AFRASIAB MOHAL JUDICIAL ACADEMY, LAHORE

0345-4644423
CONTRACT ACT, 1872

1. Mr. Ahuja of Delhi engaged Mr. Singh as his agent to buy a house in West Extension area. Mr. Singh
bought a house for Rs. 20 lakhs in the name of a nominee and then purchased it himself for Rs.24
lakhs. He then sold the same house to Mr. Ahuja for Rs 26 lakhs. Mr. Ahuja later comes to know the
mischief of Mr. Singh and tries to recover the excess amount paid to Mr. Singh. Is he entitled to
recover any amount from Mr. Singh? If so, how much explain.
Agent is not to deal on his own account. If the agent wants to do deal on his own account, he must disclose
all the material facts to his principal and obtain his consent. The principal can rescind the contract, if any
material facts were dishonestly concealed by the agent or the dealings of the agent on his own account have
been disadvantageous to the principal. Agent can not make any secret profit out of the business of agency.
If the agent deals on his own account without disclosing it to the principal, the principal is entitled to claim
from the agent any benefit received by him, out of such transaction. Mr. Ahuja engages Mr. Singh as his
agent for purchase of a house. Mr. Singh purchases a house in the name of the nominee and then purchases
the same house on behalf of Mr. Ahuja (his principal), thus making a profit of Rs. 4 lakhs. However, he
does not disclose these facts to Mr. Ahuja. Non-disclosure of profit of Rs.4 lakhs made by Mr. Singh
amounts to a beach of duty by Mr. Singh. Therefore, Mr. Ahuja is entitled to claim the secret profit of Rs. 4
lakhs made by Mr. Singh.

2. A hires a carriage enough of B and agrees to pay Rs. 500 as hire charges. The carriage is unsafe,
though B is unaware of it. A is injured and claims compensation for injuries suffered by him. B
refuses to pay. Discuss the liability of B.
In case of a non-gratuitous bailment, the bailor is liable to disclose all the faults whether known to him or
not. Accordingly, the bailor shall be liable for damages for any loss caused to the bailee whether or not he
was aware of the faults. In the the given case the hire of carriage of B by A amounts to non-gratuitous
bailment. Therefore, it was the duty of B to disclose to A that the carriage was unsafe. It is immaterial as to
whether or not B was aware of the fact that the carriage was unsafe. A is entitled to claim compensation
from B.

3. C, the holder of an over due bill of exchange drawn by A as surety for B, and accepted by B, contract
with X to give time to B, Is A discharged from his liability?
Where a contract to give time to the principal debtor is made by the creditor with a third person, and not
with the principal debtor, the surely is not discharged. Accordingly, A is not discharged from his liability.

4. A contracts with B for a fixed price to construct a house for B within a stipulated time. B would
supply the necessary material to be used in the construction/ C guarantee A’s performance of the
contract. B does not supply the material as per the agreement. IS C discharged from his liability?
The surely is discharged by any act or omission of the creditor, the legal consequence of which is the
discharge of the principal debtor. Failure to supply the necessary material by B (i.e., the creditor) amounts
to an omission on the part of the creditor resulting in discharge of A (i.e., the principal debtor), and
consequently, C (i.e., the surety) is discharged.
5. What are the difference between bank gaurantee and ususal gaurantee?
Following are some points of difference between a bank guarantee and a usual guarantee:A usual guarantee
is governed by Sec. 126 of the Indian Contract Act, 1872. A bank guarantee is not directly governed by
Sec. 126. An ordinary guarantee is a tri-partite (3 parties) agreement involving the surety, the debtor and
the creditor.
 But a bank guarantee is a contract involving two parties i.e. the bank and the beneficiary. In an ordinary
guarantee, the contract between the surety and the creditor arises as a subsidiary to the contract between the
creditor and the principal debtor. The bank guarantee is independent of the main contract. In an ordinary
guarantee, the inter se disputes between the debtor and the creditor have a material effect upon the surety's
liability. However, the bank guarantee is independent of the disputes, arising ex contractu (arising out of
the contract). An ordinary guarantee does not have any time limit before which the debt has to be claimed.
Bank guarantees generally have a specific time within which they are functional.

6. Can the invocation of a bank guarantee be prevented by initiating arbitration proceedings?

If the bank guarantee is unconditional, arbitration proceedings would in no way affect the enforcement of
the guarantee. This is because an unconditional bank guarantee is independent of the main contract which
refers disputes to arbitration. However, if the bank guarantee includes a clause to the effect that it could not
be invoked prior to the decision of the arbitrators, such a bank guarantee, which is conditional, cannot be
invoked and an injunction can be granted.

7. How can a beneficiary restrain the invocation of a bank gaurantee?

The invocation of a bank guarantee by the beneficiary can be restrained by an injunction under the Civil
Procedure Code, 1908, or the Specific Relief Act, 1963. However, the normal considerations, which apply
in granting an injunction, will not apply in cases of a bank guarantee. Courts are usually reluctant to grant
an injunction against a bank guarantee. If a bank guarantee has to be restrained, it has to satisfy the
following conditions:
Fraud; Irretrievable injustice or injury
AFRASIAB MOHAL ADVOCATE

8. How do bank guarantees help in commercial contracts? 0345 4644423

Guarantees are important instruments used to minimize the risks that are involved in commercial contracts.
For the enforcement of ordinary guarantees, as construed dependence of the guarantee on the main contract
may lead to unnecessary disputes and litigation, arising from the main contract. These disputes may have a
material effect on the guarantee, thereby blocking funds in litigation. Hence, there was a need for an
innovative instrument which would enable the guarantee to serve its original purpose; namely, providing a
form of security.The bank guarantee is one such innovative financial instrument whereby, if the beneficiary
perceives that there has been a breach of contract by the other party, he can encash the guarantee and avail
of the amount immediately, without having to undergo the hassles of litigation. Thus, the relevance of a
bank guarantee achieves relevance.

9. What does the term ‘bank guarantee’ mean?

A bank guarantee is a commercial instrument in the nature of a contract, intended between two parties, to
secure compliance with the contract. It is an off-shoot of the main contract between two parties. A bank
gaurantee is a guarantee made by a bank on behalf of a customer (usually an established corporate
customer) should it fail to deliver the payment, essentially making the bank a co-signer for one of its
customer's purchases.

