ALL CONTRACTS ARE AGREEMENTS BUT ALL AGREEMENTS ARE NOT CONTRACTS

All contracts are agreements but all agreements are not contracts. Explain this statement and also give essential elements of a valid contract?

Ads Answer; A contract is a legally binding agreement or relationship that exists between two or more parties to do or abstain from performing certain acts. A contract can also be defined as a legally binding exchange of promises between two or more parties that the law will enforce. For a contract to be formed an offer made must backed acceptance of which there must be consideration. Both parties involved must intend to create legal relation on a lawful matter which must be entered into freely and should be possible to perform.
An agreement is a form of cross reference between different parties, which may be written, oral and lies upon the honor of the parties for its fulfillment rather than being in any way enforceable.
All contracts are agreement because there must be mutual understanding between two parties for a contract to be formed. All parties should agree and adhere to the terms and conditions of an offer.
The following cases illustrate ways in which all contracts are agreements;
In the case of invitation to treat, where an invitation to treat is merely an invitation to make an offer. When a firm's offer is accepted it results into a contract provided other elements of contracts are accepted.
Considering person A buying a radio on hire purchase from person B who deals with electronics and its appliances. Both parties must come to an agreement on payment of monthly installment within specified period of time. Such an agreement result to specialty contract which a contract under seal.
All contracts are agreement until avoided for example, avoidable contract where one of the parties can withdraw from it if s/he wishes. This occurs due to minor agreement and misrepresentation or undue influence. Considering a case where person A make contract with person B but during the contract period B realizes that he was engaged to perform an agreement under undue influence.
Definition of contract
According to section 2(h) of the Indian Contract Act: " An agreement enforceable by law is a contract." A contract therefore, is an agreement the object of which is to create a legal obligation i.e., a duty enforceable by law.
From the above definition, we find that a contract essentially consists of two elements: (1) An agreement and (2) Legal obligation i.e., a duty enforceable by law. We shall now examine these elements detail.
1. Agreement. As per section 2 (e): " Every promise and every set of promises, forming the consideration for each other, is an agreement." Thus it is clear from this definition that a 'promise' is an agreement. What is a 'promise'? the answer to this question is contained in section 2 (b) which defines the term." When the person to whom the proposal is made signifies his assent thereto the proposal is said to be accepted. A proposal, when accepted, becomes a promise."
An agreement, therefore, comes into existence only when one party makes a proposal or offer to the other party and that other party signifies his assent (i.e., gives his acceptance) thereto. In short, an agreement is the sum total of 'offer' and 'acceptance'.
On analyzing the above definition the following characteristics of an agreement become evident:
(a) At least two persons. There must be two or more persons to make an agreement because one person cannot inter into an agreement with himself.
(b) Consensus-ad-idem. Both the parties to an agreement must agree about the subject matter of the agreement in the same sense and at the same time.
2. Legal obligation. As stated above, an agreement to become a contract must give rise to a legal obligation i.e., a duty enforceable by law. If an agreement is incapable of creating a duty enforceable by law. It is not a contract. Thus an agreement is a wider term than a contract. " All contracts are agreements but all agreements are not contracts,"
Agreements of moral, religious or social nature e.g., a promise to lunch together at a friend's house or to take a walk together are not contracts because they are not likely to create a duty enforceable by law for the simple reason that the parties never intended that they should be attended by legal consequences
Essential Elements of a Valid Contract
A contract has been defined in section 2(h) as "an agreement enforceable by law." To be enforceable by law, an agreement must possess the essential elements of a valid contract as contained in sections 10, 29 and 56. According to section 10, all agreements are contracts if they are made by the free consent of the parties, competent to contract, for a lawful consideration, with a lawful object, are not expressly declared by the Act to be void, and where necessary, satisfy the requirements of any law as to writing or attention or registration. As the details of these essentials form the subject matter of our subsequent chapters, we propose to discuss them in brief here.
The essential elements of a valid contract are as follows.
1. Offer and acceptance. There must a 'lawful offer' and a 'lawful acceptance' of the offer, thus resulting in an agreement. The adjective 'lawful' implies that the offer and acceptance must satisfy the requirements of the contract act in relation thereto.
