BLS LLB 5 Years Sem 5 Contract I 2019-20 Question Paper with Solutions

An invitation to offer, or invitation to treat, is a statement by which a person invites others to make proposals to him. It is not a proposal under Section 2(a) of the Indian Contract Act, 1872, and cannot be accepted into a contract; the response to it is itself the offer.

Two examples:

1. Goods displayed in a shop with a price tag, whether in a window or on a self service shelf. The customer makes the offer at the counter. Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953); Fisher v. Bell (1961).
2. An advertisement, catalogue or price list. Partridge v. Crittenden (1968). Equally, a tender notice, a company's prospectus, and an auctioneer's call for bids.

Section 11 of the Indian Contract Act, 1872, requires a person to be of the age of majority according to the law to which he is subject.

Section 3 of the Indian Majority Act, 1875, fixes the age of majority at eighteen years, and at twenty one years where a guardian of the person or property has been appointed by a court, or where the person's property is under the superintendence of a Court of Wards.

Age is only the first of the three requirements in Section 11: the person must also be of sound mind (Section 12) and not disqualified from contracting by any law to which he is subject.

Section 28 of the Indian Contract Act, 1872, makes void an agreement that absolutely restricts a party from enforcing his rights by the usual legal proceedings in the ordinary tribunals, or limits the time for enforcement, or extinguishes rights or discharges liability on the expiry of a specified period. It contains three exceptions:

1. Exception 1. Arbitration of future disputes. An agreement that any dispute which may arise shall be referred to arbitration, and that only the amount awarded shall be recoverable, is not illegal.
2. Exception 2. Arbitration of existing questions. A written agreement to refer to arbitration a question that has already arisen, and any law in force as to references to arbitration, are unaffected.
3. Exception 3. Bank guarantees. A written contract by which a bank or financial institution stipulates a term in a guarantee extinguishing rights or discharging liability on the expiry of a specified period of not less than one year is not illegal.

Section 41 of the Specific Relief Act, 1963, lists the grounds on which an injunction cannot be granted. Two of them:

1. Section 41(e): to prevent the breach of a contract the performance of which would not be specifically enforced.
2. Section 41(g): to prevent a continuing breach in which the plaintiff has acquiesced.

Others in the section include: to restrain a person from prosecuting a pending judicial proceeding, unless to prevent a multiplicity; to restrain proceedings in a court not subordinate to that from which the injunction is sought; to restrain an application to a legislative body; to restrain criminal proceedings; to prevent an act not reasonably clear to be a nuisance; where equally efficacious relief is available by another usual mode, except for breach of trust; where the plaintiff's conduct disentitles him; where he has no personal interest; and, since 2018, where it would impede or delay an infrastructure project (clause (ha)).

The question is framed on the old Section 20 of the Specific Relief Act, 1963, which governed the court's discretion to decree specific performance. Two of its guidelines were:

1. Old Section 20(2)(a): the court may refuse where the terms of the contract, or the conduct of the parties at the time of entering into it, or other circumstances under which it was entered into, give the plaintiff an unfair advantage over the defendant, even though there may be no fraud or misrepresentation.
2. Old Section 20(2)(b): the court may refuse where the performance would involve some hardship on the defendant which he did not foresee, whereas its non performance would involve no such hardship on the plaintiff.

Section 27(2) of the Specific Relief Act, 1963, lists four cases in which rescission may be refused. Two of them:

1. Where the plaintiff has expressly or impliedly ratified the contract. Having elected to affirm it with knowledge of the facts, he cannot afterwards change his mind.
2. Where, owing to a change of circumstances since the contract was made, not being due to any act of the defendant himself, the parties cannot be substantially restored to the position in which they stood when the contract was made.

The other two are: where third parties have, during the subsistence of the contract, acquired rights in good faith without notice and for value; and where only a part of the contract is sought to be rescinded and that part is not severable from the rest.

For full marks, cover: Section 12 with both its illustrations, what counts as unsoundness, the effect of such an agreement, the burden of proof, and Section 68.

Section 11 requires a party to a contract to be of sound mind, and Section 12 defines the expression.

