BLS LLB 5 Years Sem 5 Contract I 2025-26 - 60/40 Question Paper with Solutions

An invitation to offer (also called an invitation to treat) is a statement inviting others to make proposals. It is not itself a proposal under Section 2(a) of the Indian Contract Act, 1872, so it cannot be accepted into a contract.

Two examples:

1. Goods displayed in a shop window or on a shelf with a price tag. The display invites the customer to offer to buy; the contract is made at the counter when the shopkeeper accepts. Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953) and Fisher v. Bell (1961).
2. An advertisement, catalogue or price list. Partridge v. Crittenden (1968). Similarly a tender notice, a prospectus inviting share applications, and an auctioneer's request for bids are invitations; the bid is the offer.

No. A minor's agreement is void ab initio following Mohori Bibee v. Dharmodas Ghose (1903), and nothing that is a nullity can be ratified. Ratification relates back to the date of the original act, and on that date the person had no capacity under Section 11.

The rule was applied in Suraj Narain v. Sukhu Aheer (1928 All), where a fresh promise made after majority to pay a debt incurred as a minor was held unenforceable, because the only consideration for it was the void minority transaction. Past consideration furnished during minority cannot support a promise made after majority.

What he CAN do is enter into a completely fresh contract after majority, supported by fresh consideration. That is a new contract, not a ratification of the old one.

Explanation 2 to Section 25 of the Indian Contract Act, 1872: "An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given."

So the position is: consideration must be real and lawful, but need not be adequate. The law asks whether something of value was given, not whether the bargain was a good one. But gross inadequacy is evidence from which a court may infer coercion, undue influence or fraud.

Novation is the substitution of a new contract for an existing one, either between the same parties or between one of them and a stranger, by which the old contract is discharged.

Section 62 provides: "If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed."

Its essentials are that the original contract must be subsisting and enforceable, all parties must consent, and the new agreement must be valid. Novation before breach discharges the old contract; the substitution must take place before the old contract is broken.

A standard form contract is one whose terms are drawn up in advance by one party and offered to the other on a take it or leave it basis, with no real opportunity to negotiate. It is also called a contract of adhesion.

Insurance policies, railway and airline tickets, bank forms, electricity and telephone connections, and the terms attached to online services are the standard examples. They are a commercial necessity, because an enterprise dealing with thousands of customers cannot bargain individually with each.

Because the stronger party writes the terms, the law protects the weaker one through devices such as reasonable notice of the terms, strict construction against the party who drafted them (contra proferentem), and the striking down of unconscionable terms.

3. Compensation (paragraph 3). Where one person promises to do something which he knew, or with reasonable diligence might have known, to be impossible or unlawful, and the promisee did not know it, the promisor must compensate the promisee for the loss.

Grounds on which a contract is frustrated:

1. Destruction of the subject matter. Taylor v. Caldwell (1863): a music hall hired for concerts burnt down before the dates.
2. Death or personal incapacity, where the contract depends on the personal skill or presence of a party. Robinson v. Davison (1871).
3. Change of law or government intervention making performance unlawful.
4. Non-occurrence of a state of things which formed the basis of the contract. Krell v. Henry (1903), the coronation cases.
5. Outbreak of war with the country of the other party.

Situations that do NOT excuse performance:

1. Commercial hardship, a rise in price, or the contract becoming unprofitable.
2. Difficulty of performance short of impossibility.

For full marks, cover: who is a minor, the Mohori Bibee rule, and then each of the settled rules with its authority: no ratification, no estoppel, no specific performance, restitution, necessaries under Section 68, the minor as beneficiary, agency and partnership.

A minor is a person who has not completed 18 years of age under Section 3 of the Indian Majority Act, 1875, and 21 years where a guardian of his person or property has been appointed by a court. Section 11 of the Contract Act says that every person is competent to contract who is of the age of majority, of sound mind, and not disqualified by any law.

1. An agreement by a minor is void ab initio. The Act does not say what the effect of a minor's agreement is, and the Privy Council settled it in Mohori Bibee v. Dharmodas Ghose (1903). A minor mortgaged his house to a moneylender who knew he was a minor, and later sued to have the mortgage set aside. The Privy Council held the mortgage was void, and refused to order the minor to repay the money, since Section 64 applies only to voidable contracts.