10. A’ stands surety for ‘B’ for any amount which ‘C’ may lend to B from time to time during the next
three months subject to a maximum of Rs. 50,000. One month later A revokes the guarantee, when C
had lent to B Rs. 5,000. Referring to the provisions of the Indian Contract Act, 1872 decide whether
‘A’ is discharged from all the liabilities to ‘C’ for any subsequent loan. What would be your answer
in case ‘B’ makes a default in paying back to ‘C’ the money already borrowed i.e. Rs. 5,000?
The problem as asked in the question is based on the provisions of the Indian Contract Act 1872, as
contained in Section 130 relating to the revocation of a continuing guarantee as to future transactions which
can be done mainly in the following two ways:
i. By Notice: A continuing guarantee may at any time be revoked by the surety as to future
transactions, by notice to the creditor.
 ii. By death of surety: The death of the surety operates, in the absence of any contract to the
contrary, as a revocation of a continuing guarantee, so far as regards future transactions. (Section
131).
The liability of the surety for previous transactions however remains. Thus applying the above
provisions in the given case, A is discharged from all the liabilities to C for any subsequent loan.
Answer in the second case would differ i.e. A Is liable to C for Rs. 5,000 on default of B since the
loan was taken before the notice of revocation was given to C.

11. ‘A’ applies to a banker for a loan at a time where there is stringency in the money market. The
banker declines to make the loan except at an unusually high rate of interest. A accepts the loan on
these terms. Whether the contract is induced by undue influence? Decide.
In the given problem, A applies to the banker for a loan at a time when there is stringency in the money
market. The banker declines to make the loan except at an unusually high rate of interest. A accepts the
loan on these terms. This is a transaction in the ordinary course of business, and the contract is not induced
by undue influence. As between parties on an equal footing, the court will not hold a bargain to be
unconscionable merely on the ground of high interest. Only where the lender is in a position to dominate
the will of the borrower, the relief is granted on the ground of undue influence. But this is not the situation
in this problem, and therefore, there is no undue influence.

12. Mr. Dubious textile enters into a contract with Retail Garments Show Room for supply of 1,000
pieces of Cotton Shirts at Rs. 300 per shirt to be supplied on or before 31st December, 2006.
However, on 1st November, 2006 Dubious Textiles informs the Retail Garments Show Room that he
is not willing to supply the goods as the price of Cotton shirts in the meantime has gone upto Rs. 350
per shirt. Examine the rights of the Retail Garments Show Room in this regard.
In the given problem Dubious Textiles has indicated its unwillingness to supply the cotton shirts on 1st
November 2006 itself when it has time upto 31st December 2006 for performance of the contract of supply
of goods. It is therefore called anticipatory breach of contract. Thus Retail Garments show room can claim
damages from Dubious Textiles immediately after 1st November, 2006, without waiting upto 31st
December 2006. The damages will be calculated at the rate of Rs.50 per shirt i.e. the difference between
Rs. 350/- (the price prevailing on 1st November) and Rs. 300/- the contracted price.

13. Ram, Rahim and Robert are partners of software business and jointly promises to pay Rs.30, 000 to
Raheja. Over a period of time Rahim became insolvent, but his assets are sufficient to pay one-forth
of his debts. Robert is compelled to pay the whole. Decide whether Robert is required to pay whole
amount himself to Raheja in discharging joint promise.
According Section 43 of Indian Contract Act, 1872 when two or more persons make a joint promise, the
promisee may, in absence of express agreement to 7 the contrary, compel any one or more of such joint
promisers or perform the whole of the promise. Further, if any one of two or more joint promisers makes
default in such contribution, the remaining joint promisors must bear the loss arising from such default in
equal shares. Therefore, in this case, Robert is entitled to receive 2,500 from Rahims assets and 13,750
from Ram.

14. Miss.Chitra, a singer, enters in to a contract with the manager of Bangalore Gate Club, to sing in the
Club for two concerts every week during the next two months and the club agrees to pay her at the
rate of Rs.2000 for each concert. On the seventh concert Miss.Chitra willfully absents herself. With
the assent of the manager of the club, Miss.Chitra sings for the eighth concert. But on the following
day, the club, puts an end to the contract. Can Miss.Chitra claim damages for breach of contract?
Advise .
On the seventh Concert when Miss.Chitra willfully absents herself, the club is at liberty to put an end to the
contract. If Miss.Chitra sings on the eighth Concert with the consent of the club. The club has signified its
acquiescence in the continuance of the contract and cannot now put an end to it. The club is entitled to
compensation for the damage sustained because of Miss.Chitra’s failure to sing on the seventh concert. If
 the club puts an end to the contract, Miss.Chitra can claim damages for breach of contract [Section 39 of
The Indian Contract Act, 1872)].

15. Mr. X, is employed as a cashier on a monthly salary of Rs.2,000 by ABC bank for a period of three
years. Y gave surety for X’s good conduct. After nine months, the financial position of the bank
deteriorates. Then X agrees to accept a lower salary of Rs.1,500/- per month from Bank. Two months
later, it was found that X has misappropriated cash since the time of his appointment. What is the
liability of Y?
If the creditor makes any variance (i.e. change in terms) without the consent of the surety, then surety is
discharged as to the transactions subsequent to the change. In the instant case Y is liable as a surety for the
loss suffered by the bank due to misappropriation of cash by X during the first nine months but not for
misappropriations committed after the reduction in salary. [Section 133, Indian Contract Act, 1872].

16. A bank sanctions an overdraft limit against the security of a continuing guarantee. The surety dies.
Can the bank proceed against the heirs of the surety under the guarantee and, if so, to what extent ?
The death of the surety operates, in the absence of a contract to the contrary, as a revocation of a continuing
guarantee as regards future transactions. It may, however, be noted that the estate of the surety shall be
liable for all transactions entered into between the creditor and the principle debtor prior to the death of the
surety, unless there was a contract to the contrary. However, his estate shall not be liable for the
transactions entered into after his death, even if the creditor has no notice of the death. Thus, in the given
problem, since there is nothing against attachment of surety's properties after his death, the heirs of the
surety shall be liable for the debit balance in the overdraft account but this liability shall be limited to the
higher of the following two: 1. The amount of debit balance in the overdraft account as on the date of
surety's death; and 2. The value of the surety's estate acquired by the heirs.

