Taxmann's CRACKER | Business Laws & Business Correspondence and Reporting

NOTE TO STUDENTS

edke l h eo b i al ot fip b p i t a&’ , n n eglo n a di g i i e t e eb c l es e n r n hiin h e t cb l o fi C o h i ‘ s tws e s ’oh i s n t nope s i os a s cv ir i r do ap l rfm u oPso h‘ac e e sh bd rt l e du e l s wi o u sr h os nph a m s h r tp uoI a oc.r d d g yl n a ,u a s r oh e a i h t p d sa uh d y t n pd s o a er u c s t gs e a s a cr ee s ga h a npc T i te. r s e e r hg w fit s ra neeu ahwg T n e.sa s l n i t l a h r h a os Wp t i GUIDANCE FOR ANSWERING CASE STUDIES

e l a n o i t a r e h t t u o s g n i r b h c i h w y d u t s e s a c n e v i g e h t o t e c n e r e f e r d e s i r a m m u s i.e.

-

e g a u g n a l e h t m o r f d e v i r e d y l l a u s u s i t I . n o i s i v o r p d e t a t s e v o b a e h t g n i y l p p a r o f

’d n e ot i a s t us l c e nh ot Cg ‘ n ei y hl t p np i a a t r n e ot cf ta s o ui r ma n he pc as r g e s aa r a c pn te s v a i l eg he t h dt nr ao df rn i w h t a er hd Te .c n n oe i r t e s f e n ui qe eh ht t f o

. y d u t s e s a c e h t n i r o f d e k s a n o i t u l o s e h t r o s e i d e m e r e h t s n i a t n o c t I . s n o i s i v o r p i.e.

y n a M . s h p a r g a r a p t c n i t s i d e e r h t n i s t r a p e e r h t e s e h t e v a h t s u m r e w s n a d o o g A o t e l b a s i v d a s i t I . e l u r s i h t g n i w o l l o f n e v i g n e e b e v a h r e k c a r C e h t n i s r e w s n a

r o f s r e w s n a g n i t i r w f o d o h t e m d e n o i t n e m e v o b a e h t w o l l o f y l d n i k o t s t n e d u t s . l l e w e r o c s o t s m a x e r i e h t n i d n a e c i t c a r p r i e h t

n e e b s a h y d u t s e s a c e h t o t r e w s n a e h t s e c a l p n i a t r e c n i k o o b s i h t n i , r e v e w o H

e l b a c i l p p a e h t f o e c n e r e f e r t r o h s a s n i a t n o c h c i h w t n i H a g n i d i v o r p y b n e v i g

f o t i r i p s e h t h t i w g n i p e e k n i e n o d n e e b s a h s i h T . n o i s u l c n o c e h t d n a n o i s i v o r p

k c i u q r o f t n a e m ” R E K C A R C “ a f o t n e m e r i u q e r e h t o t l a i t n e s s e s i h c i h w y t i v e r b

. s n o i t s e u q f o e g a r e v o c r e d i w d n a n o i s i v e r

CA MANMEET KAUR.

I-5

Chapter-wise Marks Distribution of Previous Examinations (New Syllabus) Chapter No.

Chapter Name

May- Nov- May- Nov- Nov- Jan- July- Dec. 18 18 19 19 20 21 21 21

SECTION A : BUSINESS LAWS UNIT 1 : INDIAN CONTRACT ACT, 1872 1

Nature of Contract

1

2

Offer & Acceptance

3

Capacity to Contract

2

4

Consideration

5

5

Free Consent

5

6

Legality of Object & Consideration

7

Void Agreements

8

Contingent & Quasi Contracts

9

Performance of a Contract

4

10

Discharge of a Contract

6

8

13 3

3

4

7

2

12

5

7

5 4

2

9 7

4 6

4

3

6

7

5

6

6

4

2

5

10

UNIT 2 : SALE OF GOODS ACT, 1930 11

Formation of Contract of Sale

4

12

Conditions & Warranties

13

Transfer of Ownership

6

14

Unpaid Seller

6

4

6

6

10

6

6

6

4

12 16

6

6

7

4 4

6

3

UNIT 3 : INDIAN PARTNERSHIP ACT, 1932 15

General Nature of Partnership

4

16

Relations of Partners

6

14

I-7

14

14

2

8

12

10

16 12

N O I T U B I R T S I D S K R A M E S I W R E T P A H C

I-8 Chapter No. 17

Chapter Name Registration of a Firm & Dissolution of a Firm

May- Nov- May- Nov- Nov- Jan- July- Dec. 18 18 19 19 20 21 21 21 6

4

4

4

4

4

UNIT 4 : LIMITED LIABILITY PARTNERSHIP ACT, 2008 18

Limited Liability Partnership Act, 2008

5

5

5

5

5

5

5

5

13

13

13

13

13

13

13

13

UNIT 5 : COMPANIES ACT, 2013 19

Companies Act, 2013

SECTION B : BUSINESS CORRESPONDENCE & REPORTING UNIT 1 : COMMUNICATION 20

Communication

10

10

10

10

10

10

10

10

UNIT 2 : SENTENCE TYPES & WORD POWER 21

Sentence Types

5

5

6

6

6

6

8

6

22

Vocabulary

7

7

7

7

7

7

5

7

23

Comprehension Passage

5

5

5

5

5

5

5

5

24

Note - Making

3

3

3

3

3

3

3

3

25

Precis Writing

7

7

7

7

7

7

7

7

26

Article Writing

5

5

5

5

5

5

27

Report Writing

5

5

5

28

Letter Writing

4

4

29

E-Mail Writing

30

Resume Writing

31

Business Meeting

5 10

5 4 5

5 4

5

5

4

3 2 4

126* 126* 126* 126* 130* 126* 124* 124* Note:

.

9 1 D I V O C o t e u d d e n o p t s o p / d e l u d e h c s e r e r e w s m a x E 0 2 0 2 y a M n o i t a d n u o F A C

*Total marks greater than 100 (Compulsory+ Optional questions)

CONTENTS E G A P

Note to Students Chapter-wise Marks Distribution of Previous Examinations (New Syllabus)

I-5 I-7

SECTION A BUSINESS LAWS UNIT 1 INDIAN CONTRACT ACT, 1872 CHAPTER 1 1.5

u NATURE OF CONTRACT

CHAPTER 2 2.1

u OFFER & ACCEPTANCE

CHAPTER 3 3.1

u CAPACITY TO CONTRACT

CHAPTER 4 4.1

u CONSIDERATION

CHAPTER 5 5.1

u FREE CONSENT

CHAPTER 6 u LEGALITY OF OBJECT & CONSIDERATION

6.1

CHAPTER 7 7.1

u VOID AGREEMENTS

CHAPTER 8 u CONTINGENT & QUASI CONTRACTS

I-9

8.1

S T N E T N O C

I-10

E G A P

CHAPTER 9 u PERFORMANCE OF A CONTRACT

9.1

CHAPTER 10 10.1

u DISCHARGE OF A CONTRACT

UNIT 2 SALE OF GOODS ACT, 1930 CHAPTER 11 u FORMATION OF THE CONTRACT OF SALE

11.3

CHAPTER 12 12.1

u CONDITIONS & WARRANTIES

CHAPTER 13 13.1

TRANSFER OF OWNERSHIP

CHAPTER 14 14.1

u UNPAID SELLER

UNIT 3 INDIAN PARTNERSHIP ACT, 1932 CHAPTER 15 u GENERAL NATURE OF A PARTNERSHIP

15.3

CHAPTER 16 16.1

u RELATIONS OF PARTNERS

CHAPTER 17 u REGISTRATION OF A FIRM & DISSOLUTION OF A FIRM

17.1

UNIT 4 LIMITED LIABILITY PARTNERSHIP ACT, 2008 CHAPTER 18 u LIMITED LIABILITY PARTNERSHIP ACT, 2008

18.3

S T N E T N O C

I-11 E G A P

UNIT 5 COMPANIES ACT, 2013 CHAPTER 19 19.3

u COMPANIES ACT, 2013

SECTION B BUSINESS CORRESPONDENCE & REPORTING UNIT 1 COMMUNICATION CHAPTER 20 20.5

u COMMUNICATION

UNIT 2 SENTENCE TYPES & WORD POWER CHAPTER 21 u SENTENCE TYPES

21.3

CHAPTER 22 u VOCABULARY

22.1

CHAPTER 23 u COMPREHENSION PASSAGES

23.1

CHAPTER 24 u NOTE MAKING

24.1

CHAPTER 25 u PRECIS WRITING

25.1

CHAPTER 26 ARTICLE WRITING

26.1

CHAPTER 27 u REPORT WRITING

27.1

CHAPTER 28 u LETTER WRITING

28.1

S T N E T N O C

I-12

E G A P

CHAPTER 29 u E-MAIL WRITING

29.1

CHAPTER 30 u RESUME WRITING

30.1

CHAPTER 31 u BUSINESS MEETINGS

31.1

SOLVED PAPER: DECEMBER 2021 P.1

t. t c i ar r o t f n od. ce d tt e au ,t a s i n t e i s i t b m r ur a e pst lts l n i a e t fmc o a er te n t rn eg mao e c w ee d l r o n g a e h yat r Bo , n de ep r p e t a l h a s sg mn rh i e t t se t s i e rh ot df eo l l y e cn na ae r cv ee bn ye ah mW

