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CMA Foundation · Fundamentals of Business Laws and Business Communication · Essential Elements of a Contract, Offer and Acceptance

Priya Textiles agrees in writing to supply 500 metres of silk to Rahul on 10 May and Rahul agrees to pay ₹1,00,000 on 15 May. On 10 May Priya delivers the silk, but Rahul has not yet paid. How is the contract best classified on that day?

The contract is executed on Priya's side and executory on Rahul's side. Priya has completed her promise by delivering the silk, while Rahul's promise to pay is still unperformed. So neither fully executed nor fully executory describes it, and consideration is present.

  1. AExecuted on both sides
  2. BExecutory on both sides
  3. CExecuted on Priya's side and executory on Rahul's sideCorrect
  4. DVoid for want of consideration

Explanation

Priya has performed her whole promise by delivering the silk, so the contract is executed so far as she is concerned. Rahul's payment is still pending, so it is executory on his side. It is not executed on both sides, because payment is outstanding. Consideration exists in the mutual promises, so it is not void.

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