 Okay. Good evening, friends. And amongst us today, we have Dr. Neelima and who is a known name under her sessions. And in fact, when we contacted them for the purposes of the contract sessions, I never knew that she was so popular and her sessions would be so light. When I watched the LinkedIn, I saw that not only this time, but even otherwise a lot of students have said that if you have not learned from Dr. Neelima, you have missed something. Then I realized that often we remember, So all those who have missed it or those who are on the other side of the age, they can always learn from Dr. Neelima. And we are enamored by the fact that she has agreed to share her knowledge. Contacting her for the contract gave us the immense pleasure that if you could understand things lucidly, I was just told that there's one name and that is Dr. Neelima for the purposes of contract. And when I saw the LinkedIn, her social media, I found that there are a team number of sessions and a team number of talks on which she can share her knowledge. Be that as it may, I'm reminded that once you are with a Guru, that it's a famous Doha from the Kabir, Guru Govind Dao Kade, Kaake Lago Paye, Balihari Guru Aapki, Guru Govind Dao Kade. And those who have been linked with her social media have seen that they actually not only respect her, regard her, but actually from their heart, they have their own respect. And that is what they say that a teacher can, they say that if you teach a teacher to teach further, she not only teaches a student, but she teaches the nation. And she is one of that rare example who I can share her knowledge in the right way and in the right perspective. Without taking much time, we had a contract that I will take a short time, but be that as it may, it took some more time than the usual. Over to you ma'am for your insights and we are thankful that you agreed to share your knowledge. Thank you very much. That's wonderful to be in an online session and be able to talk to people all around India, perhaps from outside but all around India. Before the COVID, I don't think I would have had such a chance of being able to address so many persons across India. I must especially thank Vikasji that he gave me an opportunity to speak about a topic which I love to talk about. Thank you very much and thank the team of Beyond CLC. I am a regular follower of Beyond CLC videos, especially those relating to CPC and evidence. I will share my presentation and then we will start. So namaste to all of you from Pune. Perhaps we can deal with all the questions in the end. So I would request you to either put them on chat or to ask them as soon as the session is over. I have planned for a session of about 45 to 50 minutes. But of course I must control what I should talk to be able to finish the theme within 50 minutes. And then we can take questions. There are two more sessions which will follow about which I will speak as we go through the session. We all have studied contract law as law. But how does it appear from the practical perspective? How much of it is really binding? What is its purpose? And once we have this view of the contract law, so to say, we have seen the contract law of what it is from the inside. Now we have to go outside and relook at it and see how what is it really? It gives a very different view. And I will be attempting to give that view. To make my statement simple, I'm using very simple language and perhaps generalized. I know that each of these aspects which I will discuss have different shades, different interpretations, but those are the details. So I will be dealing with a big picture. What is the contract law? Where is it located? If you were to find a law, where is it? We have the Indian Contract Act, 150 years old. Not very much amended, but it handles all situations. So we have general principles in Sections 1 to 75 and certain special contracts like Veilman, Pledge, Guarantee, Indemnity, and Actions. Then there are special laws dealing with particular contracts as a whole, like the Sale of Goods Act, which deals with Sale of Goods, the Negotiable Instruments Act, the Transfer of Property Act, and of course many more. These are but examples. We also have other laws, special laws, which affect contracting. For example, the Insurance Act will tell us how an insurance assignment is to be made. And what about fraud in insurance? And we have the Banking Regulation Act and other laws relating to banking, which deal with banking related contracts. So you have, therefore, contract related provisions in many other laws. Much of contract law is also found in the case law. And the case law is very relevant because the contract law, after all, gives very fundamental principles. But when a case arises, these principles become inadequate to deal or give an answer to the case. So they have to be minutely dissected and interpreted. And that is where case law arises. We also have laws regulating contracts, which tell us also what can be agreed and what cannot be agreed. Because they just give me a while, I will stop the calls on my mobile phone. I forgot to do that. I'll just do that and be with you. Contract law is about contract. The sections tell us what is a contract and therefore the sections relating to formation, especially how it is formed, how it becomes a promise, how it becomes an agreement. Then there are conditions of validity, that is of competency, of free consent, of legal purpose and consideration. Lawful purpose and consideration and that the law should not have declared to be void, the contract law or any other law. And if these four conditions are fulfilled, then what is an agreement which I have stated becomes a contract. And therefore, if it is a contract, then we will go further and see how it is to be enforced. So the first thing it does is tells us what is a contract. Now our formality is required. For example, is it necessary that a contract should be in writing? Is it necessary that it should be attested by witnesses? Is it necessary that it should be registered? Well, the contract law doesn't require anything. An oral contract is a contract. The contract by emails is a contract and so on. A mere request requires you to please shut off all other reviews. Some of them can distract. And then, if any other law, therefore, deals with formality, some other law requires writing, some other law requires registration. What you