Contract Law

Contract Penalties: Who Proves What? βš–οΈ


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πŸ›οΈ The Contract Clause That Started Everything

🌟 Imagine you've signed an important contract with someone, and it says if you break your promise, you'll pay a fixed amount. Sounds simple, right? But what happens when that amount seems way too high - is it a fair estimate of damages or just a punishment to scare you?

πŸ’‘ What You'll Discover:

  • πŸ” The crucial difference between liquidated damages (fair estimates) and penalties (punishment clauses)
  • βš–οΈ Why proving a clause is "penal" is now much harder than before
  • 🎯 How the burden of proof can make or break your case
  • πŸ’Ό Practical tips for drafting bulletproof contract clauses

πŸš€ Real Cases Discussed:

  • πŸ’Ž Campbell v. Farron - The classic comedian case that shows why one-size-fits-all penalties don't work
  • ⭐ Maya Devi v. Lalta Prasad - Supreme Court's take on earnest money disputes
  • πŸ† Deshraj v. Rotash Singh (2023) - The landmark ruling that shifted the burden of proof forever

⚑ Key Legal Principles Made Simple:

  • πŸ“œ Section 74 of Indian Contract Act, 1872 - your shield against unfair penalties
  • 🎯 The "genuine pre-estimate" test that courts use
  • πŸ”„ Why "in terrorem" (fear-based) clauses get struck down

πŸŽ™οΈ Whether you're drafting contracts or challenging unfair clauses, this episode gives you the roadmap to navigate India's evolving contract law landscape!

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Contract LawBy Sharad Bansal