2. Intention to create legal relations. There must be an intention among the parties that the agreement should be attached by legal consequences and create legal obligations.
Agreements of a social or domestic nature do not contemplate legal relations, and as such they do not give rise to a contract. An agreement to dine at a friend's house in not an agreement intended to create legal relations and therefore is not a contract. Agreements between husband and wife also lack the intention to create legal relationship and thus do not result in contracts.
Try to work out the solution in the following cases and then go to the answer.
3. Lawful consideration. The third essential element of a valid contract is the presence of 'consideration'. Consideration has been defined as the price paid by one party for the promise of the other. An agreement is legally enforceable only when each of the parties to it gives something and gets something. The something given or obtained is the price for the promise and is called 'consideration' subject to certain exceptions; gratuitous promises are not enforceable at law.
The 'consideration' may be an act (doing something) or forbearance (not doing something) or a promise to do or not to do something. It may be past, present or future. But only those considerations are valid which are 'lawful'. The consideration is 'lawful'. unless it is forbidden by law; or is of such a nature that, if permitted it would defeat The provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or is immoral; or is opposed to public policy (sec.23).
4. Capacity of parties. The parties to an agreement must be competent to contract. But the question that arises now is that what parties are competent and what are not. The contracting parties must be of the age of majority and of sound mind and must not be disqualified by any law to which they are subject (sec.11). If any of the parties to the agreement suffers form minority, lunacy, idiocy, drunkenness etc. The agreement is not enforceable at law, except in some special cases e.g., in the case of necessaries supplied to a minor or lunatic, the supplier of goods is entitled to be reimbursed from their estate (sec 68).
5. Free consent. Free consent of all the parties to an agreement is another essential element. This concept has two aspects.(1) consent should be made and (2) it should be free of any pressure or misunderstanding. 'Consent' means that the parties must have agreed upon the same thing in the same sense (sec. 13). There is absence of 'free consent,' if the agreement is induced by (i)coercion, (ii) undue influence, (iii) fraud, (iv) mis-representation, or (v) mistake (sec. 14). If the agreement is vitiated by any of the first four factors, the contract would be voidable and cannot be enforced by the party guilty of coercion, undue influence etc. The other party (i.e., the aggrieved party) can either reject the contract or accept it, subject to the rules laid down in the act. If the agreement is induced by mutual mistake which is material to the agreement, it would be void (sec. 20)
6. Lawful object. For the formation of a valid contract it is also necessary that the parties to an agreement must agree for a lawful object. The object for which the agreement has been entered into must not be fraudulent or illegal or immoral or opposed to public policy or must mot imply injury to the person or the other of the reasons mentioned above the agreement is void. Thus, when a landlord knowingly lets a house to a prostitute to carry on prostitution, he cannot recover the rent through a court of law or a contract for committing a murder is a void contract and unenforceable by law.
7. Writing and registration. According to the Indian contract Act, a contract to be valid, must be in writing and registered. For example, it requires that an agreement to pay a time barred debt must be in writing and an agreement to make a gift for natural love and affection must be in writing and registered to make the agreement enforceable by law which must be observed.
8. Certainty. Section 29 of the contract Act provides that " Agreements, the meaning of which is not certain or capable of being made certain, are void." In order to give rise to a valid contract the terms of the agreement must not be vague or uncertain. It must be possible to ascertain the meaning of the agreement, for otherwise, it cannot be enforced
Illustration. A, agrees to sell B " a hundred ton of oil" there is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainly.
9. Possibility of performance. Yet another essential feature of a valid contract is that it must be capable of performance.
Section 56 lays down that "An agreement to do an act impossible in itself is void". If the act is impossible in itself, physically or legally, the agreement cannot be enforced at law.
Illustration. A agrees with B, to discover treasure by magic. The agreement is not enforceable.
10. Not expressly declared void. The agreement must not have been expressly declared to be void under the Act. Sections 24-30 specify certain types of agreements that have been expressly declared to be void. For example, an agreement in restraint of marriage, an agreement in restraint of trade, and an agreement by way of wager have been expressly declared void under sections 26, 27 and 30 respectively.