5. Liability for necessaries. Section 68: where a person incapable of contracting is supplied by another with necessaries suited to his condition in life, the supplier is entitled to be reimbursed from the property of the incapable person. The minor is not personally liable; only his estate is. Necessaries are goods and services suitable to the minor's station, of which he is not already sufficiently supplied. Nash v. Inman (1908).

6. A minor may be a beneficiary or promisee. The bar is on his incurring obligations, not on his acquiring rights. A minor can be a payee of a promissory note, a mortgagee, or a transferee of property, and can enforce such a contract.

7. A minor cannot be a partner, but under Section 30 of the Indian Partnership Act, 1932, he may be admitted to the benefits of partnership with the consent of all the partners, and his share alone is liable for the firm's acts.

8. A minor can act as an agent and bind the principal, because an agent merely conveys the principal's contractual intention, but he incurs no personal liability to the principal.

9. A contract by a guardian, within his authority and for the minor's benefit, is binding on the minor and can be enforced by or against him.

Section 61. Application where neither party appropriates. Where neither party makes any appropriation, the payment is applied to the discharge of the debts in order of time, whether or not they are barred by limitation; and if the debts are of equal standing, the payment is applied proportionately.

Clayton's Case, properly Devaynes v. Noble (1816), lays down the rule for a single running or current account, such as a bank account. Where there is one blended account, the payments in are appropriated to the debts in the order in which the debts were incurred, so that the first item on the debit side is discharged by the first item on the credit side. This is the rule of "first in, first out".

Illustration. A owes his banker Rs. 10,000 drawn on 1 January, Rs. 15,000 drawn on 1 February and Rs. 20,000 drawn on 1 March, all on one running account. A pays in Rs. 12,000 on 1 April without appropriating it. Under Clayton's rule the Rs. 10,000 of 1 January is wiped out entirely and Rs. 2,000 goes towards the February advance.

Limits of the rule. Clayton's rule applies only where there is one entire running account; it does not apply if the accounts are kept separate, and it may be displaced by agreement or by a contrary intention of the parties.

The three tests for a temporary injunction, which the courts apply cumulatively, are (i) a prima facie case, (ii) the balance of convenience in the applicant's favour, and (iii) irreparable injury that cannot be compensated in money.

Section 41. When an injunction is refused. Among other grounds, an injunction cannot be granted to restrain a person from prosecuting a pending judicial proceeding (unless to prevent a multiplicity of proceedings), to restrain proceedings in a court not subordinate to that from which the injunction is sought, to restrain a person from applying to a legislative body, to restrain criminal proceedings, to prevent the breach of a contract which could not be specifically enforced, to prevent an act of which it is not reasonably clear that it will be a nuisance, where the applicant has acquiesced, where equally efficacious relief can be obtained by another usual mode, where the plaintiff's conduct disentitles him to the court's assistance, or where the plaintiff has no personal interest in the matter.

For full marks, cover: the rule that past consideration furnished without request is no consideration in India, then Section 25(2) as the exception that saves the promise, its four conditions, and the answer to both parts.

(i) Can Y enforce this promise?

Yes, Y can enforce it.

Ordinarily the promise would fail. The act of saving the child was done a year before the promise and not at X's desire, so it does not answer the definition of consideration in Section 2(d), which requires the act to be done "at the desire of the promisor". The rule in Durga Prasad v. Baldeo (1880) is that an act done at the desire of a third party, or voluntarily, is not consideration.

But the promise falls squarely within the second exception in Section 25.

Conclusion on (i): Y can sue X for the arrears and for the future monthly payments. The promise is protected by Section 25(2), and X's plea that there was no consideration will fail.

(ii) Does it have valid consideration?

Strictly, no, and it does not need any.

There is no consideration in the sense of Section 2(d), because the act was past and was not done at X's desire. What the promise has instead is the statutory protection of Section 25(2), which declares that an agreement of this description is not void for want of consideration.

