 Good evening one and all. And when you have Justice Roshan Dalvi, there couldn't be a better way to understand that subject. And if it has to be an introduction for understanding the concept of the Indian Contract Act 1874, we thought that Ma'am has already shared a lot of insights in respect of various aspects, including under the contract act. And the way she shares the streams with the slides, etc. The concept is more conceptualized in the minds of not only students but also the lawyers. And Justice Roshan Dalvi as such doesn't need any introduction, especially on the platform of Beyond Law CLC. And those who are connected with law, they all know Justice Roshan Dalvi is the former judge of Bombay High Court. And also resource was to various academies and judicial academies. And now we can say proudly with Beyond Law CLC. I will not take much time. I will request Ma'am to give the introduction and make the concepts of contract act more fundamentally clear. Thank you Vikas. Good evening and good evening all the friends. We are going to just go through the main fundamentals of the Indian Contract Act today in a short span of time. So without much ado and without any other introduction, I will go to the presentation that I'm going to make. Can you all see it? Yes ma'am. Yes, okay. So contract and agreement is what must be first understood. Two people may make an agreement. They can make an agreement to go to dance. They can make an agreement to have dinner. These are not enforceable at law. They remain agreements, but they are not contracts. Contract is a little more than agreement. All agreements are not contracts, but all contracts are agreements. Okay. So the basis is that a contract is an agreement. If you can just read the slide. An agreement is a promise. An offer which is a proposal and an acceptance together makes a promise. And the promise therefore is an accepted proposal. So there is a proposal, there is an acceptance, then it becomes a promise and that constitutes a contract. Now, for every contract there must be an agreement and that agreement should be enforceable by law, not as I told you to go out to dinner. So an agreement which is not enforceable at law, which may be an unenforceable agreement, we'll go to that a little later, would be avoid agreement. Now in the contract there must be an intention. So the intention to contract is to create legal relations, legal obligations and legal consequences of that agreement. Once that is done, somebody can come to a court of law or an arbitration for its adjudication. But this is not to regulate social relations. It is not to make domestic obligations also. For example, obligations between family members or anything of the kind. Now, when does an agreement become a contract? An agreement which may or may not be a contract becomes a contract under section 10. It is not a consideration which is under section 2D. Every contract must have a consideration and if there is no consideration in a contract, the contract is void. The parties must be competent to contract under sections 11 and 12, which means that the party cannot be a minor and it cannot be insane. The contract must come with the free consent. Now generally friends we think of consent when we think of rape, that there is no consent. What consent is not there? There is no informed consent. Now, in a contract there should be a free consent, because this is a democratic situation. Two people are coming together to create legal obligations and to create a contract under which they both will have to do something or give up something. So they must consent and it must of course be for a lawful object, because if it is not for a lawful object, it's a void contract which we can go to later, not today. Now, therefore, the contract should not be expressly declared to be void under the Indian Contract Act, which is declared under all these sections from section 20 to 30 essentially, and then section 56 when it becomes an impossible contract. Now what we understand first is that there are certain invitations to offer. So it is not an offer. It is not anyone coming to say, please accept this offer. It is something prior to the offer. Now, all of these things very interestingly are invitations to offer. Display of goods in a shop, if you go in a department store or if you go in a Kirana shop, there are goods, but that doesn't mean that Chaptipa wants to sell the goods and we have got to buy by making a contract. The Chaptipa only says, this is what I have. The person who comes into the shop will say, I want to buy this box. The Chaptipa says yes or no. He may say no. I don't want to sell it to you. And if he does, then thereafter there will be a contract. Similarly, a catalog which is given. It may be given nowadays online, but otherwise there used to be in shops. It is only an invitation to offer. A quotation. Sometimes they say, give us your quotation. So the person who is the other party would give a quotation, but that doesn't mean he's making an offer. He only says that I can do this contract on these terms. If we make a proposal, he will accept it or not accept it. Then the statement of the lowest price. I will not go beyond this price. That also is not an offer. But we have a statement of intention. If somebody says I intend to buy a particular plot of land, it doesn't mean that he offers to buy a certain plot of land. Then general words that will excite offers means there are some advertisements, etc. And those are only