Offer

Section 2 (a) - When one person signifies to another his willingness to do or to abstain from
doing anything, with a view to obtaining the assent of that other to such act or abstinence,
he is said to make a proposal
Section 2 (b) When the person to whom the proposal is made signifies his assent thereto, the
proposal is said to be accepted. A proposal, when accepted, becomes a promise
Offeree is called acceptor after acceptance of the offer. First step in the formation of a contract

Offer, once it is accepted, ceases to be an offer and becomes a promise. Offer once rejected
cannot be accepted again. Offeror and Offeree must be two distinct personalities

Accept Promise
Offer
Reject

Essential elements of an Offer

(1) Offer may be express or implied

(2) Must create legal relations
Balfour v. Balfour (1919, 2 KB 571) – Lord Atkin - agreement between Husband and wife
is not enforceable
(3) Terms must be certain
Section 29 - Agreements, the meaning of which is not certain, or capable of being made
certain, are void.
(4) Offer may be Specific or General/Public
(5) Offer and Invitation to Offer

Invitation to offer/Offer to Chaffer

Invitation ↔ Offer

Revocation of Offer

Section 6 - A proposal is revoked

(1) by communication of notice of revocation

(2) by the lapse of the time
(3) by the failure to fulfill a condition precedent
(4) by the death or insanity of the proposer
A counter offer terminates original offer.
 Capacity /Competence/Qualification to Contract

Section 10 - All agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object, and are not hereby
expressly declared to be void.

S 11. Who are competent to contract. —Every person is competent to contract who is of the age of
majority according to the law to which he is subject, and who is of sound mind and is not disqualified
from contracting by any law to which he is subject.

Section 11 - Every person is competent to contract who is of the age of majority according to the
law to which he is subject, and who is of sound mind and is not disqualified from contracting by
any law to which he is subject

Section 10 of the Contract Act requires that the parties must he competent to contract. The section
11 declares the following persons to be incompetent to contract—

(1) minors – disqualification by infancy

(2) persons of unsound mind – disqualification by insanity
(3) persons disqualified by law to which they are subject – disqualification by law

Minor
The Indian Majority Act, 1875. Section 3 - The age of majority is generally eighteen. The Minority
extends to 21 if a guardian of a minor's person or property has been appointed by the court.

Contractual Capacity of Minor

 Void ab initio

Mohiri Bibi v. Dharmadas Ghose ( 1903 Cal 539 PC) an agreement with minor is void ab initio.

If the minor has carried out his obligations, he can bring a suit for against the other party for the
enforcement of the other part’s obligations.

 Promisee or Beneficiary but not a Promisor

Minor has special cloak of protection. All transactions in favor of minor are valid. A Minor can be a
promise or beneficiary but a not a promisor. A minor can enjoy the benefits under a contract but he
cannot be held liable under the contract. Minors are competent to accept non-onerous gift.

 No ratification

A minor’s agreement is void and being a nullity has no existence in the eye of law and therefore it
cannot be ratified and it cannot support a fresh promise. It cannot support a fresh promise by the
infant after attainment of majority.

 No Restitution

A minor need not restitute or return the benefits received under void or voidable agreements. If a
minor obtains some property by fraudulently misrepresenting his age, he can be ordered to restore
the property or goods thus obtained. This is called equitable doctrine. Money being generally not
traceable cannot be restored.
Leslie v. Sheill (1914, 3 KB 607) – the defendant advanced two sums of 200 pounds each
misrepresenting his age. The court dismissed the plea of infancy and applied the equitable doctrine
(quasi contract). Lord Summer – restitution stopped where repayment began. In the instant case,
money lendered was untraceable and could not be recovered.

As a general rule, minor’s agreement is void ab initio. This is the primary logic for non-applicability of
section 64 and section 65 of the Indian contract Act on the minor’s agreement. he natural corollary
to this would be the provision dealing with the exploitation of the hapless victim at the hands of
fraudulent minor, or a minor deliberately concealing his age to enter into an agreement. Under
English Law, if a minor wrongfully obtains an undue advantage from the other party and the same is
traceable and in his possession, the minor can be compelled under the equitable doctrine of
restitution to restore back the benefit so received. However, if the minor has sold the goods or
converted them, he cannot be compelled to pay the value of such goods because it will amount to
enforcing a void contract. It follows that the doctrine is not applicable to money for it is not possible
to identify the money and ask a minor to return the exact same.

