Bhagavathi Mudaliar vs N. Subramaniam on 25 August, 1967
7. A very helpful precedent for our discussion is Chunnilal v. Mohanlal, . Here the learned Judge (Krishnan J.) was concerned with the test to be applied with reference to the terms of Section 74 of the Contract Act, and he pointed out that the nomenclature in the document may not be decisive. But what should be ascertainable with reasonable precision, on the evidence, is the understanding at the time of the agreement, between the parties, that the specific amount paid was a guarantee for the performance of the contract, and therefore liable to be retained by the person to whom it is paid, on breach of contract by the other party. The learned Judge further observed that when the amount was paid at the time of the agreement itself this fact may be of some help to assume that the amount could possess the character of earnest money.