invitations. Invitation to transact business also. Nowadays we get on our emails, all sorts of emails which we just delete. These are invitations to transact business. If we click on whatever is the link or so, then we would make an offer and then that person would have to accept it or reject it. But then so far as lawyers are concerned, the most important invitations to offer are auction and tender. And that is how most of our commercial contracts work, especially with the government and with corporates. So if you have an auction or you have a tender that you float, that is an invitation to make an offer. There are various people who will make offers and then one of them could be chosen. Similarly, advertisements which come everywhere are not offers, but they only show you what the product is you may offer. Classified advertisements much the same. Even if it is a matrimonial classified advertisement, it doesn't mean that I want to marry only definitely for example. I have got all this and I want all these qualities. I may or may not accept. Railway timetable. It was a very interesting case of a railway timetable where a person said that when you put up the timetable and I come on the railway platform and the train doesn't come, I can sue you. And the court said no, you can't sue. This is only an invitation to offer. You have to find out whether that train actually comes. It may not come on a given day. Then standing or open offers. Some people make open offers. I have got things. I've got diamonds and I've got to sell. You know that way. So that is an invitation to offer. The consequences when you enter into a contract would bind the parties. So this would be after the acceptance is made after letters which are actually posted or delivered, then it must be correctly addressed after emails of access are sent. And then then after that becomes a binding contract. We have generally what is now called chain of transactions or chain of emails or letters, they constitute a contract. Even an arbitration agreement can be made in the same fashion. When one party says I want an arbitrator, the other party says, okay, Mr. A will be the arbitrator. And he says, all right, yes, I accept. All he says no, and then they go to court. So there is a contract in the first place. There is no contract in the second place. Under the agreement of arbitration. Then the performance of contracts. Parties who will perform the contracts, they will perform their respective promises. Now there is a time for performance. There is a place for performance. So when there is a specified time, or then within a reasonable time contracts will have to be performed. The place of contract will be important, especially the place of delivery. Now that gives the jurisdiction to the courts, and that also gives the jurisdiction to the arbitration seat seat. So place of performance is also very important. And of course if the agreement says that it will be at a particular place or within that particular jurisdiction of the courts, then of course the contract would be there. For example, I'm told that in the London Royal Courts of Justice, 50% of the cases are by parties outside England, and 80% of the cases are by at least one party outside England. So it is not that only the place of delivery, which is actually what gives jurisdiction to the court in case of a proper law of contract is important. It is that the parties can make any place and any reasonable time required in the contract. It is a manner of performance. It can be performed at any time and in any manner. And so many times contracts are performed by actually doing what we are supposed to do. It is a contract by performance, which we will come to a little later. But when there are large long contracts with many clauses, as is usually the case in our commercial contracts, then there are reciprocal promises. So that one party will have to do something and the other party will get a benefit. Similarly, the other party will have to undergo some detriment and the first party will get the benefit. So if either of the parties will not perform their part of the reciprocal promises, the contract is gone. There is a breach and the other party can refuse to perform it. So now for this reciprocal promises, there should be readiness and willingness to perform. We know that in specific performance suits, we make an agreement. Now there is an amendment after 2019, but the amendment, but the agreement is of readiness and willingness to perform. And not only now that you can make an agreement, but you must actually show that there is the readiness and willingness. Now friends, so far as time is concerned, we said there may be in some specified time or in any reasonable time. So when would some time be the essence of the contract is extremely important in most of the cases to consider? When the time is of the essence, upon breach, the contract becomes voidable. So now if somebody has to perform the contract within six months and he has to complete some construction, he cannot do it. Time is made of the essence and he does not do it. The other party will say very well, now I don't want to, I want another contract. Simple and many times contracts come up that way. But when time is not of the essence, then what happens? If the contract is not performed within the time learning which you have to perform it, it does not become voidable, but that man, the other side would be entitled to compensation. So then what happens is that in many cases, especially of