faster motors limited vs sunny limited

8/7/2019 FASTER MOTORS LIMITED VS SUNNY LIMITED

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FASTER MOTORS LIMITED VS SUNNY LIMITED

ISSUES RAISED

1. Whether communication of proposal made by faster motors is valid according to indian contract law.?

2. Whether a third party can enter into a contract under the indian contract act.?

3. Whether Mr.Parth was negligent about going through the contract between Sunny and Hi-Tech, so theconsequence was that there were technical difficulties that had to face by Faster Motors Limited.?

4. Whether Faster Motors committed a breach of contract by entering into an agreement with Super-techwithout the termination of existing contract or intimation to Sunny Motors.?

5. Whether Sunny Motors is bound to perform the old contract substituted by a new orally communicated

contract.?


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SUMMARY OF ARGUMENTS

1. Wether communication made to third party is accepted according to indian contract law.?

y Sec 4. Of The Indian Contracts Act states that, Communication of a proposal is complete when itcomes to the knowledge of the person to whom it is made. It is therefore implied that anyamendments should be expressed to the party to the contract. Here Mr.Arjun was not aware ofthe new amendments made to the contract and Ms.Silver being a third party to the contractcannot make amendments without the consent of Mr.Arjun so Sunny Limited cannot be heldliable for the delays that arose due to lack of communication.


y Though Ms.Silver had acted on behalf of Mr.Arjun. Ms.Silver is a third party to the contract andshe has acted on her own accord without the authority of Mr.Arjun. A contract is an agreementbetween two persons and thus the doctrine of privity of contract can come into force here.

3. Whether Mr.Parth was negligent about going through the contract between Sunny and Hi-Tech, so theconsequence was that there were technical difficulties that had to face by Faster Motors Limited.?

y Mr.Parth, being one of the parties to the contract should have carefully gone through details in thecontract and should have inspected the pros and cons earlier. The negligence on the part ofFaster Motors cannot hold Sunny limited liable for the technical difficulties facied by the fasterMotors.

4. Whether Faster Motors committed a breach of contract by entering into an agreement with Super-techwithout the termination of existing contract or intimation to Sunny Motors.?

y Faster Motors did not express the termination of contract to Sunny and they entered into a newcontract with Super-Tech, so Faster Motors is liable to compensate Sunny for the breach ofcontract.

5. Whether Sunny Motors is bound to perform the old contract substituted by a new orally communicated

contract.?

y The old contract which directs Sunny Motors to complete the software development within the

stipulated time limit is voidable because a new contract has been entered into by Faster Motors.


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ARGUMENTS ADVANCED

1. Whether communication of proposal made by faster motors is valid according toindian contract law.?

Sec 4. Of The Indian Contracts Act states that, Communication of a proposal is complete only when itcomes to the knowledge of the person to whom it is made.

It is therefore implied that any amendments should be expressed to the party to the contract. So onlywhen offer is communicated it can be accepted. This principle enabled the Allahabad High Court inLalman Vs. Gauri Datt (1913) II AII LJ 489 to deal with a matter involving a very crucial issue. HereMr.Arjun was not aware of the new amendments made to the contract. Hence, when amendments werenot signified to Mr.Arjun, Mr.Parth could not have proceeded with the amendments.

Further Sec2(b) of The Indian Contract Act defines acceptance as follows: When the person to whom the

proposal is made signifies his assent thereto, the proposal is said to be accepted, becomes a promise.Therefore only if there was proposal communicated to Mr.Arjun his acceptance could be obtained andwithout any acceptance there cannot be a promise. So the new amendments could not be valid.


Though Ms.Silver had acted on behalf of Mr.Arjun. Ms.Silver is a third party to the contract and she hasacted on her own accord without the authority of Mr.Arjun. A contract is an agreement between twopersons and thus the doctrine of privity of contract can come into force here. This doctrine was appliedby the courts in the case Nanku Prasad Singh Vs. Kamta Prasad Singh AIR 1923 PC 54.

Sec 196. of the Indian Contract Act states that Where Acts are done by one person on behalf of another,but without his knowledge or authority, he may elect to ratify or disown such acts. If he ratify them, thesame effects will follow as if they had been performed by his authority.

Here, Mr.Arjun clearly disapproves Ms.Silveract of acting on his behalf so he does not ratify the act ofMs.Silver. Further a third party cannot make amendments to a contract. Ms.Silver is therefore a third partyto the contract and so any amendments carried out by Mr.Parth on the basis of Ms.Silvers acts cannot be

considered valid.


