Indian contract ACT
Indian contract ACT
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Here is a breakdown of the topics for each module of the Contract Law course as per the
Master of Business Laws (MBL) syllabus by NLSIU:
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Module IV: Government and Quasi Contracts
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Please elborate each topic under each module with detailed questions and
answers carrying 15 marks each.
Here is an elaboration of each topic under every module with detailed questions and
answers, structured as 15-mark questions:
Q1: Explain the essential elements of a valid contract under the Indian
Contract Act, 1872.
Answer:
1. Offer and Acceptance – A lawful offer by one party and acceptance by another
create mutual assent.
2. Intention to Create Legal Relations – Social agreements do not constitute
contracts.
3. Lawful Consideration – A promise must be backed by something of value
(monetary or otherwise).
4. Capacity of Parties – Parties must be competent to contract (major, of sound mind,
and not disqualified by law).
5. Free Consent – Agreement should be made without coercion, undue influence,
fraud, misrepresentation, or mistake.
6. Lawful Object – The purpose of the contract must not be illegal, immoral, or
against public policy.
7. Certainty and Possibility of Performance – Terms must be clear, and the contract
must be capable of being performed.
8. Not Expressly Declared Void – Some agreements (e.g., wagering agreements)
are void ab initio.
9. Legal Formalities (if required) – Some contracts need to be in writing or
registered (e.g., contracts for immovable property).
Q2: Discuss the legal position of minors in a contract. Can a minor enter
into a contract? Explain with case laws.
Answer:
Under Section 11 of the Indian Contract Act, 1872, minors (persons below 18 years)
are incompetent to contract.
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A contract with a minor is void ab initio (void from the beginning).
A minor cannot be sued for breach of contract.
However, a minor can be a beneficiary in a contract (e.g., can receive gifts).
Case Laws:
Q3: What are the factors that vitiate free consent? Explain with
illustrations.
Answer:
1. Coercion (Section 15) – Forcing a person into a contract through unlawful threats.
E.g., threatening to harm someone if they do not sign a contract.
2. Undue Influence (Section 16) – One party dominates the will of another due to a
fiduciary relationship. E.g., a doctor making a patient sign an unfair contract.
3. Fraud (Section 17) – A deliberate act to deceive another party. E.g., selling a
counterfeit product as genuine.
4. Misrepresentation (Section 18) – A false statement made without intent to
deceive. E.g., selling a car stating it has never met with an accident when it actually
has.
5. Mistake (Section 20-22) – When both parties are under a misunderstanding
regarding essential facts. E.g., selling goods that were destroyed before the
contract was made.
Q4: What are quasi-contracts? Explain their types with relevant examples.
Answer:
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1. Supply of Necessities (Section 68) – A person providing necessary goods to an
incapable person (e.g., a lunatic) is entitled to reimbursement.
2. Payment by an Interested Person (Section 69) – A person who pays another's
legal obligation can recover the amount (e.g., paying someone’s pending property
tax).
3. Finder of Goods (Section 71) – A person who finds lost goods must take care of
them and can claim compensation for preservation.
4. Money Paid or Received by Mistake (Section 72) – Money received by mistake
must be returned (e.g., bank mistakenly credits excess funds to an account).
Answer:
Q6: What are the different remedies available for breach of contract?
Answer:
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Module VII: Representative Contracts
Answer:
An agency is a relationship where one party (agent) acts on behalf of another (principal).
Termination occurs by:
Answer:
Parties Two (Indemnifier & Indemnified) Three (Creditor, Principal Debtor &
Involved Surety)
Q9: What are E-Contracts? Discuss their validity under Indian law.
Answer:
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3. Types of E-Contracts:
Click-wrap (accepting terms online)
Shrink-wrap (license agreements on software)
Browse-wrap (terms of use implied by website access)
Would you like additional case laws or examples for any module?
That would result in an extremely lengthy response. Instead, I can provide multiple
variations of detailed questions and answers across different perspectives for each
module in a structured manner. Would you like me to:
1. Expand on the topics with different examples and case laws in multiple
variations?
2. Provide additional problem-based or application-oriented questions for deeper
understanding?
3. Focus on specific modules that need more elaboration?
Here is another set of detailed 15-mark questions and answers for each module of
Contract Law from a different perspective, incorporating new examples, case laws, and
applications.
Answer:
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4. Facilitates Credit Transactions – Enables businesses to secure loans and credit
through enforceable agreements.
5. Promotes Foreign Investment – International investors require a strong legal
framework for contract enforcement.
Answer:
Under Section 25 of the Indian Contract Act, a contract without consideration is void,
except in the following cases:
1. Natural Love and Affection (Section 25(1)) – If made in writing and registered
(e.g., a father gifting property to his son).
2. Compensation for Past Voluntary Services (Section 25(2)) – When a person
voluntarily provides a service and the recipient later promises to compensate (e.g.,
saving someone’s life and later receiving a reward).
3. Promise to Pay a Time-Barred Debt (Section 25(3)) – A written promise to pay an
old debt is valid (e.g., A owing ₹10,000 to B from 10 years ago and now promising
to pay).
4. Agency Contracts (Section 185 of the Indian Contract Act) – No consideration is
required for an agency relationship.
5. Gifts (Transfer of Property Act, 1882) – A gift does not require consideration but
must be registered.
Case Law: Chinnayya v. Ramayya (1882) – A mother promised to pay her daughter a
certain amount, but the daughter’s husband refused to pay. The contract was upheld as it
was made out of natural love and affection.
