Tag: Competition Law

Offer:

An offer is a clear and definite proposal made by one party (known as the offeror) to another party (called the offeree), indicating a willingness to enter into a contract on specific terms. It is the first step in the formation of a contract and creates the power of acceptance in the offeree.

According to Section 2(a) of the Indian Contract Act, 1872, an offer or proposal is when one person signifies to another their willingness to do or abstain from doing something, with the intention of obtaining the assent of the other person to such act or abstinence.

The offer must be communicated to the offeree to be effective, enabling the offeree to decide whether to accept or reject it. It must be certain and definite, leaving no ambiguity about the terms involved. The offeror must also intend to be legally bound once the offer is accepted.

Offers may be express, clearly stated verbally or in writing, or implied, inferred from the conduct or circumstances. They can also be specific, directed to a particular person, or general, made to the public at large.

Acceptance:

Acceptance is the unequivocal expression of assent by the offeree to the terms of the offer made by the offeror. It is a crucial element in the formation of a contract, as it signifies the offeree’s agreement to be bound by the offer, leading to the creation of a legally enforceable agreement.

Section 2(b) of the Indian Contract Act, 1872 defines acceptance as the assent given by the person to whom the proposal (offer) is made. For acceptance to be valid, it must correspond exactly to the terms of the offer without any modifications — this is known as the “mirror image rule.” Any change in terms amounts to a counter-offer, not acceptance.

Acceptance must be communicated to the offeror in the manner prescribed, or if no specific method is stated, then in a reasonable way. It can be express (by words, spoken or written) or implied (by conduct).

Acceptance must occur within the time specified in the offer or within a reasonable time if no duration is mentioned. Once acceptance is effectively communicated, the contract comes into existence. However, acceptance made after the offer is revoked or expired is invalid.

Communication of Offer:

The communication of an offer is the process by which the offeror conveys their willingness to enter into a contract to the offeree. According to Section 4 of the Indian Contract Act, 1872, the communication of an offer is complete when it comes to the knowledge of the person to whom it is made — that is, when the offeree becomes aware of it.

For a valid contract to arise, the offer must be properly communicated so the offeree can make an informed decision to accept or reject it. Until the offeree knows about the offer, there can be no acceptance, and thus, no contract. This is important to avoid misunderstandings or disputes later.

The communication can be done by direct methods such as spoken words, letters, emails, or even conduct, depending on the situation. For example, in a general offer (like a public advertisement), the offer is considered communicated when it is publicized.

In face-to-face conversations or phone calls, the communication is instantaneous. However, when sent by post or email, the timing depends on when the offeree actually receives and reads the offer.

Effective communication ensures that both parties are aware of their obligations and rights before entering a contract.

Steps in Communication of Offer:

Step 1. Formulation of the Offer

The first step is the formulation of the offer by the offeror. This involves the offeror deciding on the precise terms and conditions they are willing to propose, whether it is to do something or abstain from doing something. The offer must show clear intent to be legally bound if accepted, and it should not be vague or uncertain. A properly formulated offer sets the foundation for effective communication and helps avoid confusion or disputes later.

Step 2. Mode of Communication Chosen

Once the offer is ready, the offeror selects a mode of communication — oral, written, electronic, or by conduct — to transmit the offer to the offeree. The choice depends on the context and the relationship between the parties. For example, offers can be made face-to-face, over the phone, via email, or through letters. The selected mode must ensure the offeree receives the offer clearly and unambiguously, enabling them to make a proper decision.

Step 3. Dispatching or Sending the Offer

The next step is the dispatch or sending of the offer through the chosen medium. This action marks the offeror’s attempt to communicate willingness to enter into a contract. For instance, mailing a letter, sending an email, or delivering a verbal message all represent dispatching the offer. Importantly, the offeror must take reasonable steps to ensure the offer reaches the offeree. Simply writing or preparing the offer is not enough; it must be actively sent out.

Step 4. Receipt of the Offer by the Offeree

According to Section 4 of the Indian Contract Act, the communication of the offer is complete when the offeree receives the offer. It is not enough that the offeror has sent it; the offeree must actually come to know of it. For example, a letter must be delivered and read, or an email must reach the inbox and be accessed. Until the offeree knows about the offer, they cannot act on it or accept it.

Step 5. Understanding the Terms of the Offer

After receiving the offer, the offeree must understand the terms and conditions of the proposal. This step is crucial, as a misunderstanding or misinterpretation could lead to disputes or an invalid agreement. The offeror should ensure that the language used is clear, specific, and unambiguous, leaving no room for doubt. The offeree, on their part, should carefully read or listen to the offer details before making any decision regarding acceptance or rejection.

Step 6. Clarification or Inquiries

Sometimes, after receiving the offer, the offeree may have questions or need clarifications before proceeding. This is an optional but practical step where the offeree seeks additional details to fully understand the offer. For example, they may ask for clarification on pricing, timelines, or obligations. While this does not constitute acceptance or rejection, it is part of the communication process, ensuring both parties are aligned and reducing the risk of later conflicts or misunderstandings.

Step 7. Decision by the Offeree to Accept or Reject

Finally, after receiving and understanding the offer, the offeree must make a decision — either to accept, reject, or make a counteroffer. This decision concludes the communication process from the offeror’s side and transitions into the communication of acceptance or rejection. The offeree’s response determines whether a valid contract will be formed. Without the initial steps of clear offer communication, the offeree would not be in a position to decide meaningfully.

Communication of Acceptance:

Communication of acceptance is a crucial step in forming a valid contract under the Indian Contract Act, 1872. It refers to the process by which the offeree conveys their assent or agreement to the terms of the offer back to the offeror. Without proper communication, the acceptance is not legally recognized, and no binding contract is formed.

According to Section 4 of the Act, the communication of acceptance is complete:

• As against the proposer (offeror) when the acceptance is put in a course of transmission, so it is beyond the power of the acceptor (for example, when the acceptance letter is posted);

• As against the acceptor (offeree) when it actually comes to the knowledge of the proposer (for example, when the proposer receives the acceptance letter).

This means that once the offeree has done everything required to communicate acceptance, the contract is binding, even if the proposer has not yet received the communication. However, until the acceptance reaches the proposer, the offeree can revoke it.

Proper communication ensures both parties are aware of the binding agreement, reducing misunderstandings. The method of communication can be express (spoken or written) or implied, depending on the nature of the transaction.

In modern times, communication can occur via letters, email, phone, or even messaging apps, but it must follow any conditions specified in the offer.

Steps in Communication of Acceptance:

• Understanding the Offer

Before communicating acceptance, the offeree must fully understand the terms of the offer. This means carefully reviewing the proposal, including obligations, timelines, and conditions, to ensure they agree with what’s being proposed. Without clear understanding, acceptance may be invalid, or it might lead to disputes. The offeree must confirm that the offer aligns with their expectations and capabilities before moving forward to acceptance, as this marks the transition from mere negotiation to legal commitment.

