PRESIDENCY UNIVERSITY

ASSIGNMENT – MID TERM

EXAMINATION

Course Name: Business law

Course Code: MBA3001

SUBMITED BY: Paul Antony S P

Section – 12

SUBMITED TO: Prof. Sarah Pauly

SET- A (Part A)
1. Define the term Contract as given under Indian contract Act 1872
 A contract is an agreement between two or more parties that creates
obligations that are enforceable by law.
2. Explain "Doctrine of Privity of contract"
 The doctrine of privity of contract is a legal principle that says only
parties to a contract can enforce the contract or take advantage of its
terms. This means that someone who is not a party to the contract
cannot sue to enforce the contract or take advantage of its terms.
3. When does a claim on "Quantum meruit" arise?
 A claim on quantum meruit arises when one party has performed a
service for another party, but there is no contract specifying how much
the service is worth. The party that performed the service can sue for
"reasonable compensation.
4. "Consensus ad idem" is required for every contract -
comment.
 Consensus ad idem is a Latin phrase meaning "agreement on the same
thing." In order for a contract to be valid, the parties must agree on the
essential terms of the contract. If there is no consensus ad idem, there
is no contract.
5. Mention the different kinds of offer as stated under the
Indian Contract Act
 1. Offer to perform an act: An offer to do something is an offer to
perform an act.
 2. Offer to forbear: An offer to forbear from doing something is an
offer to forbear from an act.
 3. Offer to do an act or to forbear from doing an act: An offer to do an
act or to forbear from doing an act is an offer to do both.

PART-B
6. The foundation of modern law of damages, in India and
England is to be found in the judgmentin the case of
Hadley V/S Baxendale. Elucidate.

 The foundation of modern law of damages, in India and England is to

be found in the judgment in the case of Hadley V/S Baxendale. In this
case, the court held that damages for breach of contract must be those
which naturally flow from the breach, and which the parties could
reasonably have contemplated at the time of entering into the contract.
This principle has been followed in a number of subsequent cases, and
has become the cornerstone of the law of damages in India and
England.

7. Discuss when the parties have the capacity to enter into

contract.
 According to Section 11, “Every person is competent to contract who is
of the age of majority according to the law to which he is subject, and
who is of sound mind and is not disqualified from contracting by any
law to which he is subject.” So, we have three main aspects:

1. Attaining the age of majority

According to the Indian Majority Act, 1875, the age of majority

in India is defined as 18 years. For the purpose of entering into
a contract, even a day less than this age disqualifies the person
from being a party to the contract.

2. Being of sound mind

According to Section 12 of the Indian Contract Act, 1872, for the

purpose of entering into a contract, a person is said to be of sound
 mind if he is capable of understanding the contract and being able
to assess its effects upon his interests.

3. Not disqualified from entering into a contract by any law that he is

subject to
Apart from minors and people with unsound minds, there are other
people who cannot enter into a contract. i.e. do not have the capacity to
contract.

8.In case of breach of contract by the seller, where the damages

are not a suitable remedy or the goods are of a unique nature
then which rights is available to the buyer?
 The unpaid seller has the necessary rights and seller’s remedies if there
is a breach of any contract between the buyer and seller. Unpaid seller
remedies can be against the goods and the buyer.
The unpaid seller has the rights against the buyer and the goods.
A. Suit for the price In a contract, when the goods or property which the
buyer bought has been passed or send to the buyer and after the property or
goods passed buyer refuses or wrongfully neglects to pay for the goods or
property.

B. Suit for the damages If the buyer refuses or not accepted the goods
and payment of money, then according to Section 56, the seller can sue the
buyer for damages of non-acceptance of goods and the payment of the
money.

C. Suit for Interest When the buyer and seller have a specific agreement
with regards to the interest on the price of the goods from the date on which
the payment becomes due, then according to Section 61, the seller can
recover the interest from the buyer
9. Explain "Doctrine of Caveat Emptor"
 The doctrine of Caveat Emptor is an integral part of the Sale of
Goods Act. It translates to “let the buyer beware”. This means it
lays the responsibility of their choice on the buyer themselves.

It is specifically defined in Section 16 of the act “there is no

implied warranty or condition as to the quality or the fitness for
any particular purpose of goods supplied under such a contract of
sale“

A seller makes his goods available in the open market. The buyer
previews all his options and then accordingly makes his choice.
Now let’s assume that the product turns out to be defective or of
inferior quality.

This doctrine says that the seller will not be responsible for this. The
buyer himself is responsible for the choice he made.