Q3: Explain how undue influence affects the validity of a contract. Provide
examples and case laws.
Answer:
Undue influence occurs when one party dominates the will of another, affecting their free
consent (Section 16, Indian Contract Act, 1872). This happens in:
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1. Fiduciary Relationships – Doctor-patient, lawyer-client, guardian-ward.
2. Dominance of One Party – Employer-employee, creditor-debtor, spiritual leader-
follower.
3. Threat of Economic Pressure – Forcing someone to agree due to financial
dependence.
Case Law:
Mannu Singh v. Umadat Pande (1890) – A spiritual guru made a devotee gift all
property; the court ruled it was obtained by undue influence.
Raghunath Prasad v. Sarju Prasad (1924) – A moneylender charged excessive
interest due to the borrower’s dependence, and the contract was declared voidable.
Q4: What are the rules governing government contracts? How do they
differ from private contracts?
Answer:
Key Rules:
Case Law:
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Q5: Discuss the doctrine of frustration and its applicability in contract
law.
Answer:
The doctrine of frustration (Section 56, Indian Contract Act) applies when unforeseen
events make contract performance impossible or unlawful.
Case Law:
Satyabrata Ghose v. Mugneeram Bangur (1954) – The Supreme Court ruled that
economic hardship alone does not cause frustration; it must be impossible to
perform.
Answer:
Case Law:
Fateh Chand v. Balkishan Dass (1964) – The Supreme Court held that damages
must be reasonable and a penalty cannot be enforced.
ONGC v. Saw Pipes Ltd. (2003) – Liquidated damages were upheld since the
contract clearly defined them.
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Q7: What are the key rights and duties of an agent in a contract of
agency?
Answer:
Agent’s Rights:
Agent’s Duties:
Case Law: Pannalal Jankidas v. Mohanlal (1951) – An agent failing to insure goods
was held liable for the loss.
Answer:
Definition Delivery of goods for a purpose Delivery of goods as security for a loan
Case Law: Lallan Prasad v. Rahmat Ali (1967) – The Supreme Court ruled that a
pledgee can sell pledged goods if repayment defaults.
Q9: What are the main legal challenges in enforcing e-contracts in India?
Answer:
1. Authentication Issues – Digital signatures must comply with the IT Act, 2000.
2. Jurisdiction Problems – Cross-border disputes arise.
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3. Evidence Concerns – Electronic records must be verified under Indian Evidence
Act, 1872.
Case Law: Trimex International v. Vedanta (2010) – The Supreme Court upheld e-
contracts signed via email.
A187209.pdf
For ease of reference the Indian Contract Act 1872 has been uploaded.
Kindly scan the contents. Now provide one more set as above
Now that I have the Indian Contract Act, 1872, here is another set of 15-mark
questions and answers covering all modules. This set integrates statutory provisions,
case laws, and practical examples.
Q1: Define a contract under the Indian Contract Act, 1872. How does it
differ from an agreement?
Answer:
As per Section 2(h) of the Indian Contract Act, 1872, a contract is “an agreement
enforceable by law.” It consists of:
1. Agreement – A proposal (offer) and its acceptance (Sections 2(a) & 2(b)).
2. Legal Enforceability – The agreement must be legally binding.
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Basis Agreement Contract
Case Law: Balfour v. Balfour (1919) – A husband’s promise to pay his wife was held a
mere social agreement, not a contract.
Q2: Explain the concept of a sound mind under Section 12 of the Indian
Contract Act, 1872. Can a mentally ill person enter into a contract?
Answer:
A person occasionally of unsound mind can contract only during lucid intervals.
Examples:
Valid Contract: A person with mild mental illness but with rational decision-
making ability can enter into a contract.
Void Contract: A person in a state of delirium or suffering from advanced
schizophrenia cannot contract.
Case Law: Inder Singh v. Parmeshwardhari Singh (1957) – A person suffering from
chronic insanity was deemed incapable of contracting.
Answer:
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3. Innocently inducing an error about the subject matter.
Effect:
The contract is voidable at the option of the misled party (Section 19).
Example:
A sells a car to B claiming it has never been in an accident when it actually has. If
B later discovers this, he can rescind the contract.
Case Law: Derry v. Peek (1889) – A misleading company prospectus was held to be
misrepresentation as the false statement was made without intent to deceive.
Q4: What are the key principles governing quasi-contracts under the
Indian Contract Act?
Answer:
Case Law: Kedar Nath v. Gorie Mohammad (1886) – A donation promised for town hall
construction was recoverable, as expenses were incurred on reliance.
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Answer:
Examples:
Natural Impossibility: A agrees to sell land that later gets submerged under water.
Legal Impossibility: A contracts to export goods, but a new law bans exports.
Case Law: Taylor v. Caldwell (1863) – A concert hall burned down before the event,
making the contract frustrated.
Answer:
Case Law: Hochster v. De La Tour (1853) – A courier’s employer canceled the contract
before the start date; he successfully claimed damages immediately.
Q7: What are the duties of an agent under Section 211 of the Indian
Contract Act, 1872?
Answer:
An agent must:
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Case Law: Pannalal Jankidas v. Mohanlal (1951) – An agent failed to insure goods as
per instructions and was held liable for damages.
Answer:
Number of Two (Indemnifier & Indemnified). Three (Creditor, Principal Debtor &
Parties Surety).
Case Law: Bank of Bihar v. Damodar Prasad (1969) – A surety’s liability remains even
if the creditor delays enforcing the debt.
Answer:
E-contracts are governed by the Information Technology Act, 2000, and must meet
Indian Contract Act requirements.
