BUSINESS LAW

CASE STUDIES
LAW OF CONTRACTS
Case Study #1
A offers to sell his book to B for Rs.
100/- and B says that he would buy it
for Rs. 90/-

Offer and Counter-Offer

Case Study #2
B offers to buy a book from A for Rs.
100/-A says that he will sell a set of
four books to B for Rs. 360/-

2 independent offers
Case Study #3
A enters into a book stall and refers to
the catalogue of books kept over there.
He notices the book of his choice marked
at price Rs. 200/-. He tells the
shopkeeper to give that book and
tenders him Rs. 200/-.

Invitation to offer and offer

Case Study #4
M offers to buy from P a particular
piece of land on the payment of price
on a day in future at M’s option.

loose offer
Case Study #5
X offered his house to Y for Rs. 80,000/-
with the condition that the possession of
the house shall be given on a particular
day. Y agreed to buy it for Rs. 80,000/-
varying the date of possession.

Qualified acceptance
Case Study #6
A publishes an offer that, he would sell
his house to anyone who would buy it
for Rs. 5,00,000/-. X accepts this offer
first and agrees to buy it for Rs.
5,00,000/-.

General offer and acceptance

Case Study #7
A draft agreement for supply of coal was
sent by B to the manager of a railway
company for his acceptance. The
manager wrote the words “approved” on
the draft agreement, but kept the
document in the drawer by oversight.

Invalid contract/agreement
Case Study #8
A proposes to buy B’s house for Rs.
50,000/- on or before 15th August.

Loose offer no year mentioned

Case Study #9
A minor had executed a mortgage on his
immovable property for the amount of Rs.
20,000/-. Out of this amount the mortgagee
had paid the minor only Rs. 8,000/-. The minor
consequently filed a suit to recover remaining
Rs. 12,000/-. The mortgagee refused to pay
and demanded a refund of the amount of Rs.
8,000/- paid by him to the minor.

No refund – minor – contract invalid

Case Study #10
A, on board an English ship on the high
seas causes B to enter into an (Indian
Law)agreement by an act amounting to
criminal intimidation (threatening) under
the Indian Penal Code.

Coercion – Voidable agreement – no role

of place
Case Study #11
A being in debt to B, the money-lender
of his village, contracts a fresh loan on
terms which appear to be
unconscionable.

Undue influence
Case Study #12
A (who is in need of money to repay
the agricultural loan from a bank)
agrees to sell his 50% of farm area
(market value Rs. 20 lakhs) to B for Rs.
12 lakhs

Valid contract
Case Study #13
A and B, being traders, enter upon a
contract. A has private information of a
change in price which would affect B’s
willingness to proceed with the
contract.

Valid contract
Case Study #14
A, B and C enter into an agreement for
the division among them of gains
acquired, or to be acquired by them by
fraud.

Invalid contract – Fraud – illegal - void

Case Study #15
A promises to obtain for B an employment
in the public service, and B promises to
pay Rs. 1 lakh/- to A.

What is your anser if the employment in TCS

Limited is promised?
Fraud – Public policy – Invalid
Valid - Consultant
Case Study #16
A promises B to drop a prosecution
which he has instituted against B for
robbery, and B promises to restore the
value of the things taken.

invalid – no agreement for crime

Case Study #17
A finds B’s purse and gives it to him. B
promises to give A Rs. 50/-.

Valid – Past voluntary service

Case Study #18
A offers to sell to B “a hundred tons of
oil”.

Loose offer
Case Study #19
A, who is a dealer in coconut oil only,
offers to sell to B “one hundred tons of
oil @ Rs. 10,000 per ton”

Valid offer.
Case Study #20
A offers to sell to B “all the grain as on
the date of agreement, in my granary
at Ramnagar @ Rs. 10 lakhs”.

Valid – Duty of the buyer to verify

Case Study #21
A offers to sell to B “my white horse for
Rupees five hundred or Rupees one
thousand”.

Loose offer
Case Study #22
Advocate asked his client to pay 50% of
the amount recovered from the suit
filed against the borrower, in addition to
his usual fees

Professional – Ethics - Invalid

Case Study #23
Harvey telegraphed to Facey, “Will you sell us
Bumper hall Pen? Telegraph lowest Price.”
Bumper Hall Pen was a piece of land.
Facey replied, “Lowest price for Bumper hall Pen
$ 1000.”
Harvey telegraphed, “We agree to buy Bumper
Hall Pen for $ 1000 as asked by you.”
Harvey contended that this exchange of
telegrams amounted to offer and its acceptance.

Invalid since Facey didn’t agree to sell

Case Study #24
Ramesh, a minor makes a promissory
note in favour of Suresh. On attaining
majority, he makes a fresh promissory
note in lieu of the old one.

Invalid – Minor Contract

Case Study #25
Raju, a minor, under a contract of sales
delivered goods to his buyer.

Invalid but benefits need to be

transferred
Case Study #26
A transport carrier accepted the goods
for transport without any conditions.
Subsequently he issued a circular to
owners of goods limiting his liability for
goods.

