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CMA Foundation · Fundamentals of Business Laws and Business Communication · Discharge of Contracts

Anil contracts to deliver 50 maunds of saltpetre to Bimal on 1 January at a fixed price. Before 1 January Bimal contracts to resell it to Chand at a price higher than the 1 January market price. Anil fails to deliver. How is Bimal's compensation estimated?

Bimal's compensation is measured by the market price on 1 January, the date fixed for delivery, and not by the profit he expected from the resale to Chand. That resale profit is outside the compensation estimated under the Act's illustration.

  1. ABy the profit Bimal would have made on the sale to Chand
  2. BBy the market price on 1 January, not the profit from the sale to ChandCorrect
  3. CBy the price Chand agreed to pay, in full
  4. DBy Bimal's expenses of preparing the resale, only

Explanation

Illustration (o) to Section 73 states that the market price of the first of January, and not the profit from the sale to C, is taken into account. The resale profit was not communicated and is too remote, so option A is wrong.

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