: s y a w g n i w o l l o f e h t f o e n o y n a n i r u c c o y a m t n e m e e r g a l a u t u m y b n o i t a n i m r e T nte h ant ref oro e f f f di e ed g t r na u t eh i ec t s s bwi t d ue sb e srh i ot t c s asi e r t i t t c r n a oat r cpn weo emc naw ase nen ehe hth wnt e se r r o uwf ctn ceo obi rt ne a oh r i te t i a d vei ots n c Na o rc . t t n ec oha cTt r g n . nso e i i c t t s r i d a x l epo . n o i t a v o n r o f y r a s s e c e n s i s e i t r a p l l a f o t n e s n o C

n

d l o f o y r i p x e r o h c a e r b e h t e r o f e b e c a l p e k a t d l u o h s . nt oc i a t r a t vn oo Nc n

-

n

b u s w e n e l b a e c r o f n e d i l a v a e b t s u m e r e h t , n o i . t t a c va r ot nn ao tc c d ee f t f u e t i ot Ts

t fn o e es r n oo mc re oh et nh oi t nw i ee gn no ad hs ci si t nf ai ed ml i ta c v as r i t n n oot . cic t a ar a fe r t o tn nlo oAc . i t t e c a h a r t r e t t o l n t A o s ce i at r fa o p se mh rt e l t l a ef ho t

re e e g g s r n s a a e h l h c rs c oi ., os ne td i nl tt l uu u r ba of n tp mi c f a ao r ro r ee t f n g sd on se e ca l t c eh fa hc or t et e fb cn o no ac sy t ma p s rm ea e cw ec t r t ee aa h sh ht t n nn aw i en o i et ma ga h nv nt ao oe i hn s c cn s n i sI i ma e. m t e i r r e o Ro . t ht f c t r s a e e ni r pt ot n i r fo t a o a p c r ee e e eh t r l h a t t g ef f no do I

REMISSION :

u

ALTERATION :

u

NOVATION :

u

DISCHARGE OF A CONTRACT

10

CHAPTER

LONG ANSWER QUESTIONS:

Q.1 What are the instances for discharge of contract by mutual agreement?

Ans. Discharge by mutual agreement :

“If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.” Sec. 62.

: y a m y t r a p a

r o ; t r a p n i r o y l l o h w e c n a m r o f r e p t i m e r r o h t i w e s n e p s i D ) (

r o ; e c n a m r o f r e p r o f e m i t e h t d n e t x E ) (

e c n a m r o f r e p f o d a e t s n i n o i t c a f s i t a s r e h t o y n a t p e c c A ) (

w e n r o n o i t a r e d i s n o c r o f d e e n o n s i e r e h t e s i m o r p r o e s a e l e r . t an he cm ue se rr og Fa

According to sec. 63 a b c

10.1

S W A L S S E N I S U B : A N O I T C E S

10.2

n o i t c a f s i t a s l l u f n. i d se t g p r ea ch cc as i Bd ds ni ab t Be od t d sl y o ae ph AT ..

0 0 00 00 , , 5 2 Bt b se e wd e ol o Ah w e h t r o f

) etrd hioe , s t a i c t ra m fi ok i or en rc ne pa oV s e( .hd nv t i e raot t ol t sa i d i p m ee mot oGa r rnc ie pI n h e. ut hn t omm i i ma ot t a ol r ne cc od t no i ie s s s nen e cobn ncsa otac e cuhe eons vhoi t i i m i s g wi s o ofm r t i p enee r ee h s et v i h met , m ogr rne i pi th d f en a y hi b t b t a d ysh e bit t emdp e e s rt . i ct oa mf cn ta u ors re sdo pha nm twa Ao a

ts ec e ea i r t rr g ata n p to c e ach r dT t l n o . e o c e ch a at l yp ol s t nt so i e n i ni t . r tt os a i n ie ps x s eiem c hs o e t et e r nrsg efe homa l w e o a s cu sa r t tu ucc cea chrm otty n nnob oIcc t . i t s wa c s r et i a c nn r s t e oo n Ronc cde h ent haf t do ee t vl lu l e o co sn s e i am d co osc t i fs nno e oori v cpe g u vs ae i ra oe k t n hwa yT ,b t e r .l a t p e pcm h a t At r ae .n xs t h oea gcrc i o r e Fa h. at h sc fr nu o e os td i n t n enaI g mul . i t sb nt n oh oe dg sm ni i n arhr s bi e mv ah oo e)r he t vfG side h naet . s n awa a e(e yo hlbl ms e r ne ri u h e sat vqi o i nyl n a i t ko l r We n raa m i ypba ar l e s c r mhe t s to t mi c erp ah au r t tf

t aec fma o r at tsn . r c e o e eh cg pt r s sf ue e oo r m ti nh vf i g o e i ,r r y y p t re a r oh a w i pr t e ny ap eb fuh d s o t e , g tdr r e h e r a t gi t i h ua r c s rqmi octd a i c r s ye e l d j f wb n n i eut a gnss naet i mh t o s g t ai i n s x r eier s h o ne t i gf ar r e of ne tn e c hme i rpe We h s t tet r a g mni n i r , tn r c e of es j b rn ueo spc RESCISSION :

u

WAIVER :

u

MERGER :

f o n o i t a r e p o y b s e t a n i m r e t t c a r t . n r e og cr Ae m d n a , y c n e v l o s n i h t a e d f o e s a c n i w a l

l sa e g t a e nl i e mh rt e o t t hn t o a s es da ,p y t s i l e i i b t i ai l rb oa i l ll i d k sn la a s nt oh si g r . rn e pea gh ntm , i d s v e a l s e o a d vc nr e i h set t hf c t ao o r s t ne n I v .i ot cc t a nat r I n t e n s oe cr ep e hr t

ta sd mt h o ohe gt r i g ri r . r f r e e l drfe rb v o eesi a i ghne r t l a i r , c e r a y a e p v hctR ua s cn, e s n/ st e i vo dh d e n l in g o t ss ai p i r g enei rr. hics o h o s n x i ,o s r t r eA i i e n e n l f f epna a U n i n i v. v a i c i l t n , fi o f y e l sorf o l s nieO ga a c t i a c e i nct hh i dc t ei taa gdit e duws ehm c j a , o ud mu e t j n r a s d u d asaw n na i t I o sh l n l i n a.i o e n nt g vk n ow or , l s t t i so o r c d r i sr i u r a e no cer ppi t npn dec i e ae o o e h m nr c t h c er a huft ss e f n h Wcoo aet n s h e i e r t r s i e Md e t e c i d i l t i fi n n i au lbf i o a b ey i n al n t i da or l l no a l np a at i

,e .e ln i v m oli i p i c t mt a nt e I iam . xo m e e ir c ml e iyob t bF fd y .e o t h eect r A s r pa e abni s l ow yeir t r ba a e t h dsi t etmO c t i a a L . r nt s i r ea n mo he rcty e n3 ni t i es n di be iet h t t yi a i al t is w mb aed i sl e rl t c d a fi an e r awb t a n sl d onf l oo Ci u tso a h gns i os l i b t s ii ov u s eo . hr yd t pe e sen r t r i hoa u sTmb

r ee . t e hr a t o mo em sh i y ttn c fa ao r t d t n n e c oer cso n aof n fce o e she mtb t t ru o e o t n hn ei t a hw t c ftd I cn aa r t d n e og cr ea hh t c s oi t d ys t i r t a c pa at r yn bo dc ee r h e t t l , s a e yt i l l r a a i p r

-

(e) Unauthorised material alteration :

-

u

` `

Example :

Q.2 What are the instances for discharge by operation by law?

Ans. Discharge by operation of law :

(a) Death :

(b) Insolvency :

(c) Merger :

(d) Lapse of time :

T C A R T N O C A F O E G R A H C S I D : 0 1 .

