General Contracts Notes
General Contracts Notes
CONSENT
- If the mistake is caused by one party, this mistake may not necessarily
lead to invalidating ‘consent’ to the agreement.
- As mentioned, unilateral mistake may not always invalidate consent –
- Scott v Littledale- a vendor, by mistake, displayed the wrong sample
for sale. The court held that the contract was not terminated due to
mistake.
- Central National Bank v United Industrial Bank Ldt. – Consent is under-
stood as parties agreeing to the same thing in the same sense. Con-
sent induced by false representation may be ‘real’, but it is not ‘free’.
This would make the agreement voidable, not void.
2. PRIVITY
3. PROMISSORY ESTOPPEL
4. CAPACITY
5. DURESS
- 5 constituents of duress -
6. UNDUE INFLUENCE
7. FRAUD
1) suggestion as a fact of that which is not true by one who does not believe it
to be true
2) active concealment of a fact by one having knwoledge or belief of the fact
3) a promise made without intention of performance
4)any other cat fitted to deceive
5) any such act or omission the law specially declares to be fraudulent
- voidable, defrauded party can avoid performance or insist on it.. put in po-
sition would’ve been in if rep had been true
8. ADHESION CONTRACTS
When the bargain is harsh or unconscionable, equity, grounded upon ‘distributive jus-
tice’ curtails the freedom of contract so as to protect the interests of party who
entered into such bargain under distress.
Freedom of contract is of little value when parties don’t stand on equal footing; party
with weaker bargaining power enjoys no realistic opportunity to bargain and
party has no alternative between accepting a set of terms proposed by other or
doing without the goods or services offered.
These agreements are called as ‘Adhesion Contracts’, however not every such contract
is unconscionable: only when there is gross inequality of bargaining power
compounded with terms unreasonably favourable to stronger party can the in-
dication that weaker party had no meaningful choice except to consent to
the unfair and unreasonable terms, hold ground.[ A standard form contract
drafted by one party (usually a business with stronger bargaining power) and
signed by the weaker party (usually a consumer in need of goods or services),
who must adhere to the contract and therefore does not have the power to nego-
tiate or modify the terms of the contract.]
Therefore Courts will strike down any unfair or unreasonable clause/ agreement entered
into by parties when there is gross inequality in their bargaining power, and the vic-
timized party had no meaningful choice but to give his assent to the contract, how-
ever unreasonable, unfair and unconscionable a clause in that contract may be.
These adhesion/ standardized contracts are entered into by parties enjoying much supe-
rior bargaining power with a large no. of people, hence, affect people at large and if un-
conscionable, unfair and unreasonable are injurious to public interest. These bargains
therefore must be void on account of being opposed to public policy (S.23).
Further, if they were to be merely voidable on account of undue influence (for in many
cases, superior party has ‘real or apparent authority over other party’ and hence, uses
that position to obtain unfair advantage over another as according to S.16) it would
compel each victimized party to go to Court to get the contract adjudged as
voidable which would lead to multiplicity of litigations
9. MISTAKE
- Mistake as to identity
1.In case of written agreements, identity of the parties contracting is of
material importance.
2.In case of face-to-face communications, there is a strong presumption
that each intended to deal with the person present in front of them.
Thus, in case of a mistake, the contract is voidable.
3.However, if the parties are communicating through correspondence,
one party is not sure about the identity of the other party. Thus, the
contract is void.
4.However, if a party’s mistake doesn’t go to the identity of the other
party, i.e. if it is mistaken only about the attributes and not identity per
se, then contract is valid and subsisting.
- when it is obvious that someone has made a mistake in the terms of an offer, one
may not simply "snap up" the offer and be able to enforce the agreement
11. TENDER
I. Tender rules under English law should not be considered while inter-
preting §38.
II. Same conditions of the offer of performance apply in cases of offer to
the executor (If the executor has not been appointed and the promisor is
taking a risk in offering performance, then also the same conditions ap-
ply) as the conditions that would apply in case of offer of performance
to the promisee.
III. A tender of money in payment must be made with an actual produc-
tion of the
money.
Writing letters in themselves cannot be considered that they were meant
to reveal that the debtor was willing to pay the money or that the credi-
tors were given a reasonable opportunity to assess the willingness and
ability of the debtor to pay and there and then perform his/her promise
of paying the amount.
For ‘self-induced’ frustration, mere passive negligence is not enough,
the intention of the party to repudiate the contract must be clearly visi-
ble.
“Frustration renders a contract void, unless there has been conduct an-
tecedent to frustration amounting to repudiation.”
What does passive negligence here mean ? →>> means omission here
i.e u fail to do something.
-
The intention of the debtor can be deduced from expressed words or cir-
cumstances.
13. NOVATION
- The Only DIFF BETWEEN Novation + Acc and Satisfaction is that the latter takes
place after a breach has occurred.
- Arb cl – cannot survive if the agreement containing it has been superseded/ novated by
a later agreement – unless specifically incorporated
16. CALCULATION
- not about mathematical precision, always about approximation
- when contract provides for delivery within reasonable time or within reasonable time
after future date, its not contract for delivery at fixed time
- Rule that damages must be assessed at time of REFUSAL to deliver does NOT apply
in cases of anticipatory breach
-
- If there is anticipatory breach of contract then the buyer is entitled to damages as per
the difference in market price and contract price on date of repurchase.
- If it is not an anticipatory breach then the buyer is entitled to damages as per the dif-
ference between market price and contract on the date on which it was supposed to be
delivered or performed = DATE OF BREACH
- Damages to be read from diff. Perspective -
- - will apply to cases of forfeiture of earnest money under a contract. Where, however,
forfeiture takes place under the terms and conditions of a public auction before agree-
ment is reached, section 74 would have no application
- If this sum is a genuine pre-estimate of damages likely to flow from the breach, it is
called “liquidated damages”. If it is not a genuine pre-estimate of the loss, but an
amount intended to secure performance of the contract, it may be a penalty
The section does not confer a special benefit upon any party. It merely
declares the law that notwithstanding any term in the contract for de-
termining the damages or providing for forfeiture of any property by
way of penalty, the Court will award to the party aggrieved only reason-
able compensation not exceeding the amount named or penalty stipu-
lated.
-
- requirement of proof of actual loss is also dispensed with under s. 74, but legal injury
suffered by party is a prerequisite before awarding compensation
- - Some key differences between penalty clauses and liquidated damages clauses are
that penalty clauses are usually designed to deter parties from breaching a contract
to begin with, while liquidated damages clauses are intended to compensate the non-
breaching party for any potential losses.
- s. 27 can apply,
- Confidentiality or nda clause NOT in “, simply protecting trade secrets, etc
- India v stringent position, unlike English law
20. CONSIDERATION
- English law doesn’t recognise past consideration
EXTRA
- PURSUANT to section …