DISTINCTION BETWEEN COERCION AND UNDUE INFLUENCEThe following are the points of distinction between the two.

COERCION UNDUE INFLUENCE1. Nature Coercion is a physical threat to property or person.

Undue influence is a mental or moral threat.

2. Illegal & Unfair Coercion involves doing or threatening to do an illegal act.

In undue influence the act may not be illegal, it may only be unfair.

3.Penal ActionIn coercion, penal action is also taken against guilty party.

In undue influence, generally no penal action is taken against guilty party.

4.PartiesCoercion may be exercised by or against the party to the agreement; It may also be exercised by or against some third party.

Undue influence must be exercised by or against the party to the agreement.

5.RelationshipFor coercion no specific relationship between the parties is necessary

For undue influence there must be a specific relationship between the parties.

6.Refund of BenefitIn coercion the aggrieved party has to refund the benefit, if he has received any, from the other party.

In undue influence, the court has \ discretion to direct the aggrieved received from the other party.

7. Effect.In coercion, the contract is voidable at the at the option of aggrieved Party.

In undue influence, the contract is voidable or the court may cancel or enforce it in a modified form.

Essentials of FraudThe following are the essentials of fraud.1. There must be false a representation.2. The representation must relate to a fact.3. The representation must be made to induce the other, party to enter into contract. 4. The representation must have been made with the knowledge of its being false.5. The representation must have been made before the conclusion of the contract.6. The other party must have relied upon the representation.7. The other party must have been deceived by the fraud. .8. The other party must have suffered a loss.

DISTINCTION BETWEEN FRAUD AND MISREPRESENTATIONFraud Misrepresentation1. Intention In case of fraud, the party makes a false statement with an intention to deceive the other party

In case of misrepresentation, there is no intention to deceive the other party

2. BeliefIn case of fraud, the person making the suggestion does not believe it to be true.

In case of misrepresentation, the person making the suggestion believes it to be true.

3. DamagesIn fraud, the aggrieved party can claim damages in addition to the right of avoiding the contract.

In misrepresentation entitles the party to avoid contract and there can be no suit for damages

4. OffenceFraud may amount to an offence of cheating. It is a criminal act.

Misrepresentation does not amount to an offence of cheating. It is not a criminal act.

5. TruthIn case of fraud, the aggrieved party can avoid contract even if it had the means to discover the truth with ordinary diligence.

In case of misrepresentation, the aggrieved party cannot avoid the contract if it had means to discover the truth with ordinary diligence.

Discharge by Agreement.A contract can also be discharged by the fresh agreement between the same parties. A contract may be terminated by agreement in any of the following Ways:a).NovationNovation of contract means replacement of an existing contract by a new contract. In novation the parties may change. If the parties are not changed then the material terms of the contract must be altered in the new contract because a mere variation of some of the terms of a contract is not novation but alteration. A novation discharges the old contract.ExampleA is indebted to B and B to C. By mutual agreement B's debt to C and B's loan to A are cancelled and C accepts A as his debtor. There is novation involving change of parties. b). AlterationAlteration of a contract takes place when one or more of the terms of the contract are changed. If a material alteration in a written contract is made with the consent of all the parties the original contract is discharged by alteration and a new contract.takes its place. An alteration may be a change in the amount of money, the rate of interest, or the names of the parties/ Alteration results in the discharge of the original contract.The difference between novation and alteration is that in case of novation there may be a change of parties but in case of alteration parties remain the same and only the terms of the contract are changed. (Sec. 62.)ExampleA agrees to supply B. 1000 maunds of salt at Rs. 50 a maund within 3 months from date. Later on, A and B alter the agreement and A agrees to supply 800 maunds of salt at the same rate within 2 months instead of three. The latter agreement puts an end to the former.c). Rescission Rescission means cancellation of contract by mutual consent. A contract may be cancelled by agreement between the parties at any time before it is discharged by .performance. The cancellation of agreement releases the parties from their obligations arising out of the contract. (Sec 62)ExampleA promises to deliver certain goods to B on a certain date. Before the date of performance, A and B mutually agree that the contract will not be performed. The parties have cancelled the contract.d). RemissionRemission means the acceptance of lesser amount or lesser fulfillment of a promise made than what was contracted for in full discharge of the contract. It is unilateral act of the promisee discharging at his will the obligations of another (Sec. 63).ExamplesA owes B Rs. 5,000. B agrees to accept Rs. 2,000 in full satisfaction of his claim. The whole debt is discharged.4). WaiverWaiver means the intentional abandonment of a right, which a person is entitled to under a contract. A party may waive his rights under the contract, whereupon the other party is released from his obligations. For a waiver neither an agreement nor consideration is necessary.ExampleA promise to make a shirt for B and B afterwards forbids him to do so. A agrees. The contract is terminated by waiver.

