The Validity-of-Contract.pptx in Law ENG

The Validity of Contract Law

1. Validity of Contract

2. The principle of autonomy considers contracts as tools for realizing individual self-determination by means of voluntarily entering legally binding agreements. This means that parties are free to enter or not to enter into agreements. Contract law maximizes individual autonomy by enabling individuals to undertake obligations to one another, thereby providing alternatives, without fear of breach of promises. In general, the principle of autonomy in contract is the constitutive element of an individual’s freedom to make any contractual transaction and be entitled to the enforcement of the rights and duties in such transaction.

3. Free consent of the contracting parties is one of the most important essential elements of a valid contract. Free consent is genuine consent of the parties, which is measured by enforceability of the contract. It is important factor to meet the minds from the inner part of the heart of the contracting parties. The result is the agreement. It is not only important for the creation of the contract but also for maintaining and performing the contract. Such a circumstance leads the contract to void or voidable condition.

4. Free consent is a genuine acceptance of the agreed parties from their free mind. It is the consent for the sake of due and lawful consideration, but not to lose anything from the consenter. Consent is said to be free when it is not caused by the coercion, undue influence, misrepresentation, fraud and mistake. Under the Nepalese law of contract, a contract by mistake of both parties as to the essential fact of the contract at the time of its conclusion is void ab initio, while contracts by coercion, undue influence, fraud and misrepresentation are voidable (i.e. the aggrieved party must file a suit demanding the voidance of such contract, within one year of the cause of voidance).

5. A contract is said to be concluded with free consent if it is free from coercion, undue influence, misrepresentation, fraud and mistake. If any one of the elements among coercion, undue influence, misrepresentation and fraud is present while concluding contract, the contract is voidable and it is dealt under Section 518 NCC. A contract which, at the initiation of its party, may be declared void by the court shall be deemed to be a voidable contract. Person aggrieved from any of the following contracts may get the contract voided by the court: A contract concluded by coercion A contract concluded by Undue influence A contract concluded by Fraud A contract concluded by misrepresentation

6. Coercion (against will) Use of physical force (not mental or moral force) against person, property and prestige of the party while concluding contract, the aggrieved party has to claim that the contract was made to conclude in coercion contrary to his/her will.

7. Actual use of force Threat to use of force make a person to do contract against his\her will After the release from coercion, the aggrieved party has to go to court to nullify that contract but the onus of proof lies upon the aggrieved party.

8. Word “coercion”-used in Indian context Word “Duress”-used in British context but little bit narrowed in scope. The word 'duress' denotes physical use of force only against one’s near and dear relatives. There should have been completion of contract to claim the ground of coercion.

9. Undue influence (upon will) Undue influence does not occur when parties are in equal footing. It is a way to influence a person upon will. Imposed to a person who is in dominated position.

10. Requirements for an undue influence Person must have dominant position Person must have used such position Person must have controlled the will of dominated person. He\she must have taken advantage by using such undue influence.

11. Test of undue influence in Court In dealing with undue influence, the court should consider the following four important questions namely (1) Whether it is a thing which a right minded (reasonable) person might be expected to do. (2) Whether the contract suggest the idea that the donor was not master of himself, and not in a state of mind to weigh what he was doing (3) Whether it was a matter requiring a legal advisor (4) Whether the intention of making the gift originated with the donor.

12. Burden of proof Generally, onus (burden) of proof lies on the party who claimed that he has not used the undue influence, Section. Two kinds of burden of proof:- (1) A contract with a person who is under his influence, a person who is under the influence of other (2) Who is amendable to wishes of other

13. Lists (Where there is chance of undue influence) Parent-children (young) Children – Parent (old) Doctor – Patient Lawyer – Client Teacher – Student Religious leaders – Followers Boss - Servant As they are not in equal footing.

14. Remedies The parties can demand the situation as it was before the contract was concluded. They can demand the Status quo.

15. Fraud According to Sec518 (2) (c) of NCC, a party to the contract or his agent shall be deemed to have committed fraud if he leads the opposite party to believe, or takes any action which leads the latter to believe, that a particular matter is true, although he knows full well that is false, or suppress any information in his possession or indulges in any other fraudulent act punishable under current law, with the intention of deceiving the opposite party.

16. X’s action made believe Y that land (2) is his. X makes Y believe by (1) Saying (words) - X says land (2) is mine. (2) Action – X goes to land (2) and starts picking of radishes growing there as it was his. (3) Suppression of any type of relevant fact like concealing documents or flaws of some machinery about to be sold. But ICA does not include suppression of facts as frauds.

