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

Hari agrees to buy 50 maunds of rice from Balu at a stated price, with no time fixed for delivery. Hari later informs Balu that he will not accept the rice if tendered. Balu can obtain ₹60,000 for the rice at that time, against a contract price of ₹70,000. What does Section 73 illustration (c) indicate about Balu's compensation?

Balu is entitled to ₹10,000. Where no delivery time is fixed and the buyer announces refusal, compensation is the amount by which the contract price exceeds the price obtainable when the refusal is communicated, here 70,000 minus 60,000.

  1. A₹60,000, the market value of the rice
  2. B₹10,000, being the excess of the contract price over the price obtainable when Hari declared refusalCorrect
  3. CNothing, until a delivery date is fixed and passes
  4. D₹70,000, the full contract price

Explanation

Where no time is fixed, the illustration measures compensation by the excess of the contract price over the price obtainable when the buyer says he will not accept. Here that is 70,000 - 60,000 = ₹10,000. Option C is wrong because the refusal itself is the reference point.

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