Answer To The Question No : 1

a) “No consideration no contract”-Explain this statement.

Answer:   Consideration is essential for the validity of a contract. "A
promise without consideration is a gift. A promise without consideration is
a gratuitous undertaking and cannot create a legal obligation. Under
English law simple contracts must be supported by consideration but
specially contracts require no consideration. 

There are exceptional cases where a contract is enforceable even though

there is no consideration. They are as follows: 

 Natural love and affection: An agreement made without

consideration is valid. An agreement without consideration is valid, if
the following requirements are complied with: 

I. The agreement is made by a written document. 

II. The document is registered according to the law relating to

registration in force at the time. 

III. The agreement is made on account of natural love and affection. 

IV. The parties to the agreement stand in a near relation to each other. 

 Voluntary Compensation: A promise made without any

consideration is valid if, "it is a promise to compensate wholly or in
part. a person who has already voluntarily done something for the
promisor, or something which the promisor was legally compellable
to do:'-Sec. 25(2).  

 
 

Section 25(2) applies when there is a "Voluntary act by one party and there
is a subsequent promise (by the party benefited) to pay compensation to
the former. The term 'voluntarily' signifies that the act was done,
"otherwise than at the desire of the promisor". 

Time-barred debt: A promise to pay, wholly or in part, a debt which is

barred by the law of limitation can be enforced if the promise is in writing
and is signed by the debtor or his authorized agent. -Sec. 25(3). A debt
barred by limitation cannot be recovered. Therefore, a promise to repay
such a debt is, strictly speaking, with6Ut any consideration. But
nevertheless, such a promise can be enforced if the debtor or his
authorized agent- makes written and signed promise to repay it. 

Agency : No consideration is required to create an agency.-Sec. 185. 

Completed gift: The rule "no consideration, no contract" does not apply to
completed gifts. Explanation I, to Section 25 states that, "Nothing in this
section shall affect the validity as between the donor and the donee of any
gift actually made." Thus, if a person gives certain properties to another
according to the provisions of the Transfer of Property Act (i.e .. by a
written and registered document) he cannot subsequently demand the
property back on the ground that there was no consideration.
B) An agreement entered into by a husband with his wife, during
quarrels and disagreement, whereby the husband promised to
give some property to the wife. Is it void agreement or not.
Explain.

Answer: As mentioned above an agreement was entered into by

husband with his wife during their quarrels, whereby the husband agrees to
pay the maintenance allowances to his wife provided she stays separately.
In the above case the agreement held to be void because, under the
circumstances, there was no natural love and affection between parties.
As per the exceptions under the consideration section 25(1) love and
affection states that agreement has to be made out of natural love and
affection and it should be between the parties standing in relationship to
each other.
As we see in this case nearness of relationship, however, does not
necessarily import love and affection.
Therefore there is no consideration made by the husband hence it is only
an agreement and not a contract.
Therefore it is a void agreement hence the husband need not have to pay
compensation for the separation.
 Answer To The Question No 2

2. a) How may offer be terminated?

A) Answer : There are a number of ways for an offer to be terminated.

They are events that may occur after an offer has been made which
bring it to an end so that it can no longer be accepted. An offer is
terminated in the following circumstances:

 Revocation
 Rejection
 Lapse of time
 Conditional Offer
 Operation of law
 Death
 Acceptance
 Illegality

REVOCATION

Revocation means an offer is withdrawn by the offerer. The general rule was
established in Payne v Cave  that an offer can be revoked at any time before
acceptance takes place. However, the revocation must be communicated
effectively directly or indirectly to the offeree before acceptance . This is
supported by Byrne v Van Tienhoven  , where the withdrawal of an offer
sent by telegram was held to be communicated only when the telegram was
received.  Further, sufficient communication does not need to be made by
the offeree personally but through a third party in Dickinson v Dodds  . In
Routledge v Grant  , the offer may still be able to withdraw even if it
specifically stated that it would remain open for a fixed period when such
promise to leave an offer open was not supported by any consideration given
by the offeree.  However, once the offeree accepted the offer by post,
namely, letter, the postal rule would strictly apply and would not permit such
withdrawal. Contrary, once the offer has been accepted and acted upon, it
cannot be revoked, the incompliance of it would be a breach of contract. In
Errington v Errington , where a unilateral offer was made, the courts decided
that so long as the repayments were being made by the son and daughter-in-
law, the father’s offer could not be revoked. The rationale given by Lord
Denning is that “…They have acted on the promise and neither the father
nor his widow, his successor in title, can eject them in disregard of it.” In
such scenario, once the offeree relied on the offer and embarked upon it, the
offer cannot be terminated.

REJECTION

An offer is terminated when the offeree communicates his rejection to the

offeror. Hence, the offeree making a counter-offer and introduces a new
offer amounts to a rejection of the original offer. In Hyde v Wrench Lord
Langdale held that the counter offer offered by the offeree terminated the
original offer. Hence, “…thereby rejected the offer previously made by the
defendant (the offerer).” However, this should be distinguished from the
situation when the offeree merely seeks further information from the offeror,
and does not make a counter-offer. In Stevenson, Jacques v McLean a mere
inquiry would not be considered as rejection.

LAPSE OF TIME

As it would be impracticable if an offer could be accepted after an

unreasonable delay on the part of the offeree  , the court stated in Ramsgate
Victoria Hotel v Montefiore  that an offer will lapse if it is open for a
specific length of time and that time limit expires. Where there is no express
time limit, an offer is normally open only for a reasonable time. The length
for a reasonable time will depend on the circumstances of the case with
respect to offers involving other types of subject matter, definition of a
reasonable time depends upon the demand for the subject matters and upon
the volatility of its price.

CONDITIONAL OFFER

An offer which expressly provides that it is to terminate on the occurrence of

some condition cannot be accepted after that condition has occurred; and
such a provision may also be implied. In other words, termination of an offer
may also occur due to a condition not being met  . For example, in
Financings Ltd v Stimson  the offer was made in an implied condition,
namely the car maintaining in its undamaged state is a conditional precedent.
Since the car was stolen from the dealers and damaged, the offer was
terminated when the condition fails and became incapable of being accepted.
Another issue concerned in regards to the condition required would be the
capability of both parties for a contractual obligation. The loss of contractual
capacity by either offeror or offeree will terminate an offer and such loss of
capacity is usually evidenced by the appointment by the court. 

DEATH

The death of either the offeror or the offeree will cause such termination: the
right to accept an ordinary offer is not transferable. The unaccepted offer of
a deceased person cannot be converted into a contract binding upon his
estate. [18] In Dickinson v Dodds  Mellish LJ stated ‘if a man who makes an
offer dies, the offer cannot be accepted after he is dead.’ On the other hand,
in Reynolds v Atherton  Warrington LJ stated that an offer “made to a living
person who ceases to be a living person before the offer is accepted…is no
longer an offer at all”.

ACCEPTANCE

Once the offer was accepted by the offeree, the contract is formed and
brought the offer to an end. It can be made either orally, in writing, or by the
implication of conduct when they are received by the offeror. However, in
Felthouse v Bindley the court refuse to impose an obligation on the offeree
to reject the offer and further stated that silence does not amount to
acceptance.

Illegality

Finally, a change in the law which makes a potential contract illegal will
terminate an offer, since courts will not enforce an illegal contract. 

In conclusion, offer can be terminated by Revocation, Rejection, Lapse of

time, Conditional Offer, Operation of law, Death, Acceptance and Illegality.