Business Law Assignment

Name – Neha Sharma

Roll- 12216688519

Section – B (MBA - Weekend)

Q1. A beneficiary of a contract who is not a privy to the contract is debarred from filing a
suit for enforcement of a contract which confers benefits on him.

Ans.

FACTS:
Beneficiary of the contract is not hidden to the contract and it should be clearly mentioned.
RELEVANT LEGAL PROVISIONS:

TIC Act 1872, Section 2(b)When the person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.
Section 2(c): The person making the proposal is called the “promisor”, and the person
accepting the proposal is called the “promisee”
Section 73: Compensation for loss or damage caused by breach of contract.—When a contract
has been broken, the party who suffers by such breach is entitled to receive, from the party
who has broken the contract, compensation for any loss or damage caused to him thereby,
which naturally arose in the usual course of things from such breach, or which the parties
knew, when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss or damage sustained by
reason of the breach.
APLICABILITY OF LEGAL PROVISION:

Section 2 subsection a, b, c, d and e states that a promise becomes contract only when there is
consideration. According to Section 2(c) there are two parties in a contract a promisor who
makes the proposal and a promisee who accept proposal. Hence any other party have no legal
say in the contract. Further Section 2(e) states that promise or set of promises forming the
consideration for each other also states the legal obligation between the parties of the contract.
But
Concept of 'Beneficiary" as an exception to the Doctrine of Privity: The application of
Doctrine of Privity has been appreciated by the Indian courts with the well –recognized
exceptions like beneficiaries of a trust, family arrangement and marriage settlements, tort,
collateral contracts, creation of charge or covenants running with land. The aforementioned are
more or less the well- accepted and settled exceptions to the Doctrine of Privity. However
these are not exhaustive and from time to time, number of exceptions against the Doctrine of
Privity has been evolved and recognized by Indian judiciary and more than often quoted
exception is that a person for whose benefit the contract is entered into can certainly sue as it is
"beneficiary" in the contract.
SUPPORTING CASES:
Shuppu Ammal vs Subramaniyam: At the time of partition of Hindu undivided family the
brothers agreed to invest a certain sum of money in equal share for maintenance of their
mother but the subsequently refused to do so. Mother Sued them in the court of law. The Court
held that the mother is beneficiary of the contract between the brothers and hence entitle to
require her son to make the investment.
CONCLUSION:

in the above cases the court announce the verdict that since the Plaintiff is beneficiary of the
contract even though he/she is not the privity to contract is entitled to file a suite.
Hence the above statement is False

Q2. Mr Ram says in the presence of Mr Syam, “I intend to sell my car for a reasonable
price”. It implies that an offer is made by Mr Ram to Mr Syam

Ans

FACT:

The intend to sell the car at a reasonable rate

RELEVANT LEGAL PROVISIONS

Section 2 (a): When one person signifies to another his willingness to do or to abstain from
doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is
said to make a proposal;
Section 2(b): When the person to whom the proposal is made signifies his assent thereto, the
proposal is said to be accepted. A proposal, when accepted, becomes a promise;

APPLICABILITY OF LEGAL PROVISION:

According to the section 2(a) the willingness or intend to offer cannot be consider as an offer.

SUPPORTING CASE:

Harris Vs Nickerson: Auctioneer publishes advertisement in a newspaper for sale of office

furniture plaintiff came to the auction but due to certain circumstances the auction got
cancelled. The claimant sought to recover his expenses and the time which he had wasted in
attending the auction from the defendant, arguing that the withdrawal of the lots was a breach
of contract which had been formed by the offer made by the defendant in the advertisement,
and accepted by the claimant in attending the auction. The court held, dismissing the
claimant’s case, that the advertisement was merely a declaration to inform potential
purchasers that the sale was taking place. It was not an offer to contract with anyone who
might act upon it by attending the auction, nor was it a warranty that all the articles advertised
would be put or sale. As such, it did not legally bind the defendant to auction the items in
question on any particular day.

DECISION AND CONCLUSION:

From the above facts the intent to offer cannot be considered as offer. The intend cannot be
considered as willingness

Q3. An act of showing a Menu Card to a customer sitting on a dining table of a

restaurant is regarded as an offer to the customer.

Ans

FACTS:

An act of showing a Menu Card to a customer sitting on a dining table of a restaurant is not an
offer but an
‘Invitation to offer’ to the customer.
An offer is an expression of a person showing his willingness to another person to do or not to
do something, to obtain his consent on such expression. The acceptance of the offer by such a
person may result in a valid contract. An offer must be definite, certain and complete in all
respects. It must be communicated to the party to whom it is made. The offer is legally binding
on the parties.

Example: A tells B,”I want to sell my motorcycle to you at Rs. 30,000, Will you purchase it?”

