 consideration and it being lawful about consent being free and that neither the contract act nor the other law any other law has declared it to be void if these four elements are fulfilled then this agreement is a contract and I come to the last line an agreement enforceable by law is a contract so the essence of contract law is enforcement we discussed that bit in detail in my earlier session how far are other formalities required writing registration attestation for the contract law it can be oral but if any other law requires these formalities then they must be fulfilled and unless they are fulfilled it will not be a contract or it will not be enforceable by law then after talking about formation of contract the contract act that is the general principles of contract tell perform your promises so whatever is your promise you must perform it there is an obligation to perform and what is that obligation either you perform or you offer that performance then there are some details about who should perform what happens if there are joint promises what happens if a promissor dies or a promissive dies so these principles are given in the act then other aspects of performance are also discussed like time place manner of performance what happens if multiple payments are made towards many debts which are owed to a person what happens if promises are one become one after the other then what are the rules of performing them and so on so they are the different aspects of performance in a cross all cross all provisions the contract act also tells us when you need not perform for example the contract is contingent and that event on which it is contingent has not happened where the performance has become impossible where your promise depends on my promise and I have not performed my promise so your later promise need not be performed where parties together have no hated made a new contract or have altered that is changed some of the terms or have rescinded that is cancelled it where the promise see remits remits means he says instead of 50,000 give me 25,000 so he reduces where he dispenses with performance so where he says that don't do it he forbids or where he gives more time so whenever he extends time then the promises to time gets extended so the earlier promise of the earlier schedule need not be performed now this I think is the sense of contract law which is section 37 which says that the parties to a contract must either perform or offer to perform respect their respective promises unless such performance is dispensed with or excused under the provisions of the act or of any other law in today's session I want to highlight that the obligation is to perform the promise now if I don't perform the promise which I have made to you you are going to hold me liable what is that liability we'll see later so it is so important that the promise which I have made to you for which I will be liable is very correctly drafted in the contract so my stress in telling the session in telling the section here is that it is the promise that is the essential part of a contract and then the contract law tells us that okay if there is a breach now the contract law doesn't tell us what is a breach you perform and if a person has broken right so when a contract has been broken the party who suffers by such breach is entitled to receive from the party who has broken the contract compensation for any loss or damaged cause to him thereby which naturally arose or which the parties knew would arise from such breach so what I have done in the first few slides is to give an outline of the general principles of contract law formation performance the obligation of performance the aspects of performance and the consequences of breach and this is what the general principles of contract law are all about there are also laws governing special contracts like the sale of goods act the transfer of property act then in the contract act itself three separate chapters one dealing with bailment and pledge the next one with indemnity and guarantee and the last one with agency what are they they have special rules governing the rights and obligations and breach and consequences relating to those particular contract and because every that every such special contract is different from other contracts and it has different rules applicable to that contract each of these provisions first defines what it is so you have a definition of what is indemnity a definition of what is a sale of goods and then we say if the transaction is a sale of goods if the transaction is a transfer of property if a transaction is a mortgage under the transfer of property act then what is it what is it that makes a mortgage what is it that makes a transfer what is it that makes a sale so these laws help us identify the special contract I think from transaction perspective this is important for example we have a law which tells us the rights and obligations relating to pledges but we do not have any law giving the rights and obligations of hypothecation so what principles will apply to them now if you want to go to the principles of pledges then you will have to say well my transaction is a pledge and then it must fulfill that requirement so if I want to put my transaction in a compartment so that I want to take benefit of some provision in that law then I must be able to say that my transaction fits in that compartment I must show that my transaction is of that type I must show how the features of my transaction fit in the definition of that type of special contract I'm going to come later on to these features so I have just I I've just used the word features here then these special laws give special rules which apply to these transactions and very often many of these such provisions follow the general principles of contract law by that I don't mean provisions what I mean is principles right so those principles get translated further to fit that special contract now when you look at these provisions look at the provisions of these laws from this perspective I'm sure your perspective will change now what does the contract law not do and when I say contract law here I refer to all these special laws right sale of goods transfer of property etc etc they don't tell us what parties should agree they leave it for the parties to decide what they want to do okay so you want to make a contract with a minor go ahead no problem if you want to make a major go ahead no problem if you want to attempt to sell a property without registration immobile property go ahead no problem the consequences of that are given so it does not prohibit any transaction so it doesn't tell us what to agree we are free to agree even that which is void under the contract act so long as we know the consequences and it does not prohibit the making of any agreement we must remember that there may be other laws like regulatory laws which regulate transactions say electricity insurance etc which might impose terms the RERA for example might impose terms which have