So the correct answer distinguishes two things:

• Consideration under Section 2(d): absent.
• Enforceability: present, because Section 25(2) is an express exception to the general rule in the opening words of Section 25 that "an agreement made without consideration is void".

1. The contract is one of personal skill and performance. Bhavesh engaged Archana to play, not merely someone to play. Such a contract cannot be performed by a substitute, and Section 40 provides that where it appears from the nature of the case that the parties intended a promise to be performed by the promisor himself, it must be performed by him.
2. Serious illness makes performance impossible, not merely difficult. In a contract dependent on the personal skill or presence of a party, death or incapacitating illness discharges the contract. Robinson v. Davison (1871) is directly on the point: a pianist contracted to perform at a concert on a particular day, fell ill and was unable to play, and it was held that the contract was conditional on her being well enough to perform, so she was excused and the plaintiff could not recover damages.
3. Section 56 paragraph 2 applies. "A contract to do an act which, after the contract is made, becomes impossible ... becomes void when the act becomes impossible." The contract becomes void automatically on the night in question.

Two qualifications that a careful answer adds:

Paragraph 3. Compensation for a known impossibility. Where one person promises to do something which he knew, or with reasonable diligence might have known, and which the promisee did not know, to be impossible or unlawful, that promisor must make compensation to the promisee for any loss sustained through the non performance.

Grounds of frustration: destruction of the subject matter (Taylor v. Caldwell), death or personal incapacity (Robinson v. Davison), supervening illegality or change of law, non occurrence of the state of things forming the basis of the contract (Krell v. Henry), and outbreak of war.

Not grounds: commercial hardship, rise in price, difficulty short of impossibility, strikes, default of a third party, and self induced impossibility.

Restitution. Section 65: when a contract becomes void, any person who has received any advantage under it is bound to restore it, or to make compensation for it, to the person from whom he received it.

The strength of the remedy for Sunil is in those last words. In a Section 6 suit the only questions are (a) whether the plaintiff was in possession, and (b) whether he was dispossessed otherwise than in due course of law. Atul's claim that he is the true owner is irrelevant and cannot be tried in that suit. Sunil need not prove any title at all.

The conditions and limits of Section 6:

1. The property must be immovable.
2. The plaintiff must have been in possession and dispossessed without his consent and otherwise than in due course of law, which is exactly what Atul has done by taking the law into his own hands.
3. Section 6(2)(a): the suit must be brought within six months from the date of dispossession.
4. Section 6(2)(b): no such suit shall be brought against the Government.
5. Section 6(3): no appeal and no review lies from an order or decree passed in such a suit. The only recourse is a writ or revision, on limited grounds.
6. Section 6(4): nothing in the section bars any person from suing to establish his title and to recover possession on that basis.

A marriage brokage agreement, that is an agreement to pay money to a third person as a reward for negotiating or procuring a marriage, has long been held to be opposed to public policy. The reason is that marriage should be entered into on the free choice of the parties and the advice of those who care for them, and not for a broker's commission, which puts a stranger's financial interest in the way of that choice.

Applying this to the facts:

• The consideration for B's promise to pay is A's act of procuring the marriage; the object of the agreement is the procuring of a marriage for reward.
• Both are opposed to public policy, so the agreement is void under Section 23.
• Because it is void, no suit lies on it. A cannot sue B for the Rs. 20,000, and it makes no difference that A has already performed his side.

2. It is of such a nature that, if permitted, it would defeat the provisions of any law. The act is not directly forbidden, but enforcing the agreement would frustrate the purpose of a statute. An agreement by a debtor not to plead limitation, or an agreement to evade the provisions of a rent control or revenue law.
3. It is fraudulent. An agreement whose object is to defraud a third party or the creditors of one of the parties, for example a transfer made to put property beyond the reach of creditors.
4. It involves or implies injury to the person or property of another. An agreement to assault a person, or to publish a libel.
5. The Court regards it as immoral. Agreements founded on sexual immorality, such as a promise to pay for cohabitation, and agreements interfering with the marital relation.
6. The Court regards it as opposed to public policy. The recognised heads include trading with an enemy, stifling a prosecution, maintenance and champerty, interference with the course of justice, marriage brokage agreements, agreements in restraint of parental rights or of personal liberty, agreements tending to create monopolies, and the sale of public offices and titles.

