TECHNO INDIA UNIVERSITY, WEST BENGAL

MOOT COURT COMPETITION

2020

MR. RAHUL ( PLAINTIFF )

V
MR. RAJ ( DEFENDANT )

TEAM CODE 2

MEMORIAL FOR THE DEFENDANT

ROSHNI KALAM
RUCHITA SHARMA
SAGNIK BASU
TABLE OF CONTENT

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1. Index of Authorities………………………………………….....3
2. Statement of Jurisdiction………………………………………..6
3. Statement of Facts………………………………………………7
4. Issues Raised……………………………………………………8
5. Summary of Issue.………………………………………………9
6. Arguments Advanced…………………………………………..11
7. Prayer…………………………………………………………...18

INDEX OF AUTHORITIES
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BOOKS:
 The Indian Contract Act, 1872 (Bare Act)
 Contract and Specific Relief by Dr. Avtar Singh

WEBSITES:
 https://blog.ipleaders.in/
 https://thefactfactor.com/
 https://www.lexology.com/
 https://www.mondaq.com/india/contracts-and-commercial-
law/654334/frustration-of-contract
 www.legalserviceindia.com
 www.legaldictionary.net
 www.lawinsider.com
 https://www.lawsenate.com/publications/articles/is-time-essence-
of-contract.

ARTICLES:
 Contract Through Postage And Telephone – by  Sylvine
 Revocation of offer – By Hemant More
 Acceptance of Offers by E-Mail – How Far Should the Postal Acceptance
Rule Extend?- by Kathryn O’Shea and Kylie Skeahan
 Covid-19 pandemic – impact on performance of contracts by Olubukola
Seun-Oguntuga and Seyi Alao
 How the Bombay High Court is changing Force Majeure amid Covid-19 by
Tushar Behl
 India: Frustration of Contract by S.S Rana and co Advocates.
 Time and place of performance of contract by Srishti Chawla

TABLE OF CASES:

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1) Bhudra Chand Goswami v. Betts 33 Ind Cas 347……………………………...14

2) Brinkibon Ltd v. Stahag Stahl Gmbh 1982 (1) ALL ER 293………………….12

3) Chand Rani v Kamal Rani (1993) 1 SCC 519…………………………......16, 18

4) Entores Ltd v Miles Far East Corporation 1955 EWCA Civ 3...…………..11,17

5) Quadricon (P) Ltd v Shri Bajrang Alloys Ltd 2007…………………………....12

6) Ramsgate Victoria Hotel v Montefoire (1866) LR 1 Ex 109…………………..18

7) Saradamani Kandappan V. S. Rajalakshmi and ors (2011) 12 SCC 18...……...15

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 STATEMENT OF JURISDICTION

The counsel for the defendant, Mr. Raj, hereby humbly submits to the City Civil
Court of Kolkata, to the court of Senior Civil Judge, under section 6, section 9 and
section 20 of the Code of Civil procedure. The court has the jurisdiction to decide
all the matters referred to it for decision.

AND ALSO,

The Hon’ble court has the jurisdiction to decide the matters related under section 4,
section 5, section 55, and section 73 of the Contract Act.

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 STATEMENT OF FACTS

1. Mr. Raj the managing director of Tesla Cars Ltd made an offer through an email
to Mr. Rahul in the morning of 5 Th June 2020 regarding a rare vintage car for USD
5000, which was high in demand.

2. Mr. Raj didn’t receive any mail either on 5th or on 6th of June 2020.

3. Then, on 6th of June Mr. Raj received an offer from Mr. Mark regarding the
same car for USD 6000.

4. Mr. Raj, then at 5:30pm sent a revocation of offer to Mr. Rahul on 6 th of June
through an email and telex.

5. After receiving the telex from Mr. Raj on 7 th of June2020, Mr. Rahul
immediately sent a telex to Mr. Raj, stating the reason behind the delay, that is he
mailed his acceptance on 5th of June 2020 but it didn’t reach Mr. Raj because Mr.
Rahul’s internet had stopped working. And his internet service provider had less
workforce due to lockdown and hence he was unable to rectify the problem, Mr.
Rahul also apologized for the same.

