SECTION 65

 Obligations of Person who has Received Advantage under Void Agreement or contract that becomes void (Section 65)

“When an agreement is discovered to be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.” 

Analysis of Section 65

From the language of the Section, it is clear that in such a case either the advantage received must be restored back or a compensation, suflcient to put the position prior to contract, should be paid.

Example: A pays B ` 1,00,000, in consideration of B’s promising to marry C, A’s daughter. C is dead at the time of the promise. The agreement is void, but B must repay A ` 1,00,000.

In a case, the plaintiu hired a godown from the defendant for twelve months and paid the whole of the rent in advance. After about seven months the godown was destroyed by fire, without any fault or negligence on the part of the plaintiu and the plaintiu claimed a refund of a proportionate amount of the rent. Held, the plaintiu was entitled to recover the rent for the unexpired term, of the contract.

The Act requires that a party must give back whatever he has received under the contract. The benefit to be restored under this section must be benefit received under the contract (and not any other amount). A agrees to sell land to B for ` 400,000. B pays to A ` 40,000 as a deposit at the time of the contract, the amount to be forfeited by A if B does not complete the sale within a specified period. B fails to complete the sale within the specified period, nor is he ready and willing to complete the sale within a reasonable time after the expiry of that period. A is entitled to rescind the contract and to retain the deposit. The deposit is not a benefit received under the contract, it is a security that the purchaser would fulfill his contract and is ancillary to the contract for the sale of the land.