Lecture- 06 Business Laws

Top 100 Questions – Q 51 to 60

By- Kunal Mandhania Sir

 Question no 51
Mr. Parth applied for a job as principal of a school.
The school management decided to appoint him.
One member of the school management committee
privately informed Mr. Parth that he was appointed
but official communication was not given by the
school. Later, the management of the school
decided to appoint someone else as a principal. Mr.
Parth filed a suit against the school for cancellation
of his appointment and claimed damages for loss of
salary. State with reasons, will Mr. Parth be
successful in suit filed against school under the
Indian Contract Act, 1872? (RTP June 2024)
 Answer
Law - As per sec 2(b) of acceptance, the acceptance should be
communicated to offeror by offeree himself or by his authorized
agent. Communication of acceptance by third person cannot be
concluded as valid acceptance.

e
Conclusion - In the instant case, Mr. Parth applied for a job as
principal of a school and one member of the school
management committee privately informed Mr. Parth that he
was appointed. Later, the management of the school
appointed someone else as a principal. the school
against
&

Parth will not be successful in his cut

was not-
mr.

because here there was no valid contract as acceptance

valid since acceptance was not communicat by oftener te school Mat
 Question 52
In light of provisions of the Indian Contract Act, 1872 answer the following:
i. Mr. S and Mr. R made contract wherein Mr. S agreed to deliver paper
cup manufacture machine to Mr. R and to receive payment on delivery. On
the delivery date, Mr. R did not pay the agreed price. Decide whether Mr. S
is bound to fulfil his promise at the time of delivery?
ii. Mr. Y has given loan to Mr. G of ` 30,00,000. Mr. G defaulted the loan
on due date and debt became time barred. After the time barred debt, Mr.
G agreed to settle the full amount to Mr. Y. Whether acceptance of time
barred debt Contract is enforceable as per the Indian Contract Act, 1872?
iii. A & B entered into a contract to supply unique item, alternate of
which is not available in the market. A refused to supply the agreed unique
item to B. What directions could be given by the court for breach of such
contract? (MTP May 24) (7 Marks)
 Answer
(i) Mr. S is not bound to deliver goods to Mr. R since payment was not made by
him at the time of delivery of goods. As per Section 51 of the Indian Contract Act,
1872, when a contract consists of reciprocal promises to be simultaneously
performed, no promisor needs to perform his promise unless the promisee is
ready and willing to perform his reciprocal promise. Referring to the above
-

provisions, in the given case,

-
As persec 25
(ii) contract entered between parties post time barred debt is valid so, Mr. G is
bound to pay the agreed amount to Mr. Y If promise in writing signed by G medebler
↑

(iii) Where there is a breach of contract for supply of a unique item, mere
monetary damages may not be an adequate remedy for the other party. In such
a case, the court may give order for specific performance and direct the party in
breach to carry out his promise according to the terms of contract. Here, in this
case, the court may direct A to supply the item to B because the refusal to supply
the agreed unique item cannot be compensated through money.
 Question 53
Define -o
Misrepresentation and Fraud. Explain
the difference between Fraud and
Misrepresentation as per the Indian Contract
Act, 1872. (MTP May 24) (6 Marks)
common Free consect XXX
.
-
 Answer
Basis of difference Fraud Misrepresentation

o
Intention
-
To deceive the other party by There is no such intention to deceive
hiding the truth. the other party.

O
Knowledge of truth The person making
suggestion believes that the
statement as untrue.
the
The person making the statement
believes it to be true, although it is
not true.
Rescission of the contract The injured party can repudiate
The injured party is entitled to
and claim for damages the contract and claim damages.
repudiate the contract or sue for
restitution but cannot claim the
damages.
Means to The party using the fraudulent Party can always plead that the
discover the truth act cannot secure or protect injured party had the means to
himself by saying that the discover the truth.
injured party had means to
discover the truth.
⑬ Both Fraud and
misrepresentation are reasone because of which
consent not free
- However pere are certain
of parties
-are
,

difference between them which follows :

-
- are as

and includes
① Definition ! As per see
-
17 , fraud means
made without
concealment ② promise
-

e
-

statement laws
⑪False deceit A per one
intention to peth act of
Any
any A representati means
.
Pa Fake
whereas persaci 18 mo
-
to deceive
with no intention
statement Breach of duty it to
statement believing
⑯ Innocent Mistake @
False

be tree
intention to deceive ever
Fraud includes
① Essention do not
involve intention to deel
misrepret
fraud person makes
on
bath
⑭
In
knowledge
of ,

bel it to undue t -
 Question 54
*
Paridhee, a minor, falsely representing her age, enters into an agreement with an authorised
Laptop dealer Mr. Mittal, owner of MP Laptops, for purchase of Laptop on credit amounting ₹
O
60,000/- on 1st August 2022. She promised to pay back the outstanding amount with interest @
16% p.a. by 31st July 2023. She told him that in case she won’t be able to pay the outstanding
- -
amount, her father Mr. Ram will pay back on her behalf. After One year, when Paridhee was asked

