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 whether the agreement is enforceable under the Indian Contract Act, 1872, consider the following points:

• Consideration: There is a lawful consideration of Rs. 50,000. Under the Act, an agreement requires some consideration; however, courts do not normally examine the adequacy of consideration. A contract is not invalid merely because the price agreed is lower than the market value.
• Free Consent: The consent of both parties must be free and not induced by coercion, undue influence, fraud or misrepresentation (see Sections 14-19). If Ramesh voluntarily agreed to sell at Rs. 50,000, the consent is free and valid.
• Capacity to Contract: Both parties must be competent (of sound mind and of the age of majority). Assuming both are competent, this requirement is met.
• Legality of Object: The object of the contract (sale of a bike) is lawful, so the contract's object is valid.

Conclusion
Because there is lawful consideration, free consent, capacity and a legal object, the agreement is enforceable. A lower sale price by itself does not make a contract void unless there is some vitiating factor such as fraud, undue influence, coercion or incapacity.

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 mortgage executed by D, who is a minor, is not valid under the Indian Contract Act, 1872. The leading authority on this point is the decision in Mohori Bibee v. Dharmodas Ghose, where the Privy Council held that any agreement with a minor is void ab initio.

Effect on the Mortgage
The mortgage deed executed by the minor is void from the beginning and therefore unenforceable. A minor cannot be held liable on a contract, whether for money lent or for the transfer of property, because a minor lacks the capacity to contract.

Recovery of the Sum Advanced
Because the contract is void, M has no personal remedy against D to recover the loan amount under that void agreement. The lender cannot enforce the mortgage or claim repayment from the minor on the basis of the void contract.

Limited Exceptions and Practical Points
1. If the money was advanced for the maintenance and education or necessaries of the minor, recovery might be possible under other legal provisions relating to necessaries supplied to a minor (not by way of the void contract itself).
2. If any third party (for example, a guardian) acted or authorised the transaction, separate remedies may arise against those parties, but not against the minor on the basis of the void mortgage.

Conclusion
In short, the mortgage is invalid because D is a minor, and M cannot recover the sum advanced from D under that mortgage contract.

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 contracted to supply 16 units of calcium and 8 units of magnesium but could supply only 12 units of calcium and 4 units of magnesium before a government restriction limited supplies to a maximum of 10 units per dealer. The legal question is whether Apexx is liable for breach or excused from further performance.

Relevant Provision
Section 56 of the Indian Contract Act, 1872 deals with agreements which become impossible to perform or where performance becomes unlawful after the contract is made. If performance of a contract becomes impossible or unlawful due to an intervening event not caused by the promisor, the agreement becomes void and the promisor is excused.

Application to This Case
- The government restriction is a supervening legal limitation that directly affects Apexx's ability to obtain and supply the chemicals beyond the sanctioned limit.
- If Apexx genuinely became unable to procure the remaining quantities because of the statutory restriction, performance of the contract (as originally agreed) has become impossible or unlawful within the meaning of Section 56.
- Apexx should show that the impossibility was not due to any act or negligence on its part and that the restriction was unforeseen and external.

Other Considerations
- If the contract contains a force majeure clause, its terms will determine the rights and obligations of the parties on occurrence of such restrictions.
- If Apexx could reasonably have obtained prior sanction or arranged alternative lawful sources and failed to do so, the court may examine whether Apexx's conduct contributed to the non-performance.
- The identity mismatch in the suit (Moonled suing "Adarsh Chemicals") is a factual error; Moonled must sue the correct contracting party.

Conclusion
On the facts given, Apexx has a strong defence under Section 56: the government restriction makes further performance impossible or unlawful, so Moonled's suit for breach is unlikely to succeed provided Apexx proves that the impossibility was due to the new government order and not due to Apexx's fault. If the contract contained specific clauses governing statutory changes or force majeure, those clauses will control the outcome.

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:

This agreement is a contingent contract because the obligation to pay arises only upon the happening of a future uncertain event - namely, delivery of the books by Friday.

• Dependence on a Future Event: The promise to pay Rs. 10,000 is conditional on a future event that may or may not occur. Until the books are delivered by Friday, there is no enforceable obligation to pay.
• Uncertainty: Whether the books will be delivered by Friday is uncertain at the time of making the contract; hence the contract is contingent on that uncertain event.
• Reciprocal Promises: The parties have reciprocal promises: Y promises to deliver the books, and X promises to pay if that event occurs. This distinguishes the contract from a mere wager because there is an enforceable reciprocal obligation rather than a bet on an uncertain outcome.

Under the Indian Contract Act, such contracts are valid provided the contingent event is lawful and not merely a wager. If the books are delivered by Friday, X must pay Rs. 10,000; if the delivery does not occur, the obligation does not arise.