6. But Mr. Raj being a true businessman, seeing the demand for the car and the fact
that the acceptance didn’t come within the reasonable time Mr. Raj refused to sell
the car to Mr. Rahul.

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 ISSUES RAISED

1) “Time was the Essence” of the Contract as per section 46 of the Indian Contract
Act, 1872.

2) Whether the revocation of offer is valid as per section 5 of the Indian contract
Act?

3) There was no Breach of Contract, as per the section 4 and section 73 of the
Indian Contract Act.

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 SUMMARY OF ISSUES
1) “Time was the Essence” of the Contract, as per the section 46 of
the Indian Contract Act, 1872.
According to section 46 of the Indian Contract Act, 1872, if time is not specified in
a contract the parties must perform the promise “within the reasonable time”. Here
reasonable time means a fair amount of time that is required to do something
conveniently and as soon as the circumstances permit. The term reasonable time
depends on the facts and circumstances of the case and will also depend on the
nature of the transaction, as it was held by the Supreme Court in Chand Rani v
Kamal Rani’s case. In this case, the defendant did not receive the acceptance
within the reasonable time knowing the fact that the car was in demand. Therefore,
the revocation sent by the defendant becomes valid as time was the essence of
contract and the plaintiff failed to send his acceptance on time. Raj being a true
businessman accepted Mr. Mark’s offer and agreed to sell the car.

2) Whether the revocation of offer is valid as per the section 5 of the

Indian Contract Act?

The communication by telex or telephone, fax or emails is categorized under

“instantaneous” modes of communication and these are considered as
instantaneous because in an absence of the contracting parties the communication
of offer or acceptance or counter offers reaches the party within a fraction of
second or microseconds, i.e., instantaneously in the form of electronic signals.
When a telephone or telex is used as a means of communication, then the acceptor
is well known for the fact if the offeror has received his message or not, and thus,
he can send it again if any disturbances occur in the transmission of the message
regarding acceptance. But whether the communication of acceptance is completed

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depends when the acceptance reaches the proposer, i.e., when he has heard the
message of acceptance. The postal rule of completion of acceptance, which when
acceptance is put in the course of transmission it is deemed to be complete does not
apply in the case of communication through telephone or telex. Therefore the
revocation made by the defendant was valid as communication of acceptance was
not complete.

3) There was no Breach of Contract, as per the section 4 and section

73 of the Indian Contract Act, 1872.
Breach of Contract as per section 73 of the Indian Contract Act occurs when a
contract is broken by one party and the other party who suffers by such breach is
entitled to sue the party who has broken the contract. In this case Mr. Rahul has
alleged that Mr. Raj made a Breach of Contract, which is a false allegation. Mr.
Raj who is a profound businessman is aware of all the repercussions that he might
have to face for a Breach of Contract and hence, he has followed all the conditions
which are required for a valid proposal and revocation. Therefore, he has made no
breach of contract.

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 ARGUMENTS ADVNACED
1) Time was the Essence of the Contract as per section 46 of the Indian
Contract Act, 1872.

We already know that a contract requires a certain set of basic essentials that must
be fulfilled in order to make a contract legally enforceable. But even when the
parties to the contract have fulfilled these essentials, its validity can be questioned
if the contract is not fulfilled in due time and in the manner prescribed in the
contract. Although it is on the discretion of the parties to decide the time and place
of the contract but once decided it becomes necessary to comply with such terms.
“Time is the essence” is a term in contract law which indicates that the party to the
agreement must perform by the time to which the parties have agreed. In situations
where there is no time period specified for the performance of the contract and the
promisor has to perform the contract without any request by the promisee, in such
a case the promisor must perform the contract within a “reasonable time” as
mentioned in the section 46 “Where, by the contract, a promisor is to perform
without application by the promisee, and no time for performance is specified, the
engagement must be performed within a reason able time.”

