*Mr. Ahuja of Delhi engaged Mr.

Singh as his agent to buy a house in West Extension

area. Mr. Singh bought a house for Rs. 20 lakhs in the name of a nominee and then
purchased it himself for Rs.24 lakhs. He then sold the same house to Mr. Ahuja for Rs 26
lakhs. Mr. Ahuja later comes to know the mischief of Mr. Singh and tries to recover the
excess amount paid to Mr. Singh. Is he entitled to recover any amount from Mr. Singh?
If so, how much explain. Agent is not to deal on his own account. If the agent wants to do
deal on his own account, he must disclose all the material facts to his principal and obtain his
consent. The principal can rescind the contract, if any material facts were dishonestly concealed
by the agent or the dealings of the agent on his own account have been disadvantageous to the
principal. Agent can not make any secret profit out of the business of agency. If the agent deals
on his own account without disclosing it to the principal, the principal is entitled to claim from
the agent any benefit received by him, out of such transaction. Mr. Ahuja engages Mr. Singh
as his agent for purchase of a house. Mr. Singh purchases a house in the name of the nominee
and then purchases the same house on behalf of Mr. Ahuja (his principal), thus making a profit
of Rs. 4 lakhs. However, he does not disclose these facts to Mr. Ahuja. Non-disclosure of profit
of Rs.4 lakhs made by Mr. Singh amounts to a beach of duty by Mr. Singh. Therefore, Mr.
Ahuja is entitled to claim the secret profit of Rs. 4 lakhs made by Mr. Singh.
*A minor wanted to become a professional billiards player entered into a contract with a
famous billiards player and agreed to pay him a certain sum of money to learn the game. Is
he liable to pay?
no

* A sells his grocery business, including goodwill, to B for a sum of Rs. 50,000. It is agreed
that A is not to open another grocery store in the whole of India for the next ten years. A
opens another store in the same city two months later. What are the rights of A?

As per Section 27 of The Indian Contract Act, every agreement, by which anyone is retained
from exercising a lawful profession, trade or business of any kind, is to that extent void.
Exception to Section 27 provides that the seller of the goodwill of a business may agree with the
buyer to refrain from carrying on a similar business, within local limits, so long as the buyer or
any one deriving title to the goodwill from him carries on alike business, provided that such
limits are reasonable. In the given case, as the limits agreed regarding place as well as time is not
reasonable, the agreement is void. So, B cannot take any legal action against A.
*A, a singer, enters into a contract with B, the manager of a theatre, to sing in his theatre two
nights in every week during the next two months and B agrees to pay her at the rate of Rs.
1000 for each night. On the sixth night A wilfully absents himself. With the assent of B, A
sings on the seventh night. But on the following day, B puts an end to the contract. Can A
claim damages for breach of contract? Advise
Section 39 - Effect of refusal of party to perform promise wholly
 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 has signified,
by words or conduct, his acquiescence in its continuance.

Illustration

(a) A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre
two nights in every week during the next two months, and B engages to pay her 100 rupees
for each night's performance. On the sixth night A wilfully absents herself from the theatre. B
is at liberty to put an end to the contract.

(b) A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre
two nights in every week during the next two months, and B engages to pay her at the rate of
100 rupees for each night. On the sixth night A wilfully absents herself. With the assent of B,
A sings on the seventh night. B has signified his acquiescence in the continuance of the
contract, and cannot now put an end to it, but is entitled to compensation for the damage
sustained by him through A's failure to sing on the sixth night.

*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?
Problem 2 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. Solution No, B cannot recover the damages from A as both the parties share a social
relationship and there is no intention to create a legal relationship. So, it was just an
agreement which is not enforceable at law.
\
*. S offers to sell his car for Rs. 50,00. T standing nearby, says. “I will take it if B does not
take it.” B is not interested in the car. (i) Does a contract arise between S and T? (ii) What
will be the position if T says to S “here is the money, I take the car.”
S offer to sell B his car for Rs. 50,000. T standing nearby says, “I will take is if B does not
take it” B is not interested in a car. S is not bound to sell the car to T True

A manufacturing company provides jobs for many people in a small town where employment is
not easy to find. The company has stayed in the town even though it could find cheaper workers
elsewhere, because workers are loyal to the company due to the jobs it provides. Over the years,
the company has developed a reputation in the town for taking care of its employees and being a
responsible corporate citizen.
The manufacturing process used by the company produces a by-product that for years has flown
into the town river. The by-product has been considered harmless but some people who live near
the river have reported illnesses. The by-product does not currently violate any anti-pollution
laws.
What are the issues of integrity, ethics and law posed in the case study? What options does the
company have, and what should it do and why? 
Lecturer Guidelines
Some of the issues raised by this case study include the factors and decisions that led to the
current situation, such as worker loyalty caused by scarce employment and the power the
company holds over the town; whether the company is acting consistently with its reputation
as a good corporate citizen and whether not doing so affects its integrity; the ethics of
companies compared to persons, and whether companies should have more or fewer
obligations and why; whether and why the company should take action even though the by-
product does not violate any laws, and if it should take action, whether the company should
establish criteria for helping it decide when to address complaints that do not raise illegal
actions. Is there a problem with the current state of the law, and if there is, can the company
use that to justify non-action?