which the contract must fulfill so they come in other laws but not in the principles of contract law similarly there may be other laws which prohibit agreements but not the contract act so this is where we start our session today that parties enjoy tremendous freedom because the law doesn't tell what to agree parties are free to agree for example if I have to sell goods to you whether I deliver the goods to you and then ask for the fly price or whether you pay me an advance first and then I will deliver goods to you or whether I will give you a bank guarantee first then you will pay me the advance then I will deliver goods and then you will pay me goods on the amount after six months we are free to agree we are free to agree the description of goods we are free to agree what if the goods are defective will there be a right of return or a right only to claim compensation this is the freedom so parties enjoy considerable freedom in the contracts they make they have a freedom to decide how they will form the contract what will be its terms that is the provisions which are the main business of the contract before we proceed ahead I would like to divide a what shall I say a sort of formal written contract into four parts the introductory part the part which is the rights and obligations relating to the business which is to be achieved so I will deliver goods and you will pay me the price then the consequences of non-performance so if there is a delay then I will pay you 100 rupees per day consequences of non-performance right so our main business the consequence of non-performance and lastly provisions how to manage the contract I'll be dealing with some such just indicate some such provisions later and in all these aspects parties enjoy considerable freedom so what are the terms what would amount to a breach and what will be the consequences if there is a breach can one party order the other party to make changes how long the term that is how long will the contract subsist discharge means how will the contract come to an end will the contract come to an end if raw material is not available if the pandemic comes if an epidemic comes and what will happen if the contract ends the consequences in an international situation parties can also choose which law will apply to them they can decide that they will go to arbitration rather than the court and they enjoy considerable freedom in organizing the procedure of arbitration to the extent the act allows them and they can also choose jurisdiction of course so every aspect of contract they enjoy the freedom there may be regulation requiring them to agree in a certain way but that regulation applies only to certain contracts so now where do we see this freedom firstly these contract related laws you know I gave you a list of them and many others they themselves contain provisions which say so if it is section say 290 there is no such section in any law says 290 so that section itself states or provides that what is given here will be subject to what the parties have agreed so if parties have agreed something that will apply but otherwise this section will apply this is the what the section itself says now let us look at how this operates you will find this type of language there are actually 25 different ways in which it is stated across different laws where the section itself says that unless a different intention appears or unless a contrary intention appears contrary means exact opposite different need not be opposite right unless it is otherwise agreed so there's a distinction between having an intention which is a matter of evidence and there being an agreement which would require the require the fulfillment of what is an agreement so unless otherwise agreed in the absence of any agreement to the contrary in the absence of express contract to the contrary in the absence of any provision to the country so what are they all they are all provisions in these acts which themselves tell that parties you do what you want but if you haven't then this provision will apply and you will find even lots of them even in the transfer of property acts so now let us see how this operates we have a section 151 which says that the Bailey must take care of this and then 152 says Bailey when not liable for loss etc. of being bailed the Bailey in the absence of any special contract is not responsible for the loss destruction or deterioration of the thing bailed if he has taken the amount of care of it described in section 151 so what this says is that it is possible for the Bailey to agree to take more care than what 151 requires and if he agrees please remember that there is case law to say that this doesn't this doesn't mean that he can take less care I will request you to go to that case law that's not part of my discussion today but basically if I am delivering my goods to you on bailment let us say as a warehouse or as a transporter transporters are also subject to the carriage law can you agree to take on more responsibility than just reasonable care and the answer is yes but if that is not done then it is enough if you have taken the care which is described in 151 and then you are not responsible so for the loss destruction or deterioration please remember loss destruction or deterioration it doesn't refer to miss delivery so the section also therefore is restricted to what it says so what does it mean it means on the one hand that this rule applies only if there is no contract but from the transacting perspective it means that I will look at this part which I have marked in red and I will say okay in my transaction can I make an agreement which will increase the liability maybe I will say that I will take on more responsibility and I will charge more I'm in a position to do that so is that possible so it allows me to think if I look at this provision it allows me to think that there can be other ways in which something can be agreed now this is again from the contract act pony not to retain for debt or promised other than that for which the goods are pledged the pony shall not in the absence of a contract to that effect retain the goods pledged for any debt or promise other than the debt or promise for which they are placed I'm sorry there's a mistake in typing so I have pledged goods with you and you have paid me an amount I have another pledge where I have placed another goods item of goods with you which is a separate transaction for which you have paid me an amount now when I come back with the money on the first can you refuse to return the goods by saying that no no you have another one kept with me and in this section says no but what does it say it says in the absence of a contract that effect which means that there can be a contract where even if the goods are pledged for this promise long such term in government contract what does it say if we owe you an amount this is very close to the pledge right but I'm trying to bring to your attention how this is agreed banks especially when they accept goods as