BLS LLB 5 Years Sem 5 Contract I 2024-25 - ATKT 60/40 Question Paper with Solutions

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 that limits the time within which he may enforce them, or that extinguishes his rights or discharges a party from liability on the expiry of a specified period.

The section contains three exceptions:

1. Exception 1. Arbitration of future disputes. The section does not render illegal a contract by which two or more persons agree that any dispute which may arise between them shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable.

Substituted performance was introduced by the Specific Relief (Amendment) Act, 2018, which substituted a new Section 20 in the Specific Relief Act, 1963.

Where a contract is broken, the party who suffers is entitled to have the contract performed by a third party or by his own agency, and to recover the expenses and other costs actually incurred from the party in breach.

The conditions are:

1. Written notice of not less than thirty days must be given to the party in breach, calling on him to perform within that time;
2. Only on his refusal or failure may substituted performance be procured; and
3. Having obtained substituted performance, the party cannot claim specific performance, though he may claim compensation.

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) and cannot be accepted into a contract.

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 and the shopkeeper accepts. 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 inviting applications for shares, and an auctioneer's call for bids are invitations, the bid being the offer.

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 the contract 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. Rescission requires restitutio in integrum, and where that has become impossible the remedy fails.

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.

Section 6(2)(b): "No suit under this section shall be brought against the Government."

Section 6(1) gives a person dispossessed of immovable property without his consent and otherwise than in due course of law a summary remedy to recover possession, notwithstanding any other title that may be set up. Section 6(2) places two limits on it: the suit must be brought within six months of the dispossession, and it cannot be brought against the Government.

A person dispossessed by the Government must therefore proceed by an ordinary suit on title under Section 5, or by a writ petition under Article 226 of the Constitution.

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 summary and possessory. The only issues are previous possession and wrongful dispossession.
• Title is no defence at all.
• The possession protected must be settled possession, not that of a trespasser who moved in days earlier.

The two compared

Related protection

Where the plaintiff is still in possession but is being interfered with, the remedy is an injunction: a perpetual injunction under Section 38, a mandatory injunction under Section 39 to undo an encroachment, and a temporary injunction under Order XXXIX of the Code of Civil Procedure to hold the position during the suit. Section 22 allows possession to be claimed in a suit for specific performance, provided it is specifically claimed.

All four conditions must be satisfied. In Rajlukhy Dabee v. Bhootnath Mookerjee a registered agreement by a husband to pay maintenance to his wife, from whom he was living separately after quarrels, was held unenforceable, because although the parties were near relations, the document itself showed there was no natural love and affection between them.

2. Compensation for past voluntary service. Section 25(2). A promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do, is enforceable.

Conditions: the act must have been voluntary, that is not at the promisor's request; it must have been done for the promisor; the promisor must have been in existence and competent to contract when it was done; and the promise must be to compensate for that act. No writing is required.

Illustration: A finds B's purse and gives it to him. B promises to give A Rs. 50. This is a contract.

7. Remission. Section 63: a promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, may extend the time for performance, or may accept any satisfaction he thinks fit. No consideration is needed for a remission in India, a deliberate departure from the English rule in Pinnel's Case and Foakes v. Beer.

8. Gratuitous bailment. Section 148: a bailment without reward is valid, and the bailee's duties arise without consideration.

Exception recognised by the courts

9. Charitable subscriptions, where the promisee has, on the faith of the promise, undertaken a liability. Kedar Nath v. Gorie Mohamed (1886 Cal): a subscriber towards the building of a town hall was held bound, because the municipal commissioners had, on the faith of the subscriptions, engaged a contractor and incurred liability. Contrast Abdul Aziz v. Masum Ali (1914 All), where nothing had been done on the faith of the promise and the subscription was unenforceable.

Under other statutes

10. A negotiable instrument is presumed to have been made for consideration under Section 118 of the Negotiable Instruments Act, 1881.

For full marks, cover: Section 26 in all four sub-sections, the conditions, what rectification is and is not, 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 dealt with in Chapter III of the Specific Relief Act, 1963, in Section 26.