17. A guaranteed the honesty of a servant in the employment of B. The servant was guilty of dishonesty
in the course of the service, but B continued to employ him and did not inform A of what had
occurred. Subsequently, the servant committed further acts of dishonesty. B requires A to make good
the loss. Discuss the liability of A.
In the given case, A cannot be held liable because of change in circumstances not brought to his notice by
the creditor having knowledge of the same. Under such circumstances. Section 139 of the Indian Contract
Act, 1872 becomes operative. It provides that if the creditor does any act which is inconsistent with the
right of surety, or omits to do any act which his duty to the surety requires him to do, and the eventual
remedy of surety himself against the principal debtor is thereby impaired, the surety is discharged. Thus, in
the present case the omission of the creditor to inform A of servant's dishonesty and his conduct of
continuing to employ him, shall discharge the surety A.

18. An illiterate woman executes a sale deed on the assumption that it was a power of attorney and that
the deed after it was executed, was not read over to the lady. Advise the lady. In the present case,
illiterate woman claims to have signed a power of attorney whereas she has actually signed a sale
deed. Thus, there is a mistake as to the very nature of the contract itself.
In such cases. Courts have held that inspite of the mistake being unilateral, contract shall be void because
consent is a function of mind and, therefore, if a person has mentally not consented to something, he has
actually not consented at all. So there is no consent to the sale deed and thus no contract at all. Thus, lady
may be advised to proceed under mistake and the sale deed shall be set aside. Similar facts appeared before
the Calcutta High Court in the case of Bala Devi v. Shantirnoy.

19. A enters into a contract with B for the sale of goods to be delivered at a future date. Is it a wagering
agreement? Give reasons.
The contract in question is not a wagering agreement. It only involves future consideration and is a valid,
enforceable, common business transaction. A transaction, to be wagering, must make the performance of
 the transaction dependent upon the happening or nonhappening of an uncertain future event. The
performance in the given case being not so dependent, transaction is not wagering.

20. fraudulently informs B that A's estate is free from encumbrance. B there- upon buys the estate. The
estate is subject to a mortgage. Is it a void or voidable contract? State reasons.
The contract in question shall be voidable at the option of B. As per the given facts, the fact of the estate
being subject to mortgage was actively concealed by A. Such an active concealment amount to fraud as per
Section 17 state and Section 19 of the Indian Contract Act declares contract affected by fraud voidable at
the option of the aggrieved party. Hence, contract in question is not void but voidable at the option of B.

21. A tailor, expecting to make good profits at a place on the occasion of a festival there, sent through a
railway company, a sewing machine and some cloth for carriage to the place of the festival. Due to
the fault of the servants of the railway company, the machine and the cloth could not be delivered till
the termination of the festival. Discuss the rights of the tailor.
In the given problem, it is apparent that the delay in delivering the machine and cloth was caused because
of the fault of the servants of the Railway. Therefore, there is no doubt that the Railway company shall be
subject to damages for the fault of its employees. But the question is Which kind of damages. Can the
tailor claim loss of profit or say only his fare, stay expenses, return fare for the goods, etc.? Loss of profit is
a special loss, whereas other loses are ordinary damages. Ordinary damages shall no doubt be claimable.
Regarding special damages, i.e., loss of profit, claim shall be acceptable only and only if the facts and the
likely loss had been communicated to the Railway company. This rule regarding special damages was laid
down in the case of Hadley v. Baxendale and has been duly incorporated in Section 73 of the Indian
Contract Act. Thus, communication of the special circumstances is a pre-requisite to the claim for special
damages. Since in the facts given, there is no mention of the peculiar circumstances, i.e., of using the
machine and cloth for the festival, having been communicated, the tailor may only claim ordinary damages.

22. A Mohammedan lady asks for your advice whether she can sue her own father-in-taw to recover
arrears of allowance payable to her by the father-in-law under an agreement between her own father
and her father-in-law in consideration of her marriage. Give reasons for your answer.
Although the general rule of law is that a stranger to a contract cannot sue, it has been widely accepted that
a beneficiary of a contract may do so. Similar facts appeared before the Court in the case of Kwaja
Muhammad v. Haisaini Begum and the court allowed the lady, the daughter-in-law, to claim the arrears to
allowance agreed to be payable under an agreement with his father in consideration of her marriage. Thus,
in the present case, lady shall succeed in her case.

23. A contract to purchase certain immovable properties had been made by a guardian on behalf of a
minor and the minor sued the other party for a decree of specific performance to recover possession.
State whether the suit will succeed.
Yes- Although the general rule of law is that a stranger to a contract cannot maintain a valid suit, it was
recognised in Kwaja Mohd. v. Haisaini Begum, that a beneficiary can always claim the benefits and bring a
suit directly against the promisor. Moreover, the beneficiary being a minor, it shall make no difference
because under the Indian Contract Act, a minor can always be beneficiary under the contract and validly
enforce such benefits. Thus, minor, in the present case, shall succeed in his suit for specific performance.

24. A, B and C borrow Rs. 10,000 from X. All of them have executed a promissory note in favour of X. A
dies. X sues B alone for Rs. 10,000. Is X entitled to do so? If so, what is the remedy, if any, to B ?
Section 43 of the Indian Contract Act, 1872 provides that when two or more persons make a joint promise,
the promisee may, in the absence of express agreement to the contrary, compel any one or more of such
joint promisors to perform the whole of the promise. Thus, in the given case, X is entitled to claim
performance from B alone. B, of course, in turn, shall be allowed to claim contribution in excess of his
share {i.e., 1/3] from C aswell as legal representative of A. In this regard. Section 43 again provides that
each of two or more joint promisors may compel every other joint promisor to contribute equally with
 himself to the performance of the promise, unless a contrary intention appears from the contract. Thus, B
shall be entitled to claim Rs. 3,333.33 each from C and A's legal representative.

25. A proposes by a letter sent by post to sell his house to B. B accepts the proposal by letter sent by post.
State the legal position regarding revocation of offer and acceptance by A and B respectively.
The problem in question is based on the provisions of Section 5 of the Indian Contract Act. According to
Section 5, a proposal may be revoked at any time before the communication of acceptance is complete as
against the proposer as per Section 4. Communication of acceptance against the proposer is complete when
the letter of acceptance is posted. Thus, B may revoke his proposal at any time before or at the moment
when B posts his letter of acceptance but not afterwards. Revocation of acceptance, as per Section 5, may
be made at any time before the communication of the acceptance is complete as against the acceptor, but
not after- wards. As per Section 4, communication of acceptance is complete as against the acceptor when
it comes to the knowledge of the proposer. Thus, B may revoke his acceptance at any time before or at the
moment when the letter communicating it reaches A, but not afterwards.