• Decision to Accept

Once the offer is understood, the offeree must consciously make a decision to accept. This is the moment of internal agreement when the offeree decides to bind themselves to the terms of the offer. This decision must be absolute and unconditional — any changes or modifications would constitute a counteroffer, not acceptance. The decision-making step is critical, as acceptance must exactly mirror the offer for a valid contract to arise under the “mirror image rule.”

• Choosing the Mode of Communication

The offeree must then choose the appropriate mode of communication for acceptance. This could be oral, written, electronic, or any other mode specified by the offeror. If the offeror has prescribed a particular mode (for example, acceptance only by email), the offeree must comply with it. If no mode is specified, then the offeree should use a reasonable or customary method for such transactions to ensure the acceptance is valid and properly communicated.

• Dispatching the Acceptance

Once the mode is selected, the offeree must dispatch or send the acceptance. This could mean mailing a letter, sending an email, making a phone call, or verbally communicating agreement in person. As per Section 4 of the Indian Contract Act, communication of acceptance is complete against the proposer when it is put in the course of transmission and out of the power of the acceptor. This marks the point where the acceptor has done their part.

• Transmission of Acceptance

The next step involves the actual transmission of the acceptance to the offeror. This is the physical or digital movement of the acceptance from the offeree to the offeror, such as a letter traveling through the postal system or an email moving through servers. While dispatch marks the completion on the proposer’s side, transmission ensures that the acceptance is on its way and will soon reach the offeror, fulfilling the final communication requirements under the law.

• Receipt by the Offeror

Communication of acceptance is complete as against the acceptor when it comes to the knowledge of the offeror. This means the offeror must receive the acceptance — reading the email, opening the letter, or hearing the verbal confirmation. Until the offeror knows of the acceptance, the offeree can revoke it. Once the offeror is informed, the contract becomes binding on both parties, completing the circle of offer and acceptance as required under contract law.

• Confirmation or Follow-Up (if needed)

While not legally required, in modern business practice, it is often customary to confirm acceptance or follow up after it has been communicated. This ensures both parties are on the same page and helps avoid misunderstandings. For example, sending an acknowledgment email or requesting a confirmation call can provide assurance that the acceptance was received and noted. This extra step, while optional, strengthens the relationship and clarity between contracting parties.

Revocation of Offer:

Revocation means the withdrawal or cancellation of an offer by the offeror before it is accepted. Under Section 5 of the Indian Contract Act, 1872, an offer can be revoked at any time before the communication of acceptance is complete as against the offeror, but not afterward. Once the acceptance is communicated and becomes binding, the offeror can no longer revoke the offer.

Revocation ensures that the offeror retains control over the offer until it turns into a contract. However, this right is limited — the revocation must be communicated effectively to the offeree before they accept the offer.

Modes of Revocation of Offer:

The Indian Contract Act, under Section 6, outlines various modes through which an offer can be revoked. These modes ensure that both parties understand under what circumstances an offer is no longer valid and avoid unnecessary disputes. Below are the key modes of revocation:

• By Notice of Revocation

An offer can be revoked by the offeror giving clear notice to the offeree, informing them of the withdrawal. This notice can be communicated verbally, in writing, or through any medium that effectively reaches the offeree. The revocation is valid only if it reaches the offeree before they communicate their acceptance. For example, if A offers to sell his bike to B and sends a message withdrawing the offer before B sends his acceptance, the revocation is valid.

• By Lapse of Time

If the offeror specifies a time limit for acceptance and the offeree does not accept within that period, the offer automatically lapses. Even if no time is specified, if the acceptance is not made within a reasonable time — based on the nature of the offer and the surrounding circumstances — the offer expires. For example, if A offers to sell goods to B stating the offer is open for three days, but B accepts after five days, the offer has lapsed.

• By Failure of Condition Precedent

If the offer is subject to certain conditions and those conditions are not met, the offer becomes invalid. For example, if A offers to sell his car to B on the condition that B arranges full payment within one week, but B fails to do so, the offer is automatically revoked.

• By Death or Insanity of Offeror

If the offeror dies or becomes of unsound mind before the acceptance is communicated, and the offeree is aware of this, the offer stands revoked. However, if the offeree accepts the offer without knowing about the offeror’s death or insanity, the contract may still be valid. For example, if A offers to sell property to B but dies before B accepts, and B knows of A’s death, the offer is revoked.

• By Counter-offer or Rejection

If the offeree rejects the offer outright or makes a counter-offer proposing different terms, the original offer is revoked. A counter-offer is treated as a rejection of the original offer and the proposal of a new offer. For example, if A offers to sell a product for ₹10,000 and B replies offering ₹8,000, this is a counter-offer and effectively cancels the original offer.

• By Change in Law

If a change in law renders the performance of the offer illegal or impossible, the offer is automatically revoked. For example, if A offers to export a certain good to B, but the government later bans the export of that good, the offer stands revoked.

Revocation of Acceptance:

Revocation of acceptance refers to the withdrawal or cancellation of the acceptance made by the offeree before it becomes binding on the offeror. According to Section 5 of the Indian Contract Act, 1872, an acceptance can be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterward.

This means that once the acceptance is communicated to the offeror and reaches their knowledge, the offeree cannot revoke or cancel it. However, before that point, the offeree retains the right to withdraw their acceptance if they wish to do so.

For example, if A offers to sell a car to B, and B posts a letter of acceptance on Monday but sends a telegram revoking the acceptance on Tuesday which reaches A before the acceptance letter, the revocation is valid.

The key point is the timing — the revocation must reach the offeror before or at the same time as the acceptance becomes effective. Once the acceptance is communicated and comes to the knowledge of the offeror, it creates a binding contract, and revocation is no longer possible.

This provision ensures fairness and clarity, preventing situations where one party is unfairly bound by an acceptance they later decide to withdraw but fail to notify in time. Proper communication plays a critical role in ensuring valid revocation.

Modes of Revocation of Acceptance:

• Express Revocation

This is when the acceptor clearly communicates their intention to withdraw the acceptance through direct communication. For example, if the acceptor has sent a letter of acceptance but later sends an email or makes a phone call to inform the offeror of their intention to revoke before the letter is received, the revocation is valid. Express revocation can be oral or written, but it must reach the offeror in time.

• Implied Revocation

Sometimes revocation can happen through implied actions or conduct. If the acceptor performs an act that indicates they no longer intend to go through with the contract, and this action comes to the knowledge of the offeror before the acceptance reaches them, it counts as implied revocation. For example, if the acceptor sells the goods they had earlier accepted to purchase, it shows they no longer wish to accept.

• Revocation by Faster Mode of Communication

If the acceptance was sent by a slower mode (like postal mail), the revocation can be sent using a faster mode (like telephone, email, or telegram) to ensure it reaches the offeror before or at the same time as the acceptance. For instance, if the acceptor sends a letter of acceptance but follows it up with a quick phone call or email to revoke before the letter is received, the revocation is valid.

• Revocation by Death or Insanity (under certain cases)

Although death or insanity usually terminates the offer, if the acceptor dies or becomes insane before the acceptance reaches the offeror and the offeror becomes aware of it, the acceptance is effectively revoked. However, if the acceptance has already been communicated, death or insanity does not revoke it.

