Friday, August 30, 2013

Tort Notes2

“Torts are civil wrongs for which the injured party may seek legal redressal for.” The injured party in case of torts is entitled to claim ‘unliquidated damages', the judgment of which is given by the judge of a court based on the facts, circumstances and the amount of injury suffered which is actually suffered by the injured party. Tort law is largely based on common sense and the understanding prevalent between people in their everyday interactions with each other. The purpose of tort law is to ensure that people reasonably coexist with each other. In case of a tort case there are two parties involved in it i.e. plaintiff and defendant. Plaintiff is the person whose rights have been violated, the one who has been injured. He is the one who is the complainant, who comes to the court seeking remedy. On the other hand defendant is a person who has violated the rights of the other person and has injured the other person.

For the society to peacefully coexist, each member of the society has to fulfill some duties towards the other people of the society. Duties to respect people's private spaces, not to do things that unfairly disturb others, be careful and diligent when we deal with fellow beings, etc. just as we have such duties, others have the right to expect us to do these duties. Similarly, others also have duties towards us, and we have the right to expect them o fulfill these duties. Thus all people are interlinked to each other for these rights and duties towards each other, creating a world of rights and duties. We have the right to things like private spaces, the right not to be unfairly disturbed etc. we have the duty of respecting the above rights of others. The law of torts deals with the violation of these rights by the people. These rights are not mentioned in the written laws generally, but these have become the part of the legal system by common law and by the acceptance of the masses.

For explaining this I would like to demonstrate an example, a man was walking in a garden on a bright sunny day and started swinging the umbrella while walking in the park. Unfortunately, the umbrella ended up smashing the other pedestrian on his nose. The person injured was very upset with this act. So when the injured man took up this issue with the first man, first man replied that he has the right to walk in a public place in the manner which suits him. The second man replied to the first man saying that the first man's rights end where the rights of the second man begin.

Few examples of the torts or civil wrongs are: nuisance, negligence, trespass, defamation, etc. Now in the next section I would discuss some definitions which are used very commonly in the law of torts.

Civil wrongs mean those wrong actions that are not recognized by the state as being criminal wrongs. Criminal wrongs are more serious and are harmful for the whole society. On the other hand the civil wrongs are against private parties. Suppose a person walks in to the private property of other person then he commits a trespass. This act concerns only one person and does not concern the public so it is a case of tort. On the other hand, if a person murders someone, then such a person is danger to the whole society, because the whole society is concerned with the lives of community members. In this case the wrong is a criminal wrong as opposed to a civil wrong. Therefore, civil wrongs are usually defined in distinction to criminal wrongs and deal with private rights that arise by the virtue of being a member of a community, rather than dealing with public rights that the public has as a whole against every individual.

Damages are compensation payable to the injured party for injuries sustained because of the wrong committed by the wrongdoer. It is usually the most common remedy of torts. This is so because in torts it is very rare, and almost impossible, to undo the damage done and restitute a person as they were before suffering the damage. The only way of soothing the injury is by awarding damages, which, though monetary in nature, are compensation, nevertheless. By this I mean that it is the most common remedy in torts.

Unliquidated damages are those damages, the amount or extent of which has not been predetermined or decided before the wrong has committed. In civil wrongs such as torts there are no agreements as the parties are mostly unlikely aware of the fact that something like this will happen, for example when a person trespasses into land of another by unknowingly or in case a person plays loud music which causes harm to someone else, so the damages are not predetermined and are therefore unliquidated.
Law Essay Writing
Law Of Torts In India

India has inherited the law of torts from the English legal system. Barring a few civil laws, there are no written laws that specifically and comprehensively deal with the law of torts. It is up to the Indian courts to apply an English tort principle if justice demands it in a certain situation, either entirely, or with appropriate modifications, as is the demand of the case or the facts. But it is of great importance to remember that it is upon the court to decide that such principals are applicable or not. Very few tort claim cases comes to the courts, primarily people are not because people are not aware of their rights, and also because fighting a court case, in Indian scenario, is often not worth the time and effort. This is completely different from countries like America and United Kingdom where the tort claims are frequent as the people are aware of their rights.

Quasi-contract: “When a person receives some benefit that was to be given to other, than the law says that the person is contractually bound to correct recipient to compensate him for misplaced benefit.” There is no actual contract between wrong recipient and the right recipient, but law implies contract under which the wrong recipient has to pay back the compensation to the right person. This assumed contract is known as quasi-contract.
Difference Between A Tort And Quasi-Contract

In case of tort duty is owed to all members of the public (though only one may be affected) whereas in a quasi-contract, a duty is implied as being owed to a specific person i.e., the rightful recipient. In tort the duty is present at all the times, whereas in case of a quasi-contract is formed because of a particular situation i.e., the wrongful recipient of the benefit etc. also in case of tort the damages are unliquidated, but in case of a quasi-contract the damages may be liquidated damages. Conditions which are necessary for a tort are:

There must be an act or an omission on the part of the defendant or the alleged wrongdoer. In order to be liable for a tort, a person must have done some act which he was not supposed to do.

The act or omission should result in a legal damage, which means that the act or omission must result in the violation of a legal right of the plaintiff or the complainant. The legal damage is called injuria which means ‘legal injury'. One can be injured but he has to be legally injured.

Also there is no general rule in tort law that one must have intended to the wrongful act in order to be held liable. In some torts, such as assault, deceit and conspiracy, the mental condition is relevant, while in most of the other torts the mental condition of the wrongdoer is irrelevant. The reason for this is that tort law requires not just that people not attempt to hurt others, but also that people do their best not to allow their actions to accidently hurt others. So basically tort law primarily wants to catch careless people in order to avoid future misfortunes.
Order Law Dissertation

There are two terms which are used to determine whether a party has a valid claim in tort law, i.e. whether the other person could be held liable in a court of law or not. They are:

Injuria sine damno: this means the violation of the legal right without the cause of actual damage. This is a valid claim in a court of law. For example, if someone trespasses upon the property, he can be held responsible, even if the trespass did not cause any actual damage to the person. The person has a right to non-violation of the bounds of his property and it is this right which has given rise to a tort claim.

Damnum sine injuria: this means causing of death without the violation of legal right. Such a case will not be valid in the court of law. For example, the fact that a man is injured by another man's act is not sufficient cause; this might be even if the injury-causing act is intentional or deliberate. A violation of legal right is necessary in order for a valid cause of legal action to exist. Now I would like to clear the meaning of three words, these are:

Damage: actual harm suffered by the plaintiff

Injury: the violation of a legally-recognized and protected right

Damages: it means the compensation payable to the plaintiff for the harm caused
General Defenses To Tort Claims

If someone sues one person claiming that the other person has violated the rights of his and has committed a tort, then certain defenses could be taken. The extent to which they apply against different torts, may, however, differ. Some of the defenses which can be used in torts are:

Volenti Non Fit Injuria: this means ‘voluntary taking of a risk'. It's when a person chooses to be in the situation that causes the injury. For example, suppose you are a spectator at a cricket match , the batsman hits a six, and the ball lands on your head, then you cannot claim for compensation either from the stadium authorities or the batsman because when you took a seat in the stadium, you accepted the risks while sitting in the stadium. Therefore if the defendant can prove that the plaintiff voluntarily put himself in that situation, he can escape liability. The most important thing to remember is that the action must be voluntary i.e. with the informed consent of the relevant person. There must not be any cheating or use of any type of force and so the person must put himself in the situation by his own choice. There are two things which should be established in order to use this defense. (a) That the plaintiff knew or could have expected the risks involved in such a situation. (b) That the person agreed by a statement or conduct, to suffer the consequence of the risk without force or compulsion or threat.

By this I want to say that it is not enough to defend by saying that the plaintiff knew the risk; it is also necessary to show that the plaintiff voluntarily agreed to suffer the harm which might be possible in the risky situation. But in case of a master servant relation there might be some sought of pressure on the servant. I would like to give an example, a master orders his servant to go and work in a mine, if one shaft is not in a proper condition, this cannot be assumed that the servant and so in case if there is an accident than the master cannot claim that the servant knew and went voluntarily as there is pressure from the master.

