LEGAL ASPECTS OF BUSINESS

ASSIGNMENT
SUBMITTED BY: - Yashvi Bansal [ BBA 2018-21 (B)]
SUBMITTED TO: - Prof. Pooja Parikh

1. On Monday, Big Boss Ltd. (BB) offered to sell 300 mics to Salman Khan Productions Ltd.
(SKP) at Rs. 1,000 per watch. The offer to (SKP) is sent by fax and includes the following
statement:
“Please send an acceptance by 12pm today. Delivery will occur on Wednesday”.
SKP emails an acceptance at 10am. The email is accidentally deleted by an administrative
assistant at BB before it is passed on to BB’s management.
Meanwhile, SKP enters into a contract with Next-in-Line Ltd to produce new batteries that
can be sold with the mics.
Advise SKP whether there is a binding contract with BB. Would your advice differ in the
following circumstances, and if so, why?
(a) SKP telephoned an acceptance to BB on Monday afternoon.
(b) SKP faxed an acceptance to BB before Monday 12pm, but the fax machine at BB failed to
print out the fax due to lack of a new printing cartridge.
(c) The offer from BB had stipulated the following statement:
“Please send your acceptance by first class registered post sent before 12pm.” GP sent a
letter of acceptance before 12pm but by unregistered post which was never received by BB.

ANSWER: -

The mail is automatically deleted, but SKP thinks that they have accepted. But the issue lies
within the Offeror(BB), and the Offeree(SKP) thinks the transaction is complete. In this
case, the general test for ‘receipt’ is satisfied, and in view of the fact that the problem lies
within the BB’s ‘sphere of control’, there is no reason why an exception should be made.
There is, hence, a contract and legally binding.

a. Since telephone as a mode of communication is more direct than an email, SKP can
transmit the acceptance to BB whereby BB gets knowledge of it without further delay.
Also, to make it a valid acceptance, it should have been made by SKP on the same
day at 12 pm itself and not on Monday , but still the acceptance has been before the
day of the contract that has to be executed, so it is valid and binding.
 b. Since SKP faxed an acceptance to BB before Monday 12pm, but the fax machine at
BB failed to print out the fax due to lack of a new printing cartridge. This was a valid
acceptance on SKP’s part but the error was on the part of BB. There will be a binding
contract between the two as the fax was efficiently transmitted on SKP’s end but BB
failed to get it into its knowledge so. Hence the contract is valid and binding.
c. There was a default on SKP’s part where proper mode of transmission was
mentioned, yet they sent the unauthorised post due to which it was not received by BB
to form a valid acceptance to execute the contract. As they did not meet the criteria
mentioned by the BB, it is not valid contract and hence not legally binding.

2. Prem (P) put the following advertisement in the local newspaper that was distributed on
Monday:

“Motorcycle for sale. Excellent condition. Price: Rs. 3000. Tel. 1900202020. Fax. 1900 202
020”.
On Tuesday morning, Raj (R) telephoned the number provided in the advertisement. P was
away at the time and the call was answered by P’s girlfriend, Jiana (J), with whom P had just
had an argument. R explained to J that he was calling in response to the advertisement and
added: “I want to buy the motorcycle. I’ll send a fax to confirm”. J replied: “Fine. I’ll tell P
when he comes back home”.
R sent immediately thereafter a fax stating: “I am interested in buying your motorcycle at the
advertised price. I assume it is registered”.
P’s fax machine was not loaded with paper at the time, so R’s message was not printed out.
When P arrived home early Tuesday evening, J said to him: “Your stupid motorbike isn’t
particularly popular. Only one person has rung about buying it”.
P asked her if the person had provided their contact details, and she replied “no”. P, feeling
irritated, then went upstairs to his study where he discovered that the fax machine was out of
paper. He loaded it with paper, and received the print-out of the fax from P.
He noticed that there was an email address in the letterhead used by R, so he immediately
emailed R stating: “I agree to your offer to buy my motorcycle”. R received only part of this
message due to a defect in the modem in his computer. The next day, R saw another
motorcycle advertised for sale which appeared to be a better buy.
Advise R whether he has already entered into a valid contract to buy P’s motorcycle.
ANSWER: -
R has entered into a valid contract with P. As, the communication of proposal to sell the
motorcycle was within R’s knowledge and he even to responded to P and got the
confirmation.. The communication is complete as the fax sent by P of confirming to R that
he has agreed to the offer made, even though only few contents were seen, R still knew that P
agreed. The proposal and its acceptance has already been made to which R is obligated to
buy the motorcycle unless he decides revoke back his interest to buy for buying the
motorbike.