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

Rohan Traders agrees to supply 200 bags of rice to Mehta Stores, and says it will deliver the rice only if Mehta Stores first waives an earlier dispute over an old bill. Mehta Stores refuses the delivery. Which statement is correct under Section 38?

The offer is invalid because it was not unconditional. Section 38 requires an offer of performance to be unconditional, and demanding a waiver of an unrelated dispute is a condition beyond the contract. Therefore Mehta Stores' refusal does not protect Rohan Traders under the Section.

  1. AThe offer is valid, because the promisor was ready to deliver all 200 bags
  2. BThe offer is invalid, because it was not unconditionalCorrect
  3. CThe offer is invalid only because the delivery was not made in writing
  4. DThe offer is valid, because every refusal by a promisee protects the promisor

Explanation

Section 38 requires every offer of performance to be unconditional. Rohan Traders attached a condition about waiving an old dispute, which is outside what it was bound to do. So the offer does not have the protective effect of Section 38. Section 38 does not require a written offer.

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