To strike a balance between taking care of minor’s interest and to maintain the principles of equity,
the courts inaugurated the concept of restitution. According to this principle, a minor shall be
ordered to return the goods or tangible properties taken out of the possession of the plaintiff on the
pretext of being a major. But the restitution is only restricted to the returning of the goods still in
possession of the minor and not the goods s/he sold or the money received after such sale. Thus,
the courts laid down a midway by this doctrine saying that the restitution can only be done till the
limit minor is not enjoined to pay.

KHAN GUL v. LAKHA SINGH (1928) - Court ordered a minor to refund Rs 17,500 which he had taken
as advance payment for sale of land and had later refused to complete the contract. So in this case
the scope of the doctrine of equitable restitution was extended to cover cash also. “He who seeks
equity must do equity”

 No Estoppel
 No vicarious liability – parents are not vicarious liable for the liability of minor. A minor is
held liable for the necessaries supplied to him under the principle of equity.
 No specific performance– minor’s agreements, being void, cannot be specifically enforced.
But agreements in favor of minors are perfectly valid.

Persons of unsound mind

Section 12 - A person is said to be of sound mind for the purpose of making a contract,

a. capable of understanding it
b. of forming a rational judgment as to its effect upon his interests.

A person, who is usually of unsound mind, but occasionally of sound mind, may make a contract
when he is of sound mind.

A person, who is usually of sound mind, but occasionally of unsound mind, may not make a contract
when he is of unsound mind.

 Lunatics – contract is void in India. Both in England and in India a lunatic may enter into a
valid contract during a lucid interval.
 Idiots -
 Drunken persons – void in India; voidable in England (can be ratified subsequently)
  Intoxicated

Persons disqualified by law

 Convicts
 Insolvency
 Alien enemies

Free Consent
Section 10 - All agreements are contracts if they are made by the free consent of parties competent
to contract, for a lawful consideration and with a lawful object, and are not hereby expressly
declared to be void.

Section 13 - Two or more persons are said to consent when they agree upon the same thing in the
same sense.

Section 14 —Consent is said to be free when it is not caused by—

(1) coercion, as defined in section 15, or

(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18, or
(5) Mistake, subject to the provisions of sections 20, 21 and 22.

Consent is said to be so caused when it would not have been given but for the existence of such
coercion, undue influence, fraud, misrepresentation or mistake.

Coercion
Section 15 - Coercion” is the committing, or threatening to commit, any act forbidden by the Indian
Penal Code (Sec 506, IPC) or the unlawful detaining, or threatening to detain, any property, to the
prejudice of any person whatever, with the intention of causing any person to enter into an
agreement.
A, on board an English ship on the high seas, causes B to enter into an agreement by an act
amounting to criminal intimidation under the Indian Penal Code. (45 of 1860). A afterwards sues B for
breach of contract at Calcutta. A has employed coercion, although his act is not an offence by the law
of England, and although section 506 of the Indian Penal Code (45 of 1860) was not in force at the
time when or place where the act was done.

Section 19 – contract is voidable

 Ranganayakamma v. Alwar Setti (1889) - the question before the Madras High Court was
regarding the validity of the adoption of a boy by a widow, aged 13 years. On the death of
her husband, the husband’s dead body was not allowed to be removed from her house by
the relatives of the adopted boy until she adopted the boy. It was held that the adoption
was not binding on the widow.
 Chikkam Ammiraju v. Chikkam Seshama (1918) -the question before the Madras High Court
was that whether coercion could be caused by a threat to commit suicide. In this case a
Hindu by a threat of suicide induced his wife and son to execute a release deed in favor of
 his brother in respect of certain properties claimed as their own by the wife and the son. The
question before the court was whether a threat to commit suicide could be considered to be
an act forbidden by the Indian Penal Code. It was held by Wallis, C.J. and Seshagiri Ayyar, J.
that a threat to commit suicide amounted to coercion within the meaning of Section 15 of
the Indian Contract Act and therefore the release deed was voidable.
 Unlawful detaining of property - According to Section 15 coercion could also be caused by
unlawful detaining, or threatening to detain, any property, to the prejudice of any person
whatever, with the intention of causing any per to enter into an agreement. For example, if
an outgoing agent refuses to handover the accounts books to the new agent until the
principal executes release in his favor, it is coercion. (Muthiah Chettiar v. Karupan (1927)