17. But there must be intention of deceiving the opposite party. If there is no intention, that is misrepresentation. Then the demarcation between fraud and misrepresentation is intention.

18. Derry v. Peek (1889) A co. published its prospectus with some information. The co. was going to sell shares whereby they had authority to run tram (locomotive by steam engine). Huge no. of people applied to subscribe shares. Though the co. got authorized to run tram, they had to take approval from the trade board.

19. The trade board denied the approval. The company wound up. The shareholders filed cases against the directors holding that BOD had given them wrong information through prospectus. The court held the directors liable, not against fraud but only to misrepresentation since they did not have intention to deceive people.

20. Does Silence amount to fraud ? Sometimes silence amounts to fraud and sometimes it does not amount to fraud. (1) Mere silence is not fraud If somebody wishes to buy something, he must ask. Let the buyer be aware (“Caveat Emptor”) is the basic principle.

21. Caveat Emptor Shopkeeper does his best to sell more goods in more profit. It is always upon the customer what he judges the best. Customer is the best judge. The buyer may require the sick horse. It is the customer who requires to ask. The shopkeeper is not bound to answer an unasked thing. But if the customer asks, the shopkeeper has to reply otherwise silence does amount to fraud.

22. Shree Krishna v. Kurukshetra University (1976) Shreekrishna was short of attendance while filling university form, he did not mention about it, when he submitted the form, the university accepted it. When he went to sit in the exam, the university cancelled his examination on the ground of short of attendance.

23. Shreekrishna filed the case for remedy. The court held that mere keeping silence was not fraud because university had to verify it. Having being failed by the university to verify the form, the university is estopped to cancel the examination,(principle of estoppel was also attracted).

24. Silence amounts to fraud (a) duty to speak (b) half-truth

25. (a) Duty to speak If the customer asks that whether that iron is automatic or not and if the shopkeeper does not reply and the customer bought it thinking it as an automatic iron but later it was found not automatic. Then it is fraud on the ground of failure of discharge of duty to speak by shopkeeper.

26. Foel v. Law Union and Crown Ins. Co. (1908) The Insurance Company knows nothing about the life or circumstances of the assured. It has to depend on the disclosures made by the assured. It is therefore the duty of the assured to put the insurer in possession of all material facts affecting the risk covered. For this reason, contract of insurance is called as a contract of absolute good faith (uberrima Fides).

27. (b) Half truth Half truth is no better than down right falsehood. Principle:-If you are not under duty to speak, then never speak. But if you speak, speak full not half and speak the truth.

28. Misrepresentation Sec 518 (2) (d) of NCC Sec 18 of ICA Suppression of vital facts is misrepresentation.

29. The following action shall be taken as misrepresentation:- Submission of false particulars on any matter without a reasonable basis for doing so. Misleading any party so as to aggrieved him Causing any mistake or error in respect to the particulars of contract. There should be some ingredients; some chain of action. Baseless statement leading to aggrieve some party is said to cause misrepresentation.

30. Types of Misrepresentation Fraudulent misrepresentation. Negligent misrepresentation. Innocent misrepresentation.

31. Nocton v. Ashburton (1943) In a negotiation for a marriage contract, those speaking for the girl failed to disclose that she was suffering from epileptic fits, the engagement was held to be voidable, a very material fact having been suppressed.

32. Tirtha Rajkumari Rana v. Ramsankar ko Mu Sa Garne Binod Sankar Shrestha Tirtha raj Kumari claimed that she was misrepresented while selling her land. The court rejected her argument that her daughter in law had witnessed the sale so it cannot be misrepresentation.

33. Derry v. Peek Representation must be material to contract Mere expression of opinion does not amount to misrepresentation even if it turns out to be wrong. It must be made before the conclusion of the contract with the view to induce the other party to enter into the contract.

34. Chain of action The statement must lead other party to enter into the contract and (1) It must actually have been acted upon. (2) It must be wrong but the person who made it honestly believe it to be true. (3) It must be made without any intention to deceive the other party. (4) It need not be made directly to the plaintiff. A wrong statement of facts made to a third person with the intention of communicating it to plaintiff is also misrepresentation.