Section 12. What is a sound mind for the purposes of contracting. "A person is said to be of sound mind for the purpose of making a contract if, at the time when he makes it, he is capable of understanding it and 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."

Illustrations:

• (a) A patient in a lunatic asylum, who is at intervals of sound mind, may contract during those intervals.

For full marks, cover: the rule in Section 25 and the maxim, then every exception with its conditions and case.

Section 25 of the Indian Contract Act, 1872, states the rule: "An agreement made without consideration is void", subject to the exceptions that follow. The maxim is ex nudo pacto non oritur actio, out of a bare promise no action arises.

The exceptions in Section 25 itself:

1. Natural love and affection. Section 25(1). Valid if the agreement is in writing, registered, made on account of natural love and affection, and between parties standing in a near relation to each other. All four conditions are necessary. Rajlukhy Dabee v. Bhootnath Mookerjee: a registered maintenance agreement between a husband and wife living apart after quarrels was unenforceable, the document showing no natural love and affection.

2. Compensation for past voluntary service. Section 25(2). A promise to compensate a person who has already voluntarily done something for the promisor, or something the promisor was legally compellable to do. No writing is needed. Illustration: A finds B's purse and gives it to him; B promises to give A Rs. 50; this is a contract.

9. Charitable subscriptions, where the promisee has, on the faith of the promise, undertaken a liability. Kedar Nath v. Gorie Mohamed (1886 Cal), where municipal commissioners had engaged a contractor on the faith of the subscriptions; contrast Abdul Aziz v. Masum Ali (1914 All), where nothing had been done.

Under other statutes: a negotiable instrument is presumed to have been made for consideration under Section 118 of the Negotiable Instruments Act, 1881.

3. Agreements interfering with the marital relation, for example an agreement to procure a divorce, or to pay a person to desert a spouse, or an agreement for future separation.
4. Agreements for the sale or hire of goods or services for an immoral purpose, where the supplier knows the purpose and participates in it.
5. Marriage brokage agreements, that is paying a third person a commission to procure a marriage, which are also opposed to public policy.

Effect:

1. The agreement is void and unenforceable by either party;
2. money paid under it is irrecoverable, on the principle in pari delicto potior est conditio defendentis, where both parties are equally at fault the defendant is in the stronger position;
3. Section 65 does not assist, because it applies where an agreement is discovered to be void, not where the parties knew of the immorality from the start;

For full marks, cover: Section 27, the goodwill exception in full, the Partnership Act exceptions, the during and after employment distinction, and the contrast with English law.

Section 27 of the Indian Contract Act, 1872: "Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void."

The basis is public policy: every person has a right to earn a living by lawful means, and the public has an interest in the free exercise of trade and skill.

Exception 1, in the section itself. Sale of goodwill. "One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business." This is the only place in Section 27 where reasonableness enters.

For full marks, cover: Section 26 in all four sub-sections, the conditions, and the contrast with cancellation and rescission.

Rectification is the correction by the court of a written instrument which, through fraud or mutual mistake, does not express the real intention of the parties. It is governed by Section 26 of the Specific Relief Act, 1963.

Section 26(1). Where, through fraud or a mutual mistake of the parties, a contract or other instrument in writing, not being the articles of association of a company, does not express their real intention, then (a) either party or his representative may sue for rectification; (b) the plaintiff may claim it in his pleading in any suit in which a right under the instrument is in issue; or (c) a defendant may ask for it in addition to any other defence.

Section 26(2). The court may, in its discretion, direct rectification so as to express the real intention, so far as this can be done without prejudice to rights acquired by third persons in good faith and for value.

Section 26(3). A contract may be first rectified and then specifically enforced, if so prayed.

For full marks, cover: Sections 36 and 37, the table, the three tests for a temporary injunction, and Section 38.

Section 36 of the Specific Relief Act, 1963: "Preventive relief is granted at the discretion of the court by injunction, temporary or perpetual."

Section 37(1). Temporary injunctions are such as are to continue until a specified time, or until the further order of the court; they may be granted at any stage of a suit and are regulated by the Code of Civil Procedure, 1908.

Section 37(2). A perpetual injunction can be granted only by the decree made at the hearing and upon the merits of the suit; the defendant is thereby perpetually enjoined from the assertion of a right, or from the commission of an act, contrary to the plaintiff's rights.