Undue Influence
Section 16 –

(1) A contract is said to be induced by “undue influence” where the relations subsisting
between the parties are such that one of the parties is in a position to dominate the will of
the other and uses that position to obtain an unfair advantage over the other.
(2) a person is deemed to be in a position to dominate the will of another—
a. where he holds a real or apparent authority over the other, or where he stands in a
fiduciary relation to the other; or
b. Where he makes a contract with a person whose mental capacity is temporarily or
permanently affected by reason of age, illness, or mental or bodily distress.
(3) Where a person who is in a position to dominate the will of another, enters into a contract
with him, and the transaction appears, on the face of it or on the evidence adduced, to be
unconscionable, the burden of proving that such contract was not induced by undue
influence shall lie upon the person in a position to dominate the will of the other

Section 19 A – contract is voidable

(a) A having advanced money to his son, B, during his minority, upon B‟s coming of age obtains, by
misuse of parental influence, a bond from B for a greater amount than the sum due in respect of the
advance. A employs undue influence.

(b) A, a man enfeebled by disease or age, is induced, by B‟s influence over him as his medical
attendant, to agree to pay B an unreasonable sum for his professional services, B employs undue
influence.

(c) A, being in debt to B, the money-lender of his village, contracts a fresh loan on terms which appear
to be unconscionable. It lies on B to prove that the contract was not induced by undue influence.

(d) A applies to a banker for a loan at a time when there is stringency in the money market. The
banker declines to make the loan except at an unusually high rate of interest. A accepts the loan on
these terms. This is a transaction in the ordinary course of business, and the contract is not induced
by undue influence.]

Allcard v Skinner (1887) 36 Ch D 145 is a judicial decision under English law dealing with undue
influence. Miss Allcard was introduced to Miss Skinner, a lady superior of a religious order named
"Protestant Sisters of the Poor". She had to observe vows of poverty and obedience. After becoming
a member, Miss Allcard made a will bequeathing all property to Miss Skinner. She then claimed the
money back after she left the sisterhood. Lindley LJ, held that she was unduly influenced but barred
by laches (unreasonable delay) from getting restitution.
"Equity aids the vigilant, not the sleeping ones [that is, those who sleep on their rights]." Put another
way, failure to assert one’s rights in a timely manner can result in a claim being barred by laches.

In order to avoid transaction on the ground of undue influence, two conditions should be
established

 The plaintiff has to provee that other party to the agreement was in a position to
dominate his will
 That the other party had obtained an unfair advantage by using that position

Lakshmi Amma v. Telengala Narayana Bhatt - the executant who was aged and suffering from
diabetes made a deed of settlement of the entire property in favor of one of his grandsons to the
exclusion of his wife, his children and other grandchildren. The person in whose favor the deed was
made was unable to prove that the executant had executed the deed without any external pressure
while he was not of infirm mind and was fully aware of the dispositions. The court held the
settlement deed to be invalid.

The following relationships raise the assumptions of undue influence:

 –Parent and child,

 –Guardian and ward,
 –Trustee and beneficiary,
 –Religious advisers and disciple,
 –Doctor and patient,
 –Solicitor and client, and
 –Fiance and fiancee.

