Q1) Miss Shakuntala puts an application to be a teacher in the school. She was appointed by the trust of the school. Her friend who works in the same school informs her about her appointment informally. But later due to some internal reasons her appointment was cancelled. Can Miss Shakuntala claim for damages?
Provisions:
Acceptance is complete only when it is communicated to the offeror by offeree himself or by a person who has the authority to accept. It may be communicated either in words or by action.
In Powell vs Lee, P applied for the post of a headmaster in a school. The Managing Committee of the school passed a resolution selecting P for the post. But this decision was not communicated to P. L, a member of the Committee without any authority to reveal P’s appointment, informed P about the decision. Subsequently, the Managing Committee appointed someone else to the post. It was held that, P’s suit is not maintainable as there had been no authorized communication of intention to contract on the part of the committee or any authorized person.
Facts of the case:
In the given question, Miss Shakuntala applied for the post of a teacher. Her friend working in the same school informally informed her about the appointment. But Shakuntala’s appointment was subsequently cancelled, and she claimed for damages.
Analysis:
In the present case, Shakuntala’s friend did not have the authority to inform Shakuntala about her appointment. Also, the school authorities never put the acceptance in the course of transmission. Her information from a third person will not form part of contract.
Conclusion:
Miss Shakuntala cannot claim damages as acceptance was communicated neither by the school nor an authorized person.
Q2) Mr. Ram Lal Birla was a big businessman of city Pune having two sons and one married daughter. He decided to gift his one house to his daughter. For this purpose, he called his lawyer at his house and made a written document for such gift. The lawyer advised him to get the transfer document properly registered. When they both were going for registration of document, they met with an accident and both of them died. Later, his daughter found the document and claimed the house on the basis of that document. Explain, whether she can get the house as gift under the Indian Contract Act, 1872?
Provisions:
The general rule is that “an agreement made without consideration is void.” However, Section 25 mentions the few exceptions to the rule. One of the exceptions is agreement made on account of natural love and affection. Section 25 of Indian Contract Act, 1872 provides that an agreement made without consideration is valid if it is expressed in writing and registered under the law for the time being in force for the registration of documents and is made on account of natural love and affection between parties standing in a near relation to each other.
Facts of the case:
In the given case, Mr. Ram decided to gift his house to his daughter. He made the agreement in writing, but could not get it registered.
Analysis and Conclusion:
Transfer of house made by Mr. Ram Lal Birla on account of natural love and affection between the parties standing in near relation to each other is written but not registered. Hence, this transfer is not enforceable, and his daughter cannot get the house as gift under the Indian Contract Act, 1872.
Q3) Mr. Murari owes payment of 3 bills to Mr. Girdhari as on 31st March, 2020.
(i) ₹ 12,120 which was due in May 2016.
(ii) ₹ 5,650 which was due in August 2018
(iii) ₹ 9,680 which was due in May 2019.
Mr. Murari made payment on 1st April 2020 as below without any notice of how to appropriate them:
(i) A cheque of ₹ 9,680
(ii) A cheque of ₹ 15,000
Advice under the provisions of the Indian Contract Act, 1872.
Provisions:
If the performance consists of payment of money and there are several debts to be paid, the payment shall be appropriated as per provisions of Sections 59, 60 and 61. The debtor has, at the time of payment, the right of appropriating the payment. In default of debtor, the creditor has option of election and in default of either the law will allow appropriation of debts in order of time.
Facts of the case:
In the present case, Mr. Murari had made two payments by way of two cheques. One cheque was exactly the amount of the bill drawn. Whereas the other cheque was of a different amount.
Analysis:
As one cheque was exactly the amount of the bill drawn. It would be understood even though not specifically appropriated by Mr. Murari that it will be against the bill of exact amount. Hence cheque of ₹ 9,680 will be appropriated against the bill of ₹ 9,680 which was due in May 2019. Cheque of ₹ 15,000 can be appropriated against any lawful debt which is due even though the same is time-barred.
Conclusion:
Hence, Mr. Girdhari can appropriate the same against the debt of ₹ 12,120 which was due in 2016 and balance against ₹ 5650 which was due in August 2018.
Q4) A agrees to sell land to B for Rs. 40,000. B pays to A Rs. 4,000 as a deposit at the time of the contract, the amount to be forfeited to A if B does not complete the sale within a specified period. B fails to complete the sale within the specified period, nor is the ready and willing to complete the sale within a reasonable time after the expiry of that period. Can A rescind the contract and at the same time retain the deposit?
Provisions:
As per Section 54 of Indian Contract Act, 1872, if the promises are conditional and dependent, the performance of the promise by one party depends on the prior performance of the promise by the other party. In such promises if the party who is bound to perform his promise first, fails to perform it, then he cannot claim performance from the other party. Moreover, the defaulting party becomes liable to pay the compensation to the other party for the loss suffered by the other on account of the non- performing of the contract.
