concept of principle of natural justice

B-5/b/23 Feb

THIS IS A SEQUEL TO MY BLOG B-5/07Feb WITH BACK REFERENCE AS B/5/a/ 14 Feb.


During the course of development of Concept of Contract, the opinion in favour of Freedom of Contract has gained the momentum and acknowledgement. The freedom of contract has three basic components-

a) Freedom of choice in the sense that nobody was bound to enter into any contract if he did not choose to do so.

b) Freedom of choice in the sense that everyone had a choice of persons with whom he can contract.

c) Freedom of choice in the sense that people could make virtually any kind of contract on any terms they choose.


The freedom of making the terms of contract has greater ramifications and there used to be consideration of public policy, with the courts having the power to declare contracts to be ineffective if it was repungent to public policy.Now it has been legally accepted that every man has a right to break his contract if he chooses to do so provided he elects to pay damages instead of performing his contractual obligation. Further now the courts have accepted that even where a contract is entered into by an agreement , it does not necessarily determine all the contents or scope of contract. These matters are to be seen with respect to implied terms which means terms may be implied in FACT OF CASE OR IN LAW. Terms implied in fact are based on the intention of the parties whearas terms implied in law are imposed by law directing the parties to exclude a function which is contrary to the Law as interpreted by courts.

The inequality in the bargaining power of the parties involved in a contract and their further perpetuation in the society as exhibited by Government Contracts ,the courts have accepted the view that interference with freedom of contract is often justifiable even on strict economic grounds. Now the courts has been gradually more and more looking into the surronding facts and examining reasons for decisions of the parties to enter into a contract and to judge their reasonableness by objective tests.

The market forces in play in economy has brought out the necessity of devising Standfard Form of Contract. The idea of an agreement freely negotiated between the parties has given way to the necessity for a uniform set of printed conditions to be used time and time again wherein one party receives a standard form of contract devised by the other party which he must accept as it is or go without it. The freedom of contract is absent or at any rate exists on one side only against those contracts entered into based on printed condition of standard form of contract. Why it is so?Because the contractor has no liberty to discuss any of the printed conditions nor any liberty to vary the terms in any way. It is not untill that some dispute arises when he realizes how few his rights are.

The courts have made endeavour to rectify this lacunae by requiring certain standard notices in respect of the onerous terms of contract. The inequality in bargaining power in Government Contracts have led to the inclusion of certain terms which cannot be said to be fair and reasonable. Today the freedom of contract is being viewed by courts in different light and individual interests have been made to subserve those of the community. The Law today interfere at numerous points with freedom of the parties to make what contract they like.One extremely common and troublesome feature of the standard form of contract is the presence of an Exemption Clause which often provides that the organisation is not to be liable in virtually any circumstances whatsoever. This is where nowadays the courts are intervening a lot through judicial reviews and this is where a officer formulaing the terms and conditions of contract has to be very -very carefull.