• Attempted performance or tender (Section 38). Where a promisor offers to perform and the offer is not accepted, the promisor is not responsible for non performance and does not lose his rights under the contract. A valid tender must be unconditional, made at a proper time and place, and made to a person willing and able to accept it; and where it is a tender of goods, the promisee must have a reasonable opportunity of inspecting them.
• Related rules: who may perform (Section 40), effect of accepting performance from a third person (Section 41), joint promises (Sections 42 to 45), time and place of performance (Sections 46 to 50), reciprocal promises (Sections 51 to 54), time as the essence of the contract (Section 55), and appropriation of payments (Sections 59 to 61).

2. Discharge by agreement or consent (Sections 62 to 67)

What is created by agreement may be undone by agreement. The maxim is eodem modo quo quid constituitur, eodem modo destruitur.

• Novation (Section 62): substitution of a new contract for the old one, between the same or different parties.

3. Discharge by impossibility of performance (Section 56)

Initial impossibility makes the agreement void; supervening impossibility makes the contract void when the act becomes impossible or unlawful, and this is the doctrine of frustration. The grounds are destruction of the subject matter (Taylor v. Caldwell), death or personal incapacity (Robinson v. Davison), supervening illegality, non occurrence of the basis of the contract (Krell v. Henry) and outbreak of war. Commercial hardship, difficulty, strikes and self induced impossibility are not grounds. Section 65 requires restitution of advantages received.

4. Discharge by lapse of time (Limitation Act, 1963)

A contract must be performed and enforced within the period prescribed by the Limitation Act, 1963. If the promisee does not sue within it, the remedy is barred and the contract is discharged for practical purposes. The ordinary period for a suit for breach of contract is three years from the date on which the cause of action arose, and for a suit for specific performance three years under Article 54.

5. Discharge by operation of law

• Death, where the contract depends on the personal skill or qualification of the deceased.

Remedies for breach. Rescission of the contract; damages under Sections 73 and 74; suit upon quantum meruit; specific performance and injunction under the Specific Relief Act, 1963; and compensation on rightful rescission under Section 75.

1. Acceptance converts a proposal into a promise, instantly and irrevocably. 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." Before acceptance the proposer is free; the moment acceptance is complete, an agreement exists and the proposer is bound whether he likes it or not. Like the explosion, it cannot be recalled.

2. But the proposer may withdraw before the match is applied. Section 5: "A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards." The train of powder may be removed before the match touches it.

3. And the proposal may lapse of its own accord. The powder may become damp. Under Section 6, a proposal is revoked by notice of revocation, by lapse of the time prescribed or a reasonable time, by failure of the acceptor to fulfil a condition precedent, and by the death or insanity of the proposer, if that fact comes to the knowledge of the acceptor before acceptance.

So the metaphor is not a piece of decoration. It captures the exact moment at which the law transfers freedom into obligation, and it warns that everything before that moment is provisional.

3. It must be communicated to the proposer. A mental resolve to accept is not acceptance. Section 3 provides for communication by any act or omission by which a party intends to communicate, or which has the effect of communicating. In Brogden v. Metropolitan Railway (1877) conduct amounted to communication, and in Powell v. Lee (1908) an acceptance communicated by an unauthorised person was held ineffective.

4. Silence is not acceptance. The proposer cannot prescribe that silence shall amount to acceptance. Felthouse v. Bindley (1862): "if I hear no more about him, I consider the horse mine at £30" did not bind the nephew who said nothing. This is because acceptance must be signified, and a person cannot be forced into a contract by being made to speak.

5. It must be given by the person to whom the proposal is made. A proposal made to a particular person can be accepted only by him. Boulton v. Jones (1857). Where the offer is general, as in Carlill v. Carbolic Smoke Ball Co. (1893), anyone who fulfils the conditions may accept.

6. It must be given while the proposal subsists, that is before it lapses or is revoked under Section 6.

Section 5 then gives the acceptor his own escape route: "An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards." Because the acceptor is bound only when the proposer learns of the acceptance, a letter of acceptance may be overtaken by a faster telegram of revocation.