35. Babul v. R. A. Singh (1968) Petitioner, a Girl above 18yrs of age at the time of marriage, appeals to the court for the dissolution of marriage on the grounds that the Consent was obtained by Fraud and Visual misrepresentation. The Petitioner overheard her father talking to her mother that he had fixed their daughter’s marriage to a man of age between 25-30 who is financially well. On hearing this, the girl impliedly consented the marriage. At the time of Marriage, and after a few days, it was found out that, the man she married to was 60yrs old and that her consent was fraudulently obtained by her parents. It was misrepresentation Since she had given consent listening her parents. It was fraud on parents’ part.

36. Difference between Fraud and Misrepresentation Fraud  is a deliberate misstatement of a material fact. Misrepresentation  is a bonafide representation of misstatement believing it to be true which turns out to be untrue.

37. Mistake Wrong or false or erroneous belief. As a general part of free consent to become a valid contract free consent should be always there. Mistake is not intentional. General Rule: If there is mistake, the contract is void.

38. Broadly speaking, two categories of mistake (1) Mistake of law (2) Mistake of fact Mistake of law (1) Municipal Law (2) Foreign Law

39. Mistake of municipal law is no excuse. No specific provision in Nepal regarding mistake of foreign law. But in case of Indian Contract Act, mistake of foreign law is regarded as mistake of fact. (Sec 20\21) If an Indian Company makes contract with NTV to make advertisement of liquor (which is prohibited), it is mistake of foreign law that means mistake of fact. In case of foreign law, we can get excuse. Such contracts are void.

40. Mistake of facts (1) Unilateral mistake (2) Bilateral mistake Mistake is done unknowingly, not knowingly. Unilateral mistake means made by only one party in the contract. It can never be a tool of defense to avoid contract. But bilateral mistake can be a tool of defense to avoid contract.

41. X purchase gold plated iron chain from Y paying Rs 1000 per piece believing that it is gold X cannot get remedy later when he finds out that he was cheated. However, there are some unilateral mistakes which can be taken as tool of defense to avoid contract. They are:

42. Mistake as to the identity of a person The consent of party is so vital that if that consent given is by mistake. E.g; X intends to contract with Y. But the consent is blocked because instead of Y, Z (Y’s brother) gave the consent. X believed by mistake that acceptance was made by Y so he had concluded that contract. Such contract is void.

43. Material identity Identity of a person must be of material Interest or material importance. Otherwise it can not be taken as excuse to avoid that contract. That identity should be so much vital, so much fundamental, only then it can be allowed to mistake. But if there is such situation that the offer has been accepted by a company, then whosoever signs the document, it does not matter. Agent of company can make acceptance on behalf of company.

44. Sub categories of mistakes as to the identity of person (1) Assumption of false identity (2) Mistake caused by takeover of business (3) Mistake of identity caused of fraud

45. Assumption of false identity X is willing to contract with Y but by mistake contract was concluded with Z. So there is no meeting of mind at all. There is material interest of meeting of the mind. Material importance goes to the root of the business.

46. Mistake caused by takeover of business There was a company named Brocklehurst. Bolton took over the company as owner. Jones made an order to Bolton. Bolton sent the goods and Jones consumed. Invoice was signed by Bolten.Through invoice Jones knew that company was taken by other (Bolton) with the previous owner. Jones had some set off with previous owner on behalf of the company. Jones denied paying.

47. Bolton went to court. The court held that Jones did not need to pay the price of goods but he could adjust them on the ground that he was mistakenly believed that the company was still held by previous owner.

48. Mistake of identity by fraud Cundy v. Lindsay The plaintiff received orders in writing from a fraudulent man called Blenkarn . The order papers had a printed heading: ' Blenkarn & co. 37 Wood Street.’ There was a well known and respectable firm named Blenkiron & co. in the same street.

49. The plaintiff believed that the orders had come from this firm, sent a large quantity of handkerchiefs. Blenkarn received the goods and sent them to the defendant, who acted in good faith. The plaintiff sued the defendant. It was held that there was no contract between the plaintiff and Blenkarn and, therefore, he had no right to sell the goods. The plaintiffs intended to contract with Blekiron & co. and consequently no contract could have arisen between them and Blenkarn .

50. “Of him they know nothing and of him they never thought. With him they never indented to deal. Their minds never for an instant of time rested upon him, and as between him and them there was no consensus of mind which would lead to any agreement or any contract wherever as between him and then there was merely one side to a contract, whereas, in order to produce a contract two sides would be required.” The Court held that since the title never transfer in void contract, goods should be restored to the original owner.