had said to me, I just missed that line. Could you please shut off all the videos? Okay, I will do that. Then, if some other law requires writing, attestation or registration, then the contract must fulfill what that law tells us. For example, if a law requires that there should be one attesting witness for a transaction, then the transaction will not be a contract unless there is an attesting witness. We will see shortly what is meant by a contract. Then the general principles, after telling its formation, then it says, perform your promises. This is actually the essence and I will come back to it again. And so it creates this obligation to perform and tells us who must perform. What happens if there is death? What happens if promises are jointly given or jointly taken? So those are all coming under the chapter of performance. And then it also deals with some aspects of performance like time. So, of course, parties can tell at what time it is to be performed. But if it is not stated, then the law says it must be performed within reasonable time. So, specified time or reasonable time. So, it tells us about time. It tells us where is the contract to be performed. And then it says where it ought to be performed. So, parties are free to agree whether the seller is to deliver the goods at his door or to deliver them at the buyer's door. So, the place. It also tells us about the manner of performance and whether the manner can be changed. This whole chapter of performance deals with all aspects of performance, but in very, very general terms. Then our general principles of contract, which come from 1 to 75, they also tell that yes, you must perform. But you need not perform in certain situations. So, what are they? Now, the contract is contingent dependent on an event. If the collector will consent, then I will sell you my land. So, and the collector doesn't consent. Then naturally, the promise need not be performed. So, the chapter of contingent contracts deals with these conditions. Then if the performance of the contract becomes impossible, it need not be performed. If the contract consists of reciprocal promises, such that the second one is dependent on the first one. Or parties have decided an order that first you do this, then I will do that. First you pay an advance, then I will deliver goods. So, if you don't pay the advance, then naturally I need not deliver goods. And therefore, the third item says if a prior promise is not performed. Then a promise need not be performed if it is substituted by the parties or it is changed by the parties. This is section 62, where all parties substitute the existing contract or they alter some of the terms of the contract or they rescind that is cancel all the entire contract or some of the terms. And then a contract need not be performed if the promise remits. It means gives up. He says, okay, instead of 5000, I will accept 2000. This is remit. Dispenses with means he says, you don't do it. He forbids from doing so he dispenses with it. Then it need not be performed or he allows to give time. So, if he says, okay, you can perform after one month, then naturally the original promise need not be performed. You will of course find many more such situations within the act where a party need not perform his promise. They are all hidden here and there. It is for us to locate them. And then the general principles of contract one to 75 tell us that if a party breaks his promise, then the other party who is agreed is entitled to compensation. The contract act doesn't tell us what is breach. It tells us perform the promise and if a party breaks his promise if there is a breach and this breach may come of different types. Usually they are three. One is where it is not performed, which is failure. Second is where the performance is not according to the quality, which is defect in performance. The third is where there is a delay. So the performance has happened, but the breach lies in one promise. I promise to deliver on 1st of January. I didn't deliver. I delivered goods on 1st of February. This delay instead of 1st January, the delivery is on 1st of February. This is also breach. Then there are two more situations. One is where you and I have a contract and I prevent you from performing this. This is also breach. And there is one more search for it in the contract act. If I fail to give you facilities, which I'm supposed to give under the contract, that also amounts to breach. So breaches come in various shapes and sizes and forms and so on. All that the contract act says is if you have given a promise and if you have broken it, right, then you must pay compensation. Breaking a contract doesn't mean ending. So if I fail to deliver in time, right, then I have broken one promise. What is that promise? The time related promise. I bring the goods to you after a month and you take them. So I have performed the promise relating to delivery, but I have not performed the promise relating to the time of delivery. And that is the breach for which if you have suffered a loss, then you can claim compensation. Go back to Hadley versus Baxinville. The compensation was claimed for the delay because the machine power was actually delivered. The performance had happened, but the breach lay in the fact that it was delayed. And if there is a breach, is there a right to rescind? To rescind means to terminate the contract. And the answer is no, not easily. This is something we must remember. What is it that it is not easy to terminate or end a contract under the provisions of the contract act? There are only three situations where a contracting party can end or rescind or avoid or put an end. Different words are used to the contract in three situations. One is under section 39, if one party has refused to perform the contract in its entirety. So I have agreed to deliver you goods. One month before that, I tell you, well, I have these difficulties, you know, I am so sorry, I will not be able to deliver here is your advance with interest. Sounds very reasonable. But what have I done? I have repudiated my obligation. I have refused to perform the contract in its entirety. This is my breach. And this breach doesn't end the contract. Because I have committed this kind of breach, which is refusal. You have an option to end it because if you don't end it, the contract continues. And then if you don't end it, listen to this carefully. I