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Chapter 9: Consideration: Cases Legal Aspects of Business, 3 rd Edition

Chapter 9: Consideration: Cases Legal Aspects of Business, 3 rd Edition. Consideration: Cases. Case: Agreements and Contracts.

francis-frazier
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Chapter 9: Consideration: Cases Legal Aspects of Business, 3 rd Edition

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  1. Chapter 9: Consideration: CasesLegal Aspects of Business, 3rd Edition

  2. Consideration: Cases

  3. Case: Agreements and Contracts Vishal is setting up an industry. Towards this, he has to hire the services of information technology consultants to develop software. Explore the following four different agreements between Vishal and the consultants and decide whether these are contracts or not. In other words, identify the consideration for both the parties: Agreement 1: Rajesh will prepare a software for a fee of Rs one lakh.

  4. … cond Agreement 1: Rajesh will prepare a software for a fee of Rs one lakh. Consideration for Vishal: Software Consideration for Rajesh: Rs. 1 Lakh

  5. …cond Agreement 2: Ramesh will prepare a software. Vishal in turn will give him his laptop. Consideration for Vishal: Software Consideration for Ramesh: Laptop

  6. … cond Agreement 3: Mana will prepare a software for Vishal. Vishal will in turn give him the right to use the computer facilities at his office for one year. Consideration for Vishal: Software Consideration for Mana: Right of access to computer facilities

  7. … cond Agreement 4: Ria will prepare a software for Vishal. Vishal in return will prepare an architectural plan for a house for Ria. Consideration for Vishal: Software Consideration for Ria: Architectural plan

  8. Summary Consideration is the benefit to the party which can be in cash or kind; a good or a service; tangible or intangible. The key issue is does it lead to a benefit to the party.

  9. Case: Crossing the Ganges Ramesh challenged Akash, “I will give you Rs. 1000 if you swim across this river.” Ramesh took out money from his pocket and announced, “Here is the money.” Akash took the challenge and swam across the river. Akash is demanding the promised money while Ramesh refuses to give the promised money. Is there an agreement between the parties? What is the consideration for the parties? Should this agreement be enforced?

  10. Summary Some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.

  11. Summary The British courts defined consideration as: ‘rights, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.’

  12. Case: Boarding City Bus Sunil had not fully boarded the bus but the conductor negligently sounded the bell for the driver to proceed. Sunil had got hold of the rail and had one foot on the bus. Sunil got thrown off the bus and consequently, suffered injury. There was a provision for paying compensation in such cases under the ‘contract for conveyance of a passenger’. However, the transport company had given free pass to all the college students who came from families with limited means. Sunil was one among them. Is Sunil eligible for compensation?

  13. Case: Carbolic Smoke Ball The company claimed that consideration for Ms. Carlill was to get the money but there was no consideration flowing to the Company. Ms. Carlill falling ill with influenza could not be a consideration for the company. She could get the money only if there was a consideration for both the parties.

  14. Judgement Can it be said here that if the person who reads this advertisement applies thrice daily, for such time as may seem to him tolerable, the carbolic smoke ball to his nostrils for a whole fortnight, he is doing nothing at all - that it is a mere act which is not to count towards consideration to support a promise. … Inconvenience sustained by one party at the request of the other is enough to create a consideration. It appears to me that there is a distinct inconvenience, not to say a detriment to any person who so uses the smoke ball.

  15. Case: Exchange of Books Let us revisit the case Exchange of Books. Aman argued that the following declaration on the back of the receipt is an offer: Goods once sold will be exchanged and redeemed within 15 days of purchase. Please retain and present your bill (cash memo) for the exchange. Books on Travel, Astrology, Cookery and Magazine would be exchanged at our discretion only.

  16. Case: Shares on Offer Ajay said to Jeet, “I offer to sell 60 shares of Omega Ltd. for Rs. 3 lakhs.” Jeet replied, “I will get back to you by 5.00 PM but you cannot revoke the offer in this while.” Ajay responded, “Fine.” Ajay saw the price of the script go up at the stock exchange. Ajay called Jeet at 3.00 PM and withdrew the offer. 1. How many distinct offers are there between Ajay and Jeet? 2. How many agreements are formed between Ajay and Jeet? 3. Can Ajay withdraw the offer?

  17. Case: Prospecting to buy house Sushman offered to Yash in writing: “I offer to buy the flat for Rs. 40 lakhs. The offer will not be revoked for 5 days. In this while, you will not advertise the flat for sale or receive offers from others.” Sushman revoked the offer the third day. A dispute has arisen between Sushman and Yash. Decide.

  18. Judgement: Bank of India It is a rule of English law that a promise to keep an offer open needs consideration to make it binding and would thus only become so if the offeror gets some benefit, or the offeree incurs some detriment, in respect of the promise to keep the offer open. The offeree in such a case is said to 'purchase an option,' that is, the offeror, in consideration usually of a money payment, sometimes nominal, makes a separate contract not to revoke the offer during a stated period. The position is similar where the offeree expressly or impliedly promises to do or refrain from doing something in exchange for the offeror's promise not to revoke the offer.

  19. The scheme floated by the State Bank of India contained a clause (Cl. 7) laying down the mode and manner in which the application for voluntary retirement shall be considered. The relevant clause as referred to herein before creates an enforceable right. In the event the State Bank failed to adhere to its preferred policy, the same could have been specifically enforced by a Court of law. The same would, therefore, amount to some consideration.

  20. Case: Auction of Airlines Tickets Open an account at the website, mention the credit card number and authorise debiting in the even of being a highest bidder. Bid for a particular flight electronically. If another person puts a higher bid, the person will be informed that his bid has been exceeded. The bidding closed at a specified time. After the auction closes, the internet site would debit the credit card and generate a PNR number for the ticket. The winner is to take the PNR number and a photo identity to the local office of the airlines and collect the ticket.

  21. … cond Relevant Terms and Conditions The airlines reserves the right to cancel, amend, withdraw/partial withdraw and/or terminate this scheme without prior notice/intimation. On account of reasons beyond the control of the airlines or any other circumstance, even if PNR is issued and auction has been won, ticket may not be issued and money will be refunded. Once a customer has bid for a ticket, he/she cannot withdraw from the bid.

  22. Case: Abhijit withdraws Abhijit bid for a ticket in an auction for Ahmedabad – Delhi sector for November 20 for Rs. 3200. The bid was open for 4 more days. Abhijit decided to withdraw from the bid. Abhijit send an email to the internet site cancelling his bid. He also sent a fax informing the site of withdrawal of his bid. He received no communication from them. His bid amount of Rs. 3200 continued to show as the last bid. Despite receiving all communications, the site issued him PNR and charged his credit card.

  23. Case: Savita Withdraws Savita bid for a Mumbai-Bangalore ticket for November 7 for Rs. 3700. She received an email from the internet site announcing that she was the highest bidder and a PNR number was generated and her credit card was charged the amount. She was going to Bangalore to attend a job interview. The company postponed the interview to a later date. Savita immediately informed the internet site and the airlines through email, fax and telephone that she was not going to be travelling to Bangalore and the amount charged should be credited back to her account. Despite this, the amount was not returned back to her.

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