Outdated Illustrations

Earlier, I gave outmoded examples from the Indian Evidence Act. Like the Indian Evidence Act of 1872, the Indian Contract Act of 1872 provides numerous instances of outdated `illustrations'.

Here is a sample of such `illustrations'. `A, intending to deceive B, falsely represents that five hundred maunds of indigo are made annually at A's factory, and thereby induces B to buy the factory. The contract is voidable at the option of B.'

`A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Bombay. It turns out that, before the day of the bargain, the ship conveying the cargo had been cast away and the goods lost. Neither party was aware of the fact. The agreement is void.'

`B holds land in Bengal, on a lease granted by A, the zamindar. The revenue payable by A to the government being in arrear, his land is advertised for sale by the government. Under the revenue law, the consequence of such sale will be the annulment of B's lease. B, to prevent the sale and the consequent annulment of his own lease, pays to the government the sum due from A. A is bound to make good to B the amount so paid.'

`A guarantees payment to B, a tea-dealer, to the amount of pound sterling 100, for any tea he may from time to time supply to C. B supplies C with tea to the above value of pound sterling 100, and C pays B for it. Afterwards B supplies C with tea to the value of pound sterling 200. C fails to pay. The guarantee given by A was a continuing guarantee, and he is accordingly liable to B to the extent of pound sterling 100.'

`A hires a horse in Calcutta from B expressly to march to Benares. A rides with due care, but marches to Cuttack instead. The horse accidentally falls and is injured. A is liable to make compensation to B for injury to the horse.'

`A constitutes B his agent to carry on his business of a ship-builder. B may purchase timber and other materials, and hire workmen, for the purpose of carrying on the business.'

Note also section 28 of the Indian Contract Act. This states, `Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent.'

Doesn't this automatically exclude any arbitration, conciliation or mediation? Of course, certain exceptions are spelt out.

`This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred. Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to reference to arbitration.'

But is this good enough, particularly for conciliation and mediation?

Earlier, arbitration as a means of resolving disputes was not very efficient and in 1996, the Arbitration Act of 1940 was replaced by a new Arbitration and Conciliation Act.

But doesn't section 28 of the Indian Contract Act also have to be amended?