VOID AGREEMENTS

 

Void Agreement

Definition:

Literally: Void means having no legal value and agreement means Arrangement, promise or contract made with somebody.  So void agreement means an agreement that has no legal value.

Traditionally: “An agreement not enforceable by law is said to be void”. [Sec 2(g)]

LEGAL POSITION

A void agreement has no legal effect. An agreement which does not satisfy the essential elements of contract is void. Void agreement confers no rights on any person and creates no obligation.

Example of void agreement: An agreement made by a minor, agreement without consideration, certain agreements against public policy etc.

Agreement which become void:
An agreement, which was legal and enforceable when it was entered in to, may subsequently become void due to impossibility of performance, change of law or other reason. When it become void the agreement ceases to have legal effect.

EXPRESSLY DECLARED VOID AGREEMENT
There are certain agreements, which are expressly declared to be void.
They are as follows:
(1)      Agreement by a minor or a person of unsound mind.[Sec(11)]
(2)      Agreement of which the consideration or object is unlawful[Sec(23)]
(3)      Agreement made under a bilateral  mistake of fact material to the agreement[Sec(20)]
(4)      Agreement of which the consideration or object is unlawful in part and the illegal  part can not be separated from the legal part [Sec(24)]
(5)      Agreement made. without consideration.[Sec(25)]
(6)      Agreement in restraint of marriage [Sec(26)]
(7)      Agreement in restrain of trade  [Sec(27)]
(8)      Agreement  in restrain of legal proceedings[Sec(28)]
(9)      Agreements the meaning of which is uncertain [Sec(29)]
(10)    Agreements by way of wager [Sec(30)]
(11)    Agreements contingent on impossible events [Sec(36)]
(12)    Agreements to do impossible acts [Sec(56)]

Some discussions on void agreement are as follows:

(1)    Agreement by a Minor Or a Person of Unsound Mind-
A person who has not completed his or her 18 years of age signifies as minor. Law acts as the guardian of minors and protects their rights, because their mental facilities are not mature- they do not possess the capacity of judge what is good and what is bad for them. Accordingly, where is a minor charged with obligations and the other contracting party seeks to enforce those obligations against the minor, the agreement is deemed as void.

A person who does not possess a sound mind or whose mental powers are not arranged or whose mental condition is not under his or her own control. Any agreement by person of unsound mind is absolutely void because he has no capacity to judge, what is good and what is bad for him.

Illustration
(a)    A, 15 years old boy, made an agreement with B to give him Tk.1000. This is a void agreement.
(b)    A mentally disordered man made an agreement with X to marry her, but this is not a valid agreement.
 
(2) Agreement Made Without Consideration-
An agreement made without consideration is void, unless
1)    it is expressed in writing and registered under the law for the time being enforce for the registration of(documents), and is made on account of natural love and affection between parties standing in a near relation to each other; or unless.
2)    It is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promissory was legally compellable to do, or unless.
3)    It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in the behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

In any of these cases, such an agreement is a contract.

Explanation 1–Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.
Explanation 2- An agreement to which the consent of the promisor is freely given is not void merely because the consideration may be taken into account by the court in determining the question whether the consent of the promisor was freely given.

Illustrations
a)    A promises for no consideration, to give to B Rs. 1000; this is a void agreement.
b)    A, for natural, love and affection, promises to give his son, B Rs. 1000. A puts his promise to B into writing and registers it. This is a contract.
c)    A finds be B’s purse and gives it to him. B promises to give A Rs. 50. This is a contract.
d)    A supports B’s infant son. B promises to pay A’s expenses in so doing. This is a contract.

(3) Agreements in Restraint of Marriage-
 Every individual enjoys the freedom to marry and so according to section 26 of the contract act “every agreement is restraint of the marriage of any person, other than a minor, is void.” The restraint may be general or partial but the agreement is void, and therefore, an agreement agreeing not to marry at all, or a certain person or, a class of persons, or for a fixed period, is void. However, an agreement restraint of the marriage of a minor is valid under the section.

It is interesting to note that a promise to marry a particular person does not imply any restraint of marriage and is, therefore, a valid contract.

