Question 1
Mr. Ramesh promised to pay Rs 50000 to his wife Mrs. Lali so that she can spend the sum on her 30th birthday. Mrs. Lali insisted her husband ot make a written agreement if he really loved her. Mr. Ramesh made a written agreement and the agreement was registered under the law. Mr. Ramesh failed to pay the specified amount ot his wife Mr. Lali. Mrs. Lali wants to file a suit against Mr. Ramesh and recover the promised amount. Referring to the applicable provision of The Contract Act, 1872, advise whether Mrs. Lali will succeed?
Answer : 1. Parties must intend to create legal obligations: There must be an intention on the part of the parties ot create legal relationship between them.
2. Social or domestic type of agreement are not enforceabale in court of law and hence they do not result into contracts.
In the given question
Mr. Ramesh promised to pay Rs 50000 to his wife so that she can spend the same on her birthday. However, subsequently Mr. Ramesh failed to fulfill the promise, for which Mrs. Lali wants to file a suit against Mr. Ramesh
Here, in the given circumstances wife will not be able to recover the amount as it was a social agreement and the parties did not intend to create any legal relations.
Related Question: Radha invited her ten close friends to celebrate her 25th birthday party on 1st januar, 2024 at 7.30 P.M. at a well-known "Hi-Fi Resturant" at Tonk Road, Delhi. All invited friends accepted the invitation andn promised to attend the said party. On request of the hotel manager, Radha deposited Rs 5000/- as non refundable security for the said party. On the schedule date and time, three among then invited friends did not turn up for the birthday party and did not turn up for the birthday party and d did not convey any prior communication to her. Radha, enraged with the behaviour of the three friends, wanted to sue them for loss incurred in the said party. Advised as per the provisions of the Indian Contract Act, 1872.
Would your answer differ if the sayd party had been a "Contirbutory 2024 New Year celebration Party" organized by Radha?
Answer: As per one of the provision fo the requirement of Section 10 of The Indian Contract Act, 1872, there must be an intention on the part of the parties to create legal relationship between them. Social or Domestic agreements are not enforceable in court of law and hence they do not result into contracts.
In the instant case, Radha cannot sue her three friends for the loss incurred in the said party as the agreement between her and her ten friends was a social agreement, and the parties did not intend to crteate any legal relationship
If the said party organised by Radha had been a "Contributory 2024 New Year celebration Party" then Radha could have sued her three friends for the loss incurred in the said party as the agreement between her and her friends would have legal backing; on the basis of which Radha deposited the advancve amount and the parties her intended to create legal relationship.
Related Question: A invites B to stay with him during the winter vacation at his residence. B accepts the invitation and informs A accordingly. when B reaches A's house, he finds it locked and he has to stay in a hotel. Can B claim damages from A?
Answer: Mr. A invites to Mr. B to stay with him during winter vacation at his residence as it is a social contract and offer and acceptance to hospitality does not create contract.
Question 2
A shopkeeper displayed a pair of dress in the show-room and a price tag of Rs 2000 was attached to the dress. Ms Lovely looked to the tag and rushed to the cash counter. then she asked the shopkeeper to receive the payment and pack up the dress. The shopkeeper refused to hand-over to Ms. Lovely in consideration of the price stated in the price tag attached to it. Ms. Lovely seeks your advice whether she can sue the shopkeeper for the above cause under the Indian Contract Act, 1872.
Answer: An invitation to offer is different from offer. Quotations, menu cards, price tags, advertisement in newspaper for sale are not offer. These are merely invitation to public to make an offer. An invitation to offer is an act precedent to making an offer. Acceptance of an invitation of an offer does not result in the contract and only an offer emerges in the process of negotiation.
The display of articles with a price in it in self-service is merely an invitation to offer. It is no sense an offer for sale, the acceptance of which constitutes a contract.
In this case, Ms. Lovely by selecting the dress and approaching the shopkeeper for payment simply made an offer to buy the dress selected by her. If the shopkeepker does not accpet the price, the interested buyer cannot compel him to sell.
Related Question: Rahul goes to super market to buy a washing machine. He selects a branded washing machine having a price tag of Rs 15000 after a discount of Rs 3000. Rahul reaches at cash counter for making the payment, but cashier says. "sorry sir, the discount was upto yesterday. There is no discount from today. Hence you have to pay Rs 18000." rahul got angry and insists for Rs. 15000. State with reason whether under The Indian Contract Act, 1872, Rahul can enforce the cashier to sale at discount price i.e., 15000?