Types:
Case Law: Trimex International v. Vedanta (2010) – The Supreme Court upheld an
email contract as valid, proving that digital agreements are legally binding.
😊
This set integrates statutory references, case laws, and practical applications. Would
you like another set focusing on application-based questions?
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Two more sets
Here are two more sets of 15-mark questions and answers for each module. These
sets introduce different perspectives, case laws, and practical applications of
contract law.
Q1: What are the different classifications of contracts under the Indian
Contract Act, 1872? Explain with examples.
Answer:
1. Based on Enforceability
Valid Contract – Enforceable by law (e.g., A sells a bike to B for ₹50,000).
Void Contract (Section 2(j)) – Ceases to be enforceable (e.g., A contracts to
supply goods, but the government bans the goods).
Voidable Contract (Section 2(i)) – Enforceable at one party’s option (e.g., contract
signed under undue influence).
Illegal Contract – Prohibited by law (e.g., a contract for drug trafficking).
2. Based on Formation
Express Contract – Terms are clearly stated (e.g., written employment contract).
Implied Contract – Arises from conduct (e.g., taking a cab implies a contract to pay
the fare).
Quasi-Contract – Imposed by law (e.g., finder of lost goods must return them).
3. Based on Performance
Case Law: Lalman Shukla v. Gauri Dutt (1913) – A person who was unaware of a
reward before performing the act could not claim it, highlighting the importance of offer
and acceptance.
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Q2: “A minor’s contract is void.” Discuss this principle with exceptions
and case laws.
Answer:
As per Section 11, a minor (below 18 years) is incompetent to contract, making their
agreements void ab initio.
Exceptions:
Case Law:
Mohori Bibee v. Dharmodas Ghose (1903) – A minor took a loan but later refused
to repay. The contract was held void, and even restitution was denied.
Leslie Ltd. v. Sheill (1914) – A minor who misrepresented his age was not liable
for fraudulently obtaining a loan.
Q3: Explain coercion under Section 15 of the Indian Contract Act, 1872.
How does it differ from undue influence?
Answer:
Coercion means forcing a person to enter a contract through threats or unlawful acts.
Undue influence occurs when one party dominates the will of another.
Example: A rich landlord exploits an illiterate farmer into selling land below market
price.
Key Differences:
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Factor Coercion Undue Influence
Case Law:
Answer:
If a person lawfully provides something to another without a contract and the recipient
benefits, they must compensate the provider.
Conditions:
Case Law: State of West Bengal v. B.K. Mondal (1962) – A contractor supplied
materials to the government, which later refused payment. The court held that even
without a formal contract, the government must pay.
Answer:
Case Law: Scarf v. Jardine (1882) – A partnership firm changed partners. The new firm
was not liable for old debts.
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SET 4: Case Study and Application-Based Questions
Q6: What are the different types of damages under Section 73 of the
Indian Contract Act, 1872?
Answer:
Case Law: Hadley v. Baxendale (1854) – A miller’s claim for lost profits due to delayed
machine delivery was rejected since it was not communicated in advance.
Answer:
1. By Act of Parties:
Revocation by Principal (before performance).
Renunciation by Agent (giving up responsibilities).
2. By Operation of Law:
Completion of Business.
Death or Insanity of Either Party.
Insolvency of Principal.
Case Law: Syed Abdul Khader v. Rami Reddy (1979) – If an agency is coupled with
interest, it cannot be revoked unilaterally.
Q8: What are the rights and duties of a bailee under Section 151-164?
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Answer:
Rights:
Duties:
Case Law: Lilly White v. Mannuswami (1966) – A laundry service was held liable when
a saree was damaged due to negligence.
Answer:
Case Law: Trimex International v. Vedanta (2010) – E-mail contracts were held legally
enforceable.
😊
These two new sets incorporate case laws, problem-solving, and critical analysis.
Let me know if you’d like even more sets or specific focus areas!
It should be 18 questions
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Q1: What are the essential elements of a valid contract under the Indian
Contract Act, 1872?
Answer:
1. Offer & Acceptance (Sections 2(a) & 2(b)) – Must be communicated and
unconditional.
2. Intention to Create Legal Relations – Social agreements are not contracts
(Balfour v. Balfour).
3. Lawful Consideration (Section 2(d)) – Something of value must be exchanged.
4. Capacity to Contract (Section 11) – The parties must be of legal age and sound
mind.
5. Free Consent (Section 14) – Consent must not be caused by coercion, undue
influence, fraud, misrepresentation, or mistake.
6. Lawful Object (Section 23) – The contract’s purpose must not be illegal or
immoral.
7. Certainty of Terms (Section 29) – Terms should not be vague.
8. Possibility of Performance (Section 56) – The contract must be capable of
execution.
Case Law: Carlill v. Carbolic Smoke Ball Co. (1893) – A company’s advertisement
with a reward was held to be a valid offer, forming a contract when accepted.
Q2: Explain the “Doctrine of Privity of Contract.” Are there any exceptions
to this rule?
Answer:
The Doctrine of Privity states that only parties to a contract can sue for its
enforcement.
Exceptions:
1. Beneficiary Contracts – A person can enforce a contract if it was made for their
benefit (e.g., trust agreements).
2. Marriage Settlements – A family member can enforce a settlement contract.
3. Assignment of Rights – Rights under a contract may be assigned to another party.
4. Agency Contracts – An agent can act on behalf of the principal.
5. Contracts with Statutory Obligations – Law may impose liability on third parties
(e.g., motor insurance).