have refused to perform. You have not ended the contract under 39, which option you had. After a few days, I come with the goods. You are bound to accept them and pay the price. You can't say, well, you had informed me at that time, you refuse. So now I am not going to accept the goods. And if you don't accept the goods, then you have committed the breach of non acceptance. They say it takes two to end the contract. I come back to the topic. Recision under the contract act is possible one under 39 when there is a refusal, often referred to as the anticipatory breach. The second is where I have prevented you from performing your promise. Then you can end the contract because I have prevented you. And this is under section 53. And lastly, where time is specified. And I do not perform at that time, which is agreed. Then you can terminate the contract, end it, rescind it, put an end to it. Provided time is of the essence. Provided it is our intention that time is of the essence. This is what the section says. So other than these three situations, there is no right of rescission under the contract act. Parties can provide for it. I will talk about that later. And the decision to terminate is not an easy one because whether the action amounted to refusal, whether the action amounted to prevention or whether time was of essence or not, that gives the right to terminate. The question whether the situation falls in these three is to be decided by the court. So it always remains open whether my termination is valid or it is not. So when there is a breach, there is always a right of compensation under the contract law. But the right of termination or rescission as it is called is only increased situations, which are serious breaches defined or stated in the contract act, not defined, stated in the contract act. And then sections 1 to 75 also have a chapter relating to quasi-contracts. I will of course not discuss them just now. Now when transactions are made, do we need the law to make transactions? Not at all. Transactions or making them or bargaining has to be pre-legal. It has nothing to do with the law. And I take two examples. One is my grandson and I. When he was three and I wanted him to eat varandhar, the Marathi delicacy, plain dal, plain chawal with ghee, salt and lemon. And he likes it. But he wants that small piece of chocolate. So he says, Ajee, Ajee's grandmother, Ajee, if you give me the chocolate, then I will eat varandhar. The dal and rice. A child of three understands interest. What is that interest? His interest is in having the chocolate. And my interest, he knows, is that he should eat varandhar. So he understands that, that he is able to bargain. Let us also think of people in India who have no background of law, legal systems, etc. For example, tribals and adivasis. I have had this experience once, gone to a tribal area. You know, dhoop in sense, that comes as a gum from trees. So a lady was sitting with about 250 grams of dhoop. And then I asked her, well, how much will you sell it for? And she said five rupees. And that was remarkable, because coming from an urban area, this dhoop would have cost so much. But for her, that five rupees was enough to buy salt, which she wanted. So her interest lay only in so much, which would fix her what she wanted. She understood her interests. So my point is that persons understand interest and will bargain. And they don't need the law for it. Therefore, what is the role of law? This is what we are going to see. The role of the law is to generate faith in promises, in promises. So there is the dhoop and there is the five rupees and it can be exchanged immediately. But if I purchase the dhoop and I told her, well, I will pay you five rupees tomorrow. She should have faith in that. I have agreed to sell you goods and you are going to pay me later. What is it that guarantees or gives me faith that you will pay me later? So promises will be accepted only if there is the faith. And that faith comes because the legal system allows enforcement of promises. So the role of law, I believe, is to enable more and more contracts to happen, to enable lenders to lend, to enable people to give advance for the purchases they make, to enable people to deliver goods and accept payments after six months, to enable a person to buy a flat and wait, pay the money and wait till the flat is ready. It is this faith that the law generates. Now the other thing we remember is that contract law does not state what the party should agree. Not at all. Nor does it prohibit the making of any agreement. So it doesn't say minor student contract. It doesn't say don't make wages. It only says that they will not be enforced. If at all there is a prohibition on any making of a contract, it will lie outside contract law. So you may have the dowry prohibition act stating that the agreement to give and take dowry is void. Or the Benami Transactions Act which says Benami Transactions are void. Or they are punishable. Or don't make them, prohibit them. But the contract law does not do these things. And these two thoughts are very empowering, especially if you are going to be transacting. So the contract law enables, allows total freedom in contracting. So parties are free to form their contract in the way they like. To decide the terms. Whether I will give you goods and you will pay me the money immediately. Or whether you will first give me an advance for which I will give you a bank guarantee. Then I will deliver the goods, then you will give me a bank guarantee. And then the payment will come after six months. It is for us to decide. The law doesn't say, contract law doesn't say anything, freedom. We can also decide what amounts to beach, what amounts to serious breach. And what happens as a consequence. So if you don't do this, then it will not amount to breach. You will find some such contracts also that there will be no breach. Or sometimes they say there will be no liability. Or if there is a breach, only advance will be returned. If there is a breach, only price will be returned. So the consequences of breach also they are free to decide. So they can even say that even if there is a breach, there will be no compensation, which we call exclusion clauses. And they are indeed valid. They are of course, they are not telling us how they should be built, but they are valid. Then normally parties must together change the contract. But