Answer: An invitation to offer is different from offer. Quotations, menu cards, price tags, advertisement in newspaper for sale are not offer. These are merely invitation to public to make an offer. An invitation to offer is an act precedent to making an offer. Acceptance of an invitation of an offer does not result in the contract and only an offer emerges in the process of negotiation.
In the instant case, Rahul reaches to super market and selects a wahing machine with a discount price tag of Rs 15000 but cashier denied to sale at discounted price by saying that discout is closed form today and request to make a full payment. But Rahul insists to sale at discount price.
On the basis of above provisions and facts, the price tag with washing machine was not offer. It is merely an invitation to offer. Hence, it is the Rahul who is making the offer not the super market. Cashier has right to reject the Rahul's offer. Therefore, Rahul cannot enforce cashier to sale at discounted price.
Related Question: Mr. Aseem is a learned advocate. His car was stolen from his house. He gave an advertisement in newspaper that he will give the reward of Rs 10000 who will give the information about his car. Mr. Vikram reads the advertisement and on making some efforts got the stolen car and informed Mr. Aseem. Mr. Aseem found his car but denied giving reward of Rs 10000 to Mr. Vikram with the words, "An advertisement in newspaper is just an invitation to make offer and not an offer. Hence, he is not liable to make the reward. "State with reasons whether under Indian Contract Act, 1872?
Answer: An invitation to offer is different from offer. Quotations, menu cards, price tags, advertisement in newspaper for sale are not offer. These are merely invitation to public to make an offer. An invitation to offer is an act precedent to making an offer. Acceptance of an invitation of an offer does not result in the contract and only an offer emerges in the process of negotiation.
But there is an exception to above provisions. When advertisement in newspaper is made for reward, it is the general offer to public.
On the basis of above provision and facts, it can be said thaty as advertisement made by Mr. Aseem to find lost car is an offer, he is liable ot pay Rs 10000 to Mr. Vikram.
Question 3
Explain the modes of revocation of an offer as per the Indian Contract Act, 1872.
Answer: Modes of revocation.
- By notice of revocation.
- By lapse of time: The time for acceptance can lapse if the acceptance is not given within the specified time and where no time is specified, then within a reasonable time.
- By non-fulfillment of condition precedent: Where the acceptor fails to fulfill a condition precedent to accpetance the proposal gets revoked.
- By death or insanity: Death or insanity of the proposer would result in automatic revocation fo the proposal but only if the face of death or insanity comes to the knowledge of the acceptor.
Question 4
Define the term Acceptance. Discuss the legal provisions relating to communication of Acceptance?
Answer: As per the provisions of the Indian Contract Act I872, when the person to whom the proposal is mad signifies his assent thereto, the proposal is said to be accepted. The proposal. when accepted. becomess promise. This is known as acceptance.
Legal rules regarding valid acceptance:
LAcceptance can only be given by the person to whom the offer is made or who has the knowledge of the offer: In the case of a specific offer, it can be accepted only by the person to whom it is made. In the case of a general offer, it can be accepted by any person who has the knowledge of the offer.
2. Acceptance must be absolute and unqualified: The acceptance is valid only when it is absolute and unqualified and is also expressed in some usual and reasonable manner unless the proposal prescribes the manner in which it must be accepted. If the proposal prescribes the manner in which it must be accepted. then it must be accepted accordingly.
3. The acceptance must be communicated: To conclude the contract between the parties. the acceptance must be communicated in a reasonable form. Any conditional acceptance is no acceptance. If the proposal is accepted by the offeree, he must have the complete knowledge of the offer made to him.
4.Acceptance must be in a prescribed mode: Where the mode of acceptance is prescribed in a proposal., it must be accepted in that manner. But.ifthe proposer does not insist on the proposal being accepted in the manner prescribed after it has been accepted otherwise (not in the prescribed manner), the proposer is presumed to have consented to the acceptance.
5. Time: Acceptance must be given within a specified time limit, and if no time is fixed, then the acceptance shall be given within a reasonable time and before the offer lapses.
6. Mere silence is not acceptance: The acceptance of an offer cannot be implied from the silence of the offeree or his failure to answer unless the offeree has in any previous conduct indicated that his silence is the evidence of the acceptance.
7. Acceptance by conduct/lmplied Acceptance: The performance of the conditions of a proposal or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal. constitutes an acceptance of the proposal.
