CP 21-1-2013

Meera offered to sell 100 shares of a company to Ram for Rs. 1 lakhs. Ram said, "I accept the offer butI will confirm it tomorrow." Ram was discouraged by his friend from buying the shares. He called upMeera and told her that he was not going to buy the shares. Meera was able to sell the shares the nextday but only for Rs. 85,000. She claims that Ram accepted the offer when he said 'I accept the offer'.Thus, an agreement had been formed between the parties. As Ram has breached the contract, he shouldcompensate her for the loss of Rs. 15,000. Decide.

Not a contract.

Sunil offers to sell his car to Arman on Monday, as he wants to mobilise resources to buy a flat. Armanis still considering the offer. On Wednesday, Sunil gets a good amount of money by selling some of hisshares. He need not sell his car now. The same evening, Sunil informed Arman that the car was no moreavailable for sale. Arman insists that Sunil sells the car to him. Decide.

Not a contract.

~ Case: Auction of Advertisement Space)

Zed Limited owns a shopping mall. It advertised in the newspapers for interested persons to come to itsoffice for an auction of the space available for advertising in the mall. On arriving at the office of ZedLtd, the manager gave all the bidders a sheet containing the terms and conditions of the auction. Theterms included, (1) The selected bidder will deposit one-third of the amount and sign a contract; and(2) The contract will get formed only on the signing of the contract. The manager conducted the auction.The bids were as follows:

Bid 1: Bhuvan: Rs. 1.55Bid 2: Gyan: Rs. 1.56Bid 3: Chanda: Rs. 1.57Bid 4: Dina: Rs. 1.59Bid 5: Chanda: Rs. 1.70Bid 6: Gyan: Rs. 1.90The auctioneer struck the hammer, a convention followed in auctions announcing the closure of bids.

Later, the auctioneer retracted. Gyan claims that a contract had been made between the parties when thehammer was struck. Decide.

(] Case: Supply Order)

Bions Ltd. sent the following communication to Sim Ltd.

'Supply OrderWe are pleased to place an order for supply of the goods at the price and terms quoted by you in yourquotation dated .... For confirmation of the order, kindly meet our procurement manager. Kindlyconfirm acceptance of the purchase order by signing a copy and returning it to us.'

Sim Ltd. sent a signed copy of the Supply Order. After receiving this, the potential buyer sent acommunication to Sim Ltd. that they no more needed the ordered goods and, thus, were withdrawing the

'Supply Order'. A dispute developed between the parties. Sim Ltd. claims that an agreement had beenformed between the parties. Decide.

(] Case: PurchaseOrder)

Following a tender, Maxima Ltd. sent the following communication to Zed Ltd.:

'With reference to your tender dated ... , we are pleased to place the purchase order on you to supplyhundred PCs by December 15. The purchase order is subject to the following requirements:1. Deposit a performance guarantee of Rupees two lakhs.2. Sign a contract document at our office by November 10.Kindly communicate your acceptance of our purchase order by signing and returning a copy of thispurchase order.'

As Zed Ltd. did not come forward to deposit the performance guarantee, Maxima Ltd. awarded thecontract to another vendor. A dispute arose between Maxima Ltd. and Zed Ltd. Zed Ltd. claimed thatthe company's work order constituted an agreement between the parties. Can Maxima Ltd. withdraw ifZed Ltd has not submitted the performance guarantee? Decide.

o Case: Prospecting to Sell Shares)Ajay offered to sell 60 shares of a company to Jeet for Rs. 3 lakhs. Jeet said, "I will get back to you by5.00 PM but you cannot revoke the offer in this while." Ajay said, "Fine." Ajay saw the price of the scripgo up at the stock exchange. Ajay sold the shares to a stockbroker for Rs. 3.5 lakhs. Jeet claims that Ajaywas bound not to withdraw the offer.

How many distinct offers have been made byAjay and Jeet? Identify each offer. How many agreementshave been formed between Ajay and Jeet? Can Ajay withdraw the offer?

Offer and Counter Offer 2 offers1 agreementAjay cannot

1. Ajay was offered the sale of a second hand car for a very reasonable price by a colleague fromoffice. He readily accepted it and added that he would check with his family and confirm. Has anagreement been formed between the parties?

2. An auctioneer is auctioning an antique piece. Raman is the one who has made the last call ofRs. 1500. The auctioneer is trying for a higher price from other bidder. Raman has secondthoughts about the piece. He tells the auctioneer that he is withdrawing his offer. The auctioneerdoes not get a higher bid. He is insisting that Raman takes the piece.

3. A company solicited tenders from persons for putting up displays at an airport. It declared thetendering parties and their bids. At this stage, the person whose bid was the highest withdrewfrom the auction. The company is insisting that the highest bidder accepts the offer.

Contract is formed.

Annan offers to sell 50 shares of a company to Badal for Rs. 1.5 lakhs. Badal says, "No". Five minuteslater. Badal comes back and says, "I accept your offer". In this while, Arman sold off the shares toanother person. Arman and Badal dispute over whether an agreement had been formed between them.Decide.