security they will have a contract or an obligation or let us say a permission written in the contract the provision in their contract which says that if any other amount is due to the bank then we will not let go of this security not just for this amount for which this is kept as security but also any other amount again how do I look at this provision firstly I look at it to say that well if there is no contract I must get back the goods but I also look at it as a person who drafts a contract to say that well can in this contract there be a provision which says that goods can be retained for some other promise as well shall I put that in the contract so it allows me to think in that manner when does property pass what is meant by passing of property when I sell you my car before I sell we agree this is the price so and so forth and so on this is contract so you are going to pay me the price I'm going to give you the car these are all promises a time comes a moment comes when the car is yours right and at that moment we say property as fast you have become the owner so the transfer of property happens in a moment and once that happens the owner shape or whatever is that right or interest passes to the other person other person in case of immobile property you require registration so that it is effective so we are in the sale of goods so when do we say that you have become the owner of the goods which I have sold you this is what we mean by asking property passes when intended to pass when does it pass when do you become the owner and what it says is this is for parties to intend we can decide when ownership will happen and ownership will pass we are free now section 19 and later sections give special provisions that if nothing is agreed then what for example when specific goods are sold then property passes at the time of sale but there are other provisions for as unassertained goods and so on so let us look at section 3 of 19 unless a different intention appears the rules contained in sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer so first the section says property passes when it intends to pass and then there are later rules from 20 to 24 and they will apply to show the intention go through those rules and those rules will enlighten us that those rules will apply only if we have not made different provisions in the contract it's perfectly fine for us to agree like this that I have to erect a large machine for you on your premises I bring all my stuff and put it in your premises where my workers will come my employees will come and put up that machinery now normally ownership passes risk also passes so the normal rule is risk passes with ownership but that is not how I want I want that the risk should pass to you when all this equipment and all the machines and the parts will enter your premises because I don't want to take the risk for them when they are on your premises so I'm going I want to separate the risk from the ownership and then when do you want to take ownership after the machine has been erected and there are trials and so many trials and it shows performance then you want the ownership to pass so what are we doing we are separating payment from risk from ownership and we are intending that ownership will pass only at a certain time now if that doesn't happen then we will have to go to these rules to find out when property passes ideally contracts where goods are sold it's a good idea to make a provision about passing of risk and passing of ownership we must remember that ordinarily goods are at the risk of the owner sale of goods that installment deliveries what is the issue I have agreed to deliver goods to you four truck full of goods so many tons and I send one lot and the other lot is still being loaded in my warehouse so when you receive the lot you have received an installment are you bound to accept an installment or can you say no no I will not take an installment send the whole four trucks at the same time this is what provides an answer unless otherwise agreed the buyer of goods is not bound to accept delivery thereof by installments what does it mean if I want to draft the contract there a large consignment is to be delivered should I make a provision for installment deliverance right this is what I must think they come to transfer of property I operation of transfer what does it mean let us suppose that I am the lessy of a plot of land please remember section 8 applies to movable as well as the mobile property I am the lessy of land and I write a lease I like a transaction with you which we get registered where I have written that I have transferred to you this land nothing else is written now my lease remains for 100 years how much do you get this section says unless a different intention is expressed or necessarily implied a transfer of property passes forthwith to the transferring all the interest which the transfer is then capable of passing in the property so if I have not mentioned anything then you get whatever I have what do I have 100 years of lease all rights otherwise I will write in this transfer that I am transferring to you these all rights whatever I have these over 35 years I have sold you a plot of land does it come to you with all the trees the answer is yes whatever I own and attached to it comes to you but if I say that I have sold you everything except the coconut tree which is in the northwest corner so everything comes to you except the coconut tree so remember operation of transfer if you want to restrict something you can restrict otherwise whatever the transferor has gets transferred to the transfer I must repeat that I am generalizing quite a lot section 8 has plenty of commentary relating to its interpretation I'm trying to generalize what I wish to highlight is that when I am transferring property I must keep this section in mind and wonder should there be restrictions or should there be limits or do I want to give it for the whole period and so on section 45 joint transfer for consideration the whole question is that two persons have purchased the movable property and what is each person's share this is the law this is the default provision the very important part is something I'm going to highlight so let us read it very movable property is transferred for consideration to two or four persons and such consideration is paid out of a fund belonging to them in common they are in the absence of a contract to the contrary respectively entitled to interest in such property identical as nearly as may be with the interest to which they were respectively entitled in the fund so if nothing is agreed if there is no contract then their share depends on how much they have contributed so if X has put in 60% of the money and Y has put in 40% of the money and purchase immovable property or interest in immovable property their shares are 60 and 40 what this is is that if they are paid out of one fund then we look at how much they have contributed and similarly if they have paid separately you know