This section enact that agreement in restraint of the marriage of any person, other than a minor is void. In the interest of the society, contracts for marriage are scrutinized with a close and vigilant suspicion of undue influence, fraud or imposition. The law presumes constrictive fraud, on grounds of public policy, in agreements respecting marriages since marriages of a suitable nature are of the deepest importance of the wellbeing of the society, as upon the equality and mutual affection much of their happiness, sound morality, and mutual confidence, hence every temptation of the exercise often undue influence, or a seductive interest in procuring a marriage is suppressed, for there is infinite danger that it may, under the guises of friendship, confidence, flattery or falsehood, accomplish the ruin of person especially females. So the law—
(a)    prevents improvident, ill-advised, and often fraudulent matches;
(b)    Avoid all such contracts as tend to the deceit and injury, or encourage artifices and improper attempts to control the exercise of free judgment;
(c)    Discountenances secret contracts made with prevents and guardians, whereby on a marriage, they to receive a benefits
(d)    Renders invalid certain agreements in restraint of marriage.

Illustrations
(a)    A agrees with B for good consideration that she will not marry C. It is a void agreement.
(b)    A agrees with B that she will marry him only; it is a valid contract of marriage.  

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Void Agreement - 2

(4) Agreement in Restraint of Trade-
The constitution of India guarantees that the freedom of trade and commerce to every citizen and therefore section 27 declares “every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.” Thus no person is at livery to deprive himself of the fruit of his labor, skill or talent, by any contracts that he enters into.

It is to be noted that whether restraint is responsible or not, if it is in the nature of restraint of trade, the agreement is void always, subject to certain exceptions provided for statutorily.

Illustration
An agreement whereby one of the parties agrees to close his business in consideration of the promise by the other party to pay a certain some of money , is void, being an agreement is restraint of trade, and the amount is not recoverable, if the other party fails to pay the promised some of money. (Mad hub Chander vs.  Raj Kumar).

But agreements merely restraining freedom of action necessary for the carrying on of business are not void, for the law does not intend to take away the right of a trade to regulate his business according to his own discretion and choice.

Illustration
An agreement to sell all produce to a certain party, with stipulation that the purchaser was bound to accept the whole quantity, was held valid because it aimed to promote business did not restrained it (Mackengie vs. Striramiah). But where in a similar agreement the purchaser was free to reject the goods (i.e. was not bound to accept the whole quantity tendered) it was held that the agreement was void as being in restraint of trade (Sheikh Kalu vs. Ram Saran)

(5) Agreement in restraint of legal proceedings-
Every agreement, by which any party thereto is restricted absolutely from enforcing his right under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent. Section 28 declares the following two kinds of agreements void:
(a)    An agreement by which a party is restrained absolutely from taking usual legal
Proceeding, in respect of any rights arising from a contract.
(b)    An agreement which limits the time within which one may enforce his contract
Rights, without to the time allowed by the limitation act.

Illustration
In a contract of fire insurance, it was provided that if a claim is rejected and a suit is not filed within three months after such rejection, all benefits under the policy shell be forfeited. The provision was held valid and binding and the suit filed after three months was dismissed. (Baroda spinning Ltd. vs. Satyanarayan Marine and Fire Ins. Com. Ltd.)

Exception 1: This section shell not render illegal a contract by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shell be referred to arbitration and that only the amount awarded in such arbitration shell be recoverable in respect of the dispute so referred.

Exception 2: Nor shell this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration.

(6) Uncertain Agreements-
“Agreements, the meaning of which is not certain, or capable of being made certain, are void” (Sec-29). Through Sec-29 the law aims to ensure that the parties to a contract should be aware of the precise nature and scope of their mutual rights and obligation under the contract. Thus, if the word used by the parties are or indefinite, the law cannot enforce the agreement.

Illustration
(a)    A agrees to sell to B “a hundred tons of oil.” There is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainty.
(b)    A who is dealer in coconut oil only, agrees to sell to B “a hundred tons if oil.” The nature of A’s trade affords an indication of the meaning of the words, and A has entered into a contract   for the sale of one hundred toms of coconut oil.
(c)    A agrees to sell to B “one thousand mounds of rice at a price to be fixed by C.” As the price is capable of being made certain, there is no uncertainty here to make the agreement void.
(d)    A agrees to sell to “his white house for rupees five hundred or rupees one thousand.” There is nothing to show which of the price was to be given. The agreement is void.

