Indian contract Act 1956 cases Nature and Kinds of Contracts 1.

A invited B on birthday party and B promised to attend, but B did not reach the residence of A on that date while A made very good arrangement. Can A recover any damages from B? Ans: A cannot recover any damages from B as the agreement was social agreement creating no legal relationship. 2. A agrees to pay B Rs.2000 and in consideration B agrees to write for him 500 pages within 10 minutes. Is it a valid contract? Ans: This is not a valid contract. It is impossible to write 500 pages within 10 minutes. Sec 56 of the Indian Contract Act says that an agreement to do an act impossible in itself is void. 3. State, giving reasons, whether there is any contract in the following cases: a) Salman and Katrina promise to marry each other b) Anwar takes seat in a public vehicle c) Sharukh and Aamir agree to go to fishing d) Pratap invites Rana to a card party. Rana accepts the invitation. Ans: a) There is a contract between Salam and Katrina b) There is a contract between Anwar and Public Transport Company c) There is no contract since there is no intention to create legal relations d) There is no contract since there is no intention to create legal relations 4. Shahid agrees to bring gold from the moon by driving a car. Is the agreement valid? Ans: The agreement is void, as it is impossible for Shahid to drive to the moon. 5. Ajay agrees to sell Vijay my white horse for rupees five hundred or rupees one thousand. Is the agreement valid? Ans: The agreement is not valid because the terms of the agreement are not certain; it is not definite as to which of the two prices is to be accepted. Offer and Acceptance 1. Abid sees a book displayed in a shelf of a book shop with a price tag of Rs.90. Abid tenders Rs.90 on the counter and asks for the book. The book seller refuses to sell saying that the book has already been sold to someone else and he does not have another copy of that book in the stock. Is the book seller bound to sell the book to Abid? Ans: No. Display of goods with price marked there on is only an invitation for offer, and not an offer itself. Hence, the book seller is free to accept the offer or not. 2. Parvez offered a reward of Rs.500 to anyone who would restore to him his lost dog. Musharraf found the dog and restored dog to Parvez without knowing of reward. Can Musharraf claim the reward?

Ans: Musharraf cannot claim the reward as he was not aware of the reward. According to the Indian Contract Act, an offer can be accepted only by a person who knows of it. As Musharraf has no knowledge of the offer of reward before finding the dog, he is not entitled to the reward. This principle was states in Lalman Vs. Guri Dutt. 3. Waseem offered to sell his house to Pasha for Rs. 10 lakhs. Pasha accepted the offer by post. On the next day Pasha sent a telegram withdrawing the acceptance which reached Waseem before the letter. Is the revocation of acceptance is valid? Would it make any difference if both, the letter communicating acceptance and the telegram communicating revocation of acceptance reach Waseem at the same time? Ans: Yes. The revocation of acceptance is valid. If the letter of acceptance and the telegram cancelling acceptance reach at the same time, which of the two is opened first decides the issue. Usually the telegram is likely to be opened first and as such revocation of acceptance shall be valid. 4. Khusro offers by a letter to sell his television to Safi for Rs.10,000. Safi at the same time offers by a letter to buy Khusros television for Rs.10,000. The two letters cross each other in the post. Is there a contract between Khusro and Safi? Ans: No. There is no contract between A and B for both of them have made only offers, there has been no acceptance. 5. Khurram offers to sell his bike to Naveed for Rs.20,000. Naveed offers to buy it for Rs. 18,000. Khurram refuses to sell. Naveed then says to Khurram; I accept your offer and shall purchase the bike for Rs.20,000. Is Khurram bound to sell the cycle to Naveed for Rs.20,000? Ans: Naveeds acceptance is a counter-offer. Khurram is not bound to sell the cycle. This principle was confirmed in Hyde Vs Wrench case. Consideration 1. Johnny offered a reward to any one who would rescue his wife dead or alive from burning building. A fireman risking his life brought out the wifes dead body. Is he entitled to recover the reward? Ans: Yes. In this case the fireman took an extra risk of endangering (putting in danger) his life, which does not fall in his normal duties in connection with rescue operations. As such the consideration is not illusory and the fireman is entitled to the reward. 2. Vivek promised to Mukesh, his newphew, a reward of Rs.2,000 if he restrains from smoking for two years. Mukesh does so. Is he entitled to the reward? Ans: Yes. Mukesh is entitled to the reward from his uncle. In this case, Mukesh at the desire of Vivek restrained from smoking for two years. This is a valid consideration in the form of an act of abstinence. 3. Dharam, out of his free will offers to sell to Karam, his watch worth Rs.500 for Rs.50 only. Karam accepts the offer. On Dharams refusal to perform his promise, Karam files a suit against him for breach of contract. Dharam pleads inadequacy of consideration for breach of consideration. Will Dharam succeed? Decide giving reasons. Ans: Daram will not succeed. As long as the consideration is of some value it is not necessary that it should be adequate. That is a matter for the parties themselves to settle when entering into a contract. In this case, Dharams offer to sell his watch to Karam for Rs. 50 has been accepted by Karam and then an agreement has been arrived at. The court will never interfere on the ground of the inadequacy of consideration unless fraud is proved or the contract is in restraint of trade.

