Important topics for students | Exercises Law

When the court can order specific performance of contract?

The Law of Specific Relief in India was originally codified by Specific Relief Act,

1877. The provision of this enactment was considered by the Law Commission in

its Ninth Report which was later replaced by the present act of 1963. The

Specific Relief Act, 1963 deals with the remedies granted at the discretion of the

court for the enforcement of individual civil rights. In case of breach of contract,

the general remedy available to the aggrieved party is compensation or

damages of loss suffered. For this, a civil suit is filed against the guilty party who

had made the default in performance of its duty or obligation as per the terms of

contract under the statutory provision of Section 73-75 of Indian Contract Act

1872. However, sometimes pecuniary compensation does not satisfy the plaintiff

so he may ask for specific relief. For example if somebody unlawfully dispossess

a person without his consent having peaceful possession over the property then

specific relief may enable him to have the possession of same property instead

of claiming pecuniary compensation.

Recovery of possession of property

Specific performance of contracts

Rectification of instruments

Rescission of contracts

Cancellation of Instruments

Declaratory decrees

Injunction

Specific Performance of Contracts

Specific performance means enforcement of exact terms of the contract. Under it

the plaintiff claims for the specific thing of which he is entitled as per the terms

of contract. For example, if A agrees to sell certain shares to B of a specific

company which are limited in number and after the payment made by B, if A

refuses to sell the shares then B is entitled to recovery of those shares.

According to Section 10 of Specific Relief Act 1963 in the following

conditions specific performance of the contract is enforceable:

When there exist no standard for ascertaining actual damage: It is

the situation in which the plaintiff is unable to determine the amount of

loss suffered by him. Where the damage caused by the breach of contract

is ascertainable then the remedy of specific performance is not available

to the plaintiff. For example, a person enters into a contract for the

purchase of a painting of dead painter which is only one in the market and

its value is unascertainable then he is entitled to the same.

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When the court can order specific performance of contract? The Law of Specific Relief in India was originally codified by Specific Relief Act,

The provision of this enactment was considered by the Law Commission in its Ninth Report which was later replaced by the present act of 1963. The Specific Relief Act, 1963 deals with the remedies granted at the discretion of the court for the enforcement of individual civil rights. In case of breach of contract, the general remedy available to the aggrieved party is compensation or damages of loss suffered. For this, a civil suit is filed against the guilty party who had made the default in performance of its duty or obligation as per the terms of contract under the statutory provision of Section 73-75 of Indian Contract Act
However, sometimes pecuniary compensation does not satisfy the plaintiff so he may ask for specific relief. For example if somebody unlawfully dispossess a person without his consent having peaceful possession over the property then specific relief may enable him to have the possession of same property instead of claiming pecuniary compensation. Recovery of possession of property Specific performance of contracts Rectification of instruments Rescission of contracts Cancellation of Instruments Declaratory decrees Injunction Specific Performance of Contracts Specific performance means enforcement of exact terms of the contract. Under it the plaintiff claims for the specific thing of which he is entitled as per the terms of contract. For example, if A agrees to sell certain shares to B of a specific company which are limited in number and after the payment made by B, if A refuses to sell the shares then B is entitled to recovery of those shares. According to Section 10 of Specific Relief Act 1963 in the following conditions specific performance of the contract is enforceable :  When there exist no standard for ascertaining actual damage: It is the situation in which the plaintiff is unable to determine the amount of loss suffered by him. Where the damage caused by the breach of contract is ascertainable then the remedy of specific performance is not available to the plaintiff. For example, a person enters into a contract for the purchase of a painting of dead painter which is only one in the market and its value is unascertainable then he is entitled to the same.

 When compensation of money is not adequate relief: In following cases compensation of money would not provide adequate relief:

Where the subject matter of the contract is an immovable property.
Where the subject matter of the contract is movable property and,
Such property or goods are not an ordinary article of commerce i.e. which could be sold or purchased in the market.
The article is of special value or interest to the plaintiff.
The article is of such nature that is not easily available in the market.
The property or goods held by the defendant as an agent or trustee of the plaintiff. In Case of Ram Karan v. Govind Lal [1] , an agreement for sale of agricultural land was made & buyer had paid full sale consideration to the seller, but the seller refuses to execute sale deed as per the agreement. The buyer brought an action for the specific performance of contract and it was held by the court that the compensation of money would not afford adequate relief and seller was directed to execute sale deed in favour of buyer. Similarly, it was held by the court where the part payment was paid by plaintiff and defendant admitted that he had handed over all documents of title of property to the plaintiff. Sale price in an agreement is not low and defendant had failed to establish that said document was only a loan transaction then the agreement is valid and defendant is liable to perform his part ( M. Ramalingam v. V. Subramanyam)[2]. Contracts which cannot be specifically enforced According to Section 14 of Specific Relief Act 1963, there are certain contracts which cannot be specifically enforced and these are:  Where compensation in money is an adequate relief: Here the court will not order specific performance of contract as it is expected that the plaintiff will bank upon the normal remedy for breach of contract i.e. remedy of compensation. For example contract of mortgage of immovable property ( Rambai v. Khimji) [3], contract of sale of goods (Bharat v. Nisarali ) [4], contract of repair of premises etc.  Where a contract runs into minutes or numerous detail: These contracts includes contract which depends upon the personal qualification or the violation of the parties or is of such nature that the court cannot enforce specific performance of its material terms. In Robinson Davison [5], it was held by the court that the contract to perform in concert depends upon the personal kill of defendant’s wife, and the contract cannot be specifically enforced due to her illness. The other example is construction contract where the detailed terms of contract are not explained.