H C

.fn .nn gl ie nuoo i f e e i et e gb bwna n a i s r r l fn aa t t s o h h c u ouct e d r i l r F tr b n aoe e o f pmho u t ar q ee co s n a s f sr i b r a ent u wp wcs o ,ooD o o n t t t kee n esh i u l dbitd sst ei si r s aa e oh h t pTnt n . w emd d ioe sio e a e nhm w vkso m i s olc b oe ec sa e mlt me b ib oass t csea eyeish i t l bI ht t t t n t.i c tec y a er a t uai r rl qt t ien he nbho cs i oiwc s b h ucs e s ws o r ep h ,yh t t mu, c t c s aa Ice s m o r e g c t s n n n n a odaiot i cecnt s m hea v m Arc r r t ou e u s f spu c r r ur e i nS Fc pI e d r n a a h d c e i g h r a w h c f s o i d e s m i o t c s a , r s t y n a o w c a y , n r a e t m t a m n i t r c e u j c b c . um o sr y eo a hf t r m e f p o y o t nt i l o i i e b t l i c b s ua s i r o l t p: s s i e mw dy io t l er ge ha nb t p i d n no ee O n vn i r ) ) a e pl ( p ( ux Se

t n e u q. ed s i bo uv ss ae ym bo lc u e fb wt ac l a n r t un eo mc l oa cn ei bg i yr ao me h tt c , as r e t s n oa cc h ac fu o s en cI n. aw ml a rf oo f r e e g pn ea hh Tc

) (

es cg n ni eh t t s i f x o ee t da et us ne i h t t n f oi cd ee hg t r fa o h c ss i i s d a bi s et c ha t r nt on o oc t n e i h d, t es r g e n t i n h et sf i o te c t aa r t t s n n oi ca te . ar neg ecn haa fh Wo c

t c a r . t y n t i oc ca ep ha t c fi n o l sa i s n a o bs r ee hp t r so i yh t t r a a e pd af fo o s e ns oa i c t a n ci fid i l e a g ur qa lh a c ns oi sd r s i e t pc ea ht r t n eo r c e he h Wt iv Death or incapacity for personal services ) (

e. d mi io t v es he t em r o oc f e e b Bt .c r a e r ht t n o o hc ce ah eT y. r d r a a mm s oe t o tg c aA r t , n e og a ci r Br &a Am e :h n ot i r t o a f r t d s e ux l l fi I u

) (

tr a o hf t ,. t d hce a cr g ut r Sn a h .oc c e s gfi no d a s hed csn o pa tr c t aus p r t t c e n a t oa r t cm n at io lc gu e ne i h d ht ntn ufe ooh ra tt r , ued sfe e m sd e r cfo nof r ee ar t s up l mi n ae uf ca e r b i nd c i eta hlh u t t si e er h r c e yi he h hw Wt

) (

.f o s n e z i t i dc i n o ve se. w i ti d ye mb o e,v nds eee c m nn ee o i l c me a nmb aoy l hca l t rr i wae n rwe e a hg wt , r gea rw no i r ft ue dba y ool t t t n n n i i e ddu eeq r re e e s t t b n n eeu tts c c s aai e r r r t t t n n n oou cco AAc

ab initio

: s y a w g n i w o l l o f e h t f o y n a y b d e g r a h c s i d e b n a c t c a r t n o c A

loe a h utt d t i a c a h As sw yi e be n dco end gas r ma a hrh cos f s e r i i e d t P r el a ba p ug yt ac n i mAc t .a te c r t acn n r ao t n c ome crh o f t Ar f eo Ph dc ea t e p n me eh t t w Ae rc oa el cp nn ae k ma rt oe f v r e a Ph

.

1

Discharge by Performance :-

impossible to perform deprived of its commercial purpose.

10.3 Q.3 What is meant by supervening impossibility? When is a contract said to be discharged by virtue of supervening impossibility? (July 2021, 5 Marks) Ans.

i Destruction of the subject matter of contract

ii Change of Law

iii Non-concurrence of circumstances :-

v Failure of ultimate purpose of contracts :

vi Outbreak of war

Q.4 State the grounds upon which a contract may be discharged under the provision of the Indian Contract Act, 1872.

(MTP May 2018)

(MTP May 2019), (MTP July 2021)

Ans. Grounds for discharge of contract:-

S W A L S S E N I S U B : A N O I T C E S

10.4

et vp e i g c . e cc oa t n soa r t e sm f e r f s o o ur f rf oe e sr p i ed me e ost rip pmm oe er hp t t t nea ehy t ht b Wu e g br ., t t a c ach a r c r t s t n i ond coo ect e hh s t t n rtu r e deo d nn m uu a o t dei c n ne oa t h dmt ere , eo r f m r g a aes p ds e ai h hh t y: l l s a y ua t w u mg n yi aw mo l l so e i f t r e a h pt gf no i y t c n aa r t y n b ot cc ea hr t Tn o c g n i t s i x e e h t e g r a h c s i d o t e e r g a .

2

Discharge by Mutual Agreement :n o i s s i c s e R ) ( n o i t a r e t l A ) (

n o i t a v o N ) (

n o i s s i m e R ) (

r e v i a W ) (

r e g r e M ) (

y b d e g r a h c s i d d na: t g s n li l w a hl o sl o tf c ae r h t t n of co y An a f o t n e v e e h t n i w a l f o n o i t a r e p o .

3

i ii iii iv v vi Discharge by Operation of Law :-

s e c i v r e s l a n o s r e p f o e s a c n i r o s i m o r p f o y t i c a p a c n i r o h t a e D ) ( y c n e v l o s n I ) (

s t h g i R f o r e g r e M [ n o s r e p e m a s e h t h t i w t s e v s e i t i l i b a i ] L s e dt i nl i ai b sa t h i gL i R& ) ( i ii iii

. n o i t a r e t l A l a i r e t a M d e s i r o h t u a n U ) (

t c a r t n o c f o e c n e d i v e e l o s f o s s o L ) (

t een bt hu ofo t oc c ea dr eu r n i l i o u a qf t c ee r a hr st t i ,n d te o c c abf i r r o t c n e s oe g cr r a aph ec em s r i i e d t hf n Woi ds ot l i u r s e e pr ce fim i c ea ps se ah nt i m h r t o i . f e wr m dei ept mof rto oye t f s r r p a e a ppl .

4

iv v Discharge by Lapse of Time : -

tld u a i dfow v i : l a s a s l e vn e c m su n a a wrot c o es heb n lti cb i h i c g s an ws r i tot w c p n o amo l r l ico t n eAf o . m e co d h e Ac t gf er o ba hy yc l n t s n a i ed n u i qdy eni t a s t l bs i b uyi sb s s yeo r ae p mh m nti l ol g a i th n i a n mse d rn v oa r f e fmp o u r eo s f mr o t ie t e epu ht od t .

5

Discharge by Supervening Impossibility :-

r e t t a m t c e j b u s f o n o i t c u r t s e D ) (

w a L f o e g n a h C ) (

s e c n a t s m u c r i c f o e c n e r r u c n o c n o N ) (

s e c i v r e s l a n o s r e p r o f y t i c a p a c n i r o h t a e D ) (

r a w f o k a e r b t u O ) (

. t c a r t n o c e h t f o e s o p r u p e t a m i t l u e h t f o e r u l i a F ) (

t eet tsi l c c a vha , Aue i t e a g r r st c yfe oe n t knbeha saoddwm c s l i meet ,r i a g h h f o m r cf rrta a r oonhme e seecor c p h s e cb nt i f s d , y l o uat a t fmc er ut e e rubat r ca yodnpA f d n e a t r oc r hoe e ct t a tu sc ppi n sd a et ggh n r e hnh nv i yt i nWut b t i c g o.oe ec am l hmr r b t Acao i o a s f n te ors.ei . cfohr,bh c f e alpaBc dc e a ee nt nsmeya r i r emt tr bo hic miB t y a h a rmy Ws bp r omr t i f e dc n oo r l i e o b e t t acgnpca s p erA si i a f i h t d h c yol t i c b rf t u e s t n oo a i r a f A eedod e cc h o d nnec e t aaba u e s h t mmoedt t n r rrdB en u of oi h f eo l a t r r a s hm nw e e uo st ppi a

.

6

i ii iii iv v vi Discharge by Breach :-

-

T C A R T N O C A F O E G R A H C S I D : 0 1 .

H C

n i y l p p a t: o d ne sg e r oa dh c ys t i i l d i b t i o s s n os pi t mc ia gr t nn i n o ec ve r e h pt us e ss ra oc ne os i e t a h r t t n s ui r f f o s e es na i c r t g c n oi dw eo hl l To f e h t

tsn n ei ucl t i ov u cr s ce e as r ntt oro ton p l s se u n ca o fir d f tt i d fu sob e nd mo r oia cth p eu e br c sn ti c ada r sm t a r n o ohf ccr aue fsp o se eth cnt nest . avec e k a mda r re t mn ot f a o r pyc t e i l pi c f u o c t en fie ha f t g snir e uda h h mec c im s t ui e Sd o ms .e c oft h So et

to t fn o n rul pol nca h ucs a t s n c t aos r o p t i c n h os d cd a e erh a hh r t e lv fa o io ecr cro ne) aml s mma i ror oc e f st r ua e phm eT h.w. a e t t l r c ( eb a kat sr i av t un mn po sunc i pl yf f i lo o h sa e dceg i c rm i r r a a Hoph n nc lo i s a c i e i d c e s r a re n e i morl t c e l nu mb i s oaf e tor Ci -

ed he t m nr i o er f s ue ap l e c b at so i en r s i e . td hc t e ad sr s tn e n l e ot n ucx ee sh t e c b ato s r e t t s n s oai cce hc ec n t ua a nsm i nr mi o rtf e a r t e h tt p o g f nn o i od e di m vi so t t re n eph vtt ec t aa er s h t e t n ho r Tc o

, o t n i d e r e t . t n c ea st r i tn c o ac r e t n h ot ce t aa n hi cm i h r e wt rt oo f n ss e e s oo pd rt s uc pe j lb a r o e e vh et s f eo r a e n eo r e f ho t e nr eu hi l a Wf

e rh e pt ey hb t d e ng or sa dh c ns ei pd ee db yt t o r n a pl l aa h ys bt tc c a r at . r y nt t n or oca c p e ahd t r f, i o h yt ete crh nat apf d mr o ri t ohu l t f r a a e f fe po d ee r hc t o ne ea r r e mu l hri of a Wf -

y b y t i l i b i s s o p m i d e c u d n i f l e s f o t n u o c c a n o d e g r a h c s . i y d t tr o a np se i h tt c f ao r t r n e oh ct i Ae

t a h t s e c n u o n n a e u d s i e c n a mr o r, ot f c r a e r pt n ro oc f ee mh it t m er ho t f r ee r op f o e t bg yn t i r o a g pt o an ns ei he wh

u

: s r u c c o t c a r t n o c f o h c a e r b y r o t a p i c i t n A

Ans.

i.e.