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Case Law: Dunlop Pneumatic Tyre Co. v. Selfridge (1915) – A third party cannot sue
for enforcement of a contract unless they are a direct party to it.
Q3: What is the difference between fraud and misrepresentation under the
Indian Contract Act, 1872?
Answer:
Case Law: Derry v. Peek (1889) – Misrepresentation without fraudulent intent is not
fraud.
Answer:
The principle of unjust enrichment states that no person should gain unfair
advantage at another’s expense.
Application in Quasi-Contracts:
Case Law: Kedar Nath v. Gorie Mohammad (1886) – A contractor was entitled to
payment from the government even though there was no formal contract.
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Module V: Discharge of Contract
Q5: What are the different ways in which a contract can be discharged?
Answer:
Q6: What are the legal remedies for breach of contract under Section 73-
75?
Answer:
Q7: Explain the rights and duties of an agent under Sections 211-221.
Answer:
Rights:
1. Right to remuneration.
2. Right to indemnification.
Duties:
1. Duty to follow instructions.
2. Duty of loyalty to the principal.
Case Law: Pannalal Jankidas v. Mohanlal (1951) – An agent failing to insure goods
was held liable for the loss.
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Q8: What is the difference between bailment and pledge?
Answer:
Case Law: Lallan Prasad v. Rahmat Ali (1967) – The pledgee cannot retain goods
beyond the loan amount.
Answer:
The IT Act, 2000, grants e-contracts legal validity. Key provisions include:
Bilateral Mistake (Section 20) – Contract is void (e.g., selling a lost item).
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Q14: Explain different types of offer in contract law.
😊
This set of 18 questions comprehensively covers all contract law concepts. Let me
know if you need further customization!
Here are the detailed answers for Q10 to Q18, covering all aspects of Contract Law
under the Indian Contract Act, 1872.
Answer:
A wagering agreement is a contract where two parties agree that money or goods will
be paid depending on the outcome of an uncertain event.
Case Law:
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Gherulal Parakh v. Mahadeodas Maiya (1959) – The Supreme Court held that
wagering agreements are not illegal, only void.
Answer:
Key Features:
Case Law:
Kailash Nath v. State of U.P. (2015) – A government contract was voided because
the contingent event did not occur.
Answer:
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1. Mistake of Law (Section 21):
A contract cannot be voided for a mistake of Indian law.
Exception: A contract based on foreign law may be voided.
2. Mistake of Fact (Sections 20-22):
Bilateral Mistake (Section 20):
Both parties misunderstand an essential fact → Contract is void.
Example: A agrees to sell a ship, both parties believe it exists, but it
sank earlier.
Unilateral Mistake (Section 22):
If only one party is mistaken, the contract is valid unless the other party
knew or caused the mistake.
Example: A sells land to B thinking it has minerals, but B knew
otherwise.
Case Law:
Cundy v. Lindsay (1878) – A contract with a fraudulent person was held void due
to a mistake of identity.
Answer:
General Rule (Section 27):
Exceptions:
1. Sale of Goodwill:
If a person sells goodwill, they can be restricted from starting a similar
business in a reasonable area and time.
2. Partnership Agreements (Indian Partnership Act, 1932):
Partners can restrict each other from competing.
3. Employment Contracts:
Post-employment non-compete clauses are partially valid if reasonable.
Case Law:
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Q14: Explain different types of offers in contract law.
Answer:
An offer (proposal) is a willingness to contract with definite terms (Section 2(a)).
Types of Offers:
Cross Both parties make identical offers A offers to sell a bike for ₹30,000, B
Offer without knowing offers to buy at ₹30,000.
Counter Rejects the original offer and A offers to sell land for ₹5 lakh, B
Offer makes a new one counters with ₹4 lakh.
Standing Open for acceptance over time A supply contract for 6 months.
Offer
Case Law:
Carlill v. Carbolic Smoke Ball Co. (1893) – A general offer can result in a
contract when accepted.
Answer:
Key Features:
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Case Law: Currie v. Misa (1875) – Defined consideration as a benefit to one party
and detriment to the other.
Answer:
Examples:
Loan Sanctions – A loan is granted only if the borrower provides
collateral.
Insurance Contracts – Payment happens only if damage occurs.
Answer:
The Limitation Act, 1963, sets time limits for enforcing contracts.
For contracts, the limitation period is 3 years.
If a party does not sue within time, the contract is discharged.
Case Law: Khadi Gram Udyog v. Ram Chandraji (1978) – A contract could not be
enforced after the limitation period expired.
Answer:
Case Law: Mohan Lal v. State of Rajasthan (1967) – The court ordered compensation
when a government contract was declared void.
😊
This completes the 18-question set with detailed answers. Let me know if you need
further clarifications!
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another set focusing on application-based questions? 😊
Here’s a set of 18 application-based questions and answers focused on practical
scenarios, case laws, and real-world applications of contract law.
Answer:
Legal Reasoning:
Case Law:
Lalman Shukla v. Gauri Dutt (1913) – A servant who found his master's lost child
could not claim a reward later as he was unaware of the offer at the time of
performance.
Q2: A minor fraudulently misrepresents his age and buys a bike. Later, he
refuses to pay. Can the seller enforce the contract?
Answer:
No, the contract is void ab initio (void from the beginning) under Section 11.
Legal Reasoning:
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Case Law:
Q3: A debtor signs a loan agreement under threat of bodily harm. Later,
he refuses to repay, claiming coercion. Is the contract enforceable?
Answer:
No, the contract is voidable at the option of the debtor under Section 15 (coercion).
