Foundations of contract law in India

Every enforceable contract must satisfy Section 10 of the Indian Contract Act, 1872: free consent, lawful consideration, lawful object, capacity of parties, and not expressly declared void. Beyond that, special contracts are governed by the Sale of Goods Act, 1930; partnership by the Partnership Act, 1932; agency by Sections 182–238 of the Contract Act; and digital contracts by the IT Act, 2000 and the Bharatiya Sakshya Adhiniyam, 2023.

Common breach scenarios

Non-payment despite delivery; delayed delivery; defective performance; mis-description (especially in real-estate and online); abandonment of agreement to sell; refusal to renew a lease per the renewal clause; failure to pay liquidated damages; non-compete and non-solicit breaches by ex-employees and consultants; vendor and supply-chain breaches; and unilateral termination disguised as “force majeure”.

Remedies

(i) Damages — Section 73 of the Contract Act, ordinary damages; Section 74 — liquidated damages, capped at reasonable compensation per Kailash Nath Associates v. DDA (2015) 4 SCC 136. (ii) Specific performance — Specific Relief Act, 1963 as amended in 2018 now makes specific performance the default; courts no longer require the plaintiff to prove inadequacy of damages. (iii) Injunction — temporary and permanent, under Sections 36–42 of the Specific Relief Act. (iv) Rescission — Section 27 and Section 28 of the Specific Relief Act.

Arbitration as default dispute resolution

Most well-drafted commercial contracts include an arbitration clause governed by the Arbitration and Conciliation Act, 1996. We typically prescribe: sole arbitrator for low value, three for high value; seat at Kota or Jaipur; institutional rules (DAC, ICA, or Delhi International Arbitration Centre); language English; and curial law Indian. Section 11 applications for appointment of arbitrator go to the Rajasthan High Court.

Force majeure and frustration

Force majeure operates only if expressly contracted (“act of God, war, government action, epidemic” type clauses). Absent express clause, the doctrine of frustration under Section 56 of the Contract Act can be invoked — but it requires impossibility, not mere hardship — Energy Watchdog v. CERC (2017) 14 SCC 80. Many COVID-era disputes turned on this fine line.