Related Question: Mr. Pratham applied for a job as principal of a school. The school management decided to appoint him. One member of the school management committee privately informed Mr. Pratham that he was appointed but ofticial communication was not given from the school. Later. the management of the school decided to appoint someone else as a principal. Mr. Pratham filed a suit against the school for cancellation ofhis appointiment and claimed damages for loss of salary. State with reasons, will Mr. Pratham be successful in suit filed against school under the Indian Contract Act, 1872?
Answer: As per the rules of acceptance, the acceptance should be communicated to offeror by offeree himself or his authorized agent. Communication of acceptance by third person cannot be concluded in valid acceptance.
In the instant case, Mr. Pratham applied for a job as principal ofa school and one member of the school management committee privately informed Mr. Pratham that he was appointed. Later, the management of the school appointed someone else as a principal.
On the basis of above provisions and facts, communication of appointment of Mr. Pratham should be made by school management committee or any authorised agent. The communication by third person cannot be termed as communication of acceptance. Therefore, no valid contract was formed between Mr. Pratham and school and Mr. Pratham cannot file a suit against the school for cancellation of his appointiment.
Related Question: Miss Shakuntala puts an application to be a teacher in the school. She was appointed by the trust of the school. Her friend who works in the same school inforns her about her appointment informally. But later due to some internal reasons her appointment was cancelled. Can Miss Shakuntala claim for damages?
Answer: No, Miss Shakuntala cannot claim danmages. As per Section 4, communication of acceptance is complete as against proposer when it is put in the course of transmission to him. In the present case, school authorities have not put any offer letter in transmission. Her information from a third person will not form part of contract.
Related Questions: A sends an offer to B to sell his second-hand car for Rs 40000 with a condition that if B does not reply within a week, he(A) shall threat the offer as accepted. Is A correct in his proposition? What is the position if B communicates his acceptance after one week?
Answer: When B remains silent, it does not amount to Acceptance, as acceptance cannot be implied merely from silence of offeree.
Acceptance must be made within the time limit prescribed in the offer. Hence, B's Accepance after one week, will not operate to turnn the offer into a contract.
Question 5
Mr. B makes a proposal to Mr. S by post to sell his house for Rs. 10 lakhs and posted the letter on 10h April 2020 and the letter reaches to Mr. S on 12'h April 2020. He reads the letter on 13th April 2020. Mr. S sends his letter of acceptance on 16" April 2020 and the letter reaches Mr. B on 20" April 2020. On 17th April Mr. S changed his mind and sends a telegram withdrawing his acceptance. Telegram reaches to Mr. B on 19'h April 2020
Examine with reference to the Indian Contract Act, 1872:
(i) On which date, the offer made by Mr. B will complete?
(ii) Discuss the validity of acceptance.
(iii)What would be validity of acceptance if leter of revocation and letter of acceptance reached together?
Answer: 1.The problem is related with the communication of offer and time of acceptance and its revocation.
2. According to Section 4 of The Indian Contract Act, 1872
• Communication ofa proposal when complete -The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.
• Communication of an acceptance when complete- The communication of an acceptance is complete as against the acceptor when it comes to the knowledge of the proposer.
3. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.
Referring to the above provisions:-
1. In the Instant case, the communication of offer will complete on 13h April 2020 because S read the offer on 13h April i.e the date on which offer comes to his knowledge.
2. In the Instant case, acceptance is not valid, instead revocation of acceptance is valid because S (Acceptor) revoked his acceptance by sending a telegram withdrawing his acceptance which reaches B on 17th April before 20th April i.e.. before the communication of acceptance comes to the knowledge of B (Offeror).
3. When both the letter of acceptance and revocation is reached at the same time, the validity of acceptance is determined by which is opened first, ie., telegram or post. The revocation is sent by telegram but the acceptance is sent by post.
A rational person would normally open the telegram first, and hence the acceptance stands revoked. So, if the proposer (B) opens the telegram first and reads it. the revocation of acceptance is valid, and there is no contract.
However, if B opens the letter first and reads it, then the acceptance is complete and cannot be revoked. There is a valid contract in such a case.
Note: An alternative view is given as under -
Two communications (letter and telegram) reaching simultaneously will neutralize each other, and there is no agreement due to lack of consensus-ad-idem. [Countess of Dunmore vs Alexander]
Related Question: A, the secretary of a building society. handed over to B. in the office of the society, an offer to sella property at £750. Fourteen days' time was given to B for acceptance. B was residing in a diflerent town. and took away with him the offer to that town. The next day, at about 3.30 p.m. B sent, by post, his letter of acceptance. This letter was received at society's office at 8.30 Pm. But before that at about 1.00 p.m. the society had posted a letter revoking its offer, B received the letter ofrevocation at 5.30 p.m. Advice B.
