CBSE Textbook Solutions: Law of Contract | Legal Studies for Class 12 - Humanities/Arts PDF Download

Based on your understanding, answer the following questions: 

Q1. Ramesh sells his bike to his friend Suresh for a consideration of Rs. 50,000/ -, whereas the market price of the said bike is Rs. 65,000/ -. Examine if the agreement is enforceable under Law of Contrcat. 
Ans: Ramesh sells his bike to Suresh for Rs. 50,000, while the market price is Rs. 65,000. To determine if the agreement is enforceable under the Law of Contracts, we need to consider several factors:

• Consideration: According to the Indian Contract Act, 1872, a contract must have a lawful consideration. In this case, the consideration is Rs. 50,000. Although this amount is less than the market price, it does not render the contract void as long as the consideration is real and lawful.
• Free Consent: For a contract to be enforceable, both parties must consent freely. If Ramesh voluntarily agreed to sell the bike at this price without any coercion, undue influence, or misrepresentation, the consent is considered free.
• Capacity to Contract: Both Ramesh and Suresh must have the legal capacity to enter into a contract. Assuming both are of legal age and sound mind, this condition is satisfied.
• Legality of Object: The object of the contract (the bike) is legal. Therefore, this condition is also met.

Conclusion
Based on the above analysis, the agreement between Ramesh and Suresh is enforceable under the Law of Contracts. The disparity between the sale price and market price does not invalidate the contract as long as the essential elements of a valid contract are present.

Q2. 'D' , a minor borrowed a sum of money from M by executing a mortgage of his property in favour of M. Subsequently, D sued for cancellation of mortgage. Is the contract of mortgage valid? Can M recover the sum advanced to D? 
Ans: The contract of mortgage executed by 'D', a minor, in favor of 'M' is considered void ab initio under the Indian Contract Act. This principle is well-established in the case of Mohori Bibee v Dharmodas Ghose, where it was held that any agreement made by a minor is void from the beginning. Since both parties were aware of D's minority, the mortgage cannot be enforced.
Recovery of the Sum Advanced
As the mortgage is void, M cannot recover the sum advanced to D. The court in the aforementioned case ruled that a minor cannot be held liable for repayment of a loan taken under a void contract. Therefore, M has no legal grounds to claim the amount lent to D.
Conclusion
In summary, the mortgage contract is invalid due to D's status as a minor, and M cannot recover the sum advanced to D.

Q3. Apexx Chemicals entered into an agreement with Moonled Pharma Itd. to supply them with 16units calcium and 8 units of magnesium powder for its medicine unit. By the time Apexx Chemicals supplied 12 units of calcium and 4 units of magnesium the government restricted free sale of chemicals for life saving drugs. Every dealer was supposed to get his supply sanctioned from the government to a maximum of 10 units of each chemical. Apexx chemicals found it difficult to complete the order of Moonled Pharma Ltd ., Moonled Pharma Ltd. brings a suit for breach of contract against Adarsh Chemicals. Will it succeed? Analyze by referring to relevant provisions. 
Ans: Apexx Chemicals entered into a contract with Moonled Pharma Ltd. to supply 16 units of calcium and 8 units of magnesium powder. However, due to government restrictions limiting the sale of chemicals for life-saving drugs, Apexx was only able to supply 12 units of calcium and 4 units of magnesium.
Relevant Legal Provisions
The key legal principles involved in this scenario include:

• Breach of Contract: A breach occurs when one party fails to fulfill their obligations under the contract.
• Impossibility of Performance: Under Section 56 of the Indian Contract Act, if an agreement becomes impossible to perform, it is void. This could apply here due to the government restrictions.
• Force Majeure: If the contract included a force majeure clause, it may provide relief to Apexx Chemicals, excusing them from liability due to unforeseen circumstances.

Analysis
Given the government restrictions that limited the supply of chemicals, Apexx Chemicals may argue that the contract became impossible to perform as per Section 56 of the Indian Contract Act. They were unable to fulfill the order as originally agreed due to external factors beyond their control.
However, Moonled Pharma Ltd. may argue that Apexx Chemicals should have anticipated such regulatory changes and included provisions in the contract to address potential restrictions. If no such provisions exist, Moonled Pharma may claim damages for the breach.
Conclusion
The success of Moonled Pharma Ltd. in their suit for breach of contract will depend on the specific terms of the contract, including any force majeure clauses, and whether the government restrictions can be classified as an impossibility of performance. If the court finds that the restrictions were unforeseeable and that Apexx acted in good faith, the suit may not succeed.

Q4. X enters into a contract with Y to pay him 10000 rupees if the books are delivered to him by Friday. This is an example of contingent contract. Explain why?
Ans: The contract between X and Y, where X agrees to pay Y 10,000 rupees if the books are delivered by Friday, is an example of a contingent contract. This classification is based on the following characteristics:

• Dependent on a Future Event: The obligation to pay 10,000 rupees is contingent upon the occurrence of a specific event, which is the delivery of the books by a specified date (Friday).
• Uncertain Outcome: The event (delivery of books) is uncertain and may or may not happen, thus creating a condition for the contract's enforceability.
• Reciprocal Promises: Both parties have reciprocal promises; X promises to pay if Y delivers the books, and Y promises to deliver the books.
• Enforceability: If the condition is fulfilled (books are delivered), the contract becomes enforceable, allowing X to claim the payment.

In contrast, if the agreement were merely a wager (where the outcome is uncertain without a reciprocal obligation), it would not be enforceable under the law, as per Section 30 of the Indian Contract Act.