Facts of the case:
In the given question, A agrees to sell land to B for ₹ 40,000. B pays to A ₹ 4,000 as a deposit at the time of the contract, the amount to be forfeited to A if B does not complete the sale within a specified period. B fails to complete the sale within the specified period, nor is the ready and willing to complete the sale within a reasonable time after the expiry of that period.
Analysis: As B fails to perform his promise, the security deposit (earnest money) can be forfeited as per
the terms of their agreement.
Conclusion:
Therefore, A can rescind the contract and at the same time retain the deposit
Q5) Mr. Ramaswamy of Chennai placed an order with Mr. Shah of Ahmedabad for supply of Urid Dhall on 10.11.2006 at a contracted price of ₹ 40 per kg. The order was for the supply of 10 tonnes within a month’s time viz. before 09.12.2006. On 04.12.2006 Mr. Shah wrote a letter to Mr. Ramaswamy stating that the price of Urid Dhall was sky rocketing to ₹ 50 Per. Kg. and he would not be able to supply as per original contract. The price of Urid Dhall rose to ₹ 53 on 09.12.06 Advise Mr. Ramaswamy citing the legal position.
Provisions:
The stated problem falls under the head ‘anticipatory breach of contract’ as per The Indian Contract Act, 1872. Anticipatory breach of contract occurs when the promisor refuses altogether to perform his promise and signifies his unwillingness even before the time for performance has arrived. In such a situation the promisee can claim compensation by way of loss or damage caused to him by the refusal of the promisor. For this, the promisee need not wait till the time stipulated in the contract for fulfillment of the promise by the promisor is over.
Facts of the case:
Mr. Ramaswami placed an order with Mr. Shah. Before the due date, Mr. Shah informed Mr. Ramaswamy his refusal to supply goods. The price of goods increased subsequently.
Analysis and conclusion:
As per details in the problem, price as contracted ₹ 40 per kg on 10.11. 2006 rose to ₹ 50 per kg as on 4.12.2006 and finally to ₹ 53 per kg, on 09.12.2006. The answer to the problem is that
1. Mr. Ramaswamy can repudiate the contract on 04.12.2006 and can claim damages of ₹ 10 per kg viz. ₹ 1, 00,000.
2. He could wait till 09.12.2006 and claim ₹ 130,000 i.e. ₹ 13 per kg.
3. If the Government, in the interim period i.e. between 04.12.2006 and 09.12. 2006 imposes a ban on the movement of the commodity to arrest rise of prices, the contract becomes void and Mr. Ramaswamy will not be able to recover any damages whatsoever.
Q6) PQR, a hospital in Delhi, recruits Dr. A, on contract basis for a period of 3 months. The hospital management promises to pay Dr. A, a lumpsum amount of ₹1,00,000 if Dr. A test positive for novel corona virus (Covid 19) during the contract period of 3 months. Identify the type of contract and highlight the rule of enforcement. Also, what will happen if Dr. A does not contract Covid 19.
Provisions:
Section 31 of the Indian Contract Act, 1872 provides that “A contract to do or not to do something, if some event, collateral to such contract, does or does not happen” is a
Contingent Contract.
Section 35 says that Contingent contracts to do or not to do anything, if a specified uncertain event happens within a fixed time, becomes void if, at the expiration of time fixed, such event has not happened, or if, before the time fixed, such event becomes impossible.
Facts of the case:
PQR hospital recruits Dr. A on contract basis for 3 months. He was promised compensation if he contracted corona virus during the contract period.
Analysis:
In the instant case, the contract between PQR hospital & Dr. A is a contingent contract because the promisor, PQR hospital need to perform his obligation of paying Dr. A, the lumpsum amount of ₹1,00,000, only if he contracts with Covid 19 within a span of 3 months.
Conclusion:
In Case, if Dr. A does not contract Covid 19, then the contract stands void automatically.
Q7) Rahul is the owner of electronics shop. Priyanka reached the shop to purchase an air conditioner whose compressor should be of copper. As Priyanka wanted to purchase the air conditioner on credit, Rahul demand a guarantor for such transaction. Mr. Arvind (a friend of Priyanka) came forward and gave the guarantee for payment of air conditioner. Rahul sold the air conditioner of a particular brand, misrepresenting that it is made of copper while it is made of aluminium. Neither Priyanka nor Mr. Arvind had the knowledge of fact that it is made of aluminium. On being aware of the facts, Priyanka denied for payment of price. Rahul filed the suit against Mr. Arvind. Explain with reference to the Indian Contract Act 1872, whether Mr. Arvind is liable to pay the price of air conditioner?
