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Showing contexts for: a voidable contract in Chhanga Lal And Ors. vs M.C.D. on 8 April, 2008Matching Fragments
20. Voidable contracts can be divided into two groups. Contracts which are voidable at the inception itself and contracts which are not voidable at the inception but become voidable due to subsequent defaults. (See, Sections 39, 53, 55 of the Contract Act). Sections 19 and 19A deal with voidable contracts at their inception. The said Sections read as under:
Sections 19. Voidability of agreement without free consent: When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
Explanation - A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practiced, or to whom such misrepresentation was made, does not render a contract voidable.
19A. Power to set aside contract induced by undue influence - When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused.
Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit there under, upon such terms and conditions as to the Court may seem just.
22. Once an innocent party exercises the option and rescinds the contract, the contract becomes void and thereafter right to restitution in terms of Section 64 of the Contract Act gets attracted. In Satgur Prasad v. Har Narain Das , it was observed that once a voidable contract has been avoided, any person who has received any advantage under such contract is bound to restore it to the person from whom he had received it, or make compensation therefore. Quoting from Kerr on Fraud and Mistake it was held that a party exorcising his option to rescind is entitled to be restored as far as possible to his former position.
23. Section 64 of the Contract Act applies in such cases and reads as under:
Section 64. Consequences of rescission of voidable contract - When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is promisor. The party rescinding a voidable contract shall if, he has received any benefit there under from another party to such contract, restore such benefit, so far as, may be, to the person from whom it was received.