Misrepresentation
 Innocent misrepresentation
 Fraudulent misrepresentation

Section 18 —“Misrepresentation” means and includes

(1) the positive assertion of that which is not true, though he believes it to be true
(2) any breach of duty ( eg speech) which gains an advantage to the person committing it, by
misleading another to his prejudice
(3) causing a party to an agreement to make a mistake as to the substance of the thing which is
the subject of the agreement

Derry v Peek (1889) 5 T.L.R. 625 - In a company prospectus the defendant stated the company had
the right to use steam powered trams as oppose to horse powered trams. However, at the time the
right to use steam powered trams was subject of approval of the Board of Trade, which was later
refused. The claimant purchased shares in the company in reliance of the statement made and
brought a claim based on the alleged fraudulent representation of the defendant. It was held by
House of Lords that the statement was not fraudulent but made in the honest belief that approval
was forthcoming. Lord Herschell defined fraudulent misrepresentation as a statement which is made
either:

i) knowing it to be false,
ii) without belief in its truth, or
 iii) recklessly, careless as to whether it be true or false.

Section 19 – Contract is voidable

Fraud
Section 17 - Fraud” means and includes any of the following acts committed by a party to a contract,
or with his connivance, or by his agent, with intent to deceive another party thereto of his agent, or
to induce him to enter into the contract

(1) the suggestion of that which is not true, by one who does not believe it to be true
(2) the active concealment of a fact by one having knowledge or belief of the fact
(3) a promise made without any intention of performing it
(4) any other act fitted to deceive
(5) any such act or omission as the law specially declares to be fraudulent

Illustrations

(a) A sells, by auction, to B, a horse which A knows to be unsound. A says nothing to B about the
horse‟s unsoundness. This is not fraud in A.
(b) B is A‟s daughter and has just come of age. Here, the relation between the parties would
make it A‟s duty to tell B if the horse is unsound.
(c) B says to A—“If you do not deny it, I shall assume that the horse is sound.” A says nothing.
Here, A‟s silence is equivalent to speech.
(d) A and B, being traders, enter upon a contract. A has private information of a change in prices
which would affect B‟s willingness to proceed with the contract. A is not bound to inform B.

Explanation

(1) Mere silence as to facts is not fraud

(2) it is the duty of the person keeping silence to speak
(3) His silence is, in itself, equivalent to speech.

Peek v. Gurney (1873) - Facts: Peek sued a company’s board of directors for concealment of facts
and misrepresentation after he relied on their prospectus, which falsely described the company’s
strong financial position, to buy stock. The action failed because he had not in fact relied on the
prospectus but had purchased the shares in the market. The mere nondisclosure of material facts,
however morally censurable, forms no ground for an action for misrepresentation.

Misrepresentation Fraud
Innocent misstatement Willful Misstatement
No knowledge of as to its truth/honestly Knowledge of its untruth
believes it to be true
Can avoid contract Can avoid and claim damages
Not a tort Is a tort
Mistake
Mistake of Fact

 Bilateral –Void
o Common mistake –
Both promisor and promise (common) make same mistakes
o Mutual mistake

Bell v Lever Brothers Ltd [1931] UKHL 2 - is an English contract law case decided by the House of
Lords. Within the field of mistake in English law, it holds that common mistake does not lead to a
void contract unless the mistake is fundamental to the identity of the contract. Plaintiff [Lever
Brothers] employed the Defendant [Bell] in one of their companies. They terminated his agreement
and gave him a hefty compensation package. Afterwards, they learnt that he was in breach of his
duty, thus entitling them to terminate his employment without compensation. Plaintiff sought to
void the agreement for mistake and recover the money. The House of Lords held that In order for
mistake to void the contract, the mistake must be fundamental to the contract. The conduct of Bell
was not sufficiently close to the heart of the contract so as to render the contract invalid.

Section 20 - Where both the parties to an agreement are under a mistake as to a matter of fact
essential to the agreement, the agreement is void.
Explanation.—An erroneous opinion as to the value of the thing which forms the subject-matter of
the agreement, is not to be deemed a mistake as to a matter of fact.

Illustrations

(a) A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Bombay.
It turns out that, before the day of the bargain, the ship conveying the cargo had been cast away and
the goods lost. Neither party was aware of these facts. The agreement is void.

(b) A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of bargain,
though neither party was aware of the fact. The agreement is void.

(c) A, being entitled to an estate for the life of B, agrees to sell it to C. B was dead at the time of the
agreement, but both parties were ignorant of the fact. The agreement is void.