one comes from one bank account and the other comes from another bank account again it says in the absence of contract to the fund contrary their interest in that property depends on shares now for me what is important as a transaction lawyer first of all I must understand that the shares of the persons for whom I am writing the document are going to be according to contribution but then it is their wish that they want to keep it equal so they will contribute unequally but they want to keep their shares equal can they do that and this section tells us yes they can do that there may be tax implications I'm not on that issue can they do that yes they can look so much freedom in deciding what will be their shares now I come to copyright tax normally when I sell you something sell sell sale I give you everything I have permanency can property be sold divided by time the answer is yes that is how life interests are created and this is copyright is intangible so it can have multiple locations so can property be transferred or separated by locations and the answer is yes if it is capable of being done so so the question in copyright act is that if I have written a book and I have assigned assigned means sold to you transferred to you my copyright in it then how long do you get that copyrights and do you get the copyright for the whole world worldwide rights now if you go by our section 8 which is in the TP act which equally applies to copyrights because it applies to all property what it means is whatever is my copyright I give to you when I assign however this section says and let me read if the period of assignment is not stated you know contrary agreement is not stated it shall be deemed to be five years from the date of assignment so when I just say here is the copyright I assign to you you get it only for five years if it's any other property it is permanent and if territorial extent is not specified it shall be presumed to extend within India so this is for you and I when we are transacting to think that for the price which you are giving me for the copyright will it be five years ten years or permanent permanent means six years after my death will it be worldwide or will it be only for India it is for us to decide so what is the homework we do we go back to all these laws and read every provision with understanding we don't just read what the provision says but we read it from the perspective of the one party so if you're reading the chapter of leases you read it from the perspective of the lesser you read it from the perspective of the lessy you read it from the perspective of the sub-lessy then look at the effect of the legal provision if there is no contractual provision and look at the different options or aspects of that matter you will come across very long sections in the transfer of property act especially in the chapter of mortgages and leases where parties have so much freedom in looking at different aspects of the matter so sit down with the provision and look at it from all angles right and when a new case comes to you or a new transaction comes to you look at the same provision you will notice that it looks different now this is where the the earlier part was where the contract law provisions themselves said that these provisions are subject to and you will find lots of them through these laws but now I raise a proposition that the contract law itself much of it is default rules what is the default rule a rule that applies so it is a rule but when parties make a contract they override the rule and so it is said that the contract law is meant only to fill gaps first look at the contract you know we discussed that in our earlier session that when a person comes to me with an issue relating to contract be it for litigation be it for transaction be it for looking at a draft I will first look at the contract then I will look at the law because law is there to fill the gaps and let me amplify this for example we have provisions relating to impossibility in section 56 of the contract tax what does it say that when the performance becomes impossible the contract becomes void parties are discharged so even if one party does not perform he will not be liable for compensation both the parties are discharged of course work which is completed will have to be paid that is under another section which is 65 however and yes and the interpretation of this word impossibility difficulties are not impossibility so strikes lockouts non-availability of material this cannot be excuses they are difficulties and in any case parties should contemplate that these are going to arise if I am selling you all the rice on my farm which will I will grow and sell next year then I take the risk usually it falls on me that there will be no rain and there will be no rice so risk naturally falls on some parties and there are cases which look at or interpret the provisions or find out the intention of the parties as to who has undertaken the risk but apart from that time and again courts have heard the difficulties are not impossibilities I will request you to go to our famous case Satyabrata Ghosh versus Magni Ramban Bangad decided by the Supreme Court Satyabrata Ghosh where because of a requisition a developer was not able to divide the land into plots and sell them as agreed and the requisition was for the purposes of war and even if he wanted he would not he was not able to do that and yet the court looking at the facts of the case held that this is not impossibility so it's a very difficult what shall I say very difficult discharge provision very difficult to bring your case in the application of section 56 so what do parties do parties write force measure clauses they refer to not just force measure events which would be acts of God or natural calamities but also all those events which may arise in the future which are supervaining which will affect performance and then they write about how they will get resolved so will they wait will they increase the price and one party terminate after some time shall we suspend performance what is to be done about the work which is already done and so on now even in Satyabrata Ghosh if you read the judgment there's a I won't say passing a deliberate remark in the judgment which says that there is no clause which deals with situations like this what does it mean if there were a clause then that would have operated so wherever there are force measure clauses we don't go to 56 so what do we say that the provision relating to impossibility in the contract act is the default rule it will apply only parties have not made a provision in their contract so read many force measure clauses see what they do understand them well understand the different aspects of force measure clauses which people make for different contracts and use them I come to alteration section 62 says that both the parties to the contract and if there are many parties all parties to the contract can change the contract one party can't change so if you and I have a