UNIT – II
Capacity to Contract
Minor
Age of majority
Nature of minor’s agreement
Effects of minor’s agreement
- No Estoppel against minor
- No liability in contract or in tort arising out of contract
- Doctrine of Restitution
- Minor seeking relief, compellable to restore
- Amended provisions in Specific Relief Act, 1963
Beneficial contracts
- Contracts of marriage
- Marriage of Muslim minor girl
- Contracts of Apprenticeship
- Trade contracts not included in beneficial contracts
- Option to retire from beneficial contracts on majority
Ratification
Liability for necessaries [S. 68]
- Meaning of “Necessaries”
- Nature of Liability
Persons of Unsound Mind
- English Law
- Position in India
Free Consent
Definition of Free Consent [S. 14]
- Vitiating factors and their effect
Coercion
Definitions [S. 15]
Techniques of causing coercion
Acts forbidden by IPC
Detention of property
Comparison with English law
Under Influence
Definition [S. 16]
Ability to dominate with of other
- Consent under pressure
- Subtle species of fraud
Relations which involve domination
- Real or apparent authority
- Fiduciary relation
- Mental distress
- Urgent need of money, no distress
- Statutory compulsion, no distress
Burden of Proof
Presumption of Undue Influence
1. Unconscionable bargains, inequality of Bargaining Power or Economic Duress
- Unconscionableness
- Some instances of unconscionableness
- Unconscionableness in money lending transactions
- Position of dominance necessary for presumption to arise
- Unconscionableness gifts
- Relationship of blood, marriage or adoption not since qua non
- Inequality of bargaining power
- Influence distinguished from persuation
- Economic duress by forcing renegotiation of terms
- Exploitation of the needy
- Technique of judicial intervention un unfair bargains
- Rescuing employees and others from unreasonable terms
- Natural justice
2. Contracts with Pardanashin Woman
Rescission [S. 19-A]
Misrepresentation
Definition
- Unwarranted Statements
- Breach of duty
- Inducing mistake about subject-matter
Suppressing of vital facts
Of material facts
Expression of opinion
Representation of state of mind
Change of circumstances
Inducement
Means of discovering truth
Fraud
Definition
Assertion of facts without belief in truth
Active concealment
Mere silence is no fraud
When silence is fraud
- Duty to speak (Contracts uberrima fides)
- Where silence is deceptive
- Change of circumstances
- Half-truths
Promise made without intention of performing
Any other act fitted to deceive
Any act or omission specially declared to be fraudulent
Distinction between fraud and misrepresentation
Limits of Rescission [Ss. 19 and 19-A]
- By affirmation
- By lapse of time
- Intervention of rights of third parties
Mode of rescission
Restitution
Damages for innocent misrepresentation
Mistake
Definition of Consent [S. 13]
Definition of Mistake
- Supplementary provisions
What facts are essential
Mistake as to Identity
Assumption of false identity
Mistake caused by takeover of business
Mistake of identity caused by fraud
Distinction between identity and attributes
Where fraud does not lead to mistake of identity
Where identity specially important
Mistake as to Subject-matter
1. Non-existent subject-matter
2. Mistake as to Title or Rights
3. Difference subject-matters in mind
4. Mistake as to substance of subject-matter
- Mistake as to quality of subject-matter as distinguished from substance
Misapprehension as to parties’ respective rights
Mistake as to Nature of Promise
Where the contract fails to express parties’ intention
Documents mistakenly signed or non est factum
Limitations
1. Mistake of both parties
2. Erroneous opinion about value of subject-matter
3. Mistake of fact and not of law
Legality of Object
Unlawful agreements
Void Agreements
Agreements against Public Policy
Wagering Agreements
Its exceptions
Contingent Contracts
Restraint of Trade [S. 27]
Exceptions
Illegal and Void Agreements
