Are you sure that your ISP can really figure that you are sharing internet with others at their end ?

Even if they do, legally speaking, will you sharing the internet connection on your name with your flatmate / family members would amount to breach of contract ? In all likelihood, your flatmate shares the cost of the internet with you. Isnt this case is exactly the same, somebody else using your internet & helping you offset some of your cost. Am I missing something here ?

Only if more than 1 provider is available in your area. With my ISP, sharing with the public is not allowed. As such, any torrenting that happens I am responsible for. The only other provider we have is dial up, which I don't consider an alternative.