Provisions:
As per the provisions of section 142 of the Indian Contract Act 1872, where the guarantee has been obtained by means of misrepresentation made by the creditor concerning a material part of the transaction, the surety will be discharged. Further according to provisions of section 134, the surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence
of which is the discharge of the principal debtor.
Facts of the case:
Priyanka wants to purchase air conditioner whose compressor should be of copper, on credit from Rahul. Mr. Arvind has given the guarantee for payment of price. Rahul sold the air conditioner of a particular brand on misrepresenting that it is made of copper while it is made of aluminium of which both Priyanka & Mr. Arvind were unaware. After being aware of the facts, Priyanka denied for payment of price. Rahul filed the suit against Mr. Arvind for payment of price.
Analysis:
On the basis of above provisions and facts of the case, as guarantee was obtained by Rahul by misrepresentation of the facts, Mr. Arvind will not be liable. He will be discharged from liability.
Conclusion:
Hence, Mr. Arvind is not liable to pay the price of air conditioner.
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Q8) Amar bailed 50 kg of high quality sugar to Srijith, who owned a kirana shop, promising to give ₹ 200 at the time of taking back the bailed goods. Srijith’s employee, unaware of this, mixed the 50 kg of sugar belonging to Amar with the sugar in the shop and packaged it for sale when Srijith was away. This came to light only when Amar came asking for the sugar he had bailed with Srijith, as the price of the specific quality of sugar had trebled. What is the remedy available to Amar?
Provisions:
According to Section 157 of the Contract Act, 1872, if the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, in such a manner that it is impossible to separate the goods bailed from the other goods and deliver them back, the bailor is entitled to be compensated by the bailee for the loss of the goods.
Facts of the case:
Amar bailed 50 kg of high quality sugar to Srijith. By mistake, Srijith’s employee mixed the 50 kg of sugar belonging to Amar with the sugar in the shop and packaged it for sale.
Analysis and Conclusion:
In the given question, Srijith’s employee mixed high quality sugar bailed by Amar and then packaged it for sale. The sugars when mixed cannot be separated. As Srijith’s employee has mixed the two kinds of sugar, he (Srijith) must compensate Amar for the loss of his sugar.
Q9) Akash is a famous manufacturer of leather goods. He appoints Prashant as his agent. Prashant is entrusted with the work of recovering money from various traders to whom Akash sells leather goods. Prashant is paid a monthly remuneration of ₹15,000. Prashant during a particular month recover ₹40,000 from traders on account of Akash. Prashant gives back ₹25,000 to Akash, after deducting his salary. Examine with reference to relevant provisions of the Indian Contract Act, 1872, whether
act of Prashant is valid.
Provisions:
Right of retain out of sums received on principal’s account [Section 217]
This section empowers the agent to retain, out of any sums received on account of the principal in the business of the agency for the following payments:
(a) all moneys due to himself in respect of advances made
(b) in respect of expenses properly incurred by him in conducting such business
(c) such remuneration as may be payable to him for acting as agent.
Facts of the case:
In the given instance, Akash appointed Prakash as his agent to recover money from various traders to whom Akash sold his leather goods, on a monthly remuneration of ₹15,000. Prashant during a month recovered ₹40,000 from traders on account of Akash. Prashant, after deducting his salary gave the remaining amount to Akash.
Analysis and Conclusion:
In the said case, Prashant can retain out of the sums received on account of the principal in the business of the agency for the remuneration payable to him for acting as an agent.
Q10) A rented his house to B on lease for 3 years. The lease agreement is terminable on 3 month notice by either party. C, the son of A, being in need of a separate house to live, served a notice on B, without any authority, to vacate the house within a month and requested his father A to ratify his action. Examine whether it shall be valid for A to ratify the action of C taking into account the provisions of the Indian Contract Act, 1872?
Provisions:
As per section 200 of the Indian contract Act, 1872, an act done by one person on behalf of another, without such other person’s authority, which, if done with authority, would have the effect of subjecting a third person to damages, or of terminating any right or interest of a third person, cannot, by ratification, be made to have such effect.
Facts of the case:
A rented his house to B on lease terminable on 3 month notice by either party. C, the son of A without any authority from A, served a notice on B to vacate the house within a month and requested his father A to ratify his action.
Analysis:
In the given instance, A rented his house to B on lease for 3 years. The lease agreement was terminable on three months’ notice. C, son of A, gives notice of termination to B, without any authority, to vacate the house within a month. Also requested A to ratify his action. Here, ratification of C’s act affected the interest of B. Therefore, the principle of ratification does not apply.
Conclusion:
Hence, it’s not valid for A to ratify the action of C, thereby causing the notice to be binding on B.