Section 38. When a perpetual injunction is granted. To prevent the breach of an obligation existing in favour of the applicant; where the obligation arises from contract, the court is guided by Chapter II; and where the defendant invades or threatens to invade the plaintiff's right to, or enjoyment of, property, where he is a trustee, where there is no standard for ascertaining the actual damage, where compensation would not afford adequate relief, or where it is necessary to prevent a multiplicity of judicial proceedings.

For full marks, cover: Mohori Bibee and void ab initio, no estoppel, why Section 65 does not help, the limits of restitution where money cannot be traced, and then the rule against ratification for part (ii).

(i) Can Ramu recover on the strength of Chotu's lie?

No. Ramu cannot recover. Chotu's misrepresentation of his age does not assist him.

Step 1. The agreement is void ab initio.

Chotu is 16, and by Section 3 of the Indian Majority Act, 1875, majority is attained at 18. By Section 11 he is not competent to contract, and following Mohori Bibee v. Dharmodas Ghose (1903 PC) a minor's agreement is void ab initio, not merely voidable. There is therefore no contract of loan to sue upon.

Step 2. There is no estoppel against a minor.

• Khan Gul v. Lakha Singh (1928 Lahore FB) allowed restitution of money as well, reasoning that restoring what the minor still had was not enforcing the contract but restoring the parties.
• Ajudhia Prasad v. Chandan Lal (1937 Allahabad FB) confined it to identifiable property, on the view that ordering repayment of money spent is in substance enforcing the void agreement, and that money cannot be traced once spent.

Here the advance is a cash loan of Rs. 10,000, which is not traceable, and Ramu is a moneylender who could have verified Chotu's age. He is very unlikely to obtain restitution.

Conclusion: Ramu has no contractual claim, no estoppel, no claim under Section 65, and no traceable property to restore. The loss falls on the moneylender, and that is a deliberate result: the law places the risk on the person who chooses to deal with a minor.

(ii) Can Ramu recover after Chotu turns 18?

No. The passing of time changes nothing.

For full marks, cover: Section 4 in all its limbs applied to a timeline, the conclusion that the revocation is too late, Byrne v. Van Tienhoven, and then the modes of revocation and lapse under Section 6.

(i) The validity of the revocation

The revocation is invalid. It was too late. A binding contract came into existence on Wednesday, when B posted his acceptance.

The governing provisions.

Section 4. Communication when complete.

• The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

The reasoning.

1. Under Section 5, A could revoke only before the communication of the acceptance was complete as against him.
2. Under Section 4, that moment was Wednesday, when B put his acceptance in a course of transmission by posting it. It is irrelevant that A knew nothing of it until Saturday.

(ii) The ways in which an offer may lapse

Section 6. Revocation how made. A proposal is revoked:

1. By notice of revocation communicated by the proposer to the other party. The notice must actually reach the offeree (Section 4) and must do so before the acceptance is posted (Section 5).
2. By lapse of time, that is by the lapse of the time prescribed in the proposal for its acceptance, or, if none is prescribed, by the lapse of a reasonable time, without communication of the acceptance. What is reasonable depends on the subject matter: an offer to sell perishable goods or shares in a volatile market lapses far sooner than an offer to sell land. Ramsgate Victoria Hotel Co. v. Montefiore (1866).
3. By failure of the acceptor to fulfil a condition precedent to acceptance.
4. By the death or insanity of the proposer, if that fact comes to the knowledge of the acceptor before acceptance. An acceptance made in ignorance of the death is good and binds the estate.

Other ways in which an offer comes to an end, settled by the courts though not listed in Section 6:

Somu also refuses to return the vase but offers to pay for it. (i) What is Bala's remedy in case of the vase?

(ii) What is Bala's remedy in case of the wall obstructing his entrance?

For full marks, cover: for the vase, that Somu is a bailee, that Section 8 of the Specific Relief Act compels delivery of an article of special value and the money offer is no answer; for the wall, the easement of light and air and a mandatory injunction under Section 39.

(i) Bala's remedy in respect of the vase

Bala can compel Somu to deliver the vase itself, and Somu's offer to pay for it is no answer. He should sue under Section 8 of the Specific Relief Act, 1963.

