Question

LEGAL PRINCIPLE: Contract is an agreement freely entered into between the parties.
FACTUAL SITUATION: Tapan was a dealer in mustard oil. The Government of India by an order issued under the Essential Commodities Act, fixed the price of mustard oil, and also the quantity which is a person can buy from the dealer. Tapan carried on his business under this order for a while but be refused to pay sales tax on his sale transactions on the ground that these were not the contracts freely entered into by him.

• A. Tapan would succeed because the price and quantity were not negotiated by him
• B. Tapan would not succeed because free consent between the parties was there despite the restriction on price and quantity
• C. He would succeed because the Government under the new order forced him to enter into contracts
• D. both a and c

Answer 1

Answer: (B)

Tapan would not succeed because free consent between the parties was there despite the restriction on price and quantity

Section 10 states, "All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void." Since, there was a free consent between the parties, Tapan has to pay the sales tax.