For instantaneous communication, the postal rule does not apply. In Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas and Co. (1966), the Supreme Court held that where parties contract by telephone, the contract is made where the acceptance is heard by the proposer, following Entores v. Miles Far East Corporation (1955).

2. The event must be uncertain. If the event is bound to happen, the contract is not contingent but simply a contract with performance postponed.
3. The event must be collateral to the contract, that is incidental to it, and must not be a performance promised by either party or the consideration for the contract.

A contract of insurance and a contract of indemnity or guarantee are the standard commercial examples.

Rules as to enforcement (Sections 32 to 36)

1. Contracts contingent on an event happening (Section 32). Such contracts cannot be enforced by law unless and until that event has happened. If the event becomes impossible, the contract becomes void.

Illustration: A makes a contract with B to buy B's horse if A survives C. The contract cannot be enforced by law unless C dies in A's lifetime.

2. Contracts contingent on an event not happening (Section 33). Such contracts can be enforced when the happening of that event becomes impossible, and not before.

Illustration: A agrees to pay B a sum of money if a certain ship does not return. The contract can be enforced if the ship sinks.

6. Agreements contingent on an impossible event (Section 36). "Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made."

Illustration: A agrees to pay B Rs. 1,000 if B will marry A's daughter C. C was dead at the time of the agreement. The agreement is void.

Contingent contract distinguished from a wagering agreement

For full marks, cover: what specific performance is, the change made by the Specific Relief (Amendment) Act, 2018, Section 10 as it now stands, Section 11, Section 12, who may sue under Section 15, the personal bars in Section 16, and the contracts that cannot be enforced under Section 14, with Section 20 on substituted performance.

What specific performance is

Specific performance is an equitable remedy by which the court directs a party to a contract to perform the contract according to its terms, instead of leaving the aggrieved party to damages. It is granted under Chapter II of the Specific Relief Act, 1963.

The change made by the 2018 Amendment

This is the first thing to state, because it reversed the basic rule.

2. Section 11. Contracts connected with trusts. Sub-section (1): a contract shall be specifically enforced where the act agreed to be done is in the performance wholly or partly of a trust. Sub-section (2): a contract made by a trustee in excess of his powers, or in breach of trust, cannot be specifically enforced.

3. Section 12. Specific performance of part of a contract. The general rule in 12(1) is that the court shall not direct the specific performance of a part of a contract. The exceptions are:

• 12(2): where the part which must be left unperformed bears only a small proportion to the whole in value and admits of compensation in money, the court may direct specific performance of so much as can be performed, and award compensation for the deficiency.
• 12(3): where the unperformed part is large, or does not admit of compensation in money, the party in default cannot sue for specific performance, but the other party may, if he relinquishes all claim to further performance and to compensation.
• 12(4): where a part of a contract is by itself a separate and independent part, capable of separate performance, the court may enforce that part.

7. Section 20. Substituted performance (as substituted in 2018). Where a contract is broken, the aggrieved party is entitled to have the contract performed by a third party or by his own agency, and to recover the expenses and costs from the party in breach, provided he first gives notice in writing of not less than thirty days calling on the party in breach to perform. Once he has obtained substituted performance, he cannot claim specific performance, but he may still claim compensation.

Contracts that cannot be specifically enforced

Section 14 (as substituted in 2018). The following contracts cannot be specifically enforced:

• (a) where a party to the contract has obtained substituted performance under Section 20;
• (b) a contract involving the performance of a continuous duty which the court cannot supervise;
• (c) a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms;
• (d) a contract which is in its nature determinable.

Section 17. A contract to sell or let property by a person who has no title cannot be specifically enforced in his favour.

Compensation alongside specific performance

Section 21 allows the plaintiff in a suit for specific performance to also claim compensation for the breach, either in addition to or in substitution for performance, provided the claim is made in the plaint. Section 22 allows him to claim possession, partition and other reliefs in the same suit, and again these must be specifically claimed. Section 23 provides that a stipulation for liquidated damages does not by itself bar specific performance.