26. 'A' applies to a banker for a loan at a time when there is stringency in the money market. The banker
declines to make the loan except at an unusually high rate of interest. A accepts the loan on these
terms. Whether the contract is induced by undue influence? Decide.
For relief on ground of undue-influence under Section 16, two requirements need to be satisfied, viz.,
i. the party alleged must be in a position to dominate the will of the other; and
ii. he must have exercised that domination to obtain an undue advantage. In the given case, a bank
cannot be said to be in a position to dominate the will of the borrower — the borrower having
option to borrow from other banks or other sources. Thus, contract cannot be said to be induced by
undue influence.

27. A offers to B his scooter for Rs. 6,000. B writes back agreeing to buy it for Rs. 5,500. Is there a
concluded contract between A and B for sale of the scooter for Rs. 5,500?
No; For conclusion of a contract it is necessary that the offer of the party be accepted in absolute and
without any qualifications or conditions. In the present case. B's agreeing to buy the scooter for Rs. 5,500
instead of the proposed amount of Rs. 6,000, only amounts to a fresh proposal or counter-proposal and
doesn't constitute acceptance of the proposal or offer of A.

28. Anil agrees with Gopal to let out the house under construction and obtains an advance for the
purpose. The house is, however, requisitioned by Government and, therefore, Anil is unable to honor
his promise. What are the rights of Gopal against Anil? Can Gopal recover damages for breach of
contract?
No- Gopal cannot recover damages for breach of contract. The problem in question relates to Section 56 of
the Indian Contract Act. According to Section 56, a contract becomes void in the event of
supervening/subsequent impossibility as to its performance. As the house is requisitioned by the
Government (assuming under the legitimate powers). Anil shall be excused of his obligations, the contract
becoming void under Section 56. However, Gopal can claim refund of the advance made by him to Anil.
Section 65, in this regard, provides that when an agreement becomes void, any person who has received
any advantage under such agreement or contract is bound to restore it.

29. In a private Company, after the death of Mr. X entire capital of the company is held by his son Y.
Decide, whether Y can continue business of the co. with single shareholder.
In such a situation, Y can continue to carry on the business of the Company but, in accordance with the
provisions of Sec.45 of the Act, if the same position continues for more than six months, then y will
become personally liable for all the liabilities of the Company contracted after six months from the date he
becomes only shareholder.
 Both the shareholders of the Private Company died in a car accident. Decide whether Company’s
existence also comes to an end.
The Company’s existence is not affected by the death of its shareholders, since the Company has separate
legal entity. This is clearly established in Salomon Vs. Salomon & Co. Ltd, Lee Vs. Lee Air farming Ltd &
Kandoli tea Co. Ltd. cases. Further the Company has having perpetual succession.
Both the shareholders of the Private Company died in a car accident. Decide whether Company’s
existence also comes to an end.
The Company’s existence is not affected by the death of its shareholders, since the Company has separate
legal entity. This is clearly established in Salomon Vs. Salomon & Co. Ltd, Lee Vs. Lee Air farming Ltd &
Kandoli tea Co. Ltd. cases. Further the Company has having perpetual succession.

30. A borrower grants a power of attorney to bank authorising the bank to sell a ertain property
belonging to him and appropriate the sale proceeds towards his ndebtedness. He also agrees not to
institute any legal proceedings against the bank challenging either the bank's actions or its
statements of account. The property is sold for a low price and the bank calls upon the borrower to
pay the balance. Can the borrower institute legal proceedings against the bank questioning the sale ?
Yes- The borrower can institute legal proceedings since the clause in the agreement restraining the
borrower from legal proceedings is void as per Section 28 of the Indian Contract Act and thus
unenforceable. Section 28 in this respect reads as :
Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under the
contract by the usual legal proceedings in the ordinary tribunals, is void to that extent.

31. Anil was due to perform a contract on 20th Feb. 1989, but on 16th Feb., repudiated his obligation.
On 23rd Feb., the contract became illegal through a change in law. Varun, the other party to the
contract, filed a suit for breach of contract on 20th Feb. Decide the case with reasons.
Varun in this case will be held entitled to the remedies for breach of a contract. The case is not covered
under Section 56 whereunder supervening illegality renders a contract void thereby relieving the promisor
of his obligations. Section 56 covers those cases where supervening impossibility/illegality takes place
before the time for performance is due. Since in the given case, performance was due on 20th Feb. 1989,
the repudiation on 16th amounts to breach of contract and thereby entitles the aggrieved party, viz., Varun,
to claim compensation (damages). He, however, will not be entitled to claim 'specific performance'—the
transaction having become illegal. Thus, the contract becoming illegal on 23rd Feb., will not affect Varun's
right to claim damages.

32. A offers to sell a cannon to B. A knows that the cannon has a defect in it and puts a metal plug to
conceal the defect. B accepts the cannon without examining it. The cannon bursts before it is paid
for. Is B liable to pay the price ?
The facts of the given problem are similar to those of Horsefall v. Thomas, in which case it was held that a
fraud that actually does not deceive is not fraud. The court held that there was no fraud because B would
have bought it even if no deceptive plug had been put. He was in fact not deceived by it since he did not
even care to examine the cannon. The decision seems to be based upon the feeling that law shall not protect
those who are negligent about their interests.

33. An artist offers to sell a painting to an industrialist for Rs. 10,000. The industrialist offers to buy it
for Rs. 8,000, which is not accepted. The industrialist then sends a cheque for Rs. 10,000 and asks the
artist to sell the painting to him. Comment on the legal position.
Section 7 of the Indian Contract Act requires that an acceptance to be valid must be absolute and
unqualified. In other words, an offer should be accepted "as it is without any 'ifs' and 'buts'." An acceptance
with a variation, however slight, is no acceptance, and amounts to a mere counter-offer which the offer or
may or may not accept. Even where the offeree subsequently changes his mind and is prepared to accept
the offer as per original terms, it shall be deemed as a fresh offer from him which may or may not be
acceptable to the original offerer. Thus, in the given case, the artist shall have the option to accept or refuse
 the cheque for Rs. 10,000 since the sending of cheque for the original offer amount shall be deemed as a
fresh proposal from the industrialist.
34. A, in Bombay, bets with B and loses. A applies to C for a loan in order to pay B. C gives the loan to A
to enable him to pay B. Can C recover the amount of loan from A? Would it make any difference if
this transaction takes place in Hyderabad?
No- C cannot recover the amount of loan from A. The contract between the two is void being a collateral
transaction to an illegal agreement. In Bombay, wagering agreements are not merely void; they are illegal.
The consequence of an agreement being illegal is that if any collateral transaction is made by a person
knowing the illegal object of the main transaction, the collateral transaction also becomes unenforceable. If
the aforesaid transaction had taken place in Hyderabad, it would have been a valid and enforceable contract
since in Hyderabad betting transactions are only void and not illegal. Transactions collateral to a void
agreement are valid.