51. Bilateral mistake (1) Common or identical mistake by both the parties as to the existence of subject matter X and Y concluded a contract on 6 th December relating to some cargo on some ship on sea voyage. On 6 th December, there was no cargo in the sea as it was already destroyed. Both X and Y were in mistake on part of the cargo. So the contract is void ab initio. (2) Common mistake as to a fact fundamental to the contract (operative mistake)

52. Galloway v. Galloway (1914) Husband and wife believing themselves to be married made a separation (divorce) agreement whereby the husband agreed to pay one pound per week for maintenance. Later on the husband did not pay money. So wife filed the case. When the case was discussed, it was found that they were not married legitimately. That means there was no valid marriage between them.

53. When there was no marriage, there was no chance of separation. So for separation, marriage is fundamental fact. It was held that husband does not need to pay 1 pound per week. It was an operative mistake.

54. (3) Mutual mistake as to the identity of subject matter If A wants to sell Maruti car to X and X wants to purchase Nissan, the contract is void ab initio as both the parties forget to identify the car.

55. B goes to a shop and asks for the jeans pant. He didn’t specify the size, colour etc. If there is no identity of subject matter, the contract is void and if doubt in existence of subject matter, then also the contract is void.

56. Legality of object and consideration Trading of drugs in Nepalese Rupees: Illegal object but legal consideration Sell of house in foreign currency: Legal object but illegal consideration. Exchange of land with drugs: Legal object but illegal consideration. Sell of drugs in foreign currency: Illegal object and illegal consideration.

57. Void ab initio contracts/agreements The term void means not binding in law. Though the Nepalese contract act sec 13 and also sec 517 of civil code 2074 uses the term void contract for the agreements which are expressly declared void ab initio but there is a difference between void contracts and void agreements. Void agreements are such agreements which cannot be enforced by both the parties. void means null i.e. having no legal effect or force. Void agreements and void contracts differ in some respects. A void agreement is void from the very beginning. Civil code sec 517 (but refer them as void contract) have listed a number of agreements to be void abinito i.e. expressly declared void.

58. Contd For e.g., an agreement with a minor, agreement in restraint of trade or marriage, agreements with unlawful objects and consideration, agreements against morals and public order are void abinito . Section 517(3) provides that such contracts are void ab initio But ICA refers such contracts as void agreements Void contracts are such contracts which are valid at the time of making but become void later on. In other words, void contracts are valid at the time of formation but becomes void later on because of either by subsequent impossibility or by subsequent illegality Repudiation of voidable contracts If a contract contingent on happening of an uncertain event in future and the event becomes impossible

59. Void agreements v void contracts An agreement not enforceable by law is void, they do not have any legal effect and is void ab initio however, NCA 2056 and civil code 2074 strangely calls them void contracts hence, for clarity the must be referred as void ab initio contracts which are given in sec 13 and sec 517. Void contracts are not specifically defined in our law but according to sec 2(J) of ICA, it is a contract which ceases to be enforceable by law. It means contract is not void ab initio, it is binding when made but becomes void and without legal effect later due to some reasons like subsequent impossibility and illegality , voidable contract made void etc.

60. Illegal contracts Actually the term is contradictory because illegal means against the law and contract means agreement enforceable by law Because being unlawful in nature such agreements can never attain the status of contract. Hence the term illegal agreement in place of illegal contract is more apt. Illegal agreement is also void ab initio like void agreements

61. Contd If the object or consideration of an agreement is unlawful it is void. An agreement is illegal if :- it is forbidden by law it defeats any provision of law the agreement injures person or property of others It is immoral or against public policy.

62. Distinction between illegal and void agreements Illegal Contracts Void Contracts 1.An illegal agreements is always void. 2.A void agreement is also void but may not be illegal. It may be void due to some factor except illegality For e.g., agreement with uncertain terms, impossibility of performance, mutual mistake etc. 2.Co-lateral transactions are also illegal. 2.Co-lateral transactions are not unlawful

63. Contd 3.Co-lateral transaction is not enforceable at law. 3.Co-lateral transactions are enforceable at law. 4.Illegal agreements are punishable 4.Void agreements are not punishable. 5.Void from the very beginning 5.They may even become void after the formation of the contract because of certain reason. For e.g., A and B contracts to marry each other but before the marriage A goes mad. 6.All illegal agreements are void. 7.court will on its own refuse to enforce it, even if the illegality has not been pleaded 6.All void agreements are not illegal. For e.g., a minors’ contract is void not illegal. 7. Ground for the voidness has to be proved

