Protective devices in the Indian Contract Act

The world is dynamic and it is changing very fast, and the law of contract is facing problems in new and wide dimensions.  For example Life Insurance of India, Railways they are making thousand of insurance and issuing ticket and carriage every days. It is very difficult for an individual to freely bargain such a massive organization, the contract terms and conditions are printed on the ticketor on the policy documents, which restrict and often exclude liability under the contract of such organization. Therefore an individual simply bind to accept the terms and conditions which is printed whether he likes it or not.

The law of contract provide certain protective devices against the possibility of exploitation of an individual. Following are some of the modes of protection which have been evolved by the court.

1. Reasonable notice- it is the duty of the person delivering a document to give a adequate notice to the offeree of the printed terms and conditions. Where this is not done, the acceptor will not be bound by the terms.
2. Notice should be contemporaneous with contract-Notice of the terms and condition should be given before or at the time of offer, subsequent notification will need amount to a modification and will attract the new contract unless he has assented thereto-

Illustration- A book a room in a hotel and paid the rent in advance, when they went up to occupy the room there were a notice saying that- the hotel will not liable for any article stolen unless handed to the manager for safe custody.

In this case hotel will held liable in case of steal any article of A, because the notice was a part of the agreement.

1. Theory of fundamental breach- another protective device is the doctrine of fundamental breach. It is a method of controlling unreasonable consequences of wide and sweeping exemption  or limitation clauses. Even where adequate notice of terms and conditions has been given.

Core of contract- every contract contain a core or fundamental obligation which must be performed. If one party fails to perform this fundamental obligation, he will be guilty of a breach of the contract, even though there is a exemption clause.

1. Rule of strict construction- construction means the interpretation of applicable terms and conditions. Exemption or limitation clauses are construed strictly where a clause is so widely expressed as to highly unreasonable. Any ambiguity in the mode of  expressing an exemption clause or limitation clause is resolved in favor of weaker party.
2. 5. Liability in tort- even where an exemption clause is exhaustive enough to exclude all kind of liability under the contract. It may not exclude liability in tort.

Illustration- A hired a cycle from B. B agreed to maintain the cycle in good working condition. There was a limitation clause saying- nothing in this agreement shall render the owner liable for any personal  injuries. While the A was riding the cycle he got enquired.

It was held that  though there is a clause exempted the defendant , but he is liable due to the negligent form their liability.

1. 6. Unreasonable terms- If any terms of a contract intervene the public policy.

Illustration- A has given his coat for laundry, on the receipt it was written that- the customer would be entitle to claim only 15% of market value in case of article lost.

It was held by the court that, it is the duty of the laundry to perform the process properly and to return the article safe and intact, though there is a limitation clause, which is not applicable here.

1. Exemption clause and third party (doctrine of Privity). A stranger cannot sue. The basic principle of the law of contract is that a contract is a contract only between the parties to it and not third party either enjoy any rights or suffer any liability under it. The principle evolve is if any third party is not affected by the terms of a contract so also a third party cannot claim the advantage of them.