4. Abhishek, the only son of Amitabh, fell into river and Vivek saved him. Amitabh, in gratitude, made an oral promise to pay Vivek Rs.5,000. But Amitabh died before making any payment. Vivek claims Rs.5,000 from Abhishek. Will Vivek succeed? Give reasons. Ans: Yes. It is a promise to pay for voluntary services. The legal representative is bound to pay as no contrary intention appears from the contract. 5. Ram and Shyam, two Hindu brothers, divided the family property between them and agreed at the time of partition that they should contribute a sum of Rs.50,000 in equal shares and invest it in the security of immovable property and pay the interest towards the maintenance of their mother. Can the mother compel her sons to have the amount invested as settled in her favour? Ans: Yes, the mother can compel her sons to invest Rs.50,000 as per agreement and pay her the interest thereon. The rule that a stranger to a contract cannot sue is subject to exceptions in the case of trusts and family settlements. Capacity of Parties 1. Lallan, a minor student was supplied by Bhola with necessary books on credit for Rs.1,000. On Lallans failure to pay the agreed amount, Bhola sues Lallan. Can Bhola recover Rs.1,000? Ans: Yes. Books are necessary for education. Hence, Bhola can recover Rs.1000. However, the liability of Lallan is not personal. Bhola can recover the amount from the estate or property of the minor. 2. A minor fraudulently represented to a money-lender that he was of full sage and obtained a loan of Rs.500. Does the money lender have any right of action against the minor for the money lent, or for damages for fraudulent misrepresentation? Ans: No. The money-lender does not have any right of action against the minor on either of the grounds, because the rule of estoppel does not apply to a minor. Of course, if anything is traceable in the hands of the minor out of the amount of loan so obtained, the court may instruct the minor to restore that thing to the other party on equitable consideration, for minors have no privilege to cheat men. 3. Atul, a minor, borrows Rs.5,000 from B and executes a promissory note for the amount in favour of Bharat. On his attaining majority, the minor executes another promissory note in lieu of the first, which is then cancelled. Is the second promissory note valid? Ans: No, The second promissory note is not valid; for the minors agreement being void ab initio cannot be made valid by subsequent ratification. This principle was laid down in the famous case Mohendra Vs Kailash. 4. Dhoni, a minor, lends Rs.3,000 against a bill of exchange executed in his favour. Is the borrower liable to repay the money? Ans: Yes. The borrower is liable to repay the money, for the minor is allowed by the Law to take benefit under a contract. As per Law a minor can be a payee or a promisee. 5. A grocer supplies monthly rations for six months to Bunty who is aged 17 years. On Buntys failure to pay, he sues him for realisation of his due. Will he succeed? Ans: Yes, for necessaries Buntys property is liable. Free Consent

1. Aamir applied to a banker for a loan at a time when India is passing through a period of recession (depression). The banker agrees to make the loan only at an unusually high rate of interest. Aamir accepts the loan in these terms. Subsequently Aamir pleads that the contract has been procured by exercising undue influence. Will this plea succeed? Ans: No. This is a transaction in the ordinary course of business and the contract is not induced by undue influence. 2. Kumble agrees to buy a motor car from Yuvraj for Rs.50,000 and pays half the purchase price in advance. Unknown to both the parties at the time of making contract, the car had been destroyed by an accident, Advise Kumble. Ans: Kumble is advised to treat the contract as void. He has a right to take back Rs.25,000, that is, half of the purchase price paid in advance. According to Section 20 of the Indian Contract Act, an agreement is void if both the parties to it are under a mistake as to a matter of fact essential to the agreement. 3. Salman was suffering from some disease and was in great pain. A doctor agreed to treat him provided he signed a promissory note for Rs.8,000. Salman did so. After recovery he refused to honour the promissory note. Decide whether he can refuse. Ans: Yes, Salman can refuse as undue influence was used by the doctor. Salam feared that if he did not sign then the doctor may not treat him. That was the reason why she signed. This case comes under undue influence. 4. Maria, falsely representing herself as the wife of a millionaire takes a ring from a jewellers shop for the approval of her husband. She pledges it with a pawn broker who in good faith and without notice of the fraud pays her Rs.1,000. Can the jeweller recover the ring from the pawn broker? Ans: The ring cannot be recovered from the pawn broker. The jeweller intended to contract with the person present before him. He was not mistaken about his identity but only about his attributes. His intention was to sell to the person present i.e., there was consent, but it was vitiated by fraud. Hence the contract is voidable and not void. In case of a voidable contract, before it is repudiated, one can pass a good title to the pledge or purchaser in good faith. Thus, in the instant case, the pledge is valid. (Philips Vs Brooks) 5. Shah Rukh buys from Saif a painting which both believe to be the work of an old master and for which Shah Rukh pays a high price. The painting turns out to be only a modern copy. Discuss the validity of the contract? Ans: The contract is absolutely void as there is mutual mistake of both the parties as to the substance or quality of the subject-matter going to the very root of the contract. In case of bilateral mistake of essential fact, the agreement is void ab initio.

