Part-a2 – Lawsage

Questions 11 – 15 (Each Question Carries 4 Marks – Attempt All)

Q11. Explain Novation / Discharge by Novation.

Answer:
Novation means substitution of a new contract in place of an old contract. When a contract is discharged by novation, the original contract comes to an end and a new contract takes its place.

According to Section 62 of the Indian Contract Act, 1872, if the parties to a contract agree to substitute a new contract, or to rescind or alter it, the original contract need not be performed.

Novation can take place in the following ways:

1. By change of parties – where a new party is substituted for an old one with the consent of all parties.
2. By change of terms – where the terms of the contract are altered by agreement.
3. By substitution of a new contract – where the old contract is completely replaced.

For novation, the consent of all parties is compulsory. Without consent, novation is not valid.

Example:
A owes money to B. Later, C agrees to pay B instead of A, and all parties agree. The old contract between A and B is discharged and a new contract between B and C is formed.

Object of Novation:
• To replace an old contract.
• To create new rights and duties.
• To end old obligations legally.

Section Related:
✔ Section 62 – Indian Contract Act, 1872.

Simple Explanation: Novation means cancelling the old contract and creating a new contract in its place.

Q12. Explain Doctrine of Privity of Contract.

Answer:
The doctrine of privity of contract means that only the parties to a contract can sue or be sued on that contract. A stranger to the contract cannot enforce it.

A contract creates rights and obligations only between the persons who have entered into it.

Even if a contract is made for the benefit of a third person, that person cannot sue unless he is a party to the contract.

Example:
A makes a contract with B to pay ₹5,000 to C. C cannot sue B because C is not a party to the contract.

Exceptions to the Doctrine:
1. Trust – beneficiary can sue.
2. Family settlement.
3. Assignment of contract.
4. Acknowledgement or estoppel.
5. Contract through agent.

Importance:
• Protects contractual rights.
• Limits liability.
• Ensures certainty in business.

Section Related:
✔ Based on principles of Indian Contract Act, 1872.

Simple Explanation: Only the people who make a contract can use it in court.

Q13. Explain Quasi Contracts.

Answer:
Quasi contracts are obligations imposed by law even though there is no actual agreement between the parties. They are based on justice and equity.

The word “quasi” means “as if”. These are not real contracts but are treated as contracts by law.

According to the Indian Contract Act, quasi contracts are covered under Sections 68 to 72.

Types of Quasi Contracts:
• Supply of necessaries to a person incapable of contracting.
• Payment by an interested person.
• Obligation to pay for non-gratuitous acts.
• Finder of lost goods.
• Payment by mistake or coercion.

Example:
If A finds B’s lost wallet and returns it, B must reward A as per law.

Object of Quasi Contracts:
• Prevent unjust enrichment.
• Ensure fairness.
• Protect innocent parties.

Section Related:
✔ Sections 68–72 – Indian Contract Act, 1872.

Simple Explanation: Even without agreement, law creates responsibility to do justice.

Q14. Explain Standard Form of Contract.

Answer:
A standard form of contract is a contract in which the terms and conditions are already prepared by one party and the other party has no real choice except to accept them.

These contracts are commonly used in insurance, railway tickets, bank forms, mobile services and online agreements.

One party has dominant bargaining power and the other party simply agrees to the terms.

Features of Standard Form Contracts:
• Pre-written terms.
• No negotiation.
• Used in mass transactions.
• Saves time and cost.
• Mostly one-sided.

Advantages:
• Quick transactions.
• Uniform terms.
• Convenient for business.

Disadvantages:
• May be unfair.
• No equal bargaining power.
• Can exploit consumers.

Example:
Buying a railway ticket with printed conditions.

Importance:
Standard form contracts help modern business run smoothly.

Simple Explanation: It is a ready-made contract where you only accept the terms.

Q15. Explain Free Consent.

Answer:
Free consent is an essential element of a valid contract. Consent is free when it is not caused by coercion, undue influence, fraud, misrepresentation, or mistake.

According to Section 14 of the Indian Contract Act, 1872, consent is free when it is not caused by:

• Coercion
• Undue influence
• Fraud
• Misrepresentation
• Mistake

If consent is not free, the contract becomes voidable at the option of the aggrieved party.

Meaning of Consent:
Two or more persons agree upon the same thing in the same sense.

Effect of Absence of Free Consent:
• Contract becomes voidable.
• Injured party may cancel it.
• Court may grant relief.