contract we both together can change it if I say I have I want this change and you don't agree then there is no change but if I say shall we have this change and you accept it by saying yes yes we will then it is changed but without the consent of both of us a contract cannot change but parties can incorporate in their contract that one party may ask for a change and the other party will fulfill it and naturally it is not just one sentence it will have to say what about the rates what about the costs etc so do read such clauses I call them variation clauses sometimes they are called modification and so on I'll come to the last point first and then come to compensation what is recession recession is ending the contract when can recession happen under 62 when parties together decide to cancel then they cancel and under the contract act a contract can be terminated only in three situations one is where one party has refused to perform anticipatory breach section 39 the other is where you and I have a contract and I am preventing you from performing you want to but I am preventing you then you can end the contract so prevention and the third is where one party has failed to perform and time is of the sense so not for every failure there is an automatic right of termination time is also of the sense so other than these three provisions there is no provision in the contract act for termination if it's a sale of goods then naturally you go to those implied conditions which says that if a condition is broken then the buyer can reject the goods and the contract so now the law says that termination will happen only for these breaches of course if you don't terminate you can always claim compensation no problem but the right of termination comes only under these three but parties can put termination clauses what do they say that without any reason we will terminate by giving you seven days notice one month's notice the Supreme Court has upheld these clauses and said that termination is valid so again these provisions of decision become default rules now I come to the second last item that is compensation section 73 which we read earlier said that if one party breaks the contract then the party who has suffered by the breach is entitled to claim compensation for these losses those which naturally arise and those which parties contemplated when they made the contract so if I have broken the contract with you whatever losses you suffer which were in contemplation let us say I am liable to pay you but parties are free to put exclusion clauses what is exclusion clause there will be no liability to compensate are they valid yes they are valid parties can put a limit on liability that may be your loss will be 2 crore rupees but we limit our liability to 1 lakh rupees or 20 lakh rupees so parties can do that they can also limit the losses so they may say that if there is a breach then only natural losses will be paid but not loss of profits so items of losses may also be taken away which would otherwise have been available under section 73 so what do we say we say that 73 itself the essence of contract law payment of compensation that itself is a default rule look at the possibilities which the law allows us to incorporate in our contracts now I come to another aspect a contract law enforces promises so I have promised to deliver goods to you and you have promised to pay me the price and I have promised to sell them to you which means transfer to make you the owner so my promise main promises deliver goods and your main promises to pay the price now each of these has a content which goods how much so that becomes the sub details and further details what happens if the goods are not according to quality what will be your right if the goods are not according to quality how will we decide whether something is in quality or not if I am sending you small machine parts take any sample of thousand and if any three are rejected then the whole lot can be rejected so these are the consequences of not fulfilling that promise so understand the content of each promise and then you must design the promise and when I say promise I include the promise the sub promise the effect of not fulfilling understand it fully and then decide how you want design please remember we don't put delivery related provisions in one section and price related in another section they are mixed up within the contract but we have to make sure to know what we want and see that it is incorporated in the contract now these promises which I mentioned earlier deal with one is the business itself so I am going to give you goods and you are going to give me the price this is the business and if it is done then we are happy that the whole contract is fulfilled the second is the risks now what will happen if the goods are not of the quality which I say they are that is the risk you see what will happen if you have paid me the advance and I don't deliver goods to you this is the risk that you see so we also incorporate provisions in the contract to fulfill these risks then there will be provisions to manage the contract so we say that whenever goods are ready the seller will inform the buyer this is for managing the contract the goods are to be delivered but first inform how will it be informed by giving a notice how to give that notice there's a provision in the contract which says notice shall be given by email to this that that so you have provisions which manage the contract and you have provisions which manage enforcement like jurisdiction choice of law arbitration then self enforcement call the bank guarantee and so on so promises are not just I will deliver goods and you will pay the price the contract contains so many of these and all of them together form a whole and I will give you an example that I have offered to sell you goods at a certain price and I have said that Pune I am in Pune right and you are let us say in some other place Pune court will have jurisdiction when I say Pune court will have jurisdiction I'm happy now you say no no Pune court will not have jurisdiction Chennai court will have jurisdiction now I'm not so happy because if dispute arises then there are costs involved of fighting it in Chennai so then I say okay if you want Chennai jurisdiction then I will increase the price by point five percent so you see change in a managing enforcement clause is perceived as affecting the change in price you say no no you will not limit liability I say no I will limit liability at 50 lakh rupees now if there is no limit on liability then I will look at some other clause and see where changes are to be made to accommodate that risk so the whole thing is seen as a whole picture and this is very important you know when we receive a draft and we want to make a change in one part we must look whether changes are required in any other part of that contract now the steps towards applying the law is first know the transaction it is very important to know the essential features of the transaction is this