parties are free to say that we'll make this contract. And I, one party will tell you constantly to make changes. And if I tell you to make changes, you should go on making them. Freedom. They can decide the term that is the period of the contract. They can decide how their contract will end and the consequences. Look at the force measure clauses. What do they say? How will our contract end? And what will happen if our contract ends in that manner? Parties in an international transaction can even choose the law which will apply to them. So much so that they can even choose a law of a third party state. That is a state which is not involved to which the parties don't belong and which is not involved in the transaction. They can decide to go to arbitration and have considerable freedom to decide the procedures of arbitration to the extent the act allows. And they can even choose jurisdiction of course. So there is so much freedom in making contracts. So let us ask this question that if they have so much freedom in making the contract and the law says that well nothing is prohibited. And why do they perform? So why do parties perform their promises? Do they perform because they are afraid of the law? I believe that most contracts are performed for other reasons. Firstly, the party wants the benefit of contracts. So if I perform, I will get the benefit of this contract. Then parties also perform because they want to enhance their reputation or they don't want to lose reputation. To give you an example that I have agreed to deliver goods to you at a price. And I have now, when the time for delivery comes, it is getting very costly. I am going to suffer a loss but I still want to fulfill. Our contract contains a liquidated damages clause. I find that if I pay up under that, that is also cheaper. But I still want to fulfill. Why? Because I believe that if I fulfill, I will not lose reputation. And this reputation is the reputation we surveyed the other party. I want the other party to contract with me again. I want to grow my business and find others. And we all know that if I contract, perform my contract with you, I will get other contracts of other people. So this would be the main reason for completing the contract. And of course there is a moral obligation. Why is it that if I owe only 1000 rupees to the bank, rest of it is fair. I still want to go and pay it. So there is a moral obligation. Do parties really fulfill the contract because they fear enforcement? I would say no. Let us suppose that a company fears enforcement because it will affect its market price of the shares. Then again we go back to reputation. We are not going to the fear of enforcement. So do I fulfill my contract because I am afraid you will go to court. Usually that would not be the reason. Enforcement involves costs. So only that person will go to court who is willing to bear those costs. And also then earn a profit or then earn the compensation. So if these are the reasons that people will fulfill their contracts and anyway promises will get fulfilled. So I said that you and I are contracting. We want to make our contract legal. Yes, we say that well, we have agreed everything. Everything is fine, but let us show it to a lawyer. So let our lawyers approve. Why do we want to do that? That is the purpose of the contract law. We want to do that so that just in case one party breaks the promise, then some remedy should be available. The chance of a remedy. Please remember that if I break the contract, you might decide to go on with life and not do anything about it. You might say it's good she broke. Now I am able to get the goods from somewhere else at a cheaper rate. So you're happy. It will also be that well, it costs too much to file a suit. I don't want to get into it. But the thing is that you will have the right to enforce which you may or may not. It is for this option which each person wants that he wants to make his contract legal. Therefore, what parties have agreed reminds them. Else the contract is broken if they do not fulfill their promise. Then the other party has rights, which he may enforce. These are private rights and it's entirely for that party to decide whether to enforce that right or not. And this is the most important part of the which tells us the purpose of contract. It says an agreement enforceable by law is a contract. So let us ask what is enforcement by enforce we mean having remedies under which I will get back my money. I will get my laws, right, etc. And how will I get it back by a system which the legal system has provided. In our law, the system is the court system and arbitration. So these two are the main systems or rather the main fora under which we can enforce contract. But our contract itself can contain remedies and this is something remarkable, which many books called self help remedies. So if you don't pay me my commission and the agent, I will keep back all the documents and the things which are with me, right. So I need an filer suit. I will just keep everything. When you pay the money, I will return it. No need to go to court to set off and you find it in government contracts. Remarkable provisions of retaining amounts and setting them off. For example, if I am the government and you are the contractor, we have a contract under which we have agreed that if you Mr. contractor owe any amount under this contract, then we will keep back the deposit, etc., which you have kept under the contract, which is set off under this. But we can also keep back any amounts which are payable to you under any other contract which you have with the government. So if there is another contract under which you are entitled to receive your bills, then the government can keep them and adjust them towards the claims against you. This right of set off has to be in the contract. Then the whole system of bank guarantees. I mean, if I don't perform and I've given you a bank guarantee, you can simply call the bank guarantee. There is no need for you to go to court. Who is forced to go to court? The other party is then forced to go to court to say that these rights are not clearly, correctly exercised. So this is then enforcement. So when a contract comes for enforcement, these are the questions which will come before the court or the arbitrator. Has a contract formed at all? Is there a contract? And in most cases which will come before the court