*An undergraduate course required for graduation has a reputation for being extremely hard to
pass, much harder than similar courses. When posting materials to the class website, the teacher
accidently posts a test with answers indicated at the end. The teacher notices the error
immediately and deletes the test, but before she does so a student downloads the test. The
website does not allow the teacher to see whether the test was downloaded, and because she
deleted the test with the answers so quickly, the teacher later uploads the same test without the
answers and requires students to take the test. The Student Code of Ethics prohibits students
from taking a test when there is reason for them to believe they have confidential information
regarding the answers to a test they are not supposed to have. Violations of the Student Code of
Ethics are punishable.
The task in the case study is to consider the relevant issues of integrity, ethics and law. In this
case study, what options do the teacher and the student have, and what should they do and why?
Some of the issues raised in this case study include the teacher's error in posting the wrong
version of the test online. If the teacher was not 100% sure that the test version with the answers
was not seen by students, should she have discarded that test and created a new test, even if that
would be more work? If the teacher makes these kinds of errors, why can't students take
advantage of them? One reason for the student not to use the test version with the answers is that
there is dishonesty involved. The student implies when taking the test that he or she does not
already have the set of answers; it seems like this is true because if the student tried to take the
test but told the teacher he or she had the test version with the answers, the student would not be
allowed to proceed. Another reason for the student not to use the test version with the answers is
that it would be unfair to other students if one student had an advantage other students did not
have. The test is based on the assumption that students have the same kind of opportunity to
study and do well, and that the test results will reflect that knowledge and effort. If the test
answers are known to a student in advance, the test is not a fair evaluation of all students and the
results are invalid. Using the test version with the answers is also prohibited by the Student Code
of Ethics, which as a set of written rules of required behaviour with sanctions can be considered
a kind of law. The case study, however, suggests that the student might get away with using the
test version with the answers, assuming that other people do not find out and report the student.
If someone can get away with illegal or unethical behaviour, does that make unethical behaviour
acceptable? Yet another complicating factor raised in the case study is that the course is much
harder to pass than other courses, which seems unfair to students. Does one bad action justify
another? If the course is unfairly hard to pass, does that justify a student's dishonest use of the
test version with the answers? How about the use of other unethical means to pass the unfairly
difficult test? Finally, if the student does use the test version with the answers, how might that
effect the student? Will it lead them to be cynical in the future, or value ethical rules less? If the
student is asked whether they ever committed educational misconduct in a future job application,
will they have to lie to cover that up?
The case studies in this Module raise issues of ethics, integrity and law which are difficult to
answer, but a final conceptual shift is still waiting for students, when they apply the concepts of
ethics, integrity and law to themselves and problems that they or persons they know face. Now
instead of telling other, hypothetical people what to do, students are required to consider issues
intertwined with their family and friends, or their own lives and life goals. Discussion of
personal examples raises challenging issues, because analysis is greatly complicated by values,
emotional attachment, and limited perspectives. This last portion of the Module however has the
potential to be a very satisfying discussion which connects classroom discussion with the reality
of students' lives. The goal of having students consider more personal examples is to help
students internalize how ethics, integrity and law apply to them, together with some strategies of
how to resolve conflicts among the concepts in their own lives.
 *A hires a carriage enough of B and agrees to pay Rs. 500 as hire charges. The carriage is
unsafe, though B is unaware of it. A is injured and claims compensation for injuries suffered
by him. B refuses to pay. Discuss the liability of B.
The problem asked in the question is based on Sec on 150, of the Indian Contract Act, 1872.
According to this section, if the goods are bailed for hire, the bailor is responsible for damages,
whether he was or was not aware of the existence of such types of faults in the goods, bailed.
Hence, by applying the above provision in the case stated above, B is liable to compensate A for the
injuries suffered even if he has no knowledge of the defect in the carriage.

*A, a tradesman, sends some goods ordered by B. A’s servant delivers the goods by mistake
at C’s house. C uses the goods. Can A recover the price of the goods from (i) B or (ii) C ?
A, a tradesman, sends some goods ordered by B. A’s servant delivers the goods by mistake at C's
house. C uses the goods. State the legal position? Hint: A can recover the price of goods from C

A undertakes to build a house for B within a certain period, B supplying the necessary
materials. C guarantees the performance of the contract. B fails to supply the necessary
materials. Discuss the position of C.

Example : A contracts with B for a fixed price to build a house for B within a stipulated time, B supplying
the necessary timber. C guarantees A’s performance of the contract. B omits to supply the timber. C is
discharged from his suretyship. (c) Discharge of surety when creditor compounds with, gives time to, or
agrees not to sue, principal debtor [Sector 135] : A contract between the creditor and the principal
debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue, the
principal debtor, discharges the surety, unless the surety assents to such contract. (d) Surety not
discharged when agreement made with third person to give time to principal debtor [Section 136] :
Where a contract to give time to the principal debtor is made by the creditor with a third 62 Corporate
& Other Law Mohit Educomp Pvt. Ltd. C person, and not with the principal debtor, the surety is not
discharged.