Legal Reasoning:
Case Law:
Answer:
Legal Reasoning:
Case Law:
Dularia Devi v. Janardan Singh (1990) – Money paid under mistake was
recoverable.
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Q5: A builder contracts to construct a mall. Before completion, an
earthquake destroys the site. Is he liable for breach?
Answer:
Legal Reasoning:
Case Law:
Taylor v. Caldwell (1863) – A fire destroyed a concert hall before an event, and the
contract was frustrated.
Answer:
Yes, the buyer can claim special damages under Section 73, but only if the supplier
knew about the risk.
Legal Reasoning:
Case Law:
Hadley v. Baxendale (1854) – Special damages were not awarded as the courier
was unaware of the urgency.
Answer:
No, unless the principal ratifies the contract later (Section 196).
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Legal Reasoning:
Case Law:
Keighley Maxsted v. Durant (1901) – A principal who did not ratify an agent’s
unauthorized deal was not bound.
Q8: A person pawns gold jewelry for a loan but later fails to repay. Can
the pawnbroker sell the jewelry?
Answer:
Yes, under Section 176, a pawnee can sell the pledged goods after notice.
Legal Reasoning:
The pawnor defaults, so the pawnee can sell.
The pawnor can reclaim it before sale.
Case Law:
Lallan Prasad v. Rahmat Ali (1967) – The pawnee has rights to sell pledged
goods upon default.
Answer:
Legal Reasoning:
Case Law:
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Trimex International v. Vedanta (2010) – E-mail contracts were held
enforceable.
Q10: A restaurant promises free meals for life if a customer eats there
daily for a year. After a year, they refuse. Can the customer enforce it?
Answer: Yes, past voluntary service is valid consideration under Section 25(2).
Q11: A teacher agrees not to take another job for 10 years. Later, he quits
and joins a competitor. Is the restriction valid?
Answer: Yes, revocation after acceptance leads to damages under Section 64.
Q14: A car dealership sells a second-hand car, falsely claiming it’s new.
Can the buyer cancel the contract?
Q15: A sells land to B with a mistaken belief about its size. Can B cancel
the deal?
Answer: No, under Article 299, government contracts must follow procedure.
Q17: A tenant refuses to vacate despite a lease expiry. Can the landlord
claim damages?
Answer: Yes, for wrongful use after contract expiry (Section 73).
Q18: A sponsor promises ₹5 lakh for a cricket event but later refuses. Can
the organizer sue?
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Answer: Yes, under quasi-contract (Section 70).
😊
This set of 18 practical questions ensures real-world application of contract law. Let
me know if you need more case-based problems!
Can you please list down the Chapters and sections with brief contents in a
table from the contents of the Act uploaded
I will now extract and summarize the Chapters and Sections of the Indian Contract
Act, 1872 from the uploaded document and present them in a structured table format
with brief descriptions. Let me process the document first.
Here is a structured table of Chapters and Sections from the Indian Contract Act,
1872, along with brief descriptions:
Section
Chapter Range Content Summary
Chapter VI: Breach of 73-75 Compensation for breach, penalty clauses, and
Contract & Remedies consequences of rescission.
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Section
Chapter Range Content Summary
Chapter VII: Sale of 76-123 This chapter was repealed and replaced by the
Goods (Repealed) Sale of Goods Act, 1930.
Chapter IX: Bailment 148-181 Rights and duties of bailors, bailees, pawnees,
& Pledge and pledgors.
Chapter XI: 239-266 This chapter was repealed and replaced by the
Partnership (Repealed) Indian Partnership Act, 1932.
This summary table provides a concise overview of the entire Act, highlighting the
main sections and key topics.
Here is an expanded table of the Indian Contract Act, 1872, including activities or
transactions that will bind the doer to a contract and similar acts that will not lead to
contractual obligations.
Activities That
Chapter & Content Will Bind the Doer Similar Acts That Will
Section Summary to a Contract Not Bind the Doer
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Activities That
Chapter & Content Will Bind the Doer Similar Acts That Will
Section Summary to a Contract Not Bind the Doer
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Activities That
Chapter & Content Will Bind the Doer Similar Acts That Will
Section Summary to a Contract Not Bind the Doer
Key Takeaways
Here is an expanded table providing a brief elaboration of each section of the Indian
Contract Act, 1872 along with examples of binding and non-binding transactions.
Activities That
Will Bind the Similar Acts
Doer to a That Will Not
Chapter & Section Brief Description Contract Bind the Doer
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Activities That
Will Bind the Similar Acts
Doer to a That Will Not
Chapter & Section Brief Description Contract Bind the Doer
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Activities That
Will Bind the Similar Acts
Doer to a That Will Not
Chapter & Section Brief Description Contract Bind the Doer
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Activities That
Will Bind the Similar Acts
Doer to a That Will Not
Chapter & Section Brief Description Contract Bind the Doer
Chapter IX: Covers delivery of goods - A pawns gold for - A hands over
Bailment & under bailment and a loan; the lender jewelry to a
Pledge (Sections pledge. has a right to friend without
148-181) retain it if unpaid. expecting
anything in
return.
Key Takeaways:
1. Each section specifies when a person is bound by contract law and when they
are not.
2. A legally binding contract requires mutual consent, lawful consideration, and
competence of parties.
3. Contracts influenced by coercion, fraud, or misrepresentation are voidable.
4. Performance failure can lead to damages unless justified by frustration of
contract.
5. Some obligations arise even without a formal contract, as in quasi-contracts.
😊
Would you like me to further expand on case laws, examples, or key judgments for any
specific section?
