UNIT II

Capacity to Contract
Minor
Age of majority
Nature of minors agreement
Effects of minors 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