or arbitration, you will rarely find a defense which says that we have no contract. Okay, if there is a contract formed or rather an agreement that is formed, is it enforceable? Does it have these four elements of competent parties, free consent, lawful consideration, and it's not declared void? If that is the case, then it will be enforced. And have the formalities if required by any other law have they been completed? Okay, now so now the contract is there. Now it is to be enforced. Okay, then Mr. Plaintiff, what is the promise which you are enforcing? So one plaintiff says the promise I am enforcing is that the delivery was to happen on 1st of January. This is the promise I am enforcing and this is the promise that is broken. Please remember the contract has 100 other terms, but the provision I am enforcing is this provision. And then there's another provision which says that if there is a delay, then 10,000 rupees per day will be paid. So I am enforcing this provision, right? So he has to indicate what is that promise and he has to indicate that it has been broken. So showing the promise and showing the breach. This is what I mean by saying which provision is being enforced. And once he shows that and that it is broken, then whatever is agreed will be enforced. So then what is the role of contract law? First is of course to help us find a contract when one party says there's a contract and the other party says no, no. Then it provides general principles that apply for all contracts and then there will be additional provisions in the sale of goods act, in the transfer of property act and so on. It enables full freedom to the parties because it doesn't tell what you should agree. But it says obligation to perform, you must perform what is agreed. And then it provides for default rules that if, for example, the sale of goods act, it becomes very visible. If you have not stated when the price is to be paid, then price is to be paid at the time of delivery. What does it mean? If nothing is agreed, then the default rule is delivery and price have to happen together. Where should goods be delivered? If it's a sale of specific goods, they are delivered at the place where they are, which means that the buyer must come and collect them. So these are the default rules. You will find similar default rules in the contract act as well. And then it provides for limits of enforceability, that is the four conditions or features that a contract must fulfill and it provides for the remedy of damages. So this then is the role of contract law enabling enforcement, first saying perform what you have agreed and then saying, okay, if you don't, it will be enforced. So that comes to us, that question I have always asked myself, what is the most important provision in the contract law? What is the essence of contract law? And it is this obligation of parties to contract section 37. The parties to a contract must either perform or offer to perform. This is their obligation. What must they perform? Their respective promises. So you perform your promise, I will perform my promise. Unless the performance is dispensed with or excused under the provisions of this act or of any other law. So dispensing with means the promise he has dispensed with it and excuses under the contract act or under any other law. For example, the whole doctrine of impossibility gives an excuse under the contract law. So this is the essence. Parties, you perform what you have agreed. This is the essence of contract law. Now contract law is about promises. There are many theories about what is a contract, is it based on promise, is it based on bargain. But for me, if you are looking for enforcement, then what is going to be enforced? A promise. A promise is something which is to be done in the future. Now if I have to deliver goods to you on 1st of January and you will pay me the price on 1st of January and I deliver the goods and you pay me the price. There is no longer a contract because it is discharged by performance. Nothing remains. But if there is a warranty relating to the goods, then only the warranty is the promise that remains. If the goods are not defective, even that promise does not come for enforcement. So if there is a promise, then the question of enforcement arises. It is in this life that you should see the provision in the transfer of property act which says that the provisions of the contract act will apply even to transfers. What does it mean? Whenever a transfer has happened, I have sold you my property. So my promise that I will make you the owner is completed. But some promise might remain. What is that promise? A guarantee of title for example. A warranty of title. And if my title turns out to be problematic, I will indemnify you. So the indemnity remains. Which law will apply to these promises? The contract act applies to these promises. So the contract law is about promises. And once these promises are fulfilled, that promise, that promise gets discharged. If all promises are fulfilled, then the whole contract is discharged. So the content of each promise becomes important. And therefore, if you are transacting, drafting a contract, how you design that promise is the most important part. Because if you make a promise, if you have drafted a promise for the other party, you have to think that if he breaks it in this way, can it be enforced? Or should I put more details in the promise? So designing the promise is important. And if you are in litigation, proving the promise and proving its breach. And sometimes the exact promise is not written. So there might be an implied promise which you have to make out. And proving the promise becomes important. And therefore, the most important aspect of contracting and in litigation is the promise itself. I will again stop here to say that a contract may contain multiple promises given to each other. Some of them are to be done such that I will perform one, then you will perform the other, then I will perform the third. And how they are to be and him they are to be performed will be written in the contract. So many very often a contract contains multiple promises. Now what is this obligation to perform? I'm back again on section 37. 