Devesh Kumar

120C28
MBA General
Legal Aspect of Business (Assignment)

Q1. A was appointed as a managing director by a company. Later on it was found out that appointment was
invalid because the director that appointed him was not eligible. Can A claim salary for the time he worked?
A1. Yes, A can claim salary for the time he worked because all the acts of a director are valid notwithstanding
the fact that his appointment is afterward discovered to be invalid, by reason of any defeat in his appointment.

Q2. X contracted to sell 100 kg of sugar to Y at Rs. 15 per kg on a certain date. In anticipation X contracted to
purchase from Z the same quantity at Rs. 8 per kg. Z does not deliver the sugar to X. X suffers a loss of Rs. 7
per kg. Can he recover this loss from Z?
A2. X cannot recover this loss from Z because this is a case of special loss and here special losses can be
recovered only if the parties to the contract shall knew when they made the contract, about such special loss
to be likely to result from the breach of it. Z know nothing about the contract of X and Y. So, Z is not liable to
pay any special losses.

Q3. A was appointed by B to accompany him on a tour of three months from July 1st at a certain salary.
Before the 1st July, A told B that B was no more required by him. Can B sue A?
A3. This is a case of an anticipatory breech. This occurs when the promisor refuses to perform his part of duty.
So, in the above case B can sue A for breaching the contract.

Q4. In case of breach of promise to marry, the damages are awarded under what type of measurement of
damage and what will be considered to give damages?
A4. It is a well settled law that breach of promise to marry is actionable. Damages and compensation for such
breach can be awarded. So, breach of a promise to marry because it causes injury to his/her feelings and in
this case the victim is entitled to get vindictive damages.

Q5. When the buyer breaks the contract, the damage would be the difference between ______________
price and _______________ price. When the seller breaches the contract, the buyer can recover the
difference between _________________ Price and _________________ price as on the date of breach.
A5. Contract, Market, Market, Contract

Q6. M found a purse in a mall. He deposited the purse to the manager of the mall, so that the true
owner can claim it back. However, no one claimed the purse. M wants the purse back. Can he
succeed?
A6. According to the Indian Contract Act, 1872, till the owner is found out, the property in goods will
vest with the finder and he can retain the goods as his own against the whole world (except the
owner, of course). So in the given case M will succeed in his claim.

Q7. P pays the arrears of rent of his nephew to his landlord just to avoid tension. Can he recover
this amount from his nephew?
A7. He cannot recover the money because the contract was only between P and P’s landlord.

Q8. N had to pay property tax to the government. To save N’s property from being seized by the
government, N’s friend O paid the tax to the government in N’s presence. Can O recover the money
from N?
A8. O can recover the money because O paid the money to the government authorities in th
presence of N itself.
Devesh Kumar
120C28
MBA General
Legal Aspect of Business (Assignment)
Q9. A promise to sell his bike to Z for Rs. 75,000 if he feels like selling it after having a new bike. Is it
a contingent contract?
A9. No, it is a void agreement because it is an uncertain agreement.

Q10. A agrees to make furniture for B for Rs. 1 Lac on the term that payment will be made after the
completion of the work. Is it a contingent contract?
A10. No, A cannot sell because it a void agreement.

Q11. A agrees to pay B Rs. 1 Lac if sun rises in the west next morning. Is the contract valid?
A11. This is an impossible event, sun cannot be rise from went. So, this is not a valid contract.

Q12. Y holds agricultural land in Gujarat on a lease granted by X, the owner. The land revenue
payable by X to the government being in arrear, his land is advertised for sale by the government.
Under the revenue law, the consequence of such a sale will be termination of Y’s lease. Y, in order
to prevent the sale and consequent termination of his own lease pays the government the sum due
from X. Referring to the provisions of Indian Contract Act, 1872 decide whether X is liable to make
good to Y the amount so paid?
A12. Yes, X is bound to make good to Y the amount so paid. Section 69 of the Indian Contract Act,
1872, provides that “A person, who is interested in the payment of money which another is bound by
law to pay, and who therefore pays it, is entitled to be reimbursed by the other. In the given case Y
has made the payment of lawful dues of X in which Y had an interest. Therefore, Y is entitled to get
the reimbursement from X.

Q13. X, a minor was studying M.Com. in a college. On 1st July, 2005 he took a loan of Rs. 10,000
from B for payment of his college fees and to purchase books and agreed to repay by 31st
December, 2005. X possesses assets worth Rs, 2 lakhs. On due date X fails to pay back the loan to B.
B now wants to recover the loan from X out of his (X’s) assets. Referring to the provisions of the
Indian Contract Act, 1872 decide whether B would succeed?

