1. When is an offer completed? How and when may an offer be revoked?

Ans: Offer is completed when proposal is put forward by one person to another with the expectation
of obtaining his consent for performing or not performing any work. It is made to another
person with a view to seek his positive response in terms of his assent or acceptance.
Offer is revoked in following ways:
i. Offer lapse after stipulated time or reasonable contract.
ii. Offer lapse by the death or insanity of the offeror or the offeree before acceptance.
iii. Offer lapse by subsequent illegality or destruction of subject matter.
iv. A conditional offer lapse when the condition is not accepted by the offeree.
v. Offer lapse by rejection of an offer by the offeree.
vi. Offer lapse by counter-offer by the offeree.7
vii. Revocation of the offer by the offeror.

2. Distinguish between void contract and voidable contract. What

agreements are void according to the Civil Muluki code, 2074?
Ans: The difference between Void contract and Voidable contract are:
● The contract which are not enforceable is known as void contract whereas the contract
which has one of the two parties has the option to enforcr or rescind it is known as voidable
contract.
● Void contract is valid but subsequently becomes invalid due to some reason whereas
voidable contract is valid, until the party whose consent is not free doesnot revoke it.
● Void contract has no rights to party whreas voidable contract has right to party but only to
the aggrieved party.
● In void contract, no party can claim any damages for the non-performance of the contract.
On the other hand, the aggrieved party can claim damages for any loss sustained.
Agreement are void according to the Civil Muluki code, 2074 are:
1) Contract preventing any one from engaging himself in any occupation, profession or trade
not prohibited by current Nepal law.
2) Contract restraining marriages of the kinds other than those prohibited by current Nepal law.
3) Contract preventing any person from enjoining the privileges facilities already being enjoyed
by general public.
4) Contract seeking to prevent the legal rights of any person from being made applicable by
any government office or court.
5) Contract concluded in violation of current Nepal law.
6) Contract arranged for immoral purpose or concluded in disregard of public morality or
public interest.
7) Contract which can not be carried out because the parties thereto do not exactly know about
the subject matter in relation to which it has concluded.

3. Explain the law of frustration of contract.

Ans: ​Frustration of contract is the legal termination of a contract because it make the contract
and its objectives virtually impossible to execute and make the performance of the contractual
obligations illegal.
The legal consequence of a contract which is found to have been frustrated is that the contract is
automatically terminated at the point of frustration. The contract is not void ​ab initio​ ("from the
beginning"); only future obligations are discharged. At common law, obligations which fell due
for performance before the frustrating event are still in operation.
Delay can lead to the discharge of a contract where the commercial purpose of the contract has
been frustrated. Further, commercial parties will not be expected to wait until the end of a long
delay to find out whether in fact they are bound by a contract or not. A party to a commercial
contract is entitled to act on reasonable commercial probabilities and may treat a contract as
discharged where an event has caused a delay, even before the delay actually frustrates the
contract.
Establishing frustration, however, can be difficult as it does not apply to hardship. Hardship,
even if severe, does not constitute frustration. The fact that the method for performance
contemplated by a contract has been affected, or the burden of performance has been increased,
by an event or events occurring without fault, does not amount to frustration unless performance
in accordance with the contract has become commercially impossible, that is, impracticable in a
legal sense. This comes back to the issue of the contract becoming radically different from
anything contemplated by the parties.

The doctrine of frustration is applied within very narrow limits. For a party to succeed in
claiming frustration, they must show that, in the relevant contract, the parties never agreed to be
bound in the fundamentally different situation that had unexpectedly emerged. It is not because
the court thinks in its discretion that it is just and reasonable to qualify the terms of the contract.
Rather, it is because on its true construction it does not apply in that situation.

4. Define 'sale' and 'Agreement to sell' and distinguish between the two.

Ans: A contract of sales the property in the goods is immediately transferred at the time of
making contract from the seller to the buyer is known as sales.If the seller is adjudged insolvent,
the buyer is entitled to recover the goods from the Official receiver.

Under a contract of sale the transfer of property in the goods is to take place at the future time or
subject to some condition thereafter to be fulfill, the contract is called ‘an agreement to sell.

The differences between sale and agreement to sell are:

1. When the vendor sells goods to the customer for a price, and the transfer of goods from
the vendor to the customer takes place at the same time, then it is known as Sale. When
the seller agrees to sell the goods to the buyer at a future specified date or after the
necessary conditions are fulfilled then it is known as Agreement to sell.

