LE-UP-CLAT22/23-LR-CN01

LAW OF cONTRACTS 1
INTRODUCTION

Proposal When one person signifies to another his willingness to do or to abstairn from doing anything,
with a view to obtaining the assent of that other to such act or abstinence, he s said to makea
proposal.

Promise A proposal, when accepted, becomes a promise. The person making the proposal is caled the
"promisor", and the person accepting the proposal is called "promisee".

Consideration When, at the desire of the promisor, the promisee or any other person has done or abstained
from doing, or does or abstains from doing, or promises to do or to abstain from doing,
something, such act or abstinence or promise is called a consideration for the promise

Agreement Every promise and every set of promises, forming the consideration for each other, is an
agreement.

Contract An agreement enforceable by law is a contract.

What makes an agreement a contract?

Copocuky y onkn um rou Porpde Hreemen f
Free Consent Competence Lawful Consideration Lawful Obfect

1. Prin-The Parties to a contract must have intended to enter into a legally binding relationship.
Facts- Robert & Bhalla were neighbours & worked for the same man, Teja. To save costs they decided to
travel together every day to office by Bhalla's cycle & Robert would pay for air refill. They continued this
arrangement for a while. One Monday morning, however, Robert found to his dismay that Bhalla had left
for work without picking him up. Bhalla continued doing this for the rest of the week, & Robert, frustra ted
& upset, decides to sue him for not honouring their agreement. Will he succeed?
No. It was an informal arrangement & the parties clearly didn't intend to enter a binding
relationship.
b. No. The law does not take notice of trifles.
C. Yes. The parties clearly intended entering into a binding relationship & Robert was paying for air.
d. Yes. They had been carrying on this practice for some time & Bhalla knew it would cause
problems for Robert.

2. Prin - Agreements, the meaning of which is not certain or capable of being made certain, are
void. Certainty means that the words used in the agreement should lead to only one meaning.
Facts Goladas is a respected dealer in edible oils in the city. He agrees to sell Bholadas "a hundred tons
of oil". He does not send any oil to Bholadas. Bholadas wants to sue Goladas. The agreement entered into
between Goladas & Bholadas is:
a Valid. Bholadas can sue Goladas.
b. yalid but cannot be enforced.
Not valid and cannot be enforced.
d. None of the above.

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3. Prin Agreements, the mearning of which is not certain or capable of being made certain, are
void. Certainty means that the words used in the agreement should lead to only one meaning.
Facts 4Goladas is a respected dealerin coconut oilinthe city. He agrees to sell Bholadas "a hundred tons
ofoil".Hedoesnot send any oil to Bholadas. Bholadas wants to sue Goladas. The agreement entered into
Goladas & Bholadas is:
betweep
Valid. Bholadas can sue Goladas.
b. Valid but cannot be enforced.
C. Not valid and cannot be enforced.
d. None of the above.
Enqus q E Cmditien
4. Prin - Counter offer: An offer made in response to a previous offer by the other party during
negotiations.
Raja wanted to sell his car. He offered Rani to very reasonable rate of Rs. 1 lakh.
buy his car at a
Facts letter
Rani found the offer lucrative and beneficial as very affordable. She sent her
the price was
then sent a reply back
of acceptance to the offer and also inquired about the condition of the car. Raja
of contract against Raja. Rani wil:
saying that he would not sell the car to Rani. Rani filed a suit of breach
Succeed. She was only making an inquiry about the condition of the car.
b. Not succeed. Her letter of acceptance contained other clauses.
c. Not succeed as she did not suffer any loss.
d. Succeed because she intended to buy the car.

5. Prin When one person signifies to another his willingness to do or abstain from doing anything, with a

view to obtaining the assent of that other to such act or abstinence, he is said to make an offer.
it in the On
Facts-Z was a stamp collector who decided to auction his stamps. He advertised newspapers.
the day of the auction Z started the proceedings with his most precious stamp, 'Monalisa'. X placed a bid
of RS.1,00,000/- for the stamp. Just before Z was about to bang his gavel on the desk to accept the bid, he
changed his mind & decided not to sell 'Monalisa'. x, the bidder, sues 2, stating that Z had failed to
honour his contract to sell the stamp. X will:
a. Succeed. Z's act of placing the stamps up for auction signified his offer to sell, which X had
accepted by bidding for the stamp.
b. Succeed. X had placed the highest bid, and Z was bound to accept the highest bid in the auction.
C. Not succeed. Z had the right to change his mind at any time, since it was his stamp.
dNot succeed. Z was only inviting offers by placing the stamps on auction.

