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Report No. 199

Section 2(i) defines 'voidable contract' as follows:

"2(i) An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a viodable contract".

Section 2(j) defines 'void contracts' as follows:

"2(j): A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable".

For the purpose of definition of 'contract', we have considered whether it is sufficient merely to define contract as defined in section 2(h) of the Contract Act or whether it should include the word 'agreement'.

We found that sections 15, 16, 17, 18, 19, 19A which deal with 'voidable contracts' i.e. if they are vitiated by 'coercion', 'undue influence'', 'fraud', 'misrepresentation',- they all say that the 'agreement' which is a 'contract' is voidable. These deal with 'procedural unfairness' of contracts.

On the other hand, sections 10, 20, 23, 24, 25, 26, 27, 28, 29, 30 and 56 deal with 'void' agreements. This is obviously because they are not enforceable and are distinct from enforceable agreements which are called contracts but which contracts are voidable. These sections deal with agreements which are void because of absence of consideration or due to mutual mistake, unlawful consideration, or are agreements in restraint of marriage, or in restraint of trade, or in restraint of legal proceedings, or agreements which are uncertain, or by way of wager or impossible of performance. These deal with 'substantive unfairness' of agreements.

In order therefore to cover both 'procedural' and 'substantive' aspects in a single definition, we have proposed to define 'contract', for the purpose of this Act, as covering both 'contracts', ( i.e. . agreements which are enforceable) and 'agreements' simpliciter which are void. When we deal with 'procedural' aspects, the word will mean 'contract' and when we deal with 'substantive' aspects, the word will mean 'agreement'.

Unfair (Procedural and Substantive) Terms in Contract Back

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