Legality of the Object 1. Dilip, while his wife Meena was alive, promised to marry Tina in the event of the Meenas death. Subsequently, Meena died but Dilip refused to marry. Tina sues Dilip for damage for breach of promise. Decide.

Ans: Tina will not succeed because an agreement for future marriage, after the death of first wife is against good public morals and hence illegal and void. (Wilson Vs Carnley) 2. Rafe promises to pay a certain amount to Nafe who is intended witness in a suit against Rafe, in consideration of Nafe absenting himself at the trial (case proceedings). Nafe absents but fails to get the money. Can he recover? Ans: Nafe cannot recover the money because an agreement which tends to create a conflict between interest and duty is illegal and void opposed to public policy. 3. Rahul, paid Rs.1,00,000 to Pavan who agreed to obtain a seat for Rahul in a medical college. On Pavans failure to get the seat, Rahul filed a suit for the refund of money. Can Rahul recover the money from Pavan? Ans: The agreement was void as it was against public policy. Hence, Rahul cannot recover the money. 4. Vicky borrowed Rs.10,000 from Steve for starting a gambling house. Afterwards he refused to return the money. What is the remedy available to Steve? Ans: Steve cannot recover the money if he knows the purpose for which Vicky borrowed money; he can recover if he does not know the purpose. 5. Flintoff advances Rs.5,000 to Kate, a married woman, to enable her to obtain a divorce from her husband. Kate agrees to marry Flintoff as soon as she obtained a divorce. Kate obtains the divorcee but refuses to marry Flintoff. Can Flintoff recover the amount? Ans: No, Flintoff cannot recover the amount as it is against public policy. (Tikyat Vs Manohar) UNIT II Quasi-contract 1. Abdul, a tradesman, sends some goods ordered by Shoaib. Abduls servant delivers the goods by mistake at Malliks house. Mallik uses the goods. Can Abdul recover the price of the goods from Mallik? Ans: Abdul can recover the price of the gods from Mallik. 2. Is a claim enforceable on the ground of quantum meruit in the following cases? a) Altaf is engaged by Pasha to write a book to be published by instalments in a weekly magazine. The magazine is abandoned after a few issues. b) Anand is employed as a managing director in a company. After he renders service for some time it is found that the directors were not qualified to appoint him as such. c) Anees undertakes to build a house for Ghouse for Rs.70,000, but after having done half the work he abandons the contract. Ghouse afterwards completes the house. d) Ashok decorates Rahuls flat and fits a wardrobe and a book-case for a lump-sum of Rs.15,000. The work is done but Rahul complaints of faulty workmanship. Ans: In case a) Altaf can recover on quantum meruit for the work done by him under the contract and the services rendered by him. (Planche Vs. Colburn) b) Anand can recover on quantum meruit for the work done by him under the contract and the services rendered by him. (Carven Ellis Vs Canons Ltd.)

c) Anees cannot recover the value of the part that he has completed as the contract is indivisible (Sumpter Vs Hedges) d) Ashok can recover Rs.15,000 less the cost to remedy the faulty workmanship (Hoenig Vs Issacs) 3. Alyana supplied rice and wheat to the wife and children of Zayed who is a lunatic. Zayed has assests worth one lakh of rupees. (i) On non-payment, can Alyana proceed against the assets of Zayed? (ii) Would your answer be same, if Zayed instead of being a lunatic, were a minor? Ans: (i) Yes. According to law the necessaries supplied to a lunatic can be recovered from his estate, (ii) Yes, the answer will remain same. The necessaries supplied to a minor can be recovered from his estate. Though any agreement with the minor is void ab initio, supply of necessaries comes under the exceptions. 4. John left his carriage on Akshays premises. Akshays landlord seized the carriage as distress for rent. John paid the rent to obtain the release of his carriage. Can John recover the amount from Akshay? Ans: Yes, John can recover from Akshay. According to Sec.69, a person who is interested in the payment of money which another is bound by law, and who therefore pays it, is entitled to be reimbursed by the other. 5. Khan voluntarily renders substantial assistance to Mir whose house has caught fire. Can Khan claim any compensation from Mir for such assistance? Ans: No, Khan cannot claim any compensation from Mir unless the circumstances show that he did not intend to act gratuitously. Contingent Contract 1. Arvind agrees to construct a swimming pool for Bajaj for Rs.5,00,000. The payment is to be made by Bajaj only on the completion of the pool. Is this a contingent contract? Ans: This is not a contingent contract as the completion of the work being the way very thing contracted for, is not collateral to the contract. 2. Anthony agrees to pay Johnny a sum of money if Johnny marries Maria marries David. Advise Johnny Ans: When Maria marries David, the marriage of Johnny to Maria must now be considered impossible, although it is possible that David may die and Maria may afterwards marry Johnny. The contract, till this contingency happen, stands discharged and Johnny cannot recover the amount from Anthony 3. Sonia agrees to pay Man Mohan a sum of money if certain ship does not return the ship is sunk. Sonia refuses to pay. Advise Man Mohan. Ans: Man Mohan can enforce the contract when the ship sinks. 4. Shuja agrees to pay Imran a sum of money if Imran marries Zeba. Zeba marries Fardeen, subsequently Fardeen dies and Zeba marries Imran IS Shuja the legally bound to pay the agreed sum? Ans: Shuja is not liable to pay when Zeba marries Fardeen because in that case the marriage of Imran with Zerba must be considered impossible. If no time is specified and Zeba marries Imran, Shuja is bound to pay