• Revocation through Authorized Agent

The revocation of acceptance can also be communicated through an authorized agent. If the acceptor has appointed an agent to handle communication, the agent can validly notify the offeror about the revocation before the acceptance becomes effective.

Consumer:

A consumer is an individual or entity that purchases goods or services for personal use and not for resale or commercial purposes. The concept of a consumer is central to consumer protection laws and economic transactions. Under the Consumer Protection Act, 2019 (India), a consumer is defined as any person who buys any goods or hires or avails any services for a consideration, which has been paid, promised, partly paid and partly promised, or under any deferred payment system.

A consumer may include individuals, firms, companies, or organizations that use products or services to satisfy their personal needs or the needs of others, without the intent of profit-making. The law also recognizes a consumer as someone who uses the goods with the permission of the buyer. However, a person who obtains goods for resale or commercial purposes is not considered a consumer, except when the goods are used by the buyer exclusively for the purpose of earning livelihood by means of self-employment.

The definition of a consumer is vital for determining who can seek remedies under consumer laws. It ensures that the rights of buyers are protected against unfair trade practices, defective goods, deficiency in services, and exploitation by sellers or service providers. In essence, the term “consumer” symbolizes the end-user in the economic chain, whose satisfaction and protection are crucial for a fair and efficient marketplace. Consumer protection laws empower individuals to demand quality, safety, and value in the goods and services they purchase.

Consumer Protection:

Consumer protection refers to the practices, laws, and measures put in place to safeguard the rights and interests of consumers against unfair trade practices, defective goods, deficient services, fraud, and exploitation. It is an essential aspect of a well-functioning market economy, ensuring that consumers are treated fairly and provided with accurate information to make informed purchasing decisions.

In India, the Consumer Protection Act, 2019 is the primary legislation that defines and strengthens consumer rights. This Act replaces the earlier Consumer Protection Act of 1986 and provides a more comprehensive legal framework to address modern-day consumer issues such as e-commerce fraud, misleading advertisements, and unfair contracts. It establishes authorities like the Central Consumer Protection Authority (CCPA) to promote and enforce consumer rights.

Consumer protection encompasses various elements, including the right to safety, right to be informed, right to choose, right to be heard, right to redress, and the right to consumer education. These rights empower consumers to stand against any unfair or exploitative business practices.

The need for consumer protection arises because of the imbalance in the relationship between sellers and buyers, where the former may have more power, knowledge, and resources. It is not only the responsibility of the government and consumer courts but also of manufacturers, suppliers, and retailers to maintain transparency, quality, and ethical business conduct.

Consumer Protection Act 1986:

Consumer Protection Act has been implemented(1986) or we can bring into existence to protect the rights of a consumer. It protects the consumer from exploitation that business practice to make profits which in turn harm the well being of the consumer and society.

This right help to educate the consumer on the right and responsibilities of being a consumer and how to seek help or justice when faced exploitation as a consumer. It teaches the consumer to make right choices and know what is right and what is wrong.

Practices to be followed by Business under Consumer Protection Act

• If any defect found the seller should remove the mentioned defects from the whole batch or the goods affected. For example, there have been cases where car manufacturing unit found a defect in parts of the vehicle usually they remove the defect from every unit or they call of the unit.
• They should replace the defective product with a nondefective product and that product should be of similar configuration or should be the same as the product purchased.

Objectives of Consumer Protection Act:

1. To Protect Consumer Rights

The foremost objective of the Consumer Protection Act is to safeguard the fundamental rights of consumers, such as the right to safety, information, choice, and redressal. These rights ensure that consumers are not exploited or deceived by unfair trade practices. By legally recognizing consumer rights, the Act empowers individuals to seek protection and redress when those rights are violated. It strengthens the consumer’s position in the market, encouraging ethical conduct from businesses and creating a fair environment for all participants in commercial transactions.

2. To Establish a Legal Framework for Consumer Disputes

The Act provides a comprehensive and structured legal framework for addressing consumer grievances through quasi-judicial mechanisms. It establishes District, State, and National Consumer Disputes Redressal Commissions, allowing consumers to seek quick and cost-effective justice. These bodies function with minimal legal formalities and encourage speedy resolution. The Act outlines the procedures, jurisdiction, and powers of these redressal forums, ensuring transparency and accessibility. This objective makes legal recourse affordable and approachable for every consumer, reducing the burden on traditional courts while ensuring accountability from service providers and sellers.

3. To Prevent Unfair Trade Practices

The Act aims to prevent deceptive, unethical, and manipulative business practices that can harm consumers. This includes misleading advertisements, false representations, and manipulations in pricing or packaging. The Consumer Protection Act empowers authorities like the Central Consumer Protection Authority (CCPA) to investigate and penalize such actions. By curbing unfair trade practices, the Act fosters honest business behavior and ensures that consumers receive what they are promised. It promotes a culture of transparency and reliability in the marketplace, thus protecting consumers from fraudulent schemes and misleading promotional tactics.

4. To Promote and Enforce Consumer Awareness

One of the key objectives of the Consumer Protection Act is to educate consumers about their rights, responsibilities, and available redressal mechanisms. Many consumers, especially in rural and semi-urban areas, are unaware of their entitlements and remedies. The Act promotes awareness through campaigns, advertisements, and public programs. Consumer education encourages responsible buying decisions and discourages exploitation. An informed consumer can identify malpractice, question substandard products or services, and effectively seek justice. Promoting awareness helps build a vigilant society where businesses are held accountable for the quality and fairness of their offerings.

5. To Introduce Consumer-Friendly Procedures

The Consumer Protection Act simplifies legal procedures to make them more consumer-friendly. It introduces e-filing of complaints, video conferencing for hearings, and minimal legal formalities, especially in the redressal forums. This ensures that consumers from all walks of life can easily access justice without being intimidated by complex court systems. The procedures are designed to be quick, efficient, and cost-effective. These consumer-centric mechanisms encourage more people to report violations, thus creating a responsive and inclusive legal environment. It emphasizes convenience and ease of access, which are critical to effective consumer protection.

6. To Regulate E-Commerce and Digital Transactions

Recognizing the growing role of e-commerce, the Act aims to regulate online business platforms. It includes specific provisions to ensure transparency, accountability, and consumer protection in digital transactions. Online retailers must now disclose all necessary product and seller details, provide fair return policies, and ensure grievance redressal mechanisms. The Act also defines the responsibilities of e-commerce entities and mandates compliance with consumer laws. This objective brings digital markets under the purview of the law, reducing fraud and building trust in online shopping, which is vital in a technology-driven consumer landscape.

7. To Establish Central Consumer Protection Authority (CCPA)

A significant objective of the Act is to establish the Central Consumer Protection Authority (CCPA), a powerful regulatory body that protects consumer rights and investigates violations. The CCPA has the authority to initiate class-action suits, order product recalls, penalize misleading advertisements, and ensure fair practices. It acts proactively to enforce compliance and intervene in matters affecting consumer interests on a large scale. This centralized body strengthens the implementation of consumer rights and ensures swift administrative action, making the consumer protection regime more robust and responsive to emerging challenges.

