Question

Which follow from application of the undermentioned legal principle:

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 a person can buy from the dealer. Tapan carried on his business under this order for a while, but he refused to pay sales tax on his sale transactions on the ground that these were not the contracts freely entered into by him.

DECIDE

• 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: (D)

Both (A) and (C)

According to Section $10$ of the Indian Contract Act, $1972$, " 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 not hereby expressly declared to be void." As per the given legal principle, contract is an agreement freely entered into between the parties. Therefore option (d) is the correct answer because the price and quantity were not negotiated by and again the new order forced him to enter into contracts.