Ans.

10.5

SHORT QUESTIONS:

Q.5 What are the exceptional cases when a contract is not discharged by supervening impossibility?

1. Difficulty of performance

2. Commercial Impossibility

3. Strikes, lock-outs, civil disturbances and riots

4. Failure of one of the objects

5. Impossibility due to failure of third party

6. Self-induced impossibility

Q.6 What is meant by anticipatory breach of contract? State the rights of the promisee in case of such breach?

(MTP Nov. 2018)

OR

“An anticipatory breach of contract is a breach of contract occurring before the time fixed for performance has arrived.” Discuss stating also the effect of anticipatory breach on contracts.

(MTP May 2019), (MTP July 2021)

n o c e h t g n i m r o f r e p m o r f f l e s m i h s e l b a s i d t c a n w o s i h y b y t r a p a . nt ec ha r wt -

u

S W A L S S E N I S U B : A N O I T C E S

10.6

g n i w o l l o f e h t e k a t n a c y t r a p d e v e i r g g a e h t , s r u c c o h c a e r b y r o t a p i c i t n a ns : ep he t Ws d e g r a h c s i d s a t c a r t n o c e h t t a e r t y a M ) A (

d n u o b r e g n o l o n s i e h t a h t o s ,& d et ; gc r a a r ht cn s o i c d e sh a t tr c e ad r t n n u os cn eo ht i t a tg a i l eb r t o ny an ca ey Hb ) ( i

hn ci ar eo r be rc on f a mm ir h o f or t e ep l b c a fi l i i a c ve ap ss e r i o d es e mg ea r lm a ga ed l r eo hf t t ti p u os d aa e yl l fi e t , . a i d e, t mc ma. irn o nti ant coc c n ef u Ho j ) ( d e g r a h c s i d s a t c a r t n o c e h t t a e r t t o n y a M ) B (

tete c hct h a aT r r e t t .n s n d oeoa cgcc r ea ea h h hh t c Tct u s a .i s t e d c r n ast I r a e . o t ttc n i t ot n u ca a b et er m c ht r a t o o r f et t r g n s e r op e a s cf ho eo coh s h e t i cd d m i yi nt tt o r c e na s h e t spr e r doo oe t f dv tt ,i eo i f : l rnas e w g w s ge o t d d i a i l nl c yee o af bh ,tdes v y h a i cnat e e ar ah mr ew r yea b tps , r oe d a ye c d p r n gd or ne t a e a a u phveq e i v c e i c i s s l r i i a t n g d n gso sa Ai ac r ee hh Tt .o s e e i h t t r a y pb ed he t m hr t o o f be r fp o e tb fi en ne ev be ey ha t m rd on f a et vs i i t x a e r e o pt oe eu bi n t ln l i wo c tl l c i aw r t t n oc. a cr y t t en r ho a Tc p ) (

) sy nt el i pi b pi as hs o tp n em vi eg n. ni s an e yeg v l a r t e n m epa uud qsr eao s b f u e s(u s dyo l nl t a ag t h deg eli dtr c na s i i r c h t s n s e o e r s tcl o e o hy nt t ssr i ea tgp c rd aa e r hv t c n e s i oi r cdg g ha ec hi t e hh fwt I ) ( e.g.

ii

, y c n e v l o s n i h t a e d f o e s a c n i w a l f o n o i t a r e p o y b s e t a n i m r e t t c a r . t r n e og r ce Am d n a

l ea hg t e sl e e t h a nt i o mt rn e o t s hs t a a ep ds e ,i y t t i l i i l i b b a al i rd on la l i s k t sh . lg n a ia nr oem sh d r ta e ,e ps d gee nsh a i ct v l ro f o e vh s nt e i ov snt i t c It a at .n r c t e n as r e ot r cn p oe nc r I

dn in l a i b ao ast i td l h lg e l r a ir . r r m ee e f s v ohn i rt e f ac , dyre t ec, R gns e / n r v e a o e i hlt n cop s g s ne i i i s cs d x n so eA i l na epi i hUa c . t fi , r tn f e n oc O i et va he l cth o siit ndws u , i a e j dd r n eaaw gs to di n uhen j vk ol d , ator t s r so nu i ii o nrec ophe s t d r h ft eo e r pr f s aueo c i r t nnl i e eii c sb he fi af Wt il i o

t ni oe sc r e n i ps ed me ai r s u eq he t r hs t i i wt c ta s r e t vn to c ac r e t h n ot cr e ad rn e du ne uc n sa e i t m i l r i o b f ar i l e. d &pe srg e t r h ha t gr h i r c us efi hod t s nnd enn he a hs t Wt

C. Merger of Rights & Liabilities

-

B. Insolvency

-

viz

ii

i

Q.7 What are the instances when discharge of a contract by operation of law takes place?

Ans.

A. Death

T C A R T N O C A F O E G R A H C S I D : 0 1 .

H C

s an go i i l s b i ov o er hp t e sh t i T u . sn lo i v i t i c a t ni I m .l i e my ib t fd e o r . r ea t s c pbA a n e l r o ya i bs t a dtt eci a t m r a t i nn L i oe mc h r t n e i t n s i ee d bi t e i l yi t ab a t mas i l e sd r t c na aa w r t sa n nl oi of Ct o

td c n aa r t d n e og cr ea hh t c s oi t d ys t i r t a c pa r at yn bo dc ee r h e t t , l s a e i yt l r la a i p r e r t e . a he mtr soo e i hm tt c y afn r o a t t n d one e cs c r an o fof o cn see he mt b rt e t uo t on eh ht n t ia fw c I t c a r t n o c e h t t c a r t n o c f o e c n. ew t a s l i f x eo n oo t i t sa a r ee cp no eo dt i v e eu ed l d o e sg sr s a oh l c fs o i d es s d a cn a ns t I

y y, nyt t r i b c ay . d r eyaA nd p d f r oe e i uegi t l smi m ne e a r e e t R er c l r s u my c d i e a fi t erf a i au baec n d s e ti q i o dep e e nr hS c d t not e na aec h an ch et ma dtr f r i t eed r r o oo f , 2 e e n r n f 1 e ho f e . p c uwi r t e ssa ca S se fi s s s i e osnr c a g e e l e a rcpd p ohmn S m ec U .a guo( d asc. y e e nt mi l r l a e a a, uc h dy q fi w eae i hmd c e t e l , a b et p t r r s a o u l e t i honc a v wcsa i r a sest h e y e n l s Tg o n a ac . o cy eeme s h a i n r a odt d e r n m m r o a r e ff o y homf d .

Tsi r ) e e 3 map m l 6 rc 9 e o1 e at r t e c : n e a r a m t r r o u f r o e c p e h n t o y n b t s i d r e o r f e f d e r i o e l s r i y e r c a n t a e m n r o o m f t r a e h p t c h fi c i u c e s p i s s f e e l r s e . t e h i t ta w c u s aq e ee s hd a t c e a e r t h eo t hn f Ws o i e ) m o ( S

l a u t c a e h t f o e u l a v e h t n i a t r e c s . a e c on t a em l b r ao l f i r a e vp an so i dn ry a db d ne as t s u a oc ne eg r a e m ha Wd ) (

. e l b a l i a v a e b l l i w y e n o m n o i t a s n e p m o c e h t t a h t e l b a b o r p t o n s i t i e r e h W ) (

e hs t i u wa c de eb . t t .e c c et k ne r nea ou m cl a e sv h t l t c a ai n r c i t ee n t opu s cg t i t nns i i v b da u eh s t st n d c ao a r x o g ge se i n eua cqt nie ang mut o d rn oa e l f b r sa e e l pc e i b ct fir t a i o c en er pa l l sr i w , es hg y t Ti nr da l p i u d be ,r d u nj n ai l

, e r u t a n l a n or so r e , pe r fu o t c si i tp c a at r n t i n oa cp o et ht t c ea r r e t hn o Wc

u

f o e c n a m r o f r e p e h t e s i v r e p u s o t t r . t uc oa cr t en ho t c rg on f i ed l l i b i u s b s o pa t o nt c sa i r tt i n eo r c e he h Wt

t c a r t n o c o t t n e t e p m o c t o n s i t c a r t n o c e h t o t s e i t r a p e h t f o . r eo nn oi em r a e he k Wl i

u

a r o y r r a m o t t c a r t n o c a

u

u

e.g.

