Non-Performable Contracts & Related Obligations
Section 62. Effect of novation, rescission, and alteration of contract.
A contract can be replaced, cancelled, or modified only by mutual consent.
Replacing a Contract
When the parties agree to replace the original contract with a new contract, the old contract ceases to exist.
The obligations under the original contract need not be performed, because a new agreement has taken its place.
Example:
A owes B ₹10,000.
A, B, and C agree that C will pay B instead of A.
A is no longer liable; the new contract is between B and C.
Rescission of Contract:
When the parties agree to cancel the original contract, it is terminated by mutual consent.
The original obligations are extinguished, and neither party is bound to perform.
Example:
A owes B ₹10,000.
A gives B a mortgage of ₹5,000 in place of the debt.
The original ₹10,000 debt is gone; the new contract (mortgage) replaces it.
Alteration of Contract:
When the parties agree to modify some terms of the original contract.
The original contract is partially changed; obligations are now governed by the new terms.
Example:
A owes B ₹1,000.
B instructs A to credit C instead, but C does not agree.
The original contract is still in force because the alteration requires consent of all affected parties.
Section 63. Promisee may dispense with or remit performance of promise.
The promisee can choose to waive the promise, either fully or partially.
The promisee may extend the time allowed for performance
The promisee can accept any alternative satisfaction instead of the original promise if they think it appropriate.
Illustrations:
(a).
A agrees to paint a picture for B.
Later, B tells A not to paint it.
A is no longer required to fulfill the promise.
(b).
A owes B 5,000 rupees.
A pays 2,000 rupees at the agreed time and place.
B accepts the 2,000 rupees as full payment.
The remaining debt of 3,000 rupees is discharged.
(c).
A owes B 5,000 rupees
C pays 1,000 rupees to B on behalf of A
B accepts the 1,000 rupees as full satisfaction of the debt
The entire claim of 5,000 rupees against A is discharged
(d).
A owes B an uncertain sum of money under a contract.
A gives B 2,000 rupees without figuring out the full amount owed.
B accepts the 2,000 rupees as full satisfaction of the debt.
The entire debt is discharged, no matter what the actual amount was.
(e).
A owes B 2,000 rupees and also owes other creditors.
A arranges with all creditors to pay a part of what is owed, specifically eight annas per rupee
Payment to B of 1,000 rupees fulfills this agreed portion
B’s claim is considered fully discharged under this arrangement
Section 64. Consequences of rescission of voidable contract.
A contract is voidable when one party has the right to cancel it due to certain circumstances, such as:
Coercion
Undue influence
Fraud
Misrepresentation
Until it is rescinded, the contract is valid and enforceable.
When the party entitled to rescind the contract chooses to do so, the contract is treated as terminated.
The other party (the promisor) is no longer required to perform any of their promises under the contract.
If the rescinding party has received any benefit from the other party under the contract, they must return it, as far as possible.
Rescission ends all future obligations.
Any benefits already received must be returned to prevent injustice.
Rescission is a remedy available only to the party entitled to avoid the contract.
Section 65. Obligation of person who has received advantage under void agreement, or contract that becomes void.
A contract is void if it is not enforceable by law from the beginning.
Since the contract has no legal effect, no party is bound to perform obligations under it.
However, if any party has received a benefit or advantage under such a void agreement, fairness requires that it be returned.
The person who received the benefit is legally bound to:
Restore the benefit.
Compensate the person from whom it was received, if restoration is not possible.
Illustrations:
(a).
A pays B 1,000 rupees in consideration of B’s promising to marry C, A’s daughter.
C is dead at the time of the promise.
The agreement is void because it is impossible to perform.
B must repay A the 1,000 rupees.
(b).
A contracts with B to deliver to him 250 kgs of rice before the first of May.
A delivers 130 kgs only before that day, and none after.
B retains the 130 kgs after the first of May.
He is bound to pay A for them.
(c).
A who is a singer, contracts with B, the manager of a theatre, to sing at his theatre for two nights in every week during the next two months.
B engages to pay her a hundred rupees for each night’s performance.
On the sixth night, A wilfully absents herself from the theatre, and B, in consequence, rescinds the contract.
B must pay A for the five nights on which she had sung.
(d).
A contracts to sing for B at a concert for 1,000 rupees, which are paid in advance.
A is too ill to sing.
A is not bound to make compensation to B for the loss of the profits which B would have made if A had been able to sing.
But B must refund to B the 1,000 rupees paid in advance.
Section 66. Mode of communicating or revoking rescission of voidable contract.
If a contract is voidable, the decision to cancel (rescind) it can be communicated or revoked in the same way as a proposal.
The same rules that apply to sending or withdrawing a proposal also apply here.
Section 67. Effect of neglect of promisee to afford promisor reasonable facilities for performance.
If the promisee does not give the promisor reasonable help to perform the promise, then:
The promisor is not responsible for any failure caused by that lack of help.
Illustration:
(a).
A agrees to repair B’s house.
B refuses or neglects to show A the places that need repair.
If A fails to do the repairs because of B’s neglect, A is excused.
Section 68. Claim for necessaries supplied to person incapable of contracting, or on his account.
If someone who cannot make a contract, or someone they are legally responsible for, is given necessary things (necessaries) suited to their lifestyle,
The person who provides these necessaries can be paid back from the property of the incapable person.
Illustrations:
(a).
A gives B, a lunatic, food and clothing suitable to his life.
A can be reimbursed from B’s property.
(b). In the same scenario
A provides B’s wife and children (B is a lunatic) with suitable food and clothing.
A can be reimbursed from B’s property.
Section 69. Reimbursement of person paying money due by another, in payment of which he is interested.
If someone pays money on behalf of another person because the other person is legally supposed to pay it,
The person who made the payment has the right to get reimbursed by the person who owed the money.
Illustration:
(a).
B has a lease on land from A in Bengal.
A owes revenue to the Government, and because of arrears, the Government plans to sell the land.
If the land is sold, B’s lease will be cancelled.
To protect his lease, B pays the Government the amount A owes.
A must repay B the amount he paid to the Government.
Section 70. Obligation of person enjoying benefit of non-gratuitous act.
If someone does something or delivers something for another person not for free, and the other person benefits, then:
The beneficiary must compensate or return the benefit.
Illustrations:
(a).
A who is a tradesman leaves goods at B’s house by mistake.
B uses or keeps the goods. B must pay A for them.
(b).
A saves B’s property from fire but intended to do it as a favor.
A cannot claim payment from B.
Section 71. Responsibility of finder of goods.
If someone finds goods that belong to another person and takes them into their care, then:
They are responsible for those goods just like a bailee (someone who is formally entrusted with someone else’s goods).
Section 72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion.
If someone receives money or goods by mistake or because they were forced, they must return it.
It essentially states that:
If you get something that isn’t rightfully yours or either by accident or because someone made you take it then you have to give it back.
Illustrations:
(a).
A and B jointly owe 100 rupees to C.
A pays C, and B, unaware, also pays 100 rupees.
C must repay B.
(b).
A railway company refuses to release goods unless an illegal extra charge is paid.
The consignee pays it to get the goods.
The consignee can recover the illegal portion of the charge.