transaction a sale of goods or is it a bailment based on that the sales tax act will apply is this transaction a mortgage by conditional sale or is it an agree is it a sale with an agreement to repurchase for that you should know the features of sales and mortgages I've referred here to assignment and license especially of copyright let us suppose that long ago as a writer I gave you my publication right I just wrote one letter saying here is my book and I'm sure you will do justice to it please publish and later on a question arises whether this is assignment or license please remember I've not used the word transfer I've not used the word assign I've not used the word license I've not used the word permit you have paid me royalty which I have received and years later on now the question is whether cinema rights are there who has you have or I have you go back to that letter and we say is this an assignment or is this a license so we should be aware of what are the features of an assignment and what are the features of a license and in such situations which arose before the Supreme Court the Supreme Court has laid down some facts which will be noticed to arrive at this conclusion so we say when it's an assignment usually a lump sum will be paid when it's a license usually there will be control these are the features so partly the features come within the definition and that's why I gave importance earlier to the definition but partly they also come where the Supreme Court or any other court has looked at how parties enter into those transactions and their behavior and then you look at that behavior to see whether or other what is the nature of the transaction my point is from the transacting perspectives right I what I told you was the litigation perspective keep that in mind and become to transacting perspective what is it do I want to make an assignment or a license now the person who takes it wants an assignment the person who gives it wants to make it for a limited period and put conditions so how to design it and then how exactly to call it sometimes tax implications may be different so we should know these features so that we know how to design what we call our document is immaterial because ultimately what is agreed is the true nature of the transaction may I request Vikasji to please close all the videos then we must understand what are the interests of each party for example I'll come to the second example security transactions if there is a transaction of mortgage or hypothecation or pledge or a guarantee what exactly does the creditor want and what exactly does the debtor want what is his interest what is he interested in and I will say that the creditor is first interested in getting back the loan he doesn't want to sell that security and get the money it's about the ratio so that is his first interest his second interest is that God forbid the loan is not paid then this security must be of good value so that it will fetch at least equal to the loan and interest so his interest therefore is in the good title and how the properties preserve and so on what is the interest of the debtor he doesn't want to lose the security so his interest is that whenever I take the money I should get it back so understanding these interests is also important because they help us in designing the promise now the third thing is understand the risks and I take this example of a warranty let us suppose that I am selling you my business and you want from me a promise that there is no litigation I am willing to give that promise no problem but then maybe there is a litigation and if there is a litigation then you will probably either claim compensation or call of the deal so there is one litigation which I am aware of so when I write for you there is no litigation I say there is one litigation which is given in a list other than that there is no other litigation now again I will think and I will say well I am giving you that promise but there might be some litigation which I don't know so then I again change it and I say that this one is the only litigation of which I am aware I am not aware of any other what I mean is that to cover that risk which you perceive what is the promise I will give you and what is the promise you would want it can be stated in different ways so let me come to an example and therefore it becomes important to design the promise so each party's respective promise is to be located look at the content of each promise and the sub promises cover the risks and look at all the aspects and understand the effect of what is agreed how do you achieve this by reading many contracts with great interest especially reading them just like that not because you are reading it for the client but just like that you know without any purpose just read them for the purposes of understanding and appreciating so let me take this example of confidentiality I am giving you confidential information and these are the three ways in which it can be agreed so we are agreeing that you it is your obligation to keep it confidential so in the first case the receiver shall ensure that the information disclosed to the receiver shall be kept confidential and shall not be disclosed except as permitted in this agreement looks very fine right but what is that information which information will be confidential how will he ensure so if I am giving I should be conscious of the systems in your company or in your business place how are you going to ensure so it falls upon me the other way is where we say the receiver shall take reasonable steps this reasonable is very big and what is reasonable according to me may not be reasonable according to you so whether we agree in this manner I'm not saying which is better sometimes the information is not so vital that item number two is good enough or the receiver shall take the same amount of care as the receiver would take off his own information now if this is fine very good but then as a giver of information I should first inquire with you mr. receiver what care do you take off your information and I should find out whether that is good enough to protect my interest this is what I mean by saying understanding the effect of what is agreed now look at this agreement a contract for providing technical services the contractor agrees that technical personnel should abide by the rules and regulations of the company applicable at the place of work imagine I'm a contractor and I have located personnel who will come and give assistance in your company and I agree like this I must understand that these people will be in your premises so I should be clear and I have no control over these employees when they are in your premises so I should be very clear to explain to my these personnel who are visiting your premises that they must abide by the rules and regulations I am undertaking an obligation over which I have very little control this is what I mean by understanding the effect and the last part about understanding the law should we know