construction contracts, you know, construction of roads, construction of the airways, highways, etc. What happens is that a party starts the work, but there are supermeaning impossibilities. There are times when cement is not available, there are times when steel is not available, whatever happens, these are the usual words. So the party says that this is this major, I could not do it, there were floods, I could not do it. And the other party says, all right, I am giving you an extension. Okay. That is because time was not of the essence. He has to do it within a reasonable time or he has to do it within a specified time, but which can be extended. So when the time is extended, then it ceases to be of essence, even if it is of essence. And then you have to make the time of essence by issuing notice and saying now time is of the essence. You have to finish it within the next two months. Otherwise the contract will stand terminated. Unless that notice is given, once there is an extension, gods have held that time, even if it was meant to be of essence as in a written contract will not be taken to be of essence. So when late performance is accepted, no compensation is payable except when notice is given. Nothing happens. It is accepted and then you have to wait and wait. Now a very interesting illustration of extension of time if you would understand and what are the rights and privileges in a contract, which is a very detailed written contract. It is in this illustration. A party tells one man, the landlord tells somebody, I want you to construct a room for me, simple. The contract requires him to complete the construction in one month. He doesn't complete it in one month. He takes longer. It takes two months. And he's allowed to go on constructing for two months. He's paid the contract rate also. But in the meantime, prices of things either escalate or come down. Generally, of course, they escalate. So then the contract provides that if there is extension given, and if the price of let us say steel or cement goes up, then okay, you carry on the contract within the next month. But then don't settle me with the heavier cost. Then you have to bear the cost. And similarly, in the contract, it provides that if after the in the extended period, if the price falls, then I must get the benefit because I've given you the extension. Now, there are matters where the party says that both ways you win. It is heads you win tails you win. That is not fair. And therefore such a contract must be declared to be void. But it has been held that I would say that it is not so. It is very essential because there is a consideration that flows and consideration can be also forbearance. So when a man says I am for wearing, I am not telling you that okay as per our contract to give me the constructed room within one month. I'm allowing you 10 more days. I'm allowing you one more month. But therefore, whatever happens, I must not be put on a lesser pedestal because I've given you more time. So if the price rises, I won't pay the price. If the price falls, then I will get that benefit. And that is not unfair. That has been held. Now, friends, these contracts are all enforced. We are talking about enforceable contracts, but there are some contracts which will otherwise be enforceable. But which are unenforceable at certain times. So they are valid, but they cannot be sued upon. For example, if an agreement requires to be registered, it requires transfer of some property. All those agreements must be registered. It is not registered. Then it cannot be sued upon. It is unenforceable at law until it is registered. This under section 59 of the contract of the registration act, if a contract is for a collateral purpose, you are suing. There is a contract. You're not suing on the contract, but you are suing for a collateral purpose. You're suing only for specific performance, then that is allowed under the registration act. But now the second thing is stamping of agreements. Now that is for the revenue. It is held that until the revenue is paid, nothing can be enforced. Therefore, when there are stamped agreements and the stamping is either inadequate or not stamped at all, and it requires stamping. Like, for example, a conveyance, or if there is a power of attorney for sale, or if there's a mortgage or a gift, it requires to be registered and stamped and stamp duty has to be paid. Now, there is no provision in the stamp act relating to collateral contracts or any collateral purposes for which the suit or an arbitration is taken out. So that is all they say, no stamping, no procedure for them. That is the law as it stands today. Now, friends, every firm, a partnership firm is required to be registered under section 69 of the partnership act. And if the firm is not registered, then an unregistered firm cannot sue. It can be sued. The partners can sue one another, but you cannot sue a third party. So it would be an enforceable contract, but you have to register your firm first and then sue. Then agreements which are barred by limitation. There are agreements, there are times in the agreements, payment has to be made, payment is not made, and the usual monetary period expires. Then after that, can you sue on that agreement? It becomes unenforceable. And that agreement, which is barred by limitation, unless you can show that the bar is removed by part payment, or unless you can show that the bar is removed by acknowledgement in writing, you can never sue. So it is not that the