Rajesh offers to sell 100 shares of a company to Kartik for Rs. 2 lakhs. Kartik shakes his head and walksaway. Five minutes later, Kartik comes back and says, "I accept your offer". In this while, Rajesh soldoff the shares to another person. Rajesh and Kartik dispute over whether an agreement had been formedbetween them. Decide.

Rajiv and Sunil are bargaining over the sale of Rajiv's laptop. Rajiv says, "Rs. 30,000". Sunil says,"25,000". Rajiv says, "28,000". Sunil says, "27,000". Rajiv says, "Accepted". Explore the implicationof each communication.

G Case: Building Contract )Baman Builders Ltd. had bid for a tender for building a swimming pool for a sports body. The sportsbody communicated to Baman Builders an acceptance of their bid. However, in the acceptance letter, thedimensions of the swimming pool were changed and a proportionate increase in the price was allocated.Further, the swimming pool was to be completed in 60 days as opposed to 80 days mentioned in thetender. Has an agreement been formed between the parties? Baman Builders Ltd. declined to go aheadwith both the modified terms as well as the original terms. Are Baman Builders Ltd. justified in doingthi?s.

Void Contract

Shanat offers to sell his computer to Vishal for Rs. 30,000. He tells Vishal that he could think it over andlet him know by 6.00 PM, corning Monday. Vishal calls Shanat on Tuesday evening and says, "I acceptyour offer". Shanat had sold the computer on Tuesday morning to another person. Vishal is demandingthe computer. Decide.

Contract is not formed.

Shanat offers to sell his computer to Vishal for Rs. 30,000, on the phone. Vishal tells him that he willthink it over and let him know. Vishal gets back after six months. In the meanwhile, Shanat had sold the .computer to another person. Vishal is claiming that he has formed an agreement by accepting the offer.Decide

Contract is not formed

Ajay made an offer to Suman, "I offer to sell you 50 shares of Umatics Ltd. for Rs. 2 lakhs. The offer isopen till 5.00 PM, the coming Friday." Ajay revoked the offer at 9.00 AM on Friday morning. Suman, at10.00 PM, claimed to accept the offer. Suman's contention is that by the terms of the offer, Ajay cannotwithdraw the offer. It has to be kept open till 5.00 PM, Friday. Decide.


1. Mahesh offered to sell his camera to Suresh for Rs. 2,200. Mahesh got back to Suresh threemonths later, saying that he was accepting the offer. However, Mahesh had sold off the camerain the meanwhile.

2. A company had made an offer to hire a transport company for a shipment. The acceptance had tocome by 5.00 pm in the evening. The transport company was keen on accepting the offer but gotbusy organising the ship to carry the consignment. It reached the company with its acceptanceonly the next morning.

New Offer


G Case: Communication by Whom? )Dinesh, a dealer in computer accessories, offered to sell 150 pen-drives to Bhanu for Rs. 1.25 lakhs.Bhanu was prospecting with another vendor, Raman. Bhanu told Raman that he had decided to buy fromDinesh. He was going to call him to communicate his acceptance. Raman knew Dinesh well. He calledDinesh and congratulated him for having won the contract. At that time, there was another buyer inDinesh's office who was willing to pay Rs. 1.5 lakhs for the pen-drives. But in the knowledge that Bhanuhad accepted his offer, he declined it. He got a call from Bhanu who told him that he was not interestedin his offer. Bhanu had bought the pen-drives from yet another vendor. Dinesh claims that there was anagreement between them as at one point of time, as communicated to Raman, he had accepted the offer.Decide.

(I Case: Results on the Webpage )JCV India Ltd. is a large manufacturing company. It procures raw materials and plant and machineryfrom everal vendors, through tenders. In a tender notice for supply of electrical appliances, it wasmentioned that the re ult of the tender would be put up on its webpage on January 18. Abhay washappy to see hi name on the webpage of the JCV as a succe sful candidate. He saved the page on hiscomputer. A week later, he received a letter from JCV informing him that his tender had been rejected.Abhay re-visited the webpage and realised that JCV had removed the list from the webpage and hadput up another one. Abhay contends that an agreement had been formed between the parties, while JCVIndia Ltd. disagrees.

Contract is formed

G Case: Acceptance through Email )Aqua-Jet Ltd. sent a letter to Rakesh offering to sell 20 units of water purification units for Rs. 12,000a piece. The offer letter mentioned, "Kindly send your acceptance by email or fax by Tuesday." Rakeshcalled Aqua-Jet on the phone and accepted the offer. Aqua-Jet insisted, as provided in the offer letter, thatthe acceptance comes through fax or email. Rakesh explained that he was travelling and could not sendthe acceptance by fax or em ail. Aqua-Jet told him to send his acceptance by fax or email only. Aqua-Jetreceived no further communication from Rakesh till Tuesday. They sold the machines to another person.Rakesh claims that an agreement had been formed by his acceptance on the phone. According to him,the requirement of sending an email or fax was only a formality. Aqua-Jet contests this.