6. Prin When one person signifies to another his willingness to do or abstain from doing anything, with a
view to obtaining the assent of that other to such act or abstinence, he is said to make an offer
Facts The Indian Travel Agents Association ('ITTA') is an association of travel agents, and it supplied
posters for display to all its members, stating that "In the event any member of the Association fails to
reimburse customers for a cancelled tour, ITTA shall reimburse them", Monty Travels, an ITTA member,
displayed the poster in its shop window. Amrit, Monty's customer, cancelled a tour but was not
reimbursed by Monty due to financial difficulties. Amrit sues ITTA which claims that it had never offered
to pay such compensation. Amrit shall:
a. Not succeed. There was no offer made by the ITTA.
b. Not succeed. The display of the poster in the shop window merely amounted to an invitation to
offer.
Succeed. The ITTA poster displayed in the shop window clearly amounted to an offer on the part
of the ITTA.
d. Succeed, since Monty was a member of the ITTA.

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7. Prin-(1) offer & acceptance leads to a contractual

An
relationship.
(2) A contract is
completed when an offer is accepted & communicated.
Facts Dhar & Pakad are businessman negotiating a contract under which Pakad will
grades of ball-bearings to Dhar's industrial unit. During the supply different
telephonic negotiation Dhar says "1 will buy
your 1000 grade 'A' ball-bearings at Rs. 2 a piece." Pakad's
response is drowned out by an aeroplane flying
overhead. Is the contract complete?
a. The contract is complete as
long as Pakad said yes.
b. The contract is not complete since Pakad did not
say yes.
CThe contract is not complete since Dhar didn't hear the yes.
d. There is no contract since Dhar didn't make a proper offer.

8. Prin -(1) An offer & acceptance leads to a contractual

relationship.
(2) A contract is completed when acceptance is put into course of transmission.
Facts Dhar & Pakad are businessman negotiating a contract under which Pakad will supply different
grades of ball-bearings to Dhar's industrial unit. During the telephonic negotiation Dhar says "I will buy
your 1000 grade 'A' ball-bearings at Rs. 2 a piece." Pakad's response is drowned out by an aeroplane flyin8
overhead. Is the contract complete?
The contract is complete as long as Pakad said
yes.
b. The contract is not complete since Pakad did not
say yes.
. The contract is not complete since Dhar didn't hear the
yes.
a. There is no contract since Dhar didn't make a proper offer.

9. Prin (1) Acceptance of an offer is complete when the acceptance is put into course of transmission so as
to be out of the power of acceptor. (2) Acceptance once completed makes the agreement binding on both
the parties.
Facts Bill accepts to buy Steve's offer to sell his motor car for Rs. 4 lakh. The acceptance was put in an
email. Unfortunately after the email was sent there was some data corruption as a result of which Steve
was notina position to read what Bill wrote. Decide.
a Both the parties are bound to perform their part of the agreement.
b. Nobody is bound to perform theagreement.
C. Bill is bound to perform the
agreement and not Steve.
d. Steve is bound to perform the agreement and not Bill.

10. Prin (1) Acceptance of

an offer is
complete when the acceptance is put into course of transmission so as
-

to be out of the power of the acceptor. (2)

Acceptance once completed makes the agreement binding on
both the parties.
Facts Rati asks Lata to respond to the offer of sale of her car for Rs. 4 lakhs. The communication was
sent via e-mail.
Unfortunately, on account of incompatibility of font settings, Lata is not in a position to
really read what Rati has written. Is the agreement
binding in this situation ?
Both parties are bound to perform their
part of the agreement.
Neither Rati nor Lata is bound to
perform the agreement.
c. Rati is bound perform the
agreement but not Lata.
d. Lata is bound to
perform the agreement but not Rati.

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