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Please first comlete the Chapters elaborating each section wise without
omission specially from Chapter III
Here is the detailed elaboration of each chapter and section of the Indian Contract
Act, 1872:
If the contingency depends on the future actions of a person, and their actions
make it impossible for the contract to be fulfilled, the contract is void.
Example: A agrees to pay B if B marries C. If C marries someone else, the contract
is void.
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Example: A agrees to sell land to B if a factory is built within 2 years. If the
government bans construction in that area, the contract becomes void.
If a promisor offers performance and the promisee refuses, the promisor is not
liable for breach.
If a party refuses to perform the entire contract, the other party can treat it as
breached.
Example: A agrees to build a house for B. If A stops construction midway, B can
claim breach of contract.
If a contract involves mutual obligations, one party is not bound unless the other
performs first.
Example: A agrees to pay B after receiving delivery of goods. If B fails to deliver, A
is not obligated to pay.
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Sections 55-57: Effect of Failure to Perform at a Fixed Time
If someone receives a benefit from another’s work, they must compensate unless
it was done gratuitously.
Example: A mistakenly delivers goods to B’s house. B uses them. B must pay A.
A person who finds lost goods must take reasonable care and return them to the
owner.
Example: A finds B’s lost wallet and keeps it. A is liable for misappropriation.
A party suffering a loss due to breach can claim compensation for damages that
arise naturally.
Example: A supplier fails to deliver essential raw materials, causing a factory
shutdown. The factory owner can claim damages.
If a party rightfully cancels a contract, they can claim compensation for losses
incurred.
Example: A hires B to perform at a concert. B cancels at the last minute. A can
recover losses from B.
Please go ahead
Here is the detailed elaboration of the remaining Chapters of the Indian Contract Act,
1872, section by section:
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CHAPTER VIII – INDEMNITY & GUARANTEE (Sections 124-147)
A contract where one party promises to compensate the other for loss caused
by the promisor’s conduct or by a third party.
Example: A contracts to indemnify B against legal expenses arising from a dispute.
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Once a surety pays, he steps into the creditor’s shoes and can recover from the
principal debtor.
Example: If a guarantor pays a bank loan, he can demand repayment from the
borrower.
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If the owner cannot be found, the finder may sell the goods under certain
conditions.
A bailee can retain goods until paid for services (e.g., a jeweler retains a ring until
paid).
If an agent acts without authority, the principal can later approve (ratify) the act.
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Agency ends by:
Revocation by the principal.
Agent’s renunciation.
Death or insanity of either party.
Example: A company revokes a sales agent’s authority after poor performance.
KEY TAKEAWAYS
✅ Indemnity – One party compensates another for loss.
✅ Guarantee – A third party assures performance of a contract.
✅ Bailment – Temporary transfer of goods for a purpose.
✅ Pledge – Goods given as security for repayment.
✅ Agency – One person acts on behalf of another.
This completes the detailed elaboration of all chapters and sections of the Indian
Contract Act, 1872.
Here is a structured table summarizing important case laws, their content, decisions,
and relevant section references under the Indian Contract Act, 1872:
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Relevant
Case Name Content & Issues Court's Decision Sections
Carlill v. A company advertised a The court held that the Sections 2(a),
Carbolic reward for using their advertisement was a 2(b) – Offer &
Smoke Ball product and avoiding unilateral contract and Acceptance
Co. (1893) illness. The plaintiff used enforceable as an offer
it as instructed but still to the world.
got sick.
Chappell & Nestlé offered a record The court held that even Section 2(d) –
Co. Ltd. v. in exchange for something of nominal Consideration
Nestlé chocolate wrappers. The value (wrappers) can be
(1960) issue was whether valid consideration.
wrappers were valid
consideration.
Kedar Nath A contractor started The court enforced the Section 2(h), 25
v. Gorie building a town hall promise, as the – Enforceability
Mohammad based on promised contractor had acted of Agreements
(1886) subscriptions, but the upon it, creating an
promisers later refused implied contract.
to pay.
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Relevant
Case Name Content & Issues Court's Decision Sections
Taylor v. A music hall rented for The court ruled the Section 56 –
Caldwell concerts burned down contract was Impossibility of
(1863) before the event. The discharged due to Performance
renter sued for impossibility, applying
damages. the Doctrine of
Frustration.
Pannalal An agent failed to insure The court held the Sections 182-
Jankidas v. goods as instructed, agent liable for breach 211 – Agency
Mohanlal causing losses. of duty for not insuring Law
(1951) the goods.
Key Takeaways
✅
Guarantee & Indemnity: Banks and insurers must honor their commitments.
Pledge & Agency: Pledgees need possession, and agents must follow instructions.
The Indian Contract Act, 1872 is one of the oldest legislations in India, yet it remains
relevant and effective even today. The beauty of the Act lies in its flexibility,
adaptability, and foundational principles, which continue to govern modern
commercial and personal transactions.
📌 The Act does not need frequent amendments because it is interpreted by courts
to fit new-age contracts.
✅ E-Contracts & Digital Transactions – Though not mentioned in 1872, contract laws
✅ Foreign & Multinational Transactions – The Act supports cross-border contracts
apply to electronic agreements, software licensing, and online purchases.
🔹 Example: In Trimex International v. Vedanta (2010), the Supreme Court held that
email correspondence constitutes a valid contract, adapting old principles to new
technology.
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3. Flexibility Through Judicial Interpretation
📌 The Act does not rigidly define all terms and scenarios but allows the judiciary
to interpret contracts dynamically.