Explain online contracts. What are the essential terms and conditions requisites for entering into online Contract? With recent technological advancement, there is an immense change in the standard of living of people. Thus, communication is no more restricted within its geographical limits and information is transferred much widely and quickly than ever before. Electronic commerce has made its way and many problems are removed through the use of e- commerce which flow as a traditional data. Electronic commerce is a means of the transaction of business electronically and is associated with the buying and selling of information, products and services over computerized communication networks. Though, it is a much broader term encompassing not only Electronic Data Interchange but also other forms of communications such as Electronic Mail and Electronic Bulletin Board. With the emergence and steady growth of e–commerce, there is a quick elevation in the use of e-contracts. But the concept of e-contract is still not unclouded, it faces lot of challenges. The law of contract in India gives a statutory recognition to the common contractual rule. The Indian Contract Act, 1872 does not lay down the rights and duties which the law will enforce but it deals with the limiting principles, subject to which parties may create right and duties for themselves. MEANING OF CONTRACT The Indian Contract Act, 1872 deals with the principles of law of contract, its essential elements, its formation, its performance and the remedies for the breach of contracts. It determines the circumstances in which promises are made by the parties to a contract, general principles of the formation of contract and also prescribes the remedies which are available in the Court of law for the breach of contract against a person who fails to perform his undertaking created under the Contract. As per Section 10 of the Indian Contract Law, 1872, an agreement is a contract which is enforceable by law. An agreement is enforceable by law and can be defined as a valid contract if it is made by competent parties, out of their free consent and for lawful object and consideration. As per Section 23 of the Indian Contract Act, 1872 the object of the contract and the consideration must be lawful. It must be certain, definite and not vague and such as are capable of performance. A contract may be made by words spoken or written. In India, usually where there is a statutory need that contract for example Agreements relating to mortgage, sale, lease etc must be made in writing, attested by witnesses, signed by the parties and to be registered by the parties in order to make that agreement enforceable. WHAT IS AN ONLINE CONTRACT

With the advance use of internet and electronic commerce, online contracts have assumed importance mainly in terms of reach and multiplicity. Online contract or an electronic contract is an agreement modelled, signed and executed electronically, usually over internet. An Online contract is conceptually very similar and is drafted in the same manner in which a traditional paper-based contract is drafted. In case of an online contract, the seller who intends to sell their products, present their products, prices and terms for buying such products to the prospective buyers. In turn, the buyers who are interested in buying the products either consider or click on the ‘I Agree’ or ‘Click to Agree’ option for indicating the acceptance of the terms presented by the seller or they can sign electronically. Electronic signatures can be done in different ways like typing the name of the signer’s in the specific signature space, copying and pasting the scanned version of the signature or clicking an option meant for that purpose. Once the terms are accepted and the payment is made, the transaction can be completed. The communication is basically made between two computers through servers. The online contract is brought to the scenario to help people in the way of formulating and implementing policies of commercial contracts within business directed over internet. Online Contract is modelled for the sale, purchase and supply of products and services to both consumers and business associates. Online can be categorized into three types mainly i.e.