An Invitation to Offer is an act before an offer, in which one person induces another person to
make an offer to him, it is known as an invitation to offer. When appropriately responded by
the other party, an invitation to offer results in an offer. It is made to the general public with
intent to receive offers and negotiate the terms on which the contract is created.
Example:
Menu card of a restaurant showing the prices of food
items. Railway timetable on which the train timings
and fares are shown.

RELEVANT LEGAL PROVISIONS

An offer is defined in section 2 (a) of the Indian Contract Act, 1872. Conversely, an invitation
to offer is not defined in the Indian Contract Act, 1872.

APPLICABILITY OF LEGAL PROVISIONS IN THE LIGHT OF FACTS:

Section 2 (a) of Indian Contract Act , 1872 defines the term "offer" as when one person
signifies to another his willingness to or to abstain from doing something with a view to
obtaining the assent of the other to such act or abstinence he is said to a proposal. The person
making the offer is called the offeror and the person to whom the offer is made is called the
offered.
Invitation to offer is not defined in the Indian Contract Act, 1872.

SUPPORTING CASE:

Bank of India and Others vs O.P

Swarnakar and Others Supreme Court of
India, 17th December 2002

Source:https://www.casemine.com/judgement/in/575fd284607dba63d7e6a4a4

“It was contended that the scheme if read in its entirety would clearly show that the same was
an offer and not an invitation to offer and in terms thereof an enforceable rights and duties had
been conferred upon both employer and employee which would, subject to certain exception,
be enforceable. It was contended that as the concerned employee did not exercise his option of
withdrawal within the specified date, namely, 15.2.2001, his case had been considered on the
premise that he had not withdrawn his offer

RENDER DECISION AND CONCLUDE

An Invitation to offer is a very familiar term as we all have dined in a restaurant where menu
cards show the price list of the concerned food items or booked a ticket by viewing the railway
timetable.
The Offer is quite a specific term as it is meant to create legal relations as it is an essential
element for making a contract. The ‘intention’ of the party making it, is the fundamental
phenomenon that differentiates the two terms.

Hence, FALSE

Q4. A promise of donation to be paid on building a school creates a binding contract

when such a promise is accepted.

Ans
 FACTS

A promise is not legally binding, but a contract is. While people of honour and strong moral
character strive to keep promises whenever possible, there are no legal repercussions for
breaking one the way there are for breaching a contract.

A contract requires both parties to provide “consideration” (something of value) before it will be
legally enforceable. A promise to make a gift/donation is usually not legally enforceable since
the recipient hasn’t provided any consideration.

RELEVANT LEGAL PROVISIONS

The Indian Contract Act 1872 defines acceptance in Section 2 (b) as “When the person to
whom the proposal has been made signifies his assent thereto, the offer is said to be accepted.
Thus the proposal when accepted becomes a promise.

DISCUSS THE APPLICABILITY OF LEGAL PROVISIONS IN THE LIGHT OF

FACTS.

Section 2 in The Indian Contract Act, 1872

(b) When the person to whom the proposal is made signifies his assent thereto, the
proposal is said to be accepted. A proposal, when accepted, becomes a promise;
(c) The person making the proposal is called the “promisor”, and the person accepting the
proposal is called the “promisee”;
(d) When, at the desire of the promisor, the promisee or any other person has done or
abstained from doing, or does or abstains from doing, or promises to do or to abstain from
doing, something, such act or abstinence or promise is called a consideration for the promise;
(e) Every promise and every set of promises, forming the consideration for each other, is an
agreement

PROVIDE SUPPORTING CASE LAWS IF ANY

Sahibabad Steels Pvt. Ltd. vs Engineering Projects

(India) Delhi High Court, 16th September, 1987
Source: https://indiankanoon.org/doc/1883963/

“Every guarantee, like other simple contracts, must be supported by valuable consideration.
Consideration is a necessary element of a binding contract. A promise is not binding as a
contract unless it is supported by some consideration. The absence of consideration, in our
opinion, would make the guarantee unenforceable.”
 RENDER DECISION AND CONCLUDE

A promise can be described as an offer which is an important element in forming a contract

but a promise alone may not be binding on both parties. This is so because an offer alone does
not oblige the parties to respect any terms. Furthermore, a promise can lapse with the passage
of time. Or it can also be rejected by the one to whom the promise is made. It is in this sense
only a commitment by one party to another to carry out or refrain from carrying a specified act
or acts. A promise can be binding or not but difficult to enforce in law.

A promise is a mere proposition of an offer. It may be binding on both parties but nearly
impossible to be enforced by law.
A contract is a legally binding agreement between two or more parties. It could be written,
verbal or implied.
A contract is an agreement which is legally binding and can be enforced by

law at all times. Hence, FALSE

Q 5. A contract entered between two parties where one party has committed a mistake
with respect to the identity of the other party becomes void instantaneously from the time
such mistake is identified.