Plaintiff is the wrongdoer: the most important thing in this case would be that the plaintiff did something wrong which caused him the injury. Since he plaintiff did something wrong so he cannot claim damages from someone else for the injury caused to him. For example, if a person walks into someone's house and if it is written on the gate that ‘beware of dog', the dog bites him then the plaintiff entered the house after knowing the risk, as a result he cannot ask for compensation, also he was the wrongdoer.

Inevitable accident: When an injury is caused to a person by an event that could not be foreseen and avoided despite reasonable care on the part of the defendant, the defense of inevitable accident can be used. For instance, by ‘inevitable' it is not meant that the accident was bound to happen, but rather, that the accident could not have been avoided despite reasonable care. After all, how can a person be blamed for something that he had no control whatsoever over or could not prevent? For example, a situation where the defense could not be used is that of a person who, while trying to separate two people fighting, hits another person accidentally. Here the injury is negligence and no negligence is involved.

Act of God: This defense is similar to the defense of inevitable accident according to me. The only difference is that in the defense of Act of God the accident happens to occur because of unforeseen natural event. The requirements which are to be satisfied are (a) the injury most be caused by the effect of natural forces, (b) the natural forces must be unforeseen, or the effects must be unavoidable. So even if a natural event like a storm is taking place, if one can take precautions and avoid the damage, the defense cannot be used.

Private defense: If one injures someone, or something that belongs to someone else, while defending self or own property, then one can be excused if the force used to protect self was reasonable. For instance, if someone punches you on stomach and you shoot him that would be an excessive use of force which is not necessary for defending yourself. The following must be satisfied in order t claim this defense: (a) the defendant must be under threat or under attack, (b) the defense must be for self-defense and not for revenge, (c) the response must be proportional to the attack or threat. The principle for this is that the law will not hold you responsible for an action that you performed in order to save or protect yourself. If, however, it was not necessary to use force for protection, the law will not protect, and you can't use this defense.

Mistake: Mistake is not usually a defense in tort law. It's not good enough to say that you didn't know you were doing something wrong. This defense can be used in case of malicious prosecution. In malicious prosecution it must be shown that the prosecution was acting with malice.

Necessity: In necessity, you have to show that the act you did was necessary in the circumstances. For instance, if one enters someone's private land in order to collect water from his well to put out a fire in his house, that the person was prompted by necessity and the defense could be used in tort claim and it could be used against trespass of property. The level of necessity should be very high. Basically the wrong done should be smaller while comparing it to the importance of right done.

Act under Statutory Authority: If the act done was under the authority of some statute that is a valid defense. For example, if there is a railway line near your house and the noises of the train passing disturbs then you have no remedy because the construction and the use of the railway is authorized under a statute. However, this does not give the authorities the license to do what they want unnecessarily; they must act in a reasonable manner. I have an example for this from my own life, there was a telephone exchange in my locality and the generators which were used were of very high frequency which was permitted in a residential area, the court asked the exchange to be removed from that place.

Every person has a right to sue another person and every person can be sued by another person. In India a minor can sue just like an adult, the only difference is that the tort action will have to be put forth and proceeded with, in court, by an adult acting on behalf of a minor. In case a minor is sued than, his parents or guardian will have to pay damages to the plaintiff, also the minor could be held liable. Also companies can be sued for the actions of its employees committed when acting as employees of the company i.e. on duty. The judicial authority cannot be sued if they are acting with their capacity. Also the government cannot be sued for any tort claim arising while it is acting within its governmental or sovereign capacity.

Vicarious liability: This deals where a person is liable for the acts of others. This happens where the person who committed the act did it on behalf of someone else. In this case of vicarious liability, both, the person at whose behest the act is done as well as the person who does the act is liable. Vicarious liability can arise from the following relationships:

Master- Servant Relationship

If a servant does a wrongful act in the course of his employment, than both the servant and the master can be held liable for such an act. Since the servant acts under the authority of the master, the latter should also be held liable. An act is considered to be in the course of employment if the act has been directly authorized by the master or even if the act comes within the group of acts that the master impliedly requires the servant to perform. But a master cannot be held liable for a contract.

Principal-Agent Relationship

An agent is someone who is authorized to do an act by another person (principal) also the acts on his behalf. Both the principal and the servant are held liable. The difference between the master servant relation and principal agent relation is that in case of the latter the agent does not pass the direction and control test.

Partners

In a partnership, the partners are responsible for each other's during the course of employment i.e. during the conduct of the business. The partners can be held responsible jointly and severally for each other's actions. By the term jointly I mean ‘together' and by the term severally I mean ‘separately'. This means that the partners can be separately or all together for the actions of one partner.
Nuisance

“In tort law, causing ‘nuisance' means ‘unreasonably interfering' with a person's right over, and in connection, with his property or his land.” Nuisance may be caused in various ways, such as the causing of unnecessary noise, heat, smoke, smell and other such disturbing activities. For example, your neighbor unnecessary is in the habit of setting on fire the morning piles of the dead leaves. He burns these in his garden, but the smoke from this fire blows into your house, and this is a type of general disturbance for you. Such behavior would constitute nuisance and since you are denied the right to live in your property and enjoy their safely, so you could complain about this nuisance, even a tenant could complain in a fixed time frame. There are two types of nuisances, public nuisance and private nuisance.

Public Nuisance: This type of nuisance occurs when the right of the general public is interfered with. For instance, if a person deliberately blocks a road with his vehicle, then he interferes with the right of the public in general, and that would be a public nuisance. This is because the road is a public property, and by blocking it, the person interferes with the public exercise or enjoyment of that property.

Public nuisance is a sort of crime and it is not merely a civil wrong committed against the rights of a person, and commission of a public nuisance results in punishment by the state, which may impose a fine or even put behind bars i.e. punishment. The damages cannot be sought through a civil suit.

Private Nuisance: This is the kind of nuisance that is ground for a tort action for nuisance by a private party. The damages could be sought through a civil suit. There are certain requirements which need to be met for this, these include unreasonable interference by the defendant, also the interference must be with the use or enjoyment of the plaintiff's property, the plaintiff should have suffered some damage as a result.

Negligence

It is one of the most important in case of torts. This is because it is frequently committed and also there is some type of negligence in most of the tort cases according to me. Tort is negligently committed, i.e. negligently causing nuisance, negligently trespassing on someone's land, etc. in order to establish the tort of negligence, it must be proved that:

The defendant owed a duty of care to the plaintiff

The defendant breached that duty, either totally or partially.

The plaintiff suffered damage as a result of this breach of duty.

Duty of care: for showing an act of negligence, the plaintiff must show that the defendant owed the plaintiff a legal duty of care. A legal duty is different from moral, social or religious duty. In case of Donoghue vs. Stevenson, the plaintiff filled an action for negligence against the manufacturer claiming that she had been seriously injured by the contents of the drink. The defendant claimed in his defense that he had no duty as she did not buy the bottle. But the court held that the manufacture owed a duty of care to the plaintiff and to all its consumers. The court also held that the manufacturer had breached the duty and caused damage, and was therefore negligent. I would like to also state that the duty is only there where the injury is foreseeable.

Breach of duty: After having established that the defendant owes the plaintiff a duty of care it must then be proven that the duty was breached. For seeing whether due care was taken, one must what was the standard of care required in that situation. If the care taken is less than standard care than there is a breach of duty.

Damage as a result of Breach of Duty: in order to succeed in a legal action based on negligence, it is necessary to show that the plaintiff suffered some damage. The plaintiff has to show the incident happened and it caused injury to him. Also the defendant was in control of or responsible for whatever caused the incident.
The Tort Of Trespass

Trespass means illegally entering in someone else's property. There are two kinds of trespass, Trespass to a person and Trespass to land.

