Problems to solve

1. A's son has forged B's signature to a promissory note B, under

threat of prosecuting A's son, obtain a bond from Afor the amount
of forged notice. On A's failure to pay, B filed a suit on the bond.
Will A succeed?
Solution:
Yes, A will succeed if he shows that the bond was obtained under
the threat of prosecuting A's son. Threat to prosecute is an offence
under IPC and therefore coercion within the 1neaning of Sec. I5
of the Contract Act. Hence the consent by A is not free consent
Within the meaning of Sec. 14 of the Contract Act. Therefore,
the bond was obtained without free consent hence it is voidable
at the option of A within the meaning of Sec. 19 of the Contract
Act.
 --.._
A husband induced his wife to enter into co ntract under a th
2. .ti .d reat
of com111irting suicide. Can w1 e sue to set as1 e the contract •,

Solution:
Yes. Taking the defence of coercion, the wife can sue 10 set
aside the contract under Section 15 of the Contract Act as the
threat of suicide is forbidden by IPC. So it is punishable under
IPC.
Problems to solve
J.. A .. a 1nan enJcebJecl h} diseu~c or age. ,, inducl d h} B 1nllut nl,..
o, er h1 m tt1, hi, n1edJcul auendnnt tu ...tgree to pd\ B n
unrea!-.onablc ,u,n fur h,~ profe,,JonuJ ,enr ice .. \ r-.Ju, 1it t<. fuh1 l
h,, pron1i"'e ( an R enforu.: th1~ contra1..·t •
Problems to solve
I, A agreed to purchase rice from B. The rice v.·as stored up in
place to which A had access. A rescind-. the contract on the
ground that rice ½, as inferior in quality to vv·hat it\\ a-; represented
by B. Is the rescission \'alid'?
Solution:
As A had the 111eans of di-,covering the truth, re~cn,s1on "'ould
not be valid iis the n1isrepresentatiu11 j., nn innocent
tni ... representation. It ""'ould be co\ ereJ by the exception to
Sect.Jon 19 of the ( 'ontract Act.
 If, however, the misrepresentat
. . , A cau~
ion. is fraudulent
the contract as the exception to Section 19 appl 1es only to. re\c1na
. . 1nnr\,-,
misrepresentation. ""'en1
2. B obtained a loan of money by misrepresenti ng the
which the money was actually required. purpose for
Solution:
As B has to tell the real facts to the lender B's a t
fraud as he did not reveal the fact. , , c comes Under
 Problems to solve
I. A n1an h} nan1e oi N .. aJl ~..t at a J ·\\ell r •-p nJ '- h-.
4.n th nng He tendcreJ 1n pa)1TH~n1 d I h tw
the nan1 • c1 (i a persun of \,1c:d1t f-k \,14;1~ ih nn "uuJ r
t 1 R ~ht h.:KJ no n1'tl1\. u1 the fr ud ( 1n tt J \\ '-
the nn fr rn B ,
Solutklll:
The kwtl r" n..0tiil c.: tht (Jf

thal I i "-a t tr l
mded h~ tht ~1 '

-...
 . ~
. . ·-.cinded and hence
the conlracl ,~ n.:. . t"
lhe RLlllc uf B is g1,1,d · ·S11 lhi,
.Jeweller cunnol n.:cnvc' f the. nng ron1 , ,. . ~

2 . ., 1....,. 11 y inforn1s B thal A s house 1s rree Ir nrn

Afrauull-t: 11

, , B thereupon .buys
· encu1n branc1;s. . lhc house.
. ? The hou1;e is •l-iu1...llJt.\:t
•
to a rnortgagc. Whal are lhe ri g hts o1 B.
Solution:
8 ,nay either avoid the contr:.u..: l or may in!->ist on its being carried
out and the inortgage debt redeemed.
3. A receives so1ne money from J to be paid over to P. A admits of
the receipt to P. Can P recover due amount from A?
Solution:
A should have returned 1noney to P if he had good intention. It
becomes fraud if A does not return as he has ill intention to
keep the amount with him. Then, P can recover the amount
from A.

4. A soap powder advertisement says: '"It washes \.Vhiter than \Vhite".

Comment.
Solution:

If the soap powder perfonns well, the advertisement cannot be

treated as fraud. However, if the soap powder does not function.
so and ~oes not make wash whiter, than the company is held
responsible for making misrepresentation.

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Problems to solve
l, A agrees to huy a ,notor car fron1 B for R;,. 15,000/- and pays
half lhe purcha,e pril't' in advanct'. Unknuwn Lu both the paities
al the time of making contract, thl' car had heen dl!.,troycd by an
accident. Advise A.
 Solution:
. _ t
A is ..,d v1S~L1 tll r·ea t the con tra ct as. voi d. I-le has a rig}
.. '
500 the adv anc e he pai d. Ac cor din g to Selttu ti.t~e
bac k R.s. 7• ' ·. ·d ·r l:lJo
nt the Co nti dC Ac t • an agr eem ent I S VO J• .l bo th the . . n,,(J
t
• •r

