
• Exception for Necessities: Contracts for necessities (like food, clothing, shelter, or
medical care) are enforceable even if made by a minor.
• Right to Disaffirm: A minor usually has the right to disaffirm (cancel) a contract,
but may be held responsible for the reasonable value of necessities.

2. Mental Competence

• A person must be able to understand the nature and consequences of their actions
to be considered competent.
• If an individual is suffering from a mental impairment (due to illness, disability, or
intoxication) that prevents them from understanding the contract, the contract may
be voidable at the individual's discretion.
• Temporary Mental Impairment (e.g., intoxication): If a person is intoxicated to the
point that they cannot comprehend the nature of the agreement, they may lack the
capacity to contract. However, the intoxicated person must prove the condition at the
time the contract was made.
• Permanent Mental Impairment: If someone is permanently mentally impaired
(e.g., due to a mental illness or developmental disability), they may be considered to
 lack capacity to contract. These contracts are voidable, but in some cases, courts may
declare them void altogether.

3. Unsound mind

• A person must be able to understand the terms and consequences of the contract. If a
person is intoxicated to the extent that they cannot understand the nature of the
contract at the time it is formed, they may not have the requisite capacity to enter into
it.
• Evidence of Intoxication: The intoxicated party must prove that they were so
impaired that they could not understand the nature of their actions at the time of
contracting.

4. Legal Entities (Corporations, Partnerships, etc.)

• Authority: For businesses and organizations (e.g., corporations, LLCs), the

individuals entering the contract must have the legal authority to act on behalf of
the entity. For instance, a corporate officer must have the authority to bind the
corporation to contracts.
• Corporate Rules: A corporation may be considered incapable of entering into
certain contracts if doing so violates its internal rules or the laws governing the entity.

5. Legal Disabilities

• Incompetent Parties: Individuals who have been declared legally incompetent by a

court (e.g., those under guardianship or conservatorship) are usually not competent
to enter into a contract.
• Effect of Incompetency: Contracts entered into by legally incompetent individuals
are typically voidable, meaning the individual can choose to cancel the contract.

Free consent

Free consent is a fundamental principle in contract law, ensuring that all parties involved
in a contract voluntarily agree to the terms without any external pressure, coercion, or undue
influence. For a contract to be valid, consent must be given freely and with a clear
understanding of the terms. If consent is obtained through force, manipulation, or
misrepresentation, the contract may be considered voidable.

Key Elements of Free Consent

1. Absence of Coercion
o Coercion involves forcing someone to agree to a contract through threats or
intimidation. This could include physical harm, threats to life, property, or
reputation.
o A contract made under coercion is voidable at the option of the person whose
consent was coerced.
2. Absence of Undue Influence
 o Undue influence occurs when one party uses their position of power or trust
(such as a parent-child relationship, employer-employee, or doctor-patient
relationship) to unfairly influence the other party into agreeing to a contract.
o Example: A person in a dominant position pressures someone they have
authority over to sign a contract.
o A contract made under undue influence is also voidable by the person who
was influenced.
3. Absence of Fraud
o Fraud involves deliberate deception or misrepresentation of facts to induce
another party to enter into a contract.
o Examples of fraud include lying about the value of goods, hiding defects, or
making false promises.
o A contract made under fraudulent circumstances is voidable by the deceived
party.
4. Absence of Misrepresentation
o Misrepresentation is an unintentional false statement or omission that leads
another party to enter into a contract.
o Unlike fraud, misrepresentation does not involve an intent to deceive.
However, it still affects the validity of consent.
o A contract based on misrepresentation is voidable if the misrepresentation is
material and has led the other party to make the decision to enter into the
contract.
5. Absence of Mistake
o Mistake involves misunderstanding or incorrect belief about the facts or the
law when entering into a contract.
o There are two types of mistakes:
▪ Unilateral Mistake: One party is mistaken about a fact, but the other
party knows or should know about it.
▪ Bilateral Mistake: Both parties are mistaken about the same fact.
o If the mistake is about a fundamental aspect of the contract, it may render the
contract voidable.

Types of Free Consent:

1. Coercion:
o Definition: The act of forcing someone to enter into a contract using threats or
physical force.
o Example: A person threatens to harm another unless they sign a contract.
2. Undue Influence:
o Definition: A situation where one party takes advantage of their power or
influence over the other to persuade them to sign a contract.
o Example: A caregiver persuading an elderly person to sign over property
rights.

3. Fraud:
 oDefinition: Deliberate deception or misrepresentation of facts to induce
someone into entering a contract.
o Example: Selling a car and falsely claiming it is in perfect condition when it
is not.
4. Misrepresentation:
o Definition: A false statement made without the intent to deceive, but which
causes the other party to agree to the contract.
o Example: A seller describes an item as "genuine leather," when it is actually
synthetic.
5. Mistake:
o Definition: A misunderstanding of facts or law by one or both parties.
o Example: Both parties think a painting is an original, but it turns out to be a
replica.

Legal Effect of Lack of Free Consent:

• Voidable Contracts: If consent is not freely given (due to coercion, undue influence,
fraud, misrepresentation, or mistake), the contract is generally voidable. This means
the aggrieved party has the right to rescind (cancel) the contract.
• Right to Rescind: The party who has not given free consent can choose to either
affirm (continue) or rescind the contract.
• Restitution: If the contract is rescinded, the parties may be required to restore the
benefits they received under the contract, depending on the circumstances.