When establishing time in a contract, the parties can refer to a “reasonable time”
period, or a “date certain.” Reasonable time is an amount of time that is considered
to be fair and necessary insofar as however long it takes to meet the needs of the
contract, circumstances permitting. Section 46 elucidates of the Indian Contract
Act held that a contract must be performed in reasonable time and Section 55 of
the Act, deals with the effect of failure to perform at fixed time when time is
essential. If an act is not done within time stipulated, the contract becomes
voidable at the option of the promise provided the intention of the parties was that
time should be of the essence of the contract. In Bhudra Chand v. Betts, the

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plaintiff stipulated with the defendant to engage his elephant for the purpose of
Kheda operations. The contract provided that the elephant would be delivered on
the 1st October, 1910, but the defendant obtained an extension of the time till 6 th
October and yet did not deliver the elephant till 11 th the plaintiff refused to accept
the elephant and sued for damages for the breach. It was held that the plaintiff was
entitled to recover damages since the conclusion of the contract confirmed by the
circumstance that the defendant obtained an extension of the time. It means that
time was the essence of the contract. Therefore the intention of the parties to make
the time as the essence of the contract, it should be specified either expressly or
impliedly in Bhudra Chand v. Betts case, time was specifically provided and in
Raj’s case time was impliedly provided as both the parties knew that the car was
rare and was in high demand.

Further in Saradamani Kandappan v. S. Rajalakshmi and ors 2011 the Supreme

Court of India have tried to address this question by calling upon the courts to
revisit the principles laid down by the court in the preceding judgments on same
issue and observed that as a general preposition of law time is not essence of
contract unless the parties to the contract intend to make time an essential
condition for the performance of contract. The court said that parties to a contract
may intend to make time an essence of contract by expressly providing so or it can
be inferred by necessary implication from the conduct of parties or circumstance
surrounding the performance of contract. The court also said “the general
presumption of law that time is not essence of contract that is for sale of
immovable properties needs to be revisited as time forms an essential condition for
the performance of contract in circumstance of ever- increasing prices of real-
estate property which are bound to affect transactions of sale of immovable
property”.

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Also in the case of Chand Rani v. Kamal Rani (1993) 1 SCC 519, the apex court
held that in case of sale of immovable property there is no presumption of law as to
time being essence of contract however even in case where time is not essence of
contract then also the court may infer that is to be performed in a reasonable time
from the conditions of express terms of contract, from the nature of property and
from surrounding circumstances like object of making contract. The court also held
that even when parties to contract have expressly provided time is to be essence of
contract then also such stipulation will have to be read along with other terms of
contract as on proper construction of these terms may indicate towards excluding
inference that the completion of work by particular date was meant to be
fundamental.

As mentioned in Chand Rani’s and Saradamani Kandappan’s case, the following

requirements should be taken under consideration while deciding whether time was
the essence of the contract or not and they are as follows:

(1) The language of the agreement,

(2) The nature of the property to be sold, and

(3) Conduct of parties and surrounding circumstances at or before the contracts.

In this case, Defendant sent an offer to Plaintiff to sell him rare vintage car which
was high in demand and time was the essence for the forgoing agreement but he
did not receive any acceptance from Rahul within a reasonable time and thereby
sent an email and telexed a revocation of offer to Rahul. Later when Mr. Mark who
showed his interest to buy the same car, Mr. Raj being a true businessman went
ahead with the offer, the fact that the car was rare and high in demand, it
automatically made time an essential factor for the contract.

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2) Whether the revocation of offer is valid as per section 5 of the
Indian Contract Act?

