CMA Foundation · Fundamentals of Business Laws and Business Communication · Performance of Contracts
Mehta Textiles made a valid offer of performance to Rao Garments by delivering the agreed fabric at the agreed place and time, but Rao refused to accept it without any lawful reason. What is the legal effect on Mehta?
Mehta is not responsible for non-performance and keeps his rights under the contract. Under Section 38, when a valid offer of performance is not accepted by the promisee, the promisor is protected from liability and does not forfeit his contractual rights. The contract is not void.
- AMehta is responsible for non-performance but may claim a reduced price
- BMehta loses all rights under the contract because delivery was not completed
- CMehta is not responsible for non-performance and does not lose his rights under the contractCorrect
- DThe contract automatically becomes void
Explanation
Section 38 states that where a promisor has made an offer of performance and it is not accepted, the promisor is not responsible for non-performance, nor does he lose his rights under the contract. Hence Mehta keeps his rights, and the contract does not become void.
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