Discharge of contract

Discharge of contract simply means that the contract comes to an end, and the parties no
longer have to perform their duties under it. This can happen in different ways, and here are
the main ones in simple terms:

1. Discharge by Performance

• This happens when both parties do what they promised to do in the contract. Once
both sides fulfill their obligations, the contract is finished.
• Example: If you hire someone to paint your house, and they paint it exactly as agreed,
the contract is complete and discharged.

2. Discharge by Agreement

• Both parties agree to end the contract before it is fully performed. This can happen
in a few ways:
o Rescission: Both sides decide to cancel the contract.
o Novation: One party is replaced with another, and the contract continues with
the new party.
o Accord and Satisfaction: Both parties agree to change the terms of the
contract, and once the new terms are met, the contract is discharged.
3. Discharge by Impossibility

• If something happens that makes it impossible to carry out the contract, it can be
discharged. For example:
o Natural disasters (like a flood destroying the building in a construction
contract).
o Legal changes that make the contract illegal.
o Death or illness (in personal service contracts, like performing at an event).

4. Discharge by Breach

• If one party does not do what they were supposed to do (a breach), the contract can
be discharged. If the breach is serious, the other party can end the contract and may
even seek compensation.
• Example: If a seller promises to deliver a car by a certain date and fails to do so, the
buyer might cancel the contract and seek damages.

5. Discharge by Operation of Law

• Sometimes, the law automatically ends a contract:

o Time Limits: If a contract has a set time limit, it ends once the time is up.
o Bankruptcy: If one party goes bankrupt, the contract may be automatically
ended.
o Death: If one party dies, and the contract was personal (like performing a
service), it can be discharged.

Breach of Contract

A breach of contract occurs when one party fails to fulfill their obligations as outlined in
the contract. The failure can be total or partial and may happen in several ways, including:

1. Failure to Perform on Time: If a party does not perform their obligations within the
specified time.
2. Incomplete Performance: If a party performs their duties but not according to the
agreed-upon terms.
3. Refusal to Perform: If a party outright refuses to perform their obligations.
4. Failure to Perform Properly: If a party does perform their duties, but the
performance is defective or does not meet the standards of the contract.

Types of Breach

1. Material Breach:
o A material breach is a major violation that goes to the heart of the contract,
affecting its overall purpose.
o The non-breaching party can terminate the contract and seek damages.
o Example: If a contractor is hired to build a house but does not use the agreed-
upon materials, this would be a material breach.
2. Minor (Insubstantial) Breach:
 o A minor breach is a less serious violation that does not impact the main
purpose of the contract.
o The non-breaching party must still perform their duties, but they may seek
damages for the breach.
o Example: If the same contractor finishes the house but finishes a little later
than agreed, this could be a minor breach.
3. Anticipatory Breach (Repudiation):
o This occurs when one party indicates, before the due date, that they will not
perform their duties under the contract.
o The non-breaching party can act immediately by treating the contract as
terminated and seeking remedies.
o Example: If a seller tells the buyer in advance that they will not be delivering
goods as agreed, this is an anticipatory breach.

Remedies for Breach of Contract

] Recession of Contract

When one of the parties to a contract does not fulfil his obligations, then the other party can
rescind the contract and refuse the performance of his obligations.

As per section 65 of the Indian Contract Act, the party that rescinds the contract must restore
any benefits he got under the said agreement. And section 75 states that the party that rescinds
the contract is entitled to receive damages and/or compensation for such a recession.

2] Sue for Damages

Section 73 clearly states that the party who has suffered, since the other party has broken
promises, can claim compensation for loss or damages caused to them in the normal course
of business.

Such damages will not be payable if the loss is abnormal in nature, i.e. not in the ordinary
course of business. There are two types of damages according to the Act,

• Liquidated Damages: Sometimes the parties to a contract will agree to the amount
payable in case of a breach. This is known as liquidated damages.
• Unliquidated Damages: Here the amount payable due to the breach of contract is
assessed by the courts or any appropriate authorities.

3] Sue for Specific Performance

This means the party in breach will actually have to carry out his duties according to the
contract. In certain cases, the courts may insist that the party carry out the agreement.
So if any of the parties fails to perform the contract, the court may order them to do so. This
is a decree of specific performance and is granted instead of damages. For example, A decided
to buy a parcel of land from B. B then refuses to sell. The courts can order B to perform his
duties under the contract and sell the land to A.

4] Injunction

An injunction is basically like a decree for specific performance but for a negative contract.
An injunction is a court order restraining a person from doing a particular act.

So a court may grant an injunction to stop a party of a contract from doing something he
promised not to do. In a prohibitory injunction, the court stops the commission of an act and
in a mandatory injunction; it will stop the continuance of an act that is unlawful.

5] Quantum Meruit

Quantum meruit literally translates to “as much is earned”. At times when one party of the
contract is prevented from finishing his performance of the contract by the other party, he can
claim quantum meruit. So he must be paid a reasonable remuneration for the part of the
contract he has already performed. This could be the remuneration of the services he has
provided or the value of the work he has already done.