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Section 52 of the Indian Penal Code defines the term “good faith”. It reads: “Nothing is said to be done or believed in ‘good faith’ which is done or believed without due care and attention.” The term ‘due care and attention’ signifies the standard of care exercised by a reasonable person in the same situation or under similar circumstances. It differs from person to person. Due care denotes the degree of reasonableness and it depends on the position of the person. It is considered as a reference to capacity and intelligence. It shows the degree of reasonableness a person is about to display. If the offence depends on the existence of certain circumstances or knowledge, the failure to make due enquiry would make the person guilty of want of good faith. If a situation requires special knowledge or skill, then not possessing that special knowledge or skill would amount to a lack of good faith.
The term ‘good faith’ as defined in Section 52 is in the negative form. Section 3(22) of the General Clauses Act defines the term in a positive form. It reads: “A thing shall be done in good faith where it is in fact done honestly, whether it is done negligently or not.” The element of honesty is not incorporated in Section 52 of the IPC. Under the General Clauses Act, the stress is on the moral element of honesty and the right motive. If the intention is honest, then even if the act was negligent, it is deemed to be done in “good faith”. Under the IPC, the emphasis is on whether the person has done the act with due care and attention.In the given case, a contract exists between X and Y that X will pay a certain sum of money to Y if Y marries Z. Z happens to marry F. Y is not aware of the marriage between Z and F. Taking advantage of Y’s ignorance, Z also marries Y. Let us consider this situation from two perspectives: Section 34 of Contingent contracts under the Indian Contract Act, 1872 and Section 494 (Bigamy) of the Indian Penal Code, 1860.
i) When Z marries Y, Z is committing bigamy, which is an offence under Section 494 of the Indian Penal Code, 1860. Section 494 of the Indian Penal Code, 1860 states that whoever, having a husband or wife living, marries in any case in which such marriage is void by reason of it taking place during the life of such husband or wife, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine. Hence, the marriage between Z and Y is also void, because it took place during the life of Z’s wife, F, as per the provision laid down in Section 494 of the Indian Penal Code, 1860. Their marriage, thus, holds no validity in the eyes of law. Section 2(g) of the Indian Contract Act, 1872 defines a void contract as “an agreement not enforceable by law”.
ii) Section 34 of the Indian Contract Act, 1872 states that if the future event on which the contract is contingent is the way in which a person will act at an unspecified time, the event shall be considered to become impossible when such person does anything which renders it impossible that he should so act within any definite time or otherwise than under further contingencies. At that point of time of Z’s marriage with F, the contract becomes void because Z’s action of marrying F renders the impossibility of the event of Z’s marriage with Y. Thus, the marriage of Y with Z must be considered impossible at the time Z marries F.
Given these two perspectives, X is not legally bound to pay the agreed sum to Y.Section 5 of the Indian Contract Act, 1872 states that an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards. Section 4 of the Indian Contract Act, 1872 states that the communication of acceptance is complete, as against the acceptor, when it comes to the knowledge of the proposer. For example, if X proposes, by a letter by post, to sell his house to Y on 1st January. Y accepts the proposal by a letter sent by post on 4th January. The letter reaches X on 6th January. In this case, Y could have revoked his acceptance at any time before 6th January, but not afterwards.
Here, the keyword is ‘the knowledge of the proposer’. Let us understand the given problem to elucidate the keyword. A proposes to sell his car to B, and communicates his proposal to B via a post on 1st February. The letter reaches B on 4th February. B reads the letter and accepts A’s proposal. B communicates his acceptance to A via a post on 7th February. On 8th February, B decides to revoke his acceptance, and wrote a letter to A, informing him of the revocation of the acceptance. B posted the letter on the same day, that is, 8th February. Coincidentally, both the letters- letter of acceptance and letter of revocation- reach A on 10th February. Here, lies the question: which letter will be taken into consideration, or, which letter will be considered as the first communicated letter? Let us discuss two different scenarios:
i. If A reads the letter of revocation before the letter of acceptance, then the letter of revocation will be considered as the first communicated letter, as it came to A’s knowledge first, even though both the letters reached him on the same day. In this instance, B’s acceptance will be revoked.
ii. If A reads the letter of acceptance before the letter of revocation, then the letter of acceptance will be considered as the first communicated letter, as it came to A’s knowledge first, even though both the letters reached him on the same day. In this instance, B’s acceptance will be not be revoked.
This example, thus, proves that ‘the knowledge of the proposer’ is the keyword in the problem. It entirely depends on which letter is read by the proposer first.Section 168 of the Indian Contract Act, 1872 states that “The finder of goods has no right to sue the owner for compensation for trouble and expense voluntarily incurred by him to preserve the goods and to find out the owner; but he may retain the goods against the owner until he receives compensation; and where the owner has offered a specific reward for the return of goods lost, the finder may sue for such reward, and may retain the goods until he receives it.” Thus, a finder of goods is a bailee and bound by the duty of reasonable care. He does not have the right to sue the owner for compensation for trouble and expense; it has been incurred by him on his will. However, it allows the finder to retain the goods against the owner until he receives compensation for trouble and expense. Furthermore, where the owner has offered to reward for the return of the lost goods, the finder may sue the owner for the said reward, and may retain the goods until the receipt of such reward.
Here, let’s take note of the fact that the analysis of Section 168 relates to goods. The definition of goods, as enumerated in section 2(7) of Sale of Goods Act, 1950, is “every kind of moveable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale”. Clearly, human beings have not been included in the ambit of the definition of “goods”.
In the aforementioned problem, the child does not come under the scope of “goods”. Thus, Section 168 does not apply in this case, since it relates specifically to the finder of “goods” only. Hence, we can conclude that the servant cannot refuse to send the child back in the custody of his father until he receives the award, under section 168 of the Indian Contract Act, 1872.Section 7 of the Indian Contract, 1872 states that in order to convert a proposal into a promise, the acceptance must be absolute and unqualified. The offer and its acceptance must be absolute and unconditional, and should not be ambiguous. It should not create any room for doubt. The acceptance should not lack clarity at all.
The offeree should agree to all the terms of the contract, not just a part of the contract. If the offeree makes any amends to any part of the contract, it does not amount to acceptance, as it is not absolute- it imposes a condition. In such cases, the first stage of negotiation has not passed. Hence, no legal obligation is imposed, unless there is absolute and unqualified acceptance. For example, X offers to sell his car to Y for 3 lakhs, Y agrees to the offer but wants to change the amount to 2.5 lakhs. This amounts to a counter-offer, which is not acceptance, since it is conditional.
The basis of offer and acceptance can be summarised in three elements: certainty, commitment and communication. In the absence of any one of the elements, a valid contract cannot be made. Moreover, for valid acceptance, there must be consensus ad idem- both the parties to a contract should agree to the same thing in the same sense. For example, X owns 5 houses. X offers to sell a house to Y. While making the contract, X means to sell the house at 2nd Avenue, but Y thinks that X will sell the house at 5th Avenue. Here, the parties to the contract are not on the same page, they are not agreeing to the same thing in the same sense. Besides, acceptance must not be given under any undue influence or coercion. The offeree should accept the contract, on his own free will; otherwise, it would not amount to absolute and valid acceptance.