Note cannot be issued post facto invalid

Case Study #27
A sends an offer to B to sell his second hand
car for Rs. 40,000 with a condition that if B
does not reply within a week’s time, A shall
treat the offer as accepted.
Is A correct in his proposition?
What shall be the position if B communicates
his acceptance after one week?
Acceptance needs to be communicationed.
After a week invalid
Case Study #28
 X by a letter to Y offers to sell his car for Rs.
2 lakhs. At the same time Y by a letter to X
offers to buy the car for Rs. 2 lakhs. Is it an
offer and acceptance and hence a contract?

 Cross offer
Case Study #29
A who is indebted to B, sells his
property to C.
C promises to pay off the debt to B, but
fails to pay.
Can B sue C?

No, not a tripartite agreement

Case Study #30
In case of general offers, acceptance
need not be communicated.

True\False

True
Case Study #31
 Where contracts are entered through
telex/email it is the duty of the acceptor
to ensure/confirm that telex/email is
received by the offerer- true/false

 False
Case Study #32
 Mr. Payer promises to pay an existing
debt punctually on due date if, Mr.
Receiver the creditor gives him a
discount. Is this consideration valid?

 Invalid
Case Study #33
 Mr. Oldie, a man enfeebled by age is induced
by Mr. Cure’s influence over him as his
medical attendant, to agree to pay Mr. Cure
an unreasonable sum for his professional
services.
 Here Mr. Cure employs- ? Undue influence
Case Study #34
 K engages M, an artist to paint a
portrait of his uncle and promises to
pay M Rs. 10,000 for the work. Later K
refuses to pay stating that consideration
must move from his uncle.

 K must honor the commitment

Case Study #35
 A college announced a prize to a
student but failed to pay the same

 It must be given as it declared before

the contest
Case Study #36
 A company declared dividend for its
shareholders but did not pay the same

 Must honor commitment to

stakeholders
Case Study #37
 A father executed a registered deed on
a stamp paper in favour of his son
promising a prize of Rs. 5000 if the son
could get the admission to SPJIMR

 Must honor – natural love and affection

Case Study #38
 Mr. S, a secretary of a charitable institution
promised Mr. A that through his contacts he
would secure Padmashri award to ‘A’ if he
(A) would donate Rs. I lakh to his
institution. Accordingly A donated but the
promise of Padmashri award never
materialised. Can A successfully sue S?
 No civilian awards not valid
Case Study #39
 A, a poor widow, borrowed money from a
moneylender @ 100% rate of interest. On
due date the poor lady defaulted in payment
of interest as well as repayment of loan. The
moneylender therefore sues her. The poor
lady is seeking to avoid the contract in toto
on the ground of undue influence. Advise
her – cant avoid fully must pay reasonable
ROI and principal
Case Study #40
 Mr. Srinivasan invites Salman Khan to his
daughter’ wedding reception and dinner
party. Srinivasan makes special security
arrangements for Salman. Salman
however does not turn up for the
reception. Srinivasan wants to sue Salman
for the security expenses he incurred
 Personal visit – no contract
Case Study #41
 A loan was given by a minor on the
mortgage of the property of the
borrower. The borrower defaults on
repayment of loan. Is the mortgage
enforceable?
 Yes, benefits must be transferred
Case Study #42
 A minor can enter into a contract of
apprenticeship, or for training or
instruction in a special art, education
etc.
 True\False

 True
Case Study #43
 At an auction, the auctioneer sells a horse
which he knows to be unsound. However,
the auctioneer does not disclose this to
the buyer whose bid is accepted.
 The buyer can avoid the contract on the
ground of fraud
 True\False
 False
Case Study #44
 A promise, in writing and signed by the
promissor, to pay a time barred debt is
enforceable
 True\False
 True
 Case Study #45
Ranjan sells his property to Anand at a consideration of Rs. 1 crore. As per the
agreement Anand was also required to pay to Ranjan’s friend, Sanjay, every
month, 5% of rents collected. For first 6 months Anand pays to Sanjay the
agreed amount but defaults in subsequent months. Can Sanjay bring a legal
action against Anand?

Yes
Case Study #46

Rajat agrees to sell his laptop worth Rs. 50,000 to Rajan for Rs. 20,000

Valid contract and consideration

 Case Study #47

Anand & Co. issues a Purchase order for purchase of goods to Mahesh Ltd.
Is it a contract?

Offer
LVMH-TAG watch worth Rs 40 lakh was a gift on account of love and
affection to her from the company selling it and not part of her professional
income.
A similar reasoning by her regarding a Toyota Prius car, valued at Rs 27 lakh,

 The value of both items were

treated as taxable perquisites
in the hands of Chopra, under
section 28(iv) of the Income-
tax (I-T) Act. This section
treats as taxable, 'the value of
any benefit or perquisite
(whether convertible into
money or not), arising from
business or exercise of
profession.'