5. Saleem promises to pay Abdul Baseer for his services whatever Saleem himself will think right or reasonable Later, being dissatisfied with the payment made, Abdul Baseer sues Saleem. Decide. Ans: Abdul Baseers suit will not be admitted by the Court because if the performance of a promise is contingent upon the mere will and pleasure of the promisor, there is no contract the rule of law being Agreements, the meaning of which is not certain or capable of being made certain, are void. Performance of the contract 1. Abdul, Mateen, and Pasha are under Joint promise to pay Rs.3,000 to Imran. Pasha being an insolvent, is unable to pay anything. Mateen, although solvent, does not pay anything to Imran Abdul is, however, compelled to pay the whole amount to Imran. Is Abdul entitled to receive Rs.1,500 or Rs1,000 from B by way of contribution? Ans: According to Sec 43 of the Contract Act, where one of the Joint promisors discharges the obligation, he is entitled to receive equal contribution from others, and in case of default of any Joint promisor to pay his contribution, the remaining Joint promisors are required to bear the loss on account of such default here, in this problem Abdul is entitled to receive Rs1,500 from Mateen by way of Contribution. 2. Asif, Rizwan, and Safi jointly lent Rs.3,000 to Rahath. Asif dies. Rizwan and Safi file a suit against Rahath for recovery of money lent. Will they succeed? Ans: According to Sec.45 of the Contract Act, when a person has made a promise to two or more persons jointly, the right to claim performance rests, after the death of any of them with the representatives of such deceased person jointly with the survivors. In the given problem, therefore, the suit would have been filed by Asifs representative, Rizwan and Safi. Only Rizwan and Safi cannot file a suit against Rahath. 3. N. F. Hussain promises to paint a picture for Madhuri by a certain say on payment of Rs.90 lakhs. Hussain dies before that date Can this contract be enforced by Hussains representatives or by Madhuri? Ans: The contract cannot be enforced either by Hussains representative or by Madhuri Contracts involving personal skill come to an end when the promisor dies. His heir or legal representatives are not bound to perform such contracts 4. Mushtaq owes Wasi a sum of Rs.50,000. Zafar, who is Mushtaqs friend, pays to Wasi Rs. 40,000. Wasi accepts the amount in full satisfaction of his claim against Mushtaq. Will this payment discharges Mushtaq from the whole debt? Ans: Yes, the payment by Zafar to Wasi discharges Mushtaq from the whole debt. Section 41 lays down that if a promise accepts performance of the promise from a third person, the promisor is discharged 5. Amar borrows Rs.30,000 from Ravi, Prasad, and Sharma. When debt becomes due Amar tenders it to Ravi who accepts it. Is Amar discharged by the payment? Ans: Amar is not discharged by the payment because under the terms of section 45 a payment to one of several joint promises does not operate as a complete discharge of debt. (Govindlal Vs Firm Thakurdas) Discharge of contract

1. The unloading of a ship was delayed beyond the date agreed with the ship-owners owing to a strike of dock labourers. On a suit by the ship-owners for damages, the plea of impossibility of performance was raised advise the ship-owners. Ans: The ship-owners are bound to succeed in the suit. Strike by workmen renders performance only difficult or expensive and not impossible and as such it is not covered under the doctrine of supervening (subsequent) impossibility. 2. A wine merchant contract to sell to a customer five dozen bottles of a particular brand of Champagne. At the time of the contract the wine merchants whole stock of wine had been destroyed by fire, but he was not aware of this fact. What is the effect on the legal rights of the parties? Ans: The legal rights of the parties remain unaffected. It is only the destruction of specific subjectmatter which cannot be replaced, that the contract is discharged under impossibility. As it is not so here and the bottles can be procured from somewhere else, the wine merchant is bound to supply. 3. An existing mortgage was discharged by the substitution of a new agreement of mortgage the new agreement could not be registered and hence, it was not enforceable. Could parties fall back upon the original contract? Ans: Yes. In novation if for any reason the new contract cannot be enforced, the parties can fall back upon the old contract. The principle was confirmed in the case Shankar Lal Damodar Vs Ambalal Ajaipal 4. In July, 1989 Radhey Shyam entered into a contract with Raja Ram to build a house for a fixed sum of Rs. 10,00,000. Owing to unexpected shortage of skilled labour and of certain materials, the contract took 24 months to complete instead of the 12 months expected and cost about Rs.12,50,000. Radhey Shyam contended (argued) that the contract had been frustrated and that he was entitled for the cost actually incurred. Advise Raja Ram. Ans: The doctrine of supervening impossibility does not apply in this case the present case is that of more difficult and not of impossibility 5. Anokha contracted to supply Sayana a certain quantity of Finland Birch Timber to be delivered at Bombay from July to October 1939 no deliveries were made before September 1939 when World War II broke out. Transport was disorganised and Anokha could not get any timber from Finland. Is Anokha discharged from his obligation? Ans: No Anokha is not discharged from his obligation (Blackburn Bobbin Co. Vs Allen & Sons)

