SEAT NO: - 421008

SEAT NO: - Four Two One Zero Zero Eight

PROGRAMME: - BBA LLB
SUBJECT: - Law of Contract
Q.1.
Introduction: - The given case talks about section 2(a) which is offer, section 2(b)
acceptance, section 2(c) of Indian Contract Act,1872 which is promise. Another part which is
being signified in the case is invitation to offer.
Section 2(a) – The mentioned section talks about offer, which means proposing someone to
do or not do something.
Invitation to offer – The term invitation to offer means inviting someone to make an offer.
The difference between offer and invitation to offer is the offer leads to acceptance which
further leads to promise and contract but invitation to offer further leads to a valid offer so,
an invitation to offer cannot be considered offer.
Section 2(b) – Acceptance means accepting of the offer as it was stated by both the parties
without any external factors acting to make the acceptance (like fraud, undue influence,
etc.)
Section 2 (c) – Promise means both agrees to act in the prescribed manner by the other
party.
Issue: -
1) whether the said proposal was accepted?
2) whether there was a valid contract between Mr. X and Mr. Y
Facts: -
There was a invitation to offer from the side of Mr. X to Mr. Y to which Mr. Y responded
with the offer and then Mr. X again responded to it with his acceptance on which Mr. Y
responded with his denial.
Analysis
The scenario in the above given case signifies that there has been an invitation to offer from
side Mr. X. The same reached to Mr. Y on which he replied with his offer. The given case is
similar as Harvey v. Facie (1893) case in which there was a same condition in which court
pointed out that there is a difference between offer and invitation to offer.
Later, Mr. Y’s offer reached Mr. X which he accepted but it can be well noticed that it was
only Mr. X who accepted but not Mr. Y. His acceptance and the communication of the same
acceptance to the other party is equally important for the formation of a contract. The
reference of such situation can be taken from Felthouse v Bindley (1863) case in which court
stated that the communication of acceptance must be from both the sides in order to reach
a proper promise and later contract. The acceptance of Mr. Y was not communicated to MR.
X.
Conclusion
The promise could only have been formed if Mr. Y should have communicated his
acceptance too which is clearly missing in this case. Hence, there can be no contact in
absence of acceptance and promise. So, Mr. Y is not liable for any breach because any
contract was not formed between them.
Q.2. Introduction: - Free Consent(section 14) is an important part or one may say one of
the most crucial elements of a contract. Free Consent means a consent to enter into a
contract with free will. The notion is derived from the maxim ‘Consensus Ad Idem’ which
means meeting of minds. But it is not possible if any external factor is acting upon to make
the consent and hence the consent obtained after such interference will not be free.
One such external factor is “Fraud”. Fraud means to deceive another party and obtain unfair
advantage from the contract. Section 17 of Indian contract Act, 1872 tells us about Fraud.
There are enormous ways to Fraud someone and silence is one of them but not wholly.
There are circumstances where silence is considered to be Fraud but not all the time or
generally.
Analysis
Fraud is done to get unjust benefit from a contract but the other party has to suffer loss and
harm because of it which is unlawful. There are enormous ways to commit fraud. Some of
them are listed below –
1)Asserting such facts which are not true intentionally.
2)The other form of Fraud can be providing incomplete information.
3)A contact entered only for own benefit and no will to perform own part of the promise.
4)Any act or omission done with a view to deceive.
5)Doing any act which is unlawful and forbidden by law.
There are some important elements of fraud which needed to be done in order to
categorize an act or omission fraud. They are
1)Will or intention
2)Malicious intention to not perform own part.
3)Knowledge of the act being done.
Conclusion
Silence is most commonly not considered as fraud which is stated in section 17 of Indian
Contact Act but there are some exceptions. They are listed below
1)Relationship
To make silence a component of fraud, there must a relationship (Fiduciary) in which one
acts for the good of the other, and in such a case if he remains silent intentionally, this will
amount to fraud.
2)where speaking is an important element of the duty
EX – Salesman, if he will not state the pros and cons of a product, it may be considered fraud
because his duty is to give all information.
3)The contract which are made on the basis of trust and good faith. Maintaining silence in
such situation will be fraud.
4)The cases where silence will be considered approval.
5)The cases where essentials can only be communicated through speech.