37 is about performing promises. And then it says parties must perform. So what is that obligation? The obligation is to perform or to offer to perform. To perform means I bring their goods to your door and deliver them. I have performed. What is offered to perform? I have brought the goods to your door, but you didn't accept them. So I come back. So I have attempted performance. This is offered to perform. So I must either perform or I must offer to perform my promise. This is the obligation. And then the section 37 says you need not perform if it is dispensed with or excused by law. I have discussed this earlier. The second important part of the contract act is compensation for loss or damage caused by breach of contract, which I call the sense of contract law. When a contract has been broken, the party who suffers by the breach is entitled from the party who has broken the contract compensation for loss or damage and the two branches of that compensation. Now what I discussed today and the purpose for which I am speaking is to is to highlight that the contract law is actually default rules. Just as if you are using say MS word, then a for calibre one and half or 12 points spacing. These are the default formatting provisions in MS word. You can change them, but if you haven't changed, they are going to apply. So the contract act is default rules. You are free to make your own provisions in the contract. If you have made them, don't come to the contract act. But if you haven't, then the contract law or its interpretation or the case law will decide the answer to the case. Now the contract act itself contains these provisions. I've simply collected them from contract act and sale of goods act. No, it says unless a different intention appears or if it is seen that it is the intention of the parties or unless a contrary intention appears or 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 contrary and it can go on. I mean across the sale of goods act, the transfer of property act and the contract act, this list is of about 25 different ways in which the law recognizes that parties are free to make their own provisions. So let me take this example. If you and I have a contract where I'm your contractor, can I get the work done through a subcontract? Not my employees, right? Somebody else is going to complete the whole thing and I will give it to you as if I have performed it. Can I do that? You find this provision in section 40. What does it say? If it was the intention of the parties that it should be personally performed, then it must be performed personally. And I come to the last paragraph. In other cases, the promissor or his representatives may employ a competent person. So what does it mean? I can get it done from a subcontractor and you cannot object to this because the right is given in the last paragraph. But in the earlier paragraph, the first paragraph it says we can have an intention shown in the contract that I will get it done through my own agency, not through somebody else. That intention can be put in the contract. Therefore, if you and I agree that I have to do it and there will be no subcontracting, then naturally I can't appoint a subcontractor. So the default provision is that I can appoint a subcontractor and we can make a provision in the contract otherwise. So one situation I am showing you to say that this rule in the contract act of subcontracting is a default rule. Then these are also default rules. For example, the doctrine of impossibility and it's impossible to prove impossibility. And force measure clauses. Now the section relating to impossibility, which is section 56, doesn't use the word unless the intention and unless there's express contract and so on. It just states the principle of impossibility. If the performance of a contract becomes impossible, it becomes void when the performance becomes impossible. It doesn't give any answers. It just states the principle. But what have the courts said? The courts have said that if there's a force measure clause dealing with situations, supervaning events, then any breach or any claim under the contract will be answered with reference to the force measure clause. And there's no question of section 56 being applicable. So the whole of section 56 is actually a default rule. Similarly, the contract act says all parties together can change the contract alteration that is section 62. But there can be a provision in the contract which says that the government, the engineer on behalf of the government can make any modifications. And if he does so, the contractor has to comply. Compensation is section 73 doesn't say unless otherwise agreed. But there can be clauses which say we will play only direct clauses and not consequential losses. There can be clauses which say that our loss or the amount we pay will be limited to the price of the contract. There are clauses which say that liabilities limited to 20 lakh rupees. And there are clauses which say that even if there is a breach, we will not be liable. The exclusion clause. So even section 73 is a default rule. Then rescission, the contract act says you can end the contract in three circumstances. There's no other provision except for these three. But parties are free to have termination clauses. Then termination can happen for smaller breaches and even without reason. You and I have an agreement where we say either of us can end the contract by giving one month's notice without any reason. So that is also possible. So it so happens that most of the contract law except for the formation part is actually default rules. And I believe, this is my belief, my only mind that other than the liquidated damages clause, most of the other provisions in the contract act are actually default rules. And therefore, this is the message I wish to give into this session. Contract law from the practical perspective. What is it? The contract governs the rights and liabilities more than the contract law itself. Right. So if a client comes to me and says, Madam, this has happened. What do I do? I shouldn't be looking at the contract law. I should be reading the contract first. So this is all I had to discuss today. I propose to have another session about contract law from a transaction perspective and contract law from the litigation perspective. I once again thank because C to give me this opportunity. I think I have completed in time. So if there are any questions, I can answer them. Shall I close my presentation? Yes. Seema has asked alteration variation innovation. Please briefly explain the conception examples. Yeah. Let