Further, an agreement “to enter into an agreement in future” is void for uncertainty unless all the terms of the proposed agreement are agreed expressly or implicitly. Thus, an agreement to engage a servant some time next year, at a salary to be mutually agreed upon is a void agreement.

(7) Wagering Agreement-
Literally the word ‘wager’ means ‘a bet’ something stated to be lost or won on the result of a doubtful issue, and, therefore, wagering agreements are nothing but ordinary betting agreements. Thus where A and B mutually agree that if it rains today A will pay B Tk.100 and if it does not rain B will pay A Tk.100 or C and D entered into agreement that on tossing up a coin, if it fall head upwards C will pay D Tk.50 and if falls tail upwards D will pay C Tk.50, there is a wagering agreement.

In Tracker vs. Hardy Cotton, L.J., described a ‘wager’ ad follows: “The essence of gaming and wagering is that one party is to win and the other to lose upon a future event which at the time of the contract is of an uncertain nature- that is to say, if the event turns out the other way he will win.”

Agreement by way of wager, void. Section 30 lays down that “agreements by way of wager are void; and no suit shell be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made,” Thus, where A and B enter into an agreement which provides that if England’s cricket team wins the match, A will pay B Rs. 100, and if it loses B will pay Rs. 100 to A, nothing can be recovered by the winning party under the agreement, it being a wager. Similarly, whether C and D enter into a wagering agreement and each deposits Rs.100 with Z instructing him to pay or give the total sum to the winner, no suit can be brought by the winner for recovering the bet amount from Z, the stake-holder. Further, if Z had paid the sum to the winner, the looser   cannot bring a suit, for recovering his Rs.100, either against the winner or against, the stake-holder, even if Z had paid after the loser’s definite instructions not to pay. Of course the looser can recover back his deposit if he makes the demand before the stake-holder had paid it over to the winner (Ratnakalli vs. Vochalapu). But even such a deposit cannot be recovered by a loser in the States of Maharashtra and Gujarat where such an agreement is void and illegal.

(8) Agreement Contingent on Impossible Events-
“Contingent agreements to do or not to do anything if an impossible event happens are void, whether the impossibility of the event is know on not to the parties to thr agreement at the time when it is made.” (Sec. 36)

Illustration
(a)    A agrees to pay B Rs.1000 (as a loan) if two straight line should enclosed a space. The agreement is void.
(b)    A agrees to pay B Rs.1000 (as a loan) if B will marry A’s daughter, C. C was dead at the time of the agreement, the agreement is void.

(9) Agreements to do Impossible Act-
“An agreement to do an act impossible in itself is void.” (Sec, 56 Part-1)

Illustration
(a)    A agrees with B to discover treasure by magic. The agreement is void. [Section 56].
(b)    A agrees with B to run with a speed of 100 Kilometer per hour. The agreement is void.

QUASI CONTRACTS

Q: Explain in detail what is Quasi Contract? Also explain its different kinds Under contract act 1872.

Introduction:

                   Most of us are familiar with the term contract , which refers to a legal agreement that binds the parties with duties and obligations. The contracting parties agree to the conditions of the contract, either orally or in writing and such contracts are enforceable in a court of law. .in order to be classified as a valid contract, there must be an offer, acceptance between the parties for a valid consideration; however, there is one type of contract wherein these factors are not needed for the formation of the contract. There is not contract between the parties, till the court creates it. these are quasi contracts that are created by courts to prevent one party from getting            unjust enrichment at the expense of the other.

What does quasi contracts mean.

Denotative meanings:

                    Quasi is a Latin word for “as if, almost, somewhat, to a degree and analogous to”

Connotative meaning:

                               A quasi contract is an obligation invoked by law in the absence of an agreement. Its purpose is to create a legal duty where, in fact, no agreement was entered into by the parties. Quasi contracts are based on the principle of equity and justice. It simply states that no body shall enrich himself unjustly at the expense of another.