Example:
If A forces B to sign a contract by threat, B’s consent is not free.

Section Related:
✔ Sections 13, 14, 15–22 – Indian Contract Act, 1872.

Simple Explanation: A contract is valid only when agreement is made without force, cheating, or pressure.

Questions 16 – 20 (Each Question Carries 4 Marks – Attempt All)

Q16. Explain Rights of Finder of Lost Goods.

Answer:
A finder of lost goods is a person who finds goods belonging to another person and takes them into his custody. Though he is not the owner, the law gives him certain rights and responsibilities similar to a bailee.

According to Section 168 of the Indian Contract Act, 1872, a finder of goods has the responsibility of a bailee. He must take reasonable care of the goods and not misuse them.

Rights of Finder of Goods:
• Right to sue for reward when promised.
• Right to take action for finding the true owner.
• Right to lien for reward.
• Right to suit for specific reward if promised.
• Right to defend possession against wrongdoers.

The finder has no right to sue the owner for reward unless it was promised, but he can retain the goods till he receives the reward.

Example:
A finds B’s lost watch. If B had announced a reward, A can claim it and keep the watch till paid.

Section Related:
✔ Sections 168–169 – Indian Contract Act, 1872.

Simple Explanation: A person who finds lost goods gets legal rights to protect and safely return them.

Q17. Explain Declaratory Decrees.

Answer:
A declaratory decree is a decree passed by a court declaring the legal rights or status of a person without ordering any further relief.

It simply states what the legal position is between the parties. It does not direct any party to do or not to do something.

According to Section 34 of the Specific Relief Act, 1963, any person entitled to any legal character or right to property may institute a suit against anyone denying such right and the court may declare his right.

Declaratory decrees are used to remove uncertainty and protect legal status.

Example:
A files a suit to declare that he is the lawful owner of property. The court declares his right without giving further relief.

Importance:
• Clarifies legal position.
• Prevents future disputes.
• Protects rights.

Section Related:
✔ Section 34 – Specific Relief Act, 1963.

Simple Explanation: The court only declares your right, it does not order anyone to act.

Q18. Explain Meaning of Acceptance.

Answer:
Acceptance is the expression of assent to the terms of an offer. When the person to whom the offer is made agrees to the offer, acceptance is said to take place.

According to Section 2(b) of the Indian Contract Act, 1872, when the person to whom the proposal is made signifies his assent, the proposal is said to be accepted and becomes a promise.

Acceptance must be absolute and unqualified. It must be communicated to the offeror and must be given in the prescribed manner.

Rules of Valid Acceptance:
• Must be absolute and unconditional.
• Must be communicated.
• Must be in prescribed mode.
• Must be within time.
• Must be given by offeree.

Example:
A offers to sell a book to B. B agrees. This is acceptance.

Section Related:
✔ Section 2(b), Indian Contract Act, 1872.

Simple Explanation: Acceptance means saying yes to an offer properly.

Q19. Explain Appropriation of Payments.

Answer:
Appropriation of payments means the application of a payment made by a debtor to one or more debts owed to the creditor.

When a debtor owes several debts and makes a payment, the question arises as to which debt the payment should be adjusted against.

According to Sections 59 to 61 of the Indian Contract Act, 1872, appropriation of payments can be done in three ways:

1. By Debtor: If the debtor specifies, the payment must be applied accordingly.
2. By Creditor: If debtor does not specify, creditor may apply it to any lawful debt.
3. By Law: If neither specifies, payment is applied in order of time.

Example:
A owes B ₹500 and ₹1,000. A pays ₹500 without saying anything. B may adjust it to any debt.

Section Related:
✔ Sections 59–61 – Indian Contract Act, 1872.

Simple Explanation: It decides which debt your payment will clear.

Q20. Explain Doctrine of Frustration.

Answer:
The doctrine of frustration applies when a contract becomes impossible to perform due to an event beyond the control of the parties.

When performance becomes unlawful or impossible, the contract automatically comes to an end.

According to Section 56 of the Indian Contract Act, 1872, an agreement to do an impossible act is void and a contract becomes void when it becomes impossible to perform.

Frustration may occur due to:
• Destruction of subject matter.
• Change in law.
• Death or incapacity.
• Outbreak of war.

Example:
A contracts to rent a hall for a concert. The hall burns down. The contract becomes void.

Section Related:
✔ Section 56 – Indian Contract Act, 1872.

Simple Explanation: If something impossible happens, the contract automatically ends.

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