the law at all you know this is this big question that do we need to know the contract law at all to be able to transact I say yes because the contract law tells us different aspects which we can contract despite the law right there are so many aspects where the law says something but we can still make our own provisions but we must also understand the law because we should be clear that what we agree does not violate this requirement of void agreements so if our transaction is somewhat speculative then we must make sure that it does not fall foul of section 30 relating to measuring agreements if our transaction restricts someone's right to do something then we should design it in such a way that it will not violate section 27 relating to restraint of trade so we should know these principles well so that our contract does not violate them so this is what I had to discuss with you how much of contract law applies when you make a transaction how do you use the law while you make the transaction and although I say that the contract itself is more important than contract law I will now go forward and say that that is true provided you have a sound background of the contract law now beyond the ICA there are other concepts like representations and warranties indemnities assignment which is actually the law of property the doctrine of privacy and this entire boilerplate boilerplate refers to those provisions which deal with management of the contract itself like assignment anti-waver merger or entire agreement notices they all come towards the end of the contract and if disputes arise then they will shock you by their impact so it's important to understand these as well so know the law understand the transaction identify rights and obligations and put them into words thank you we can have that screen sharing off yes this is a Nageshwar Rao asks are there any provisions in the contract act which are mandatory and non-derivable and if so please give examples is it on the chat yes ma'am it's on the chat mandatory contractual provisions most of them will be in other laws not the contract law according to me the only mandatory provision in the contract act is the control over liquidated damages almost every of course the contract has to be formed so that it can be enforced so that part which deals with formation is of course compulsory but otherwise I think it's only the liquidated damages then there are regulatory laws which provide for mandatory provisions but not the contract act next question also by him can you please explain the relevance of section 27 to 29 of the specifically fact which deals with the decision of contracts can you give practical illustrations of when these provisions can be made use of by the parties okay although that is not the subject of our discussion today rescission occurs if I remember section 27 correctly when the contract is voidable at the option of a party and not necessarily a party even any other person now let us suppose that the contract is voidable because of lack of the consent it is not necessary to file a suit for a decision it is enough if I give a notice that I have rescinded it and I have ended the contract and that doesn't require your acceptance we must remember that when we are avoiding it under 39 53 or 55 then there has to be a refusal and a termination just the refusal is not enough but when it is voidable for lack of free consent then just the notice communicating the decision the decision must be communicated I think it's 66 or 67 of the contract and that should be enough however sometimes I may need more reliefs like return of property or return of an amount and for that I'm required to go to court so I can either say I have rescinded it therefore give me the money order that the defender should give me the money or I can myself ask for the relief of recess under 27 there is also provision in 27 to 29 where the degree of specific performance is not fulfilled by the defendant sorry by the plaintiff who has failed to deposit the money and then the defendant can ask for a decision other than that I think I'm not in a position to give more illustrations just now I will have to read up for these illustrations and limitation of liability or exclusion clauses be challenged as violative of section 23 of the contract act yes my first answer is yes you can challenge anything in the court will you be successful I believe no because exclusion clauses have been held to be valid other than this Brojanath Ganguly's case which dealt with a situation which I in simple words is like this that there is a party which is a big party and a small party such that this big party can dictate terms which the small party cannot negotiate and a small party has no other option than to undertake what the big party has proposed then it may be struck down as against public policy I say it may be because every such contract every such agreement will come up separately to test whether these tests have been fulfilled can you please give real examples of clauses in the contract which lead to assumption then attribution of risk what do we identify such clauses representations warranties and indemnities I would say read more about them just to Google representations warranties and indemnities they are the methods of taking care of risks risks of information and this and before we take the session you can just tell the website of yours so that people can connect with the articles with that yes my website is you can post it in the chat meanwhile I will take the question whether I'm out with a dicta dot in where I write there has been a gap in writing during the during the lockout in fact people had more time to write but we always follow them we know in the house so I had less time to write but I write here and I write in plain language obiter dicta dot in K. Muthu Muthukumar Swami whether amount specified in the contract as liquidated damages is final and conclusive irrespective of the proof of actual damages the law relating to liquidated damages I believe is in a mess ordinarily the amount specified as liquidated damages should have been final unless the other party showed that it was not reasonable the current state of law is that the very simply stated that if the amount of the claim of liquidated damages is challenged and if I am claiming it against you and I file a suit for claiming liquidated damages against you the amount which is agreed I will have to first show that in our contract it was difficult to calculate damages so they were uncertain and therefore because of this difficulty I'm entitled to this amount because they can't be calculated that is really sad I will request you to go through my article which you will find on obiter dicta doting which is called commercial law must be certain which discusses this how the interpretation of liquidated damages and when it can be claimed has changed over the years so there is no certainty actually the whole purpose of liquidated damages to give certainty but the current state of law is