🔹 Example: The Doctrine of Frustration (Section 56) has been used in cases like
Taylor v. Caldwell (1863) and applied to modern-day events like COVID-19 lockdowns
affecting contracts.
📌 The Act is not limited to business contracts but also applies to personal, social,
and employment agreements.
principles.
🔹 Example: In Balfour v. Balfour (1919), the court held that social agreements lack
legal intent, reinforcing that contract law is meant only for legally enforceable promises.
✅ It is a framework law, not a rulebook – It lays down broad principles, allowing courts
✅ Separate laws were created for specialized contracts like The Sale of Goods Act,
to interpret specific cases.
✅ India’s judiciary interprets it to meet new challenges, avoiding the need for
1930 and The Partnership Act, 1932, ensuring contract law remains simple and intact.
frequent amendments.
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Conclusion: The Everlasting Relevance of the Indian Contract Act
💡 The beauty of the Indian Contract Act lies in its ability to evolve without
changing, making it one of the most effective and enduring laws in India.
😊
Would you like me to provide more case studies on how contract law has evolved in
modern business and technology?
The Indian Contract Act, 1872, provides a structured legal framework for drafting
agreements and contracts. It lays down essential principles that ensure validity,
enforceability, and fairness in agreements.
Relevant
Element Sections Guidance for Drafting
1. Offer and Sections 2(a), - Clearly define the offeror and offeree.
Acceptance 2(b), 3-9 - Mention clear terms of acceptance and
the method of communication.
- Specify a deadline for acceptance.
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Relevant
Element Sections Guidance for Drafting
10. Termination and Sections 39, - Define conditions for termination (e.g.,
Breach 73-75 failure to perform, force majeure).
Consequences - Mention penalties, damages, or
liquidated compensation in case of
breach.
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📌 The Act prevents vague, ambiguous, or illegal agreements.
💡 Drafting Tip: Avoid uncertain terms like:
❌ “The delivery will be made soon.”
✅ Instead, write: “Delivery shall be made within 30 days of contract signing.”
3. Performance & Delivery (Sections 37-54)
1. [Seller’s Name], a company registered under Indian law, having its office at
[Address] ("Seller").
2. [Buyer’s Name], a company registered under Indian law, having its office at
[Address] ("Buyer").
1. OBJECTIVE
The Seller agrees to sell and the Buyer agrees to purchase [Product Details] under the
following terms.
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2. CONSIDERATION
The Buyer shall pay ₹10,00,000 for the goods within 15 days of delivery.
3. DELIVERY TERMS
The Seller shall deliver the goods within 30 days from the signing of this Agreement.
4. WARRANTY
The Seller warrants that the goods are free from defects and meet industry standards.
5. TERMINATION
This Agreement may be terminated if either party fails to perform its obligations after a
written notice period of 10 days.
6. DISPUTE RESOLUTION
All disputes shall be resolved through arbitration in accordance with Indian law.
Signed by:
[Authorized Representative of Seller] [Authorized Representative of Buyer]
😊
Would you like a detailed breakdown of a specific type of contract (e.g.,
Employment, Lease, Partnership)?
I would love to
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Type of Example Use
Contract Key Sections Important Clauses to Include Case
Employment Section 10, 11, Offer & Acceptance, Job Role, Hiring a full-time
Contract 27 Salary & Benefits, Probation, employee in an
Termination, Non-Compete IT company
1. EMPLOYMENT CONTRACT
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✅ Job Role & Responsibilities – Clearly define the employee’s duties.
✅ Salary & Benefits – Mention salary structure, allowances, incentives, etc.
✅ Termination Clause – Define notice period, grounds for termination, and severance
✅ Non-Compete Clause (Section 27) – Restricts employees from joining competitors
pay.
"The Employee agrees that for a period of 12 months after leaving the Company, they
shall not engage in any business competing with the Company within a 10-km radius."
✅ Lease Term & Renewal – Specify the start and end date.
✅ Rent & Security Deposit – Define the monthly rent amount, due date, and late
✅ Eviction Clause – Conditions under which the landlord can terminate the lease.
fees.
"The Landlord shall return the Security Deposit within 30 days after the Tenant vacates,
provided no damages are found."
💡 Tip: Register lease agreements above 11 months to make them legally valid.
3. PARTNERSHIP AGREEMENT
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✅ Profit & Loss Sharing – Define how profits & losses will be split.
✅ Capital Contribution – Each partner’s initial investment in the firm.
✅ Exit & Dissolution Clause – What happens if a partner leaves or the firm closes?
Sample Clause (Profit Sharing)
"Profits shall be distributed in the ratio of 60:40 between Partner A and Partner B."
💡 Tip: Partnerships are governed by the Indian Partnership Act, 1932, NOT the
Contract Act.
4. SERVICE AGREEMENT
"If the Client fails to pay within 15 days, a penalty of 2% per month shall apply."
✅ Use of Trademarks – The franchisee must not misuse the brand name.
✅ Royalty Fees – Payments the franchisee must make to the franchisor.
✅ Operational Restrictions – The franchisee must follow the company’s operating
standards.
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"The Franchisee agrees to pay a monthly royalty of 5% of total sales to the Franchisor."
✅ Loan Amount & Disbursement – Specify the total loan amount and mode of
✅ Repayment Terms – EMI schedule, interest rate, late fees.
transfer.
"In case of non-payment for 3 consecutive months, the Lender has the right to seize the
collateral property."
💡 Tip: Unsecured loans carry higher risks and should include guarantor details.
