Reasoning the Reason

Reasoning The Reason



1. A contract comes into being from the acceptance of an offer. When the person to whom the offer is made signifies his assent thereto, the proposal is said to be accepted and the parties are at consensus ad idem regarding the terms of the agreement.

2. Consideration is something that moves from the promisee to the promisor, at the implied or express request of the latter, in return for his promise. The item that moves can be a right, interest, profit, loss, responsibility given or suffered, forbearance or a benefit which is of some value in the eyes of law.

3. Contractual rights and liabilities are exclusive to the parties to contract.

4. There are few exceptions to the doctrine of privity of contract like agency, trust, assignment and third-party beneficiary,

5. A quasi-contract is a contract that is created by the court when no such official contract exists between the parties to prevent a party from being unjustly enriched, or from benefitting from the situation when he does not deserve to do so.

1. FACTUAL SITUATION: Goodtyre is a tyre manufacturer who agreed with their dealer to not sell the tyres below a recommended retail price (RRP). As part of the agreement, Goodtyre also required their dealers to gain the same agreement with their retailers, who in this instance was Bestmotors. The agreement held that if tyres were sold below the to that agreement. Sometime after this, Bestmotors sold the tyres below the agreed price and Goodtyre sued for damages and an injunction to prevent them from continuing this activity. Bestmotors is arguing that Goodtyre could not enforce the contract as it was not part of the contract between the dealer and Bestmotors. The court decided that Goodtyre had no right to access damages. Which of the following are correct reasons?
I.  Goodtyre could not claim for damages as only a party to a contract can claim damages under it.
II. Goodtyre had not given any consideration to Bestmotors and therefore, there could be no binding contract between the parties.
III. Goodtyre was not listed as an agent within the contract and could therefore, not be included as a valid third-party who had rights to claim on the contract.

a) I only
b) II only
c) I and II
d) I, II, III.

2. FACTUAL SITUATION: X, by deed of gift, made over certain landed property to Y, her daughter. By the terms of the deed, which was registered, it was stipulated that an annuity of Rs. 3,000 should be paid every year to Z, sister of X. Y executed in Z’s favour an agreement promising to give effect to the stipulation. The annuity was, however, not paid and Z sued to recover it. Y is defending herself by claiming that there is no valid contract with Z. Which of the following can be ground/s for court’s decision?
I. A promise is enforceable if there is some consideration for it and it is quite immaterial whether it moves from the promisee or any other person.
II. Only a person who is a party to a contract may demand the execution of that contract from other party. But if there is third party beneficiary to contract then it is enforced to the extent of his/her benefit.
III. The agreement is valid as both Y and Z agreed to the same thing in the same sense.
IV. There is no privity of contract as Z has furnished no consideration. Y had promised to Z but consideration was furnished by X.

a)  I, II
b) III, IV
c) I only
d) II only.

3. FACTUAL SITUATION: A’s brother, B, tries to talk her into building a greenhouse in her large back-yard. She declines, but B is convinced that, if she were surprised by a lovely greenhouse, she would love it. Knowing that A makes good money, and could easily afford the greenhouse, B contacts greenhouse builder C, and arranges to have him erect the structure while his sister is at work one day.
A is not happy by her brother’s initiative, but the deed is done. B has directed C to bill his sister for the greenhouse, and that turns out to be the biggest surprise for her. She declines to pay, and B tells C he cannot afford it. C is now out, not only for payment for his many hours of hard work, but cash for the materials he used. He files a civil suit to claim against both A and B.

a) B is liable to pay as he has entered into contract with C for his services
b) A is not liable to pay as there is no contract between C and A.
c) A is liable to pay C the costs involved in building the greenhouse as she has been unjustly enriched by this deal.
d) A is liable as B is her brother and was acting on her behalf under her implied consent as she liked the greenhouse.

The answers are: 1. (d); 2. (a); 3. (a).


Directions (Qs. 1 – 4): Study the following information carefully and answer the questions given below.

Three ladies and four men are a group of friends i.e. P, K, R, Q, J, V and X. Each one has a different profession i.e. Lawyer, Travel Agent, Air-hostess, Doctor, Professor, Consultant and Jeweller and each one owns a different car i.e. Alto, Corolla, Santro, Lancer, Ikon, Scorpio and Esteem, not necessarily in that order. None of the ladies is a consultant or a Lawyer. R is an Air-hostess and she owns an Ikon car. P owns a Scorpio. K is not a Doctor. J is a Jeweller and he owns Corolla. V is a Lawyer and does not own Alto. X is a Consultant and owns Santro. The Doctor owns Esteem car whereas the Professor owns Scorpio. The Travel Agent owns an Alto. None of the ladies owns a Scorpio.

1. Who are the three ladies in the group?

a)V, R, K
b) R, P, J
c) R, K, Q
d) Data inadequate

2. What car does Q own?

a) Esteem
b) Lancer
c) Alto
d) Santro

3. Who owns the car Lancer?

a) V
b) X
c) K
d) Data inadequate

4. What is the profession of K?

a) Doctor
b) Professor
c) Travel Agent
d) Data inadequate

The answers are: 1. (c); 2. (a); 3. (a); 4. (c).


In terms of Purchasing Power Parity (PPP), rural households have more purchasing power than do urban and suburban households at the same income level, since some of the income urban and suburban households utilize for food and shelter can be utilized by rural households for other needs.

Which of the following inference is best supported by the statement made above?

a) All three types of households, urban, suburban, and rural, spend more of their income on housing than all other purchases combined.
b) Rural households have lower housing and food costs than do either urban or suburban households.
c) The median income of suburban and urban households is generally more than that of rural households.
d) The average rural households include more people than does the average urban or suburban households.

The answer is (b).

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