Trespass to person: This category of torts deals with the threat of, or actual use of unlawful force against a person. There are three types of torts in this category: Battery, Assault, False Imprisonment.

Battery: It basically deals with actual use of unlawful force against a person. In order or a person to prove a tort of battery, one needs to show the following things: one needs to show that there was a use of force. The force need not have to be great. For example throwing water or spitting on a person is a battery. Also it must be proven that the use of force was without any legal justification and the use of force was intentional. By this I mean that an accident will not constitute battery as long as there was no negligence involved.

Assault: the tort of assault occurs when the defendant does something that causes a reasonable fear of battery in the mind of the plaintiff. By this I mean that assault occurs when something scares the plaintiff that he is going to be subjected to use of force. Also the defendant should have the ability to harm the plaintiff. . for example if a person in a hospital having fractures in his body and is plastered and he says you ‘I will bash you', it is not an assault. Also assault comes before battery takes place.

False Imprisonment: This is tort that constitutes trespass against a person. This takes place when a person is deprived his liberty or he totally restrained from it. False imprisonment occurs when a person is locked in a lock up i.e. n a jail or even in a room. The restraint must be imposed without any lawful justification, then only he can be said to be falsely imprisoned.

Trespass To Land

There are different signboards which could be seen at different places stating “NO TRESSPASSING”. In law of torts, trespass to land means to interfere with someone's possession of land without any lawful justification. Trespass can be committed by the trespasser himself entering the land, or by the trespasser doing it by using some object. An example of this would be a person throwing stones in the property of another person while remaining physically out of the property. Trespass can be committed intentionally, negligently or even accidently. Tort of trespass does not require any actual damage.
Strict Liability

The rule was laid down in the famous Ryland vs. Fletcher (1868) case. In this case, the defendant constructed a reservoir on his land to provide water to his mill. The defendant did not know that there were some disused mineshafts just next to his reservoir. The water burst through the reservoir into the disused mineshafts, and flooded coal mines in the adjoining land. The defendant did not know of the shafts, and there was no negligence on his part though there was negligence on the part of the contractors he had hired to build the reservoir. Yet the court held him liable. The court said the principal governing such a situation is one of “strict liability”, because if a person brings a potentially dangerous thing on his land and if such a thing escapes and does damage, then such person should be held responsible, even if he were not negligent. Here the reservoir was said to be the potentially dangerous thing. The criterion for strict liability is that, a dangerous thing must have been brought by the person on his land; such a thing must have escaped the land. Also the thing must have been intended to be used for some non-natural purpose.

The defenses for escaping strict liability are: if the plaintiff himself did something which resulted in damage to him by the defendant's property, then that is a defense. If there is an act of god than it is also defense. Also in case if there is an act of third party i.e. some stranger, than that is a defense. Also in case a government keeps dangerous thing under a statute, then there is no question of strict liability.
Absolute Liability

This is similar to strict liability, except for the fact that there is no defense to it. In effect, there are no excuses for the harm caused. The rule of absolute liability evolved in the famous Indian case M.C. Mehta vs. Union of India (1987). In this case the court said that there are no defenses as were there in the case of Ryland vs. Fletcher. The court came out with a logic that a person a person who carries on a dangerous activity for profit is responsible for any harm that may flow from such activity. The rule of absolute liability was followed in Bhopal Gas Leak case and is also used in environmental pollution cases. 

tort notes

Class Notes on Law of Torts – Unit I (1st Sem / 3 year LL.B)
Written by LawJournal | September 16, 2012 | 0
Law of Torts – UNIT I: Revision Notes for LL.B – First Year
Introduction to the Law of Torts

The word tort is of French origin and is equivalent of the English word wrong. It is derived from the Latin word tortum, which means twisted or crooked. It implies conduct that is twisted or crooked. Tort is commonly used to mean a breach of duty amounting to a civil wrong.

Salmond defines tort as a civil wrong for which the remedy is a
common law action for unliquidated damages and which is not exclusively the
breach of a contract or the breach of a trust or other merely equitable
obligation.

A tort arises due to a person’s duty to others which is created by one law or the other. A person who commits a tort is known as a tortfeaser, or a wrongdoer. Where they are more than one, they are called joint tortfeaser. Their wrongdoing is called tortuous act and they are liable to be sued jointly and severally.

The principle aim of the Law of tort is compensation for victims or their
dependants. Grants of exemplary damages in certain cases will show that
deterrence of wrong doers is also another aim of the law of tort.
Evolution of Law of Torts in India

The law of torts in India is mainly the English law of torts which is based on the principles of the ‘common law’. This was made suitable to the Indian conditions in accordance with the principles of justice, equity and good conscience. However, the application of tort laws in India is not a very regular event and one can even go to the extent of commenting that tort as a law in India is far from being looked upon as a major branch of law and litigation. In the Indian legal system, the concept of ‘punishment’ occupies a more prominent place than ‘compensation’ for wrongs.

It has been argued that the development of law of tort in India need not be on the same lines as in England.

In M.C. Mehta v. Union of India, Justice Bhagwati said, “we have to evolve new principles and lay down new norms which will adequately deal with new problems which arise in a highly industrialized economy. We cannot allow our judicial thinking to be constructed by reference to the law as it prevails in England or for the matter of that in any foreign country. We are certainly prepared to receive light from whatever source it comes but we have to build our own jurisprudence.”
Objectives of Law of Torts

to determine the rights between parties to dispute
to protect certain rights recognized by law
to prevent the continuation or repetition of a harm
to restore the property to its rightful owner

Scope of Tort

Tort & Contract

In a contract, the parties fix the duties themselves whereas in torts, the law fixes the duty.
A contract stipulates that only the parties to the contract can sue and be sued on it (privity of contract) while in tort, privity is not needed in order to sue or be sued.
In the case of contract, the duty is owed to a definite person(s) while in tort, the duty is owed to the community at large i.e. duty in- rem.
In contract remedy may be in the form of liquidated or unliquidated damages whereas in tort, remedies are always unliquidated.

Tort & Crime

In tort, the action is brought in the court by the injured party to obtain compensation whereas in crime, proceedings are conducted by the state.
The aim of litigation in torts is to compensate the injured party while in crime; the offender is punished by the state in the interest of the society.
A tort is an infringement of the civil rights belonging to individuals while a crime is a breach of public rights and duties, which affect the whole community.
Parties involved in criminal cases are the Prosecution verses the Accused person while in Torts, the parties are the Plaintiff versus the Defendant.

Constituents of Tort

The law of tort is an instrument to enforce reasonable behavior and respect the rights and interests of one another. A protected interest gives rise to a legal right, which in turn gives rise to a corresponding legal duty. An act, which infringes a legal right, is wrongful act but not every wrongful act is a tort.

To constitute a tort or civil injury therefore:

There must be a wrongful act or omission.
The wrongful act or omission must give rise to legal damage or actual damage and;
The wrongful act must be of such a nature as to give rise to a legal remedy in the form of an action for damages.

The wrongful act or omission may however not necessarily cause actual damage to the plaintiff in order to be actionable. Certain civil wrongs are actionable even though no damage may have been suffered by the plaintiff.

01. Wrongful Act

An act or omission that prejudicially affect one’s legal right. Such legally violative wrongful act is called as actus reus. Thus, liability for a tort arises when the wrongful act amounts to either an infringement of a legal private right or a breach.

An act, which at first, appears to be innocent may become tortuous if it invades the legal right of another person e.g. the erection in one’s own land which obstructs light to a neighbors’ house. Liability for a tort arises when the wrongful act amounts to an infringement of a legal right or a breach.

02. Damage

The sum of money awarded by court to compensate damage is called damages. Damage means the loss or harm caused or presumed to be suffered by a person as a result of some wrongful act of another. Legal damage is not the same as actual damage.

