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Question
Legal Principle: An agreement entered into by way of a wager/bet is unenforceable in law.
Fact Situation: Thomas is very good at predicting the outcomes of cricket matches. Raja and Hoja give him rupees thousand each to enable him to bet with others about the outcome of a cricket match. Thomas wins rupees three lakh after betting three thousand rupees.
Which of the following statements is the most appropriate in relation to the legal principle stated above?
Options
Thomas must share rupees three lakh with Raja and Hoja equally.
Thomas must return rupees thousand each to Raja and Hoja.
Thomas need not share the three lakh with Raja and Hoja since it is the outcome of an unenforceable agreement.
If Thomas does not pay them rupees two lakh each, Raja and Hoja can sue him to recover their share.
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Solution
Thomas need not share the three lakh with Raja and Hoja since it is the outcome of an unenforceable agreement.
Explanation:
Effects of wagering agreement-According to the section 30 of contract act, "agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made". Thus in the case presented before us, there is no agreement and even If there was an agreement, it was by way of wager, so it is void under section 30 of the contract act. Hence option (c) is the most appropriate and Thomas is not required to share his winnings with Raja and Hoja as there was no enforceable agreement between them.
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Principle: When one person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the assent of that person to such an act or abstinence, he is said to have made a proposal.
Factual Situation: Xavier telegrammed to William, "Will you sell me your house? Telegram the lowest cash price." William also replied by Telegram "The lowest price for my house is ₹30 lakh. Xavier immediately sent his reply consenting to William's telegram by saying "I agree to buy your house for ₹30 lakh asked by you." William refused to sell his house.
Decision
LEGAL PRINCIPLE: A person is said to be of sound mind for the purpose of making a contract if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests.
FACTUAL SITUATION: Mr. X who is usually of sound state of mind, but occasionally of unsound state of mind, enters into a contract with Mr. Y when he was of unsound state of mind. Mr. Y having come to know about this fact afterward, wants to file a suit against Mr. X.
DECISION:
Principle: When a party to a contract has refused to perform or disabled himself from performing his promise in its entirety, the other party shall not put an end to the contract.
Facts: A engaged B on April 12 to enter his service on June 1, but on May 11, A wrote to B that his services would not be needed. On May 22, B joined C for employment.
Apply the legal principles to the facts given below and select the most appropriate answer.
Legal Principles:
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 and idem regarding the terms of the agreement.
2. Consideration is something that moves from the promise 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 contracts 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/she does not deserve to do so.
Facts: 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 RRP, they would be required to pay ₹ 500 per tyre in damages to Good tyre. This was agreed between the dealer and Bestmotors, which effectively made Goodtyre a third party to that agreement. Sometime after this, Bestmotor 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 is the correct reasons?
I. The good tyre could not claim for damages as only a party to a contract can claim damages under it.
II. The good tyre had not given any consideration to Bestmotors and therefore there could be no binding contract between the parties.
III. The good tyre 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.