Answer: Revocation of Proposals (Section 5 of The Indian Contract Act, 1872)
*A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.
Completion of communication of acceptance against proposer (Section 4 of The Indian Contract Act. 1872)
*The communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor.
Thus, the offeror becomes bound by the acceptance as soon as the letter of acceptance is posted by the acceptor.
The revocation was held to be ineffetive [Henthorn v. Fraser]. In order that revocation to be effective, it shold have been reached B before he sent his acceptance i.e. before 3.30 p.m.
Related Question: A applied for shares in a company. A withdrew his offer on 26th October. His letter of withdrawal was received by the company at 11.30 a.m. on 27th October. But on 27th October at 10.00 a.m., the company had already resolved to allot the shares to A, and the letter of allotment (acceptance) was given to a peon to post, but the letter was not actually posted till 11.30 a.m. Advice A and also to company.
Answer: Revocation of acceptance (Section 5 of The Indian Contract Act, 1872)
An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards
Thus, the acceptor becomes bound by his acceptance only when it comes to the knowledge of the offeror.
Completion of communication of acceptance against acceptor (Section 4 of The Indian Contract Act,| 1872)
When it comes to the knowledge of the proposer. It was held that the revocation was valid. The aceptance was too late as the letter was not actually posted å±±he ofer had bcen revoked. But. ifthe letter of acceptance had bcen actually posted before the leller of revocation reached the company (i.e. before l1.30 a.m.), the acceptance would have been binding [London and Northern Bank v. Jones]. It may be noted that a revocation is effective only when it iS brought to the notice of the person to whom it is made.
COMMUNICATION OF SPECIAL CONDITIONS OF OFFER/ACCEPTANCE
(important question)
(Related Question 1) A passenger was travelling with luggage from Dublin to Whitehaven on a ticket, on the back of which there was a term that exempted the Shipping Company from liability for loss of luggage. He never looked at the back of the ticket and there was nothing on the face of it to draw his attention to the terms on its back. He lost his luggage and sued for damages. Held, he was entitled to damages as he was not bound by something which was not communicated to him.
(Related Question 2) A passenger deposited a bag in the cloakroom at a Railway Station. Acknowledgement Receipt given to him carried, on the face of it, the words "See back". One condition limited the liability of Railways for any package to £10. The bag was lost, and passenger claimed £24 being its value, pleading that he had not read conditions. Held, passenger was bound by conditions printed on the back, as the Company gave reasonable notice.
(Related Question 3) A Transport Carrier accepted goods for transport wvithout any conditions. Subsequently, he issued a circular to owners of goods limiting his liability for goods. Since the special conditions were not communicated prior to the date of contract for transport, these were not binding on the owners of goods.
Answer:- Tacit communication and acceptance: Sometimes there are situations where there are contracts with special conditions. These special conditions are conveyed tacitly and the acceptance of these conditions are also conveyed by the offeree again tacitly or without himeven realizing it.
- Deemed Acceptance: In any event, the passenger is treated as having accepted thespecial condition the moment he bought his ticket if they are communicated to him in some reasonable manner, e.g. conditions on the reverse of a train ticket, air ticket, bill issued byservice providers, etc.
- Notice of Conditions mandatory: The party delivering the document should have given reasonable notice of the special terms / conditions. Words like See Back for Conditions, Please Turn Over. Subject to Terms and Conditions contained in Annexure, are indicative of a reasonable notice to the Acceptor. It shall be binding even though the Acceptor did not read the same or could not understand it.
- Any contractual obligation, if the document is printed and delivered to him in such condition that, it does not give reasonable notice on its face that it contains certain special conditions.
- When the conditions are contained in a document that is delivered after the Contract iscomplete.
- If conditions limiting or defining his rights are not brought to his notice.
Basis | Void Agreement | Illegal Agreement |
| It is an agreement not enforceable by law, but they are not forbidden under law. | Illegal agreements are forbidden under law. |
| All void agreement need not be illegal | All illegal agreement are void ab initio |
| Void agreement are not punishable | Illegal agreement may be punishable with fine or imprisonment or both. |
| Collateral Transaction are not affected | Collateral transaction are also void. |
| Agreement entered into with a Minor is Void-ab-Initio (from the beginning) | Agreement to murder a person |
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