Nirma University

Institute of Law
Semester End Examination (SEE), August- 2021
B.A./B.Com. LL.B.(Hons.), Semester – II
2BL231-Contract Law I

Roll/Exam No. Supervisor’s Initial with date

Time: 5 Hours Max. Marks : 50

Instructions: 1. Attempt all questions.
2. Figures right indicates full marks.

Q.1 A contract was entered between A & B which had a clause:

“That in the event of the sale of shares having taken place before the institution of the
suit, the deponent No.1 (A) and those to whom the shares have been sold and also
subsequent transferees, their servants, agents, nominees, employees, subsidiary
companies, controlled companies, affiliates or associate companies or any person acting
for and on their behalf are restrained by an interim injunction from using the plants of
respondent No. 1 (B) at Ahmedabad and Rajkot for manufacturing, bottling or selling or
dealing with or concerning themselves in any manner whatsoever with the beverages of
any person till January 25, 1996."
"As such the Bottler covenants that the Bottler will not manufacture, bottle, sell, deal or
otherwise be concerned with the products, beverages of any other brands or
trademarks/trade names during the subsistence of this Agreement including the period of
one year's notice as contemplated in the agreement.

Discuss whether such clause is a valid clause under the Indian Contract Act. Discuss the
implication of such negative covenants and whether they can be held valid under any
circumstance and if yes, under what circumstances? Elaborate with the help of case laws.

(20 Marks) (upto1000 words)

Q.2 . On the 7th February, 1996, the Deputy Commission at Ahmedabad published an auction
notice notifying that the right to vend beer, wines and other foreign liquor including Indian
made Foreign Liquor PMFL) in the shops at 13 specified locations at different places as
mentioned therein for the period from the 1st April, 1996 to 31st March, 1997 would be sold
by auction in one lot as a single auction to be held on 22.2.1996 at the Conference Hall of the
Deputy Commissioner's Office at Ahmedabad. It was mentioned in the said auction notice
that the presiding officer reserved the right to accept or reject the highest bid without any
reason. The terms and conditions subject to which bids were invited at the said auction and
the license would be granted, were referred to in that notice. It was mentioned in the terms
and conditions that a licence would be issued under Rule 9 of the Excise Rules, 1934 in
accordance with the contract of sale. Clause 6(n) of the terms and conditions provides inter
alia that the highest bidder shall deposit 50% of the money minus Rs. 75,00,000 of earnest
money already deposited by him on the fall of the hammer and the remaining bid money
would be deposited by him in five equal monthly instalments on or before 10th of every
month starting with April 1996, falling which interest would be charged at the Bank's rate. It
was also mentioned therein that acceptance of 50% of the bid money on the date of bid would
not however be construed as acceptance of the bid. In clause 6(s) it was mentioned that the
successful bidder would enter into an agreement with the licensing authority to bind himself
to the terms and conditions of the auction.

Auction was held, as per the publication of auction notice, on 22nd February, 1996. The
respondent herein offered bid in that auction and he was the highest bidder, his bid amount
Rs. 3,09,20,000. As per the terms of the auction notice the respondent herein, who is the
petitioner in the case, then deposited a sum of Rs. 1,54,60.000 on the spot. The respondent
herein was thereafter awaiting invitation from the Deputy Commissioner for entering into an
agreement for vending liquor for the year 1996-1997 as the successful bidder in the auction
and for grant of necessary licence for the said year. However, due to his criminal record he
was not awarded the license. He claimed that the acceptance had already taken place by the
fall of the hammer and therefore amounts to a valid agreement. The cancelling of license
amounts to breach of contract. Discuss whether it amounts to a valid acceptance with the help
of case laws.

Also in the above case, he heard from some insider source that he has been granted the
license in an unofficial capacity but he was never informed of the same officially. The
respondent claimed that they are bound by the principle of promissory estoppel. Discuss in
detail whether he can claim promissory estoppel?

(20 Marks)( upto 1000 words)

Q.3 What are boilerplate contracts? Are standard form of contracts against public policy or
they can be set aside under undue influence? Discuss in detail the validity of contracts where
the parties have different bargaining position ad whether economic duress in India makes the
contract void or voidable?

(500 words)(10 Marks)