Q.3. Introduction: - Free Consent – It is mentioned in section 14 of Indian contract act says
any approval given with free mind and will with no external emphasis being exerted is free
consent and is the most crucial element of a contract to be formulated.
There are various ways in which consent is obtained but it’s not free –
1)Coercion – (section 15) Doing anything or threatening to do, to obtain consent.
2)Undue Influence – (Section 16) Putting anytime of external pressure to get the consent for
the contract
3)Fraud – (Section 17) Deceiving anyone and getting the consent for the contract
4)Misrepresentation – (section 18) Presenting something which is not true but not
intentionally because if it is done intentionally, is considered Fraud.\
5)Mistake
Issue of the case
1)Was Mr. y’s consent free?
2)Is Mr. X liable?
Facts of the case
Mr. x has sold his horse of unsound mind to Mr. Y without telling him the actual truth. Is
there any liability of Mr. X?
Analysis
The facts of the case clearly state that there was a fact which is ‘the horse was of unsound
mind’ which has not been propagated to Mr. Y before selling the horse. Section 13 well
states about Consent and in order to obtain it one need to ascertain all the facts about a
contract and if any object is associated the other party should know each and every aspect
of it, the consent given by him will be free consent (sec 14).
In any case one party or the offeror in contract of sale hides something intentionally so that
other party could not know the truth and give his consent, such consent is not free and falls
under the category of fraud (section 17).
Conclusion
In the given case Mr. X has not asserted the right fact and remained silence and section 17
clearly state that silence can be a mode of fraud if there was a duty of the party to speak
and here in this case it was his obligation to tell the truth to Mr. Y. so, in this case Mr. X is
liable for committing fraud and Mr. Y can sue him for damages.
Q.4.
Introduction
Section 11 talks about competency to contract in which there are certain.
Section 10 talks about that a contract can be made where the parties are competent.
Competency states three measures in which the parties must pass in order to form lawful
contract. They are listed below –
1)Age – the parties must not be minor. Section 3 of Indian majority act states that anyone of
18yrs or above than that is major and capable of contract but not less than that.
2)Sound mind- The person must have sound mind while forming the contract.
3)The person engaged must not be disqualified by law.
Issue
1)will the contract be valid?
2)Being minor can he form a contract?
Facts
Mr. M is a minor and has asked for loan from Mr. B mortgaging his house. Is this a valid
contract?
Analysis
Mr. M is a minor and he has not hidden the fact from Mr. B who has given him loan
mortgaging his house. Firstly, section 11 of Indian contract act 1872 clearly states that a
minor is not competent to a contract and any contract with a minor is void ab initio. For
reference we can take the example of Mohiribibi v Dharmodas Ghosh (1903) Cal 539 court
said in that case that even if the minor has misrepresented his age and told he is a minor
there can be no liability of the minor to repay the money back. Even you can’t put
ratification once he attains majority. There will be no insolvency. A minor can be beneficiary
but not liable to perform his part of the contract. Hence, the court declared the contract
void and held that the minor had no liability to repay any amount back.
Conclusion
Here in this we can see that Mr. B knows that he is a minor but still he is formulating
contract with him. So, the contract will be void and he can do nothing if the minor refuses to
repay the loan back.
Q.5.
Introduction
Section 14 of Specific contract act- Contracts that can’t pe specifically enforced
Section 39 – Effect of breach whose performance is said to be not done wholly
Section 41 – Performance by third party
Issue –
1)Has Mr. X breached the contract?
2)Is Mr. X liable
FACTS-
Mr. X is a known singer who was hired by a college student group for performance in the
college and paid advance. But, 4 days prior he wrote to the principle that he will be unable
to come.
Analysis
The case says that there was a contract between the college group and Mr X to sing on the
designated day but after accepting the advance that is a way of acceptance mentioned in
section 2(b) of Indian contract, the advance was the consideration (section 2(d)) and hence
it was a proper contract but after refusing to do so he breached it. The thing is it cant be
specially enforced because it is matter if personal skill and cant be brought into action if
refused (section 14 of SRA).
Conclusion
The thing is the breach has been done and the effects (sec 39) will be handled by the
parties. So, in this case the college has two options
1)Sue Mr. X for damages
2)Apply section 41 and get it done by the third party and recover the expenses.
Permanent Injunctions(37(2) can also be put on Mr. X not to perform in college ever