DISCHARGE BY OPERATION OF LAWA contract terminates by operation of law in the following cases:A). InsolvencyThe insolvency Act provides for discharge of contracts under particular circumstances. Where the court declares a person as insolvent, the rights and duties of such person are transferred to the officer of court, known as official receiver. After the order of the court such person is discharged from his liabilities.ExampleA promise to sell his car to B for Rs. 2 lac. Before the performance of the contract A is declared insolvent by court. The contract is discharged.

b). MergerMerger takes place when an inferior right available to a party merges into a superior right available to the same party under some other contract. As a result of merger the former contract stands discharged automatically.Example Where a man holds property under a contract of tenancy buys the property, his rights as a tenant are merged into the rights of ownership and the contract of tenancy stands discharged by operation of law.c). Unauthorized Material AlterationWhere a party to the contract makes any material alteration in the contract, without the consent of the other party, the contract can be avoided by the other Party. A material alteration is one, which changes the legal identity or character of the contract or the rights and duties of the parties to the contract. An alteration which is not material or which is authorized will not affect the validity of the contract. An alteration even by a stranger will entitle the other party to avoid the contract, but where the alteration is unintentional, contract cannot be avoided.ExampleA executes a promissory note in favour of B for Rs. 3,000. B by alteration exceeds the amount from Rs. 3,000 to 30,000. A may refuse to pay Rs. 3,000

Kinds of DamagesOrdinary DamagesWhen a contract has been broken, the injured party can recover from the guilty party the ordinary damages suffered by him. Ordinary damages are those, which naturally arise as the result of breach of contract.In other words, the aggrieved party can claim damages for loss, which is the direct result of such breach. He cannot claim damages for indirect loss which is too remote. In the case of sale and purchase, the damages payable would be the difference between the contract*price and the market price at the date of breach. The subsequent increase or decrease in the market price would not be considered. (Sec. 73)Examples(a) (A contracts to sell and deliver 500 bales of cotton to B on a fixed day. A breaks the promise, and B having no cotton, is obliged to close his mill. A is not responsible to B for the loss caused.)b) Special DamagesAccording to Section 73, these damages arise under some special circumstances affecting the plaintiff. These are not the losses which naturally arise as a result of breach of contract like ordinary damages. These arise when a party makes a special contract through which he expects large profits and such profits are likely to be lost through the breach of contract. These cannot be claimed as a matter of right. These can only be claimed under the following circumstances:

a) The special circumstances must be known to the parties at the time of contract.b) Subsequent knowledge of the special circumstances will not create such damages.

c) The damages must be such as would naturally result from the breach of contract.

d) The parties must have the knowledge about the loss, which will arise in case of breach of contract, before making the contract.

ExamplesA contracts B to supply him 20 tons iron at Rs. 10,000, a ton at a specified date. A contract with C to buy 20 tons iron at Rs. 8,000 a ton. A informs C about the purpose of contract. C fails to perform the contract. As a result, A cannot supply to B. C is liable for profit which A would have made by performance of contract with B. C) Exemplary DamagesThese damages are awarded to punish the guilty party for the breach, and not to compensate the injured party for the loss suffered. The breach of contract results in monetary loss to the aggrieved party and causes disappointment.

a) In case of breach of a contract to marry, the amount of damages will depend upon the extent of injury to the feelings of the party.

b) In case of dishonor of a cheque by a banker when there are sufficient funds to the credit of the customer. The rule is, the smaller the cheque dishonored, the greater the damage.

ExampleO, a banking corporation, agreed to loan W money for a trip to California by crediting in account with such sums, as he might need after reaching his destination. W reached California, but O refused to give him the promised credit. The court allowed damages for humiliation and mental suffering.d) Liquidated DamagesAccording to section 74, if parties to a contract fix the amount of damages for the breach of contract at the time of formation of contract, then such damages are called liquidated damages.Liquidated damages represent only a fair and reasonable estimate of loss which a party may suffer due to breach of the contract. Where a sum has been agreed in the contract to be paid by the defaulting party in case of breach of contract, the court will allow the actual and reasonable damages not exceeding the amount already agreed by the parties. In case, the actual loss is more than the agreed amount; damages will be payable only to the extent of the agreed amount.ExampleA contracts B to pay him Rs. 1000 if he fails to pay B Rs. 500 on a given day. A fails to pay B Rs, 500 on that day. B can recover from A such damages not exceeding Rs. 1000, as the court considers reasonable.e) Nominal DamagesThese are neither awarded to compensate the aggrieved party nor to punish the guilty party. When the aggrieved party suffers no loss, the court may award him nominal damages in recognition of his right. But the court has discretion in this case. The court may refuse to award damages.ExamplesA promises to sell 20 bags of cement to B for Rs. 200 per bag. A does not supply the cement. At the time of breach of contract, the market rate of cement is the same. B is entitled to nominal damages.

DISTINCTION BETWEEN INDEMNITY AND GUARANTEEIndemnity Guarantee

1. Number of PartiesIn a contract of Indemnity, there are two parties the indemnifier and the indemnity holder.

In a contract of guarantee, there are three parties - The creditor, principal debtor, and the surety.

2. Number of contractIn indemnity there is only one contract between the indemnifier and the indemnified.

In guarantee, there are three contracts one between creditor, and the principal debtor, the second between the creditor and the surety, and the third between the surety

and the principal debtor.3. Nature of Liability

The liability of indemnifier is primary and independent.

The liability of surety is secondary. It' means that surety is liable only if the principal debtor fails to perform his obligations

4. RequestIn the contract of indemnity, the indemnifier acts without the request of the debtor.

In a contract of guarantee, it is necessary that the surety should give the guarantee at the request of the debtor

5. Existence of LiabilityIn a contract of indemnity, the liability of the indemnifier arises only on the happening of a contingency.

In a contract of guarantee, the liability already exists and its performance is guaranteed by the surety.

6. Filing of SuitIn a contract of indemnity, the indemnifier cannot sue the third party for loss in his own name. He can do so only if there is an assignment of claim in his favour.

In the contract of guarantee, the surety the creditor can, proceed against the principal debtor in his own right.

7. PurposeA contract of indemnity is for the reimbursement of loss.

A contract of guarantee is for the security of a debt.