Novation
Sailee
(Querist) 27 July 2011
This query is : Resolved
I wanted to know the elements essential for novation of a contract..
I have a hypothetical case where a woman wants to make a villa for the purpose of hiring it to out to people for15,000 per month. She was in a contract with her realtor wherein he had given the estimate of15,00,000 for the construction. However, it was also mentioned in the contract that if the prices of cement and steel go up, the additional expenses will be borne by the woman.
And the prices of cement and steel did go up before the discharge of contract. the realtor sent a letter to the woman that read,
"Because of the Hike in steel and cement prices, I have acquired the building material at a higher price and therefore the revised cost of the entire construction will go up by2,50,000. This is the best deal I have managed to get. I am sure this is acceptable"
My queries are:
Does this letter lead to novation of contract because the price which is the actual consideration itself for the realtor in this contract is changed?
In fact, in my argument I have to prove its novation, so I wanted to know the essential elements involved in novation of contract.
Sailee
(Querist) 27 July 2011
The PDF while with all the facts of the case has been attached here. It's really urgent. The competition is on this saturday.
M V Gupta
(Expert) 28 July 2011
See Section 62 of Contract Act.There is no novation in the case. What the builder has claimed is the difference in the cost due to increase in the prices of cement and steel.This is as per the contract terms. Mrs. Sharma never disputed the raise in the prices. On the other hand she had even given a cheque for the difference in the cost and took possession of the building. Plea of novation in defense does not stand.
Sailee
(Querist) 28 July 2011
So is it alteration of contract?
Also, There is a mention of certain Mr. Chhabra...They haven't clearly mentioned that he is an arbitrator or that Arbitration Act 1996 will apply...can he still be considered an arbitrator in the contract? If he can, how can I defend the fact that the plaintiff filed a summary suit in the Pune Civil Court without approcahing the arbitrator first?