Section 26. When instrument may be rectified

26(1). When, 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 to which the Companies Act applies, does not express their real intention, then:

• (a) either party or his representative in interest may institute a suit to have the instrument rectified; or

Conditions

1. There must be a contract or other instrument in writing.
2. It must fail to express the real intention of the parties.
3. The failure must be due to fraud or mutual mistake. A unilateral mistake is not enough unless accompanied by the fraud or inequitable conduct of the other party.
4. The articles of association of a company are excluded.
5. The remedy is discretionary.
6. Third parties who acquired rights in good faith and for value are protected.
7. The relief must be specifically claimed, with liberty to amend.

Rules of enforcement

Section 32. Contingent on an event happening. Such contracts cannot be enforced unless and until that event has happened, and become void if the event becomes impossible. Illustration: A contracts to buy B's horse if A survives C. The contract cannot be enforced unless C dies in A's lifetime.

Section 33. Contingent on an event not happening. 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.

Section 34. Event linked to the future conduct of a living person. The event is considered impossible when the person does anything which renders it impossible that he should so act within any definite time, or otherwise than under further contingencies. Illustration: A agrees to pay B a sum of money if B marries C. C marries D. The marriage of B to C is now considered impossible, though D may die and C may afterwards marry B.

For full marks, cover: Section 15, the point that a threat to commit suicide is a threat to commit an act forbidden by the Penal Code, Chikham Amiraju v. Chikham Seshamma, the effect under Sections 19 and 64, and the current status of attempted suicide as an offence.

(a) Can the wife avoid the contract?

Yes. The wife can avoid the transfer. Her consent was caused by coercion, and the contract is voidable at her option.

Step 1. The definition. Section 15. "Coercion" defined.

"Coercion is the committing, or threatening to commit, any act forbidden by the Indian Penal Code, 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 threatened to commit suicide, an act forbidden by the Penal Code within the meaning of Section 15.
• The threat was made to the prejudice of his wife, and Section 15 expressly extends to a threat "to the prejudice of any person whatever".
• It was made with the intention of causing her to enter into the agreement, namely the transfer of her personal assets.
• Her consent was therefore not free under Section 14, being caused by coercion.

Step 4. The consequences.

• Section 19: "When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused." The wife may rescind the transfer.
• Section 64: on rescission she must restore any benefit she has received under the contract.
• Section 72: "A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it." So she may recover the assets transferred.

This does not change the answer. The reasoning in Chikham Amiraju rests on the word "forbidden", not "punishable", and the deliberate taking of one's own life remains an act the law forbids rather than permits. Moreover, a threat of this kind directed by a husband at his wife to extract her property would independently amount to undue influence under Section 16, and could well constitute cruelty under Section 498A of the Penal Code, now Section 85 of the Bharatiya Nyaya Sanhita, which is itself an act forbidden by the criminal law. A careful answer states the point and shows both routes.

(b) The case law

Chikham Amiraju v. Chikham Seshamma (1912 Madras), set out above, is the case directly in point and is the one the examiner is looking for.

Two supporting authorities are worth adding:

• Ranganayakamma v. Alwar Setti (1889 Madras): the relatives of a deceased Hindu prevented his widow, a girl of 13, from removing his corpse for cremation until she consented to adopt a boy. The adoption was held to have been obtained by coercion, since obstructing a funeral is an offence.

For full marks, cover: the definition of specific performance and the change made in 2018, then Section 7 of the Partnership Act, Section 43, and Section 14(d) of the Specific Relief Act, with the remedies that remain.

(a) What is specific performance of contract?

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

It exists because damages are not always an adequate substitute: money will buy another consignment of wheat, but not the particular plot of land or the particular painting.

Step 2. A partnership at will can be dissolved at any moment.

Section 43 of the Partnership Act: "Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm."

So even if the court compelled A and B to become partners today, either could dissolve the firm tomorrow by a written notice, and the decree would be worthless.

Step 3. Section 14(d) of the Specific Relief Act, 1963.

As substituted in 2018, Section 14 provides that the following contracts cannot be specifically enforced: "... (d) a contract which is in its nature determinable."

A partnership of unspecified duration is the standard illustration of a determinable contract, and was the express illustration to the old Section 14(1)(c) before the amendment.

Step 4. Two further grounds.

• Section 14(c): a partnership is a relation of mutual trust and confidence, delectus personae. A contract "so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms" cannot be enforced.

For full marks, cover: Mohori Bibee, that a minor's agreement is void ab initio, that there is no estoppel against a minor, the limits of restitution where money cannot be traced, and then the rule against ratification for part (b).

