Lawful object and consideration

A cooperative housing society was formed in 1926 with bye-laws restricting membership exclusively to persons belonging to a particular community. One of its members sold his property with the consent of the society, and the purchaser (also from the same community) became a member. Later, this purchaser sought to sell the property to an outsider who did not belong to that community. The society refused permission, citing its bye-law restricting membership only to community members. The purchaser challenges this refusal, arguing that: The bye-law is contrary to Section 23 of the Indian Contract Act, 1872, since its object and consideration are opposed to public policy (discrimination on grounds of religion). The refusal violates constitutional principles of equality (Article 14) and the right to acquire, hold and dispose of property (Article 300A).

On the other hand, the society argues that: Membership in a cooperative society is a matter of contract between the members, and restrictions voluntarily agreed upon in the bye-laws cannot be challenged as unconstitutional. The bye-laws were duly registered under the Cooperative Societies Act and do not contravene any statutory provision. The freedom of contract and right to form an association under Article 19(1)(c) allows the society to limit membership to persons of its choice. Is the bye-law restricting membership to persons of a particular community is void under Section 23 of the Indian Contract Act, 1872 on the ground of being opposed to public policy?

• Yes. Bye-law is void

• No. Bye-law is valid

• Partly void and partly valid

• Voidable

Sadasivan and Vijayalakshmi obtained a decree of divorce by mutual consent under Section 13B of the Hindu Marriage Act. In their joint petition, they inserted a clause stating:

"We mutually agree and consent that neither of us has any claim or right on each other’s person or property."

Later, Vijayalakshmi filed a petition under Section 125 of the Code of Criminal Procedure, 1973 seeking maintenance. Sadasivan opposed it, arguing that the agreement clause prevented her from claiming maintenance. Under the Indian Contract Act, 1872, is such an agreement clause valid and enforceable?

• Yes, the clause is valid, because parties have freedom to contract

• No, the clause is void under Section 23 of the Indian Contract Act, 1872, because it defeats the provisions of Section 125 CrPC

• Yes, the clause is valid, because maintenance under Section 125 CrPC is a private right of the wife, which she can relinquish voluntarily.

• The clause is partly valid: it can bar civil law claims for maintenance under personal laws, but not a statutory claim under Section 125 CrPC.

A customer entrusted a new saree and blouse to a laundry firm for dry cleaning. The saree was lost due to the firm’s negligence. The customer sued for the full market value of the saree. The laundry firm relied on a printed condition on the back of its receipt stating:
"In case of loss, the customer is entitled to claim only 50% of the market value of the article."

The firm argued that since the customer accepted the bill, he was bound by this condition and could not claim more than 50%.

Which of the following best represents the legal position under the Indian Contract Act, 1872?

• The clause is valid, because parties are free to contract on any terms, and acceptance of the bill amounts to consent.

• The clause is void, because it is opposed to public policy and defeats the law relating to liability for negligence; hence, the laundry is liable for the full market value.

• The clause is valid only if the loss occurred without negligence on the part of the laundry firm.

• The clause is partly valid: the customer can recover more than 50% only if fraud or misappropriation is proved; otherwise, recovery is restricted to 50%.

If a prostitute enters into a contract for renting a house, what is the legal status of this agreement under the Indian Contract Act?

• Valid

• Void

The defendant promised to marry the claimant once the defendant’s father died. He later changed his mind, and told the claimant that he would not marry her at all. The claimant sued for breach of contract. The defendant’s father was still alive. Will the claimant succed

• Yes.

• No.

Rohit hires an event company to organize his daughter’s wedding in December. In October, the company takes up another massive project and tells Rohit it will only provide decoration, not catering or music, as originally promised.

• He must accept partial services since some part of the contract is being performed.

• He can cancel the whole contract and hire another company for all services.

• He must renegotiate the contract terms to fit the company’s convenience.

• He has no remedy until the wedding day actually comes.

A startup, BrightTech, entered into a one-year contract with SoftServe Pvt. Ltd. for providing cloud storage services. After three months, SoftServe informed BrightTech that it would no longer provide any services due to a change in its business model.

What can BrightTech legally do under the Indian Contract Act?

• Wait until the one-year term ends before taking legal action.

• Immediately treat the contract as terminated and claim damages.

• Force SoftServe to continue providing services.

• Accept partial services from another company without terminating the contract.

Amazon contracts with Suresh, a transporter, to deliver 200 boxes. Suresh uses his drivers and trucks to complete the delivery. Is this valid performance?

• Yes, because the contract did not require Suresh personally.

• No, because only Suresh should perform the contract.

• No, unless Amazon gave written approval.

• Yes, but Suresh must reduce his fee.

Ramesh hires Neha, a famous artist, to paint his wife’s portrait. Neha sends her student to do it instead. Ramesh refuses to accept it. What is the correct legal position?

• Ramesh must accept it, since the work was completed.

• Ramesh may reject it, because only Neha was supposed to perform.

• Ramesh must pay half the agreed price.

• Ramesh must allow the student to finish.