- (a) X agrees to pay Y Rs. 1,00,000/-, if Y kills Z. To pay Y, X borrows Rs. 1,00,000/- from W, who is also aware of the purpose of the loan. Y kills Z but X refuses to pay. X also to repay the loan to W. Explain the validity of the contract.
(i) Between X and Y.
(ii) Between X and W[2022 December – 4 Marks]
- (a) Explain the following statements in the light of provisions of Indian Contract Act, 1872:(i) “Agreements made out of love and affection are valid agreements.”(ii) “Promise to pay a time barred debt cannot be enforced.”
[2022 December – 7 Marks]
- (b) Mr. Y aged 21 years, lost his mental balance after the death of his parents in an accident. He was left with his grandmother aged 85 years, incapable of walking and dependent upon him. Mr. M their neighbour, out of pity, started supplying food and other necessaries to both of them. Mr. Y and his grandmother used to live in the house built by his parents. Mr. M also provided grandmother some financial assistance for her emergency medical treatment. After supplying necessaries to Mr. Y for four years, Mr. M approached the former asking him to payback Rs. 15 Lakhs inclusive of ` 7 Lakhs incurred for the medical treatment of the lady (grandmother). Mr. Y pleaded that he has got his parent’s jewellery to sell to a maximum value of ` 4 Lakhs, which may be adjusted against the dues. Mr. M refused and threatened Mr. Y of legal suit to be brought against for recovering the money.
Now, you are to decide upon based on the provisions of the Indian Contract Act, 1872:
(i) Will Mr. M succeed in filing the suit to recover money? Elaborate the related provisions?
(ii) What is the maximum amount- of money that can be recovered by Mr. M?
(iii) Shall the provisions of the above act also apply to the medical treatment given to the grandmother?[2022 December – 6 Marks]
- (a) Differentiate between Novation and Alteration as per the Indian Contract Act, 1872.
[2022 December – 5 Marks]
- Sheena was a classical dancer. She entered into an agreement with Shital Vidya Mandir for 60 dance performances. As per the contract, she was supposed to perform every weekend and she will be paid Rs. 10,000/- per performance. However, after a month, she was absent without informing, due to her personal reasons. Answer the following questions as per the Indian Contract Act, 1872.
(i) Whether the management of Shital Vidya Mandir has right to terminate the contract?
(ii) If the management of Shital Vidya Mandir informed Sheena about its continuance, can the management still rescind the contract after a month on this ground subsequently?
(iii) Can the Shital Vidya Mandir claim damages that it has suffered because of this breach in any of the above cases?[2022 May – 4 Marks]
Answer :
Section 39 provides that when a party to a contract has refused to perform or disabled himself from performing his promise in its entirety the promisee may put an end to the contract unless he had signified, by words or conduct his acquiesce in its continuance. Further, in term of Section 40, the promisee shall be required to perform personally, if there is such an apparent intention of the parties.Also, as per Section 75 of the Act, a person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through non-fulfilment of the contract.
Therefore, in the instant case,
(i) Since, Sheena could not perform as per the terms of contract, Shital Vidya Mandir can terminate the contract.
(ii) In the second situation, the management of Shital Vidya Mandir informed Sheena about the continuance of the contract. Hence, the management cannot now rescind the contract after a month on this ground subsequently.
(iii) As per Section 75, Shital Vidya Mandir can claim damages that it has suffered because of this breach in part (i). - “The general rule is that an agreement made without consideration is void.” State the exceptions of this general rule as per the Indian Contract Act, 1872.
[2022 May – 7 Marks]
Answer :
(a) An agreement made without consideration is void (Section 25 of the Indian Contract Act, 1872): In every valid contract, consideration is very important. A contract may only be enforceable when consideration is there. However, the Indian Contract Act contains certain exceptions to this rule. In the following cases, the agreement though made without consideration, will be valid and enforceable.Exceptions:1. Natural Love and Affection: Conditions to be fulfilled under section 25(1)
(i) It must be made out of natural love and affection between the parties.
(ii) Parties must stand in near relationship to each other.
(iii) It must be in writing.
(iv) It must also be registered under the law.
A written and registered agreement based on natural love and affection between the parties standing in near relation (e.g., husband and wife) to each other is enforceable even without consideration.
2. Compensation for past voluntary services: A promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, is enforceable under Section 25(2). In order that a promise to pay for the past voluntary services be binding, the following essential factors must exist:
(i) The services should have been rendered voluntarily.
(ii) The services must have been rendered for the promisor.
(iii) The promisor must be in existence at the time when services were rendered.
(iv) The promisor must have intended to compensate the promisee.
3. Promise to pay time barred debt: Where a promise in writing signed by the person making it or by his authorised agent, is made to pay a debt barred by limitation it is valid without consideration [Section 25(3)].