The real significance of legal damage is illustrated by two maxims namely:
Injuria sine damno and Damnum sine injuria

Injuria sine damno (Injury without damage)

It means violating of a legal right without causing any harm, loss or damage to the plaintiff. There are two kinds of torts: firstly those torts which are actionable per se, i.e. actionable without the proof of any damage or loss. For instance, trespass to land, is actionable even though no damage has been caused as a result of the trespass.

Secondly, the torts which are actionable only on the proof of some damage caused by an act. For successful actions the only thing which has to be proved is that the plaintiff’s legal right has been violated, i.e. there is injuria.

Case Law: Refusal to register a voter was held as and injury per-se even when the favorite candidate won the election - Ashby Vs. White (1703). This rule is based on the old maxim of law, Ubi jus ibi remedium, which means that where there is a right, there is a remedy.

Damnum sine injuria (Damage without injury)

It means “There may be an injury inflicted without any act of injustice.” There is another term like it that is “damnum absque injuria“, which means damage or harm without an injury in the legal sense. In other words a loss or injury to someone which does not give that person a right to sue the person causing the loss.

Case Laws:

In the case of Mayor & Bradford Corporation Vs. Pickles (1895), Pickles was annoyed by the refusal of Bradford Corporation to purchase his land for their water undertaking. Out of spite, he sank a shaft on his land, which had the effect of discoloring and diminishing the water of the Corporation, which percolated through his land. The House of Lords held that the action of Pickles was lawful and no matter how ill his motive might be he had a right to act on his land in any manner that so pleases him.

In the case of Mogul Steamship Co. Vs. Me-Gregory (1892). Certain ship owners combined together. In order to drive a ship-owner out of trade by offering cheap freight charges to customers who would deal with them. The plaintiff who was driven out of business sued the ship-owner, for loss caused to him by their act. The court held that a trader who is ruined by legitimate competition of his rivals could not get damages in tort.

03. Remedy – Development of Ubi jus ibi Remedium

The law of torts is said to be a development of the maxim ubi jus ibi remedium (there is no wrong without a remedy). Whenever the common law gives a right or prohibits an injury, it also gives a remedy. It is an elementary maxim of equity jurisprudence that there is no wrong without a remedy.

The maxim means only that legal wrong and legal remedy are correlative terms.

A tort is a civil injury, but all civil injuries are not torts. The wrongful act must come under the category of wrongs for which the remedy is a civil action for damages. The essential remedy for a tort is an action for damages, but there are other remedies also e.g., injunction, restitution, etc.

Case Law:

In the case of Abbot v. Sullivan, the court held that there is a right to receive a time-barred debt but there is no remedy to recover it.
Foundations of Tortious Liability

Tortious liability arises from the breach of a duty primarily fixed by the law: such duty is towards persons generally and its breach is compensated by an action for unliquidated damages.

• Theory 1: By Winfield – Law of Tort – General Liability: all injuries done to another person are torts, unless there be some justification recognized by the law

• Theory 2: By Salmonds – Pigeon Theory – Law of Torts: there is a definite number of torts (assault, battery, defamation) outside which liability in tort does not exist

Case Law:

Rougher, J., described in the case of John Munroe (Acrylics) Ltd. v. London Fire and Civil Defence Authority, “It is truism to say that we live in the age of compensation. There seems to be a growing belief that every misforture must, in pecuniary terms at any rate, be laid at someone else’s door, and after every mishap, the cupped palms are outstretched for the solace of monetary compensation.”
General Elements of Torts
Act & Omission

To constitute a tort, there must be a wrongful act. The word “act” is used to include both positive and negative acts i.e., acts and omissions. Wrongful acts which make a person liable in tort are positive acts and sometimes omissions. They must be distinguished from natural calamities, and even from mere thoughts and intentions.

Failure to do something in doing an act is a bad way of performing the act. For example, if a lawyer gives an opinion without taking notice of the change in law brought about by a reported decision of the Supreme Court, he would not be guilty of an omission but of performing the act of giving his opinion in a bad way.

Where as an omission is failure to do an act as a whole. Generally, the law does not impose liability for mere omissions. An omission incures liability when there is a duty to act. For example, a person cannot be held responsible for the omission of not rescuing a stranger child whom he sees drowning even though he can rescue him without any appreciable exertion or risk of harm to himself. But the result would be different if a parent or guardian is failed to attempt to rescue the child. In that case, it would be an omission as there is a duty to act.
Voluntary Acts & Involuntary Acts

A voluntary act may be distinguished from an involuntary act as only voluntary acts have liability. Voluntary act can be understand based on its willed mascular contraction, its circumstances and its consequences. For example, an act of murdering a person by shooting at him is one act and not merely the muscular contraction of pressing the trigger.

An involuntary act does not give rise to any liability. For example, an involuntary act of trespass is not a tort.

Omissions like positive acts may also be voluntary or involuntary.

In the case of Olga Tellis v. Bombay Municipal Corporation, the Supreme Court held that the encroachments committed by those persons are involuntary acts in the sense that those acts are compelled by inevitable circumstances and are not guided by choice.
Mental elements

A voluntary act can be held in strict liability if there’s a presence of required mental element i.e., malice, intention, negligence or motive in addition to the other necessary ingredients of the torts are present.
o Malice in Law and in Fact

Malice means spite or ill-will. However, in law malice has two distinct meanings such as: 1. Intentional doing of a wrongful act and 2. Improper motive. In the first sense, malice is synonymous with intention and in the second sense, malice refers to any motive which the law disapproves.

Malice with an intention of wrongful act is called as Malice in Law. It is also called as implied malice. In a legal sense, malice means a wrongful act, done intentionally, without just cause or excuse. For example, if a person give a perfect stranger a blow likely to produce death, the person do it out of malice because, he do it intentionally and without just cause or excuse.

Malice with an improper motive is called as Malice in fact. It is also called as express malice. Malice in fact is liable for malicious prosecution.

Wrongful acts of which malice is an essential element are:

Defamation
Malicious prosecution
Willful and malicious damage to property

o Intention, Negligence and Recklessness

Intention is an internal fact, something which passes in the mind and direct evidence of which is not available. There’s a popular saying that it is common knowledge that the thought of man shall not be tried, for the devil himself knoweth not the thought of man.

In general terms, negligence is “the failure to use ordinary care” through either an act or omission. That is, negligence occurs when:

somebody does not exercise the amount of care that a reasonably careful person would use under the circumstances; or
somebody does something that a reasonably careful person would not do under the circumstances.

In the case of Dulieu Vs. White & Sons (1901), the plaintiff, a pregnant woman, was sitting behind the counter of her husband?s bar when suddenly a horse was driven into the bar. Fearing her personal safety, she suffered nervous shock and gave birth to a premature baby. In the circumstances, the court held that the plaintiff was entitled to recover in negligence.
Recklessness is also called as gross negligence. Gross negligence means conduct or a failure to act that is so reckless that it demonstrates a substantial lack of concern for whether an injury will result. It is sometimes necessary to establish “gross negligence” as opposed to “ordinary negligence” in order to overcome a legal impediment to a lawsuit. For example, a government employee who is on the job may be immune from liability for ordinary negligence, but may remain liable for gross negligence.
o Motive

Motive is the ulterior object or purpose of doing an act. It differs from intention in two ways. First, intention relates to the immediate objective of an act, whereas, motive refers to the ulterior objective. Secondly, motive refers to some personal benefit of satisfaction which the actor desires whereas intention need not be so.

For example, When A poisons B, the immediate objective is to kill B and so this is A’s intention. The ulterior objective of A may be to secure B’s estate by inheritance or under a will executed by him and this objective will be A’s motive. Motive is generally irrelevant in tort.

