Contract Law – Unit II – Revision Study Notes for LL.B First Year

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UNIT – II

Capacity to Contract

 Minor

Age of majority

Nature of minor’s agreement

Effects of minor’s agreement

  1. No Estoppel against minor
  2. No liability in contract or in tort arising out of contract
  3. Doctrine of Restitution
    1. Minor seeking relief, compellable to restore
    2. 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

  1. Unwarranted Statements
  2. Breach of duty
  3. 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

  1. Duty to speak (Contracts uberrima fides)
  2. Where silence is deceptive
  3. Change of circumstances
  4. 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]

  1. By affirmation
  2. By lapse of time
  3. 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