: s e s a c g n i w o l l o f e h t n i

. f e i l e r e t a u q e d a n a s i n o i t a s n e p m o c y r a t e n o m e r e h W

Specific performance is not allowed

-

D. Lapse of time

e.g.

10.7

E. Unauthorised material alteration

F. Loss of Evidence of contract

Q.8 What is meant by Suit for Specific Performance? What are the instances in which specific performance shall not be granted?

Ans.

Specific performance is an order of the Court directing the defendant to fulfil his obligations under the contract

a

b

c Examples:

S W A L S S E N I S U B : A N O I T C E S

10.8

i nns I oa i .t u ’ e aq ns ona des kpi rmt ooI wc. rm ee i hvh t o cy oe b t nrd n ‘o e ar ic rt or e ond pon ose rrr pee p n i c a i v t ta r n e hs et ms ynr aao pee ‘ n ‘smo t sni d nau aer k eme r mtmo w i t i me , e u . uh y s rn t td e n Mea oe s utm lq ma e r ug,nl o s e t i dt a l n u anrrt uIooc a Q.wpr ’ o r rt e n hpo t nc o i Q.9 What is meant by Suit for Quantum Meruit? What are the instances in which quantum meruit is granted?

(RTP May 2020)

as much as deserves or

as much as merits’

Ans. earns

: s e s a c g n i w o l l o f e h t n i s e s i r a t i u r e m m u t n a u q n o m i a l c e h T

se kh at er r o bf yn t r o a i t pa rs e n he t p o em o hc t t u m ba i ,l t c c an r t a n oc y ct . er d hae t r fpe o dd en tr r a ur e pj ane i c se i mh v r rte ons f ee r e hh ptt ,r yn t r eo a ee pwn ae to d eb r k e r no hi Wi tw 1. Where there is breach of the contract

sdk i her cmo i rw h oe wf h r t te c pr as o r f t at n ohn cou aho rwm e na do e ns h urt e dp r ee e t v p ho etc cne ce r ah o dtt , nd d ai e eot l nvi t oen dbe nos eti edt bec sra e a r vt ho n kc o rs c oi ) e5 wdh y et l t6 . mn fc oeoe sutS r ( qa ee . r e e spn hbeo uhd Ws t 2. When an agreement is discovered to be void

e n o d n e e b s a h : y l s u) o0 t 7 i u . c t e a r S g ( . t n on ne em ny oa dp g nn et i et be g sf a ho n go ni i t h n t e e t n mi oe sh nt eh hi t Ww

3. When something has been done non-gratuitously

i.e.,

t fn o e sm e cy na ep ut qe eg s o nt od ce l rt i ot f n ee l e b ab i y l ea bm e dh l u m oi wh yy: t bs r e ec a pnn oa gd t nk s i t rm l o u u awc f r e e i hc dt g ern s oi a f w ct o u l ab l o ,f hh cc e ua h se t rn nb I i 4. Where work has been done by the person guilty of breaking the contract

ro dgo nfw ni an t ns ea i ou l i b mt i h a s es T i r v . i t eni e d h pu st i r me t mo c r ao cm r e f t m l r n b u oea t cpn n Aooa t su :s a ee q s urf fmo e s ii r a dls nca anb tae i fch: t y o t n t tr s r o a i a x p , pg d e e an d m i l st u r ml o u o ra h f of r s f ees r dpn e peto rt i yha t t i pd r , t a n r eo pa hc apt ) (

a Where the work to be done was divisible

d n a , e l b i s i v i d s i t c a r t n o c e h t f I ) (

t r a p f o t fi e n e b e h t d e y o j n e s a h t l u a f t a t o ne . yc t n r a a pm r eo hf t r e fp I ) (

a b

t eo t e n l n p ma. c t o i t cl u ur sa e e fm r i e u qdm nu ei r t tyn i t , a r u a q ,pf e e l o h b s t i i s , s i t v a n i b d e tme o h nyt san p i o t r c , o e af n r t o n n d o oi t k ci r ed o hnw t o fc r i , o af d nss aa t n hee rc e m ny ha t o ma erp hom f t i r a ne l Op c

i.e.

y dst nar aha kop rhr owe wnt h eoo s r i e r t e h n t ept eu eh ht b t ,; y fl o dm nau obs i p t h e gm l uuk . p molr oheo cthw , t l el d u m hf a i t b a n ri l r c od o f f denn t a i e co a l i pptt c emcu a bor td ocn e n t od ec se a i em mbh i usta sa l h d pkec o mrms o rl uw oa l f n aer ea hp ft c I

5. When the indivisible contract is performed substantially/fully

T C A R T N O C A F O E G R A H C S I D : 0 1 .

H C

erre e o c hf hn t t yo a et r d r r a e a ho sp t e c gdyc aeba vtn me ci ai drad r ,gt e g 2 n t n 7ao 8ec a r 1h fg ,t o t ohe c r Atc aa twe c d aar n L r ba t f f n o o e ot r tu Cr n t nuua aoon C i c d ci n naa I y y ebnr h oo d t t ema fw is o n 3ohe y 7l lb p: nad ms one i onol e t i c t icu ea a er Sst r g onsan u e t s si gpy e w nmr g o i oual l d j m o rcn oyi af cr/ e casDh t s .

Ae t o y nl h t r t oea i hpw mt ne ti h a et ns y i er b ha t d ye el r r l e a a r v hu o tc ca i e h nr whe si cb e ghn awa m.c h a c d a . he y ec t rr ha ba Te -rhp g ebcn u f l o b s i t a l e m r u co e a vnr f e oef cu d eqse g r en h s i en t h r ot a m o scfr o e e l f gb e aa s y r t mb r ua aoo r Dp cp d l yda e r u v n a e nasi i r lug d a eg rr ha Ou t .

1

:s tfysy me e t mhobc i l es g tn i hsuunh b o c o ai o t l gt r i s rt i i tfc ss r ba u oolsmfmo btaa oup r c u ae sworce. e h r f i pu t t ws s sft c ne e ee oaltt i a c u a nr hr i k rnemc t a n a a m ot eop si e ,lsisps t i a e a e s me t th i l r den c b u t h a e h af aec t pr t p d r m o t i s eesc n i a s v n a ho e ed e l o t f y l c m i c i e t n fe t i eu da oar l yrssabe ep l eptl fh eo n o hm r b t g oa t na e nn ft ro e efi c h t l n b cnolaeeo v aieeuco gc a h t s c r de c s f e n e i eh e gel e vwx r osetdat wt ce s mo i e on f g x ea han o ni r et d ks te emn f e a r e e r o h a u a s a hw t d e o eh s yts se cdg eoo e gscedthtl aoadesTtl i u l h a mhnvw h.g t i f o c a or oTf iue e t ep n .n Dr op t s rs iskc i lar be a a a e ea i cerleh s c t htpr n t eea t n e ef ao phh oh t wo STt s tct .

2 . eh r c a a se e gr ab f mo an do es s a e e hr t ey cb nd i s e en l i b a t as r u e vs ot co en r e tr o na ed r n a a se e l gb aa e me as de tr c o ef r y i l d b na i n r oo s ea t e o r mt eo Rn .

3 sedi s a heh ht t ,nd t yc a e t r arv g a r o t pn e r r p do a ec s sa r uaeh g j f a n f o f i i t ehmn a hcd i t a a eep l er s r be e e hehh hTt Wt .t l :fa a donh enit me no i sog a a d t s ene urel syrw o sban s mk si os l c ooha nlyy y b l rne e oal r f dbe se a m e r re ge o af v t mfot u . ascr e n uo Dc tr ow sc la e a f g & nn e i ah mi t e m t s oo aya Nnd bc .

4

-der t : su n i sa e mo cyo c nt re ar ph a t t s a, npf y i d l l eou cv fie hf i icg c eran pgeo sgrr a B w ne) i r h(e yt k l n efn otoa a eb dss a ena e cy wp om nb l i lo a re u q scee v e oe . s gt he adwcg meoaa adHfm r da .oa h rd ywi su r a noy a l r una e p pol r hp ma o s est im xe e egwDx e)e rai (d omv eaa&r vdhya i rw t y tr l i c a l i way a d u tma ns i o om VUnt .

5

,d e ce nw eo i l l n ea ve nb oo cs nl i a ry oa f sm e t i gu as mf ao dt s do ec t r n e ah r t g r eu bF . oc st l e a . t nyr n ao u cg o yaC t le r a a t h pn t dey emb vt ,s er e i g oa r f g gmm ao a cd es hi s Td a .