In the case of Mayor & Co. of Bradford v. Pickles, A sank a well on his land and thereby cut off underground water-supply from his neighbour B, and B’s well was dried up. It was not unlawful for a land-owner to intercept on his own land underground percolating water and prevent it from reaching the land of his neighbour. The act did not become unlawful even though A’s motive in so doing was to coerce B to buy his land at his own price. A, therefore, was not liable to B, however improper and malicious his motive might be.
o Malfeasance, Misfeasance, Non-feasance

The term “Malfeasance” applies to the commission of an unlawful act. It is generally applicable to those unlawful acts, such as trespass, which are actionable per se and do not require proof of intention or motive.

The term “Misfeasance” is applicable to improper performance of some lawful act for example when there is negligence.

The term “non-feasance” applies to the omission to perform some act when there is an obligation to perform it. Non-feasance of gratuious undertaking does not impose liability, but misfeasance does.

M.C. Mehta v. Union of India

o Fault

If mental elements such as intention, negligence, malice or motive together with an act or omission which is violative of a right recognized by law plays an important role in creating liability. Such tortious liability has an element of fault to support it. But there is a sphere of tortious liability which is known as absolute or strict liability, where the element of fault is conspicuously absent.

In the case of M.C. Mehta v. Union of India, the rule of strict liability is laid down that an enterprise engaged in a hazardous or inherently dangerous activity is strictly and absolutely liable for the harm resulting from the operation of such activity.

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Friday, August 23, 2013

Discharge of Contract

A contract may be discharged under the following grounds:

1. Performance of Contract
:

A contract can be discharged by actual performance or attempted performance. Actual performance occurs when parties to the contract full their obligations precisely and completely in accordance to the contract. Attempted performance or tender is over to perform. (except for tender of money), when the promisor overs to perform, and the promisee refuses to accept, then tender is equivalent to actual performance

2. Discharge by Agreement:
“Things may be destroyed in the same manner in which it is constituted”. It is necessary for the parties to the contract to mutually agree to discharge the contract by agreement. The grounds for discharge by agreement are:
a. Waiver: this is mutual abandonment of the contract- no consideration is required
b. Alteration: changes in terms of the contract
c. Recission: cancellation of some or all the terms),
d. Novation: new contract with the same or a third party before the expiry of the contract
e. Remission: acceptance of lesser fulfilment
f. Merger: merger of inferior rights under a contract with superior rights under another contract with the same party.

3. Impossibility of performance: Impossibility can be pre contractual or post contractual (supervening impossibility Sec 56). The ICA provides for the grounds under which the supervening
impossibility is acceptable, and where it is not acceptable. Situations under which it is acceptable (performance is excused): destruction of subject matter, non existence of state of things, death/incapacity, change of law, and outbreak of war. Situations where its not acceptable (performance not excused): difficulty of performance, commercial impossibility, failure of third party, failure of one of the objects, and strikes and lockouts

4. Breach of Contract: The breach may be actual (during performance) or anticipatory (before performance). The repudiation can be express or implied. The party injured has a right to damages, as well as is discharged by the contract.

5. Operation of Law: The contract may be discharged by the occurrence of death, merger, insolvency, unauthorised alteration, and when rights and liabilities devolve on the same party (eg. as in case of a bill of exchange in the hands of the acceptor, the other parties are discharged).

6. Lapse of Time: A contract may be discharged due to lapse of time. This is governed by the Limitation Act 1963. eg. if the creditor does not �le suit for recovery within three years, then the debt becomes time barred and irrecoverable


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30. Agreements by way of wager, void

Agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which may wager is made. Exception on favour of certain prizes for horse-racing: This section shall not be deemed to render unlawful a subscription or contribution, or agreement to subscribe or contribute, made or entered into for or toward any plate, prize or sum of money, of the value or amount of five hundred rupees or upwards, to be rewarded to the winner or winners of any horse-race.

Section 294A of the Indian Penal Code not affected : Nothing in this section shall be deemed to legalize any transaction connected with horse-racing, to which the provisions of section 294A of the(45 of 1860) apply.

COMMENTS

Scope

To treat an agreement by way of wager as void is that the law discourages people to enter into games of chance and make earning by trying their luck instead of spending their time, energy and labour for more fruitful and useful work for themselves, their family and the society; Subhash Kumar Manwani v. State of Madhya Pradesh, AIR 2000 MP 109.

Wagering Contract

A chit-fund does not come within the scope of wager; Narayana Ayyangar v. K.V. Ambalam, (1927) ILR 50 Mad 696 (FB).
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29. Agreements void for uncertainty

Agreements, the meaning of which is not certain, or capable of being made certain, are void.

Illustrations

(a) A agrees to sell B “a hundred tons of oil”. There is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainty.

(b) A agrees to sell B one hundred tons of oil of a specified description, known as an article of commerce. There is no uncertainty here to make the agreement void.
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28. Agreements in restrain of legal proceedings, void

1[***]Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to the extent.

Exception 1 : Saving of contract to refer to arbitration dispute that may arise.This section shall not render illegal contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subject shall be referred to arbitration, and that only and amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.

2[***]

Exception 2: Saving of contract to refer question that have already arisen – Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to reference to arbitration. 3

COMMENTS

Agreement restricting law of limitation

The clause in the agreement that the appellant would not have any right under the bond after the expiry of six months from the date of termination of the contract has been held not to be contrary to section 28 of the Act nor it imposed any restriction to file a suit within six months; Food Corporation of India v. New India Assurance Co. Ltd., AIR 1994 SC 1896.

Jurisdiction of the proper court

It has been held that it is not open to the parties by agreement to confer jurisdiction on any court which it did not otherwise possess under section 20 of Code of Civil Procedure; Patel Roadways v. Prasad Trading Company, AIR 1992 SC 1514
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27. Agreement in restraint of trade, void

Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.

Exception 1 : Saving of agreement not to carry on business of which good will is sold – 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.

1[***]

COMMENTS

Agreement in restraint of trade

The words “restrained from exercising a lawful profession, trade or business”, do not mean an absolute restriction, and are intended to apply to a partial restriction, a restriction limited to same particular place; Mahbub Chander v. Raj Coomar, (1874) XIV Bengal Law Reports 76.
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26. Agreement in restraint of marriage, void-

Every agreement in restraint of the marriage of any person, other than a minor, is void.

COMMENTS

Agreement in restraint of marriage

An agreement between two co-widows that if any of them remarried, she should forfeit her right to her share in the deceased husband’s property is not in restraint of marriage; A. Suryanarayan Murthi v. P. Krishna Murthy, AIR 1957 Ori 125.
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25. Agreement without consideration, void, unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law

An agreement made without consideration is void, unless -

(1) it is expressed in writing and registered under the law for the time being in force for the registration of 1documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless.

(2) it is 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; or unless.

(3) it is a promise, made in writing and signed by the person to be charged therewith or by his agent generally or specially authorised in that behalf, to pay wholly or in part debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, such an agreement is a contract.

Explanation 1 : Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.

Explanation 2 : 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.

Illustrations

(a) A promises, for no consideration, to give to B Rs. 1,000. This is a void agreement.

(b) A, for natural love and affection, promises to give his son, B, Rs. 1,000. A puts his promise to B into writing and registers it. This is a contract.

(c) A finds B’s purse and gives it to him. B promises to give A Rs. 50. This is a contract.
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24. Agreements void, if consideration are objects unlawful in part

If any part of a single consideration for one or more objects, or any one or any part of any one of several consideration of a single object, is unlawful, the agreement is void.

Illustration

A promises to superintend, on behalf of B, a legal manufacturer of indigo, and an illegal traffic in other articles. B promises to pay to A a salary of 10,000 rupees a year. The agreement is void, the object of A’s promise, and the consideration for B’s promise, being in part unlawful.
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23. What consideration and objects are lawful, and what not

The consideration or object of an agreement is lawful, unless -It is forbidden by law; oris of such nature that, if permitted it would defeat the provisions of any law or is fraudulent; ofinvolves or implies, injury to the person or property of another; orthe Court regards it as immoral, or opposed to public policy.

In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.