So the doctrine attempts to make the buyer more conscious of his

choices. It is the duty of the buyer to check the quality and the
usefulness of the product he is purchasing.

If the product turns out to be defective or does not live up to its

potential the seller will not be responsible for this.

SET-C
10. A written contract to sell fruit pellets contained the
expression stipulation, "shipment to be made in good condition".
In fact, some of the pellets were not in good condition when
shipped However, they were, on arrival, still fit to be used for
the purpose the buyer had intended and although they were
worth less than they should have been, they could still have been
re-sold at a reduced price.
A. Comment on whether there is a breach of Condition and
whether the buyer is entitled to repudiate the contract and reject
the goods.
 Three kinds of remedies are mentioned under the Sale of Goods Act,
relating to the breach of contract.

• Seller’s Remedies against Buyer

• Buyer’s Remedies against Seller
• Remedies available to both Buyer and Seller

Seller’s Remedies against Buyer

There are two types of remedies which the seller has against the buyer. They
are: Suit for Price: Section 55[1] of the Sale of Goods Act states two
conditions. The first is that when any goods are passed to the buyer under the
contract to a sale, and the buyer intentionally neglects payment or refuses to
pay for the goods according to the terms stated in the contract, the seller may
sue the buyer for the payment of the price of the goods.

Damage for Non-Acceptance: Section 56 of the Act states that when the
buyer is intentionally and wrongfully refusing to accept the goods and pay for
the same, the seller may sue the buyer for non-acceptance of goods.

Buyer’s Remedies against the Seller

The buyer has three remedies against the seller for breach of contract under
the Sale of Goods Act. These are:
Damages for Non-Delivery: Section 57 of the Act states that if the seller is
intentionally or wrongfully neglecting the delivery of the goods to the
customer, the customer can sue the seller for damages for non-delivery.
Remedy for Breach of Warranty: Section 59 of the Act states that when
there is a breach of warranty on the part of the seller, the buyer is not entitled
to reject the goods on that basis, but he may sue the seller breach of warranty
in diminution or extinction of the price.

Remedies available to both Seller and Buyer

The buyer and seller have two remedies while dealing with goods under the
Sale of Goods Act. These are:

Suit for Repudiation of Contract before the Date or Anticipatory

Breach: Section 60 of the Act states that if any party renounces the contract
before the delivery of the goods, the other party may wait till the date of
delivery of the goods or may treat the contract as annulled and claim for
damages.
Interest by way of Damages and Special Damages: Section 62 of the Act
states that the buyer or seller can recover special damages where by law
special damages or interest may be recoverable

11. Raj agreed to erect a plant for Gorge by 31st January 2018.
The contract provided that Gorge should pay Rs.500/- per month
for every month that Raj took beyond the agreed date. Raj was
late by six months. Gorge sued Raj for Rs 6,500/- the actual loss
caused to him as a result of the delay. To what damages, if any,
is Gorge entitled?
  A:- A contract with B to pay B Rs. 65000 if he fails to pay B Rs. 500
on a given day. A fail to pay B Rs. 500 on that day. B is entitled to
recover from A such compensation, not exceeding Rs. 6500, as the
Court considers reasonable.
 74 Compensation for breach of contract where penalty stipulated for:-
[When a contract has been broken, if a sum is named in the contract as
the amount to be paid in case of such breach, or if the contract contains
any other stipulation by way of penalty, the party complaining of the
breach is entitled, whether or not actual damage or loss is proved to
have been caused thereby, to receive from the party who has broken
the contract reasonable compensation not exceeding the amount so
named or, as the case may be, the penalty stipulated for. Explanation.
— A stipulation for increased interest from the date of default may be
a stipulation by way of penalty.]

SET-B

1. Consensus ad idem" is required for every contract comment.

 Consensus ad idem is a Latin term that means, simply, agreement. This
is the first principle that's the foundation of enforceable contracts
because for contracts to be enforceable, agreement or a meeting of the
minds of all involved parties, is required.

2.Write the distinction between "Condition & warranty"

  A condition is a stipulation in a contract that must be fulfilled in order
for the contract to be valid. A warranty is a guarantee that the product
or service being purchased will meet certain standards.

3.Explain "Doctrine of Privity of contract"

 According to the doctrine of privity of contract, only the parties to a
contract are bound by its terms. This means that only the parties to a
contract can enforce its terms. Third parties who are not parties to the
contract cannot enforce its terms, even if they are intended
beneficiaries.

4.Mention the different kinds of offer as stated under the Act.

