1.

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

- india done away w privity of consideration, not privity of contract

3. PROMISSORY ESTOPPEL

- Lord denning laid down pe, however operates within a scope

4. CAPACITY

- Minor - indian law - void ab into , no competenc

- English law - contract voidable at option of minor - limited
- Minor can be a promise of beneficiary, while cant be bound by con-
tract, CAN bind other party - derive benefit
- minor cant ratify agreement upon attainment of majority, og - void ab
into
- Cant be asked to return benefits recd under void contract
- Can always plead minority, even if used deception to enter contract
- Cant be a partner in partnership
- Estate is liable to a person who supplies necessities of life
- Parents NOT liable for minors ..
- Minor can act as agent without incurring personal liability

5. DURESS

- 5 constituents of duress -

1. Personal violence or threat thereof

2. Imprisonment or threat thereof unless brought act in good faith acc to law
for civil claim
3. Threat of physical injury or wrongful imprisonment or prosecution of near
relative
4. Threats of wrongfully destroying injury seizing or withholding land or other
things
5. Any wrongful acts that compel a person to manifest apparent assent to a
trans

6. UNDUE INFLUENCE

- undue influence - presuemed when person is in a position to dominate the

others will when -
1) holds real or apparent auth over the other, or stands in a fiduciary relation-
ship. The other
2) He contracts w a person whose mental capacity is temp or perm affected
by age, illness or mental or bodily distress presumed in relation-
ship between - parent and child, guardian and ward, doc and pa-
tient, lawyer and client, trustee and beneficiary, etc
- voidable at option of party whose consent was obtained by undue influ-
ence
- Burden of proving absences if Dom of 1 proved, lies on Dom party

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

Substantial Performance cannot be pleaded in case of lump sum contract

where although the performance is done, it was not effective enough and
it defeated the very purpose of the performance.

Factors to consider for substantial performance -

1. Nature of defects
2. Proportion between the cost of rectifying the defects and the con-
tracted price to be paid for the work.

10. SUBSTANTIAL PERFORMANCE

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.

Essential conditions for frustration: 1) of a

permanent nature so as to render the contract impossible to be performed
on any
future date or, 2) of fundamental nature or, 3) of such a duration, so as to
make
the contract, when resumed, a different one from the original contract.
When a contract is dependent on the continued existence of one particu-
lar thing, and the thing comes to an unforeseen end, the owner is not
bound by the contract.

for Repudiation, intention has to be there(for 39 to apply)

“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.
-

12. INNOMINATE CLAUSES / intermediate terms (s.55) - eg :

discuss time
time not of essence
Time is not the essence unless the contract specifically provided to that effect. However,
even where time is not the essence of the contract, the contract must be performed within
a reasonable time period à The promisor is not bound to perform his promise unless the
promisee shows his willingness to perform his part in case of reciprocal promise. It is
well established that in case of immovable property, it is presumed that time is not the
essence of the contract – however, the courts may in such circumstances infer that it is to
be performed in a reasonable time.
- appropriation of payment

“When the debtor makes a payment to the creditor, he may appropriate

the money as he pleases, and the creditor must apply it accordingly. If
the debtor does not make any appropriation at the time when he makes
the payment the right of appropriation devolves to the creditor,”

The intention of the debtor can be deduced from expressed words or cir-
cumstances.

The intention of the creditor may not be expressed. He may appropriate

it till the last moment. So, the creditor's choice remains till the end.

SoA(Statement of Account) can also amount to valid expressway of ap-

propriation by the creditor unless other circumstances point in an oppo-
site direction

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

14. MATERIAL ALTERATION

A material alteration is one which varies the rights, liabilities or legal position of the par-
ties ascertained by the deed in its original state or otherwise varies the legal effect of the
instrument as originally expressed or reduces to certainty some provision which was
originally unascertained and as such void, or may otherwise prejudice the party bound
by the deed as originally executed.

In case of variation/alteration, there is no such executory clause in second contract as

would enable parties to sue upon it alone if the first contract did not exist; while in case
of novation /substitution, parties could sue on the second contract alone and the first con-
tract is extinguished either by express words or because second dealing with the same
subject matter or having the same legal effect as the first but in a materially different
way.
15. UNJUST ENRICHMENT
3 conditions under S.70 –
· Lawful Action
· No gratuitous intent
Voluntary benefit accepted by the other party
- anticipatory breach
- Only if EXECUTORY contract (reciprocal promise)
- repudiatory breach renders contract voidable, .. becomes void
- unliquidated damages

The damages available for breach of contract include:

1. Those which may fairly and reasonably be considered arising natu-
rally from the breach of contract or
2. Such damages were reasonably supposed to have been contemplated
by both the parties at the time the contract was made. (Reasonably have
been contemplated ??)

If any special circumstances exist which were actually communicated to

the Defendant, the Claimant may recover any damages which would or-
dinarily follow from a breach of contract under the special circum-
stances communicated.
-

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 -

- 1. Measure, 2. Quantum, 3. Causation, 4. Foresight (Hadley), 5. mitigation

- Fist on p to prove direct connection, breach and loss
- If d can prove break in chain of causation, then too remote
- Only 2 kinds of damages - general and special in contracts

17. LIQUIDATED DAMAGES

- - 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

Section 74 declares the law as to liability upon breach of contract where

compensation is by agreement of parties predetermined or where there is
a stipulation by way of penalty. But the application of the enactment is
not restricted to cases where the aggrieved party claims relief as a plain-
tiff.

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.

18. RESTRAINT OF TRADE

Blue pencil test -The doctrine of blue pencil relates to striking out the illegal and/or
unenforceable and/or unnecessary portion of a contract and retaining the rest of the con-
tract and allowing it to be enforceable and legal.

- s. 27 can apply,
- Confidentiality or nda clause NOT in “, simply protecting trade secrets, etc
- India v stringent position, unlike English law

19. DISCHARGE s.37

-most obvious way to discharge contract - through performance
2. Contingency - doesn’t materialise, then performance is rendered impossible
3. Frustration
4. Novation
5. Breach - fault based liability, others all no fault

20. CONSIDERATION
- English law doesn’t recognise past consideration

EXTRA
- PURSUANT to section …