-
to pay the outstanding amount with interest she refused to pay the amount and told the owner
that she is minor and now he can't recover a single penny from her.
O
-

She will be a major on 1st January 2025 and only after that agreement can be ratified. Explain by
&
which of the following ways, Mr. Mittal will succeed in recovering the outstanding amount with
reference to the Indian Contract Act, 1872.
(i)
⑳
By filing a case against Paridhee, a minor for recovery of outstanding amount with interest?
(ii) ⑳
By filing a case against Mr. Ram, father of Paridhee for recovery of outstanding amount?

⑳
(iii) By filing a case against Paridhee, a minor for recovery of outstanding amount after she
attains majority?
[RTP Dec 2023]
Law: As per sec.ll of indian contract act
he can never
=

with minor is void-ab-initio

① Agreement
be held liable
-

⑪ minor can always plead his minonty

acts
will not be
liable for of
⑭ Parents/avandia of minor

minor miner
a
not allowed case If
Q Ratification
estoppel
is
do not on mind's case
apply
.

Rule of
① In present come,
Conclusion P
wil miner
Mittal cannot sue paidhee m agreet
⑦ Mr .
as
void-abinte
in which
he becomes liable is
liable for
not
Ram paints
. mittal
cannot sue as
⑱ Mr
act of miner paridle other
claims money from
⑪ mr mitted cannot
.

ratificates is not allowed

in

swee
-

attany majouty
meno
-

care
g
 Question 55
Rahul was a Disk Jockey at a five-star hotel. As per the contract, he
is supposed to perform every weekend. (i.e. twice a week). Rahul
will be paid ` 2,500 per day. However, after a month, Rahul willfully
absents himself from the performance. Taking into account the
provisions of the Indian Contract Act, 1872, answer the following:
(RTP June 2024)
(i) Does the hotel have the right to end the contract?
(ii) If the hotel sends out a mail to Rahul that they are interested to
continue the contract and Rahul accepts, can the hotel rescind the
contract after a month on this ground subsequently?
(iii) In which of the case – (termination of contract or continuance
of contract) can the hotel claim damages that it had suffered as a
result of this breach?
 Answer
Law-
By analysing Section 39 of the Indian Contract Act, 1872, it is understood that when a
party to a contract has refused to perform or disabled himself from performing his
promise entirely, the following two rights accrue to the aggrieved party (promisee):
(a) To terminate the contract
(b) To indicate by words or by conduct that he is interested in its continuance
In either of the two cases, the promisee would be able to claim damages that he suffers.
Conclusion - In the given case,
(i) Yes, the hotel has the right to end the contract with Rahul, the DJ.
(ii) The hotel has the right to continue the contract with Rahul. But once this right is
exercised, it cannot subsequently rescind the contract on this ground subsequently.
(iii) In both the cases, the hotel (promisee) is entitled to claim damages that has been
suffered as a result of breach.
 Question 56
Rohan found a wallet in a restaurant. He enquired all the
customers present there but the true owner could not be
found. He handed over the same to the manager of the
restaurant to keep the wallet till the true owner is found. After
a week, Rohan went back to the restaurant to enquire about
the wallet. The manager refused to return it to Rohan, saying
that it did not belong to him. In the light of the Indian Contract
Act, 1872, can Rohan recover the wallet from the Manager?
[RTP Dec 2023] Mits Finder of goods right in rem except
= me owner (seet1]
conclusion-Rolan can recover wallet
C
 Question 57
Rohan is running a grocery store in Delhi. He sells his
grocery business, including goodwill worth ₹ 1,00,000
to Rohit for a sum of ₹ 5,00,000. After the sale of
goodwill, Rohit made an agreement with Rohan. As per
this agreement, Rohan is not to open another grocery
store (similar kind of business) in the whole of India for
next ten years. However, Rohan opens another store in
the same city two months later. What are the rights
available with Rohit regarding the restriction imposed
on Rohan with reference to Indian Contract Act, 1872?
[MTP Jun 2022(3 Marks)]
 Answer
Law-
Section 27 of the Indian Contract Act, 1872 provides that any agreement that restrains a person from
carrying on a lawful trade, profession or business is void agreement. However, there arecertain
exceptions to this rule. One of the statutory exceptions includes sale of Goodwill. The restraint as to
sale of goodwill would be a valid restraint provided-
(i) Where the restraint is to refrain from carrying on a similar business
(ii) The restrain should be within the specified local limits
(iii) Themrestraint should be not to carry on theu s
similar business after sale of goodwill to the buyer
for a price.
(iv) The restriction should be reasonable.
=
Reasonableness of restriction will depend upon number
of factors as considered by court.
Conclusion –
In the given case, Rohan has sold the goodwill and there is restraint for not carrying on the same
business of grocery store. However the restriction imposed on Rohan is unreasonable as he cannot
carry similar business in whole of India for next 10 years. The restriction on restraint to similar kind of
trade should be reasonable to make it a valid agreement. Therefore, Rohit cannot take any legal action
against Rohan as the restriction is unreasonable as per Section 27 of Indian Contract Act, 1872. Hence,
the agreement made between Rohan and Rohit in restraint of trade is void agreement
 Question 58
43. Explain the type of contracts in the following agreements under
the Indian Contract Act, 1872:
(a) A coolie in uniform picks up the luggage of A to be carried out of
the railway station without being asked by A and A allows him to do
so.
(b) Obligation of finder of lost goods to return them to the true
owner.
(c) A contract with B (owner of the factory) for the supply of 10 tons
of sugar, but before the supply is affected, the fire caught in the
factory, and everything was destroyed.
[MTP Nov 2022(4 Marks)]
 Answer
(a) It is an implied contract and A must pay for the services of the coolie detailed by him.
Implied Contracts: Implied contracts come into existence by implication. Most often the
implication is by law and or by action. Section 9 of the Act contemplates such implied contracts
when it lays down that in so far as such proposal or acceptance is made otherwise than in
words, the promise is said to be implied.
(b) Obligation of finder of lost goods to return them to the true owner cannot be said to
arise out of a contract even in its remotest sense, as there is neither offer and acceptance nor
consent. These are said to be quasi-contracts.
Quasi-Contract: A quasi-contract is not an actual contract but it resembles a contract. It is
created by law under certain circumstances. The law creates and enforces legal rights and
obligations when no real contract exists. Such obligations are known as quasi-contracts. In
other words, it is a contract in which there is no intention on part of either party to make a
contract, but law imposes a contract upon the parties.
(c) The above contract is a void contract.
Void Contract: Section 2 (j) states as follows: “A contract which ceases to be enforceable by law
becomes void when it ceases to be enforceable”. Thus, a void contract is one which cannot be
enforced by a court of law.
 Question 59
What do you mean by Quantum
T
Meruit and state the cases where the
claim for Quantum Meruit arises?
much as
-
as

