Novation : When a contract Need Not be Performed

Q. Define Novation [4 marks - 2022]

Novation

Novation is the substitution of one obligation for another, with or without a change of parties. It is also the discharge of rights and obligations between contracting parties and the recreation of them in a new contract.

Section 62 of the Indian Contract Act states "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".

The act provides 3 illustrations to explain the point:
Illustrations
(a) A owes money to B under a contract. It is agreed between A, B and C that B shall thenceforth accept C as his debtor, instead of A. The
old debt of A to B is at an end, and a new debt from C to B has been contracted.
(b) A owes B 10,000 rupees. A enters into an arrangement with B and gives B a mortgage of his (A’s) estate for 5,000 rupees in place of the
debt of 10,000 rupees. This is a new contract and extinguishes the old.
(c) A owes B 1,000 rupees under a contract. B owes C 1,000 rupees B orders A to credit C with 1,000 rupees in his books, but C does not
assent to the arrangement. B still owes C 1,000 rupees, and no new contract has been entered into.

Contract : Definition

Q. Define Contract [4 marks - 2022]

Definition of Contract

Section 2(h) of Indian Contract Act defines a contract as "An agreement enforceable by law is a contract". Section 2(e) of the act defines agreement as "Every promise and every set of promises, forming the consideration for each other, is an agreement".

So, a contract is defined as an agreement between two or more parties that creates legally enforceable rights and obligations. A contract can be verbal or written. It can be a promise to do something or to refrain from doing something. 

Voidable Contract : Contract Law

Q. Under what circumstances contract becomes voidable? [4 marks - 2022]


Voidable Contract
Section 2(i) of the Indian Contract Act 1872 defines voidable contract as:
An agreement 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, is a voidable contract;

A voidable contract is a formal agreement between two parties that may be rendered unenforceable for any number of legal reasons, which may include:

Failure by one or both parties to disclose a material fact
  • A mistake, misrepresentation, or fraud
  • Undue influence or duress
  • One party's legal incapacity to enter a contract (e.g., a minor)
  • One or more terms that are unconscionable
  • A breach of contract

Invitation to Offer - Contract Law

Q. What is an Invitation to Offer? [4 marks - 2022]


Invitation to Offer

An invitation to offer, is a statement or action that indicates a party's willingness to negotiate a contract. It's not a specific proposal or commitment to enter into an agreement. 
An invitation to offer is a precursor to an offer. It's an opportunity for both parties to discuss and negotiate the terms they would like to agree on, if they decide to enter into a contract.

Coercion in Contract Law

Q. What is coercion? [4 marks - 2022]

Coercion

Coercion means using force to compel a person to enter into a contract. Consent obtained by coercion is not a free consent because force or threats are used to obtain the consent of the party. Section 15 of the Indian Contract Act describes coercion as. committing or threatening to commit any act forbidden by the law in the IPC.

Article 14 : Doctrine of Reasonable Classification

Q. Article 14 of the Indian Constitution permits reasonable classification but forbids class legislation. [10 marks - 2021[

Article 14  of the Indian Constitution permits reasonable classification but forbids class legislation: A discussion

Article 14 in India’s Constitution guarantees the right to equality for every citizen of the country. It encompasses the general principles of equality before the law and prohibits unreasonable discrimination between two persons. It incorporates the idea of equality expressed in the preamble.

Reasonable Classification

While Article 14 forbids class legislation, it does not forbid reasonable classification of persons, objects, and transactions by the legislature for the purpose of achieving specific ends. But classification must not be “arbitrary ,artificial or evasive”. It must always rest upon some real upon some real and substantial distinction bearing a just and reasonable relation to the object sought to be achieved by the legislation. Classification to be reasonable must fulfill the following two conditions:
Firstly, the classification must be founded on the intelligible differentia which distinguishes persons or thing that are grouped together from others left out of the group.
Secondly, the differentia must have a rational relation to the object sought to be achieved by the act.
The differentia which is the basis of the classification and the object of the act are two distinct things. What is  necessary is that there must be nexus between the basis of classification and the object of the act which makes the classification.

Case References

1. In the case of E.P Royappa v. State of Tamil Nadu, the traditional concept of equality i.e. reasonable classification was challenged in the Supreme Court and a new concept was laid down in the judgment. Bhagwati J. delivered the judgment on behalf of himself, Chandrachud and Krishna Iyer J.J introduced a new concept of equality. It was stated that equality is a dynamic concept with many aspects and dimensions and it cannot be cribbed, cabined, and confined with traditional doctrinaire limits. Equality is antithetic to arbitrariness. Equality and arbitrariness are sworn, enemies. It is implicit in that it is unequal both according to political, logic, and Constitutional law and is therefore violative of Article 14. 
2. The same judgment was used in another landmark judgment of Maneka Gandhi v. Union of India. 
3. In the case of R.D Shetty v. International Airport Authority, Bhagwati J. reiterated the same principle stating that Article 14 at strikes arbitrariness because any arbitrary actions must necessarily involve negation of equality.

Conclusion:

Article 14 guarantees the fundamental right to equality to every citizen in the country. It provides equality to all the people irrespective of their caste, religion, race, sex, place of birth. There are two aspects under the Article i.e. equality before the law and equal protection of the law. Earlier, there was a test to test the constitutionality know as the reasonable classification test under which it was tested whether there is reasonable classification in the legislation. Later, a whole new test was announced to test whether it was violating Article 14 and it was known as the arbitrariness test. There was much criticism on this new doctrine and many legal pieces of literature did not agree with the new doctrine. Though the reasonable classification test was rejected today also in some cases it is being used.