64. Collateral transactions If an agreement is void but not illegal any agreement collateral to it is not invalidated but remain valid for e.g. if A borrows money to pay a bet with B from C the contract between A and C is valid A collateral agreement of illegal agreement is also tainted with illegality, if the third party is aware of illegality of the main agreement for e.g. A borrows money from C to give the contract killer B to murder D the agreement between A and C if C knows the purpose of the loan , he cannot recover the money. But he can recover if he is not aware of the purpose of the loan. In this case the contract is valid and not collateral to the illegal agreement. However, if the illegal part can be separated from the legal part then only illegal part is unenforceable, legal part is enforceable at law, same applies to void ab intitio contracts (section 517(4)). There is no limitation to make the void contract void, the afected party can repudiate it at any time (sec 520)

65. Expressly declared void contracts An agreement may have all the essential elements of a valid contract. But it will not be valid and enforceable if it is expressly declared void by law. Such agreement have no legal effect and is void from the very beginning. NCC sec 517, gives a list of such agreements e.g. The agreements declared void are: Mutual mistake (if both parties are mistaken about the material fact of the contract) (sec 517(2(m)) When the subject matter is not clearly known to the parties (sec 517 (2(g)) Agreement in restraint of trade, business and profession (but have exceptions. (sec 517(2(a)(1,2,3,4)) Agreement in restraint of marriage Agreement in restraint of using public facility

66. Contd Agreement in restraint of legal proceeding (to enforce legal rights) Agreement contrary to the law or prohibited by the prevailing law Agreement against public order or interest and morality Agreement with unlawful object (sec 517 2(k)) Impossible/imaginary agreements Agreements by incompetent parties e.g. by persons disqualified by law and minors Uncertain agreements

67. Restitution of void contract Restitution means return or restoration of the benefit received. Restitution differs from damages. Damages is given to the aggrieved party to compensate him monetarily to a position in which he or she would have been if the contract been performed, but restitution is provided to the aggrieved party to a position in which he or she was if the contract was not made. It is provided in sec 538 NCC Restitution is available in case of void contract also if it is discovered to be void. It means any benefit received must be restored or reasonable compensation paid.

68. Contd ………. In case of void ab initio contract restitution is only allowed if the contract is discovered to be void (In India), e.g. A pays B Rs 10000 to sell his cow but the cow was dead at the time of contract, it is a contract discovered to be void hence, B must return the money to A but it does not apply in the case of contracts known to be void or illegal e.g. if A pays 50000 to B to murder C the money cannot be recovered. In India there is no restitution in expressly declared void contracts it is provided only if it is discovered to be void (there is no case law and statute is not clear in Nepal hence, smart lawyers can deal according to the interest of their clients).

69. When there is no restitution In India there can be no restitution of the benefit in the case of expressly declared void agreements (void ab initio contracts), however there are some exceptions: Agreement by bilateral mistake of essential fact, restitution is allowed since it is discovered to be void Agreement made by minor fraudulently; restitution is allowed if the subject matter is traceable on him (on equitable grounds) When a contract becomes void after its formation e.g. by frustration etc

70. When a contract in restraint of trade is valid? Although contracts in restraint of trade is void but in certain cases they can be valid. They are – Sale of goodwill Partners’ agreement Traders’ combinations (no Nepalese statutory provision but is seen to be praticed ) Service Contracts/Employment Contracts

71. Contd sale of business involving goodwill (517(2(a)(1)) : In the purchase of business the buyer not only, wants to acquire the business but also the goodwill of the business. This restraint may be for specific time or territory or both. But the restraint may be reasonable. For e.g., A owns a store in Biratnagar. He sells his store to B and agrees not to do the same business any where within Nepal. The agreement is unenforceable because the restraint is unreasonable. But if A agreed not to do the same business in Biratnagar the agreement is enforceable.

72. Contd Partners’ agreement Section 517 (2)(a)(2 and 3) permits a contract between the partners restraining a partner from doing any business of the same nature or doing business with the competitors of the firm while he remains a partner. Same way, civil code also provides that a contract in restraint of trade is valid if a partner makes a contract with his partner that he will not do any business similar to that of the firm within a reasonable specific period or specific place after leaving the partnership.

73. Contd Traders’ combinations Businessmen normally form association to regulate a fixed price. It is in restraint of trade but it is not unlawful. But any trade combination to create monopoly is against public order and void under anti-monopoly statute.