Ans

FACTS

Section 22 of the act says that A contract is not voidable merely because it was caused by one
of the parties to it being under a mistake as to a matter of fact

RELEVANT LEGAL PROVISIONS:

As per Section 22 of the Act states that just because one party was under a mistake of fact the
contract will not be void or voidable. So if only one party has made a mistake of fact the
contract remains a valid contract.
However, there are some exceptions to this.
In certain conditions, even a unilateral mistake of fact can lead to a void or voidable agreement.
i) When Unilateral Mistake is as to the Nature of the Contract:

When a mistake is made by one of the parties regarding the very nature of the contract
being entered into and such a mistake is known to the other party, such a contract is said to
be void.
ii) Mistake of the Identity of the Person contracted with:
Generally, the identity of the parties entering into an agreement is not essential to a contract.
But in certain cases, when a unilateral mistake is made regarding the identity of the parties to
the agreement due to misrepresentation by one party who claims himself to be someone who
he really is not, In such cases the agreement is said to be void.

APPLICABILITY OF THE LEGAL PROVISION:

According to Section 22 a unilateral mistake does not make the contract voidable but there
exception to the section, the contract can be void if it is proved that contract was caused
due to fraud etc.

SUPPORTING CASE

In the case of Cundy v Lindsay (1878), Lindsay & Co were manufacturers of linen handkerchiefs
amongst other things who received an order of 250 Dozen handkerchiefs from a man named
Blenkarn, who imitated the signatures of “Blenkiron & Co.” a reputed firm located at “123,
Wood Street”.The man further mentioned his address to be at 37, Wood Street, Cheapside.
Lindsay and Co assumed that the order was from the reputed firm located at Wood-street and
thus delivered the order. Later the man sold the goods to an innocent party, Cundy. When
Blenkarn failed to pay for the said order Lindsay & Co sued Cundy for the goods. Lindsay and
Co claimed that since they sold the goods to Blenkarn under the mistaken assumption that they
were selling it to Blenkiron & Co, there was no real consent to the contract of sale.
It was held that there was a unilateral mistake by the claimants regarding the identity of the other
party making the contract void and hence the title of the goods did not pass to Blenkarn, and
therefore could not have passed to Cundy who was liable to return the goods back to Lindsay and
Co.

RENDER DECISION AND CONCLUSION:

The validity of a contract is hindered when consent is gained due to a mistake by the parties.
As discussed, a mistake can be of two types, Mistake of fact and Mistake of law. When consent
to a contract is gained due to a bilateral mistake of fact, the contract is said to be void but when
the mistake occurs due to a unilateral mistake of fact, the agreement is valid except in the cases
of mistake regarding the nature of the contract or identity of the parties to the contract.
Similarly, when consent to a contract is gained due to a mistake of the Indian law it is a valid
contract but if it is due a foreign law by both the parties, the contract is said to be void.
Q 6. Any statement made by a party to a contract which is not true, irrespective of such
statement being innocent or otherwise, is sufficient to render the consent obtained on the
basis of such statement as not free.

Ans

FACTS
Party made a false statement; the statement is rendering the consent obtained based on such
statement as not free.

RELEVANT LEGAL PROVISIONS:

Section 14: “Free consent” defined.—Consent is said to be free when it is not caused by—

(1) coercion, as defined in section 15, or

(2) undue influence, as defined in section 16, or

(3) fraud, as defined in section 17, or

(4) misrepresentation, as defined in section 18, or

(5) mistake, subject to the provisions of sections 20, 21 and 22.

Consent is said to be so caused when it would not have been given but for the existence of such
coercion, undue influence, fraud, misrepresentation or mistake

Section 18(3): causing, however innocently, a party to an agreement, to make a mistake as to the
substance of the thing which is the subject of the agreement.

APPLICABILITY OF THE LEGAL PROVISION:

Section 10 states that all agreements are contracts if they are made by free consent. Referring
to section 13 and section 14 for consent and free consent respectively the clear definition of
free consent appears. From section 18 subsection 3 the misrepresentation of facts however
innocently or with intention render the obtained consent as with not free consent.

SUPPORTING CASE:
Babul Vs R.A. Singh (1968): A told his wife within the hearing of their daughter that the
bridegroom proposed for her was a young man. The bridegroom however, was over sixty
years. The daughter gave her consent to marry him believing the statement by her father. Held
the consent was vitiated by misrepresentation and fraud.

RENDER DECISION AND CONCLUSION:

True, since misrepresentation means the concealment of the fact which leads to the hindrance
in making the correct and calculated decision which in turn leads to the decision which is not
by free consent.