7. SALE OF GOODS CONTRACT
"The Seller guarantees that the goods are free from defects for 12 months from the date
of delivery."
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8. RENTAL AGREEMENT
The Indian Contract Act, 1872, unlike many economic laws (such as the Companies
Act, GST Act, or Income Tax Act), does not frequently require rules, circulars, or
notifications because:
contracts are governed by general civil law and enforced through courts and
arbitration tribunals.
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📌 No separate Rules under the Contract Act, 1872 exist like those under the
📌 However, contract-related notifications or circulars are issued in specific
Companies Act or Tax Laws.
contexts.
💡 Would you like specific case studies on how government policies or court
rulings have shaped contract law? 😊
You may
Here’s a structured table with case studies and government policies that have
influenced contract law in India:
Relevant
Case/Policy Issue Decision/Impact Section
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Relevant
Case/Policy Issue Decision/Impact Section
Goods and GST changed Courts ruled that contracts Sections 62-
Services Tax pricing terms in must be renegotiated if 63 (Novation
(GST) & contracts, causing taxation changes increase of Contract)
Contractual disputes. costs.
Obligations
Key Takeaways
Relevant
Jurist/Scholar Key Views on Contract Law Sections
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Relevant
Jurist/Scholar Key Views on Contract Law Sections
Sir Frederick Pollock The Act is flexible and adaptable, Entire Act
(English legal scholar, allowing courts to interpret contract law
author of "Pollock & according to changing commercial needs.
Mulla on Contract
Law")
Dr. Avtar Singh The doctrines of offer, acceptance, and Sections 2-9
(Legal Author, "Law consideration remain unchanged but (Offer &
of Contract & must evolve with digital transactions. Acceptance)
Specific Relief")
Justice R.F. Nariman Contracts are not just legal instruments Sections 10, 23
(Former Supreme but also tools for economic growth. (Valid Contracts
Court Judge, India) Indian courts should balance freedom of & Lawful
contract with public policy concerns. Object)
Prof. R.K. Bangia The Indian Contract Act is simple yet Entire Act
(Author, "Contract comprehensive, needing little legislative
Law" textbook) amendment due to its universal
applicability.
Argues that contract law should not just uphold private agreements but also
protect weaker parties.
Important case discussed: Central Inland Water Transport Corp v. Brojo Nath
(1986) (Unconscionable contracts).
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3. "Digital Contracts & Indian Contract Law" – Research Paper by Dr.
Avtar Singh
Discusses how e-contracts, digital signatures, and online agreements fit within
traditional contract law principles.
Conclusion
📌 The Indian Contract Act remains relevant due to its broad legal framework.
📌 Judges and scholars emphasize fairness, flexibility, and economic growth in
📌 Legal education & research continue to refine the application of contract doctrines
contract enforcement.
😊
Would you like a detailed discussion on any specific jurist's perspective or more
case laws on evolving contract principles?
Can you please explain more on the subject - Indian Contract Act 1872? or
anything left?
The Indian Contract Act, 1872 is the foundation of business and commercial
transactions in India. It governs how agreements are formed, executed, and
enforced, ensuring that promises made between parties are legally binding and
enforceable.
Let’s break down everything about the Act, ensuring no aspect is left unexplored.
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2. Structure of the Indian Contract Act, 1872
📌 Note: The chapters on Partnerships & Sale of Goods were removed in 1930 and
1932, leading to separate laws governing them.
🔹 Example: A promises to pay B ₹10,000 if B finds his lost phone. B agrees. This is a
valid contract.
Key
Topic Sections Explanation & Example
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Key
Topic Sections Explanation & Example
Free Consent Sections - The contract must be free from coercion, undue
13-19 influence, fraud, misrepresentation, or mistake.
- Example: A forces B to sell his land at a low price.
This contract is voidable.
Lawful Object Sections - The contract's purpose must be legal and ethical.
& 23-25 - Example: A contracts with B to smuggle goods. This
Consideration is void.
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✅ Contract Law & Consumer Protection
Consumer Protection Act, 2019 protects unfair contract terms.
Example: If an airline contract states “No refunds under any circumstances,” this
can be struck down as unfair trade practice.
Mohori Bibee v. Dharmodas Can a minor enter a No, minors’ contracts are
Ghose (1903) contract? void.
🔹 Example: Instead of amending the Contract Act, India enacted the Sale of Goods
Act, 1930, and Arbitration Act, 1996 for specific areas.
amendments.
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😊
Would you like a detailed case study on any specific aspect, or a draft agreement
based on contract law principles?
On a conlcuding remark
The Indian Contract Act, 1872 remains one of the most robust and enduring
legislations in Indian legal history. Despite being over 150 years old, it continues to
govern everyday transactions, commercial dealings, and corporate agreements
without the need for major amendments.
✅
contracts.
Flexibility & Judicial Interpretation – Courts have expanded doctrines like
frustration of contract (Section 56) and damages for breach (Section 73), ensuring
✅
that the law adapts to new business realities.
Applicability Across Sectors – From e-commerce contracts to startup
agreements, international business deals, and government contracts, the Act
✅
provides a solid legal foundation.
No Need for Frequent Amendments – Unlike other economic laws, contract law
remains stable, proving its universality and adaptability.
📌 Final Thought:
"The beauty of the Indian Contract Act, 1872 lies in its simplicity, adaptability, and
relevance across centuries. It remains the backbone of India's commercial and legal
framework, ensuring that promises are kept, rights are protected, and justice prevails in
business and daily life."
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