Remedies for Breach of Contract 1. Alisha, a singer enters into a contract with Chopra, the manager of a theatre, to sing at his theatre for two nights in every week during the next two months Chopra agrees to pay Rs.600 for singing day. On the sixth day, Alisha wilfully absents herself from the theatre. Advice Chopra. Ans: In the above circumstances, Chopra shall be entitles to two-way remedy (a) right if rescission and (b) right to claim damages. Since, as per facts, Alisha wilfully abstained herself, Chopra shall be within his right to rescind the contract. In such circumstances, Sec.75 of the Indian Contract Act provides that a person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained for non-fulfilment of the contract. Chopra shall, therefore, be entitled not only to rescind the contract but also claim compensation for the damages which he has sustained through the nonfulfilment of the contract

2. Sadat contracts to pay a sum of money to Aakhil on a specified day. Sadat does not pay the amount on that day. Aakhil in consequence of not receiving the money on that day, is unable to pay his debts and is totally ruined. Aakhil claims heavy damages. Advise Sadat. Ans: Sadat is liable to pay interest only from the specified day up to the date of payment. In other words Aakhil can claim only ordinary damages. Aakhil cannot claim heavy damages unless Sadat had notice of the special circumstances resulting in the special loss at the time of entering into the contract. (Hadley Vs Baxendale) 3. Vajid employs Nadeem as manager of his factory for a term of three years at a monthly salary of Rs. 15,000 Without any lapse on the part of Nadeem, Vajid dismiss him after two tears of service Nadeem could not get an alternate job elsewhere and files a suit for damages for breach of contract against Vajid. Will he succeed? If yes, assess the amount of damages recoverable by him. Ans: Yes, Nadeem will succeed. If it cannot be proved that Nadeem has failed in his duty to mitigate the loss subsequent upon the breach, Nadeem will be entitled to full salary for the whole of the unexpired period of service i.e., one year. Hence the amount of damages recoverable by Nadeem amounts to Rs. 1,80,000. 4. The wife of a person died from tin poisoning caused by the tinned salmon (fish) bought from a dealer. What damages can the husband claim? Ans: The husband can rescind the contract and claim damages incurred by employing extra servants by reason of the loss of his wifes services, medical expenses during her illness and pecuniary (Financial) loss occasioned by her death. 5. Sanjeev agreed to act as sales manager for Company XYZ for a period of three years at a monthly salary of Rs.10,000. Sanjeev worked for six months and then left and joined another company at a higher salary what are the rights of Company XYZ? Ans: Company XYZ may not only treat the contract as rescinded but also bring suit against Sanjeev to recover any monetary loss suffered by it as a result of breach.

UNIT III Contracts of Indemnity and Guarantee 1. Ali is employed as cashier on a salary of Rs.2,000 a month by a bank for a period of three years, Chand standing surety for Alis good conduct. Ten months afterwards, when the financial position of the bank deteriorates (get worse), Ali agrees to accept a lower salary of Rs.1,500 a month. Two months later it is discovered that Ali has been misappropriating cash all through. What is the liability of Chand? Ans: Chand is liable as a surety for the loss suffered by the bank due to misappropriations by Ali during the first 10 months but not for misappropriation committed after the reduction in salary.