 There are three types of offers under the Act, which are as follows:
1. An offer to sell goods: This type of offer is made by a seller who
intends to sell goods to a buyer. The offer is usually made in the form
of a advertisement or a catalog.
2. An offer to buy goods: This type of offer is made by a buyer who
intends to buy goods from a seller. The offer is usually made in the
form of a request for quotation or a purchase order.
3. An offer for services: This type of offer is made by a service
provider who intends to provide services to a customer. The offer is
usually made in the form of a proposal or a contract.

5. Goods form the subject of contract of sale, define Goods as

per Sec.2 (7) of the Sale of Goods Act
 According to Sec.2 (7) of the Sale of Goods Act, 1930, the term
‘goods’ means every kind of movable property other than actionable
claims and money; and includes stock and shares, growing crops, grass,
and things attached to or forming part of the land which are agreed to
be severed before sale or under the contract of sale.
 PART-B

6. Pen in what is Sale & Agreement of Sale

 Nature of contract
Agreement to sell is executory
Sale is executed
 Transfer of property
Sale -At the time of sale
Agreement to sell- at some future time
 Risk of loss
Sale-buyer
Agreement to sell-seller
Consequences of breach
Insolvency of the buyer
Insolvency of the seller
Right of resale
7.Where the property in goods has passed on to the buyer, what
are the rights of an unpaid seller against the goods?

 The seller is unpaid (S 45)- • When price not paid

• When the negotiable instrument given towards the
payment dishonored.
The seller remains an unpaid seller so long as any portion
of the price however small, remains unpaid.
 Rights against the goods s 46
When the property in the goods has passed
 Right of lien ss 47-49
Right of stoppage of goods in transit ss 50-52
GIP Rly Co v Hanmandas ILR (1889) 14 Bom 57
Whitehead v Anderson (1842) 9 M & W 518
Right of re sales 54
Right of withholding the property
When property in goods has not passed
Right of withholding delivery

8.Discuss when the parties have the capacity to enter into

contract.

 A party’s capacity to contract refers to their legal ability to enter into a

contract.
Capacity also implies that a person must be legally competent.
Capacity is assessed by whether or not a person has achieved the age of
majority and whether or not they are mentally competent of
comprehending the contract conditions.
These six elements must be included in any contract:

• Offer
• Acceptance
• Consideration
• Capacity
• Intent
• Legality
9.Deliberate the Facts, & principle involved in "Carlill v/s
Carbolic Smoke Ball Co”.
 The facts of the case are that the Carbolic Smoke Ball
Company advertised that their smoke ball, when used as
directed, would protect the user from catching influenza or
colds.
Mrs. Carlill purchased and used the smoke ball as directed, but
she still contracted influenza.
When she sought a refund from the company, they refused, and
she sued.

The principle involved in this case is that a company cannot

make false or misleading claims about their products. If a
company does make such claims, they can be held liable if
someone suffers damages as a result of relying on those claims.

PART-C
10. Should pay Rs.500/- per month for every month that Raj
took beyond the agreed date Raj was late by six months. Gorge
sued Raj for Rs. 6,500/-the actual loss caused to him as a result
of the delay.
To what damages, if any, is Gorge entitled?
 A contract with B to pay B Rs. 65000 if he fails to pay B Rs. 500 on a
given day. A fail to pay B Rs. 500 on that day. B is entitled to recover
 from A such compensation, not exceeding Rs. 6500, as the Court
considers reasonable.
 74 Compensation for breach of contract where penalty stipulated for:-
[When a contract has been broken, if a sum is named in the contract as
the amount to be paid in case of such breach, or if the contract contains
any other stipulation by way of penalty, the party complaining of the
breach is entitled, whether or not actual damage or loss is proved to
have been caused thereby, to receive from the party who has broken the
contract reasonable compensation not exceeding the amount so named
or, as the case may be, the penalty stipulated for. Explanation. — A
stipulation for increased interest from the date of default may be a
stipulation by way of penalty.]

11. Aravind contracted to make & deliver 100 pairs of shoes to

Benny by January 31st A strike of Aravind's employees
prevented him from fulfilling his contract. In a suit by Benny for
breach of contract, Aravind claimed that the contract was
terminated by impossibility of performance A. Was his defence
good? Justify
 Atul is liable to Benny for damages.
A contract is not discharged on the grounds of strikes, lockouts and
civil disturbances unless otherwise agreed by the parties of the contract.
Hence in the case Aravind is liable to Benny for damages as Atul
cannot terminate the contract on ground of impossibility of
performance.