2. The nature of sale is absolute while an agreement to sell is conditional.

3. Risk and rewards are transferred with the transfer of goods to the buyer in Sale. On the
other hand, risk and rewards are not transferred as the goods are still in possession of the
seller.

4. Tax is imposed at the time of sale, not at the time of agreement to sell.
 5. In the case of a sale, the right to sell the goods is in the hands of the buyer. Conversely, in
agreement to sell, the seller has the right to sell the goods.

6. A contract of sale is an example of Executed Contract whereas the Agreement to Sell is

an example of Executory Contract.

5. Explain the modes of creating of agency.

Ans: The modes of creating of agency are as follows:
I. By express agreement: ​The authority given by the principal to his agent is an express
authority which enables the agent to bind the principal by act done with in the scope of his
authority.
II. By implied agreement: Implied agencies arise from the conduct, situation or relationship of
parties. Whenever a person places another in a situation in which that other is understood to
represent or to act for him, he become an implied agent. Agency by implied authority is of
three types as shown below:
Agency by Neccesity
Agency by Estoppel
Agency by Holding out.
III. By subsequent ratification of an unauthorized act: Agent sometimes perform acts on
behalf of the principal that exceed their authority. In such cases, the principal for whom the
agent claimed to act may either ignore the transaction or ratify it. Ratification occurs when
the principal approves the unauthorized act performed by an agent or by one who has no
authority to act as an agent. this is also known as ex post facto agency.
IV. By operation of law:​ At times contract of agency comes into operation by vitue of law.

6. Who is unpaid seller? What are rights of unpaid seller against the goods?
Ans: When buyer doesnot pay the price of the goods, the seller is deemed to be unpaid. An unpaid seller
has a two fold right, one against the goods, and the other against the buyers personally.
The rights of unpaid seller against the goods are:
 1) Right of Lien: Lien means possession of goods and refuse to deliver them to the buyer until
price due in respect them is paid. The unpaid seller of goods, who is in possession of them,
is entitled to retain possession until payment of price in the following cases:
a) When the goods have been sold without any stipulation as to credit.
b) Where the goods have been sold on credit but term of credit has expired.
c) Where the buyer become insolvent.

2) Right of re sale: The unpaid seller who has retained possession of the goods in exercise of
his right of lien or who has resumed possession from the carrier upon insolvency of the
buyer, can resell goods if the goods are of a perishable nature, without any notice to the
buyer and if goods are of a non perishable nature.
3) Right of stoppage in transit: When the buyer of goods becomes insolvent, and the goods
are in course of transit to the buyer, the seller can resume possession of the goods from the
carrier. This is known as the right of stoppage transit.
4) With holding delivery:​ If goods has not passes to buyer.

7. What is fraud? Distinguish between fraud and Misrepresentation.

Ans: F​raud is an intentionally deceptive action designed to provide the perpetrator with an unlawful
gain or to deny a right to a victim. Fraud can occur in finance, real estate, investment, and
insurance. It can be found in the sale of real property, such as land, personal property, such as ​art
and collectibles​, as well as ​intangible property​, such as stocks and bonds.
The differences between fraud and misrepresentation are:

BASIS FOR
FRAUD MISREPRESENTATION
COMPARISON

Meaning A deceptive act done The representation of a misstatement,

intentionally by one party in made innocently, which persuades other
order to influence the other
 party to enter into the contract party to enter into the contract, is known
is known as Fraud. as misrepresentation.

Defined in Section 2 (17) of the Indian Section 2 (18) of the Indian Contract
Contract Act, 1872 Act, 1872

Purpose to deceive Yes No

the other party

Variation in extent In a fraud, the party making In misrepresentation, the party making
of truth the representation knows that the representation believes the statement
the statement is not true. made by him is true, which subsequently
turned out as false.

Claim The aggrieved party, has the The aggrieved party has no right to sue
right to claim for damages. other parties for damages.

8. Explain the circumstance where a contract need not to be performed.

Ans: The circumstances under which contracts need not be performed are as follows:

1. If parties to a contract agree to ‘Novation,’ ‘Rescission’ or ‘Alteration’; the original contract

need out be performed (Section 62). In such cases the original contract disappears and is
substituted by a new contract.

2. If parties to a contract agree to dispense with or remit performance of promise either wholly or
in part, the original contract stands discharged (Sec. 63). This is technically called as
‘Remission.’
 3. When a person, at whose option a contract is voidable, rescinds it, the other party there to need
not perform his promise. (Sec. 64).