8. To Promote Fair Competition in the Market

By ensuring that businesses follow ethical practices and deliver quality products and services, the Consumer Protection Act contributes to maintaining fair competition in the marketplace. It discourages monopolistic behavior, price manipulation, and quality compromises. Fair competition benefits consumers by providing better choices, reasonable prices, and improved services. Businesses that prioritize consumer interests are likely to earn customer loyalty and market respect. Thus, the Act not only protects consumers but also encourages healthy competition among businesses, which is essential for a balanced, vibrant, and growing economy.

Environment Protection Act, 1986, is a comprehensive legislation enacted by the Parliament of India with the primary aim of providing for the protection and improvement of the environment. It was introduced in the wake of the Bhopal Gas Tragedy in 1985, highlighting the need for a regulatory framework to address environmental issues. The Act serves as an umbrella legislation designed to provide a framework for coordinating, supervising, and enforcing environmental protection standards.

Introduction:

The Act empowers the central government to take measures necessary to protect and improve the quality of the environment by setting standards for emissions and discharges of pollution in the atmosphere by any person carrying on an industry, operation, or process. Additionally, it lays down guidelines for the State governments and other authorities to direct their activities towards environmental protection.

Objectives of the Act:

• To Protect and Improve Environmental Quality

The Act aims to prevent, control, and abate environmental pollution to ensure a healthy environment for all citizens.

• Regulation of Environmental Pollutants

It seeks to regulate the discharge of environmental pollutants and the handling of hazardous substances.

• Comprehensive Environmental Protection

The Act endeavors to take appropriate measures for understanding and mitigating environmental pollution in its entirety, not just specific aspects or factors.

• Legal Framework for Environmental Protection

It provides a legal framework for planning and executing a nationwide program for the prevention, control, and abatement of environmental pollution.

Definitions of Important Terms:

• Environment

The term Environment encompasses all living and non-living elements that interact with each other. This includes natural components like air, water, soil, flora, fauna, and man-made structures such as buildings, roads, and industries. As per the Environment (Protection) Act, 1986, it refers to water, air, land, and the inter-relationship among them and with human beings, other living creatures, plants, and property. A healthy environment supports life systems and ecological balance. The quality of the environment determines the sustainability of development, public health, and biodiversity. Preserving environmental integrity is essential for future generations and responsible governance.

• Enmental Pollutant

An Environmental Pollutant is any solid, liquid, or gaseous substance present in such concentration that it may cause harm to the environment. These substances can degrade air, water, or land quality and pose risks to human, animal, or plant life. Pollutants include chemicals, smoke, sewage, industrial waste, and toxic emissions. Under the Environment (Protection) Act, 1986, pollutants are those substances whose presence in the environment exceeds permissible limits. These may arise from industrial processes, vehicular emissions, or even household activities. Controlling pollutants is essential to maintain environmental quality and to safeguard ecological and public health.

• Environmental Pollution

Environmental Pollution refers to the contamination of natural resources by harmful substances, rendering them unsafe for use or causing damage to the ecosystem. It affects air, water, and soil quality, and results in adverse health, economic, and ecological consequences. According to the Environment (Protection) Act, 1986, pollution is the presence of any environmental pollutant that leads to environmental degradation. Pollution can be caused by industrial discharge, vehicular emissions, improper waste disposal, deforestation, and urbanization. It disrupts ecological balance and requires regulation and mitigation through laws, policies, and active community participation to ensure sustainable development.

• Hazardous Substance

A Hazardous Substance is any material, whether chemical or biological, that poses a significant risk to health, safety, or the environment due to its toxic, reactive, flammable, or corrosive properties. Under the Environment (Protection) Act, 1986, it is defined as any substance or preparation which can cause harm to humans, living organisms, or property due to its chemical or physico-chemical characteristics. Examples include industrial chemicals, pesticides, biomedical waste, and radioactive materials. The handling, transport, and disposal of hazardous substances are strictly regulated to prevent accidents, contamination, and long-term environmental damage.

• Occupier

An Occupier refers to a person who has control over the affairs of a factory, premise, or operation and is responsible for ensuring compliance with environmental laws. As per the Environment (Protection) Act, 1986, an occupier includes any person who has control over a factory or premises and includes, in relation to any substance, the person in possession of the substance. The occupier is legally obligated to manage environmental risks, ensure safe handling of hazardous materials, maintain records, and report environmental incidents. The role of the occupier is central to environmental accountability and legal compliance in industries and institutions.nviro

Consumer Dispute

Consumer dispute arises when there is a disagreement or conflict between a consumer and a seller, manufacturer, or service provider regarding the quality, price, quantity, or standard of goods or services. Under the Consumer Protection Act, 2019, a consumer dispute is formally recognized when a consumer complaint is filed before a Consumer Disputes Redressal Commission and is not resolved satisfactorily by the opposite party.

The Act ensures that consumers are provided with speedy, simple, and effective redressal of their grievances. It also establishes a legal structure for resolving disputes efficiently at the district, state, and national levels.

According to Section 2(6) of the Consumer Protection Act, 2019, a consumer dispute means a dispute where the person against whom a complaint has been made denies or disputes the allegations contained in the complaint.

This definition implies that a consumer dispute begins when:

• A consumer files a valid complaint, and
• The opposite party disagrees or refutes the allegations.

Examples of Consumer Disputes

• A consumer buys a refrigerator which stops working within a week. The seller refuses to repair or replace it.
• A customer books a flight online but is denied boarding despite a confirmed ticket.
• An insurance company refuses to settle a claim citing hidden clauses.
• A student pays fees for a coaching institute, but the promised classes are not delivered.

Causes of Consumer Disputes:

• Defective Goods

One of the primary causes of consumer disputes is the purchase of defective or substandard goods. These may include products that are damaged, unsafe, or do not perform as promised. When sellers or manufacturers refuse to replace, repair, or refund such goods, consumers are left dissatisfied. This leads them to seek legal remedies through consumer forums. The absence of product guarantees and post-sale service often intensifies the problem, resulting in formal complaints and legal conflicts.

• Deficiency in Services

When a service provider fails to deliver promised services with adequate care, skill, or quality, it results in a deficiency. This includes delayed responses, poor customer support, incomplete service delivery, or negligence in sectors like banking, insurance, healthcare, or transport. Consumers expect reliable service after payment, and when expectations are not met, they initiate disputes. Service deficiencies account for a significant percentage of consumer complaints registered before dispute redressal commissions.

• Unfair Trade Practices

Unfair trade practices include false advertising, deceptive pricing, misleading product descriptions, and fraudulent schemes. For instance, a company may advertise exaggerated benefits or hide important terms in fine print. These practices mislead consumers into making purchases based on inaccurate information. When the truth is discovered post-purchase, consumers feel cheated and approach legal forums to seek compensation or cancellation, thus leading to disputes. These issues undermine trust in market ethics and transparency.

