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CMA Intermediate · Business Laws and Ethics · Indian Contracts Act, 1872

Meera invites her friend Kavita to dinner at her house on Sunday, and Kavita accepts. Meera cancels because of a family event, and Kavita, who had skipped another party, claims damages. What is the likely legal position?

Kavita fails because a dinner invitation is a social agreement, and parties to such arrangements ordinarily do not intend legal consequences. Without an intention to create legal relations there is no enforceable contract, so the loss from skipping another party gives no right to damages.

  1. AKavita succeeds, because an accepted invitation is a valid contract
  2. BKavita succeeds, because she suffered a loss by relying on it
  3. CKavita fails, because social agreements ordinarily lack the intention to create legal relationsCorrect
  4. DKavita fails, because the agreement lacked a written form

Explanation

Social and domestic arrangements are presumed not to be meant to create legal obligations, so no contract arises. Reliance loss does not change this. Writing is not the reason for failure, since the writing requirement does not apply generally.

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