6

lt fha n o c e eiuv t h t a wce a mte e in h t ht u s e otn o i m e t r e es pat i enar nana i s o i u i o t t ntr eio y gdp l a e ok ae ri tp ts l o s ni nI s. di . s h sytc ie aa yg lh t h e l a gtr a i sb nmh s eas f oo Pdi l ea &l bs raa i b a e os f ri epr hea th o ett rfy ao . lh s ec k e et i a l ga e r ameb r mia t f as o e t de eac h drt n eps e t u eeq a nge di i a u s u mn na qe i o L gdc

Penalty

.

1

Liquidated Damages

a

b

-

i.e

10.9 Q.10 What are the types of damages that can be awarded as a remedy for breach under section 73 of the Indian Contract Act, 1872? (RTP Nov. 2019) Ans.

-

Q.11 Differentiate between liquidated damages & penalty. (RTP July 2021)

Ans.

S W A L S S E N I S U B : A N O I T C E S

10.10

tmd c aon. t r rac t f ta n r oyct t a cr n r t o ean c hpo t a f n co e i fe go da c er n t uha a c oa l m u ce r s pi ro i dbr t f s doae nt p g e awn u ei di t d t ev i xam e i r f hmu st c i ioe tw cs I eefg hhoi n t t v y nn t o ni r i a i p dtaf r t o ee r t e cc s a s e l a s nn u poue i t t p e s . hxt w e r detd u nidi o oc avo iv davae haoh et t tt iod a n mwtni ,sas it t e te c s gng e aa ua r t sn mom i oama tc dad I

.

3

t n e m h s i n u p a f o yy . at wr ya bp dg ei n s t o l pu a mf ie s i d y e t l h a nt en Po y a w y b d e d r a w a e r a s e g an o mi t aa ds dn ee t p a dm i o u c qf i L o

Penalty

.

2

Liquidated Damages

CASE STUDIES :

g . .. ynend s, 0 e n m e n 0 g(0 i emoa n a , won , g0 s e at a m d w k, v s 0 efbi r bi o ar1 , a f e d e r v o p mee yp, cvne a u .

0 s ane m o p1 R ewt i o o ) .r o r , ic t t 6 eos .Mf H e. @0 o e tt s f c n oi .pbels0 b d a l 0 t g ur 2 n l m a , .

0 s a a ot . i o i 2 e l 0 h t n , 1 mo , g(0 . sme0 . a a ac 4 3 t 1 g, dbe 0 c l tfmk ( l 1 aya n o a o bo r r 6t nhde 0 nhls , l a scyp.0n saa a y o a h 2 h e e oep3,.caasc dro1)2ephsr i 1 6 b t e 0.hoSep 9 dl t g t . @ 0 r eb a , e d 20) t l M s . t n a e m t b 2 i i n n a a mlo1r a d e o i e e . l t f 9 b0 me c ml e fr i ol 10bnb op ca nsrt tt e hhboeeo nc u as ssvn o a o i a l l r hhl r l t mn SaaeaGa h h c h ao .S yes si r h r t . s c i t Mr pl h ee e iy .Mgdb a hh T ) i b a h n 6 .t s 5 mas lS y n a . aeo . e c pdr me c e di mdM aw S r f w , t ( o piay se r y ttgu l a b t t ncn n i me l a i u i ne n r ac b i ot n i negu Re s m q v . s n e r r o aori s e M p ecedn f p e f a o oi ur m hh d c t i Ttst

Q .12 Mr. Ramaswamy of Chennai placed an order with Mr. Shah of Ahmedabad for supply of urad dal on 10.11.2006 at a contracted price of ` 40 per kg.

The order was for the supply of 10 tonnes within a months’ time viz., before 09.12.2006. On 04.12.2006 Mr. Shah wrote a letter to Mr. Ramaswamy stating that the price of urad dal was sky rocketing to ` 50 Per. Kg. and he would not be able to supply as per original contract. The price of urad dal rose to ` 53 on 09.12.06. Advise Mr. Ramaswamy citing the legal position.

Ans. Hint: Increase in price of urad dal

If Ramaswamy

waits till 09.12.2006 -

`

i.e `

i.e

e.g

If Ramaswamy

repudiates the contract on 04.12.2006

`

i.e `

i.e

see ’ cc C n n na e i r m h e t f rf i i wod f r se e a ph wt t in, .A o sn a o ( n t i h) t l k s u an sl o e 1t r 0 d 0 l f 5 u o os r o ws )of Cln o (nt mi r ige h np yi t bl 0 u 0 ts c 8 e4 , ar r t B n d odn cn a fa o n hAo c t n ae r ee e r p bw0 tt0 a e 0 hb, t 5 t ec ga dr n te en l e wow oct nfe b ko

Q.13 A contracted with B to supply him (B) 500 tons of iron-steel @ ` 5,000 per ton, to be delivered at a specified time. Thereafter, A contracts with C for the purchase of 500 tons of iron-steel @ ` 4,800 per ton, and at the same time told C that he did so far the purpose of performing his contract entered into with B. C failed to perform his contract in due course, consequently, A could not procure any iron-steel and B rescinded the contract. What would be the amount of damages which A could claim from C in the circumstances?

Explain with reference to the provisions of the Indian Contract Act, 1872.

Ans. Hint: A can recover ` 1 lakh as special damages from C `

`

`

i.e

(Sec. 73).

T C A R T N O C A F O E G R A H C S I D : 0 1 .

H C

10.11

,5ndnd .ts . c cr7 eet or ea .t i e2 eL Sr e d t w ( a 1 t a n s tM n yo r e ne f t T e i bo c n l t i iepc ft te b e o c a m g i n s haw rad o s t r e ochtcn t l a n Seyo pe b w coo mr yenf a cn ibbc nyo k gade e e nne rac h i p i r n sre n,t f o s et a u f o e l vu citmc t r t snd n r e h peie oag h s f t urs t r s u s o o l, emr p o e ub t t t h( nco r s o t n in h nc u ek t o o a l e a t a r l s m n i e 5 ec a e 2 uew . d t p1 ps o .ssr m ) n o e r f3eed 7 s c c o a e .dnr a i o osc T s d teer; T S g h st ( a) ir t i en ms n ahade dkhaZ r a ST d yl n r 0o a h a t 5 t n1 . s di i r ene d r1sed u , o Z e a c.ydahr T nd nct t a s ii eLpas t wn H oso .Mthlt oa ) r k h y.a 6 on 5b l f iS

Q.14 M Ltd. contracts with Shanti Traders to make and deliver certain machinery to them by 30.6.2004 for ` 11.50 lakhs. Due to labour strike M Ltd. could not manufacture and deliver the machinery to Shanti Traders.

Later, Shanti Traders procured the machinery from another manufacturer for ` 12.75 lakhs. Shanti Traders was also prevented from performing a contract which it had made with Zenith Traders at the time of their contract with M Ltd. and were compelled to pay compensation for breach of contract. Advise Shanti Traders the amount of compensation which it can claim from M Ltd. referring to the legal provisions of the Indian Contract Act.

(May 2018, 6 Marks)(MTP Nov. 2019)

Ans. Hint: Labour strike non-delivery of machinery by M Ltd. M Ltd. is liable i.e ` i.e. ` M Ltd. is not liable

`

viz.

n o i t a s n e p m o c m i a l c ( d. nS af to c t r aa r t p n e oh ct dn no i c t s c e a r r t on t o dc ef l o t i t h n c ea e er bb l f lo a he ss u) Ma c e b S m o r f

Q.15 S, a singer, contracts with M, the manager of a theatre, to sing at the letter’s theatre for two evenings in every week during the next two months.

M engages to pay her ` 300 for each evening’s performance. On the seventh evening, S wilfully absents herself from theatre. M, in consequence, wants to rescind the contract and claim compensation for the loss suffered by him through the non-fulfilment of the contract by S. Advise.

Ans. Hint:

Contract Act .

Sec. 75 of the Indian

r% e v0 o7 cg ei n r d oe t e yc l x n e ot do en l t t i t u n b e( sl e i b Ya .n y t o l s a a ne er ps fr o e d ei r s un t o a c nt er hu t o sC i ne ot h i t s a l a u n po i t i t s a ss i n h e) Tp . t s me or e ct hn ci uf so

Q.16 X borrows ` 1,000 from Y and agrees to repay the amount with interest at 12% at the end of six months. The contract further provides that in case of default in repayment, the interest will be payable at the rate of 70% from the date of default. What is the nature of this stipulation, and what is the right of Y. Ans. Hint:

re ou f q ke nh ac be ehe . hts t f a moc s oti rn h f ut son e i gms aae g mea ah m dt a yrd r ef l a l l o a p e mmu l esa xev eh e mTh i.t a e e l ub c ql l ne a ah h cc s hfr t e o e t Sra e aur nog nne aoh hht s Dd i d e r lu u o fn g no h os ri wd

Q 17 A bank wrongfully dishonoured a cheque of ` 1,000 belonging to Dhanna Seth (a Millionaire). He says that his credit has come down to the level of Mofat Lal (a person having only a few thousand rupees) as his cheque of ek hazar, i.e., one thousand has been dishonoured wrongfully by the bank.

Advice Dhanna Seth.