(a) Can Ramu recover the money on the basis of Chotu's lie?

No. Ramu cannot recover the money. Chotu's misrepresentation of his age does not help him.

Step 1. The agreement is void ab initio.

Chotu is 16 years old, and under Section 3 of the Indian Majority Act, 1875, a person attains majority at 18. By Section 11 of the Contract Act 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 on which Ramu can sue.

• In Mohori Bibee the Privy Council held that Sections 64 and 65 do not apply to a minor's agreement at all, because there was never any contract, and Section 65 speaks of an agreement "discovered to be void", which presupposes parties who did not know of the invalidity.
• The weight of authority is that Section 65 cannot be used to make a minor personally liable to repay, since that would be to enforce indirectly the very agreement the law declares void.

Step 4. Can Ramu claim restitution in equity?

Only if the money or property is traceable, which it is not here. Where a minor obtains property by falsely representing his age, and the property is still in his hands and identifiable, a court may order restitution under the equitable doctrine and under Section 33 of the Specific Relief Act, 1963, which allows the court, on adjudging the cancellation of an instrument, to require the party to whom relief is granted to restore any benefit received.

But there is a division of authority on money:

• Khan Gul v. Lakha Singh (1928 Lahore, Full Bench) allowed restitution of money as well as property, reasoning that restoring what the minor still had was not enforcing the contract but restoring the parties.

1. A minor's agreement cannot be ratified on attaining majority. A void agreement is a nullity, and ratification relates back to the date of the original act, when Chotu had no capacity. Suraj Narain v. Sukhu Aheer (1928 All): a fresh promise made after majority to pay a debt incurred as a minor was unenforceable, the only consideration for it being the void minority transaction. Past consideration furnished during minority cannot support a promise made after majority.
2. No fresh cause of action arises on his 18th birthday. Chotu incurs no liability by simply growing older, and Ramu's claim does not revive.

For full marks, cover: Section 16 in all three sub-sections, apply 16(2)(b) to the mental distress caused by the business loss, note that friendship raises no presumption, then Section 16(3) on the burden of proof, and list the relationships in which undue influence is presumed.

(a) Can A set the contract aside?

Yes, A has a good arguable case, and if he can show that the friend was in a position to dominate his will, the burden of proving that the sale was not induced by undue influence will shift to the friend. The contract is then voidable at A's option under Section 19A.

Step 1. The definition. Section 16(1).

"A contract is said to be induced by 'undue influence' where (i) the relations subsisting between the parties are such that one of them is in a position to dominate the will of the other, and (ii) he uses that position to obtain an unfair advantage over the other."

Note what does not assist A. Mere friendship raises no presumption. The relationship of friend and friend is not among those in which a position of dominance is presumed, so A cannot rest on the relationship alone; he must prove the distress and the friend's knowledge of it. The words "at his suggestion", meaning at the friend's suggestion, are important, because they show that the friend initiated the transaction rather than merely accepting an offer.

Step 3. Was an unfair advantage obtained?

Plainly yes. Property worth Rs. 10 crore was sold for Rs. 5 crore, that is at half its value. That is a substantial and evident advantage to the friend.

Step 4. The burden of proof. Section 16(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."

Note also Explanation 2 to Section 25: the inadequacy of the consideration does not by itself make the contract void, but it "may be taken into account by the Court in determining the question whether the consent of the promisor was freely given". The gross undervalue is therefore evidence and not a ground on its own.

Conclusion: A should sue to have the sale set aside under Section 19A, pleading undue influence under Section 16(2)(b), and, since the property has been conveyed, seeking cancellation of the sale deed under Section 31 of the Specific Relief Act, 1963. His prospects depend on proving the mental distress and the friend's knowledge of it; the unconscionable price then does the rest by shifting the burden.

(b) When is undue influence presumed?

Undue influence is presumed, that is a position to dominate the will is presumed, in the following:

Under Section 16(2)(a): real or apparent authority, or a fiduciary relation.

1. Parent and child, and guardian and ward;
2. Trustee and beneficiary;
3. Solicitor or advocate and client;
4. Doctor and patient;

• Husband and wife, except where the wife is pardanashin;
• Landlord and tenant;
• Creditor and debtor;
• Friend and friend, which is why A in this problem must rely on Section 16(2)(b) and not on the friendship.

