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Report No. 199

(B) Substantive unfairness: Indian Statute Law:

(a) Indian Contract Act, 1872: (substantive unfairness)

There are several provisions of the Indian Contract Act, 1872 which deal with substantive unfairness of the terms of a contract. There are terms which are by themselves unfair.

Section 10 states that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object and are not expressly declared to be void.

Section 23 says that the consideration or object of an agreement is lawful, unless it is forbidden by or is of such a nature, that, if permitted, it would defeat the provisions of law; or is fraudulent, or involves or implies injury to the person or property of another; or the Court regard it as immoral, or opposed to public policy. Such agreements whose object or consideration is unlawful are void.

Section 24 states that if any part of a single consideration for one or more objects or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.

Under section 20, an agreement is void where both parties are under a mistake of fact; section 21 states that a contract is not voidable because it was caused by a mistake of law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact. Section 22 states that a contract is not voidable because of mistake of fact of one of the parties.

Under section 25, an agreement without consideration is void, unless it is in writing and registered, or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law.

Section 26 states that an agreement in restraint of marriage is void.

Section 27 states that an agreement in restraint of trade is void.

Section 28 states that agreement in restraint of legal proceedings is void.

Section 29 states that agreements the meaning of which is uncertain or is not capable of being made certain, are void.

Section 30 makes agreement by way of wager void.

Section 56 deals with contracts 'frustrated' and thereby become void.

These are provisions in the Indian Contract Act, 1872 which can be said to deal with substantive unfairness.

Unfair (Procedural and Substantive) Terms in Contract Back

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