Q 7. An agreement in the form of promissory note duly signed by the borrower wherein it
is stated that the money is being borrowed to meet the dowry expenditure for performing
marriage of an unmarried daughter of the borrower after she has attained 18 years of age
is enforceable.

Ans

FACTS
Promissory note duly signed by the borrower, money is being borrowed to meet the dowry
expenditure.

RELEVANT LEGAL PROVISIONS:

Section 23: What considerations and objects are lawful, and what not. —The consideration or
object of an agreement is lawful, unless—

it is forbidden by law4; or

is of such a nature that if permitted, it would defeat the provisions of any law; or

is fraudulent; or

involves or implies injury to the person or property of another; or

the Court regards it as immoral or opposed to public policy.

APPLICABILITY OF THE LEGAL PROVISION:

The signatory of the contract borrowing the money for an activity which is unlawful in the
court of law. With reference from Section 23 and 24 the contract is not enforceable.

RENDER DECISION AND CONCLUSION:

False ,based on above explanation

Q 8. Contracts under which the parties have not agreed on any time limits for the
performance of respective obligations of the parties remain valid as long as the parties do
not perform their respective obligations.

Ans

FACTS
Contract with no time limit
It is false as the contract does not become voidable at the option of the promise. Time is the
essence is specified in Section 55 of The Indian Contract Act, 1872, “When a party to a
contract promises to do a certain thing at or before a specified time, or certain things at or
before specified times, and fails to do any such thing at or before the specified time, the
contract, or so much of it as has not been performed, becomes voidable at the option of the
promisee, if the intention of the parties was that time should be of the essence of the contract
RELEVANT LEGAL PROVISIONS:

Section 46: Time for performance of promise, when no application is to be made and
no time is specified.—Where, by the contract, a promisor is to perform his promise
without application by the promisee, and no time for performance is specified, the
engagement must be performed within a reasonable time.
Explanation.—The question “what is a reasonable time” is, in each particular case, a question of
fact.

CONCLUSION:
True, But in Section 46 it is specified that the engagement must be performed within a
reasonable time. Also the reasonable time is defined according to the task in the contract

Q 9. Wager agreements are not enforceable because they are forbidden by law

Ans
FACTS
Wager above means the risk against someone else’s on the basis of the outcome of an
unpredictable event; Bet

RELEVANT LEGAL PROVISIONS:

Section 30: Agreements by way of wager void.—Agreements by way of wager are void; and
no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted
to any person to abide the result of any game or other uncertain event on which any wager is
made.

Exception in favour of certain prizes for horse-racing.—This section shall not be deemed to
render unlawful a subscription or contribution, or agreement to subscribe or contribute, made
or entered into for or toward any plate, prize or sum of money, of the value or amount of five
hundred rupees or upwards, to be awarded to the winner or winners of any horse-race.

APPLICABILITY OF THE LEGAL PROVISION:

The wager agreement are not enforceable because even though the agreement is done between
two parties the condition on which both the parties perform their part is depending upon a third
entity which is not the privy to the contract.

Their entity can be terms as for example bet made on cricket match the condition on which the
parties privy to contract will perform their agreement is based on the result of the cricket
match. Hence the wager is not enforceable.
SUPPORTING CASE:

A and B agree with each other that if it rains on Tuesday, A will pay Rs. 100 to B and if it does
not rain on Tuesday, B will pay A Rs. 100. Such an agreement is a wagering agreement and
hence is void.

RENDER DECISION AND CONCLUSION:

A wagering agreement is void ab initio, and S. 65 has no application to it Money paid directly
by a third party to a winner of a bet cannot be recovered from the loser. Even if a loser makes a
new promise to pay for his losses in consideration of his not being posted, the promise cannot
be enforced

Q 10. A minor who has misrepresented his age and entered a contract with another as if
he is a major is liable to perform his promise under such a contract due to operation of
the rule of estoppel.
 Ans

FACTS
Section 115 of the Indian Evidence Act, 1872 incorporates the meaning of estoppel as when
one person either by his act or omission, or by declaration, has made another person believe
something to be true and persuaded that person to act upon it, then in no case can he or his
representative deny the truth of that thing later in the suit or in the proceedings.

RELEVANT LEGAL PROVISIONS:

The following conditions are to be satisfied in order to apply the doctrine of estoppel:

● The representation must be made by one person to another person.

● The representation made must be as to facts and not as to the law.
● The representation must be made as to an existing fact.
● The representation must be made in a manner which makes the other person believe that it is
true.

APPLICABILITY OF THE LEGAL PROVISION:

A minor cannot be stopped by a false representation, as there can be no estoppel against a

statue. A minor who falsely represents himself to be a major and thereby induces another
person to enter into a contract with him, can plead minority as a defence. The infant is not
stopped from setting up infancy. A minor cannot be sued on the ground that he falsely
represented that he is of full age and thereby induced other person to enter into a contract,
because to allow an injured person to sue a minor person, i t would be giving him indirect
means of enforcing a void contract.