~ Case:Acceptance by Silence)

Neumatic Ltd. received a written offer from a party selling photocopiers, whose offer ended with thefollowing clause 17: "If we do not hear from you within 15 days, we would understand that you haveaccepted our offer. The photocopier would be delivered to you the next day and the price would bepayable by you within 10days." Neumatic Ltd. did not reply to the letter and the party sent a photocopier,which Neumatic Ltd. did not want. A dispute arose between the parties.

Void ab initio

G Case: Transportation of Goods)Ajeet placed an order for the upply of a merchandise, on a party in Mumbai and was awaiting theacceptance. He got a phone call from a tran porter making enquiries regarding reaching his premises.The tran porter told Ajeet that he had been contracted to deliver the goods. Later, the seller informedAjeet that he wa rejecting the offer. Ajeet contend that an agreement had been reached between theparties when the transporter communicated that he would be delivering the goods. Decide.

Contract is not formed.3rd party involvement

@ Case: Memorandum of Agreement)Secura Ltd. was going to sign a 'Memorandum of Agreement' with a consultant for doing a trainingprogramme for their executives. Secure Ltd. drew up a Memorandum of Association, signed it andsent it to the consultant for signing it. The covering letter stated, "Kindly send a signed copy of the

'Memorandum of Agreement' within 10 days as acceptance of the offer." The consultant called upSecuraLtd. and informed them that he had accepted the offer. However, he failed to send back a signedcopyof the document within ten days. Secura Ltd. is not interested in getting the training programmeconductedby the consultant now. Had an agreement been reached between the parties?


1. Suman made an offer to Baman for undertaking the interior designing of his office. In a visit toBaman's office, Suman saw a letter addressed to him, lying on the table of Baman's secretary.Tue letter communicated an acceptance of the offer. Later, Baman changed his mind and tore offthe letter. The parties contested on the formation of an agreement between them.

2. Shanti Sales gave a quotation for a water cooler for Rs. 12,000 to Industrial Engineers Ltd. TheIndustrial Engineers wrote back to Shanti Sales six months later, accepting the offer. In thiswhile, the price of the product had increased to Rs. 12,500. Shanti Sales is willing to sell, butonly for the new price.

3. A trader made an offer to another trader by email: "We offer to sell 20 cartons of the goods ofthe following description .... for Rs. 15,000. Come with cash to our depot." The trader repliedto the offer, "I accept the offer." In this while, the seller ran out of stock. He sent an email to thepotential buyer, "We revoke the offer made to you by our email yesterday.". Was an agreementformed between the parties? What is the connection between communication and passing ofconsideration?



4. A wholesaler made an offer to a trader by email: "We offer to sell 10 tins of the goods to you,for Rs. 10,000. If interested, come with cash to our depot." The trader reached the depot twodays later. He was told that as they did not get any reply to the email, they sold off the stock.They could deliver from a new stock for Rs. 17,000. Had an agreement been formed between theparties? What is the connection between communication and passing of consideration?

5. A potential buyer, B, made an offer to a potential seller, S, "I am willing to buy the powerstabiliser for Rs. 2,500. If interested, kindly deliver it to my office." S took the power stabiliserto B in the evening. In this while, B had already bought one from another seller for Rs. 2,200. Bcontends that the offer was never accepted by S by making a communication. The parties are indispute on the formation of an agreement. What is the connection between communication andpassing of consideration?

6. A potential buyer, B, made an offer to a potential seller, S, on the phone, "I am willing to buy thepower stabiliser for Rs. 2,500. If interested, kindly deliver it to my office." S replied, "We can sellit only for Rs. 2,700." However, S felt that it was not a bad bargain even for Rs. 2,500. S took thepower stabiliser to B in the evening. In this while, B had already bought one from another seller.The parties are in dispute over the formation of an agreement. What is the connection betweencommunication and passing of consideration?

7. A potential buyer, B, made an offer to a potential seller, S, by email: "I am willing to buy thepower stabiliser for Rs. 2,500. If interested, kindly deliver it to my office." S replied: "We acceptyour offer to buy the power stabiliser. We would be delivering it to you within the next threedays." B responded: "I am glad and await the delivery." The next day, B sent another email toS: "I revoke the offer for the supply of the power stabiliser." The parties are in dispute over theformation of an agreement.

8. A potential buyer, B, made an offer to a potential seller, S, by email: "I am willing to buythe power stabiliser for Rs. 2,500. If interested, kindly deliver it to my office." S replied: "Weaccept your offer to buy the power stabiliser. We would be delivering it to you within the nextthree days." The next day, B sent an email to S: "I revoke the offer for the supply of the powerstabiliser." The parties are in dispute over the formation of an agreement.

9. A potential buyer, B, made an offer to a potential seller, S, by email: "I am willing to buythe power stabiliser for Rs. 2,500. If interested, kindly deliver it to my office." S replied: "Weaccept your offer to buy the power stabiliser. We would be delivering it to you within the nextthree day." B waited for several days but S did not turn up. The parties are in dispute over theformation of an agreement.


Contract is formed




Contract is formed

Documents

CP 21-1-2013