Subhas Chandra Das Mushib v. Ganga Prasad Das Mushib (1967 SC) is the leading authority on this last point: the Supreme Court held that undue influence must be specifically pleaded and proved, that the mere existence of a relationship is not enough, and that the court must be satisfied of both limbs, the position to dominate and its use to obtain an unfair advantage. Lakshmi Amma v. Telengala Narayana Bhatta (1970 SC) is to the same effect.

For full marks, cover: Section 2(g) and the void, voidable and becomes void distinction, then each expressly void category in section order with the exceptions to Sections 26, 27 and 28 in full, and close with Section 65 and the void against illegal point.

Definition

Section 2(g) of the Indian Contract Act, 1872: "An agreement not enforceable by law is said to be void."

A void agreement is a nullity from the outset, void ab initio. It creates no rights and imposes no obligations, and no suit lies upon it by either party.

Distinguish it from:

• a voidable contract, Section 2(i), which is "enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others", and which is valid and binding until avoided; and
• a contract which becomes void, Section 2(j), which "ceases to be enforceable by law", having been valid when made, as under Section 56.

3. Agreements with unlawful consideration or object. Section 23. The consideration or object is unlawful where it is forbidden by law; is of such a nature that if permitted it would defeat the provisions of any law; is fraudulent; involves or implies injury to the person or property of another; or the court regards it as immoral or opposed to public policy. Every such agreement is void. The settled heads of public policy 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 personal liberty, and the sale of public offices.

4. Agreements with unlawful consideration in part. Section 24. If any part of a single consideration for one or more objects, or any one or part of several considerations for a single object, is unlawful, the agreement is void as a whole, unless the unlawful part can be severed.

5. Agreements without consideration. Section 25, subject to its three exceptions and Explanation 1.

• Judicial exceptions: trade combinations that regulate rather than restrain; exclusive dealing and sole selling agency agreements; and restraints operating during employment, Niranjan Shankar Golikari v. The Century Spinning and Manufacturing Co. Ltd. (1967 SC). Restraints operating after employment are void: Superintendence Company of India v. Krishan Murgai (1980 SC); Percept D'Mark (India) v. Zaheer Khan (2006 SC).
• India has no reasonableness test, unlike England (Nordenfelt, 1894): Madhub Chunder v. Rajcoomar Doss (1874 Cal).

8. Agreements in restraint of legal proceedings. Section 28. Void to the extent that they absolutely restrict a party from enforcing his rights by the usual legal proceedings, limit the time for enforcement, or extinguish rights or discharge liability on the expiry of a specified period.

• Exception 1: arbitration of future disputes.
• Exception 2: arbitration of existing questions.

• A wager is void but not illegal, so collateral transactions are enforceable: Gherulal Parakh v. Mahadeodas Maiya (1959 SC). In Maharashtra and Gujarat, the Bombay Wagers (Amendment) Act, 1865, makes wagers illegal, and collateral transactions fall with them.

11. Agreements contingent on an impossible event. Section 36. Void whether the impossibility is known to the parties or not.

12. Agreements to do an act impossible in itself. Section 56, first paragraph.

13. Reciprocal promises to do illegal acts. Sections 57 and 58. Under Section 57, where persons reciprocally promise, first, to do legal things and secondly, under specified circumstances, to do illegal things, the first set is a contract and the second a void agreement. Under Section 58, in an alternative promise one branch of which is legal and the other illegal, the legal branch alone can be enforced.

Effect: Section 65

"When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it."

For full marks, cover: Section 2(a) and the related definitions, the classification of offers, each essential as a numbered heading with sections and cases, then communication under Sections 3 and 4 and revocation and lapse under Sections 5 and 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 related definitions complete the chain:

• Section 2(b): when the person to whom the proposal is made signifies his assent, the proposal is accepted, and a proposal when accepted becomes a promise.
• Section 2(c): the person making the proposal is the promisor, and the person accepting it the promisee.

4. Counter offer, which is a fresh proposal and destroys the original: Hyde v. Wrench (1840).
5. Standing or continuing offer, as in a tender for the supply of goods over a period, which is accepted each time an order is placed.

The essentials of a valid proposal

1. It must be made with a view to obtaining the assent of the other party. This is the phrase that separates a proposal from an invitation to offer, a mere statement of price, or a declaration of intention. Harvey v. Facey (1893): a telegram stating the lowest price of a property was information, not an offer. Shop displays (Pharmaceutical Society of Great Britain v. Boots, 1953), advertisements (Partridge v. Crittenden, 1968), tender notices, prospectuses and auction announcements are invitations.