SUPPORTING CASE:

Akash, a leading entrepreneur, wants to buy a car. Raj is his good friend who owns a classic
motorcycle of great worth. When Akash contacts Raj to help him in purchasing a motorcycle,
he says that he can buy his motorcycle which he has been planning to sell for some time now.
Akash buys his motorcycle. Later on, the motorcycle became Raj’s property. Raj takes the
defence that when he sold that motorcycle to Akash, he had no title over it. The court held that
Raj would be liable and would have to prove his want of title.

RENDER DECISION AND CONCLUSION:

The Doctrine of estoppel is an important principle which protects people against fraud or
misrepresentation. There are several instances where an innocent person becomes a prey to
false representations made to them by some party. Sometimes the case may be such that the
plaintiff suffered huge losses.

Q 11. Not disclosing all the relevant and material facts by one party to an agreement to
another party despite having knowledge of such facts will amount to fraud due to silence.

Ans

FACTS

Not disclosing the relevant and material fasts in an agreement despite having knowledge of it.
RELEVANT LEGAL PROVISIONS:

TIC Act Section 17. “Fraud” defined.—“Fraud” means and includes any of the following acts
committed by a party to a contract, or with his connivance, or by his agent2, with intent to
deceive another party thereto of his agent, or to induce him to enter into the contract:—
(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
Explanation.—Mere silence as to facts likely to affect the willingness of a person to enter into
a contract is not fraud, unless the circumstances of the case are such that, regard being had to
them, it is the duty of the person keeping silence to speak3, or unless his silence is, in itself,
equivalent to speech.
APPLICABILITY OF THE LEGAL PROVISION:

Mere silence of a party as to certain facts does not generally amount to fraud. A party to the
contract is under no obligation to disclose the whole truth to the other party. Similarly there is
no duty to disclose facts, which are within the knowledge of both the parties. Silence in such a
case will not amount to fraud.
SUPPORTING CASE:

Sri Krishna Vs Kurukshetra University (1976)

 A student does not disclose details about attendance shortage in his application though he
knew it. He cannot be stopes from appearing examination. The student committed no fraud by
not disclosing the attendance shortage. It was the duty of the university to scrutinize forms and
call for explanation in case of doubts. However, silence cannot go too far. It amounts to fraud
in certain cases. They are as follows
1. When the party keeping silence under duty to speak. Duty to speak arises when one party
responses and the other accepts confidence. For example a father selling a horse to his son, has
the duty to tell his son whether the horse was of unsound mind, because the son responses
confidence in his father.
2.Finally silence amounts to fraud when a person voluntarily makes a settlement but stops half
a way through. Having committed himself to disclose he has duty to speak out remaining truth.
Failure to do so amounts to fraud.
RENDER DECISION AND CONCLUSION:
False

Q 12. The scope of unlawful objectives is exhaustively defined under the Indian Contract
Act by the legislature.

Ans

FACTS

Statement states "Unlawful Objectives" is exhaustively defined under India Contract Act by
RELEVANT LEGAL PROVISIONS:

Section 10. What agreements are contracts—All agreements are contracts if they are
made by the free consent of parties competent to contract, for a lawful consideration and
with a lawful object, and are not hereby expressly declared to be void.
Section 23: What considerations and objects are lawful, and what not—The
consideration or object of an agreement is lawful, unless—
1. it is forbidden by law; or
Section 10. What agreements are contracts—All agreements are contracts if they are
made by the free consent of parties competent to contract, for a lawful consideration and
with a lawful object, and are not hereby expressly declared to be void.
Section 23: What considerations and objects are lawful, and what not—The
consideration or object of an agreement is lawful, unless—
1. it is forbidden by law; or
2. is of such a nature that if permitted, it would defeat the provisions of any law; or
3. is fraudulent; or
4. involves or implies injury to the person or property of another; or
5. The Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful.
Every agreement of which the object or consideration is unlawful is void.
In this Section 23, the words expressions used are „Void‟, „object„, and „consideration‟.
There may not be „void object‟ as such, but one can consider it as a void contract having
unlawful objects which can be declared void objects.
Similarly, there may not be „void consideration‟ as such, but one can consider it as a void
contract having unlawful/illegal consideration which can be declared void consideration.

APPLICABILITY OF THE LEGAL PROVISION:

For understanding the statement, it is necessary to understand the difference between object
and objective. An object is the purpose of a thing, while an objective is a goal to be
completed.
Section 23 is confined to the object of the transaction and not to the reasons or motives
which prompted it. In determining the validity of the contract, the object of the agreement
and not action actually taken under the agreement should be considered.