Section 4 of The Indian contract Act states “The communication of an acceptance

is complete, — as against the proposer, when it is put in a course of transmission to
him so as to be out of the power of the acceptor and as against the acceptor, when
it comes to the knowledge of the proposer”, but this is the postal rule which is not
applied in telexes. In this case, Mr Raj didn’t receive any acceptance and even if
Mr. Rahul had sent his acceptance via telex still it won’t be considered valid
because it didn’t came into the knowledge of Mr. Raj, it is in the postal rule that if
the acceptance is send via post, and then the revocation is made at the same time,
won’t be considered valid, as the post is in transmission, but in case of telex this
postal rule doesn’t apply. As mentioned in Entores Ltd v Miles Far East
Corporationin 1955, Lord Denninghe concludes ‘the rule about instantaneous
communications between parties is different from the rule about post. The contract
is only complete when the acceptance is received by the offeror”. Therefore, for
the completion of acceptance via telex the offeror must receive the telex, i.e., he
must read the telex, so that it comes to his knowledge.

Section 5 in The Indian Contract Act, 1872, states that “a proposal may be revoked
at any time before the communication of its acceptance is complete as against the
proposer, but not afterwards.” In this case the communication of acceptance was
incomplete as the mode of communication used was of an instantaneous one and
the postal rule does not apply to it and thus the revocation of the offer was valid
and binding. The fact that the acceptance was not received by the defendant and
the defendant wasn’t aware that the acceptance would be coming via telex and not
via email, shouldn’t make the defendant liable for the non completion of the
acceptance. Rather, the plaintiff should have informed the defendant that he was
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using a different mode of communication, as it would have made the defendant
alert, but it didn’t happen.

Section 6 clause 2 of the Indian Contract Act, 1872 states that A proposal is
revoked- “by the lapse of the time prescribed in such proposal for its acceptance,
or, if no time is so prescribed, by the lapse of a reasonable time, without
communication of the acceptance”, in this case the subject matter was a rare
vintage car which was in demand and therefore, the acceptance should have been
made within the reasonable time as also mentioned in Ramsgate Victoria Hotel v
Montefiore, the court held that “the Ramsgate Victoria Hotel’s action for specific
performance was unsuccessful. The offer that the defendant had made back in June
was no longer valid to form a contract. A reasonable period of time had passed and
the offer had lapsed. The court stated that what would be classed as reasonable
time for an offer to lapse would depend on the subject matter”. In Chand Rani v
Kamal Rani, the supreme court was held that in case of immovable property there
is no presumption of law as to time being the essence of a contract however even
in case where time is not the essence of contract then also the court may infer that
it is to be performed in the reasonable time from the conditions of express terms of
the contract, from the nature of the property and from surrounding circumstances
like object of making contract.

It was Mr Rahul’s duty to send his acceptance within reasonable time, which didn’t
happen and therefore, the revocation of offer is valid as no contract was formed
due to absence of acceptance from the plaintiff.

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3) There was no Breach of Contract, as per the section 4 and section
73 of the Indian Contract Act, 1872.
According to section 2(b) of the Indian Contract Act, 1872 “When the person to
whom the proposal is made signifies his assent thereto, the proposal is said to be
accepted. A proposal when accepted becomes a promise”. In this case, assent to the
proposal was incomplete, as the facts of the case shows that the defendant on 5 th of
June 2020 had sent an email to Mr. Rahul stating an offer for the sale of a rare
vintage car for USD 5000. But Mr. Raj didn’t receive any response regarding the
offer on the same day. The next day Mr. Raj while he was at work received another
offer regarding the same car for USD 6000 by Mr. Mark. The fact that no
acceptance was made from the plaintiff it was quite obvious on the defendant’s
part to go ahead with the offer sent by Mr. Mark.