Common Mistake

o Mistake as to the existence of the subject matter

Couturier v Hastie [1856] UKHL J3 is an English contract law case, concerning common mistake
between two contracting parties about the possibility of performance of an agreement. Couturier
agreed with Hastie to deliver some corn. They thought it was in transit between Salonica (now
Thessaloniki) and the UK. But the corn had already decayed. The shipmaster had sold it. Couturier
argued that Hastie was liable for the corn because Hastie had already bought an ‘interest in the
adventure’, or rights under the shipping documents. The court held that the contract was void
because the subject matter of the contract did not exist at the time the contract was made.

o Mistake as to the quality of the subject matter

Nicholson & Venn v Smith Marriott (1947) - Defendants put for auction table napkins with crest of
Charles I, authentic property of that monarch. On that basis lot bought for £787 - but was in fact
Georgian, only worth £105. Buyer able to recover damages for breach of contract as agreement is
void.

o Mistake as to the title of the subject matter

o Mistake as to the price of the subject matter
o Mistake as to the possibility of perfuming
 Physical impossibility
 Legal impossibility
o

 Unilateral – neither void or voidable

Section 22 - A contract is not voidable merely because it was caused by one of the
parties to it being under a mistake as to a matter of fact.
Exceptions
Mistaken of identity
Cundy v Lindsay (1877–78) LR 3 App Cas 459 is an English contract law case on the
subject of mistake, introducing the concept that contracts could be automatically
void for mistake to identity, where it is of crucial importance. Lindsay & Co were
manufacturers of linen handkerchiefs, amongst other things. They received
correspondence from a man named Blenkarn. He had rented a room at 37 Wood
Street, Cheapside, but purported to be 'Blenkiron & Co'. Lindsay & Co knew of a
reputable business of this name which resided at 123 Wood Street. Believing the
correspondence to be from this company, Lindsay & Co delivered to Blenkarn a large
order of handkerchiefs. Blenkarn then sold the goods – 250 dozen linen
handkerchiefs – to an innocent third party, Cundy. When Blenkarn failed to pay,
Lindsay & Co sued Cundy for the goods. House of Lords held that, The House of Lords
held that Lindsay & Co had meant to deal only with Blenkiron & Co. There could
therefore have been no agreement or contract between them and the rogue.
Accordingly, title did not pass to the rogue, and could not have passed to Cundy.
They were forced to therefore return the goods.
Mistake as to the nature of Contract (non est facturm - "it is not [my] deed"). A claim
of non est factum means that the signature on the contract was signed by mistake,
without knowledge of its meaning.
Foster v Mackinnon, 1869 - the defendant, a senile man with poor eyesight, was
induced to sign a document which he was told was a guarantee. In fact, it was a bill
of exchange upon which the claimant ultimately became entitled. It was held that
the defendant, who had not been negligent, was not liable on the bill; the plea of
non est factum succeeded.

Mistake of Law – is no excuse (ignorantia juris non excusat)

 Mistake of law of India

 Mistake of law of foreign country - void
Lawful Object
S 23. What considerations and objects are lawful, and what not

The consideration or object of an agreement is lawful, unless

1. it is forbidden by law
The word "forbidden by law" is not synonymous with the word 'void' and hence it is not
necessary that whatever is void is also "forbidden by law".
2. it would defeat the provisions of any law
It refers to performance of an agreement which necessarily entails the transgression of the
provisions of any law. The court will only give effect to the intention of the parties as
expressed in the contract in accordance with the applicable laws of the land.
In short three principles arise from the section12 :
 an agreement or contract is void, if its purpose is the commission of an illegal act;
 an agreement or contract is void, if it is expressly or impliedly prohibited by any
law
 an agreement or contract is void, if its performance is not possible without
disobedience of any law.
As per section 23, the difference between agreements that are void and agreements those
are illegal is very thin or small.
3. is fraudulent
4. involves or implies, injury to the person or property of another
5. the Court regards it as immoral, or opposed to public policy.
2i 3f (S 23)

Every agreement of which the object or consideration is unlawful is void. All agreements against the
welfare/interests of the public are void
Illustrations

