Contract Act_Practical Problems_46

'A' applies to a banker for a loan at a time when there is stringency in the money market. The banker declines to make the loan except at an unusually high rate of interest. A accepts the loan on these terms. Whether the contract is induced by undue influence? Decide.

For relief on ground of undue-influence under Section 16, two requirements need to be satisfied, viz.,

(i) the party alleged must be in a position to dominate the will of the other; and
(ii) he must have exercised that domination to obtain an undue advantage.

In the given case, a bank cannot be said to be in a position to dominate the will of the borrower — the borrower having option to borrow from other banks or other sources.

Thus, contract cannot be said to be induced by undue influence.

Contract Act_Practical Problems_45

A offers to B his scooter for Rs. 6,000. B writes back agreeing to buy it for Rs. 5,500. Is there a concluded contract between A and B for sale of the scooter for Rs. 5,500?

No; For conclusion of a contract it is necessary that the offer of the party be accepted in absolute and without any qualifications or conditions. In the present case. B's agreeing to buy the scooter for Rs. 5,500 instead of the proposed amount of Rs. 6,000, only amounts to a fresh proposal or counter-proposal and doesn't constitute acceptance of the proposal or offer of A.

Contract Act_Practical Problems_44

Anil agrees with Gopal to let out the house under construction and obtains an advance for the purpose. The house is, however, requisitioned by Government and, therefore, Anil is unable to honour his promise. What are the rights of Gopal against Anil? Can Gopal recover damages for breach of contract?

No- Gopal cannot recover damages for breach of contract. The problem in question relates to Section 56 of the Indian Contract Act. According to Section 56, a contract becomes void in the event of supervening/subsequent impossibility as to its performance. As the house is requisitioned by the Government (assuming under the legitimate powers). Anil shall be excused of his obligations, the contract becoming void under Section 56. However, Gopal can claim refund of the advance made by him to Anil. Section 65, in this regard, provides that when an agreement becomes void, any person who has received any advantage under such agreement or contract is bound to restore it.