• Overcharging and Price Disputes

Charging prices above the MRP (Maximum Retail Price), including hidden costs, or imposing unauthorized charges leads to frequent consumer disputes. Sellers may also exploit demand by raising prices unfairly during shortages or festivals. Additionally, in digital transactions, final prices may be higher than the price displayed due to added service or handling charges. Such price-related discrepancies prompt consumers to lodge complaints and demand fair pricing practices through legal channels.

• Non-Delivery or Delay in Delivery

Consumers often face disputes when purchased goods or services are not delivered within the agreed timeframe or are not delivered at all. This issue is especially common in e-commerce and logistics services. Delays in delivering critical goods like medicines, electronics, or groceries cause inconvenience and loss. When sellers fail to justify or compensate for the delay, or remain unresponsive, consumers seek legal intervention to enforce delivery or obtain refunds.

• Lack of After-Sales Service

After-sales service is essential for products like electronics, automobiles, and appliances. When service centers fail to provide promised maintenance, repair, or warranty support, it creates dissatisfaction. Consumers often feel helpless when companies ignore complaints or delay resolution. This negligence in honoring warranties or providing poor support leads to a loss of faith and forces consumers to file complaints. Poor after-sales service remains a recurring cause of consumer grievances.

Procedure to File a Consumer Dispute:

• Filing a Complaint

The first step is to file a written complaint by the consumer or their authorized representative. The complaint must clearly mention the details of the goods or services, the defect or deficiency, and the relief sought. It should be filed at the appropriate Consumer Disputes Redressal Forum—District, State, or National—based on the value and nature of the dispute.

• Payment of Fees

Upon filing the complaint, the consumer must pay the prescribed fee according to the value of the claim. The fee varies for District, State, and National Commissions and is often nominal. Fee payment is essential for the complaint to be registered and proceed further. Sometimes, fee exemptions or reductions are available for certain categories of complainants, such as senior citizens or economically weaker sections.

• Serving Notice to Opposite Party

Once the complaint is accepted, the forum issues a notice to the opposite party (seller, manufacturer, or service provider). The notice informs them about the complaint and requests a written reply within a specified time, usually 30 days. The opposite party is expected to respond with their version, defenses, or any settlement proposal to address the consumer’s grievance.

• Hearing and Disposal

The Consumer Forum schedules hearings where both parties present evidence, witnesses, and arguments. The forum examines the case details thoroughly and may suggest settlement or mediation. After hearing both sides, the forum issues its judgment within a reasonable time. The order may include compensation, replacement, repair, refund, or other reliefs. The decision is binding but can be appealed in a higher forum.

Recent Trends in Consumer Dispute Resolution:

• Integration of Artificial Intelligence in Dispute Resolution

Artificial Intelligence (AI) is increasingly being utilized in consumer dispute resolution to enhance efficiency and accessibility. Platforms like LLMediator leverage AI to assist in online dispute resolution (ODR) by analyzing dispute conversations, selecting suitable intervention types, and generating appropriate intervention messages. This integration aims to streamline the dispute resolution process, making it more efficient and accessible for consumers, especially in high-volume, low-intensity legal disputes.

• Expansion of Online Dispute Resolution (ODR) Mechanisms

Online Dispute Resolution (ODR) is gaining traction in India as a means to resolve consumer disputes efficiently. The Indian government has been promoting ODR through initiatives like e-Lok Adalats, which have successfully resolved millions of cases remotely. Additionally, startups and enterprises are adopting ODR platforms to address consumer grievances swiftly and cost-effectively. This trend reflects a shift towards digital platforms for dispute resolution, aiming to reduce the burden on traditional courts and provide timely justice to consumers.

• Government’s Emphasis on Mediation Over Arbitration

The Indian government is shifting its focus from arbitration to mediation as the preferred method of dispute resolution in domestic public procurement contracts. New guidelines introduced in June 2024 recommend that arbitration clauses be included only in contracts with a dispute value below ₹10 crore. For higher-value disputes, the government encourages the adoption of mediation under the Mediation Act, 2023. This approach aims to reduce litigation costs and expedite dispute resolution processes, promoting a more efficient and accessible justice system.

• Enhanced Enforcement Measures by Consumer Forums

To address non-compliance with consumer court orders, the Karnataka State Consumer Disputes Redressal Commission (KSCDRC) plans to involve police in enforcing orders in exceptional cases. This initiative targets defiant parties, such as certain real estate firms, who fail to comply with judgments. Additionally, KSCDRC is investing ₹52 crore in digital tools to boost case transparency and efficiency, including a Telegram channel for notifications and YouTube for live-streaming court proceedings. These measures aim to uphold the commission’s authority and enhance public engagement

• Digital Service of Legal Notices

The Ernakulam Consumer Disputes Redressal Commission has recognized the use of digital platforms like WhatsApp for serving legal notices, especially when parties avoid traditional methods. This approach aligns with the Supreme Court’s directive to adopt more efficient and cost-effective methods over conventional ones like registered post. Section 65 of the Consumer Protection Act permits electronic delivery of notices, ensuring that parties cannot evade legal action by avoiding notice acceptance. This development enhances the efficiency of the legal process

Challenges in Consumer Dispute System:

• Delayed Justice

One of the biggest challenges is the delay in resolving consumer disputes. Cases often remain pending for years due to a backlog in consumer forums, shortage of staff, and procedural bottlenecks. These delays defeat the very purpose of quick and affordable redressal, leaving consumers frustrated and disillusioned with the system’s effectiveness.

• Lack of Awareness

A large section of consumers, especially in rural areas, are unaware of their rights and the redressal mechanisms available under the Consumer Protection Act. This lack of awareness restricts them from approaching consumer courts, even when exploited. Moreover, many do not understand the documentation or evidence needed to file a successful claim.

• Limited Infrastructure

Consumer forums often suffer from poor infrastructure, such as inadequate office space, lack of technology, and insufficient support staff. Many forums lack basic amenities like functioning websites or digital filing systems, which hampers efficiency and discourages consumers from pursuing their grievances through formal channels.

• Non-compliance of Orders

Even when consumer forums pass favorable orders, many companies or service providers ignore or delay compliance. Enforcing these orders often requires further legal proceedings, adding time and cost. This undermines the authority of the consumer forums and discourages consumers from seeking justice.

• Undertrained Personnel

Consumer redressal bodies often lack professionally trained personnel with expertise in consumer law, technology, or financial matters. Judges or members may not always be equipped to deal with complex modern disputes involving digital transactions or technical products, leading to poor quality judgments or unfair outcomes.

• High Legal Costs

Despite being designed as an affordable option, the cost of pursuing a consumer case can be high, especially when legal counsel is needed. Long durations, documentation, and multiple hearings can add financial strain on consumers, making the process inaccessible to economically weaker sections.

Defect

According to Section 2(10) of the Consumer Protection Act, 2019, a defect means:

“Any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law in force or under any contract, express or implied, or as is claimed by the trader in any manner whatsoever in relation to any goods or product.”

This definition highlights that a defect is not limited to physical damage. It can also refer to non-compliance with contract terms, legal standards, or representations made by the seller.

Types of Defects:

• Manufacturing Defect

This occurs during the production process. The defect may be due to poor workmanship, faulty machinery, or human error. Such defects make the product unsafe or unusable for the consumer.

