CIA-1

CASE STUDY ON CONTRACT FORMATION – 15 marks

Ram, a software engineer working in Bengaluru, wants to sell his Hyundai i20 petrol edition
car which is 2 years old and has run 50,000 kms. Ram then wants to purchase a new Honda
City diesel edition which costs Rs. 14,00,000-. Ram would like his brother, Shyam to have the
car rather than anybody else. Shyam works as a salesperson in Hyundai showroom and cannot
afford to buy a new car. Ram asks Shyam if he would buy the car from him and Shyam
expresses his interest in buying it. Ram informs Shyam that he would like at least Rs. 2,00,000-
as he has to buy a new car. Shyam asks Ram for some time as he has to consult his wife and
consider his budget. Ram tells Shyam to take his time and inform.

After not hearing from Shyam for a couple of days, Ram’s wife suggests to Ram to try for
buyers on OLX, keeping the option open for Shyam when he decides. Ram uploads a
photograph of his Hyundai car on OLX mobile app for sale for Rs. 2,50,000-. Ram also sticks
a pamphlet on his car stating “For Sale: Rs.2,50,000-. Contact: Ram- 98345 98543”

The next day, Ram receives a phone call from his neighbor, Ashwini who asks about the model,
mileage, age and condition of the car. After getting the information, she negotiates to buy the
car for Rs. 2,00,000. Ram replies that he cannot consider anything less than Rs.2,25,000-.
Ashwini informs Ram that she accepts, subject to her husband’s confirmation tomorrow.

The next day, Ram receives a notification on OLX app that a verified member, Keshav has
agreed to buy the car for Rs.2,50,000-. Ram contacts Keshav and Keshav confirms the message,
asking about mode of payment. Ram gives his bank account details but asks Keshav to wait for
his confirmation. Keshav does not wait for Ram’s confirmation and transfers Rs.2,50,000- to
Ram’s bank account in NEFT transaction on the same day. Due to server issues, the bank does
not send any notification to Ram about deposit of Rs.2,50,000 in his account.

Ashwini’s husband verifies that Ram’s car is in good condition and Rs.2,25,000 would be a
bargain for the car. Ashwini then tries to call Ram the next day to accept Ram’s quote of
Rs.2,25,000- but is not able to reach Ram on his mobile phone. She writes a note and sticks it
on the front door of Ram’s house but the note is blown away in the wind. By the end of the
day, Ram thinks that Ashwini’s husband must have advised her against buying the car as he
did not hear from her all day.

At night, Shyam comes to Ram with Rs.2,00,000- cash and asks Ram to give him the car. Ram
informs Shyam that he has a buyer in OLX mobile app ready to pay Rs. 2,50,000 for the car
but as Shyam is his brother, he is selling the car at a loss to him.

Keshav and Ashwini both challenge the sale of the car to Shyam, claiming they each accepted
Ram’s offer earlier and send legal notices to Ram for specific performance by sale of the car
to them.

Advise Ram as to his legal obligations towards Shyam, Keshav and Ashwini, if any, relating
to formation of contract under Indian Contract Act.

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 INSTRUCTIONS
Students are required to answer based on IRAC method for each party in the case study.
Innovative advice substantiated with law/caselaw may be given at the end after conclusion.
All relevant provisions of law and supporting cases should be mentioned.
Marks: 15
Criteria: Identification of relevant issues, Application of law, Relevant case laws, Writing
skills, Formatting
Word limit: 1000 words (excluding cover page)
Font: Times new roman, size 12, 1.15 line spacing, justified margins
File: Word or PDF format only
Cover page: mandatory to include Name of course, subject, CIA heading, Name & Register
number o student
Submission: to be submitted on Moodle(LMS)
Last date of submission: 2nd July 2018 (Monday) 11.59 PM
Penalty for late submission: to be submitted in printed hard copy with deduction of 2 marks
per day of delay
Clarifications: allowed only on instructions. No clarifications over emails or otherwise after
30th June 2018
No reasons (bonafide or otherwise) accepted for no submission or late submission

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