CMA Foundation · Fundamentals of Business Laws and Business Communication · Essential Elements of a Contract, Offer and Acceptance
Gupta Textiles orally agrees to sell 50 bolts of cloth to Rao Garments for a price to be fixed later, with no method for fixing the price and nothing that makes it ascertainable. Which essential element of a valid contract is most directly lacking?
The missing element is certainty of terms. Because the price is left to be fixed later and no method exists to determine it, the meaning of the agreement is uncertain and cannot be made certain, so it is void and not enforceable.
- ACapacity of parties
- BCertainty of the terms of the agreementCorrect
- CFree consent
- DLawful object
Explanation
An agreement whose meaning is not certain, or cannot be made certain, is void. Here the price is left open with no method to determine it, so the terms are uncertain. Capacity, consent and object are not in doubt from the facts.
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