1. A agrees to sell his house to B for 10,000 rupees. Here B‟s promise to pay the sum of 10,000 rupees is
the consideration for A‟s promise to sell the house, and A‟s promise to sell the house is the
consideration for B‟s promise to pay the 10,000 rupees. These are lawful considerations.
2. A promises to pay B 1,000 rupees at the end of six months, if C, who owes that sum to B, fails to pay
it. B promises to grant time to C accordingly. Here, the promise of each party is the consideration for
the promise of the other party, and they are lawful considerations.
3. A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked
on a certain voyage. Here, A‟s promise is the consideration for B‟s payment and B‟s payment is the
consideration for A‟s promise, and these are lawful considerations.
4. A promises to maintain B‟s child, and B promises to pay A 1,000 rupees yearly for the purpose. Here,
the promise of each party is the consideration for the promise of the other party. They are lawful
considerations.
5. A, B and C enter into an agreement for the division among them of gains acquired or to be acquired,
by them by fraud. The agreement is void, as its object is unlawful
6. A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to
A. The agreement is void, as the consideration for it is unlawful.
7. A, being agent for a landed proprietor, agrees for money, without the knowledge of his principal, to
obtain for B a lease of land belonging to his principal. The agreement between A and B is void. as it
implies a fraud by concealment, by A, on his principal.
8. A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to
restore the value of the things taken. The agreement is void, as its object is unlawful.
 9. A‟s estate is sold for arrears of revenue under the provisions of an Act of the Legislature, by which the
defaulter is prohibited from purchasing the estate. B, upon an understanding with A, becomes the
purchaser, and agrees to convey the estate to A upon receiving from him the price which B has paid.
The agreement is void, as it renders the transaction, in effect, a purchase by the defaulter, and would
so defeat the object of the law.
10. A, who is B‟s mukhtar, promises to exercise his influence, as such, with B in favour of C, and C
promises to pay 1,000 rupees to A. The agreement is void, because it is immoral.
11. A agrees to let her daughter to hire to B for concubinage. The agreement is void, because it is
immoral, though the letting may not be punishable under the Indian Penal Code (45 of 1860).

Pearce v Brooks is an 1866 case in English contract law. In Pearce v Brooks the owner of a
horse-drawn coach was prevented from recovering the costs of hire from a prostitute who
had hired the coach in order to attract clients.

Public Policy
No polluted hand shall touch the pure fountains of justice.

It has been described as an 'untrustworthy guide', 'variable quality', 'unruly horse', etc.

Public policy is a very unruly horse, and when once you get astride it you never know where it will
carry you. - Burrough, J., Richardson v. Mellish (1824)

Section 23 creates a limitation on the freedom of a person in relation to entering into contracts and
subjects the rights of such person to the overriding considerations of public policy and the others
enunciated under it. The word "object" used in section 23 connotes means "purpose" and does not
purport a meaning in the same sense as "consideration". For this reason, even though the
consideration of a contract may be lawful and real, that will not prevent the contract from being
unlawful if the purpose (object) of the contract is illegal.

It is trite law that one who knowingly enters into a contract with improper object cannot enforce his
rights in relation to such contract. Notably, the Act does not anywhere define the expressions
"public policy" or "opposed to public policy" or "contrary to public policy".

1. Trading with alien enemy

2. Stifling Prosecution
3. Maintenance and champerty
4. Transfer of public offices and titles
5. Agreement to procure votes

the epithet ‘illegal’ may aptly and correctly be applied to following types of contracts:

A contract to commit a crime, a tort or a fraud on a third party.

A contract that is sexually immoral.

A contract to the prejudice of the public safety.

A contract prejudicial to the administration of justice.

A contract that tends to corruption in public life.

A contract to defraud the revenue.

The public conscience test
Ex turpi causa non oritur action - illegality defense - Latin "from a dishonorable (illegal) cause an
action does not arise". is a legal doctrine which states that a plaintiff will be unable to pursue legal
remedy if it arises in connection with his own illegal act. if one is engaged in illegal activity, one
cannot sue another for damages that arose out of that illegal activity.

Ex- out of, from

Oritur – arises

Domo malo – fraud

Turpi – foul

Ex dolo malo non oritur action - From a fraud an action does not arise - ‘no right of action can have
its origin in fraud’- No court will lend its aid to a man who founds his cause of action upon an
immoral or an illegal act.