4.If any promisee neglects or refuses to afford the promisor reasonable facilities for the
performance of his promise, the promisor is excused for the non-performance of the contract
(Sec.67). For instance, A contracts with B to repair B’s house. B neglects or refuses to point out
to A the places at which his house requires repair. A is excused for the non-performance of the
contract, if it is caused by such neglect or refusal.

9. "All contract are agreement but all agreement is not contract."Discuss

Ans: The most common ways of making a contract is through an agreement. The two parties may agree
to something through a process of mutual negotiations. When one party makes an offer and the
other accepts the same, there arises an agreement, which may be enforceable by law. Therefore,
an agreement enforceable by law is a contract.
But every sort of agreement does not create legal obligation. So where the parties make a binding
contract, they create rights and obligations between themselves. Thus, all contracts are
agreements but all agreements are not contracts because some agreements cannot be enforced by
law.
Agreements lacking legal enforceability are known as social agreements or domestic agreements.

10. Define the term 'Acceptance'. What are essential of a valid acceptance?
Ans: Acceptance of an offer is the expression, by words or conduct, of an assent to the terms of the offer
in the same manner prescribed or indicated by the offeror.
The essential of valid acceptance are:
1) Acceptance must be given only by the person to whom the offer is made.
2) Acceptance should be absolute.
3) Acceptance should be expressed in usual or prescribed manner.
 4) Communication of acceptance by the offeree to the offeror.
5) Communication must be made by the offeree or his authorised agent
6) It must be given within a prescribed or reasonable time.
7) Slience doesnot amount to acceptance.
8) Acceptance must be given before the offer lapses or before the offer is withdrawn.
9) Acceptance cannot go before an offer.

11. Discuss the rules for valid tender.

Ans: The rules of valid tender are:

1. Tender must be Unconditional:

There must not be any condition associated with the tender​. ​The tender should be unconditional.
In order to be legally enforceable, a tender should not only be in accordance with the contractual
terms, the promisor should also not attach any condition to it, because it is not reasonable to
compel the other party to accept a changed or otherwise modified performance, whatsoever.

2. Tender must be made at a proper time and place:

A tender should be made at the proper time and place. Generally, the time and place of
performance are fixed by the parties in their contract. If a person’s obligation is to deliver goods
or render services, they must be tendered at a reasonable hour, for example, not in the middle of
the night. If such a tender is refused, it will not release the tendering party from further
obligation.
 3. Chance of Adjudging:

A tender must be made under such circumstances that the person to whom the tender is made
shall have a fair amount of chance of adjudging that the person by whom the tender is made is
able and eager and then proceed with what he is bound by his promise.

4. Must be for Agreed Quantity and Quality:

If the offer is to deliver a particular thing to the promisee, the promisee must have a reasonable
opportunity of seeing that the thing offered is the same that the promisor is bound by his promise
to deliver.

5. Ability and Willingness to Perform the Obligation:

The party making a tender must be in a position and willing to perform his promise. A party
cannot be said to be able and willing if he has neither possession of nor control over the goods he
had promised to deliver.

12. Business law is the control mechanism of unlawful business activities".

Explain it and discuss the various sources of business law with suitable
example.
Ans:

4x5=20
Comprehensive Answer Question

1. (a). A minor fraudulently represent to a money lender that he was the full age and
obtain the loan of Rs 2000. Has money lender any right of action against the minor for
the money lends of for damages for fraudulent?
 (b).KMC pharma was manufacturing a medicine for cure cancer. They advertise in
magazine saying that whoever consumes this medicines will not suffer from cancer if
suffer they will give 100000 for compensation. Mr. Avinash read this advertisement in
the magazine and consumed, but he suffer from cancer. Mr. Avinash can claim for the
compensation?

2. (a). Miss Madhuri, a film actress agreed to work exclusively for a period of two years,
for a ABC film production company. However, during the said period she enters into a
contract to work for another film producer. A contract between Miss Madhuri and ABC
film production company valid or void according to Contract law of Nepal.

(b). KBC Pvt. Ltd. contracts with Bishal Traders to make and deliver certain machinery
to them by 30.5.2019 for Rs. 11.50 lakhs. Due to labour strike, KBC Pvt. Ltd could not
manufacture and deliver the machinery to Bishal Traders. Later, Bishal Traders procured
the machinery from another manufacturer for Rs. 12.75 lakhs. Discuss the legal remedies
of Bishal Traders against the KBC Pvt. Ltd. referring to the legal provisions of the
Nepalese Contract law.