Contract Act - LLB I (3 years) - Mumbai University, Study notes of Contract Law

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CONTRACTS THAT ARE SPECIFICALLY ENFORCEABLE

Contracts that are specifically enforceable have been provided in section 10 to 13 of the Specific Relief Act, 1963.

Section 10 of the Specific Relief Act, 1963 lays down cases in which the specific performance of the contract becomes enforceable.^1

DAMAGES CANNOT BE ASCERTAINED: This rule is based on the uncertainty in calculation of damages in cases where they are mere conjecture or surmise. COMPENSATION NOT ADEQUATE RELIEF: Specific performance is granted by the courts in cases where the stipulation in contracts is such that its non-performance will render the compensation claimed by way of damages an inadequate remedy. Thus, specific performance may be ordered of a contract to execute a mortgage for money advanced. CONTRACT TO TRANSFER IMMOVABLE PROPERTY: The view that a breach of contract for land cannot be adequately compensated is not because of the real nature of land, but because damages, even where calculated upon the general money value of land, may not be a complete remedy to the purchaser, to whom the land may have a peculiar and specific value. CONTRACT REGARDING MOVABLE PROPERTY: A contract to deliver specific goods will be

and distinction or of special value to the party suing by reason of personal or family association or like. PRESUMPTION: This section raises a presumption that compensation would not be adequate in the case of transfer of immovable property, and it would be adequate in case of breach of transfer of movable property. Thus, the party alleging compensation is respectively adequate or inadequate must prove it.

Section 11 : Cases in which specific performance of contracts connected with trusts enforceable:

Section 11 entails provisions regarding contracts entered into by or against a Trust. The act stipulated in the contract can be wholly or partially in the nature of Trust. A discretionary power has been granted to the court to award relief in nature of specific performance of the contract.

Section 12 states Specific performance of part of contract:

As a general rule, specific performance is not awarded to enforce the contract partially. Exceptions have been provided as follows.

Case i: The person is unable to perform whole of its part of the contract. Part left unperformed is proportionally smaller and can be equated with compensation. Court can award performance as well as award compensation for deficiency. Case ii: Where part left unperformed has been admitted to be of compensation of money and the defaulter has paid the consideration for the part performed or when it has not been admitted of compensation of money, the consideration has been paid for the entire contract without abatement. Case iii: Where part performed and unperformed are independent, order can be given for the former.

Section 13 states Rights of purchaser or lessee against person with no title or imperfect:

Where any immovable property with no or imperfect title has been sold or let, section 13 gives the purchaser/lessee following rights against vendor/lessor: o To compel performance of contract out of acquired interest of vendor or lessor, acquired subsequent to the contract. o To compel performance of obtaining concurrence of other persons so required for validating the title. o To compel performance of redeeming mortgage and obtaining proper discharge; conveyance from mortgagee where necessary.

done something for the promisor, or something which the promissory was legally compellable to do, or unless.

3. It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in the behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

In any of these cases, such an agreement is a contract.

4.) Agreement in restraint of marriage [Sec (26)]

Every agreement in restraint of marriage of any person, other than a minor, is void.

In Lowe v/s peers (1768) Promise by a man in favour of Ms. Lowe that he would not marry any person other than Mrs. Lowe and a further promise of pay Ms. Lowe a sum of

5.) Agreement in restraint of trade [Sec (27)]

[Nur Ali Dubash vs Abdul Ali on 4 March, 1892, Calcutta 765:]

In this case, the plaintiff agreed with the defendant not to carry on the business of dubash for three years and agreed to act for that period as stevedore ( man who works in harbour loading and unloading the ship) of five ships assigned to the defendant and no others. The contract was void as the first clause was absolute restraint and the second, a partial

Exceptions to this agreement are:

1.) Sale of goodwill 2.) Exceptions under the Indian Partnership Act

6.) Agreement in restrain of legal proceedings [Sec (28)]

Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which, he may thus enforce his rights , is void to that extent.

7.) Agreements the meaning of which is uncertain [Sec (29)] Agreements the meaning of which is uncertain are void.

show what kind of oil was intended. The agreement is void for uncertainty.

8.) Agreements by way of wager [Sec (30)]

A wager means a contract by a person to pay money to another on the happening of a given event, in consideration of that another paying to him money on the event of not happening.

9.) Agreements to do impossible acts [Sec (56)]

I.

A agrees with B to discover treasure by magic. The agreement is void. [Section 56].

DOCTRINE OF FRUSTRATION

An agreement to do an impossible act in itself is void. Clause (1) to S.56.

An act which was to be performed after the contract is made becomes unlawful or impossible to perform and which promisor could not prevent, then such an act becomes impossible to perform and hence unlawful and so it is void.

Eg: 1. A & B enter a contract to find treasure by magic. This contract is void as this is impossible in the eyes of law.

2. If A agrees to deliver goods by ship on a particular freight to B in another country and a war is declared in that country where goods are to be delivered. This contract becomes void.

In cases, where one party knows or with reasonable diligence might have known and which promisee did not know to be unlawful or impossible, such promisor must make compensation to such promise for any loss which such promises sustains through the non-performance of the promise.

Doctrine of frustration is applicable in following situations:-

1. Loss/Destruction of Object - Doctrine of frustration comes into two situations :- a. Object has failed or disappeared b. Performance is physically cut off.
2. Non-occurrence of a contemplated event

Case 1 :- The contract has become physically impossible because of disappearance of subject matter. Eg :- Krell v/s Henry The defendant agreed to hire from the plaintiff a flat on June 26th^ and 27th.^ On these days a coronation process would occur. To enjoy/attend that process the stay was planned. A part of rent was paid in advance. did not occur. The defendant refused to pay the balance. The object of the contract was the coronation process, its non- occurrence declared this contract as void.

Case 2 Paroshtam Das v/s Municipal Committee A municipal committee leased out certain tonga stands to plaintiff for Rs. 5000. But no tonga driver come forward to use it throughout the year. It was a loss to the plaintiff. It was concluded that plaintiff obtained the lease and committee granted the same to him on the assumption that the stand will be used. Plaintiff sued for recovery of rent money. A contract on sale of land for non-agricultural land use was held as a frustrated when the application for such use was rejected by authorities.

3. Commercial hardship post entering the contract when the circumstances are altered in a way that upsets the purpose altogether.

Case Sachindra Nath v/s Gopal Chandra The plaintiff let the certain premises to defendant for running a restaurant at somewhat higher price. The defendant agreed to pay high rent because the British troops were stationed in that area. A clause was British