Ans. Hint:

yA ml ons rou f h tT dc. eAn hto sc i i t a u u r gt c nn e . i xe o t c s Cen i f d noa eaem bil r d b o i ns f dI r se l u o oepp f hhmo sti f y eoei t c mi l n6ob a5c i s mnes robo oi p t h f c cm r ei e i pShf .wo fe s o cdd i no n yav t u m l s o u t r r c co g a fif r fr n t i e o n Dp o d .fce o o g er Nys a o t h hc i l t i s b si i e d s r s t a ol o pc n mes idi

tonyhe c ch hebi aw ke t r orhm t e w r n yb hro ot r r Ca stof t npamhl cu a hia e i ohe s d hh e orr ntw I , tbo en dht y e hk ec t y t s r u l o fr u a se o a p k i 3becml 7nh oe eterb g ne f ob maso i m g t t oa c sr nt i ea c Shfdha t e r rf :tv t S ce ioo n Ea seo c r Gt essc o r An r e l uh Mooyo t Actnce ld daa Dae rua -nl t e T os i Chtfum n y Awe nee ohh Rtsi t Tait nt a h h Nt i n s cn ee Ona esh Cw e pow r Fob mr Od oaw y h e l scca l Hy n utr .

Ca c ki t u Alsa sf t e E2yra i o t 7bn t R8 sonrh B1 a r h c c e pa c ,f i t e f eh er c uh hb As twt (MTP May 2018 & MTP Nov. 2018, RTP Nov. 2020)

S W A L S S E N I S U B : A N O I T C E S

10.12

Q.18 A enters into a contract with B for supplying 800 tonnes of iron ore within 4 months. A fails to make the delivery in time owing to difficulty in transport.

But he admitted the availability of iron ore in the market at a higher price.

Can A take the plea of impossibility of performance? Give reasons.

Ans. Hint:

Q.19 ‘X’ entered into a contract with ‘Y’ to supply him 1,000 water bottles @ ` 5.00 per water bottle, to be delivered at a specified time. Thereafter, ‘X’ contracts with ‘Z’ for the purchase of 1,000 water bottles @ ` 4.50 per water bottle, and at the same time told ‘Z’ that he did so for the purpose of performing his contract entered into with ‘Y’. ‘Z’ failed to perform his contract in due course and market price of each water bottle on that day was ` 5.25 per water bottle. Consequently, ‘X’ could not procure any water bottle and ‘Y’ rescinded the contract. Calculate the amount of damages which ‘X’ could claim from ‘Z’ in the circumstances? What would be your answer if ‘Z’ had not informed about the ‘Y’s contract? Explain with reference to the provisions of the Indian Contract Act, 1872.

Ans.

t dsseec eauhba htdr dwt i t ln c t mu d ec ooo danr wc sraf t f , a , t n o ge n wo nt hd . a i a tcd ce t i l l a p henu t ea chesmr t i f c e ebi h e r t h en ds wc n iee ohu nh hgctm i t w aymm oo omb lr rt e a afc fd df nwd i nt oon es nh ui la l sataon e l f e , tryw cpc l di .nea o v h lr a n u r t t t oak s n yn i mb o owd s udcyrs o ce e e r tehdc h i a l t c n u cth sl i i a o ot c n a t i n utiws h c s i m h e m o e w c i u pp t i m t c r h sso c r i e aa i wc h p c r h t yl t t e en nt r a r ho oa uc i e eh wtcje s t h np i h a tetcfs o cr d o u e abs ts gu n nomof e i C touh d y o t ael h lnc mr eh a w a e l a d etuoe t en hyc nrh Tba u kbt Baxendale”

“Hadley

’ ..fX ti fa ss o e o‘ 3hhceet t g 7’ c fi si nni a o nZi arr t o‘ms ppp o i t rm0gf t c ou5 no df ee rc.it St r 0 r e un i fa f pc cu’ o . mfloo o Y si o a e r m ‘ nt i t pa oneca h i s e i r t eei s dop h i hw v apset o r h tt rhuetngc p’phtena t X a i e r e e‘ef-w t b et ho hs / n t 0t)o e ’ e 0 narg c Y 5b‘ ocod s i dtfe eoh n c t l m ’n ea f w Z e s i t e o h s c a o‘r i bn n e mer i m f c p kof se i o n i r g d a nhref n h ( otft i m l s m i n e l t r e I e ii s da s l o . e f asr 2tal t u7 h c pde o q8 e b’ o p t 0 Z s1r‘ t c 5a i e , . e d h , t h t s t e0rt c t a u l nAw n t ×o y hi i t t b dc gTnsce e ea e . n’ dd l kri t Yi st na sts ‘ n o a a a ohh’b m s X t mCc e ‘ i e r l r , enu we t v e l ta rto b a t a h o oipc wbd f rdsa e r pnat r r 0el eIwn e 0tu e hh eoh0ao Tt hcT1ww

i.e

`

T C A R T N O C A F O E G R A H C S I D : 0 1 .

H C

10.13

te se e b gkd arl mau amo dew s fhe t o dg tn a n uam oea mcd i f ro ap t etn hc t au r o nt enm hoa c t e ,eh t t h c . ) ,e ats r s ndi t er n a oeop cww5 tr7 se ’ . e0 bh Y ‘ t e fco× o s n e enl I ’r t Z . t e t ‘ l o f u f di b ar ed f m e e e t da rh ot fw f no0 n i y0 e ea0 tb d o nee1 h. dvt aan ( hho / ’d 0 l e X u c5 ‘ i or 7 fwp I `

i.e

Q.20 Mr. JHUTH entered into an agreement with Mr. SUCH to purchase his (Mr. SUCH’s) motor car for ` 5,00,000/- within a period of three months. A security amount of ` 20,000/- was also paid by Mr. JHUTH to Mr. SUCH in terms of the agreement. After completion of three months of entering into the agreement, Mr. SUCH tried to contact Mr. JHUTH to purchase the car in terms of the agreement. Even after lapse of another three month period, Mr. JHUTH neither responded to Mr. SUCH, nor to his phone calls. After lapse of another period of six months. Mr. JHUTH contacted Mr. SUCH and denied to purchase the motor car. He also demanded back the security amount of ` 20,000/- from Mr. SUCH. Referring to the provisions of the Indian Contract Act, 1872, state whether Mr. SUCH is required to refund the security amount to Mr. JHUTH. Also examine the validity of the claim made by Mr. JHUTH, if the motor car would have destroyed by an accident within the three month’s agreement period.

(MTP Nov. 2018)

eyi n t hi t rd e dut nci e i e s c f s r yo e nf r oad t en tr a h e t ghs i l wl r a arh ses h a t e hr m yua t Fs r .e a pyh dnt eat , vfc eia s i r r e t g g n ga o am c eae hd h t ,&t t r c a e n d r on . t t i n t c ua u ot r et ci tdn fs o eao hrmc c f amno eieh a e r l bc Bc a se &a r thb c tf i as o r oe t ps n oea cdc

Ans. Hint :

. f sgHyo rrne e t h r n e i Mv Tr t i u v t n n l eg i .w i n t oeUuu a c H c v sf eo mr aoa Js s e r c Hw i t 3peec h . n a ush omef n sat i cimo n yc o h h e t a fy b t an c i o s h d n b u d w i c e hdeo e s l ce hc tgu( l r s an t c n fi ,l a t ei eh nn ea u r a i d cn cd bt uf i n s s o c t i ru cinoo s d os adamn f e n y a t e /i ner s n e 0 e l e y i a a t 0 b f t b t i f t r i 0 a i r e y s c , o u v ns0 b a amct r oe2f d t e h d pg n c n s safa ede o e m yl f j t o c r u o b o s rou sad d n t i w d wsn no s e mu e Hi tfu h n c d o f Ta fw e a l l ne l Uc r r nt a y orl e Hnoh i ent on Jats o c t bc o .cd h u r d y e e c r d d t l Mr e i h t t at e l s h i t t at hn e ep i i t nw e s d e . n r f e a tc t h a oer cd i ) e t s t o t . vooa c, y nft ne d e n r p e t e ei r o u e en eb hi vr a s d r d i i g o te b p g g c y y na f pt ea eaHt e it iv ih l heTr ,ni cy r t h ut eba b ntUcl e ihth s v , m n fi H i e d s e uc l e l sHJsu ou a we oe uC af . rpo og hUrso m mr TSMa t Haiwab `

Q.21 Mr. X and Mr. Y entered into a contract on 1st August, 2018, by which Mr. X had to supply 50 tons of sugar to Mr. Y at a certain price strictly within a period of 10 days of the contract. Mr. Y also paid an amount of ` 50,000 towards advance as per the terms of the above contract. The mode of transportation available between their places is roadway only. Severe flood came on 2nd August, 2013 and the only road connecting their places was damaged and could not be repaired within fifteen days. Mr. X offered to supply sugar on

S W A L S S E N I S U B : A N O I T C E S

10.14

20th August, 2018 for which Mr. Y did not agree. On 1st September, 2018, Mr. X claimed compensation of ` 10,000 from Mr. Y for refusing to accept the supply of sugar, which was not there within the purview of the contract.

