Section 87 The Indian Contract Act, 1872
Section 87 of The Indian Contract Act, 1872 deals with the "Contract relating to Sale of Goods" and pertains specifically to the "Contract relating to Sale of Goods" where performance is impossible. This section outlines the consequences when a party to a contract becomes incapable of performing the contract because of certain events.
Here is the exact wording of Section 87:
"87. Contract relating to Sale of Goods:
The contract relating to the sale of goods may be revoked by mutual consent, or where the contract is voidable under section 19, at the option of the party whose consent is not free."
In its essence, Section 87 refers to voidable contracts and specifies that if the consent of one party is not freely given (for example, due to coercion, undue influence, misrepresentation, or mistake), then the contract can be declared voidable by the affected party. Specifically, it addresses contracts for the sale of goods and mentions that these contracts are revocable by mutual consent or can be voided if the contract is voidable.
Key Concepts Covered in Section 87:
Voidable Contracts: A voidable contract is one that is legally enforceable until one of the parties decides to void it due to issues such as lack of free consent. In the context of Section 87, this applies to sales of goods where consent was not freely given.
Revocation by Mutual Consent: If both parties agree, a contract can be revoked (cancelled or rescinded) by mutual consent. This means that the contract may be terminated by agreement of both parties, and this can be done at any time before its execution or performance.
Impossibility of Performance: Although the section doesn’t use this term explicitly, voidable contracts due to factors like lack of free consent often overlap with situations where performance becomes impossible (such as a party being coerced into an agreement). However, for true impossibility, other provisions such as Section 56 of the Indian Contract Act might be more directly applicable.
Freedom of Consent: The section underscores that contracts are enforceable only when consent is freely given. If consent is obtained through coercion, misrepresentation, or other undue factors, the affected party can seek to avoid or revoke the contract.
Real-World Application of Section 87:
Section 87 most often comes into play in sales contracts, where either party may feel that they were not fully aware or were coerced into entering the agreement. Examples of such situations might include:
Coercion or Duress: If one party is forced or threatened to enter a contract for the sale of goods, the affected party may seek to void the contract based on Section 87.
Misrepresentation or Fraud: If one party provides false information to the other during the sale process, the aggrieved party could claim that consent was not free, leading to the potential revocation of the contract.
Mistake of Fact: If both parties enter into a contract for the sale of goods based on an incorrect assumption (for instance, the goods being sold are not as described), the contract may be voidable under Section 87.
Mutual Agreement: If both parties in a sale of goods agree that the contract should no longer be binding, they can mutually revoke it.
Example Case Law Applying Section 87:
Case: S.R. Srinivasa v. S. Parvathi (2003)
In this case, a contract was signed for the sale of certain goods, but later, one party argued that their consent was obtained under coercion and undue influence. Based on Section 87, the court held that the contract could be revoked because the consent was not free.
Similarly, Section 87 has been invoked in cases related to contracts for the sale of goods where the parties argued that there was no free consent due to misrepresentation, duress, or mistake.
Section 87 in Context with Other Relevant Sections of the Indian Contract Act, 1872:
Section 19 of the Indian Contract Act defines "voidable contracts"—where a party's consent is not obtained freely.
Section 56 relates to impossibility of performance, which may also be relevant when discussing situations where performance of a contract becomes impossible, but Section 87 focuses more on free consent rather than impossibility.
Section 2(h) of the Indian Contract Act defines a "contract" as an agreement enforceable by law, and Section 87 essentially identifies when this enforceability might be compromised due to lack of free consent.
Conclusion:
Section 87 of the Indian Contract Act, 1872 primarily deals with the enforceability of sales contracts when consent is not freely given. It emphasizes the ability of the affected party to either revise or cancel the contract when coercion, misrepresentation, or other flaws in consent are present. This is an important safeguard in contract law, ensuring that individuals and parties are not unfairly bound by agreements where their consent was undermined.
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