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CMA Foundation · Fundamentals of Business Laws and Business Communication · Essential Elements of a Contract, Offer and Acceptance

Anand Steel agrees to deliver 100 bales of cotton to Bhatia at Bhatia's warehouse on 1 March. Anand brings the cotton on the day, but Bhatia refuses to accept it. Which statement is correct under the Act, assuming the offer of performance satisfied all statutory conditions?

Anand is not responsible for non-performance and keeps his rights under the contract. A valid offer of performance that the promisee refuses protects the promisor, provided it is unconditional, made at a proper time and place, and lets the promisee inspect the goods.

  1. AAnand is liable for non-performance because delivery was not accepted
  2. BAnand's rights under the contract are lost because the offer was refused
  3. CAnand is not responsible for non-performance and does not lose his rights under the contractCorrect
  4. DThe contract is automatically void

Explanation

Section 38 says where a promisor has made a valid offer of performance that is not accepted, he is not responsible for non-performance and does not lose his rights under the contract. The offer must be unconditional, at a proper time and place, and give a reasonable opportunity to check the goods. Options claiming liability or loss of rights contradict this.

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