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

Mehta Traders agrees to sell 50 maunds of rice to Gupta at a fixed price, with no delivery time fixed. Gupta later informs Mehta that he will not accept the rice if tendered. What is Mehta entitled to receive from Gupta as compensation, according to the Act's illustration?

Mehta can claim the amount, if any, by which the contract price exceeds the price he can obtain for the rice when Gupta announces he will not accept it. Compensation is the shortfall in value, not the entire price.

  1. AThe amount, if any, by which the contract price exceeds what Mehta can obtain for the rice at the time Gupta says he will not accept itCorrect
  2. BThe full contract price regardless of the market price
  3. CThe difference between the contract price and the price prevailing one year after the refusal
  4. DNothing, because no time for delivery was fixed

Explanation

Illustration (c) to Section 73 says the seller gets the excess, if any, of the contract price over what he can obtain for the rice at the time the buyer announces refusal. The full price would ignore the resale value, so option B is wrong.

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