74. Contd Service Contracts/Employment Contracts (sec 517(2)(a(4)) Sales people, management personnel and other employees have to sign employment contracts prohibiting them from competing with their employers during employment and for some extra time after termination. This is in restraint of profession but it is a valid contract. This type of contract is applied to protect interest and the trade secretes of the employees. For e.g., a servant cannot use trade secrets he learnt during employment if there is a contract restraining it. Civil code sec 517 (2(a(4)) recognises such restraint in profession as valid

75. Voidable contracts . It is a type of contract which may be set aside by one of the parties but until it is repudiated such contracts remain valid and binding. In simple words, it is neither wholly a void contract nor it is a valid contract. It lies in the middle between a valid and void contract. If the consent of one of the party is obtained by fraud, misrepresentation, coercion and undue influence then the contract becomes void able at the option of the party whose consent is not free. For e.g., A induces B to enter into a contract by fraud. B when discovers the fraud notifies to A that he is not going to perform the contract. In this situation, law will support B. Thus, a contract made by such factors is voidable. If B wants he can make the contract void. But if he chooses to keep the contract valid then the contract remains valid and enforceable.

76. Difference between void and voidable contract Void Agreement Void able Contract They are void ab inito i.e. void from the very beginning. They become void only if the aggrieved party takes action to make it void. Otherwise, they remain valid and enforceable. 2. Not enforceable by law 2.Enforceable if the aggrieved party does not repudiate the contract. 3. One or more elements necessary for a valid contract except free consent is absent. 3.Its voidable because free consent is absent. 4.Third party who purchase goods do not have rights to obtain the title to the goods 4.Third party has rights if they buy the goods in good faith and consideration before the contract was made void or repudiated (sec 518 (6). 5.Damages cannot be claimed 6. The defects are incurable 5.Aggrieved party can claim damages. 6. The defect is curable and may be condoned(accepted)

77. Contd Thus the voidable contract is binding on parties unless set aside by the injured party. But once a voidable contract is acted upon by a party as valid he is estopped from denying this liability. Hence in a voidable contract one of the parties is injured by a defect as to his consent, and he has a right either to repudiate or to choose to enforce the contract in spite the defect the other party has no option in this matter It is enforceable by law at the option of the party whose consent is not free i.e. obtained by coercion, fraud, misrepresentation or undue influence. NCA 056 sec 14 and sec 518 of civil code provides provisions relating to voidable contract( go through it yourself)

78. Rights and obligations of the parties when the voidable contract is rescinded The injured party has a right to rescind the contract or instead of rescinding can demand a pre contract status (sec 518 (3(a)) As per sec 538 NCC if the rescinding party has received any benefit he must restore it e.g. if a contract for sale of land is made void on the ground of undue influence any money received as price must be refunded.

79. Unenforceable contracts NCA 2056 had no provisions but civil code section 519 provides provisions regarding unenforceable contracts, according to which any contract not enforceable by courts are unenforceable contracts. Unenforceable contracts are neither void nor voidable they are valid but just unenforceable due to some technical defects as per civil code sec 519(2) the following types of contract is unenforceable If the contract has to be in written form as per the law then oral contracts are not enforceable e.g. contracts of guarantee has to be in a written form If the contract needs to fulfill some formality as per the law then the contract is not enforceable if the formality is not fulfilled, e.g. contract of mortgage has to be registered, any written contract worth more than 50000 has to be attested by the local bodies according to civil procedural code section 36(2), if not they will not be enforced by the courts as per section 36(5) of the civil procedural code If the contract is signed by the agent on behalf of the principle then the contract is not enforceable if the agent has no authority of the principle or exceeds the scope of his authority

80. Synopsis Unenforceable contracts are valid contracts but they cannot be enforced due to technical defects for e.g., a contract of bailment of goods worth more than 25000 is not enforceable I it is not in a written form (sec 575 (1)( expln )). Unenforceable contracts are those contracts which cannot be enforced by law due to some technical defects and if there is a breach law doesn't provide any remedy. For e.g., a contract whose limitation of time has expired like time barred debt. Hence such contract is neither void or voidable, but it cannot be enforced in the court because it lacks some item of evidence like writing, registration or stamping. However if the defect can be cured the contract becomes enforceable. E.g. contract of loan without stamp. In this way unenforceable contracts, though perfectly valid lacks some technical requirements needed to make it enforceable. E.g. non registration, lack of proper stamp, lack of signature etc. it may be enforceable if this defects are cured.