When it comes to the communication of acceptance, according to Section 4 of the

Indian Contract Act, “the communication of an acceptance is complete as against
the proposer, when it is put in a course of transmission to him, so as to be out of
the power of the acceptor and as against the acceptor, when it comes to the
knowledge of the proposer”, this is the postal rule which is applied when a
message is send via letter or email, postal rule does not apply in telex. In
Entores Ltd v Miles Far East Corporation it was held that “a telex is a "virtually
instantaneous" method of communication”. As a result, when an acceptance is sent
by telex “it is not until [the offeree's] message is received that the contract is
complete”. Lord Denning mentioned the reason behind this decision, that is,
“where an instantaneous method of communication is used, usually one party will
know if some part of the acceptance has not been received, which effectively
removes the risk of a party proceeding upon the mistaken assumption that an
acceptance has been communicated”. In Brinkibon Ltd v Stahag Stahl GmbH,

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Lord Wilberforce stated that “The senders and recipients may not be the principals
to the contemplated contract. They may be servants or agents with limited
authority. The message may not reach, or be intended to reach, the designated
recipient immediately, messages may be sent out of office hours, or at night, with
the intention, or on the assumption, that they will be read at a later time. There may
be some error or default at the recipient's end which prevents receipt at the time
contemplated and believed in by the sender. The message may have been sent
and/or received through machines operated by third persons”. And therefore, the
court held that “that the acceptance was not effective until communicated to the
offeror”.

Also, In Quadricon (P) Ltd. v. Shri Bajrang Alloys Ltd, it was held that “in postal
service the communication becomes complete when the letter is posted from the
offeror and the offeree is bounded by it. But if electronic modes are taken into
account then fax communications like telephonic communication, becomes
complete when the acceptance is received by the offeror”. Therefore, as per the
above cases mentioned and as per the provision of section 4 of the Indian Contract
Act, 1872, it becomes quite clear that communication of acceptance, when made
via telephone or telex is concluded when acceptance reaches the proposer, i.e.,
when he hears the message or when he reads the message respectively. In this case
the acceptance was not received and he had no idea that the acceptance would be
coming via telex and not via email.

According to section 5 of the Indian contract act, 1872 “a proposal may be

revoked at any time before the communication of its acceptance is complete as
against the proposer, but not afterward”, in this case Mr. Raj had sent the
revocation only when he didn’t receive any reply from Mr. Rahul. Also, Section 51
of the Indian Contract Act, states that “When a contract consists of reciprocal

16
promises to be simultaneously performed, no promisor need perform his promise
unless the promisee is ready and willing to perform his reciprocal promise”. Here
the acceptance of the offeree within a reasonable time was essential for the
performance of the contract. Seeing no response from the plaintiff and continuous
increase in the demand of the car, Mr. Raj being a true businessman and someone
who knows the true ethics of a business, he moved on with the other offer and he
accordingly sent the revocation to Mr. Rahul.

Mr. Raj sent the revocation on 6 th of June 2020 at 5:30pm, via email and via telex,
though his working hours is between 9am to 5pm, but still he took the extra effort
of sending the telex on the same day. And seeing the fact that Mr. Rahul didn’t
respond via email, Mr. Raj thought of sending the message via telex also, so that
he might get some response. And hence, on 7 th of June 2020, Mr. Rahul responded
via telex and stated the reason behind the delay and apologized for it. But it was
too late, Mr. Raj had already formed a contract with Mr. Mark and he refused to
sell the car to Mr. Rahul.

Therefore, Mr. Raj had made no breach of contract rather he followed all the
conditions for a valid proposal and revocation. It was Mr. Rahul who failed to
communicate his acceptance on time and he should be made liable for the damages
and should compensate Mr. Raj for falsely accusing him.

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 PRAYER FOR RELIEF

In the light of the above, defendant prays this hon’ble court to declare that:

1. Due to non communication of acceptance there is no concluded contract as per

section 4 of the Indian Contract Act, 1872.

2. The alternative and wholly without prejudiced to prayer clause (1) declare that
time was the essence of the contract and the revocation of the contract as per
section 5 of the Indian Contract Act is valid.

3. The suit is not maintainable, dismiss it.

4. Defendant should be awarded compensation, and any other relief which the
Court deems fit.

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