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CONTENTS
CONTENTS
Table of cases xv
Table of major statutes xli
Foreword by Abhishek Singhvi xlvii
Acknowledgements li
INTRODUCTION
1.  Introduction 3
Historical origins 3
Sources of law 4
Case law 6
Recourse to English law 7
Our approach 8
The significance of the topic 10
FORMATION
2.  Offer and Acceptance 15
Offer 16
Acceptance 17
Acceptance by silence 18
Acceptance by conduct 19
Acceptance must coincide with the offer, and must be absolute
and unqualified 21
Revocations of offers and acceptances 22
Whether parties are bound pending finalisation of a
formal contract 24
Requirements of form 25
3.  Intention to Create Legal Relations 27
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viii CONTENTS
4.  Certainty 30
Methods of resolving apparent uncertainty 30
Contractual mechanisms 31
Implied terms 32
Interpretation 32
The test for uncertainty 33
Severability 35
5.  Consideration 36
The definition of consideration 36
Consideration must be bargained for 37
Consideration must arise at the desire of the promisor 37
Past consideration 38
Consideration can move to, and from, third parties 39
Consideration must be of value 40
Consideration and pre-existing duties 42
Consideration and contractual variation 44
Exceptions from the requirement of consideration 47
Section 25(1): Registered agreement made on account of natural love
and affection 48
Section 25(2): Agreement to compensate for voluntary acts 48
Section 25(3): Agreement to pay time-barred debt 49
Promissory estoppel 50
CONSENT AND VITIATING FACTORS
6.  Incapacity 53
Minority 54
The general rule 54
Legislation relating to guardianship 54
Statutory claims for reimbursement under Section 68 56
Unsound mind 57
Legal disqualification 59
Consequences and remedies 59
7.  Coercion and Undue Influence 63
Coercion 64
Undue Influence 68
Causation 72
Remedies of the coerced/influenced party 72
Pleading 73
CONTENTS ix
8.  Fraud and Misrepresentation 74
Categories of fraud and misrepresentation 75
Misstatements 76
Culpable silence and active concealment 79
Other misleading conduct 81
Causation and the due diligence exception 82
Remedies of the representee 83
Pleading and proof 84
9.  Mistake 86
Common mistake 86
Existing fact 87
Essentiality test 87
Mistake of law 90
The effect of allocation of risk under the contract 93
Unilateral mistake and non est factum 93
Mutual misunderstanding 95
Consequences and remedies 96
10.  Rescission for Vitiation of Consent 97
Grounds for rescission 97
Exercise of the right of rescission 98
Effect of rescission 98
Bars to rescission 99
Ratification 100
Delay 101
Impossibility of restitution 102
Intervening third-party rights 102
Partial rescission 102
ILLEGALITY
11.  Illegality 107
Nexus between illegality and agreement –
‘object or consideration’ 108
Kinds of illegality 110
Forbidden by law 110
Defeats the provisions of any law 111
Involves injury or is fraudulent 112
Contrary to public policy or morality 113
The rule in Brojo Nath and unfair terms 115
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Consequences of illegality 116
Severability 117
Passing of title 117
The position of the transferor seeking to recover property 117
The position of the transferee seeking to enforce a transfer 121
Restitution 123
12.  Agreements Specifically Proscribed Under the Contract Act 124
Agreements in restraint of marriage 124
Source of restraint 124
Coverage of indirect restraints 125
Restraints on remarriage 126
Agreements in restraint of trade 126
Comparison with English law 127
Types of ‘negative covenants’ 128
Judicial interpretation of Section 27 129
Wide construction of Section 27 129
Attempts to align Section 27 more closely with English law 129
Supreme Court case law and the shift towards a temporal rule 131
Exceptions 135
The ‘goodwill’ exception 135
The partnership exception 136
Agreements in restraint of legal proceedings 136
Restrictions as to time 137
Judicial carve-out for extinction clauses under the unamended
Section 28 137
Criticism by the Law Commission and consequent amendment 137
Time limitations in bank guarantees 138
Restrictions as to forum 139
Exclusive jurisdiction clauses 139
The arbitration exception 140
Wagering agreements 140
Test for labelling a transaction as an agreement by way of wager 141
Collateral contracts 143
INTERPRETATION AND TERMS
13.  Interpretation and Terms 147
Identifying terms 148
The admissibility of extrinsic evidence 149
The provisions of the Evidence Act 150
Judicial decisions on the threshold test for admitting extrinsic evidence 152