Illustrations

(a) A agrees to sell his house to B for 10,000 rupees. Here, B’s promise to pay the sum of 10,000 rupees is the consideration for A’s promise to sell the house and A’s promise to sell the house is the consideration for B’s promise to pay the 10,000 rupees. These are lawful considerations.

(b) A promises to pay B 1,000 rupees at the end of six months, if C, who owes that sum to B, fails to pay it. B promises to grant time to C accordingly. Here, the promise of each party is the consideration for the promise of the other party, and they are lawful considerations.

(c) A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked on a certain voyage. Here, A’s promise is the consideration for B’s payment, and B’s payment is the consideration for A’s promise, and these are lawful considerations.
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22. Contract caused by mistake of one party as to matter of fac

A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact
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21. Effect of mistake as to law

A contract is not voidable because it was caused by a mistake as to any law in force in 1India; but mistake as to a law not in force in India has the same effect as a mistake of fact.

Illustration

A and B make a contract grounded on the erroneous belief that a particular debt is barred by the Indian Law of Limitation; the contract is not voidable.

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20. Agreement void where both parties are under mistake as to matter of fact

Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement the agreement is void.

Explanation.—An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement, is not to be deemed a mistake as to a matter of fact.

Illustrations

(a) A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Bombay. It turns out that, before the day of the bargain the ship conveying the cargo had been cast away and the goods lost. Neither party was aware of these facts. The agreement is void.

(b) A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement is void.

(c) A, being entitled to an estate for the life of B, agrees to sell it to C, B was dead at the time of agreement, but both parties were ignorant of the fact. The agreement is void.

COMMENTS

Mistake

There can be a mistake of identity only when a person bearing a particular identity exists within the knowledge of the plaintiff and the plaintiff intends to deal with him only; King’s Nortan Metal Co. v. Edridge, Merrett & Co., (1897) 14 TLR 98 (CA).
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19-A. Power to set aside contract induced by undue influence -

When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused.

Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the Court may seem just.

Illustrations

(a) A’s son has forged B’s name to a promissory note. B under threat of prosecuting A’s son, obtains a bond from A for the amount of the forged note. If B sues on this bond, the Court may set the bond aside.

(b) A, a money-lender, advances Rs. 100 to B, an agriculturist, and, by undue influence, induces B to execute a bond for Rs. 200 with interest at 6 per cent. per month. The Court may set the bond aside, ordering B to repay the Rs. 100 with such interest as may seem just.]
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19. Voidability of agreements without free consent

When consent to an agreement is caused by coercion, 1fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to contract, whose consent was caused by fraud or mispresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the position in which he would have been if the representations made had been true.

Exception : If such consent was caused by misrepreentation or by silence, fraudulent within the meaning of section 17, the contract, neverthless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

Explanation : A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.

Illustrations

(a) A, intending to deceive B, falsely represents that five hundred maunds of indigo are made annually at A’s factory, and thereby induces B to buy the factory. The contract is voidable at the option of B.

(b) A, by a misrepresentation, leads B erroneously to believe that five hundred maunds of indigo are made annually at A’s factory. B examines the accounts of the factory, which show that only four hundred maunds of indigo have been made. After this B buys the factory. The contract is not voidable on account of A’s misrepresentation.

(c) A fraudulently informs B that A’s estate is free from incumbrance. B thereupon buys the estate. The estate is subject to a mortgage. B may either avoid the contract, or may insist on its being carried out and mortgage-debt redeemed.

(d) B, having discovered a vein of ore on the estate of A, adopts means to conceal, and does conceal the existence of the ore from A. Through A’s ignorance B is enabled to buy the estate at an under-value. The contract is voidable at the option of A.

(e) A is entitled to succeed to an estate at the death of B; B dies: C, having received intelligence of B’s death, prevents the intelligence reaching A, and thus induces A to sell him his interest in the estate. The sale is voidable at the option of A.

COMMENTS

Scope

The defendant represented himself to be a partner of the firm by his conduct and through documents and got a loan of Rs. 60,000 from the plaintiff bank. The plaintiff bank gave loan to all the defendants believing them to be partners of the defendant. It was held that the defendant had represented himself to be a partner and therefore liable with other defendants; Oriental Bank of Commerce v. S.R. Kishore & Co., AIR 1992 Del 174.
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18. “Misrepresentation” defined

“Misrepresentation” means and includes -

(1) the positive assertion, in a manner not warranted by the information of the person making it, of that whichis not true, though he believes it to be true;

(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or anyone claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him;

(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is subject of the agreement.

COMMENTS

A statement is said to be warranted by the information of the person making it when he receives the information from a trustworthy source. It should not be a mere hearsay; Mohanlal v. Sri Gungaji Cotton Mills Co., (1900) 4 CWN 369.
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17. “fraud defined ”

“Fraud” means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agents,1 with intent to deceive another party thereto his agent, or to induce him to enter into the contract;

(1) the suggestion as a fact, of that which is not true, by one who does not believe it to be true;

(2) the active concealment of a fact by one having knowledge or belief of the fact;

(3) a promise made without any intention of performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law specially declares to be fraudulent.

Explanation.—Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak2, or unless his silence, is, in itself, equivalent to speech.

Illustrations

(a) A sells, by auction, to B, a horse which A knows to be unsound. A says nothing to B about the horse’s unsoundness. This is not fraud in A.

(b) B is A’s daughter and has just come of age. Here the relation between the parties would make it A’s duty to tell B if the horse is unsound.

(c) B says to A—‘‘If you do not deny it, I shall assume that the horse is sound”. A says nothing. Here, A’s silence is equivalent to speech.

(d) A and B, being traders, enter upon a contract. A has private information of a change in prices which would affect B’s willingness to proceed with the contract. A is not bound to inform B.

COMMENTS

Cases where there is duty to speak

It is the duty of the assured to put the insurer in possession of all material facts affecting the risk covered; Mithoo Lal Nayak v. L.I.C. of India, AIR 1962 SC 814.

Pleading and proof of fraud

The transaction designed to defeat the plaintiff creditors was fraudulent. Fraud was fully carried into effect in letter and spirit. In as much as the plaintiff himself was the preparator of fraud, he should not be granted any discretionary relief. Once it is found that the parties are in pari delicto the court will not assist the party who enters into illegal transaction and makes that transaction the basis of his claim; Sultan Ahmad v. Rashid Ahmad, AIR 1990 All 47.
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Thursday, August 22, 2013

16. “Undue influence” defined

1[16.‘Undue influence’ defined.—(1) A contract is said to be induced by "under influence" where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.

(2) In particular and without prejudice to the generally of the foregoing principle, a person is deemed to be in a position to dominate the will of another -

(a) where he hold a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or

(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.

(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 be upon the person in a position to dominate the will of the other.

Nothing in the sub-section shall affect the provisions of section 111 of the Indian Evidence Act, 1872 (1 of 1872)

Illustrations

(a) A having advanced money to his son, B, during his minority, upon B’s coming of age obtains, by misuse of parental influence, a bond from B for a greater amount than the sum due in respect of the advance. A employs undue influence.

(b) A, a man enfeebled by disease or age, is induced, by B’s influence over him as his medical attendant, to agree to pay B an unreasonable sum for his professional services, B employes undue influence.

(c) A, being in debt to B, the money-lender of his village, contracts a fresh loan on terms which appear to be unconscionable. It lies on B to prove that the contract was not induced by undue influence.

(d) A applies to a banker for a loan at a time when there is stringency in the money market. The banker declines to make the loan except at an unusually high rate of interest. A accepts the loan on these terms. This is a transaction in the ordinary course of business, and the contract is not induced by undue influence.]

COMMENTS

Unconsiderable transaction

The circumstance that a grandfather made a gift of a portion of his properties to his only grandson a few years before his death is not on the face of it an unconscionable transaction; Subhas Chandra Das Mushib v. Ganga Prasad Das Mushib, AIR 1967 SC 878.