such that there is no certainty that the amount will be awarded and section credit arguably does not allow a limitation on rights is it open however for parties to agree that the representations will survive only for a specific period of time the effect would be that after representations that a party cannot claim indemnity based on those representations what we mean to say is that my representation is valid or rather I give this warranty or I give this representation or that your claim relating to it will be valid only after or until three years or so I think this will not be affected by section 28 I might I might be careful in wording it I might be careful in wording it that I am liable only for three years don't we have warranties goods warranties which say that we give a warranty for only three years this is going to eat what impact will it make if a transaction of a contract if parties enter as an agreement or license how it amounts to be an essential feature a license is a permission it is it is a permission to do something which would otherwise be unauthorized so you cannot enter my flat without my permission so I give you permission to enter my flat that is a license you cannot enter a cinema theater without permission so you enter you buy a ticket that is a license you cannot copy my book without my permission so when I give you that permission it is a license so I don't give you sell it to you right it's like saying this chair is mine and I give it to you sell it to you then it is yours but I say this is my chair keep it with you and use it for sitting so whenever you come you sit here and pay me five rupees an hour this is a license so much depends on how you have drafted it I'm not gauge for it posted one question you can read that or I can read that you said that provisions found in the contract are in the nature of default rules and can be derogated from by relying on certain expressions in the absence of contract etc but this expression isn't found in certain other provisions like section 73 how do you say that 73 is a default rule then is there any precedent to say it is derogable there is no precedence saying it is derogable that is there are precedents which have applied limitation of liability that have said that exclusion clauses are valid and that have said that have said that loss of profits cannot be claimed because that is excluded in the clause in the contract so that is how we say that section 73 may not fully be applicable in such cases and these were the questions before we part for the day we wanted to ask like everybody reads those books which are tough in their language as they earlier I said that it's always been done that the languages such that even the common man doesn't understand and more so even the lawyers sometimes don't understand so while you have also read all these books how do you make as a student of law or a lawyer understand that how to simplify things for their own understanding because they will not be able to understand or they will not be able to have all these sessions from Dr. Nilipa so we will keep on requesting so what are the key mantras for that the key mantra to make something simple is to understand something really well I must remember I must share with you an experience we had in our college we I used to hold I mean I designed and I conducted judgment writing competitions and in these competitions very usually a high court judge would come sit as a judge and guide students about writing judgments and very usually after the students questions were over I would ask the judge so how long will this judgment be and I remember a reply by a particular judge the judge said that if I have lots of time then I will write the judgment in three pages but if I don't have time it can go to 20 pages so what it means is when you understand you can simplify and bring it to the court understanding it is important it is just like what I read it in one of the articles I'm not very sure but they said when it was asked by probably to Mr. Nariman that how much time will you take for a speech he said that if it has to be spoken for one hour I can speak extempore but if I have to speak it in three minutes then I require a few days of practice because it has to be concise precise right and I must I also must mention my teacher that is Professor S. P. Sathe and he would often tell us teachers that you should know the subject so well that you should be able to explain the whole of it in three sentences and that's not possible unless you know the subject I don't claim that I know contract law well there is so much in it and so many principles which we keep borrowing from other jurisdictions how the same thing is interpreted in a different way in other jurisdictions it's very interesting it is just that I'm sharing that much which I have understood yeah then one topic could be that one always understands different topics but like you did the previous session and this session with different interplays of different acts so as a student of law or for a lawyer how can he understand the juxtaposition of all these acts in one go so that he can he or she can place in that is it practice or some other key mantras also I belong to I practiced for about 12 years and that is at a time when there was no internet there was nothing on the net we actually had to open books you know very strong shoulders take out journals and put them back and we read with attention and we read a lot so very often I would as a very very young junior where I didn't have permission even to conduct matters my senior would say take this brief and study everything about it so study why is it senior division study why it's called a regular civil suit study why these are the defendants right study why relief is claimed only against one defendant and when you start looking at these questions it leads you to reading more and more nothing was ready made and I think that is the that is the trick so you mean to say that the fish always is available on the ocean easily but if you have to find pearls you have to type a deal maybe because pearls don't float as such so for pearls of wisdom thank you for sharing all this knowledge and we are indebted to you we will take the third session ma'am you can declare the third session topic and then we will decide the date as such yes the third session is contract law from the litigation perspective so friends we can connect as in when we will be stay connected with us on the social media of instagram facebook and linkedin we can always be connected for the third session with us and tomorrow the session would be mastering the art of cross-examination practical tips and law by justice Vedh Prakash Sharma who is also a resource person with natural judicial academy Mubal so do stay connected he's a former judge from Madhya Pradesh at 6 p.m everyone stay safe stay bliss and indebted to professor Nilima Babade as usual you will keep on learning and keep on sharing her insights from her thank you thank you once again thank you