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INDIAN CONTRACT ACT 1872 IN SHORT

What do you think a law means? Yes, you are correct anything which defines “what is write” and “what is wrong” is a law. 

What do you think a law means? Yes, you are correct anything which defines “what is write” and “what is wrong” is a law. In today’s article I am going to talk about one of the most important law that we use in our daily life without noticing it much. Are you able to guess the law? Yes, correct it’s “Indian Contract Act 1872”. I am going to explain the basics and applications of this act in our daily life.

Indian Contract Act,1872 came into effect on the 1st September, 1872 and applicable to whole of India except Jammu & Kashmir containing a total of 266 sections and XI chapters regulating the Indian contracts.

Let’s start with the meaning of contract, see it is very simple an agreement which is enforceable at law is a contract. A contract should validate the essentials of a valid contract and must be capable of enforceability in the eyes of law.

Essentials of valid contract includes:

  1. Offer and Acceptance: There must be 2 parties to an agreement, one party making an offer and other one accepting it unconditionally.
  2. Intention to create a legal relationship: Agreement entered to make legal relations are valid. Agreements of a social or domestic nature don’t fall in this category.
  3. Lawful consideration: Consideration means “something in return” and should be lawful.
  4. Capacity of parties: the parties to the agreement must be capable of entering into the contract and must not be minor, lunatic and of unsound mind.
  5. Free and genuine consent: Consent of both the parties must be free before entering into an agreement. Agreement made on the basis of undue influence; gun point will not be considered as valid agreement.
  6. Lawful Objects: objectives to enter into the agreement must be lawful.
  7. Agreement not declared void: Agreements which are already declared void by this act are defined under Section 24-30 and 56.
  8. Certainty and possibility of performance: Performance of contract must be possible in normal circumstances.
  9. Legal formalities: Both oral and written agreements are valid in the eyes of law. But some agreements should be in writing for example an agreement for sale of land etc.

So, contract is a law that binds parties to perform their promises or the activity for which they are liable. But it doesn’t mean that anything which is not possible due to external or supervising reasons should be performed because you are in contract. No, you can terminate your contract as and when needed by mutual consent if possibility of performance is not possible due to external reasons which are outside the control of both the parties. Do you think this kind of situation can occur or it’s not possible? No, it can happen let me give you some example, Lets imagine you and one other party who belongs to different country are contracting for exchange of some product for some price and delivery date is after 15 days. Suddenly after a week there is a crisis between the counties on the matter of the same product on which you were dealing and your country banned its import. This is a case where you and the other party is not having anything in their hands and can’t even perform the obligations. So, now you can terminate the contract without having any legal obligation further. Other example can be war like situation, law changes, alien enemies and there are “n” number of examples that you can think off.

But yes, it doesn’t mean anything not possible for you will come under supervening impossibility. Trust and Bonafede person are always at the top in the law to gain benefit and support. So, keep in mind if anybody is using any unethical and illegal means will not be tolerated and should be punished in the eyes of law.

Now when we enter into a contract usually a contract is discharged (termination of a contractual relationship between the parties) by its performance but there are more forms in which a contract can be discharged.

Discharge of a contract

Let’s have a look on all the methods of discharge of a contract:

1. By performance:

Performance means doing all the necessary things which a contract demands. So here both the parties have performed or attempted to perform their obligations which discharged them from their obligations.

2. By agreement or consent:

 Consent means that both the parties are mutually  deciding to terminate the contract. In this form of discharges their can be various ways:

  1. Novation: its when a new contract is substituted for an existing one between the same parties.
  2. Rescission: its when some or all of the terms and conditions are cancelled between the same parties.
  3. Alteration: its when pervious contract is terminated and new contract is made between the same parties for mutual benefit.
  4. Remission: it means that accepting less than what we are supposed to get.
  5. Waiver: it is a mutual abandonment of the rights by both the parties.
  6. Merger: its when superior right is given to the party which is having an inferior right earlier leads to termination of pervious obligations.

3. By impossibility of performance:

I already explained the basic of this above. Let’s dive into some ways of this form of discharge:

  1. Impossibility existing at the time of agreement: It can be in 2 ways. First can be when it is known to the parties that possibility of contract is not possible then this kind of contract is void ab into. And if it is not known to the parties then contract will be void on the ground of the mutual mistake.
  2. Impossibility arising subsequent to the formation of the contract.

4. By lapse of time: here contract is terminating because time for which contract was made is expired.

5. By operation of law: operation of law here means that contract can be discharged independently of the wishes of the parties.