35. A, a minor, borrows Rs. 10,000 and executes a pronote for the amount in favour of B. After attaining
the majority, A executes another pronote in settlement of the first pronote. Will B succeed in
recovering money from A? Give reasons in support of your answer.
No-B will not succeed in recovering money from A. Although Section 2(d) recognises the concept of past
consideration, but it must be something to which law attaches a value. A contract with a minor is void ab
initio. The consideration for the second pronote is a void agreement and hence of no value. Besides,
ratification by a minor of a contract, on attaining majority is not allowed.

36. Peter Feraro offered to pay Rs. 10,000 to any person, who would swim a hundred yards on Bombay's
sea coast on the New Year's Day of 1983. A fisherman, without any information about the offer,
claimed Rs. 10,000 on swimming the distance to save his life after he was accidently thrown
overboard by the rough sea waves. Can the fisherman claim the money ?
No- the fisherman or servant cannot claim the money. They acted without any information as to the offer.
How can a person accept an offer unless he is aware of it ? Therefore, the offer cannot be said to have been
accepted thereby resulting in a contract. Similar decision was given in Lalman Shukla v. Gauri Dutt.

37. A, a dealer in horses, sold a mare to B with the knowledge that the mare had a cracked hoof which A
had filled up so as to prevent detection even after a diligent examination. Discuss the right of B when
he subsequently detects it.
The facts of the above problem suggest that A has attempted to defraud B. But under Section 17 of the
Indian Contract Act, mere silence as to the faults in the goods being sold, shall not ordinarily amount to
fraud unless silence is either equivalent to speech or it was obligatory on the part of the party to disclose the
facts. In the given case either of these exceptional situations not being present, the common rule of caveat
emptor, i.e., let the buyer beware shall apply, that is, it is the duty of the buyer to satisfy himself about the
goods he is buying. It is no duty of the seller to point out the defect of his goods. Thus, in the present case,
when buyer later on detects the defect, he may not have any remedies against the seller.

38. C with the intention of inducing D to enter into a contract with him, makes a statement to D, which
is, in fact, untrue and thereby induces D to enter into the contract. What are D's rights, if the
statement is made by C :
i. knowing that it was untrue,
ii. recklessly, without caring to know whether it was true or false,
iii. in good faith but negligently,
iv. in good faith and without negligence?
In the first two situations, i.e., where untrue statement has been made either knowingly or recklessly, it
amounts to fraud and the rights of the party defrauded include not only rescission of the transaction but also
a claim for damages. On the other hand, since in situations (iii) and (iv) mis-statement was made in good
faith, i.e., innocently—without knowing it to be untrue, it amounts to misrepresentation. The effect in these
cases shall be that D shall be entitled only to rescind the transaction. He cannot claim damages.
39. A agrees with B to give a motor car to B's son in consideration of his marrying A's daughter. Can B's
son sue A on the agreement?
Yes- B's son can sue. A stranger to the contract has no right to seek the performance. But, if the stranger
happens to be a beneficiary under a transaction, he is permitted to seek its direct enforcement. Thus, in the
given problem, although contract is between A and B and B's son, therefore, as a stranger to the contract, he
shall, being beneficiary of it, be entitled to enforce it.

40. X sells a horse to Y for Rs. 1,200, but unknown to both parties at the time of the transaction, the
horse was dead. Discuss the rights and liabilities of X and Y. Would it make any difference to your
answer if the horse was seriously ill at the time of transaction and died within a few hours after the
transaction?
Agreement is void on account of mutual mistake of fact essential to the agreement (Section 20). In the
alternative situation, however, X will be entitled to the price.

41. A enters into a contract with B for supplying 800 tonnes of iron ore within 4 months. A fails to make
delivery in time owing to difficulty in transport. But he admitted the availability of iron ore in the
market at a higher price. Can A take the plea of impossibility of performance? Give reasons.
No-difficulty of performance and commercial impossibility should be distinguished from impossibility of
performance. Section 56 of the Indian Contract Act declares only contracts void which become impossible
of execution.

42. Ram's son absconded from home. He sent his servant in search of the boy. When the servant had left,
Ram, by handbills, offered to pay Rs. 500 to anybody discovering the boy. The servant came to know
of this offer only when he had already traced the missing boy. He, however, brought an action to
recover the reward. Will he succeed in his attempt? Give reasons.
No- since the servant was not aware of the offer. An offer, unless communicated, is not valid. The facts of
the given problem are similar to the case of Lalman Shukla v. Gauri Dutt in which the identical decision
was given.

43. M/s Ganguly & Co., Calcutta, entered into a contract with the General Manager of the Indian
Railways at Calcutta for the construction of a bridge and received an advance of Rs. 10 lakhs for the
same. They did not complete the work within time and the Railways terminated the contract. This
contract was found to be void from its inception'for not being in conformity with the Constitution of
India". The Indian Railways want to recover the advantage given to the contractor. Will it succeed?
Discuss.
"The problem is based on the provisions of Section 21 read with Section 24 and Section 65 of the Indian
Contract Act. Section 21 and 24 read together, provide that a contract based on mistake as to any law in
force in India is not voidable and where any part of a single consideration for one or more objects, or any
one or any part of any one of several considerations for a single object, is unlawful, the agreements is void.
Thus, the agreement between M/s Ganguly & Co., Calcutta with the Indian Railways is void (and not
voidable) being not in conformity with the Constitution of India and both the parties are under a common
mistake of law. A void agreement does not create any legal obligations or confer any rights. However,
Section 65 provides for restitution. It reads "where an agreement is discovered to be void or when a
contract becomes void, any person who has received any advantage under such agreement or contract is
bound to restore, it, or to make compensation for it, to the person from whom he received it." In view of
the above, Indian Railways can recover the advance of Rs. 10 lakhs paid to M/s Ganguly & Co. [Jigi Bhai
v. Nagji; Gulabchand v. Fulbai; State of Orissa v Raj Ballaie]
44. A contracted to indemnify B & Co., a publishing firm, against the consequences of any libel which
might appear in any of their publications. B & Co. were forced to pay damages for a statement
published by them which they knew to be libellous. The firm sues A on the basis of the agreement. Is
this agreement enforceable?
No- the agreement between A and B & Co. is unlawful (Section 23 of the Indian Contract Act). The
consideration or object of an agreement is unlawful if it involves or implies injury to the person or property
of another. Similar view on similar facts was given in Anthrop v. Neville and Shackel v. Rosier.

