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Report No. 97

2.3. Effect of section 28.-

The effect of section 28 of the Contract Act1 (so far as relates to the subject-matter of this Report) may, on the basis of the case law2, on the subject be stated in the form of two propositions, to begin with:-

(a) The parties to an agreement are not allowed to substitute their own periods of limitation in place of the period laid in the general law of limitation.

(b) But the parties to an agreement are allowed to substitute their own periods of prescription, that is to say, they are free to provide that if a party does not sue within a specified period, then the rights accruing under the contract shall be forfeited, or extinguished or that a party shall be discharged from all liability under the contract. (The precise words used may differ from agreement to agreement, but in substance their object is usually to forfeit or extinguish the rights). In other words, a clause limiting the time for enforcing a remedy is prohibited, but a clause limiting the duration upto which the rights remain alive, and extinguishing those rights at the end of such period, is permissible. We are concerned with the latter proposition and our object will be to examine whether it is sound in justice and logic and beneficial in practice.

1. Para. 2.2, supra.

2. Sec case law discussed in para. 2.4, infra and paras. 3.4 and 3.5, infra.



Section 28 of the Indian Contract Act, 1872 - Prescriptive Clauses in Contracts Back




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