Undue influence

Merely because the parties were nearly related to each other no presumption of undue influence can arise; Subhas Chandra Das Mushib v. Ganga Prasad Das Mushib, AIR 1967 SC 878.

Undue influence and fraud

(i) Undue influence is said to be a subtle species of fraud whereby mastery is obtained over the mind of the victim, by insidious approaches and seductive artifices; Mahboob Khan v. Hakim Abdul Rahim, AIR 1964 Raj 250.

(ii) Where pardanashin and illiterate woman acting under full confidence of the defendant who projected a false impression of the contents of a documents, put this thumb impression on such documents, their comment is a vitiated one; Kharbuja Kuer v. Jangbahadur Rai, AIR 1963 SC 1203.

What to prove—Burden of proof

If the transaction appears to be unconscionable then the burden of proving that the contract was not induced by undue influence is to lie upon the person who was in a position to dominate the will of the other; Shrimati v. Sudhakar R. Bhatkar, Air 1998 Bom 122.

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1. Subs. by Act 6 of 1899, sec. 2, for section 16.
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15. “Coercion” defined

“Coercion” is the committing, or threating to commit, any act forbidden by the Indian Penal Code (45 of 1860) 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.

Illustrations

A, on board an English ship on the high seas, causes B to enter into an agreement by an act amounting to criminal intimidation under the Indian Penal Code (45 of 1860).

A afterwards sues B for breach of contract at Calcutta.

A has employed coercion, although his act is not an offence by the law of England, and although section 506 of the Indian Penal Code (45 of 1860) was not in force at the time when or place where the act was done.

COMMENTS

An act forbidden by the Penal Code

The threat of suicide amounts to coercion within section 15; Chikam Amiraju v. Chickam Seshamma, (1912) 16 IC 344.
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13. & 14. Consent & Free consent

13. “Consent” defined -

Two or more person are said to consent when they agree upon the same thing in the same sense.

14. “Free consent” defined -

Consent is said to be free when it is not caused by -

(1) coercion, as defined in section 15, or

(2) undue influence, as defined in section 16, or

(3) fraud, as defined in section 17, or

(4) misrepresentation, as defined in section 18, or

(5) mistake, subject to the provisions of section 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.
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12. What is a sound mind for the purposes of contracting

A person is said to be of sound mind for the propose of making a contract, if, at the time when he makes it, he is capable of understanding it and of forming a rational judgement as to its effect upon his interest.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.

(b) A sane man, who is delirious from fever, or who is so drunk that he cannot understand the terms of a contract, or form a rational judgment as to its effect on his interests, cannot contract whilst such delirium or drunkenness lasts.
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11. Who are competent to contract

Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is sound mind and is not disqualified from contracting by any law to which he is subject.

Comments

Minor’s contract of service

A contract of marriage, entered into by a father for the benefit of his minor child is not void for want of consideration, unlike a contract of service by a minor which is a contract of service entered into by a father on behalf of the minor which is not enforceable as it is void for want of consideration; Raj Rani v. Prem Adib, AIR 1949 Bom 215.

Minor’s contract void

Where a mortgage was made by a minor and the money lender who had advanced money to the minor on the security of the mortgage sued the minor on the strength of the contract. It is held, having regard to sections 2, 10 and 11 of the Contract Act, that the Act makes it essential that the contracting parties should be competent to contract and that a minor’s contract is void; Mohoribibee v. Dharmodas Ghose, (1903) ILR 30 Cal 539 (PC).
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10. What agreements are contracts

All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

Nothing herein contained shall affect any law in force in 1India, and not hereby expressly repealed, by which any contract is required to be made in writing 2or in the presence of witnesses, or any law relating to the registration of documents.

COMMENTS

Breach of statutory provision

Railway invited tenders for the supply of jaggery to the railway grain shops. The respondent submitted his tender for the supply of 14,000 imperial maunds of cane jaggery during the month of February and March and the tender was accepted by the letter. So far, the offer of a supply of a definite quantity of jaggery during a specified period at a certain rate and the acceptance of the offer would constitute an agreement, but would fall short of amounting to a legal contract inasmuch as the date of delivery of the jaggery was not specified. Once the order is placed for such supply on such dates, that order amounts to a binding contract making it incumbent on the respondent to supply jaggery in accordance with the terms of the order and also making it incumbent on the Dy. General Manager to accept the jaggery delivered in pursuance of that order; Union of India v. Maddala Thathaiah, (1964) 3 SCR 774.

What agreements are Contract

If entering into a contract containing prescribed terms and conditions is a must under the statute then that contract becomes a statutory contract. If contract incorporates certain terms and conditions in it, which are statutory then the said contract to that extent is statutory; Thermal Power Ltd. v. State of Madhya Pradesh, AIR 2000 SC 1005.

In order to constitute a contract, both the parties must consent to the agreement; Steel Authority of India Ltd. v. Salem Stainless Steel Suppliers, AIR 1994 SC 1415.

A person who by reason of infancy is incompetent to contract cannot make a contract within the meaning of the Act. The question whether a contract is void or voidable presupposes the existence of a contract within the meaning of the Act, and cannot arise in the case of an infant; Mohoribibi v. Dharmodas Ghose, (1903) 30 IA 114.

What agreements are not Contract

Agreement subject to ratification by others who are not parties to it is not a conclusive contract; M.V. Shankar Bhat v. Claude Pinto (Deceased) by LRs, (2003) 4 SCC 86.
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9. Promise, express and implied

9. Promise, express and implied

In so far as the proposal or acceptance of any promise is made in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise than in words, the promise is said to be implied.

COMMENTS

Implied terms

A contract can be implied and it is very clear from section 9 of the Contract Act, but it is a fundamental principle of law that the court should not make a contract for the parties. A contract implied in fact requires meeting of minds. The court should refuse to read an implied term into a contract which is silent on the point or did not clearly indicate the nature of the term. However, when the stipulations are clear and in contemplation of the parties or which necessarily arise out of the contract between the parties, they will be implied; State of Maharashtra v. Saifuddin Mujjaffarali Saifi, AIR 1994 Bom 48.
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8. Acceptance by performing conditions, or receiving consideration

Performance of the conditions of proposal, for the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.

Comments

Performance by act: Interference of acceptance

The defendant company advertised that they would pay pound 1,000 to any person who used their carbolic smoke ball for a certain time any yet contracted influenza. The plaintiff purchased the medicine, used it for the stated time but contracted the disease. It was held that the contract was accepted by being acted upon, that the defendant had not stipulated for any communication of acceptance and therefore the plaintiff was entitled to recover the amount; Carlill v. Carbolic Smoke Ball Co., (1893) 1 QBD 256.
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7. Acceptance must be absolute

7. Acceptance must be absolute

In order to convert a proposal into a promise the acceptance must -

(1) be absolute and unqualified.

(2) be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted; and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but; if he fails to do so, he accepts the acceptance.

COMMENTS

Acceptance must be unqualified and without condition

The cardinal principle in the light of section 7 of the Act is that the offer and acceptance of an offer must be absolute without giving any room of doubt. It is well settled that the offer and acceptance must be based or founded on three components—Certainty, commitment and communication. If any one of three components is lacking either in the offer or in the acceptance there cannot be a valid contract; Kilburn Engineering Ltd. v. Oil and Natural Gas Corporation Ltd., AIR 2000 Bom 405.

When the acceptor puts in a new condition while accepting, the contract already signed by the proposer is not complete until the proposer accepted the condition; Haridwar Singh v. Begum Sumbrui, AIR 1972 SC 1942.

An acceptance with a variation is no acceptance; it is simply a counter proposal which must be accepted by the original promisor before a contract is made; Haji Mohd. Haji Jiva v. E. Spinner, (1900) 24 Bom 510.