• Design Defect

A design defect exists when the product’s design is inherently dangerous or ineffective. Even if manufactured perfectly, the product cannot perform as expected due to flawed design.

• Packaging Defect

If the product’s packaging is improper or misleading, leading to contamination or incorrect usage, it can be considered a defect. For example, food items not stored hygienically or with mislabeling.

• Non-conformity with Standards

If the goods do not conform to prescribed standards set by organizations like the Bureau of Indian Standards (BIS) or FSSAI, they are considered defective.

• Hidden or Latent Defect

These defects are not immediately visible or known at the time of purchase. They become apparent only after the product is used for some time.

Examples of Defect:

• A consumer buys a washing machine that stops working within a week due to poor wiring — a manufacturing defect.
• A medicine bottle with an incorrect label leading to overdose — a packaging defect.
• A car model designed with a braking system prone to failure — a design defect.
• A packet of biscuits that contains insects — a purity defect.
• An electronic product claiming 6 hours of battery life but failing after 2 hours — non-conformance with the seller’s claims.

Significance of Identifying a Defect:

• Protects Consumer Rights

Identifying a defect enables consumers to assert their legal rights under consumer protection laws. It empowers them to demand quality goods, fair treatment, and timely remedies. This process strengthens the position of consumers in the marketplace and deters sellers from indulging in unethical practices, ensuring fairness and integrity in trade.

• Ensures Product Accountability

When a defect is identified and reported, it holds manufacturers and sellers accountable for product quality. They must ensure that goods meet legal and contractual standards. This encourages businesses to implement quality control mechanisms and maintain product safety, helping to prevent defective goods from entering the market in the future.

• Promotes Market Discipline

Highlighting defects helps instill discipline in the market by discouraging negligent or fraudulent business practices. It creates pressure on producers and sellers to uphold quality, comply with regulations, and act transparently. Over time, this results in a more competitive and responsible market environment where consumer interests are better safeguarded.

• Supports Legal Recourse

The identification of a defect provides a solid foundation for filing a legal complaint or seeking compensation. It serves as essential evidence in consumer forums or courts. Without proving a defect, consumers may lose the opportunity for redressal, making this identification a vital step in pursuing justice under the Consumer Protection Act.

• Boosts Consumer Awareness

When defects are detected and discussed, it enhances consumer awareness about product quality, warranties, and standards. Educated consumers are better equipped to make informed purchasing decisions. This awareness also contributes to creating a vigilant society where buyers can detect substandard goods early and avoid exploitation or financial loss.

• Encourages Industry Improvements

Frequent identification and reporting of product defects drive companies to innovate, improve product design, and adhere to compliance norms. It fosters a culture of continuous improvement, where businesses strive to deliver superior goods, enhancing customer satisfaction and brand reputation. Ultimately, it benefits both consumers and manufacturers.

Deficiency:

Deficiency refers to any fault, imperfection, shortcoming, or inadequacy in the quality, nature, or manner of performance of a service. It arises when a service provider fails to meet the standard promised or expected under a contract. The Consumer Protection Act clearly identifies deficiency in services like banking, insurance, transport, and education as grounds for consumer disputes, entitling consumers to seek remedies such as compensation or correction.

• Deficiency in Banking Services

Deficiency in banking occurs when banks fail to deliver promised services like fund transfers, loan disbursements, cheque clearance, or ATM transactions. For example, wrongful deductions, non-issuance of statements, or delay in processing loans may qualify as deficiencies. Since banks hold a fiduciary duty to customers, any lapse is taken seriously under consumer law, enabling aggrieved individuals to file complaints in consumer forums.

• Deficiency in Banking Services

Deficiency in banking occurs when banks fail to deliver promised services like fund transfers, loan disbursements, cheque clearance, or ATM transactions. For example, wrongful deductions, non-issuance of statements, or delay in processing loans may qualify as deficiencies. Since banks hold a fiduciary duty to customers, any lapse is taken seriously under consumer law, enabling aggrieved individuals to file complaints in consumer forums.

• Deficiency in Insurance Services

Insurance service deficiency may involve delayed claims settlement, wrongful denial of claims, non-disclosure of policy terms, or misleading information about coverage. When insurers fail to uphold policy commitments, it adversely affects consumers financially and emotionally. Courts often view such actions as deficiency in service, holding insurance companies liable for compensation, especially in life, health, and motor insurance cases.

• Deficiency in Medical Services

In medical services, deficiency arises when healthcare providers fail to follow due care, skill, or ethical standards, resulting in harm or injury to the patient. Misdiagnosis, surgical errors, or lack of post-treatment support can be cited as deficiencies. Courts assess medical negligence based on standard professional practices, and compensation is awarded to affected patients under consumer protection laws.

• Deficiency in Educational Services

Educational institutions can also be liable for deficiency in service if they fail to provide promised courses, infrastructure, or certifications. Charging fees without conducting proper classes, failing to conduct exams, or issuing invalid degrees are common issues. Students can file consumer complaints when expectations based on a contract or prospectus are unmet by the institution.

• Deficiency in Transport Services

Deficiency in transport services includes delayed or canceled bookings, mishandling of goods, poor customer service, or failure to follow routes. Transport companies, airlines, railways, or courier services are expected to meet specific standards. A breach of those, such as a bus not showing up or damaged luggage, can be challenged under the Consumer Protection Act.

• Deficiency in Telecom Services

Telecommunication services, like mobile networks and internet providers, may be liable for poor connectivity, hidden charges, or failure to activate promised plans. When services are erratic or misrepresented, and grievances are ignored, customers may file for redressal under consumer forums. Telecom Regulatory Authority of India (TRAI) guidelines also support claims for service lapses.

• Deficiency in Housing and Real Estate Services

Deficiency in housing services includes delay in possession, poor construction quality, deviation from approved layouts, or refusal to refund booking amounts. Builders are contractually obliged to fulfill commitments made in brochures or agreements. Any failure to deliver the promised amenities or possession timeline allows buyers to seek remedy through consumer courts.

• Deficiency in Legal Services

Lawyers and legal firms can be liable for deficiency in service if they fail to represent clients diligently, miss court hearings, or provide incorrect legal advice. While legal services are sensitive in nature, blatant neglect or misconduct may be seen as service deficiency. Clients have a right to claim compensation for damages resulting from professional lapses.

• Deficiency in Hospitality Services

Hotels, restaurants, and resorts may be held accountable for poor services, unhygienic conditions, overcharging, or non-fulfillment of bookings. For instance, providing substandard food or failing to provide a reserved room constitutes a deficiency. Customers can approach consumer forums for redressal, demanding refunds or compensation for inconvenience or breach of contract.

• Deficiency in E-commerce Services

Online platforms face frequent complaints regarding delivery delays, defective products, poor customer support, and return policy violations. As digital transactions grow, so do instances of service lapses. E-commerce platforms are considered service providers and must adhere to consumer protection norms. Non-compliance with stated policies may amount to deficiency in service.