A13. A minor is liable to pay out of his property for ‘necessaries’ supplied to him or to his minor
dependents that he is legally bound to support. A necessary means ‘Goods suitable to the condition
in life of such infant or other person, and to his actual requirement at the time of a sale & delivery”.
Necessaries also include education, training for a trade medical advice etc. Any loan incurred to
obtain necessaries will also make the minor’s property liable i.e. a loan taken by minor to obtain
necessaries also binds him and is recoverable by the lender as if he himself had supplied the
necessary. In the given case X, a minor had taken loan of ` 10,000 from B for his education (payment
of college fees and purchase of books. Therefore, X’s assets will be liable for the payment of loan of
Rs. 10,000. B (the lender) a recover the amount given by way of loan. Hence B would succeed in
recovering loan out of X’s assets.
Devesh Kumar
120C28
MBA General
Legal Aspect of Business (Assignment)
Q14. A student was induced by his teacher to sell his brand-new car to the later at less than the
purchase price to secure more marks in the examination. Accordingly, the car was sold. However,
the father of the student persuaded him to sue his teacher. State whether the student can sue the
teacher?

A14. The relation subsisting between a teacher and student is such that one can dominate the will of
other and the transaction in this case is also unconscionable as a brand new car has been sold at a
price less than purchase price. A can thus sue his teacher on the ground of undue influence under the
provisions of Indian Contract Act, 1872.

Q15. Ramesh, aged 16 years, was studying in an engineering college. On March 1st, 2011, he took a
loan of Rs. 1 Lakh from Suresh for payment of his college fees and agreed to pay by 30th May,
2012. Ramesh possesses assets worth Rs. 10 lakhs. On due date Ramesh fails to pay back the loan
to Suresh. Suresh now wants to recover the loan from Ramesh out of his assets. Whether Suresh
would succeed? Decide, referring to the provisions of the Indian Contract Act, 1972.

A15. A person who is of the age of majority is competent to enter into any contract. In India a person
who has completed the age of 18 years is a major and otherwise he will be treated as minor. Ramesh
who is a minor is not competent to enter into a contract and any agreement with him is void. India
Contract Act, 1872 says that though minor is not personally liable to pay the price of necessaries
supplied to him or money lent for the purpose, the supplier or lender will be entitled to claim the
money/price of goods or services which are necessaries suited to his condition of life provided that
the minor has a property. The liability of minor is only to the extent of the minor's property. This type
of contract is called a Quasi-contract and the right of the supplier/lender is based on the principle of
equity. Therefore, Suresh will be entitled to recover the amount of loan given to Ramesh for payment
of the college fees from the property of the minor.

Q16. B owes C a debt guaranteed by A. C does not sue B for a year after the debt has become
payable. In the meantime, B becomes insolvent. Is A discharged? Decide with reference to the
provisions of the Indian Contract Act, 1872.

A16. A is not discharged from his suretyship. B owes to C a debt guaranteed by A. The debt becomes
payable. C does not sue B for a year after the debt has become payable.

Q17. 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 bank
deteriorates. Then X agrees to accept a lower salary of Rs. 1,500 per month from the bank. Two
months later, it was found that X has misappropriated cash since the time of his appointment.
What is the liability of Y?

A17. On the off chance that the loan boss makes any change without the assent of the surety, at that
point surety is released with regards to the exchanges consequent to the change. In the moment case
Y is at risk as a surety for the misfortune endured by the bank because of misappropriation of money
by X amid the initial nine months yet not for misappropriations conferred after the decrease in pay.
Devesh Kumar
120C28
MBA General
Legal Aspect of Business (Assignment)
Q18. A hire a carriage 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?

A18. According to the Indian Contract Act, 1872, if the goods are bailed for hire, the bailer is
responsible for damages, whether he was aware about the existence of such types of faults in the
goods bailed or not. Thus in given case, B is liable to compensate A for the injuries suffered even if he
has no knowledge of the defect in the carriage.

Q19. A bail his jewellery with B on the condition to safeguard in bank’s safe locker. However B kept
in safe locker at his residence, where he usually keeps his own jewellery. After a month all
jewellery was lost in a religious riot. A filled a suit against B for recovery. Referring to provisions of
the Indian Contract Act, 1872, state whether A will succeed.

A19. According to the Indian Contract Act, 1872, B is liable to compensate A for his negligence to
keep jewellery at his resident. Here, A and B agreed to keep the jewellery at the Bank’s safe locker
and not at the latter’s residence.