4. Agency: According to Section 185 of the Indian Contract Act, 1872, no consideration is necessary to create an agency.
5. Completed gift: In case of completed gifts, the rule no consideration no contract does not apply. Explanation (1) to Section 25 states “nothin g in this section shall affect the validity as between the donor and donee, of any gift actually made.” Thus, gifts do not require any consideration.
6. Bailment: No consideration is required to affect the contract of bailment. Section 148 of the Indian Contract Act, 1872, defines bailment as the delivery of goods from one person to another for some purpose. This delivery is made upon a contract that post accomplishment of the purpose, the goods will either be returned or disposed of, according to the directions of the person delivering them. No consideration is required to affect a contract of bailment.
7. Charity: If a promisee undertakes the liability on the promise of the person to contribute to charity, there the contract shall be valid. (Kadarnath v. Gorie Mohammad) - Srishti, a minor, falsely representing her age, enters into an agreement with an authorised Laptop dealer Mr. Gupta, owner of SP Laptops, for purchase of Laptop on credit amounting ` 60,000/- for purchasing a laptop, on 1st August 2021. She promised to pay back the outstanding amount with interest @ 16% p.a. by 31st July 2022. She told him that in case she won’t be able to pay the outstanding amount, her father Mr. Ram will pay back on her behalf. After One year, when Srishti was asked to pay the outstanding amount with interest she refused to pay the amount and told the owner that she is minor and now he can’t recover a single penny from her.
She will be adult on 1st January 2024, only after that agreement can be ratified. Explain by which of the following way Mr. Gupta will succeed in recovering the outstanding amount with reference to the Indian Contract Act, 1872.
(i) By filing a case against Srishti, a minor for recovery of outstanding amount with interest?
(ii) By filing a case against Mr. Ram, father of Srishti for recovery of outstanding amount?
(iii) By filing a case against Srishti, a minor for recovery of outstanding amount after she attains maturity?[2022 May – 6 Marks]
- “Liquidated damage is a genuine pre-estimate of compensation of damages for certain anticipated breach of contract whereas Penalty on the other hand is an extravagant amount stipulated and is clearly unconscionable and has no comparison to the loss suffered by the parties”. Explain the statement by differentiating between liquidated damages and penalty with reference to provisions of the Indian Contract Act, 1872.
[2022 May – 5 Marks]
- (a) A, B, C and D are the four partners in a firm. They jointly promised to pay ` 6,00,000 to
F. B and C have become insolvent. B was unable to pay any amount and C could pay only ` 50,000. A is compelled to pay the whole amount to F. Decide the extent to which A can recover the amount from D with reference to the provisions of the Indian Contract Act, 1872.[2021 December – 4 Marks]
- Explain any five circumstances under which contracts need not be performed with the consent of both the parties.
[2021 December – 7 Marks]
- Examine the validity of the following contracts as per the Indian Contract Act, 1872 giving reasons.
(i) X aged 16 years borrowed a loan of ` 50,000 for his personal purposes. Few months later he had become major and could not pay back the amount borrowed, on due date. The lender wants to file a suit against X.(ii) J contracts to take in cargo for K at a foreign port. J’s government afterwards declares war against the country in which the port is situated and therefore the contract could not be fulfilled. K wants to file a suit against J.[2021 December – 6 Marks]
- What is meant by ‘Quasi-Contract’? State any three salient features of a quasi -contract as per the Indian Contract Act, 1872.
[2021 December – 5 Marks]
- (a) State with reason(s) whether the following agreements are valid or void:
(i) A clause in a contract provided that no action should be brought upon in case of breach.
(ii) Where two courts have jurisdiction to try a suit, an agreement between the parties that the suit should be filed in one of those courts alone and not in the other.
(iii) X offers to sell his Maruti car to Y. Y believes that X has only Wagon R Car but agrees to buy it.
(iv) X, a physician and surgeon, employs Y as an assistant on a salary of ` 75,000 per month for a term of two years and Y agrees not to practice as a surgeon and physician during these two years.[2021 July – 4 Marks]
- (a) Explain the term Contingent Contract with reference to the Indian Contract Act, 1872 with the help of an example. Also discuss the rules relating to enforcement of a contingent contract.
[2021 July – 7 Marks]
- X, Y and Z jointly borrowed ` 90,000 from L. Decide each of the following in the light of the Indian Contract Act, 1872:
(i) Whether L can compel only Y to pay the entire loan of Rs. 90,000?
(ii) Whether L can compel only the legal representatives of Y to pay the loan of Rs. 90,000, if X, Y and Z died?(iii) Whether Y and Z are released from their liability to L and X is released from his liability to Y and Z for contribution, if L releases X from his liability and sues Y and Z for payment?[2021 July – 6 Marks]
- (a) Explain what is meant by ‘Supervening Impossibility’ as per the Indian Contract Act, 1872 with the help of an example. What is the effect of such impossibility?
[2021 July – 5 Marks]