Report No. 67

Appendix

Some Sample Situations wiiere an Instrument Would be Void1

1. An agreement by a minor is void.2 In general, a transfer by him is also void.3 If the parties knew that one of the parties is a minor, the need for applying section 49(d)(1) would hardly arise, because the agreement is not "found to be void". But cases can arise where one of the parties does not know that the other party is a minor, and a suit is filed to obtain a declaration that the instrument is void.

1. These cases did not involve stamp duties, but relate to the validity of the transactions.

2. Section 11, Indian Contract Act.

3. See discussion in Waugh v. Morris, 1873 LR 8 QB 202.

2. An agreement which defeats the provisions of any law is void.1 A transfer defeating a law is also void.2 At the time of the formation of the agreement or execution of the instrument, the parties may not know that the agreement violates some law. For example, it is agreed by a charter party that a ship then in country X should go with a cargo of bay to country Y. Before the date of charter party, an order is made and published under legislation relating to Contagious Diseases of animals, prohibiting the landing of hay from country X to Y. The parties did not know of this notification, and the master learnt it for the first time on arriving in country Y. Nevertheless, the charter party would be void. Where a contract is to do a thing which cannot be performed without a violation of the law, it is void, whether the parties knew the law or not3

1. Section 7, Transfer of Property Act.

2. Section 23, Indian Contract Act.

3. Section 6(h), Transfer of Property Act.

3. An agreement may be void by reason of a mistake of fact common to both the parties. There is the familiar situation of an agreement relating to a subject matter contemplated by the parties as existing, which, in fact, did not exist. There is the illustration given in the Contract Act,1 where A agrees to sell to B a specific cargo of goods supposed to be on way from England to Bombay. It turns out that before the day of the bargain the ship carrying the goods had been cost away and the goods lost. Neither party was aware of this fact. The agreement is void.2

The decision in such cases of mistake, as Lord Wright has said,3 turns on the question whether the mistake was "sufficiently basic". The case of Bell v. Lever Brothers, 1932 AC 161, demonstrates how it may not always be easy to determine whether the agreement is void by reason of mistake in such 'cases-thereby illustrating why it is often advisable for a party to obtain a judicial verdict as to nullity.

1. Cf. (a) lmambandi v. Haji Matsaddi, AIR 1918 PC 11 (18). (b) Kannusami v. Rabiath Aminol, AIR 1933 Mad 806 (813).

2. Section 20, Contract Act.

3. Compare Couturior v. Hastte, (1856) 5 House of Lords cases 673, and F.B. Lawson, (1936) 52 LQB 79, article "Error in Substantia".

4. A minor himself may challenge an agreement as void, because it was entered into by a person who was not his guardian,1 or by a guardian but without legal competence to enter into the particular transaction.2

1. Lord Wright Legal Essays, p. 214.

2. Jaffar Ali v. Standard Co., AIR 1928 PC 762.