Cutter v. Powell(1795) 6 TR 320 : perform the contract wholly.
Pricket v. Badger(1856) 1 C.B. (N.S.) 296: quantum meritus was allowed.
In the case of Indu Mehta v. the State of U.P., Miss Indu Mehta was a practicing advocate at
the District Court of Kanpur. She was appointed as an Asst. District Government Council,
whereof she provided her services. After some time it was found out that her appointment
violated Section 24(2) of the Criminal Procedure Code, 1973. Her appointment was held to
be void but since the State had enjoyed the benefit of her services, the government could not
recover back the fees already paid for the services.
Contract and Specific Relief — Remedies/Relief — Remedies for Breach of Contract —
Damages: Party claiming compensation must establish that breach was cause for loss of
anticipated profit. Causal connection between breach and loss is essential. Breach should be
sufficiently substantial cause of loss. Remoteness of damage has also to be determined on
basis whether loss was within reasonable contemplation of parties. No compensation is
payable for making bad bargain. [Kanchan Udyog Ltd. v. United Spirits Ltd., (2017) 8 SCC
237]
Adarsh Food Products P Ltd. vs State: Respondent No.2 invited global tenders for the
procurement of assorted pulses namely (i) Malka (Red Lentil); (ii) Urd Sabut; (iii) Moong
Sabut and (iv) Dal Channa. The State Government approved the rate submitted by the
petitioner for supplying of Dal Chana, but the petitioner claimed that no intimation in this
regard was communicated to him. The petitioner withdrew the offer. Respondent No.2 sent a
show cause notice dated 3.5.2017 whereby he was asked to show cause as to why its earnest
money deposited be not forfeited and why the petitioner should not be black listed from
participating in further tenders issued by respondent No.2-corporation. Aggrieved by
forfeiture of its earnest money of Rs. 25,00,000/-, the petitioner has filed this writ petition.
ConclusionThe SLPC recommended that since the petitioner had violated the terms and
conditions of the tender document, therefore EMD of `25 lacs may be forfeited, besides
blacklisting of the bidder as per Clause 2 (2) of the tender document. The forfeiture of earnest
money when it is made for breach of auction/tender condition a precontractual stage when no
contract has yet come into existence, does not infringe any statutory right under the Contract
Act, 1872 since the earnest/ security is given and taken in such cases only to ensure that a
contract comes into existence. It was further held that even though the tenderer has a right to
withdraw his offer, but he will have no right to claim refund of earnest money if such offer is
subjected to the condition that earnest money will be forfeited, if the order is withdrawn. The
Court found no difficulty in upholding the action of the respondents whereby they have
issued show cause notice and the petitioner has been asked to show cause as to why its EMD
amounting to Rs. 25 lacs may not be forfeited. However, as regards, the show cause notice
for blacklisting, the court had strong reservations for the same. The petition was partly
allowed.
Specific Relief Act, 1963 — Ss. 34, 35, 38, 39 and 41 — Declaratory relief with suit for
injunction simpliciter — When necessary: Where bare injunction suit has been filed to
restrain State Authorities from acting in a particular manner without seeking declaratory
relief as to illegality of orders/actions of State Authorities based on which State Authorities
were seeking to act, said bare injunction suit was not maintainable, as no government order
can be ignored altogether unless a finding is recorded that it was illegal, void or not in
consonance with law. [Nagar Parishad, Ratnagiri v. Gangaram Narayan Ambekar, (2020) 7
SCC 275]
The Supreme Court in the case of C.S. Venkatesh vs. A.S.C. Murthy (Civil Appeal No. 8425
of 2009) on 07.02.2020 opined that mere plea that the plaintiff is ready to pay the
consideration, without any material to substantiate this plea, cannot be accepted. It is not
necessary for the plaintiff to produce ready money, but it is mandatory on his part to prove
that he has the means to generate the consideration amount.