SUPPORTING CASE:

A, B and C enter into an agreement for the division among them of gains acquired or to be
acquired, by them by fraud. The agreement is void, as its object is unlawful.

RENDER DECISION AND CONCLUSION:

Based on the above explanations the statement under question is False.

Q 13. Void contracts are those which are explicitly declared to be void under the Indian
Contract Act and are not enforceable as they fail to meet the conditions specified under
Section 10 of the said Act.

Ans

FACTS
Condition for a contract to be void

RELEVANT LEGAL PROVISIONS:

TIC Act

Section 10: What agreements are contracts. —All agreements are contracts if they are made by
the free consent of parties competent to contract, for a lawful consideration and with a lawful
object, and are not hereby expressly declared to be void.

Nothing herein contained shall affect any law in force in 1[India] and not hereby expressly
repealed by which any contract is required to be made in writing2 or in the presence of
witnesses, or any law relating to the registration of documents.

Section 14 to Section 30

APPLICABILITY OF THE LEGAL PROVISION:

Condition in Section 10 can be termed as a primary condition, when it is violated the contract
is void. But, when any contract satisfies the section 10 it also needs to satisfy various other
section, which if failed to do so becomes void.

SUPPORTING CASE:
Example can be taken as a contract is made to borrow money for dowry, it satisfies Section 10
but is an illegal act hence is void.

RENDER DECISION AND CONCLUSION:

False, there are many sections when, violated the contract becomes void

Q 14. An offer is valid only when it is certain whereas an acceptance is valid even when it
is unconditional.

Ans

FACTS
Validation of offer and acceptance of offer
RELEVANT LEGAL PROVISIONS:
Section 7: Acceptance must be absolute.—In order to convert a proposal into a promise, the
acceptance must—

(1) be absolute and unqualified;

(2) be expressed in some usual and reasonable manner, unless the proposal prescribes the way
it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the
acceptance is not made in such manner, the proposer may, within a reasonable time after the
acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed
manner, and not otherwise; but if he fails to do so, he accepts the acceptance.

Section 8: Acceptance by performing conditions, or receiving consideration.—Performance of

the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise
which may be offered with a proposal, is an acceptance of the proposal.

Section 29: Agreements void for uncertainty.—Agreements, the meaning of which is not
certain, or capable of being made certain, are void.

APPLICABILITY OF THE LEGAL PROVISION:

The acceptance of a proposal has to be unconditional else the act of acceptance becomes the
act of giving an offer

Ex. A offer B to buy car for Rs 1 lakh payable in 7 days. B must accept this offer
unconditionally, but B makes a counteroffer to Buy the car for Rs. 80,000 payable in 4 days
now A has to accept the offer, this is called counter offer.

RENDER DECISION AND CONCLUSION:

Thus, it can be concluded that an offer is valid only when it is certain and an acceptance is
valid only when it is unconditional.

Q 15. Communication of acceptance is complete as against the proposer when it comes to

his knowledge and not before.
Ans

FACTS
Any acceptance made subject to final approval is a provisional acceptance , and it does
not bind either party until final ... as against the person to whom it is made , when it
comes to his knowledge .
Communication of acceptance is complete as against the proposer when it is put in a course of
transmission to him so as to ... What is reasonable time is a question of fact and circumstances
of each case .
RELEVANT LEGAL PROVISIONS:
Clause No. 5 of Indian Contract Act 1872 (Revocation of proposal )which states that: a proposal
may be revoked at any time before the communication of its acceptance is complete as against
the prosper , but not afterwards .

APPLICABILITY OF THE LEGAL PROVISION:

The communication of a proposal is complete when it comes to the knowledge of the person
The communication of an acceptance is complete, as against the proposer, when it is put
in a course of transmission to ... B may revoke his acceptance at any time before or at the
moment when the
letter communicating it reaches A, but not ... insanity of the proposer, if the fact
of his death or insanity comes to the knowledge of the acceptor before
acceptance.

SUPPORTING CASE:
A proposal by a letter sent by post to sell his house to B. B accepts the proposal by letter
sent by post . A may revoke his proposal at any time before or at the moment when B post
his letter of acceptance but not afterwards.
RENDER DECISION AND CONCLUSION:
The above statement is false as the proposal can’t be revoked after acceptance

Q 16. Minor is incapacitated from entering into a contract under the Indian Contract Act
and is therefore absolutely free from any liabilities or any charge on its estate.

Ans

FACTS
A minor is one who has not attained the age of 18, and for every contract, the majority is a
condition precedent. By looking at the Indian law, minor’s agreement is a void one, meaning
thereby that it has no value in the eye of the law, and it is null and void as it cannot be
 enforced by either party to the contract. And even after he attains majority, the same
agreement could not be ratified by him. Here, the difference is that a minor's contract is
void/null, but is not illegal as there is no statutory provision upon this .

