8/3/2019 LAW WAC

1/1

Ans. 1 Section 12 of the contract act 1872 defines the persons of unsound mind. Here in the given case Prathap

who was usually of unsound mind but occasionally of sound mind can enter contract only, when while entering, he

was of sound mind And Giridhar who was usually of sound mind but occasionally of unsound mind, may not make

contract, when he is of unsound mind. Section 68 of the ICA 1972 says that agreement entered by persons of

unsound mind is void. But the soundness of the brothers at the time of making contract is not mentioned anywhere

in the case so it will be deemed that they both were sound or even if one of them was not, the agreement shall be

deemed valid. Also the soundness of the brothers can be proved by the fact that the amount for which they agreed

was fair and reasonable and they duly accepted Rs. 1 lakh as advance. It is a clear case of anticipatory breach of

contract. So Prathap and Giridhar are liable to sell the land to Balaram unless they succeed in proving that bothwere unsound while entering contract.

Ans.2 Section 70 of the ICA 1872 defines Obligation to pay for non-gratuitous acts one of the Quasi Contract (free,

voluntary act, done without any reason). When a person (Mr. A) does anything for another person (Mr. B), with an

intention to do so non-gratuitously (for E.g.-as a legal obligation or duty, what agent does for principal) and such

person for whom it is done (Mr. B) enjoys the benefit, the person named Mr. B is bound to make compensation to

Mr. A.Here Pradeep saved Manavs property from fire and incurred some costs for the act. Pradeep is not entitled

to compensation from Manav since the act done by Pradeep here is on moral grounds not lawfully, the intention of

Pradeep here is just gratuitous and there is no such benefit enjoyed by Manav, overall it was a loss for Manav so

Pradeep is not entitled to any compensation. But still compensation can be awarded by Manav to Pradeep on

moral grounds at Manavs Discretion.

Ans3. As per Agency provisions of the ICA 1972-An agent must not set up his own title to the goods or land which

he receives from the principal as an agent. If he does so he is liable for conversion of property in the name of

principal. He should not mismanage the business and its funds. He should not put up in a situation where his

interest and duty conflict. Not to make secret profits from agency. To render proper accounts to the principal.

Acting as a Hindrance in the smooth conduct of business. These are the various contravention took place on the

part of Kumar so the co has right to terminate the agency with immediate effect. The company will succeed in

getting permanent injunction against Kumar. Whereas will not be granted temporary injunction as there is a prima

facie breach of agency.Injunction-where a party is in breach of a negative term of a contract, the court may by

issuing an order, restrain him from doing what he promised not to do. Such an order of the court is known asInjunction.

Ans.4 Section 62 to 68 deals with the Liability for the misstatements in prospectus. If there is a misstatement of

material information in a prospectus and if it has induced any shareholder to purchase shares, he can-

-Rescind (to invalidate, to revoke or repel) the contract and

-Claim damages from the company whether the statement is fraudulent one.

The contract can be rescind or say remedy to shareholder is available only if the following conditions are satisfied-

1. The statement must be a material misrepresentation of a fact. (This was there in case).

2. The statement must have induced the shareholder to take the shares. (This was also there in the case).

3. The statement must be untrue. (One of the fact of case).

4. The deceived shareholder is an allottee and he must have relied on the statement (Here the allottee is Mr. Ashok

not Mr. Ajay who is just deceived so he cannot enjoy the remedy of rescission of the contract)

5. The proceedings for recession must be started as soon as the allottee comes to know about the misleading

information and necessarily before liquidation, which is not happening in case.

Another remedy available here is Damages for deceit-He can sue co and claim damages from co after proving the

misstatement by co. in prospectus but for this also above 5 conditions should be met, Which are again not fulfilling

in the case so Due to the non fulfillment of condition 4 and 5 Ajay contention that he should be indemnified by

directors holds no weight, Hence he wi ll not succeed in claiming any of the damages.