In the recent case of Energy Watchdog vs Central Electricity Regulatory Commission and
others[1],the Supreme Court held that if the fundamental basis of the contract remains
unchanged, other changes in the contract wouldn't constitute a force majeure event and would
not frustrate the contract.
The Hon'ble Supreme Court observed that 'a person' mentioned in Section 31 of the Specific
Relief Act, 1963 does not include a third person but it is restricted to a party to the written
statement or any other instrument which may bind a third party. The aforementioned section
determines when a written statement can be adjourned as void or voidable. The Court
contended that it is clear by a section that an action under it is strictly an action inter-parties
or by a person that has obtained a title by the parties and thus is in persona. Deccan Paper Mills
Co. Ltd. V. Regency Mahavir Properties & Ors., 2020
The Supreme Court of India ruled in favor of CERC The bench constituted of Justice
Nariman and Justice Ghose who narrowly interpreted the force majeure clauses of PPAs and
elaborated that “hindrance could mean an event wholly or party preventing performance. But
a mere rise in prices is not a hindrance, whole or part. Clause 12.4 specifically excluded rise
in fuel cost or agreement becoming onerous to perform from the purview of force majeure.” It
was discerned by the judges that import of coal from Indonesia specifically neither was
fundamental to the contract nor was the basis on which the contract was entered into at the
first instance. Energy Watchdog vs. CERC (2017) 14 SCC
In the case of Gherulal Parekh v. Mahadevdas Maiya[v], the apex court observed: ‘Public
policy’ is a vague and unsatisfactory term, and calculated to lead to uncertainty and error,
when applied to the decision of legal rights; it is capable of being understood in different
senses; it may, and does, in its ordinary sense, mean ‘political expedience’, or that which is
best for the common good of the community; and in that sense there may be every variety of
opinion, according to education, habits, talents, and dispositions of each person, who is to
decide whether an act is against public policy or not. To allow this to be a ground of judicial
decision, would lead to the greatest uncertainty and confusion. It is the province of the
statesman, and not the lawyer, to discuss, and of the Legislature to determine, what is best for
the public good, and to provide for it by proper enactments. It is the province of the judge to
expound the law only; the written from the statutes; the unwritten or common law from the
decisions of our predecessors and of our existing Courts, from text writers of acknowledged
authority, and upon the principles to be clearly deduced from them by sound reason and just
inference; not to speculate upon what is the best, in his opinion, for the advantage of the
community. Some of these decisions may have no doubt been founded upon the prevailing
and just opinions of the public good; for instance, the illegality of covenants in restraint of
marriage or trade. They have become a part of the recognized law, and we are therefore
bound by them, but we are not thereby authorised to establish as law everything which we
may think for the public good, and prohibit everything which we think otherwise.”
Rao Rani v. Gulab Rani AIR : The court held that if widow elect to remarry,
she would be deprived of her rights in her husband’s property. Also, this does
not impose any restraint to marriage.
Lowe v. Peers where the defendant had entered a promise under seal to
marry no one but the promisee, on penalty of paying her 1000 pounds within
three months of marrying anyone else. The Court remarked-
“that it was not a promise to marry her, but not to marry anyone else, and
yet she was under no obligation to marry him.” The Court found the contract
void as it was purely restrictive and carried no promise to carry on either
side.
Under the common law, the present position is taken from the case
of Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd.
In the said case, Thorsten Nordenfelt was a producer of firearms in Sweden
and England. Thorsten sold his business to an organization, which at that
point moved the business to Maxim Nordenfelt. Then, Thorsten went into a
concurrence with Maxim that he would not take part in the assembling of
weapons for a period of 25 years, other than what he produces for the benefit
of the organization. Afterward, Thorsten broke his promise asserting that the
understanding was not enforceable as it was in restriction of trade. The
decision of the court was in support of Thorsten.
This was brought out in the case of Madhub Chander v. Raj Coomar, where
the defendant had proposed to pay the plaintiff a certain amount of money if
the latter agreed to shut down his shop in a particular locality. However, upon
shutting down his shop, the plaintiff was denied payment by the defendant.