EX DOLO MALO Out of fraud; out of deceitful or tortious conduct.

DE DOLO MALO Of or founded upon fraud.

EX TESTAMENTO From, by, or under a will. The opposite of ab intestato

EX NUDO PACTO ACTIO NON ORITUR Latin, meaning No action arises on a contract without
consideration.

ACTIO DE DOLO MALA An action of fraud; an action which lay for a defrauded person against the
defrauder…

LEX NON ORITUR EX INJURIA Latin, meaning The law does not arise from a mere injury.

pari delicto est conditio defendentis - in equal fault ,better is the condition of the
possessor (defendant)

pari delicto (potior/melior est conditio possidentis), Latin for "in equal fault (better is the condition of
the possessor)"- when the parties are equally at wrong, the condition of the possessor is considered
to be better. Simply put, it means a person in a wrongful act cannot sue another person in the same
wrongful act. When two parties have equally wronged, courts will generally not interfere with the
status quo, which is the reason why the possessor is at benefit. The doctrine is also known as the
dirty hands or unclean hands doctrine.

In pari delicto - in equal fault

Potior – more preferable

Melior – better

Est – is

Section-26 Agreement in restraint of marriage – void

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

 Partial restraint
 Total restraint
Every agreement, in restraint (whether partial or total) of the marriage of any person is void, but
restraint on re-marriage is valid. In England only total restraint is void.

Contract for Marriage brokerage and future (not present) separation of husband and wife are
against public policy and void

LOWE V PEERS (1768)

In the said contract, the defendant undertook a contract that he would not marry anyone other than
Mrs. Catherine Lowe and promised to pay her 1000 pounds on default. However, the defendant
married another woman and the plaintiff brought an action towards the defendant. It was held that
the contract was illegal and being in restraint in marriage as it was opposed to public policy - void.

Marriage Brokerage Contract – against public policy and is void. Only the agreement romising money
in lien of marriage is void.

An agreement for the future separation of husband and wife is opposed to public policy.

Section 27 - Agreement in restraint of trade – void

Every agreement by which any one is restrained from exercising a lawful profession, trade or
business of any kind, is to that extent void.

Exception 1 —Saving of agreement not to carry on business of which good-will is sold -

Refrain from carrying on a similar business, within specified local limits (reasonable
restriction)

Art 19 (1) (g) – freedom of trade, profession or business, Art 19(6) deals with reasonable
restrictions.

Object of this public policy is to strengthen the trade and to avoid monopoly.

Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd (1894)

The case also established the Blue pencil doctrine as a method for deciding whether
contractual obligations can be partially enforced

Thorsten Nordenfelt, was a Swedish gun manufacturer. He sold the business to the plaintiff
company against two conditions. That he would not make guns or ammunition anywhere in
the world, and would not compete with Maxim in any way for a period of 25 years’.

The house of lords declared the second covenant void and held the first covenant
valid/reasonable and granted injunction.

Principle: Restraint of trade clauses were prima facie void at common law, but they may be
deemed valid if three conditions are met:

1. the terms seek to protect a legitimate interest

2. the terms are reasonable from the viewpoint of the parties involved
3. the terms are reasonable from the viewpoint of public policy.

Whether unreasonable restraint was severable from the reasonable restraint The court
used the test of whether striking out (with a blue pencil) words containing unreasonable
provisions would leave behind a contractual obligation that still made sense.
“ for the next 25 years, would not make guns or ammunition anywhere in the world , and would
not compete with Maxim in any way"

Exceptions to S 27

a) Sale of Goodwill
b) Partnership Act 1932
c) Traders combinations/Associations to regulate business
d) Service Contracts

Quasi Contract
Developed by common law courts

Remedy under common law – Contractual, Delictual and Quasi Contractual

Quasi(Latin) = as if

No actual contract – no meeting of minds

Law attributes to a particular situation consequence similar to those of contract

Quasi contractual actions were gradually evolved under the stress of practical necessity.

If A gave property to B requiring him to hold it for the benefit of C, equity imposed on B a trust
obligation which C can enforce against B

Theory of unjust enrichment

Moses v Macferlan (1760)

foundational case in the law of restitution