On the other hand, Mr. Y claimed for refund of ` 50,000, which he had paid as advance in terms of the contract. Analyse the above situation in terms of the provisions of the Indian Contract Act, 1872 and decide on Y’s contention.

(Nov. 2018, 4 Marks)(MTP July 2021)

r ddei he et ot i h r c ,t e es e pp m i t dxr o eea r n fiu pf i d c e e fg pnor sana f o ao i h t nea c i s cli h t npd i wemd r e n drta euns t c o r ccs i u o ei e qyh t eb tr r a s dp e i n l tb o g c iy n s as ei r t b o t c n p a s . o e r t t cmc c n a aino s r act fe t o n s em eo comhc ncute aec&h r i mbc dt i ref m o omo vr f a o r esf s e r pegee n m eha op hth ct o t ndcen enabo harti c t Weoaa m t r g n t i i te n l b fvoo o ec

Ans.

srn e oo mts onr cee emp e be h te c rt ag o r at t t n h i oc r cu o as f n n r ee o hd i t wna rus oen e dg p i a o t m vn o eac bv e odk t a dya en m r ao e v t odr e cv o s i, i e d t ci se i e rr t . n t oi st ea d mhse e eorv eh i oe r g wtc a de nnnr aoue s oh nr bm ee hpi so wyt h rnc e aaw h, r t dtm r n i o uo or Fvc f te di i h o t m vr h t oo sf e rb me ope c c eon bte eu Ylq b e i s .s s r n Moo pc dm nia ass eA Xms . .od r co Meo b fl nto ei ent e we u th e bwd d ,o t8 c i 1r a0 e r 2p t n .e og cum i. eAt d hdde t neg r e2ta a s l n h a u c cop s i i ys t nl d et e vner i e ha g ut s eq e n e i hs i h t t b r t i a uw ns p I . tssd c eae ag t r awn t h m n a cr oai g cd h e we m hi b -l t / l ta 0a l a c 0h ht 0s t do0Y n 5 en . da r f uc M l o c o nXdt o.ns u crf t fi eMe e bdr n nnae aamb yif ct t i a il o l si n nbco oi soi t i s t s o d u i p t v e i l o t t s rmi e pitr t n dn ey ees l t uin a q Y o t e.s s esr u vbMh ou T , r bse . aov e t ee c en hu wa t gdov ndHd i e.a y gY l n p r .a par ahMs ,c a s s md ui i d oa hs rp Ti f `

Q.22 Mr. Rich aspired to get a self portrait made by an artist. He went to the workshop of Mr. C, an artist and asked whether he could sketch the former’s portrait on oil painting canvass. Mr. C agreed to the offer and asked for ` 50,000 as full advance payment for the above creative work. Mr. C clarified that the painting shall be completed in 10 sittings and shall take 3 months.

On reaching the workshop for the 6th sitting, Mr. Rich was informed that Mr. C became paralyzed and would not be able to paint for near future. Mr. C had a son Mr. K who was still pursuing his studies and had not taken up his father’s profession yet?

Discuss in light of Indian Contract Act, 1872?

y 2tl 7ct 8an 1ee hu ,t t q c e­ Ans e th b c u aWs r t e .l t n c b oa i s Cr s nto anp o i cm d i nas I efe hom e t o g fr c o e a b 6h , 5c t s c ni a od r i t t en c eho t s c n fi e o h s t st nl r e oud s i e s n i r v u oyd t rl i e pi m ebr i hs o t s f or op t e gmp nie i gb d rnt o i on ce d cv e r Ar i eu pq ue sr

(i) Can Mr. Rich ask Mr. K to complete the artistic work in lieu of his father? (ii) Could Mr. Rich ask Mr. K for refund of money paid in advance to his father?

(May 2019, 6 Marks)

Ans.

T C A R T N O C A F O E G R A H C S I D : 0 1 .

H C

ldf, &a e noc na do en i tca s o vrsnm e , e y r r sp t r e o r ur f maa e ofpcp n co o esac r o tf-f bc n o ta od c r y e nt at t r i n l a t iyl l o n r p oCbl a m c.ai e esrmt hno n i o l t i lSo t i . na c k n eg so y hi l s l l l t r a ,bae r o n y u t opt rs r ea i a r e h ph n e t . st fa gtpo c n f m i a ywr t oot c h i t r e af c cn s r ai i o t c dr phc n ee awf og cr xcso n eaeige n h r hc g eo i t r h r a fsi th h i u f o d t qa o c tde s l i reed u t n d aa h an n t f t s co i ysi t nshdrl a e ai wel u u g s t tr r , c e u e i a r t oar h r l hpuc l a t a t ea s ph i i hn wt d as seeh e r ho c mtt u s oys cben e ri bdod e t e t yn dt t n i n au l a ir b r gog i s ebe s eb obb pl ll t ma lo ihan h gss l l nne a i ohh n i s et vu&n t r s o i e t t i t fi ps a uees srnn ree fe bp o h ym st no dr nuaC uFd. ey oe .v rl t ir g be eaca heep r c t r r se no a h of ht dn o eeoe gehh r bwt a y o hot t ctr k a s sp i c e d a s g a te nb c i e act c r m. t &aa e n r s s odt a n co i e c oh Av a ct d e d u l c n o c e b n a c t i e s a c n e v i g e h t o t s n o i s i v o r p d e t a t s e v o b a e h t g n i y l p p ast ua hh Tt

.aa l flr o i sg Mi b l e li i s l kts k s sii so fpaeh c t o ny mo i ein b s s gn d i c naCe r i c.m n r e xehMr evc o i r rr f ge Re np e hp .t i ur r i sMae u f qf sb r eoe i t r shho ,dt n fn e nro r a uuu c u F o t e r a .l e i y ngt c ii lnc nn a noa e odpkh r a sec r g o& e r nwr e pa i c u h’ st i ac t C s a fs i i o n t .r r l sdM i a d an tn e c f aaoho s t t r . s t re t e e n l n t v l pi e u oa t l fa chop o c t esc mtn hta c i e o t as e,ncr e t cCoon r . p nr yto i e Mi t Kcr S ) ( e h& t d i eo cv ng i s n ,i e cm no ac ve db t ac . y t nai r i l t i b dni i o s a cs pt o ynp eem nvi oeg men h i t n fn e o iv r dde nep utu fns a e r r f o egt s hi n t n u oo mi t iu c a c l t a c i t n s ne o ar cf d e hog cyr i a d Re h c .ms r i ed Mr ) (

,r 2 e 7t 8f 1a ,i f t c y At i ti l c b ai r s t s n o op Cm ni ag i d n i nn I e ev hr Te fp o u 6s 5f no ot i n t u c eo Sc c fa o s nn oo i d s e i v g or ra ph c es hi t d os t d gn na i t d rs oc t ca ct An o c a

Ans.

-

i

10.15

ii

Q.23 On 20th September X agreed to sell to Y of 10 tons of a particular chemical to be manufactured in his factory @ ` 8,000 per ton to be delivered on 20th October. Calculate the amount of damages which could be recovered

by Y from X in each of alternative cases:

Case (a): The chemical could not be manufactured because of strike by the workers and X failed to supply the said chemical to Y on 20th October when the price of that chemical was ` 12,000 per ton.

Case (b) On 1st October, X informed Y that he was not going to supply the goods since the price of that chemical rose to ` 10,000 per ton on 1st October.

The price of that chemical, further rose to ` 12,000 per ton on 20th October.

Y decided to rescind the contract on 1st October.

Case (c) On 1st October, X informed Y that he was not going to supply the goods since the price of that chemical rose to ` 10,000 per ton on 1st October.

The price of that chemical, further rose to ` 12,000 per ton on 20th October.

Y decided not to rescind the contract on 1st October and to wait till 20th October. On 19th October, the entire chemical in the factory was destroyed by fire without the fault of either party.

CRACKER

Business Laws & Business Correspondence and Reporting AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO PAGE NO. BINDING TYPE

: : : : : : :

S.K. AGRAWAL, MANMEET KAUR TAXMANN FEBRUARY 2022 5TH EDITION 9789393880635 388 PAPERBACK

Rs. 395 | USD 36

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book is prepared exclusively for the Foundation Level of Chartered Accountancy Examination requirement. It covers the entire revised, new syllabus as per ICAI. The Present Publication is the 5th Edition for CA-Foundation | New Syllabus | May/Nov. 2022 Exams, authored by Dr. S.K. Agarwal & CA Manmeet Kaur, with the following noteworthy features:

u

u

[Most Amended & Updated] This book covers all the latest applicable amendments Coverage of this book includes: n

u

All Past Exam Questions l

CA Foundation Solved Paper – November 2020

l

CA Foundation Solved Paper – January 2021

l

CA Foundation Solved Paper – July 2021

l

CA Foundation Solved Paper – December 2021

n

Theoretical Questions

n

Short Notes

n

Case Studies

n

Practice Questions in Business Correspondence & Reporting

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