limitation will go away and you can sue that just goes. And contracts for lending money under the money lenders act. If there is a, every money lender is supposed to be licensed. So if there is an unlicensed money lender, he cannot sue on a promissory note on a bill of exchange for the money which has been lent. These are five important things which come up for consideration in courts. Then friends, when payments have to be made in contracts, the first thing is the appropriation. Some payments are made. Generally in these contracts, payments are made from time to time. You know, you give an advance, then you give something more for say construction, you have got more steel. So you keep on giving, but then at some time you have to take accounts. So you have to appropriate the payments and say that see, look, I'm the creditor, but all payment is not made. And I have appropriated the payment for that. So first under section 69, the debtor is given that chance because the debtor would be sued and the debtor has made the payment. So he would appropriate the payments. If the debtor doesn't do it, the creditor can appropriate the payments under section 60. If neither does it, then by order of time in the contract or by proportionate or proportionability, the appropriation can be made. So this is generally applied for payments which are delayed or not made or have to be made in installments. And these are many, many matters that come up to courts and in arbitrations for appropriations which would require to be made. And then we can say that you appropriate for this purpose and then he would pay by installments and maybe we can settle also in the arbitration under section 30. Now, why is the contract is made? And when a party wants to sue or even before a party wants to sue, if they have got some understandings among themselves, then they may slightly modify the contract. When the contract is modified, there becomes a novation. Then there's a new contract which comes up. So for example, let us say time of the assets and you have to complete the construction within six months, but you cannot complete. You allow, okay, in the next one year you completed. There is a novation. There is a new contract. So the old contract is substituted by another contract under section 62. Extension of time by the promising is specifically mentioned under section 63. And there are n number of cases on that. So novation must be made by both the parties because there is a contract. There is another contract. And when there is a novation, the first contract need not be performed. The second contract becomes enforced. Okay, so one man cannot do that. Both have to do that and agree upon that. It may be oral, it may be in writing as all contracts are generally and advisedly it would be in writing, even by a letter. Now there is a novation, let us say, even then, when after this extension or after whatever else for relating to price, relating to escalation of price, there is a novation and the one party does not perform. Then there is a breach. So the party in bridge must compensate the other for the loss that is section 73. Now how do you compensate at a given time for the loss that would occur? Let us take our example of constructing a room, a simple example. And you are supposed to pay say one lakh rupees for that. You have to find out what would be the market rate on the date of the breach and thereafter until you are sued. Once one person commits the breach, the other person has the detriment of that breach and therefore he must be compensated to put him in the same position that he would have been had that contract been actually performed. So that is now today always for everything for movable as well as immoveable properties, we find out the market rate. The price under section 73 is for direct cause, not for any remote cause in America you may have reaches of contact for any remote cause and millions of dollars are given, but that is not the law in India. It is not the law in England. It should be not for any remote damage. You can say I could have got married. If the room was constructed and I could have got my bride into the room. That is not compensable. Okay. Then that is not even for mental agony. You find in many suits and in arbitrations, there are prayers specifically for mental agony. And the lead evidence also of mental agony, which generally is not substantiated. But even if it is then under by way of prudence under section 73, right from 1872, our law says that for mental agony, you will not get it. But if there is something else, and if you just cannot get what you've got, then for that direct cause, yes, you can be compensated. So if there is delay in performance, if there is delay in performance, as I told you, it can be condoned. If it is condoned, there is no breach. If there is no breach, no compensation. After condoning, if there is a breach, there would be a compensation. And for all the compensations, because you are claiming damages, the law of damages under taught law, that says that you must try to mitigate as much of damages as you can. So if suppose there is something which would rot, if there is something which is left to the rain or something like that. And then you say, no, now this has become worse, you will not get all those damages, because you should have taken those things in and not allowed it to say rot in the rain. Then no loss is to be proved if penalty for breach is stipulated. Now, friends, this is a little dicey. Under section 