In: Accounting
Business Law
Question:
Maniam is an antique collector, he offered to buy Nanda’s antique’s piano at the price of RM15,000 although the current market price of the antique piano is higher than that. Both of them had signed the agreement and Nanda has received the payment from Maniam.
A few days later, Nanda changed his mind as he claims that the price of the antique piano is too low.
Required:
The report should be approximately 1,500-2,000 words
Part A. Advise Nanda on whether he can repudiate the contract with Maniam. (Confine your answer to the law of contract).
As per the Indian contract Act 1872,
Consideration need not be adequate: Consideration need not to be
of any particular value. It need not be approximately of equal
value with the promise for which it is exchanged but it must be
something which the law would regard as having some value.
Something in return need not be equal to something
given. It can be considered a bad bargain of the party.
It may be noted in this context that Explanation 2 to Section 25
states that an agreement to which the
consent of the promisor is freely given is not void merely because
the consideration is inadequate.
But as an exception if it is shockingly less and the other party
alleges that his consent was not free than
this inadequate consideration can be taken as an evidence in
support of this allegation.
Example: X promises to sell a house worth Rs 6 lacs for Rs. 1 lacs
only, the adequacy of the price in itself shall
not render the transaction void, unless the party pleads that
transaction takes place under coercion, undue influence or
fraud.
In our case, as Mr. Nanda was neither under coercion, undue influence nor any fraud has been committed to him. The contract was mutual as well as the consideration is present in the contract, Mr. Nanda cannot repudiate the contract for lack of consideration. If he does pass the possession of piano to Mr. Manium, he can be sued for damages and penalty.