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).

7. It may be made to a definite person or to the world at large. Carlill v. Carbolic Smoke Ball Co. (1893), where an advertisement was held to be a proposal because the company had deposited £1,000 with its bankers to show its sincerity.

8. It must be distinguished from a mere statement of intention, or a declaration. An announcement that goods will be sold by auction is not an offer to sell, and a person who travels to the auction cannot sue if it is cancelled: Harris v. Nickerson (1873).

9. Special terms and conditions must be brought to the notice of the offeree before or at the time of contracting, particularly in standard form contracts: Parker v. South Eastern Railway (1877); Henderson v. Stevenson (1875); Olley v. Marlborough Court (1949).

10. It must be capable of acceptance while it subsists, that is before it lapses or is revoked under Section 6.

Communication, revocation and lapse

Section 3 provides that the communication of proposals, and of the acceptance and revocation of proposals, is deemed to be made by any act or omission of the party by which he intends to communicate, or which has the effect of communicating it.

For full marks, cover: Sections 36 and 37(2) for the definition, Section 38 in all three sub-sections, the contrast with a temporary injunction, then every clause of Section 41 for the second limb, and close with Sections 39, 40 and 42.

What a perpetual injunction is

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(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, which would be contrary to the rights of the plaintiff."

So a perpetual injunction is a final order, made after the merits have been tried on evidence, which permanently restrains the defendant.

Explanation. For the purpose of this section, a trespass to property occasioning or likely to occasion irreparable injury shall be deemed an invasion within clause (c).

Perpetual and temporary injunctions compared

• (ha) if it would impede or delay the progress or completion of any infrastructure project, or interfere with the continued provision of a relevant facility related to such a project (inserted in 2018);
• (i) when the conduct of the plaintiff or his agents has been such as to disentitle him to the assistance of the court;
• (j) when the plaintiff has no personal interest in the matter.

Related provisions

• Section 39. Mandatory injunction, compelling the performance of acts the court is capable of enforcing, in order to undo a breach.

For full marks, cover: the definition and the commercial necessity, the danger, then each safeguard as a numbered heading with its case, giving the most space to the notice cases and to Brojo Nath Ganguly, and close with the statutory controls.

What a standard form contract is

A standard form contract, also called a contract of adhesion, 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. The weaker party has the freedom to contract or not to contract, but no freedom to settle the terms.

Examples: insurance policies, bank and loan documents, hire purchase agreements, railway, bus and airline tickets, electricity and telephone connections, hotel, laundry and parking receipts, employment forms, and the terms of service of online platforms, including clickwrap, shrinkwrap and browsewrap agreements.

• Henderson v. Stevenson (1875): a condition printed on the back of a steamer ticket, with nothing on the face to point to it, did not bind the passenger.
• Thornton v. Shoe Lane Parking (1971): a condition referred to on a ticket issued by an automatic machine and displayed inside the car park was insufficiently prominent and came too late. Lord Denning said that a particularly onerous clause would need to be printed in red ink with a red hand pointing to it.

2. Notice must be contemporaneous with the contract. Olley v. Marlborough Court (1949): a notice in a hotel bedroom disclaiming liability was ineffective, because the contract had been concluded at the reception desk.

3. The document must be contractual in character. Chapelton v. Barry Urban District Council (1940): a deck chair ticket was a mere receipt, and a condition printed on it did not bind the hirer.

4. Strict construction, contra proferentem. Ambiguity in an exemption clause is construed against the party who drafted it, since he chose the words and could have made them clear.

• Central Inland Water Transport Corporation v. Brojo Nath Ganguly (1986 SC): a service rule permitting the termination of a permanent employee on three months' notice or pay was struck down. The Supreme Court held that a court will not enforce, and will strike down as unconscionable, an unfair and unreasonable clause in a contract between parties who are not equal in bargaining power, applying Section 23 of the Contract Act as being opposed to public policy. The Court said expressly that 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, and a term restricting eligibility was struck down as arbitrary.
• Bharathi Knitting Co. v. DHL Worldwide Express Courier (1996 SC), on a signed limitation of liability clause.

8. Statutory protection.