browse or web wrap contracts,
shrink wrap contracts and
clickwrap contracts. Other kinds of online contracts include employment contract, contractor agreement, consultant agreement, Sale re-sale and distributor agreements, non- disclosure agreements, software development and licensing agreements, source code escrow agreements. Though these online contracts are witnessed in our everyday life, most of us are not aware of the legal complexities connected to it; the use of online contract faces many technical and legal challenges.  Shrink-wrap agreements are usually the licensed agreement applicable in case of software products buying. In case of shrink-wrap agreements, with opening of the packaging of the software product, the terms and conditions to access such software product are enforced upon the person who buys it. Shrink-wrap agreements are simply those which are accepted by user at the time of installation of software from a CD-ROM, for example, Nokia pc-suite. Sometimes additional terms can be observed only after loading the product on the computer and then if the buyer does not agree to those additional terms, then he has an option of returning the software product. As soon as the purchaser tears the packaging or the cover for accessing the software product, shrink-wrap agreement gives protection by indemnifying the manufacturer of the product for any copyright or

something in return for the performance of his promise. For eg. an online site that offers purchase of land in moon.  Capacity of parties – Parties to a contract must be capable of entering into a contract. He must attain the age of majority and must be of sound mind. He must not be disqualified from contracting by any law for the time being in force. In our country an agreement where either party is a minor has no significance.  There must be free and unaffected consent – Consent which is defined under Section 13 of the Indian Contract Act, 1872 is an essential requirement of a contract. But in case of online contract there is a narrow scope of physical communication between the website and the customer availing their service, they just give consent by clicking the option that ensures free and genuine consent.  Possibility of performance – The terms and conditions of agreement must be certain and not vague and must also be such as are capable of performance. An agreement to do an act impossible in itself cannot be enforced as per section 29 of the Indian Contract Act, 1872.  FORMATION OF ONLINE CONTRACT The Indian Contract Act, 1872 gives a lawful status to the common contractual rule. A valid contract is formed by free consent of competent parties for a lawful object and consideration. The Information Technology Act, 2000 has made certain provisions for the validity and the formation of online contracts but no specific legislation has been incorporated for the validity of online contracts in India. Even if no specific provision is made for the validity of online contracts, it cannot be challenged based on technical grounds. Another process available for the formation of an online contract is through online agreements by clicking on the button that says ‘ I Accept’ while connecting to a software and by clicking on ‘I Agree’ button while signing up for an e-mail account. Online contract is formed through new modes of communication such as e-mail, internet, fax and telephone. The requirement of essential element such as offer and acceptance in online contract formation is as much essential as it is for the formation of paper based traditional contract. Contract formation over websites is quite different from the earlier ways of contract formation. Online contract formation mainly raises issues in relation to the applicability of the offer and acceptance rule.  VALIDITY OF ONLINE CONTRACT

The Information Technology Act, 2000 provides various procedural, administrative guidelines and regulates the provisions relating to all kinds of electronic transactions. These include computer data protection, authentication of documents by way of digital or electronic signature. Though electronic contracts have been given recognition by the IT Act, 2000, but majority feels it less secured to get into any kind of online contracts as there are no concrete judicial precedents for the validity and enforceability of online contracts in India. However courts in other countries such as US, have dealt with validity and enforceability of contracts such as shrink wrap and click wrap contracts. It was held in the famous case of ProCD. Inc. versus Zeidenburg “that the very fact that purchaser after reading the terms of the license featured outside the wrap license opens the cover coupled with the fact that he accepts the whole terms of the license that appears on the screen by a key stroke, constitutes an acceptance of the terms by conduct.” Thus it is confirmed that shrink wrap agreements are valid contracts and are enforceable against the purchaser of the software. But the enforceability of the shrink wrap agreement is extended as far as the general principles of contract are not violated. The validity of click wrap agreement was first considered when the Court for northern district of California upheld in the famous case of Hotmail Corporation that “the defendant is bound by the terms of the license as he clicked on the box containing “I agree” thereby indicating his assent to be bound” [Hotmail Corporation v. Van $ Money Pie Inc, et al]. The citizens of India are encouraging the concept of Digital India, but there are no definite legislations relating to the transactions done over computerized communication networks. Several laws such as The Indian Contract Act, 1872, Information Technology Act, 2000, Indian Copyright Act, 1957 and the Consumer Protection Act, 1986 to some extent are working and acting on resolving issues that arise relating to the formation and validation of online contracts. The Information Technology Act, 2000 is the Act that governs the transactions conducted over internet and explains the considerable mode of acceptance of the offer and provides the rules for revocation of offer and acceptance in a vague or indefinite manner. Hence, a separate law for regulating contracts based on electronic devices is highly recommended.  EVIDENTIARY VALUE OF ONLINE CONTRACT Documents are mainly registered for conservation of evidence, assurance of title and to protect oneself from fraud. The evidentiary value of electronic contracts has been given recognition and can be understood in the light of various sections of Indian Evidence Act. Sec 65B of the Indian Evidence Act deals with the admissibility of electronic records. As per Sec 65B of the Indian Evidence Act any information contained in an electronic record produced by the computer in printed, stored or copied form shall deemed to be a document and it can be admissible as an evidence in any proceeding without further proof of the original

But to keep a pace with the fast advancement of the technology, a separate legislation in regard to electronic or online contract has to be enacted in India.

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