us suppose that I have agreed to please excuse me. My examples are always very simple. I have agreed to supply stationary to your company and we have agreed on a minimum that this is the minimum you will always buy every month. And otherwise, whenever you place an order, I will deliver the stationary for your company according to the order within seven days. Now, if you have made this contract, can we together make changes in it? Can we together, for example, increase the minimum? Can we together cancel the contract? The answer is yes. So what does section 62 contemplate? It contemplates that parties together can either substitute totally a new contract. Or they may alter some of the terms. So they might, for example, change the price. They might, for example, change. So if it is a contract for supply of computers required by a company over a year, they might change the specification of those goods to match the current requirement. So together they can sit and make changes. Very often, long term contracts contain provisions where changes are accommodated because that becomes necessary in long term contracts. Now the main question arises that let us suppose that there is contract number one, which contains an arbitration clause. And there is contract number two, that is the parties have made it later, which does not contain an arbitration clause. A dispute arises. And the question is, will this go to arbitration? Party number one says that the contract number one is the main contract and contract number two merely changes some aspects of contract number one. So contract number one still stands and therefore the arbitration clause is binding. The other party says no, no, contract number two totally substitutes the first contract. And therefore the arbitration clause also has fallen. And it falls for the court to decide whether contract number two substitutes contract number one or not. There are many tests laid down by the Supreme Court. You may go to some, especially search on section 62 and Supreme Court in the various search engines and you will come across important cases which tell the tests to decide whether there is a total substitution or a mere arbitration. The point is, whether public-private partnerships contracts are governed by the contract law or what are laws? Public-private partnerships. Basically the general principles of contract law apply. But I would say that contracts of this type, they will also be regulated. They will also be subject to public law principles. And they are so much in detail that if at all a dispute arises, it will fall to be decided with reference to the interpretation of the provision itself. So are they governed by contract law? Yes. But I would rather say they are governed more by the contract itself than the contract law. Time and again for the some persons who have joined the lead. We have been time and again laying emphasis rather than the contract law it will be on the basis of the contract. The subtle difference between the two if it can be substantiated and elaborated. Okay, let us take the government contract. Very long, every detail has been given. Now what happens for example if the pandemic has come? And let us forget for the time being that the government issued a notification saying that it will be a force measure. Let us suppose that is not there and the pandemic has come. So will it be covered by the force measure clause or not? Will the resolution happen under the force measure clause? Which in most government contract means that there is an extension and for certain types of extension the rates will be renegotiated. And then maybe after the time limit which is stated in it, either party can terminate. There are many types of force measure clauses. But for example, it will allow parties to wait and also allow parties to change the rates at which the contract has happened. Now that the pandemic has come and one party says, well, I am discharged. The other party says no, no, you have broken. So compensation is payable or we will take away your deposit money. So the question is, will this be decided with reference to the impossibility or with reference to force measure? And if a client, if a contractor comes to me and says, madam, this is my claim and this is the notice I've received. Will I look at the case law on impossibility first, section 56? Or will I look at the contract itself? These contracts have force measure clauses and its effects running into two, three pages. So I will look at the contract to read to find out whether the word pandemic is there. Sometimes the word epidemic is already there, so pandemic is covered. Will it fit within that term which is called and other causes of a life nature? So to interpret and other causes of a life nature, I will go to case law. But there I am going for interpreting a term, not for understanding the doctrine of impossibility. So this is what I mean by saying that when we come to take a decision relating to a contract, we have to look at the contract first to see whether it makes a provision. And if it doesn't, then we go to the general principles of contract law. Thank you from where we had like they say in an interview, one who is being interviewed, they normally lead the question to the extent that the interviewing board should ask that question because he is thorough in it. Now the subtle difference between doctrine of impossibility and doctrine of force measure. Yes, you want me to talk about that? What is the difference between the two, doctrine of impossibility and force measure? Basically both of them deal, both the doctrines, actually force measure doctrine. Because it normally appears to be overlapping. Yeah, actually force measure refers to acts of God, but I will not take it at that. I will say that the whole question is whether because of a supervaning event which neither party could prevent performance, even if a person wants, he cannot perform. So should he be excused for that or not? So let us look at some events, floods, natural causes is one category of events. War is another category of events. The third is non-availability of machinery, the third category. The fourth is the, you know, all transport is closed because of some strike. Not the strike in my factory, but the general strike of transport, that is why that is another category. And all these, you know, actually we are in a position to say that strikes and