. d , Pan1e
in is tak e a~ a ma tte r of fac t ess ent ial
, t are u n er a s to
to the
agr eem ent .
.~ ent ered n. 110 a con tra ct for sal
.
e of a plo t of Jan d to B Both
.
. e und er the .. · the
part1e'i wer im pre ssi on tha t 1t wa s 1Iv e Big has in
area
The b u I•id·Incre
area wa s fou nd to be les s. Un der the
inuni· .· ·
regulations a bui ldi ng site wa s to hav e an are ... L•Pal
a of not Jes~ than
five Big has . Sta te wh eth er A can enf orc e the
con tra ct against W!
Sol uti on:
Th e mis tak e rela tes to a que stio n of fac t. If
bo th the parties kno\\
tha t the lan d wa s int end ed for bui ldi ng pu rpo
ses and tha t it would
be fit for tha t pur pos e onl y if it wa s no t les
s tha n fiv e Big has. the
fact wo uld be ess ent ial to the agr eem ent .
So A can not enforce
the con trac t aga ins t B.
3. B. the ma nag ing dir ect or of a the atr e gav
e ins tru ctio ns that a
ticket wa s not be sol d to S an art cri tic. S kn
e\\' this . and asked a
frie nd to buy a tick et for him . Wi th thi s tic ket
S \\:e nt to the theatre
but was ref use d the adm iss ion . So S file s a sui
t aga ins t the theatre
com pan y. Wi ll be suc cee d?
Sol uti on:
s·s suit ~·ill not suc cee d sin ce the the atr e com pan y nev er intended
to con trac t wit h him . S, wit h the ful l kn ow led
ge tha t he could not
get a tick et und er his ow n nam e and got it thr
oug h his friend and
hen ce the re wa s no liab ilit y for dam age s (Sa
KB 497 ]. id, ,. Bu tt {( I 920J 1

4. X off ers to sell y a pai nti ng wh ich X kno w~

is a cop y of o ~ell
kno wn ma ste rpi ece . y thi nki ng tha t the pai nti
ng is an orig1na1 one
and tha t X m~ st be una wa re of this , im me
dia tel y accept~ X s
offer. Do es this res ult in a con tra ct?
 Solution:
Yes. 1he1e i~a val id contract. The rule of Caveat Emptor applies
in Ulse ,,I 11r1ilateral mi~take a~ to the quality of Lhc ~ubject-,natter
ol cnnlract.

5. A a telephone and purchases good~ on credit from B, a

U!:-iCS

111crchm1I. who "-Upplies under the mistaken belief that he was

eontrarting with a man of credit. A reselling a goods Lo C who is
u l>ona fide purchaser for value. Can B recover the goods
lrnm C?
Solution:
B cannot recover the good~ from C. Though there is a mi~taken
beJief, B had iucntified the person with whom he was dealing by r
hearing anu was intending to deal with the person at the other
t'n<.1 of the telephone. As between A and C, A will have to bear
the consequences of the tnistakc though both are innocent parties.
The mistake is one not in con.,ensus but iri causa and so B
cannot recover the goods from C.
6. A assumed a false name ~Hallen & Co.,' and under that name
wrote a letter to the plaintiff, metal manufacturer, ordering for
metal wire. The letter head contained a picture of a large factory
with list of overseas depot~. The plaintiff believing that he was
dealing with a respectable company '>Upplied the wire. A sold the
wire to defendant. Can the plaintiff succeed in recovery of wire
as his property?
Solution:
A mistake as to identity of the other party prevents the fonnation
of contract. Here the mistake is only as to the attributes and not
a~ to the identity. The contrm:t might be voidable on the ground
of fraud practised by A. It would not, however. be void. So third
parties can acquire rights under ~uch a contract. Hence the suit
is liable to be dismissed.
 ~
7. A. an old inan of feeble sight, endorsed a biJI of exchange thinkin
it Vlas a guarantee. There was no negligence on the part of A I~
A liable?
Solution:
As A thought that the document was a guarantee and endorsed a '
bill of exchange due to feeble sight A is not liable as it was not a
case of fact.

8. A signed a document guaranteeing B's account with a Bank

thinking that he was signing a proposal for insurance. Is A Hable
on the guarantee if he was negligent in signing?
Solution:

A is liable, for he cannot plead non est factum successfully since

the mistake relates to the character of the document as not as to
its contents.
Problems to solve
I. A a~ees to ~e11 and deb _ . ver to B a, t Ge neva ;0 Italy 1,000 JUte
ba1!~ from India knowing it fully well that th e bags were ,n~ant
fo; ~ale in South Africa to which direct or indirect export of Jute
bags \Vas prohibited at the time of contract by the Government
of India . .A~ctually the bags were not delivered at Geneva a!\
agreed. Advice B.
Solution:
Here the contract is forbidden by law, hence Bis helpless, because
at the time of making the contract, A and B were fully aware of
the fact that the jute bags were to be exported to South Africa to
~ hich direct or indirect export was prohibited by the Government
1

of India. But if B insists that he does not want to export them to

South Africa but to consume them at Geneva or other place
where the Government of India has no objection to export. then
he can very well enforce the contract and compel A to fulfil it.
2. There is an agreement among the ice vendors of a city that during
particular months of the summer season~ they shall not sell •
. per kil ogram. I s t h e agreement enforceableice
below 50 pa1se at
la\\<,
Solution:
The contract is invalid. A contract is valid if not illegal or a
the public policy. In this case the contract is against the gainst
poHcy. hence it is not enforceable by law. Public
Problems to solve

1 x .I n-..tlUL~ ts, y
l) enter on X 's behalf into a wagering
l . f . transa.
. )~I ' .., in the transaction and pays rom his pocket. ls y c~iu~.
l) . e ? ent1t1
tn n:iinbursen1ent from X · ed

Solution:
'-' "s ,1raoering agreements are void but not illegal xCept i
l t:' . VY e I..

Maharashtra and Gujarat States. Hence collateral transa~. n

are valid. l:ltons

2. A put a bet of Rs. I 000 with B that a certain horse would Win a
certain race. Under this agreement A had to deposit Rs.200 with
B. Since A had no money, he approached his friend c who
advanced him Rs.200. Subsequently A lost the bet and refused to
pay the amount to C. Advice C.
Solution:

C can recover the amount. Wagering agreements are void but

not illegal except in Maharashtra and Gujarat States. Hence
collateral transactions are not void (i.e., valid).

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