45. A authorises B to sell a camera for him, and agrees to give B, a commission of 10 per cent of the sale
price. A afterwards, by a telegram, revokes B's authority. B, after the telegram is sent, but before he
receives it, sells the camera to C for Rs. 10,000. C is also not aware of the revocation of authority by
A. A later refuses to deliver the camera to C and pay commission to B for the sale, on the ground that
the sale was not binding upon him. Decide
i. whether A's contention is valid ?
ii. whether B is entitled to commission on the sale price ?
iii. what are the provisions of the Indian Contract Act in this regard ?

i. A's contention is not valid.

ii. Yes, at 10 per cent on Rs. 10,000.
iii. Revocation of authority of an agent does not, insofar as the agent is concerned, take effect until it
becomes known to him and insofar as third parties are concerned until it becomes known to them
According to Sec. 208 of the Indian Contract Act.

46. A agrees to sell to B "my white horse for rupees five hundred or rupees one thousand." Is the
agreement valid?
No-the agreement is not valid because the terms of the agreement are not certain. There is nothing to show
which of the two prices was to be given. The agreement is, therefore, void because of uncertainty. Section
29 of the Indian Contract Act, specifically declares such agreements to be void.

47. A, a minor and an undergraduate student of a university, buys on credit from B, a clothier, seven suit
lengths for his own use. Is B entitled to any payment in respect of the goods ?
A contract with a minor is void ab-initio. Minor being incompetent of contracting as per Section 11 of the
Indian Contract Act. However, Section 68 recognises by way of quasi contractual obligation, contracts for
the supply of necessaries of life to a minor or any of his dependants as validly enforceable against minor's
properties, if any. Coats may be considered as necessity of life for a student coming from a reasonably
good family. But it is doubtful, if seven coats at one time shall be considered as a necessity for a student
even coming from a rich family. Thus, even the properties of the minor may not be held liable.

48. A, a tradesman, leaves his goods at B's house by mistake. B treats the goods as his own and
appropriates them. Can A file a suit against B for the price of such goods?
The problem relates to quasi-contracts and is based on Section 72 of the Indian Contract Act which
provides that a person, to whom money has been paid or anything delivered by mistake, must repay or
return it. Thus, in the present case, B should either return the goods to A or pay for it.

49. A Hindu husband executed and registered a document in favour of his wife whereby, referring to
quarrels and disagreement between the parties, he agreed to transfer one of his properties to her.
Later, he refused to effect the transfer. Can the wife file a suit against the husband for enforcing the
contract ?
No- Wife will not succeed. The problem relates to the exception to the rule 'No consideration no contract'.
Section 25 (1) of the Indian Contract Act provides that a contract without consideration shall be valid if
made out of natural love and affection, between parties standing in a near relation to each other, and
through a written and registered document. Thus, such a contract must be an outcome of natural love and
 affection between the parties. Mere nearness of relationship does not import natural love and affection.
Thus, in the present case, since promise is made to transfer properties after reference to quarrels, natural
love and affection being absent, contract shall not be enforceable. The same was the decision in the case of
Rajhikhy Dohee v. Bhootnath on which the facts of the present problem have been based.

50. A stationer agreed to supply white paper on rate contract for one year. Later, due to steep increase in
market prices, the contractor stated that he would suffer very heavy loss by supplying at the
contracted rates. Under the contract, the rates were tobe firm except for statutory levies. The
stationer claimed that the contract had become commercially impossible of performance and that he
was discharged. Comment on the legality of his plea.
Section 56 of the Indian Contract Act provides that a contract shall become void if the contracted act
becomes, by reason of some event which the promisor could not prevent, impossible. However,
impossibility contemplated under Section 56 is genuine or literal impossibility and shall not be deemed to
include cases like failure to realize expected profits or the availability of raw materials at higher prices or
with difficulty. Such situation may render a transaction commercially impossible but not impossible. Thus,
in the given case the stationer's plea shall not be acceptable and in the event of nonperformance he will be
held liable for breach and the consequential damages.

51. A landlord agrees with a bank to lease to it space in a building under construction and obtains an
advance for the purpose. The building is, however, requisitioned by Government and, therefore, the
landlord is unable to honor his obligations. What are the rights of the bank as against the landlord?
Can the bank recover damages for breach of contract?
The problem in question relates to supervening/subsequent impossibility. Section 56 of the Indian Contract
Act exonerates a promisor from any liability if the transaction becomes impossible of performance because
of some event which the promisor could not prevent. The contract in such cases becomes void. Thus, in the
above case since the Government has requisitioned the premises, the agreement to lease out the same is
naturally impossible. Hence, the landlord cannot be subjected to any damages for not honouring his
obligations. Bank can only ask for the return of advance on grounds of failure of consideration.

52. A owes B two debts of Rs. 2,000 and Rs. 550. B telephones to A saying that he is in urgent need of Rs.
550 and that A should at least pay Rs. 550. A merely sends a cheque for Rs. 550. B then finds that the
other debt of Rs. 2,000 is about to get time-barred. So he applies the cheque in part payment of that
debt. Discuss.
Section 59 of the Indian Contract Act, 1872 gives us the rule regarding appropriation of payments. It says,
where a debtor, owing several distinct debts to oneperson, makes a payment to him, either with express
intimation or under circumstances implying that the payment is to be applied to the discharge of some
particular debt, the payment, if accepted, must be applied accordingly. In the given question, it seems that
the payment has been directed to pay off the outstanding debt of Rs. 550 and must, therefore, have been
applied towards the same. Its application to the other debt of Rs. 2,000 is not valid.