Example:

            A is knocked down by a vehicle. B, a stranger, who found A on the road in unconscious state, takes A to doctor. The doctor provides treatment to A, who is In a unconscious state. In such a situation, there is no contract between A and doctor and A claims that he is not liable to pay for the services offered by the doctor, as he was unconscious at the time of treatment and there is no agreement between the two.

Application:

                   In such a situation, the theory of quasi contract applies. In this case the doctor has spent his valuable time for the treatment of accident victim(A) and so, A is liable to pay for the services of the doctor. If A fails to do so, the court can apply the doctrine of quasi contract and order A to pay. This is to prevent the unjust enrichment of A at the expense of doctor.

Liability:

             The main question that arises in such situations is the liability of the defendant. As the aim of this doctrine is to prevent unjust enrichment of one party, at the expense of the other,

The damages are usually restricted to the value of services rendered or the cost of the goods delivered. If the damages exceed that value, the whole concept of quasi contract will be defeated, as it will be unfair for the defendant.

Under contract act 1872

                                      Section 68 to 72 deals with “certain relations resembling those created by contract” under the contract act 1872.There are five kinds of quasi contractual obligations for which brief discussion is discussed below.

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1.Supply of necessaries (sec. 68)

                                                      If necessaries are supplied to a person who is incompetent to contract or to someone whom he is legally pound to support, the supplier is entitled to recover the price from the property of the incompetent person. The necessaries must be suited to conditions of life of the incompetent person.

  Example1: A supplies B, a lunatic, with necessaries suitable to his conditions in life. A is entitled to be reimbursed from B’^s property.

  Example 2: A supplies the wife and children of B, a lunatic with necessaries suitable to their condition in life. A is entitled to be reimbursed from B’^s property.

2. Payment by an interested person: (sec. 69)

                                                                             “A person who is interested in the payment of money which another is bound by law to pay, is entitled to be reimbursed by the other.”

Example:

The conditions of liability under this section are:

1. Plaintiff should be interested in making payment to protect his interest. The interest should be legally recognizable.
2. It is necessary that the plaintiff himself should not be bound to pay.
3. The defendant should have been ‘bound by law’ to pay the money.
4. The plaintiff should have made the payment to another person.    

Example:

              A holds land on lease granted by B,  the zamindar. The revenue payable by B to the Government being in arrear, his land is advertised for sale by the Government. Under the revenue law, the result of such sale will be the annulment of A’^S lease. A wants to prevent the sale and his own lease, pays the sum due from B. B is bound to make good to B the amount so paid.

3. Liability to pay for non-gratuitous acts:  (sec. 70)          

Section 70 states, ”where a person lawfully does anything for any other person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of or to restore the thing so done or delivered.”

Example:

              A, a tradesman, leaves goods at B’^s house by mistake. B treats the goods as his own. He is bound is bound to pay A for them.

Example:

    A saves B’^s property from fire. A is not entitled to compensation from B, if circumstances show that he intended to act gratuitously.

4. Responsibility of finder of goods: (sec.71)

                                                                    “A person who finds goods belonging to another and takes them into his custody, is subject to the same as a bailee.”

Thus in respect of duties and liabilities, a finder is treated as bailee.

 The rights of a finder of goods include the following:

1. He can sue the owner for the specific reward announced for the return of goods and recover the reward.
2. He is entitled to recover his lawful charges incurred in preserving the goods and in order to find the true owner.
3. He can sell the goods if

 a-The goods are perishable in nature.

 b-His lawful charges exceed two third of the value of goods.

 c- When after due search, the true owner can not be found.

 d- Even if the true owner is found out, but he refuses to pay the lawful charges to the finder.

5. Mistake or Coercion (sec.72)

                                                        sec. 72 states, “A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it.”

 Example:

    A and B jointly owe Rs. 100 to C. A alone pays the amount to C, and B, not knowing this fact pays Rs. 100 again to C. C is bound to repay the amount to B.

Money paid under mistake is recoverable whether the mistake is of fact or law.

Example:

                A railway company refuses to deliver up certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charges as was illegally excessive.       end