RELEVANT LEGAL PROVISIONS:

Section 10 : according to Section 10 of the Indian Contract Act, 1972 all agreements are not
contracts. Only those agreements are contracts that are made by parties who are competent to
enter into a contract. Further, the word ‘competent’ has been described in Section 11 of Indian
Contract Act; it is inclusive of 3 essentials-

● The person should be of the age of majority; that is to say, 18 years

● He should be of sound mind at the time of making a contract.
● He should not be disqualified from contracting by any law to which he is subject.

It can be said that majority is an essential before entering into a contract.

APPLICABILITY OF THE LEGAL PROVISION:

When minor has performed his obligation: In a contract, a minor can be a promisee but not a
promisor. So if the minor has performed his part of the promise, but the other party hasn’t the
minor being in the position of a promisee he can enforce the contract.
A contract entered into by guardian of minor for his benefit: In that case, a minor can sue
the other party when it does not perform its promise. In the case of Great American Insurance
v. Madan Lal the guardian on the behalf of her son entered into an insurance contract in respect
of fire for the minor’s property. When the property was damaged and the minor asked for
compensation, the insurer denied it by saying that a contract with a minor is a void one. But
later the court held that this contract was enforceable, and he is liable to pay compensation.

SUPPORTING CASE:
the plaintiff Dharmodas Ghosh, when he was a minor, mortgaged his property to the defendant,
a moneylender. At that time, the defendant's attorney had the knowledge about the plaintiff's
age. The plaintiff later paid only Rs 8000 but refused to pay rest of the money. The plaintiff’s
mother was his next friend (legal guardian) at that time, so he commenced an action against the
defendant saying that at the time of making of a contract, he was a minor, so the contract being
a void one, he is not bound by the same.
RENDER DECISION AND CONCLUSION:
Based on the above explanations the statement under question is False.

Q 17.A Pakistan national who has illegally entered into India and presently lodged in jail
having been remanded to judicial custody cannot enter into any contract in India.

Ans
 FACTS

No, He cannot enter into contract as he is a person disqualified by law to enter into a contract.

As per section 11 of Indian Contract act Every person is competent to contract who is of the age
of majority according to the law to which he is subject , and who is of sound mind, and is not
disqualified from contracting by any law to which he is subject.

Following category of persons do not possess the legal capacity to enter into a contract:

I. Minor
II. Person of
unsound mind
III.Persons
disqualified by
law
RELEVANT LEGAL PROVISIONS:

Alien enemy: A person who is an Indian citizen is called an alien or non-citizen of the Republic
of India. An alien enemy is a person whose country is at war with India. In India, a contract with
an alien enemy is void but a contract with an alien friend is valid under the Indian Contract Act.
No contract can be made with an alien enemy during the subsistence of war, except with the
prior approval of the Indian Government.

Convicts: A convict is a person, who is sentenced by a competent court to the death sentence
or imprisonment. A convicted person cannot enter into a contract while undergoing sentence.
When the period of his sentence is over or he is pardoned, then his incompetency is also over.

Insolvent: There is no prohibition against a contract by an insolvent after the insolvency

proceedings have commenced but before adjudication. In simple words, the insolvent is
disqualified from entering into a contract until he is discharged by the court of law.

For example, A executed a sale-deed, but before he could get it registered the deed took
place during the pendency of the insolvency proceedings. Under these circumstances, the
sale-deed is valid and binding on the parties.

Foreign sovereigns and diplomats: Foreign sovereigns have some special privileges. Generally,
they cannot be sued unless they, themselves surrender under the jurisdiction of the Indian court
of law. They cannot enter into a contract unless an Indian citizen obtained a prior sanction of
the Government of India, in order to sue them in the Indian court of law.

Corporations: The power of a corporation to make a contract vary according to the character
of the corporation. A company is an artificial person created by law and is competent to
contract. But its power of contract is subject to the limitation which may be either necessary or
express.

APPLICABILITY OF THE LEGAL PROVISION:

When the illegal immigrant is in legal custody, the same person will be presented before the
court hence will be given counsellor access. The counsellor access can be termed as a contract
between the illegal immigrant and counsellor.

SUPPORTING CASE:

Mohammed Ajmal Mohammad Amir Kasab @ Abu Mujahid Vs State of Maharastra

RENDER DECISION AND CONCLUSION:

From the above discussion, it is very clear that only those people are competent to contract who
is major, sound mind and not disqualified by law. A person who is diagnosed as being mentally
ill, that prevents them from managing his own affairs may be declared mentally incompetent by
a court of law. When a person is
judged to be incompetent, a guardian is appointed to handle the person’s property and personal
affairs.