53. A bank sanctions an overdraft limit against the security of a continuing guarantee. The surety dies.
Can the bank proceed against the heirs of the surety under the guarantee and, if so, to what extent ?
The death of the surety operates, in the absence of a contract to the contrary, as a revocation of a continuing
guarantee as regards future transactions. It may, however, be noted that the estate of the surety shall be
liable for all transactions entered into between the creditor and the principle debtor prior to the death of the
surety, unless there was a contract to the contrary. However, his estate shall not be liable for the
transactions entered into after his death, even if the creditor has no notice of the death. Thus, in the given
problem, since there is nothing against attachment of surety's properties after his death, the heirs of the
surety shall be liable for the debit balance in the overdraft account but this liability shall be limited to the
higher of the following two: 1. The amount of debit balance in the overdraft account as on the date of
surety's death; and 2. The value of the surety's estate acquired by the heirs.
54. 'A' applies to a banker for a loan at a time when there is stringency in the money market. The banker
declines to make the loan except at an unusually high rate of interest. A accepts the loan on these
terms. Whether the contract is induced by undue influence? Decide.
For relief on ground of undue-influence under Section 16, two requirements need to be satisfied, viz.,
i. the party alleged must be in a position to dominate the will of the other; and
ii. he must have exercised that domination to obtain an undue advantage.
In the given case, a bank cannot be said to be in a position to dominate the will of the borrower —
the borrower having option to borrow from other banks or other sources. Thus, contract cannot be
said to be induced by undue influence.

55. A is a minor aged seventeen years, who broke his right leg in a football match. He engaged B, a
doctor, to set it. Does the doctor have a valid claim for his services? Give reasons.
Under Section 68, minor's properties, if any, can be held liable for necessaries supplied or necessary service
rendered to a minor or to any of his dependents. Medical service of the nature under reference can well be
considered as necessary and, therefore, the doctor shall have claim only against the properties of the minor,
if any i.e., he can sue for attachment of minor's properties. Money cannot be recovered from the minor
personally.

56. A enters into a contract with B for the sale of goods to be delivered at a future date. Is it a wagering
agreement? Give reasons.
The contract in question is not a wagering agreement. It only involves future consideration and is a valid,
enforceable, common business transaction. A transaction, to be wagering, must make the performance of
the transaction dependent upon the happening or nonhappening of an uncertain future event. The
performance in the given case being not so dependent, transaction is not wagering.

57. A contract to purchase certain immovable properties had been made by a guardian on behalf of a minor and
the minor sued the other party for a decree of specific performance to recover possession. State whether the
suit will succeed.
Yes-Although the general rule of law is that a stranger to a contract cannot maintain a valid suit, it was
recognised in Kwaja Mohd. v. Haisaini Begum, that a beneficiary can always claim the benefits and bring a
suit directly against the promisor. Moreover, the beneficiary being a minor, it shall make no difference
because under the Indian Contract Act, a minor can always be beneficiary under the contract and validly
enforce such benefits. Thus, minor, in the present case, shall succeed in his suit for specific performance.

58. K agreed to sing at the Star Theatre for a period of three months beginning 1 st January 1996. She
further agreed not to sing at any other theatre during this period. Is this contract enforceable against
her?
Restraint of trade is considered against public policy and, therefore, is bad in the eyes of the law. Section
27 of the Indian Contract Act declares it void. However, with regard to service agreements, restraints of the
nature mentioned in the given problem shall bevalid, if reasonable. The facts of the given problem are
based on the case of Lumley v. Wagner in which the Court held this restraint of 3 months to be reasonable
and thus enforceable. Thus, K can be restrained from singing elsewhere during the period of 3 months.

59. A, a minor, borrowed Rs. 5,000 on loan from B, staling that he was a major and executed a receipt in
his favour. Discuss the remedies available to B to recover the money lent by him.
A minor is always allowed to plead minority and is not estopped to do so even where he had procured a
loan or entered into some other contract by falsely representing that he was of full age. In Leslie v. Shiell,
S, a minor, borrowed £ 400 from L, a money lender, by fraudulently misrepresenting that he was of full
age. On default to pay by S, L sued for return of the £ 400 and damages for the tort of deceit. Held, L could
not recover £ 400 and his claim for damages also failed. The Court did not grant relief, otherwise it would
have been an indirect way of enforcing a void contract. Even on equitable grounds, the minor could not be
asked to refund £ 400, as the money was not traceable and the minor had already spent the same. Thus, in
 the given case, the agreement being void, B shall not be allowed to recover the money. However, if the
money can be traced with A, the minor shall be liable, on equitable grounds, to restore the same since a
minor cannot be given a liberty to cheat.

60. The lessor let out his premises to the lessee on a fixed rent. The deed recited that "if the company did
not vacate the premises by a specific date, the company shall commence paying the then prevalent
market rent." Does this provision in the lease deed make the contract void for uncertainty?
Yes- such an agreement shall be void as per Section 29 of the Indian Contract Act being uncertain in terms
of the rent payable.
The expression 'market rent' lends uncertainty to the amount of rent chargeable since rent might vary from
location to location, premises to premises. Hence the clause in the lease deed suggesting payment of rent at
market rate shall be void and unenforceable.

61. A customer entrusts certain G.P. Notes for safe custody to his bank. The bank keeps the G.P. Notes
in a wooden box. Later, it is found that the Notes are destroyed by white ants. What is the bank's
liability to the customer?
Section 151 of the Indian Contract Act, 1872 charges a bailee (which the bank is in the present case) to take
as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances,
take of his own goods of the same bulk, quality and value as the goods bailed. Further, Section 152
provides that if the bailee has taken reasonable amount of care which a man of ordinary prudence would
take, then in the absence of any special contract, he will not be responsible for the loss, destruction or
deterioration of the goods bailed. In the present case, if to the knowledge of the bank manager, the
premises were infested with white ants, it would certainly be considered negligence on his part to have
stored valuable documents like G.P. Notes in a wooden box. Otherwise, i.e., not being aware, keeping G.P.
Notes in wooden box is not likely to be considered as improper and hence bank may not be subjected to
any liability.

