Question 16
P sells by auction to Q a horse which P knows to be unsound. The horse
appears to be sound but P knows about the unsoundness of the horse. Is this
contract valid in the following circumstances under the Indian Contract Act,
1872:
(a) If P says nothing about the unsoundness of the horse to Q.
(b) If P says nothing about it to Q who is P’s daughter who has just come of
- -
age.
(c) If Q says to P “If you do not deny it, I shall assume that the horse is
sound.” P says nothing.
(3 Marks)
By - CA Shantam Gupta
Question 16
han
Section 17
Accordingto of the Indian Contract Act 1872,
Silence is not equivalent to fraud unless
,
the parties involved
are in
fiduciary relationship with one another or the silence
is equivalent to speech
fact
horse that horse
↑ sells a a
to
of which I isaware
is
of unsound mind .
Conclusion
is
If P does not
inform &
of the unsoundness
of the
horse it is not fraud.
is If P and a
which
are
G
related then there is a
fiduciary
relationship requires disclosure
of theher
all
material fas a
unsounders
including of
(ii) In this case the silence has amounted to speech,
hence non disclosure in this
ease is
fraud.
Question 18
X, Y and Z are partners in a Partnership Firm. They were carrying their
business successfully for the past several years. Due to expansion of
business, they planned to hire another partner Mr. A. Now the firm has 4
partners X, Y, Z and A. The business was continuing at normal pace. In one of
formal business meeting, it was observed that Mr. Y misbehaved with Mrs. A
(wife of Mr. A).Mr. Y was badly drunk and also spoke rudely with Mrs. A. Mrs. A
felt very embarrassed and told her husband Mr. A about the entire incident. Mr.
A got angry on the incident and started arguing and fighting with Mr. Y in the
meeting place itself. Next day, in the office Mr. A convinced X and Z that they
should expel Y from their partnership firm. Y was expelled from partnership
without any notice from X, A and Z.
Considering the provisions of the Indian Partnership Act, 1932, state whether
-
they can expel a partner from the firm. What are the criteria for test of good
-
-
-
faith in such circumstances?
-
(6 Marks)
By - CA Shantam Gupta
s Conclusion
Mr . Y's removal is arid ,
ie . without
to Section the Indian Partnership
According 33 Act effect notice
1432 ,
of any legal ,
since no was
given to him valid reason
nor
any
a partner may
be expelled from the partnership firm if :
for removal .
exists
expulsion is as
per an express agreement between partners.
·
removal is in
good failt ie . In the best interest
of the
firm .
· removal is supported by majority of partners.
The test
of good faith involves :
to the
·
a notice
being
served partner
·
removal in best interest
of the
firm
.
·
an
opportunity of being heard is awarded.
fact
Mu Y .
was expelled from the
firm by majority of X
,
2
,
and A
for
misbehaving with Als
wife
Question 19
-
Rahul, a minor, falsely representing his age, enters into an agreement with
a shopkeeper for a loan amount for purchasing a laptop. He gave his
expensive watch as a security and took a loan of ₹ 40,000. He was very
happy to get ₹ 40,000 and quickly went to the market and purchased a
laptop worth ₹ 30,000. He happily spent the rest of the amount with his
friends on a pleasure trip. Later on, Rahul realized that his watch was an
expensive watch and he should not have given like this to the shopkeeper.
So, he went back to the shopkeeper and asked for his watch back. Also,
he refused to repay the loan amount. The shopkeeper disagrees to this
and files a case against minor for recovery of the loan amount. Can the
shopkeeper succeed in recovering the loan amount under the Indian
Contract Act, 1872?
By - CA Shantam Gupta
Q
Conclusion
how
The
shopkeeper cannot
lawfully see the minor
·
Section Contract Act 1872,
According to 11
of the Indian or retain
void .
the watch as the contract is
Any agreement with a minor is void ab initio ,
ie . It is void
from ·
Assuming that to laptop was a
necessity and a
the
beginning ,
a minor can always plead minority in the
of
part estate the Shopkeep a
mino a
law
court
of and there is no estappe against the minor
of his claim
of 20, 000.
similarly as per section 68 where a contract is
for ·
The loss
of 10 , 000 shall not be recoverable.
necessity recovery from estate
of the minor is possible
even under a void contract as itis a quasi obligation
by low
.
fact
his watch Obtain 40,000
A Minor
pledged to rupees
which he spent on a laptop and now wants to
get
back the watch
from the shopkeeper without
paying
the loan .
Question 20 At
- sto ca-shaan-gupto
X, Y and Z jointly borrowed ₹90,000 from L. Decide each of the following in the
- -
light of the Indian Contract Act, 1872:
-
-
(i) Whether L can compel only Y to pay the entire loan of ₹90,000? Yes
-
-
(ii) Whether L can compel only the legal representatives of Y to pay the loan of
-
-
₹90,000, if X, Y and Z died?
-
-
(iii) Whether Y and Z are released from their liability to L and X is released
-
-
- - -
-- -
from his liability to Y and Z for contribution, ifO
&
L releases X from his liability
-
and sues Y and Z for payment?
-
(6 Marks)
-
By - CA Shantam Gupta
aa
According to the relevant
provisions of the Indian Contract Act
1872 ,
all the
joint promisors are
jointly and
severally
outsiders however the
responsible for the liability
due to the
legal representatives are
always jointly responsible with other
joint promisors.
If one
of the
joint promisors is excused by the outsider , the
other
a
joint promisors can
lawfully obtain contribution from such
joint promisor .
