Alteration of Contract
Alteration of Contract
Definition:
Alteration of a contract refers to any change, addition, or deletion in the terms of a contract after it has been executed, without the consent of all parties involved. Such alterations are generally illegal and can render the contract void or unenforceable.
Legal Position
Indian Contract Act, 1872 does not specifically define “alteration of contract,” but principles are derived from Sections 19 and 20, dealing with fraud, misrepresentation, and coercion.
Altering a contract without mutual consent is considered fraudulent, and the party affected can rescind the contract.
Types of Alteration
Material Alteration:
Changes that affect the essence of the contract.
Example: Changing the amount payable, dates, or parties’ obligations.
Material alterations without consent void the contract.
Non-Material Alteration:
Minor or clerical changes that do not affect the rights and obligations of the parties.
Example: Correcting spelling mistakes, dates, or formatting errors.
Generally, these do not void the contract.
Consequences of Unauthorized Alteration
The contract becomes void if altered materially without consent.
The party committing the alteration may be liable for damages or fraud.
The innocent party may choose to:
Rescind the contract, or
Enforce the contract as per the original terms (if identifiable).
Leading Case Law
Pilcher v Rawlins (1872) LR 7 HL 468) – Material alteration of a deed without consent makes the deed void.
Union of India v T. M. A. Pai Foundation (2002) – Unauthorized changes in agreements can lead to the contract being unenforceable if it affects essential terms.
Distinction from Variation of Contract
| Aspect | Alteration | Variation |
|---|---|---|
| Consent | Without consent of parties | With mutual consent |
| Effect | Usually void/illegal | Valid and enforceable |
| Scope | Often affects material terms | Can change any agreed term legally |
| Example | Changing payment amount without consent | Parties mutually agree to extend the payment date |
Conclusion
Alteration of a contract without mutual consent is illegal and may render the contract void. Parties must ensure that any changes to a contract are mutually agreed upon, usually documented in writing, to avoid disputes.
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