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Report No. 108

6.2. Suggested section 25A, Contract Act "Promissory estoppel-25A. (1) Where.-

(a) a person has, by his words or conduct made to another person, an unequivocal promise which is intended to create legal relations or to affect a legal relationship to arise in the future; and

(b) such person knows or intends that the promise would be acted upon by the person to whom it is made; and

(c) the promise is, in fact, so acted upon by the other person, by altering his position, then, notwithstanding that the promise is without consideration, it shall be binding on the person making it, if, having regard to the dealings which have taken place between the parties, it would be unjust not to hold him to be so bound.

(2) The provisions of this section apply whether or not there is a preexisting relationship between the parties.

(3) The provisions of this section shall not apply:-

(a) Where the events that have subsequently happened show that it would be unjust to hold the promisor to be bound by the promise; or

(b) Where the promisor is the Government and the public interest would suffer if the Government is held to be bound by the promise; or

(c) Where the promisor is the Government, and enforcing the promise would be inconsistent with an obligation or liability imposed on the Government by law.

Explanation (1).-Where a question arises whether public interest would suffer within the meaning of Clause (b), the court shall have regard to the amount of harm likely to be caused to the promisee if the promise is not enforced and the extent of injury to be caused to the public interest if the promise is enforced, and shall decide the matter on a balance of the two considerations.

Explanation (2).-In this section 'Government' includes all public bodies."

K.K. Mathew Chairman.

J.P. Chaturvedi Member.

Dr. M.B. Rao Member.

P.M. Bakshi Part-time Member.

Vepa P. Sarathi Part-time Member.

A.K. Srinivasamurthy Member-Secretary.

Dated: 12th December, 1984.

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