Step 1. Somu is a bailee.

• (a) when the thing claimed is held by the defendant as the agent or trustee of the plaintiff;
• (b) when compensation in money would not afford the plaintiff adequate relief for the loss of the thing claimed;
• (c) when it would be extremely difficult to ascertain the actual damage caused by its loss;
• (d) when the possession of the thing claimed has been wrongfully transferred from the plaintiff."

Every relevant clause is satisfied:

• (a) Somu holds the vase as a bailee, that is in a fiduciary character and certainly not as owner;
• (b) and (c) the vase is an heirloom inherited from Bala's grandfather. It has a special value to him and cannot be replaced by any other vase, so money is not adequate relief and the damage cannot be measured.

1. An easement of light and air. Under Section 15 of the Indian Easements Act, 1882, a right to the access and use of light or air to and for a building may be acquired by prescription, that is by peaceable enjoyment as an easement, without interruption, for twenty years. Where the house has enjoyed the light and air for that period, the right is established. An obstruction that causes a substantial diminution of light or air is an infringement, and is also an actionable private nuisance.
2. A right of access. The wall is built outside the entrance of Bala's house, obstructing his way in. Interference with the only or ordinary access to a house is an infringement of his right of way, whether by grant, by prescription under Section 15, or as a way of necessity under Section 13 of the Easements Act.

Step 5. Bala's absence protects him on acquiescence. Section 41(g) refuses an injunction to prevent a continuing breach in which the plaintiff has acquiesced, and Section 41(i) where the plaintiff's conduct disentitles him. Somu built the wall while Bala was out of India, so Bala neither knew of it nor stood by, and neither ground is open to Somu. Bala should nevertheless sue promptly on his return, since delay is the commonest reason a mandatory injunction is refused.

For full marks, cover: Section 2(a) and the chain of definitions, the classification of proposals, each essential with its section and case, and communication, revocation and lapse under Sections 3 to 6.

Definition

Section 2(a) of the Indian Contract Act, 1872: "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."

The chain of definitions places it: 2(b) acceptance and promise; 2(c) promisor and promisee; 2(e) agreement; 2(h) contract. So Proposal + Acceptance = Promise, and Agreement + Enforceability = Contract.

Kinds of proposal

1. Express and implied. Section 9: in words, the promise is express; otherwise than in words, implied.

2. It must be communicated to the offeree. Section 4: the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. There can be no acceptance in ignorance of the offer: Lalman Shukla v. Gauri Dutt (1913 All); contrast Harbhajan Lal v. Harcharan Lal (1925 All).

3. It must intend to create legal relations. Balfour v. Balfour (1919); rebuttable, Merritt v. Merritt (1970).

4. Its terms must be certain, or capable of being made certain. Section 29. Illustration: an offer to sell "a hundred tons of oil" is uncertain; but if the offeror deals only in coconut oil, his trade makes it certain.

5. It must not contain a term the non compliance with which amounts to acceptance. Felthouse v. Bindley (1862): silence is not acceptance.

6. It may be positive or negative, since the section says "to do or to abstain from doing anything".

7. It may be made to a definite person or to the world at large. Carlill, where the deposit of £1,000 with the company's bankers showed it meant to be bound.

8. Special terms must be brought to the notice of the offeree before or at the time of contracting: Parker v. South Eastern Railway (1877); Henderson v. Stevenson (1875); Olley v. Marlborough Court (1949).

For full marks, cover: Sections 13 and 14, then each of the five vitiating factors with its definition, essentials, cases and effect, and finally the combined effects under Sections 19, 19A, 64, 65 and 72, distinguishing void from voidable.

Consent and free consent

Section 13. Consent. "Two or more persons are said to consent when they agree upon the same thing in the same sense." This is consensus ad idem, and consent is an essential of a valid contract under Section 10.

Section 14. Free consent. "Consent is said to be free when it is not caused by (1) coercion, as defined in Section 15; (2) undue influence, as defined in Section 16; (3) fraud, as defined in Section 17; (4) misrepresentation, as defined in Section 18; (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."