Unfair Trade Practices:

Unfair Trade Practices refer to dishonest or deceptive practices used by businesses to gain an unfair advantage over consumers or competitors. These practices include misrepresentation, false advertising, hoarding, cheating, or any activity that misleads or exploits the consumer. The concept is legally recognized under the Consumer Protection Act, 2019 in India, which defines unfair trade practices in Section 2(47) as any trade practice that adopts deceptive methods to promote the sale, use, or supply of any goods or services.

The objective of identifying and restricting unfair trade practices is to ensure that consumers are not misled or defrauded and that businesses engage in ethical and transparent dealings. Some common examples include selling fake or counterfeit products, providing false guarantees, misleading advertisements, and offering fake discounts. These practices can cause significant financial and emotional harm to consumers.

Unfair trade practices not only affect individual consumers but also disrupt healthy market competition. Honest businesses suffer as they cannot compete with the deceptive practices of others. Therefore, laws against unfair trade are crucial for maintaining consumer trust and a fair business environment.

Consumers who are victims of unfair trade practices can file complaints with consumer courts, which may award compensation, penalties, or direct the business to stop such practices. Thus, preventing unfair trade is essential for consumer protection and market integrity.

Key Forms of Unfair Trade Practices:

• Misleading Advertisements

Advertising goods or services with false claims about quality, performance, or benefits, such as promoting a beauty product as having “permanent results” when it does not.

• False Representation

Claiming a product is of a certain standard, grade, or quality when it is not, or saying that a second-hand item is brand new.

• Bargain Price Misleading

Offering goods at a bargain price without having the actual intent to sell them at that price, or having insufficient stock.

• Hoarding and Destruction

Hoarding or destroying goods with an intent to raise prices unfairly or create artificial scarcity.

• Disparaging Other Goods/Services

Making false or misleading statements about the goods or services of another business to undermine competition.

• Prize Schemes and Contests

Offering contests or lottery-like schemes with the intention to promote sales without intending to genuinely deliver the promised prizes.

Contractual capacity

Contractual capacity refers to the legal ability of a person or entity to enter into a valid, binding contract. It means that the person must have the mental and legal competence to understand the terms, obligations, and consequences of the agreement they are making. Not everyone has the capacity to contract — for example, minors, people of unsound mind, or persons disqualified by law generally lack full contractual capacity.

In most legal systems, including under the Indian Contract Act, 1872, a contract made by someone without contractual capacity is void or voidable. This rule exists to protect individuals who may not fully understand what they are agreeing to or who are at risk of being taken advantage of. For a contract to be enforceable, all parties involved must meet the minimum requirements of age (usually 18 or above), mental competence, and legal eligibility.

Mental competence means the person should be of sound mind, capable of understanding the nature and effect of the contract at the time it is made. A person temporarily mentally impaired — due to intoxication, illness, or distress — may also lack capacity during that period. Similarly, minors are generally deemed incapable of entering into enforceable contracts, except for certain necessities.

Contractual capacity ensures fairness and justice in contractual relationships. If someone lacks capacity, the contract can usually be canceled or voided by the party lacking capacity or their guardian. This rule prevents exploitation and protects vulnerable groups. However, it also means the other party should exercise due care before contracting with someone whose capacity might be in question.

Capacity to Contract:

Capacity to contract means a party has the legal ability to enter into a contract.

Capacity to contract refers to the legal competence of a person or entity to enter into a valid and enforceable agreement. Under the Indian Contract Act, 1872, Section 11 specifically states that a person is competent to contract if they (1) have attained the age of majority, (2) are of sound mind, and (3) are not disqualified from contracting by any law they are subject to. This means only individuals who meet these conditions can create binding legal obligations through a contract.

The age of majority is generally 18 years. Anyone below this age is considered a minor and, under law, lacks capacity to contract. Contracts entered into by minors are generally void or voidable to protect them from exploitation. However, contracts for necessities (such as food, clothing, or shelter) supplied to a minor may be enforceable to ensure fairness.

Being of sound mind means the individual must be mentally capable of understanding the nature of the contract and making rational decisions about their obligations. Persons who are mentally ill, intoxicated, or otherwise incapable of understanding the consequences of their actions at the time of contracting may not have the capacity to contract.

There are also legal disqualifications that apply to certain individuals or groups, such as bankrupt persons, convicts, foreign sovereigns, or companies, depending on the jurisdiction. These disqualifications prevent certain people or entities from entering into specific types of contracts.

Capacity to contract is essential because it ensures that all parties entering into agreements understand what they are doing and can be held accountable for their promises. If a person lacks capacity, the contract may be deemed void or voidable, protecting vulnerable individuals and ensuring fairness in contractual dealings.

A contract must contain these six elements:

• Offer
• Acceptance
• Consideration
• Capacity
• Intent
• Legality

Incapacity to Contract – Minors:

Under the Indian Contract Act, 1872, one of the key elements of a valid contract is that the parties involved must be competent to contract. Section 11 of the Act clearly states that a person is competent if they have attained the age of majority, are of sound mind, and are not disqualified by any law. A minor — that is, a person below 18 years of age — lacks the legal capacity to enter into a valid contract.

Contracts entered into by minors are generally considered void ab initio, meaning they are void from the very beginning. This is done to protect minors from exploitation, as they are assumed to lack the maturity and judgment to understand the legal consequences of contractual obligations. For example, if a minor signs an agreement to buy a car, that agreement is not enforceable against the minor.

However, the law provides certain exceptions to this rule. A minor’s contract for necessaries — such as food, clothing, education, or medical care — is enforceable, but only against the minor’s property, not personally against the minor. This ensures that suppliers providing essential goods and services to minors are protected.

Another key principle is that a minor cannot ratify an agreement upon attaining majority. If a minor enters into an agreement, turning 18 does not make the past contract valid unless a new agreement is drawn and consented to afresh.

Minors can, however, be beneficiaries under a contract. This means they can receive benefits, gifts, or payments under agreements without being bound by obligations. For example, if an adult promises to pay a minor a scholarship or gift, the minor can accept the benefit.

In essence, the incapacity of minors to contract is a protective legal measure. It shields them from the consequences of immature decision-making, while also ensuring that essential needs are met fairly. It strikes a balance between protecting young individuals and maintaining fairness in commercial and social interactions.

Who Doesn’t Meet Criteria for Capacity

Some people lack the capacity to enter into a legally binding contract:

• Minors: In general, anyone under 18 years old lacks capacity. If he or she does enter into a contract before they turn 18, there is usually the option to cancel while he or she is still a minor. There are some exceptions to this rule, however. Minors are allowed to enter into contracts for purchasing various necessities like clothing, food, and accommodations. Some states allow people under 18 to obtain bank accounts, which often carry strict terms and stipulations.
• Mental Incapacitation: If a person is not cognitively able to understand his or her responsibilities and rights under the agreement, then they lack the mental capacity to form a contract. Many states define mental capacity as the ability to understand all terms of the contract, while a handful of others use a motivational test to discern whether someone suffers from mania or delusions.
• Intoxication: Someone who is under the influence of drugs or alcohol is generally believed to lack capacity. If someone voluntarily intoxicated themselves, the court may order the party to uphold the obligation. This is tricky because many courts have also agreed a sober party shouldn’t take advantage of an intoxicated person.