2. Ateeq advances Rs.5000 to a minor, Hussain on the guarantee of Isaac. On demand for repayment, the borrower pleads minority. Can Ateeq recover the amount from Isaac? Ans: Yes, The surety in such case will be taken as principle debtor. The contract with the surety is not collateral but a principal contract. In this case, Isaac is liable to Ateeq as Hussain is a minor. 3. Pasha employs Adil, to beat Tarun and agrees to indemnify him against all the consequences of the act. Adil, therefore, beats and has to pay damages to Tarun for doing so. Is Pasha liable to indemnify Adil? Ans: Pasha is not liable to indemnify Adil because the object of the agreement is illegal. 4. Chantu and Bantu go into a shop. Chantu says to the shopkeeper, Let Bantu have the goods and if he does not pay, I will What kind of contract is this? Would it make any difference in your answer if Chantu had said to the shopkeeper, Let Bantu have the goods. I will see you will be paid? Ans: The first contract is one of guarantee. Where as the second contract is the contract of Indemnity. 5. Askar contracted to buy from Chisti 100 bales of cotton at Rs.5,000 per bale for the March, 1991 delivery. The performance of this contract by Chisti was guaranteed by Saleem. Soon after, Askar contracted to sell to Chisti 10 bales of cotton of the same kind at Rs.6,000 per bale, for the same delivery. Is Saleem discharged from his guarantee? Ans: No, as the second agreement is an independent one. The guarantee given by Saleem was for only a specific event and is called as Specific Guarantee, and it was not a Continuing Guarantee. If Saleem would have given guarantee for new contract between Askar and Chisti, then he would have not been discharged. Bailment and Pledge 1. Bilal lends his motorcar to Zaid for a drive by him only. Zaid allows his son Abdullah, who is an expert car driver, to drive the vehicle. Abdullah drives carefully but the axle suddenly breaks and the car is damaged. Is Zaid liable for the damage? Ans: Yes, Zaid is liable for the damage to Bilals car, since the use of the car by Abdullah was unauthorised According to Sec.153 of the Indian Contract Act, if the bailee makes an unauthorised use of goods bailed, he is liable for compensation to the bailor even if he is not guilty of any negligence. If the bailee makes an unauthorised use, his responsibility becomes like that of an insurer. In this case A lends the car for driving by Zaid only. If Abdullah drives the car, this is an unauthorised use of the car bailed. So Zaid is liable for any loss to the car. 2. A white tiger was entrusted by Pollock to the railway for carriage. The cage broke by jolts received during the journey and the tiger escaped. It killed a bullock belonging to Jack and was almost immediately crushed by the engine. If the railway administration liable to pay loss to Pollock and Jack? Ans: The railway administration is liable neither to Pollock nor to Jack. The cage broke by jolts. The cage is given by the owner. It could not bear the Jolts of a railway journey. If a loss occurs to third party on account of no fault of railways, the Railway Administration is not liable to third party also. 3. Umar enters a restaurant for dining his bad containing some important documents was taken by a waiter at the gate, who placed it at shelf behind Umar. After having his dinner when Umar rose to leave, the bag was gone. Umar wants the proprietor of the restaurant liable for the loss. Decide. Ans: Umar can hold the proprietor liable for the loss on account of his failure to take a reasonable care According to Section 151 of the Indian Contract Act, the bailee must take reasonable care of the goods

bailed if they (goods) are lost or damaged due to negligence, the bailor ca claim compensation. The act of the waiter mounted to bailment. Umar handed over the bag to the waiter with an implied instruction to return him the bag after he has dined.. It imposed a responsibility on the proprietor also. Hence, the proprietor is responsible for the loss. 4. George, who wanted to attend a cinema, left his car in Bushs grounds after having paid a rupee and obtained a car parking ticket He returned from the cinema and found that the car had been stolen by someone George sued Bush as bailee for negligence. Decide. Ans: Georges suit against Bush would succeed. In this case George left his car in Bushs grounds after having paid a rupee and obtaining a car-parking ticket . It is thus a case of non-gratuitous bailment. According to law the bailee must take reasonable care of the goods bailed with him. If he is negligent, he is liable for damages. The car can be lifted from a regular car-parking point only if the watchman is negligent. The bailee is therefore, liable to make good the bailors loss. Hence, Georges suit against Bush would succeed. 5. Afridi lends a book to Gul and Gul promises to return it one week before the University Examination, which both Afridi and Gul are to take. Gul does not return the book inspite of Afridis repeated demands till the examination is over Afridi sues Gul for breach of contract and claims damages for the inconvenience caused to him. Gul pleads absence of consideration for his promise to return the book to Afridi. Decide. Ans: Guls plea of absence of consideration is not valid. Gul is also liable to compensate. Afridi for the inconvenience suffered by Afridi. The detriment (loss/harm) suffered by Afridi in parting with the possession of the book is a sufficient consideration to support the contract of bailment. Law of Agency 1. Sajjad holds a lease from Afsar terminable on three months notice. Ghafoor without Afsars authority, gives notice of termination to Sajjad. Afsar ratifies the notice and files a suit for eviction. Is Afsar entitled to get a decree (decree is the part of courts order) Ans: No, Afsar is not entitled to get a decree in the suit of eviction, since ratification in this case would amount to the termination of Sajjads right to hold a lease. 2. Jeelani was given power of attorney by Azmath to manage his business. Jeelani had to leave the place and he authorised his son Nazeer to look after the business. Nazeer had a power from his father. He entered into a contract in the name of Azmath and signed the same. Discuss the rights and liabilities. Ans: In this case, Azmath is the principal and Jeelani is the agent. Generally an agent cannot delegate his power to another without the knowledge of the principal, Jeelani engaged his son Nazeer as his agent without the knowledge and consent of Azmath. So Nazeer is an improperly appointed sub-agent. So the principal Azmath is not responsible. 3. Yash, without Chopras authority, lends Chopras money to Aditya. Afterwards Chopra accepts interest on the money from Aditya Discuss the rights of Yash, Chopra and Aditya. Ans: The acceptance of interest by Chopra amounts to implied ratification by Chopra of Yashs act of lending money. Hence, the contract entered by Yash would be a valid contract. 4. Pathan appoints Irfan, a minor, to sell his bicycle for cash for a price not below Rs.1,000. Irfan sells it to Mir for Rs.800. explain the position of Irfan and Mir.

