Unit -1
Indian Contract Act 1872
On the basis of creation
On the basis of validity
On the basis of execution
On the basis of Liabilities
Lekhpal promises today Rs 5 lakhs to his son if the son passes the CA
exams. On passing the exams, the son claims the money. Can the son
file a suit against the father?
Answer:
No. Because it is a domestic agreement [no intention to create legal
relations]
X, a coolie in uniform carried Y’s luggage from the railway platform to
taxi without being asked by Y to do so. Y does not make any attempt to
stop X from carrying the luggage. Is Y bound to make payment to X?
Answer:
Yes [implied contract: implied offer & implied acceptance (silence as a
manifestation of acceptance)]
Arun has two cars – one of white colour and another of red colour. He
offers to sell one of the cars to Basu thinking that he is selling the car
which has white in colour. Basu agrees to buy the car thinking that Arun
is selling the car which has red in colour. Will this agreement becomes a
valid contract?
Answer:
No. [Hint – since consensus idem is missing]
Point out with reason whether the following agreements are valid or
void:
1.Riya promised Samarth to lend Rs. 500,000 in lieu of consideration
that Samarth gets Riya’s marriage dissolved and he himself marries
her.
Ans: Void Agreement – As per Section 23 of the Indian Contract Act,
1872, an agreement is void if the object or consideration is against
public policy. The agreement in the given case is of the nature which
interferes with marital rights & duties of a person and is therefore
opposed to public policy, illegal and void ab initio.
2. Aryan agrees with Mathew to sell his black horse. Unknown to both
the parties, the horse was dead at the time of agreement.
Ans: Void Agreement – As per Section 20 of the Indian Contract Act,
1872, an agreement made on the grounds of a Bilateral Mistake of fact
is regarded as void. The mistake of fact is with respect to the existence
of subject matter at the time of formation of the contract.
3. Ravi sells the goodwill of his shop to Shyam for Rs. 4,00,000 and
promises not to carry on such business forever and anywhere in India.
Ans: Void Agreement – As per Section 27 of the Indian Contract Act,
1872, an agreement that is in restraint of trade is treated as void.
However, a buyer of goodwill can exceptionally impose certain
restrictions on the seller of goodwill, not to carry on the same business
provided such restrictions are reasonable regarding the duration &
place of business. The restrictions imposed in the given case are
unreasonable and therefore the agreement is in restraint of trade &
void
4. In an agreement between Prakash and Girish, there is a condition
that they will not institute legal proceedings against each other without
consent.
Void Agreement – As per Section 28 of the Indian Contract Act, 1872,
an agreement that is in restraint of legal proceedings is void. The
agreement in the given case imposes an absolute restriction on the
rights of the parties to institute legal proceedings & is therefore
regarded as void.
Mr W boards a bus at a bus stop. He travels for some distance and on
arrival at his destination, he makes a move to get off the bus. The
conductor stops him and asks for the fare. He denies his duty to pay to
say they did not form any contract comment.
Answer:
Implied contract – a contract that can be understood from the conduct
of the parties – Mr W is bound to pay the fare for availing the
transportation services.
State whether a contract is created in the following cases:1.Mr. R promises to supply 4 teakwood chairs to Mr. S for a price which shall be
fixed by Mr. F.
A valid contract is created – the terms of the contract should be certain or capable
of being made certain.
2. Mr. P promises to pay Rs. 10 Lacs to Mr. T, if he brings back to life Mr. P’s dead
wife.
No contract is created – the impossibility of performance – void ab initio.
3. A mother promises to give Rs. 500 to her son, if he accompanies her for
shopping.
No contract is created – domestic agreements are mere agreements and not
contracts.
4. Mr. P promises to pay Rs. 10 Crores to Mr. N if he resigns from his party and joins
Mr. P’s political party.
No contract is created – political agreements are mere agreements and not
enforceable.
Under the Indian Contract Act, 1872, there are specific principles related to offer and acceptance, which are crucial in determining whether Y can sue the
shopkeeper in this scenario.
1. Offer and Acceptance:
- An offer is a proposal made by one party (the offeror) to another (the offeree) indicating a willingness to enter into a contract on certain terms.
- Acceptance occurs when the offeree agrees to the terms of the offer.
2. Communication of Offer and Acceptance:
- For a contract to be formed, there must be a clear and unambiguous communication of the offer and acceptance between the parties.
3. Price Tag as an Invitation to Offer:
- In commercial transactions, such as displaying goods in a shop with a price tag, the general rule is that the price tag is considered an invitation to offer, not
an offer itself.
- When Y saw the mobile phone with a price tag of Rs. 10,000, it was an invitation for customers to make an offer to purchase the phone at that price.
4. Shopkeeper's Right to Refuse:
- The shopkeeper has the right to refuse to sell the mobile phone to Y at the displayed price if it was a clear mistake or error in the price tag.
- This is based on the principle that there was no valid offer by the shopkeeper at the displayed price, and hence no acceptance occurred.
5. Legal Position:
- Y cannot successfully sue the shopkeeper under the Indian Contract Act, 1872, because there was no valid offer made by the shopkeeper at the price
displayed on the mobile phone.
- The price tag was an invitation to offer, and until Y made an offer to purchase at that price and the shopkeeper accepted it, no binding contract was formed.
In conclusion, Y cannot sue the shopkeeper for refusing to sell the mobile phone at the displayed price under the Indian Contract Act, 1872, as the price tag
constitutes an invitation to offer, not a binding offer itself.
CAPACITY TO CONTRACT