Contracts made with people who don’t have legal capacity are voidable. The other person has the right of rescission, the option to void the contract and all related terms and conditions. Courts may opt to void or rescind a contract if one of the parties lacked legal capacity. If the court voids the contract, it will attempt to put all parties back in the position they were in before the agreement, which may involve returning property or money when feasible.

Capacity of Companies

Companies also have to have capacity when entering into an agreement. If they don’t, there can be serious consequences, particularly regarding guarantees. There are similarities across legal systems and jurisdictions when it comes to the general rules that govern the legal capacity of companies. For example, the legal theory that a business has a separate legal personality is recognized in both civil and common law jurisdictions. This means that as a defined legal person, a company has the capacity to enter into a contract with other parties and can be held liable for its actions.

Civil Law Countries

The United States isn’t the only country that recognizes this legal concept. For example, France, a civil law country, has also adopted this idea. Legal capacity regarding entities was recently reformed by Ordinance n°2016-131, which went into effect in 2016. Under French Civil Code Article 1147, a company’s lack of capacity is a grounds for relative nullity, a defense that can be invoked by the aggrieved party to void the contract. In this case, the aggrieved party would be the company. Furthermore, Article 1148 allows French companies who lack capacity to contract to legally enter into contracts that are day-to-day acts which are authorized by usage or legislation.

In Spain, there is a special relationship with church and state. As a result, the church is governed by elements of a specific concordat: Spanish Civil Code Article 37, which says that companies enjoy “civil capacity.”

Common Law Countries

In common law countries, a company’s capacity is limited by the company’s memorandum of association. This document contains the clause that describes the commercial activities the business is involved in, thereby delineating the company’s capacity.

Under the ultra vires doctrine, a business cannot do anything beyond what is allowed by its statement of objects. The ultra vires doctrine was initially seen as a necessary measure to protect a company’s shareholders and creditors. This doctrine gave rise to what’s known as the constructive notice rule, which states that any third party that entered into a contract with another company must have been knowledgeable of that business’s objects clause.

Consent and free consent

Free Consent is an essential element for formation of a contract . According to Section 10 of the Indian Contract Act, 1872, All agreements are contracts, if they are made by the free consent. Section 13 and Section 14 of the Indian Contract Act, 1872 defines ‘Consent’ and ‘Free Consent’ respectively.

Meaning of Consent

The term Consent means “agreed to “or giving acceptance. The parties to the Contract must freely and mutually agree upon the terms of the contract in the same sense and at the same time.  There cannot be any agreement unless both the parties it to agree to it. If there is no Consent, Agreement will be void ab initio for want of consent       

Consent

Section 13 of the Indian Contract Act 1872 defines Consent as “Two or more person are said to consent when they agree upon the same thing in the same sense.”

Free Consent

According to Section 10 of the Indian Contract Act, 1872, to constitute a valid contract, parties should enter into the contract with their free Consent. Consent is said to be free when it is not obtained by coercion, or undue influence or fraud or misrepresentation or mistake.

Section 14 of the said act defines ‘Free Consent’ as Consent is said to be free, when it is not caused by:

(1) Coercion (as defined in section 15 of the Indian Contact Act 1872) or

(2) Undue Influence as defined in section 16 of the Indian Contact Act 1872) or

(3) Fraud (as defined in section 17 of the Indian Contact Act 1872), or

(4) Misrepresentation as defined in section 18 of the Indian Contact Act 1872) or

(5) Mistake, subject to the provisions of section 20, 21, and 22.

Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation, or mistake

Section 2(i): An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract;

Section 2(g): when a consent is caused by mistake, the agreement is void. A void agreement is not enforceable at the option of either party.

Consideration

Consideration: “Something which is given and taken.”Section 2 (d) of the Contact Act 1872 defines contract as “When at the desire of the promissory, the promise or any other person has done or abstained from doing or does or abstains from doing or promise to do or abstain from doing. Something such act or abstinence or promise is called a consideration for the promise.”

“When at the desire of the promissory, the promise or any other person has done or abstained from doing or does or abstains from doing or promise to do or abstain from doing. Something such act or abstinence or promise is called a consideration for the Promise.”

Importance of consideration

Consideration is the foundation of ever contract. The law insists on the existence of consideration if a promise is to be enforced as creating legal obligations. A promise without consideration is null and void.

Types of Consideration

1. Executory,
2. Executed
3. Past consideration

Executed consideration is an act in return for a promise. If ,for example, A offers a reward for the return of lost property, his promise becomes binding when B performs the act of returning A’s property to him. A is not bound to pay anything to anyone until the prescribed act is done.

Executory consideration is a promise given for a promise. If, for example, customer orders goods which shopkeeper undertakes to obtain from the manufacturer, the shopkeeper promises to supply the goods and the customer promises to accept and pay for them. Neither has yet done anything but each has given a promise to obtain the promise of the other. It would be breach of contract if either withdrew without the consent of the other.

Past consideration which as general rule is not sufficient to make the promise binding. In such a case the promisor may by his promise recognize a moral obligation (which is not consideration), but he is not obtaining anything in exchange for his promise (as he already has it before the promise is made).

Essentials of a valid consideration:

• At the desire of the promisor
• Promisee or any other person
• Consideration may be past, present or future
• Consideration must be real

Consideration must move at the desire of the promisor:

In order to constitute legal consideration, the act or abstinence forming the consideration for the promise must be done at the desire or request of the promisor. Thus acts done or services rendered voluntarily, or at the desire of third party, will not amount to valid consideration so as to support a contract.

Consideration may move from the promisee or any other person:

The second essential of valid consideration, as contained in the definition of consideration in Section 2(d), is that consideration need not move from the promisee alone but may proceed from a third person.

Thus, as long as there is a consideration for a promise, it is immaterial who has furnished it. It may move from the promisee or from any other person. This means that even a stranger to the consideration can sue on a contract, provided he is a party to the contract. This is sometimes called as ‘Doctrine of Constructive Consideration’.

Consideration may be past, present or future:

The words, “has done or abstained from doing; or does or abstains from doing; or promises to do or to abstain from doing,” used in the definition of consideration clearly indicate that the consideration may consist of either something done or not done in the past, or done or not done in the present or promised to be done or not done in the future. To put it briefly, consideration may consist of a past, present or a future act or abstinence. Consideration may consist of an act or abstinence:

Past consideration: When something is done or suffered before the date of the agreement, at the desire of the promisor, it is called ‘past consideration.’ It must be noted that past consideration is good consideration only if it is given by the promisee, ‘at the desire of the promisor Present consideration: Consideration which moves simultaneously with the promise is called ‘present consideration’ or ‘executed consideration’

Future consideration: When the consideration on both sides is to move at a future date, it is called ‘future consideration’ or ‘executory consideration’. It consists of an exchange of promises and each promise is a consideration for the other.

Consideration must be ‘something of value’: The fourth and last essential of valid consideration is that it must be ‘something’ to which the law attaches a value. The consideration need not be adequate to the promise for the validity of an agreement.