Ans: Mir gets good title to the bicycle. Irfan is not liable to Pathan for his negligence in the performance of his duties. 5. Parvez instructed his agent Sadat to sell a picture at a specified price. Parvez died. Afterwards , before the fact of his death became known to Sadat, Sadat sold and delivered the picture. Was this sale binding on Parvezs executors. Ans: Yes, as the revocation of Sadats authority on the death of Parvez takes effect from the time the death of Parvez becomes known to Sadat. UNIT IV Sale of Goods Act 1. Anmol purchases some chocolates from a shop. One of the chocolate contains a poisonous matter and as a result Anmols wife has eaten it falls seriously ill. What remedy is available to Anmol against the shop-keeper? Ans: The chocolates are not of merchantable quality as they contain poisonous matter. Hence, Anmol can repudiate the contract and recover damages. It is a case of breach of implied condition of merchantability of goods. 2. Ashok sells a horse to Bharat. When Bharat goes with the horse he is arrested by the police on the charge of keeping stolen property as the horse belongs to Chetan. Can Bharat sue Ashok and if so, on what basis and what damages can he recover. Ans: There is breach of condition as to the title of goods. Bharat can consider the contract as repudiated and claim for recovery of price paid and also claim damages of loss suffered. (Rowland Vs Divall) 3. Abdul purchases a typewriter from Hassan on Hassans plea that though it is old, it is in excellent condition. Abdul finds later that the type-writer does not work at all. Can he reject the type-writer and recover his money? Ans: Goods should correspond with description if it is sold by description. Here there is breach of an implied condition of correspondence of the goods with the description. Buyer is entitled to reject the type-writer and treat the contract as repudiated. 4. Taqi sends certain good to Ahmed on approval. Taqi does not return them or ask the seller to take them away for 8 months. Is Ahmed bound to pay for the goods? Ans: Ahmed is bound to pay. Although no time has been agreed for return of goods, these should have been returned within a reasonable time. The period of 8 months is more than reasonable to convey his decision to buy or reject the goods. Ahmeds act was such which gives presumption that he has accepted the goods. 5. Certain articles of furniture were delivered by a dealer to Bahadur on sale or return within a week. Three days after, two of Bahadurs creditors in execution of a decree seized the articles. The dealer claims his good. Decide. Ans: The dealer can claim his goods and creditors must return because Bahadur was not the owner of goods. There was no transfer of ownership because fixed time of one week had not passed and the goods remained the property of the dealer. Consumer Protection Act

1. A doctor purchased a car for his personal use. Can the doctor be treated as consumer as per the Consumer Protection Act? Ans: According to Consumer Protection Act, 1986, the buyer of goods for a consideration is a consumer. The consideration may be either paid or promised or partly paid and partly promised or under a system of deferred payment. But according to Section 2 (d) (1) of the Act, the term Consumer does not include a person who obtains or purchases goods for resale or for any commercial purpose. In this case, the doctor purchased the car for his personal use but not for resale or for any commercial purpose. Hence, the doctor can be treated as a consumer as per the Consumer Protection Act. 2. Asif issued a cheque on Andhra Bank to Mateen for Rs.10,000 in settlement of debt due to Mateen. Andhra Bank dishonoured the cheque despite sufficient balance in Asifs account. Is Asif entitled for compensation? Ans: Dishonour of a cheque by the bank despite sufficient balance in the account of Asif is gross negligence and amounts to Deficiency in Service. So, Asif is entitled for compensation under the Consumer Protection Act also. 3. A doctor was providing free medical aid to patients I his clinic. Can the patients be treated as consumers? Give reasons. Ans: According to the information provided, the patients who have been provided free medical services or aid cannot be treated as consumers. Under the Consumer Protection Act, 1986, the services must have been provided or hired for consideration only. Hence, free service availed by patients will not make them consumers. 4. Krishna, a retailer purchased goods which were later found to be defective. He wants to claim compensation as consumer for defect in goods. Is he entitled to claim compensation as consumer? Give reasons for your answer. Ans: Krishna, who purchased goods for re sale, cannot be regarded as a consumer according to Sec. 2 (d) (1) of the Consumer Protection Act. He purchased the good for re-sale or for commercial purpose. Hence, he is not entitled to claim compensation as consumer. 5. A car dealer repaired the damaged car and supplied it as a new car to a consumer. What type of action the consumer is entitled to take on car dealer? Ans: It is an Unfair Trade Practice followed by the seller. The consumer is entitled to get protection under Consumer Protection Act. The Act provides the protection of the interests of consumers against unfair trade practices by providing specific remedies to compensate the loss suffered by the consumer. UNIT V Companies Act, 1956 1. During the war all the members of a private company, while in a general meeting were killed by a bomb. Does the company cease to exist because all the members died? State reasons. Ans: No. The company has a perpetual succession. The company is/was started by the law and it will be closed or cease to exist by the law. The member may die or retire, the directors may die or retire, the managing director may die or retire, and the managers may die or retire, the company will never die or cease to exist, until the law closes it.

