Name PRASHANT JAIN

PRN No. 1801016190232

MGT412-Legal Aspects of Business

Answer any one of the questions 1 and 2. Question number three is compulsory. Each question carries
15 marks and total marks 30.

1.”All agreements are not contracts but all contracts are agreements.” Discuss the statement
explaining the essential elements of a valid contract.

NOT TRIED

2.What is an “offer”? When is it complete? State the rules of a valid offer.

ANSWER:

An offer must be communicated to the offeree. An offer must be communicated to the person to
whom the same is addressed. Communication of offer is important to conclude an agreement because
acceptance can be given only after one knows about the offer. This applies to both 'specific' as well as
'general' offer.

When one person signifies to another his willingness to do or to abstain from doing anything with a
view to obtaining the assent of that other person to such act or abstinence, he is said to make a
proposal.”

The person making the proposal is called the ‘offeror’ or ‘promisor’. The person to whom the offer is
made is called the ‘offeree’ or ‘promisee’.

An offer to be valid must comply with the following rules:

a. Offer may be express or implied:

An offer may be express or may be implied from the conduct of the parties or circumstances
of the case.

b. Offer may be specific or general:

A specific offer is one which is made to a particular-person. It can be accepted by the person
to whom it has been made, no one else can accept such an offer.

c. Offer must give rise to legal obligation:

An offer to be valid must create legal relationship between the parties. The very purpose of
entering into an agreement is to make it enforceable at a Court of law. If the offer has not
been made with this intention it will not become a contract even if it is accepted by the party
to whom it was made.
 d. Terms of an offer must be definite and certain:
The terms of an offer should not be vague or indefinite.

e. Offer must be distinguished from an invitation to offer:

An offer must be distinguished from an invitation to offer. The shopkeepers generally display
their goods in showcases with price tags. The shopkeeper in such cases is not making an offer
so that you can accept it. He is, on the other hand, inviting you to make an offer which he may
or may not accept. Thus, you cannot compel a shopkeeper to sell the goods displayed in the
showcase at the marked price. However, if there is specific law to sell goods at marked price
then the seller will have to sell at marked price. For example, during National Emergency
essential commodities like sugar etc. have to be sold at marked price.

f. Offer must be distinguished from a mere declaration of intention:

A declaration of intention to make an offer is not an offer. It is regarded as an invitation to
offer. An advertisement for sale in a Newspaper or Magazine etc. is not an offer for sale.

g. Offer must be communicated:

An offer must be communicated to the person to whom it is made. A person can accept the
offer only when he knows about it. If he does not know it, he cannot accept it.

h. Communication of Special Terms:

Special terms of a contract must be communicated. Generally, such cases arise in respect of
general offers, like tickets or receipts for depositing luggage at the Railway Station or receipts
for clothes given for dry cleaning etc. The rule in these cases is that parties are not bound
unless conditions printed are properly communicated.

i. Offer must be made with a view to obtaining the consent of the other party to do or to
abstain from doing the act:
The offer must be made with an intention to get the consent of the other party to do or to
abstain from doing the act and not simply with a view to making known the intention of
making an offer.

j. Offer should not impose an unnecessary obligation to communicate non-acceptance:

Thus, an offeror cannot say that if acceptance is not communicated by Sunday next, the offer
would be considered as accepted.

3. Attempt the following problems, giving reasons: -

A] Over a cup of coffee in a restaurant, A invites B to a dinner at his house on a Sunday. B hires a taxi
and reaches A’s house at the appointed time, but A fails to perform his promise. Can B recover any
damages from A? {5 marks}

Answer:

NO. B can not recover damages from A as both parties enjoy a social relationship and there is no
intention to create a legal relationship in this case. So, it was just an agreement which is not
enforceable by any Law.

B] M mows L’s lawn without being asked by L to do so. L watches M do the work but does not attempt
to stop him. Is L bound to pay any charges to M? {5 marks}
Answer:

YES, L is bound to pay the charges as he did not stop him from mowing the lawn. His implied silence is
considered as Speech here.

C} P applied for the principal’s post of a local college, and the Governing Body passed a resolution
appointing him. After the meeting, a member of the Governing Body privately informed him of the
resolution. The resolution was subsequently rescinded. P claims damages. Will he succeed? {5 marks}

Answer:

NO. P cannot claim damages as there was no formal communication to him.