Q 18. Domination of will of another person is conclusive when the person who has been
alleged to have dominated the will of the other person has apparent authority over the
other person.

Ans

FACTS
The Undue influence

RELEVANT LEGAL PROVISIONS:

Section 16.“Undue influence” defined.—(1) A contract is said to be induced by “undue
influence” where the relations subsisting between the parties are such that one of the parties is
in a position to dominate the will of the other and uses that position to obtain an unfair
advantage over the other.
(2) In particular and without prejudice to the generality of the foregoing principle, a person is
deemed to be in a position to dominate the will of another—

(a) where he holds a real or apparent authority over the other, or where he stands in a fiduciary
relation to the other; or

(b) where he makes a contract with a person whose mental capacity is temporarily or
permanently affected by reason of age, illness, or mental or bodily distress.

Nothing in this sub-section shall affect the provisions of section 111 of the Indian Evidence
Act, 1872

SUPPORTING CASE:
Karnal Distillery co. Ltd Vs Ladli Prasad: confirmed by the supreme court in 1963brother in
respect of a compromise arrangement the transition was held to be voidable at the instance of
the younger brother.

RENDER DECISION AND CONCLUSION:

While concluding, it may be said that undue influence is one of the ways under which there is
inadequate consent as defined under Section 13 of the Act. In addition, the formation of a
contract by misusing one’s influence violates the principle of equity. Thus, in fiduciary and other
relationships where one party enjoys real authority or influence, one must ascertain that the
contract he/she has made is free from any external manifestation. However, such contracts are
voidable at the option of the party whose consent was so taken under Section 19A and cannot be
enforced in Court of law.

Q 19. A promise to give a gift becomes an enforceable agreement even without any
consideration on its acceptance by the promisee.

Ans

FACTS
A promise to give a gift has been made by someone and is volunteered by someone by
others without any consideration. In this question it’s a promise to give a gift without any
consideration by another party.
RELEVANT LEGAL PROVISIONS
Clause No. 25 which states that: Agreement without consideration, void, unless it is in
writing and registered, or is a promise to compensate for something done or is a
 promise to pay a debt barred by limitation law.
DISCUSS THE APPLICABILITY OF LEGAL PROVISIONS IN THE LIGHT FACTS
No Consideration- No Contract. The General Rule is that an agreement without consideration
is a void agreement and not a contract. Purely gratuitous or unilateral or bare promise (nudum
pactum) creates no right to action. The parties must get some benefit, advantage at the cost of
something in an agreement. In short, a contract must have some valid consideration. If there is
no consideration then there is no contract.
PROVIDE SUPPORTING CASE LAWS
For instance, A promise to pay Rs.1000/- to B. It is a unilateral promise without any
consideration, and therefore it is merely a promise but not a contract.
RENDER DECISION AND CONCLUDE
The above statement is false as this is the promise for a gift without consideration.

Q 20. Persons of unsound mind as mentioned in the Indian Contract Act are only those
who are diagnosed by a duly constituted medical board and certified by it as suffering
from permanent and chronic psychological disorders.

Ans

FACTS
The facts represented in the above statement mention only those who are diagnosed by a
duly constituted medical board and certified by it as suffering from permanent and chronic
psychological disorders.
RELEVANT LEGAL PROVISIONS:
Section 12: What is a sound mind for the purposes of contracting—A person is said to be
of sound mind for the purpose of making a contract, if, at the time when he makes it, he is
capable of understanding it and of forming a rational judgment as to its effect upon his
interests.
A person who is usually of unsound mind, but occasionally of sound mind, may make a
contract when he is of sound mind.
A person who is usually of sound mind, but occasionally of unsound mind, may not make a
contract when he is of unsound mind.

APPLICABILITY OF THE LEGAL PROVISION:

Thus, the Contract Act is very clear about its purpose of sound mind at the time of contracting.
The test of sound mind should be made applicable to the following categories of persons such as-
1. Lunatic or insane persons.
2. Person under influence of Drinks or other intoxicants.
3. Seriously ill patients or people delirious from fever etc.
SUPPORTING CASE:
Ashfaq Qureshi v. Aysha Qureshi (Nivedita Yadav) (AIR 2010 chh 58),a Hindu girl was
married to a Muslim man, the girl filed a suit on the grounds that she was not in her sense as
she was under intoxication at the material time and was not conscious of ongoing conversion
and nikah ceremony. And also that she had not lived with that man for a single day. She
proved all the stated facts and thus the marriage was declared void on the grounds that as she
was intoxicated so she was not in a position to take a decision and forming a rational
judgement in regard to his interest.

RENDER DECISION AND CONCLUSION:

Based on the above explanations the statement under question is False.