(MTP May 24) (6 Marks) much

eat
he

part payment
& as
-

Applicanis -
Breach Connect , deceive
to
prop
z
Y in

coses-claim-Dnan-gratuitous work done

-
⑧ separable
-

Dir Badly perfor

 Answer
Quantum Meruit: Where one person has rendered service to another in circumstances which indicate an understanding
between them that it is to be paid for although no particular remuneration has been fixed, the law will infer a promise to pay.
Quantum Meruit i.e. as much as the party doing the service has deserved. It covers a case where the party injured by the
breach had at the time of breach done part but not all of the work which he is bound to do under the contract and seeks to be
compensated for the value of the work done. For the application of this doctrine, two conditions must be fulfilled:
(1) It is only available if the original contract has been discharged.
(2) The claim must be brought by a party not in default.
The object of allowing a claim on quantum meruit is to recompensate the party or person for value of work which he has done.

G
Damages are compensatory in nature while quantum meruit is restitutory. It is but reasonable compensation awarded on
implication of a contract to remunerate.
The claim for quantum meruit arises in the following cases:
loo good-no good
a) O
When an agreement is discovered to be void or when a contract becomes void.
b)
c)
G
When something is done without any intention to do so gratuitously.
= ⑳
Where there is an express or implied contract to render services but there is no agreement as to remuneration.

o
②

d) When one party abandons or refuses to perform the contract.

e) Where a contract is divisible and the party not in default has enjoyed the benefit of part performance.

①
f) When an indivisible contract for a lump sum is completely performed but badly the person who has performed the
contract can claim the lump sum, but the other party can make a deduction for bad work.
 Question 60
Mr. Sanjay Kothari was a big businessman having two sons and
one married daughter. He decided to gift his house to his
daughter. For this purpose, he called his lawyer at his house
and made a written document for such gift. The lawyer advised
him to get the transfer document properly registered. When
they both were going for registration of document, they met
an accident, and both died. Later, the daughter found the
document and claimed the house on the basis of that
document. Explain, whether she can get the house as gift
under the Indian Contract Act, 1872?
 Answer
(i)Law - Section 25 of the Indian Contract Act, 1872 provides that an agreement
made without consideration is valid if it is expressed in writing and registered
under the law for the time being in force for the registration of documents and is
made on account of natural love and affection between parties standing in a near
relation to each other.

Conclusion - In the instant case, the transfer of house made by Mr. Sanjay Kothari
on account of natural love and affection between the parties standing in near
relation to each other is written but not registered. Hence, this transfer is not
enforceable, and his daughter cannot get the house as gift under the Indian
Contract Act, 1872. be anwered by a a
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