62. The manager of a cinema theatre gave instructions that no tickets were to be sold to R. R, knowing
this, asked his friend to buy a ticket for him. With this ticket R went to the theatre but was refused
admission. He filed a suit for damages for breach of contract, against the theatre. Would he succeed?
Decide giving the provisions of the Indian Contract Act in this regard.
R would not succeed. Section 22 of the Indian Contract Act provides 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 essential to the
agreement. However, in certain exceptional cases, a unilateral mistake renders a contract unenforceable.
One such circumstance may be 'mistake with regard to the identity of the person contracted with'. A large
number of a legal decisions are available on this point including those of Candy v. Lindsey. The facts of
the given problem are similar to those of Said v. Butt in which the contract was declared void on ground of
mistake. Manager of the theatre having issued instructions not to sell ticket to R, suggests that he had no
intentions to make contract with R. Thus, had it been known that the ticket was being purchased for R, it
would have been refused. There is thus absence of consent altogether and hence no valid agreement. R
would, therefore, not succeed in his suit for damages.

63. X, an old lady, by a deed of gift made over certain property to her daughter D, with the specific
directions that she should pay P, who is the sister of the old lady, a sum of Rs. 100 per month. The
same day D entered into an agreement with P to pay her the agreed amount. D now refuses to pay
her aunt P, the above amount on the plea that no consideration had moved from P to D. P, therefore,
sues D. Is the suit maintainable and can D be held liable to pay the amount? Decide.
Yes-D can be held liable to pay the amount to P. Consideration may move from a stranger [Section 2(d) of
the Indian ContractAct]. The facts of the given problem are based on the case of Chinnaya v. Ramaya in
which a similar decision was given.
64. A & Co., through a newspaper advertisement, announced a reduction sale of ready-made woollen
garments and exhibited articles in their showroom with the original and reduced prices marked on
them. B, who has read the advertisement, picks up a woollen suit marked Rs. 500 as the original
price and Rs. 200 as the reduced price. But when B offers Rs. 200 to the salesman of A & Co., he
refuses to accept the amount and handover the suit to B. Discuss the rights of B against -A & Co.
Price quotations and price-tags do not amount to an offer but are only an invitation to an offer. "Therefore,
B's picking up the woollen suit with a price tag of Rs. 200 as the reduced price amounts to an offer by B to
purchase the same at that price. It remains to be accepted by the seller—the salesman of A & Co. to result
in a concluded contract. The salesman has every right to refuse or to accept the offer. Thus, B shall have no
remedies.

65. A, seeing a watch in B's shop, marked for sale for Rs. 200, entered the shop, placed Rs. 200 on the
counter and asks for the watch. Is B bound to sell the watch ? Give reasons.
66. No- B is not bound to sell the watch. Price labels on articles only amount to an 'invitation to offer' and not
an 'offer'. Placing of Rs. 200 by A amounts to an offer which may or may not be accepted by B. In
Pharmaceutical Society of Great Britain v. Boots Cash Chemists Ltd., it was observed that in such cases,
there is nothing to prevent a shopkeeper from saying, "I am sorry I cannot let you have this article, it is the
only piece I have got and I have already promised it to another customer or there has been a mistake in
writing its price or prices have been revised since then."
67. M agreed on Monday to sell his property to N by a written agreement which stated "that this offer to
be left open until Saturday 10 a.m." In the meantime, on Wednesday, M enters into a contract to sell
the property to 0. N, who was sitting in the next room, hears about the deal between M and 0. On
Friday, N accepts the offer and delivers to M the letter of acceptance. Is N's acceptance valid? Give
reasons.
N's acceptance is valid, the acceptance being made before revocation of the offer by M. The overhearing by
N does not amount to a valid revocation. The situation would have been different if, before acceptance by
N, M had formally communicated his revocation to him.

68. A executes a guarantee in favour of a bank as security for a loan to B. Later, A contends that the
guarantee is not enforceable as it is not supported by consideration as he was not paid any guarantee
commission. Is A's stand correct in law?
A contract of guarantee must also be supported by lawful consideration. However, it is not necessary that
something must have been done for the benefit of the guarantor. Anything done for the benefit of the
principal debtor is a sufficient consideration to support the promise of the guarantor. Section 127 of the
Indian Contract Act, 1872 lays down that, "Anything done, or any promise made for the benefit of the
principal debtor may be a sufficient consideration to the surety for giving the guarantee." Thus, A's stand
shall not be upheld as correct.

69. A bank sanctions to an oil merchant a loan against the security of groundnut oil and an agreement is
entered into between the bank and the borrower. Before the loan is disbursed, the Reserve Bank
issues a statutory directive to all banks prohibiting grant of advances against the security of
groundnut oil and, therefore, the bank cancels the loan. Can the customer sue the bank for damages
for breach of contract ?
No- In the given problem, the customer shall not be entitled to claim damages from the bank for breach of
contract. The relief to the bank shall be available under Section 56 of the Indian Contract Act, 1872.
Section 56 provides that a contract to do an act which, after the contract is made, becomes impossible, or
by reason of some event, which the promisor could not prevent, unlawful, becomes void when the act
becomes impossible or unlawful. In the present case, performance by the bank after receipt of statutory
directive from the Reserve Bank shall naturally be unlawful on its part. The contract shall, therefore,
become void exonerating the bank of performance.
70. A minor, who wanted to become a professional cricket player, entered into a contract with a coach
and agreed to pay him certain amount to learn the game. Is the minor liable to pay the amount?
Yes- minor shall be held liable to pay the amount provided he has properties existing in his name.
Education in India has been held as a necessity of life and as per Section 68 of the Indian Contract Act, the
properties of a person incompetent to contract may be attached for necessaries supplied to him or to his
dependants. The facts of the given problem are similar to the case of Roberts v. Gray in which the aforesaid
view was taken.

71. A woman fraudulently represented to a firm of jewellers that she was the wife of a certain minister
and thus obtained two pearl necklaces on credit on the pretend of buying them. She subsequently
sold those necklaces to a third party. Can the jeweler recover the necklaces from the third party ?
Yes, the jeweller can recover the necklaces from the third party. It is because, consent is a mental
phenomenon and absence of it renders a contract void ab initio. In the present case, since the woman
introduced herself as the wife of a minister thereby leading the jeweller to believe that he was contracting
not with the lady physically present in the shop but with the wife of the suggested minister. Hence, not that
the contract is voidable on ground of fraud but because of mistake as to the person contracted with, there is
no contract at all, there being absence of consent altogether. The woman, therefore, got no title. And a
person who has no title can obviously confer none. Thus, third party can claim no rights on those necklaces
even though purchased in good faith and for value. Similar decision was given in the case of Lake v.
Simmons on which the facts of this problem are based.

COMPILED BY
ANUM AKRAM
AFRASIAB MOHAL JUDICIAL ACADEMY, LAHORE
0345-4644423