No second acceptance

The rule of law is that a mere offer to sell property, which can be withdrawn at any time, and which is made dependant on the acceptance of the person to whom it is made, is a mere nudum pactum. The person to whom, the offer has been made, cannot, by acceptance make a binding contract after he knows that the person who has made the offer has sold the property to someone else; Dickinson v. Dodds, 1876 Ch. D. 463.
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6. Revocation how made

A proposal is revoked -

(1) by the communication of notice of revocation by the proposer to the other party;

(2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;

(3) by the failure of the acceptor to fulfil a condition precedent to acceptance; or

(4) by the death or insanity of the proposer, if the fact of the death or insanity comes to the knowledge of theacceptor before acceptance.
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5. Revocation of Proposals and acceptance

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but no afterwards.

Illustrations

A proposes, by a letter sent by post, to sell his house to B.

B accepts the proposal by a letter sent by post.

A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards.

B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards.

COMMENTS

Revocation

Where an offer gives the offerer an option to accept within a fixed period, it may be withdrawn even before the expiry of that period unless there is some consideration for keeping it open; Airfred Schonlank v. Muthurayna Chetty, (1892) 2 Mad LJ 57.
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Communication when complete

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 communication of an acceptance is complete,—

as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor;

as against the acceptor, when it comes to the knowledge of the proposer.

The communication of a revocation is complete,—

as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge.

Illustrations

(a) A proposes, by letter, to sell a house to B at a certain price.

The communication of the proposal is complete when B receives the letter.

(b) B accepts A’s proposal by a letter sent by post.

The communication of the acceptance is complete,

as against A when the letter is posted;

as against B, when the letter is received by A.

(c) A revokes his proposal by telegram.

The revocation is complete as against A when the telegram is despatched.

It is complete as against B when B receives it.

B revokes his acceptance by telegram. B’s revocation is complete as against B when the telegram is despatched, and as against A when it reaches him.

COMMENTS

Communication of proposal and acceptance

The advertisement of the Corporation for tenders was an ‘invitation to make an offer’. The tenders when submitted to the Corporation were ‘offers’ or ‘proposals’ in terms of section 4 of the Act and the ‘communication’ of ‘proposal’ or ‘offers’ was complete when received by the Corporation. In terms of section 4 of the Act, the ‘acceptance’ was not complete as it was never made, and never put into transmission. The revocation within the meaning of section 4 was complete as it was received and within the knowledge of the Corporation. The offers on tenders were revoked before it was accepted. The contract never saw the light of the day; Shyam Biri Works Pvt. Ltd. v. U.P. Forest Corporation, AIR 1990 All 205.

Where an offer is made by a method of instantaneous communication like telex, the contract is only complete when the acceptance is received by the offerer, and the contract is made at the place where the acceptance is received; Entores Ltd. v. Miles Far East Corporation, (1955) 2 All ER 493: (1955) 2 QB 327: (1955) 3 WLR 48.

Contract by correspondence: Antecedents and subsequent negotiations

The communication of acceptance of the highest bid is necessary for completed contract; Haridwar Singh v. Begum Sumbrui, AIR 1972 SC 1942.

Dispensing with notice of acceptance

A notification of acceptance is required for the benefit of the person who makes the offer, the person who makes the offer may dispense with notice to himself if he thinks it desirable to do so: there can be no doubt that where a person in an offer made by him to another person expressly or impliedly, intimates a particular mode of acceptance as sufficient to make the bargain binding, it is only necessary for the other person to whom such offer is made to follow the indicated mode of acceptance; and if the person making the offer expressly or impliedly intimates in his offer that it will be sufficient to act on the proposal without communicating acceptance of it to himself, performance of the condition is a sufficient acceptance without notification; Carlill v. Carbolic Smoke Ball Co., (1893) 1 QBD 256

Communication, acceptance and revocation of proposals

The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptance, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he intends to communicated such proposal, acceptance or revocation, or which has the effect of communicating it.

Comments

Communication of acceptance

An offer is accepted when the acceptance is communicated. The communication must be made to the offeror and a communication of acceptance made to a third person creates no contract; Felthouse v. Bindely, (1862) 6 LT 157.

Exposure of goods: offer or not

The Exposure of goods by a shopkeeper does not amount to an offer to sell. On picking the goods, it is an offer by the customer to buy, and sale is not effected until the buyer’s offer price is accepted by the shopkeeper; Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd., (1952) 2 QB 795.

Offer to the whole world

Though an offer may be made to the whole world, a contract can arise only by acceptance of the offer. Hence knowledge of the terms of the offer is essential for acceptance. Thus where a person sent his servant in search of his missing boy and subsequently offered a reward to any one who would find the boy, the servant, on finding the boy, could not claim the reward, as his search for the boy could not be regarded as a consideration for the promise of reward; Lalman Shukul v. Gauri Dat, (1913) 11 AQLJ 489.

Unaccepted offer creates no right or obligation

A mere making of an offer does not form part of the cause of action for damages for breach of contract which has resulted from the acceptance of the offer. Ordinarily it is the acceptance of the offer and intimation of that acceptance which results in a contract; Bhagwan Das Goverdhan Das Kedia v. Girdhari Lal & Co., AIR 1966 SC 543.

Short Title & Interpretation

1. Shot title.

This Act may be called the Indian Contract Act, 1872.

Extent, Commencement. -It extends to the whole of India 1[except the State of Jammu and Kashmir]; and it shall come into force on the first day of September 1872.

Saving.- 2[* * *] Nothing herein contained shall affect the provisions of any Statute, Act or Regulation not hereby expressly repealed, nor any usage or custom of trade, nor any incident of any contract, not inconsistent with the provisions of this Act.

1. Subs. by Act 3 of 1951, sec. 3 and Sch., for “except Part B States”.

2. The words “The enactments mentioned in the Schedule hereto are repealed to the extent specified in the third column thereof, but” rep. by Act 10 of 1914, sec. 3 and Sch. 11.

2. Interpretation -clause

In this Act the following words and expressions are used in the following senses, unless contrary intention appears from the context:

(a) 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;

(b) When a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when a accepted, becomes a promise;

(c) The person making the proposal is called the “promisor”, and the person accepting the proposal is called “promisee”,

(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;

(e) Every promise and every set of promises, forming the consideration for each other, is an agreement;

(f) Promises which form the consideration or part of the consideration for each other, are called reciprocal promises;

(g) An agreement not enforceable by law is said to be void;

(h) An agreement enforceable by law is a contract;

(i) 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;

(j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

COMMENTS

At the desire of the promisor

Suit would lie for the recovery of a promised subscription where on the faith of the promisee, the promiser entered into a contract with a contractor; Kedarnath Bhattacharji v. Gorie Mohomed, (1886) ILR 14 Cal 64.

Consideration and motive

A promise founded on motive of generosity, prudence and natural duty is a promise without consideration; Abdul Aziz v. Masum Ali, (1914) ALJR 36 All 268.

Contract

A contract comes into existence only when all the terms and conditions have been finalised. If the facts of a particular case show that execution of a written contract was a condition precedent for coming into force of the contract between the parties, then it cannot be said that any concluded contract in absence of a written contract being executed has come into force between the parties; J.K. Industries Ltd. v. Mohan Investments and Properties Pvt. Ltd., AIR 1992 Del 305.

Proposal: Offer and statement of intention

The proposal when accepted gives rise to an agreement. It is at this stage that the agreement is reduced into writing and a formal document is executed on which parties affix their signature or thumb impression so as to be bound by the terms of the agreement set out in that document. Such an agreement has to be lawful; Tarsem Singh v. Sukhmider Singh, AIR 1998 SC 1400.

Valid consideration

The consideration should be something which not only the parties regard but the law can also regard as having some value. It must be real and not illusory, whether adequate or not; Chidambara v. P.S. Renga, AIR 1965 SC 193: (1966) 1 SCR 168.

When Strangers may not sue – the general rule

A person not a party to a contract can sue on it; Venkata Chinnaya Rau Garu v. Venkataramaya Garu, 1881 ILR 4 Mad 137.

Creating legal relations

If there being no