16(2): a person is deemed to be in such a position (a) where he holds a real or apparent authority or stands in a fiduciary relation, or (b) where he contracts with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.

16(3): where such a person contracts and the transaction appears unconscionable, the burden of proving that it was not induced by undue influence lies on the dominant party.

Presumed in parent and child, guardian and ward, trustee and beneficiary, advocate and client, doctor and patient, spiritual adviser and disciple; not presumed between husband and wife (except a pardanashin lady), landlord and tenant, or creditor and debtor.

Cases: Mannu Singh v. Umadat Pande (1890 All); Wajid Khan v. Raja Ewaz Ali Khan; Subhas Chandra Das Mushib v. Ganga Prasad Das Mushib (1967 SC), holding that undue influence must be pleaded and proved.

Effect: Section 19A, voidable, and the court may set the contract aside absolutely or upon such terms as it thinks just.

4. Misrepresentation (Section 18)

(1) a positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true; (2) any breach of duty which, without intent to deceive, gains an advantage by misleading another to his prejudice; (3) causing, however innocently, a party to make a mistake as to the substance of the thing which is the subject of the agreement.

5. Mistake (Sections 20, 21, 22)

• Section 20: a bilateral mistake as to a matter of fact essential to the agreement makes it void. The Explanation excludes an erroneous opinion as to value. Raffles v. Wichelhaus (1864); Couturier v. Hastie (1856).

6. Damages are recoverable only for fraud, in deceit.
7. The proviso to Section 19 bars avoidance for misrepresentation, or fraud by silence, where the party had the means of discovering the truth with ordinary diligence.

• Who must perform (Sections 40 to 45): the promisor personally where personal skill is intended; Section 41, acceptance from a third person discharges the promisor; Sections 42 to 44 on joint promises, under which any one or more joint promisors may be compelled to perform the whole, with equal contribution and the loss of a defaulter shared equally, and the release of one does not discharge the others; Section 45 on joint rights.
• Sections 46 to 50 time and place; Section 55 time as the essence; Sections 59 to 61 appropriation of payments.

2. By mutual agreement or consent (Sections 62 to 67)

Novation, rescission and alteration under Section 62; remission under Section 63, needing no consideration in India; waiver; merger; and Section 67, which excuses a promisor whom the promisee has not afforded reasonable facilities for performance.

3. By impossibility of performance (Section 56)

Initial impossibility makes the agreement void; supervening impossibility, that is frustration, makes the contract void; and a promisor who knew or might with reasonable diligence have known of the impossibility must compensate a promisee who did not.

6. By breach (Sections 39, 73 to 75)

Actual breach, at or during the time for performance, and anticipatory breach, before it, by repudiation or by disabling oneself. Section 39 entitles the promisee to put an end to the contract where the other has refused to perform, or disabled himself from performing, in entirety, unless he has acquiesced. Hochster v. De La Tour (1853) allows an immediate suit.

Remedies for breach: rescission with compensation under Section 75; damages under Sections 73 and 74 on the rule in Hadley v. Baxendale, subject to the duty to mitigate; quantum meruit; and specific performance or injunction under the Specific Relief Act, 1963.

Section 6. Suit by person dispossessed of immovable property

6(1). "If any person is dispossessed without his consent of immovable property otherwise than in due course of law, he or any person claiming through him may, by suit, recover possession thereof, notwithstanding any other title that may be set up in such suit."

6(2). No suit shall be brought (a) after six months from the date of dispossession, or (b) against the Government.

6(3). No appeal and no review lies from any order or decree in such a suit.

6(4). Nothing in the section bars any person from suing to establish his title and recovering possession on that basis.

• The suit is possessory, not proprietary: the only issues are previous possession and wrongful dispossession.
• Title is no defence at all.
• The possession protected is settled possession, not that of a trespasser who has just entered.

The two compared

• Krishna Ram Mahale v. Shobha Venkat Rao (1989 SC): where a person is in settled possession, even on the assumption that he had no right to remain, he cannot be dispossessed by the owner except by recourse to law.
• Rame Gowda v. M. Varadappa Naidu (2004 SC): explains settled possession, which must be effective, undisturbed and to the knowledge of the owner or with his acquiescence; a trespasser in the process of entering may still be resisted.
• Poona Ram v. Moti Ram (2019 SC) restates the position.