73, whenever there is a breach, there is compensation payable for direct loss. Now, if you read section 73, and immediately if you read section 74, I would say that section 74 is an exception to section 73. You have to prove the damages for how much could be compensated, how much loss have you suffered. Now both parties may feel that we don't want to prove anything. But if there is some kind of a breach, then we will say that 2% of this price would be paid by way of damages. Now, one would say that this is so that a party doesn't have to prove damages, and therefore it is an exception to section 73. But in various cases, when GC versus SOAPIPE is beginning, it has been held that if this amount which the parties have determined results in a penalty for one party, then that is not given. On the same principle that remote damage is also not given. Now, why is this so? You have to yet prove the loss. Now, because it is difficult to prove the loss, the parties say that if there is a breach, we will take the loss to be 100 rupees. Fair enough. You can do it. The parties say we will take this loss to be 2%. Yes. But in some contracts, it came to be 10%. Now, which are those contracts and why was this law settled? The contract is between a very powerful party and a very small party. It may be government party, Hindustan Construction Company, for example. And it may be a tiny contractor who gets his screens also on hire and does some work for, say, digging of the road or the stone quarrying or anything like that. So therefore, God's help that parties power balancing is not done. In this kind of a contract, you will sign on the dotted line. And then the party that is the Hindustan Construction Company or whoever is that a huge corporation would say, I'm not going to prove the loss. I want 10% of this about where will this land be. And that is why there's been a complete jury students on this. Through various cases, and they say that section 74 is not an exception to 73, but it goes after 73. And in any case, you have to prove the loss. Quite bad. I would say it's an exception and not it's an exception to 73 and not only an extension as has been held by the Supreme Court. So for friends in this totality, what right begins right from the invitation to offer, then you will of course offer an acceptance which you know, then there is a contract. There are certain contracts which cannot be performed and which are not enforceable. All others are enforceable. There may be reciprocal promises, there may be written and oral contracts, and then there may be a breach. The conclusion is that you have to bear in mind that parties have a continuing relationship in most of these contracts, parties relationships will have to be handled with care, because you may win a battle but lose the war. And you have to ensure that there is no litigation in future. That is what is expected of all courts and arbitrations. So therefore what we say is that in all of these contracts, once we have an evaluative mediation, then we can tell the parties, of course at the end of the whole thing, because it is an arbitration it must end in an award. And if there is some adjudication by some kind of evidence it must end into a judgment. When that comes, it must be that the adjudicating authority says that see you've got business relationships. You will have so many such contracts. Generally that happens. Or you may have family relationships where also there may be various contracts within the family members. So this must be handled with care. There must be not a tug of war, but a tug of peace. And then there will be no further litigation on that award or judgment. So, I would say that it would be made up or are made when we do arbitrations when I do arbitrations at the end of the arbitration, I tell the parties that I do extra cost I would like to settle if I can, let us mediate and create options, because it will be good for you. Even if the parties don't settle that germ of settlement settles in. So when they go ahead for enforcement of the award, or for challenge to the award, then they might really think, and then the relationship can be maintained. So then there will be no other litigation hopefully. As I said, genius is the ability to reduce the complicated into the simple. And I hope I'll meet the contract at simple. Thank you. In fact, it was simply funny simply. It's always a pleasure that whenever you speak, you take the mediation process like we have the mediation bill also recently, and especially in the commercial aspects, we have the judgment of Justice Joseph also which laid emphasis on the mediation. And mediation is also part of the society now and for all litigation, not only on commercial aspects and even other aspects. And the way you have actually unlocked all the things and made it simplified. That's one of the reasons that a lot of people ask the Justice Roshan Dalvi should explain all the aspects. And thank you ma'am for sharing the knowledge at the short notice. Though originally we had a lot of discussing on the Stamp Act latest judgment, but ma'am is always ready with any topic which we give her to her. And thank you. It was an excellent session. Like one of the, said G Bhargava says it's an excellent session short and precise. That's true. Thank you. And tomorrow the changing dimension to the IPC of General Defenses will be taken by Justice Chandrasekhar from Karnataka High Court to join with us tomorrow at 6 p.m. Thank you. Thank you. Good night. All the best.