How is ‘ambiguity’ understood? 154
CONTENTS xi
Categories of admissible extrinsic evidence 156
Surrounding circumstances (or ‘factual matrix’) 156
Subsequent conduct 156
Antecedent correspondence and negotiating history 158
Evidence of individual subjective intention 159
Principles of interpretation 159
Primacy of the text and its plain meaning 159
Interpreting the contract as a whole and in light of its object 160
Commercial common sense 161
Contra proferentem 162
Rectification 163
PERFORMANCE AND DISCHARGE
14.  Performance 167
The general duty to perform 167
Statutory default terms relating to performance 167
Default terms regarding time of performance 168
Default terms regarding place of performance 168
Default terms regarding who must perform 169
Defences to claims of non-performance 170
Defence of tender 170
Defence of failure to provide reasonable facilities 171
Defence of prevention 172
Defence of failure or unwillingness to perform dependent obligations 173
Defences based on consent of the promisee 174
Vicarious performance 175
Authorised manner of performance 175
Delayed performance 175
Waiver 176
Variation 177
Non-defence of release of a joint promisor 177
Implications of performance and non-performance 177
15.  Discharge by Frustration 178
Timing of the supervening event 179
Effect of the supervening event 180
Physical impossibility 180
Legal impossibility 182
Performance becomes radically different 182
Limits on the ability to invoke supervening events 185
Consequences of discharge under Section 56 187
xii CONTENTS
16.  Discharge by Consent 188
Section 62: Discharge by agreement 188
Section 63: Unilateral discharge 192
17.  Discharge by Breach 195
Entitlement to terminate 195
Renunciation or anticipatory breach 196
Breach of condition 197
Fundamental breach 199
Contractual right to terminate 201
Prevention of performance 202
Election and matters of process 203
Consequences of termination 204
No further performance 204
Innocent party may claim damages 204
Restitutionary remedies and the decision in Muralidhar Chatterjee 204
REMEDIES
18.  Damages 209
Measuring loss 209
Object of the exercise 209
Date of assessment 210
Certainty 212
Damages for loss of profit 212
Punitive damages 214
Mental distress 214
Causation 215
Remoteness 216
The duty to mitigate 219
‘Substituted performance’ 220
Agreed remedies 221
Legislative history and the conscious departure from English law 222
Judicial interpretation of Section 74 223
Stipulated sums 223
‘Other stipulation by way of penalty’ 225
Forfeiture of deposits 225
19.  Specific Performance and Injunctions 227
The 2018 amendment and the two statutory frameworks 228
Specific performance: Bars to specific performance and the
exercise of discretion under the pre-2018 amendment
Specific Relief Act 229
CONTENTS xiii
Statutory Bar I: Damages adequate 229
Statutory Bar II: Party not ready or willing to perform essential terms,
in breach of essential terms, or subverting the intended contractual
relationship 230
Statutory Bar III: Personal service 231
Statutory Bar IV: Continuous supervision 232
Statutory Bar V: Minute or numerous details, dependent on volition, or
otherwise unenforceable 232
Statutory Bar VI: Determinable contracts 233
Statutory Bar VII: Contracts made in breach of trust 233
Statutory Bar VIII: Partial specific performance 234
Statutory Bar IX: Not ‘entitled’ to compensation for breach 235
Exception to Statutory Bars I, IV and VI for particular types of contracts 235
Exercise of discretion 236
Specific performance: Bars to specific performance and the
duty to award specific performance under the post-2018
amendment Specific Relief Act 236
Outline of changes 237
(New) Statutory Bar X: Substituted performance obtained 238
Injunctions 238
Claims for damages in addition to, and in substitution of,
injunctions and orders for specific performance 240
Enforcement 241
Policy justifications for the 2018 amendment 241
20.  Restitution 243
The statutory framework 243
Restitution in circumstances of contractual failure:
Sections 64 and 65 244
Restitution in circumstances of non-gratuitous performance
outside the scope of any valid contract: Section 70 248
Treatment of payments made under mistake or coercion:
Section 72 249
Common law (extra-statutory) defences 250
Content of the duty to make restitution 250
FURTHER TOPICS
21.  Contingent Contracts 255
Contingent contracts (as distinguished from contingent
obligations within contracts) 256
xiv CONTENTS
Contracts contingent on collateral events (as distinguished from
events which are the subject of contractual obligations)