2. A bank had power in the Articles to issue bonds under the authority of an ordinary resolution. The directors issued bonds to Turquand without the requisite resolution. Turquand sued the company for the recovery of the money under the bonds. The suit was resisted on the grounds that there was no requisite resolution of the company. Will Turquand succeed? Ans: Yes. Turquand could recover the amount of the bond from the company on the ground that he was entitled to assume that the resolution had been passed. 3. Three persons were appointed as directors of a company by a single resolution. A member, who did not object to this in the meeting, later filed a complaint to Magistrate under Sec.626-A of the Companies Act, who sentenced them to a fine of Rs.250 each and in default 15 days simple imprisonment. The directors appealed against the conviction. Decide. Ans: Sec 629-A provides for penalty in case of offences where no specific remedy is provided elsewhere in the Act. The appointment of 2 or more persons as directors by a single resolution is void. The decision of the Magistrate is correct and the appeal of the directors against the conviction will be set aside. 4. The Secretary of a company purchased some stationery for the company but he took it home and put it to his private use. The company refused to pay to the supplier of the stationery on the plea that it never received the stationery. Is the company liable? Ans: Yes, the company is liable. 5. Sameer, a shareholder, after appointing Praful as his proxy at a meeting of the company, himself attended the meeting and voted on a particular resolution. Praful, thereafter, claimed to exercise his vote. Examine his claim. Ans: Prafuls claim is invalid. He was proxy for Sameer. When Sameer himself attended and performed his right then there can be no claim from Prafuls side. 6. Default has been made in holding the annual general meeting of a company more than 18 months having lapsed since the date of the last such meeting. What can be done in the circumstances by a member who wishes that the meeting should be held? Ans: He may apply to the Company Law Board which may call or direct the calling of a general meeting of the company. 7. Amar takes proceedings against the directors of a company of which he is a member to compel them to make good the losses sustained by the company owing to their fraud. Will he succeed? Ans: No. The company can itself take proceedings if it thinks fit to do so far. The majority of members supported the directors. As the company can act only thorough its majority shareholder Amar will not succeed with his proceedings. (Foss Vs Harbottle) 8. A companys trade has been suspended temporarily owing to the trade depression with Bona fide intention to continue its operations when conditions improve. A petition was made to the Court for winding up the company. Decide. Ans: The court will dismiss the petition as in such circumstances it does not consider it just and equitable to order winding up of the company. 9. There is a persistent violation of the regulations and the Statute, and an appeal to the general body of shareholders is not likely to put an end to it on account of the fact that those responsible for violations are in control. The aggrieved shareholders file an application for winding-up. Decide.

Ans: The court will order the winding up of the company on just and equitable ground. 10. An application was made by a father as guardian of his minor daughter for shares and the company registered the shares in the name of the daughter describing her as minor. The company went into liquidation and the father of the minor was placed on the list of contributories. The father resists this. Decide. Ans: The father cannot be placed on the list of contributories. 11. Under the Articles, the directors of a company had power to borrow up to Rs.10,000 without the consent of the shareholders. The directors themselves lent Rs.35,000 to the company without any consent of shareholders and took debentures. Is the company liable for Rs.35,000? Ans: The company is liable only for Rs.10,000. As the shareholder have not given their consent for Rs.35,000. they are not liable for the same. 12.The board of directors of ABX Ltd. Met only 3 times in the previous year. A fourth meeting was adjourned twice for lack of quorum. Does this constitute a violation Sec 285? Ans: No. According to Sec.288, If a meeting of the Board cannot be held for want of quorum, it shall automatically stand adjourned till the same day in the next week, at the same time and place unless the Articles provide otherwise. If the day in the next week happens to be a public holiday, the adjourned meeting shall be held on the day following the public holiday. 13. The shareholders of a company duly called upon the managing director to convene a meeting of the company at which they wanted to move a motion removing the managing director from his post. The managing director failed to oblige them, so the shareholders themselves met at a place other than the registered office of the company and by a resolution removed the managing director from his post. Is the resolution validity passed? Ans: Yes, provided the meeting is held within 3 months from the date of the deposit of requisition by the requisitionists.