The court here, ruled that the defendant did not own any money to the
plaintiff since the agreement was void (as it was in restraint of trade), even
though it imposed partial restraint i.e. extended to only a particular locality.
Gunthing v Lynn (1831) 2 B7 Ad 232 The court held that the condition
to pay £5 extra for the horse if it was lucky, was deemed to be too vague
to create a binding contract between the parties. The words contained in
an agreement must be clear so that the parties can be sure of the terms
upon they are contracting. As a result of this, the only part of the
transaction that was sufficient for the court was the purchase of the horse
for the price of £63 and that was the vast majority of the legal agreement
between the parties.
Gherulal Parekh v.Mahadeo Das[xii] that though a wager is void and
unenforceable it is not forbidden by law .Hence a wagering agreement is
not unlawful under section 23 of the Contract Act and therefore the
transactions collateral to the main transaction are enforceable.
On the facts, the Court held that there was overwhelming evidence from
the oral negotiations between the Parties that, prior to signing the written
document, the Parties came to a mutual understanding the prospective
purchase was not intended to be an agreement until the invention was
approved by the engineers. As there was no approval, there was no
agreement and Campbell was not obliged to pay Pym. Pym v Campbell -
1856
Krell v. Henry frustration of contract
Taylor v. Caldwell doctrine of impossibility as subject matter
destroyed
In Robinson v Davison (1871) LR 6 Ex 269, a contract by a pianist to
perform on a specific day was held to be frustrated when the pianist
became too ill to perform.
By Satyabrata v Mugneeram, [1] the Supreme Court established the
scope of Section 56 of ICA [2] that impossibility as mentioned in the said
Section is used in a practical and not in literal sense [3]. It also held that it
is not permissible to import English law to the statutory provisions of ICA.
However the principle also applies to contingent contract, as was the case
in Frost v Knight (1872) 7Exch 111. The defendant promised to marry the
plaintiff on the event of the death of his father. The father was then still
living and the defendant proclaimed his intention that he would not fulfill
his promise on the event of his father’s death off the engagement. The
plaintiff did not wait for the death of the father, but immediately brought
an action for the breach of contract. He asserted that the breach could
arise only on the contingency taking place. But CockBurn CJ held that the
case falls within the principle of Hochester v. De La Tour, hence the option
is with the aggrieved party to sue immediately or wait for the
performance.
In Bhudra Chand v. Betts(1915) the defendant promised to deliver an
elephant to the plaintiff for the capture of a wild elephant as a part of
Kheda Operations. The contract provided that the elephant would be
delivered on the 1st of October, 1910, but the defendant obtained an
extension of the time till 6th Oct and yet did not deliver the elephant till
11th. The plaintiff refused to accept the elephant and sued for damages
for the breach. It was held that the plaintiff was entitled to recover
damages since it was proved that time was the essence of the contract
since the defendant had tried to obtain an extension of time.
Avery v Bowden (1856) 5 E & B 714
By contract the claimant was to carry cargo for the defendant.
The claimant arrived early to collect the cargo and the defendant
told them to sale on as they did not have any cargo for them to
carry and would not have by the agreed date. The claimant
decided to wait around in the hope that the defendant would be
able to supply some cargo. However, before the date the cargo
was supposed to be shipped the Crimean war broke out which
meant the contract became frustrated. The claimant therefore
lost their right to sue for breach. Had they brought their action
immediately they would have had a valid claim.
Devaynes v Noble (1816) 35 ER 781, best known for the claim
contained in Clayton's case, created a rule, or more precisely
common law presumption, in relation to the distribution of money
from a bank account. The rule is based upon the deceptively
simple notion of first-in, first-out to determine the effect of
payments from an account, and normally applies in English Law in
the absence of evidence of any other intention. Payments are
presumed to be appropriated to debts in the order in which the
debts are incurred.