Related protection by injunction

Where the plaintiff is still in possession but is being interfered with, the remedy is an injunction: a perpetual injunction under Section 38(3), a mandatory injunction under Section 39 to undo an encroachment, and a temporary injunction under Order XXXIX, Rules 1 and 2, of the Code of Civil Procedure. Section 22 allows possession to be claimed in a suit for specific performance, if specifically claimed.

Its Explanation raised two presumptions: unless and until the contrary is proved, the court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money, and that the breach of a contract to transfer movable property can be so relieved, except where the property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods not easily obtainable in the market, or where it is held by the defendant as the agent or trustee of the plaintiff.

From 1 October 2018, Section 10 reads: "The specific performance of a contract shall be enforced by the court subject to the provisions contained in sub-section (2) of section 11, section 14 and section 16."

The change is fundamental. Specific performance is no longer a discretionary remedy granted where damages are inadequate; it is the rule, and the court shall enforce it unless one of the three named provisions bars it. The old Section 20, which conferred the general discretion, has been substituted by the provision on substituted performance.

Section 20 allows an aggrieved party, after thirty days' written notice, to have the contract performed by a third party or by his own agency and to recover the cost. Clause (a) is the consequence: having had the obligation performed elsewhere, he cannot also demand that the defaulter perform it. He must elect, keeping his claim for the expense. Section 16(a) states the same bar from the other side.

(b) A contract involving the performance of a continuous duty which the court cannot supervise.

Building and maintenance contracts, and agreements to run or manage a business. The objection is practical: a decree the court cannot supervise invites endless applications for execution and contempt. Ryan v. Mutual Tontine Westminster Chambers Association (1893).

(c) A contract so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms.

Contracts of personal service and employment, and contracts to sing, act, paint or write. The performance would be worthless if compelled, and compelling personal service comes close to servitude.

(d) A contract which is in its nature determinable.

The qualification: Section 42

Notwithstanding Section 41(e), where a contract comprises an affirmative agreement coupled with a negative agreement, the court's inability to compel specific performance of the affirmative part does not preclude an injunction to enforce the negative part. Lumley v. Wagner (1852); Niranjan Shankar Golikari v. The Century Spinning and Manufacturing Co. Ltd. (1967 SC).

The danger. Because one party drafts the terms, they favour him and almost always contain exemption or exclusion clauses. The other party frequently does not read them and could not change them if he did, so consent becomes formal rather than real, and the classical assumption of equal bargaining power fails.

The safeguards

1. Reasonable notice of the terms. Parker v. South Eastern Railway (1877): the party relying on printed conditions must show he took reasonable steps to bring them to the notice of the other, before or at the time of contracting.

2. A term must not be hidden. Henderson v. Stevenson (1875): a condition on the back of a steamer ticket, with nothing on the face to point to it, did not bind the passenger.

3. The notice must be contemporaneous with the contract. Olley v. Marlborough Court (1949): a notice in a hotel bedroom came after the contract was concluded at the reception desk and was ineffective.

4. The document must be contractual in character. Chapelton v. Barry Urban District Council (1940): a deck chair ticket was a mere receipt.

• Central Inland Water Transport Corporation v. Brojo Nath Ganguly (1986 SC): a service rule permitting termination of a permanent employee on three months' notice or pay was struck down. A court will not enforce an unfair and unreasonable clause in a contract between parties of unequal bargaining power, applying Section 23 as opposed to public policy, and the Court said the principle applies to standard form contracts.
• LIC of India v. Consumer Education and Research Centre (1995 SC): the standard terms of a State insurer were subjected to Article 14.
• Bharathi Knitting Co. v. DHL Worldwide Express Courier (1996 SC), on a signed limitation of liability clause.

10. Statutory protection. The Consumer Protection Act, 2019, defines and prohibits an "unfair contract", including terms imposing excessive security deposits, a disproportionate penalty, or unilateral termination, and empowers the commissions to declare such terms null and void. Sectoral regulators such as IRDAI, the Reserve Bank of India and TRAI prescribe fair terms, and Article 299 of the Constitution governs government contracts.