  1. By death
  2. By merger
  3. By insolvency
  4. By unauthorised alteration of the terms of a written contract
  5. By rights and liabilities vested in the same person.

6. By breach of a contract:

Breach of contract means breaking of the obligation which a contract imposes and this type of termination leads to punishment to the one party and give provision to claim damages to another party.

Real life examples

Now, let’s try to find incident where we use Indian Contract Act, 1972 without paying much attention to it. I will try my best to explain things that I want to tell you in this article and will surely say that you would love it.

  1. When we purchase ticket from any station it’s like an entering into a contract. Think about all the essentials of a valid contract and you will find out that yes all are matching with the criteria above. Isn’t interesting?
  2. When we rent our premise to tenant what we are doing? Yes, we are entering into a contract where one party is offering the premise and other one is accepting the offer. At the same time both are getting something in return for what they pay. Have you ever thought about this incident like this ever till now?
  3. When we enter into a job or internship it’s like entering a contract, they have well defined rules which you have to follow and yes you are getting a salary/stipend as your work role may be.
  4. When we purchase anything from a shopkeeper it’s a kind of contract because if we find it defective or not according to specifications, we are having a right to return or exchange it.
  5. When we board a bus it’s an contract that you have accepted their offer and now you will pay them consideration for the service they are proving you now.

Contact tracing in Kerala:

The state of Kerala has used telephone call records, CCTV footage and GPS to trace the covid-19 suspects. They have also published the date and time maps showing the movement of people who have tested positive.  The Kerala government had entered into an agreement with the US-based tech firm Sprinklr for collection and management of health data of Covid-19 patients and those quarantined in the state.   
Concerns were raised and a case “Bali Gopalkrishnan and ors V/s State of Kerala and ors” was filed in Kerala High Court that entrusting health data with an American company puts the privacy at risk. In regards to this case, Kerala High Court mentioned that , “We do not want the COVID epidemic to be substituted by a data epidemic.”                                                                                            

Court issued an interim order to anonymise all the data that have been collected and collated from the respective citizens, then access to be allowed to Sprinklr. Citizens must be informed that their data has been collected and is likely to be accessed by any other third party and their specific consent must be taken. The court also prohibited Sprinklr from breaching confidentiality and ordered that it entrust all data to the Kerala government as soon as their contractual obligation is over. Because of these issues government decided to cancel the agreement.
Thus proving, Right to Privacy is dominant.    

Right to privacy:

The Aarogya Setu app works only after allowing it to use Bluetooth and GPS which is sent among Inter Governmental agencies. This according to many people, seemed to be the violation of their fundamental right – Right to Privacy.

As elucidated by the ruling of nine judges in the matter of Justice K.S. Puttuswamy and Another v. Union of India  [ (2017) 10 SCC 1 ] which recognizes right to privacy as an intrinsic part of the right to life and personal liberty under Article 21 and as a part of the freedoms guaranteed by Part III of the Constitution. It also recognised data protection as an essential part of informational privacy of an individual and observed that India lacks a comprehensive legal framework for personal data protection.

Hackers frequently look at crisis as an opportunity, and COVID-19 is no different. A French ethical hacker under the alias Elliot Alderson who first flagged the privacy concerns in the coronavirus contact tracing app Aarogya Setu explained the security flaws in a blog. He explained that the Aarogya Setu app is not supposed to disclose a corona patient’s location but merely tell the user that there are cases around him. The two main concerns he points out is that anyone can access the internal database and that anyone can see who is sick anywhere in India, which violates privacy. While the government has touted Aarogya Setu to be absolutely safe, the fact that it reportedly got hacked by the hackers, raises concerns that if not the government, hackers can get into the app and leak user data.
In order to maintain data privacy, the government introduced the Personal Data Protection Bill, 2019 (PDP Bill) in the Lok Sabha, largely incorporating the principles of personal data protection. 

Section 12 of the PDP Bill, 2019, does allow processing of personal data without consent during medical emergencies and pandemics. However, the Bill has not been passed till date. Hence, there is an absence of governing legislation.

Conclusion:

“Technology can help keep us safe; but fear must not be leveraged to track citizens without their consent.” -Rahul Gandhi (Congress leader)

The conflict between public health preservation and protection of fundamental rights of the citizens is a serious concern and cannot be disregarded.  And in order to preserve personal data of the citizens, it is important to enforce safeguards as well.
Public health interest can be considered as a sole reason to increase monitoring of individuals but government authority has to monitor by taking necessary precautions. If such precautions are not exercised in times of urgency, we may be successful in preventing the spread of virus, but may vandalize the citizen’s rights.

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