lockouts should always be contemplated. So we are asking this question whether we should provide an excuse or not. Now ideally in long-term contracts, parties should be wise enough to think that there are bound to be such situations coming up later. And when these situations come up, how should we resolve them? Should we end the contract? Should we wait? If we wait, then what about increase in rates and so on? So if they are wise enough, they will incorporate how they will deal with this situation in the contract itself. And such clauses which deal with it, which may be one clause or multiple clauses, they are referred to as force measure clauses. They may talk of extension of time, they may talk of increase in the rates or payment which is to be made and so on. Now, let us suppose that there is no force measure clause and an event has happened. Let us take Satyabrata Ghosh's case. In Satyabrata Ghosh, a developer has agreed to develop a land, develop it, convert it to plots and sell them. It's a remarkable case. And before he can do anything, before he can even start developing, if the war comes and the whole plot of land is requisitioned by the government. So even if he wants, he cannot develop it and actually draw those plots so that he can hand over the plots. So the question before the Supreme Court was, that is he discharged because he just cannot perform. Requisition by its nature, although it is temporary, you never know when it will be lifted. And then the court again looked, the court held that this is not impossibility. And I will request all of you to read that case again and again to locate the facts which the court considered relevant to come to a conclusion that war was in the contemplation of parties. It is a remarkable judgment because what can be more difficult than not being able to perform because there is a war. But the court still said that there is a risk because parties should have contemplated the war and this is the risk they undertake. So very often courts say that this was a risk which parties should have contemplated. This is a risk which the seller has undertaken. This is a risk which must fall on the buyer. And based on that, the court may decide that there is no discharge. I have not come across any case, any judgment where the court has applied Section 56 Simplicita. You know, sometimes there are force measure clauses. So those cases interpret force measure clauses where the court has applied Section 56 Simplicita. There is no force measure clause and the court has held that there is an impossibility, the Indian judgments. When you came more into swing just as the COVID case is arising, a lot of people started discussing and a lot of people started feeling the heat of it that why didn't they incorporate it? Yes. Now after your session people will at least know the difference. What is the difference between how to be wise and how to avoid the vice? And this is by Nitin. He says that what difference does it make? I'm just narrowing down the question. What difference does it make if the contract is notarized rather than having a proper agreement that is stamping etc.? Does it make any difference? Notarizing is not compulsory in our law. He refers to, I mean, if it's an international situation, then perhaps the law of another country with which a party is contracting or the person in another country with which a party is contracting might require notarization. And if that is the case, it might be necessary. Notarizing only adds, I would say, one more layer of credibility to the contract. One thing is that if you and I have a contract and we both are happy notarizing it, that's very good. Both of us feel more bound by our signatures if it is notarized. There is also a small presumption. I say small because that may not always be applied. A presumption about signatures if a particular contraction is notarized. But otherwise notarization, I mean, if you're happy notarizing no problem, but the law does not require notarization. I would also request Nitin Kumarji to go to civil law, just Google civil law notary and common law notary. Civil law notaries, let us say are notaries in the European countries, not England. They have a much larger role to fulfill. In fact, you will find that some notarized documents can be effectively enforced as if they are a decrease. There's no need to go to court. So they have a larger role to fulfill. Whereas notaries in India or the common law systems, they are more for the purpose of just lending authentication to signatures. Can parties residing in India choose the contract of some other country for their contract? Yes. I would say yes, they can. What happens is now, for example, you need to write principles or there are so many other conventions dealing with particular contracts. Parties can always agree that my contract will be subject to unit or principles. What does it mean? It means that as if those principles are incorporated as terms of the contract. So parties may as well say that our contract will be subject to the French law. What does it mean? It means that whatever are the provisions of French law, for example, if the French, if, if, so I'm not very familiar. If the law of the other country says that acceptance is complete only when it is received. Or the law of that country says that liquidated damages will be dealt with in a certain manner. Or that the law of that country gives rights of termination, terminating the contract on more grounds than the Indian Contract Act. And what we are saying is that as if that is incorporated into our contract. So that is how it might be interpreted if the matter comes to court. I'm just checking on the YouTube as to whether you have any questions. Thank you, ma'am for sharing your insights. And the way you have made it simplified is just like what we say that it should be always simple. Break it to the best and then you learn the best. So everyone stay safe, stay blessed. It was a pleasure connecting with Dr. Nilima. And those who have missed our previous webinars, they can watch it subscribe and like the webinars. And we would be having more sessions as Dr. Nilima has said. Stay connected with us on the social media for the latest updates. I will ask ma'am the convenient time and date. We will post it on the social media either on the WhatsApp groups as well as on the LinkedIn. Instagram as well as Facebook. Thank you. Thank you.