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Sec.38 clause (2) states that

The offer must be made at a proper time and place, and under such circumstances that the person towhom it is made may have a reasonable opportunity of ascertaining that the person by whom it is made

is able and willing there and then to do the whole of what he is bound by his promise to do.

Here Ms. Silver is not the right person to ascertain the consequence and aftermaths of thecommunication made by faster motors and thus sunny can refuse to accept the offer of performanceunder sec 38(2) of indian contract act.

Thus this can be supported through an English case law Startup vs. Mac. Donald(1843)64 RR in whichthe courts ruled that there should be reasonable ooportunity and able mind to perform the contract

3.Whether Mr.Parth was negligent about going through the contract between Sunny andHi-Tech, so the consequence was that there were technical difficulties that had to faceby Faster Motors Limited.?

It is the duty of the partner to the contract to carefully look into the details contained in theContract. Only after the free consent of parties an agreement is drafted and made into a valid contract.And it is the responsibility of the parties to check all the terms and conditions in the agreement and it mustbe inspected by the parties concerned in order to avoid any complications in the future which may lead tobreach of contract. Mr.Parth however has not inspected the Contract between Sunny Limited and Hi-Techthat was to supply the software for their machinery, this as a result has resulted in technical difficultieslater. The engineers at Faster Motors upon inspection realized that they were in need of upgradedversion.

Faster Motors should have clearly specified their requirements in the earlier stage. The contract wasdrafted on December 2007, but only during January 2008, Faster Motors have realized that the presentsoftware was not compatible with their systems, so they made a change in their requirements andspecified it with a delay. Hence Sunny Limited cannot be held responsible for Mr.Parths lack ofknowledge on the facts of the contract which has resulted in technical difficulties and delay in producingsoftware to Faster Motors.

Though sec 55. states that- Effect of failure to perform at fixed time, in contract where time is essential:When a party to a contract promises to do a certain thing at or before a specified time, or certain things,the contract, or so much of it has not been performed, becomes voidable at the option of the promise, ifthe intention of the parties was that time should be of the essence of the contract. , the delay caused inperforming the contract was by Faster Motors because of their untimely change in their requirements.


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4. Whether Faster Motors committed a breach of contract by entering into an agreementwith Super-tech without the termination of existing contract or intimation to SunnyMotors.?

Sunny Limited has acknowledged about the delay of delivery in the software to Faster Motors due to thenew requirements. But Faster Motors approached Super-Tech to get the desired software. Faster Motorstherefore has not signified the termination of the existing contract with Sunny Limited but instead hasentered a new agreement with Super-Tech. Hence Faster Motors has committed a breach of Contract.

Sec 67 of the Indian Contracts Act states that, Effect of neglect of promise to afford promisor reasonablefacilities for performance- If any promise neglects or refuses to affordthe promisor reasonable facilities forthe performance of the promise, the promisor is executed by such neglect or refusal as to any nonperformance cause thereby.

Here the Faster Motors did not provide Sunny with proper information on the software that they were in

need of . Sunny Limited made arrangements to provide the software that was mentioned initially when the

contract was drafted but only later did Faster Motors make a change in their speciation and thesechanges were not informed to Mr.Arjun who was the party representing Sunny in the contract. So it was

Fasters Motors part that caused a delay.

In spite of Sunny limited informing Faster Motors about the delay Faster Motors entered into a new

contract with Super Tech for same purpose for which they were earlier engaged with Sunny. Faster

Motors did not even signify their termination of contract with Sunny while doing so according to Sec 73. of

the Indian Contracts Act Faster Motors should compensate for loss or damage caused by breach of

contract to Sunny Limited.

5.Whether Sunny Motors is bound to perform the old contract substituted by a new

orally communicated contract.?

Sec.62 speaks about the Effect of novation, rescission, and alteration of contract. It states that

If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the originalcontract need not be performed.

Here, Faster Motors has directed Sunny Motors to alter the contract by asking them to supply anupgraded version of software terminating the original agreement. The new contract is completelysubstituted in the place of old one as it is directs Sunny Motors to provide upgraded version at anupgraded price but at the same time period which was stated in the original agreement .

It is seen that the terms of the two contracts are completely different and though a new contract is enteredby Faster Motors with Sunny Motors, the former asks the latter to perform the new contract in the old timelimit, thus not completely substituting the new agreement in place of the old agreement which is essentialfeature for the performance of the new contract. Thus the old contract which directs Sunny Motors tocomplete the software development within the stipulated time limit is voidable because a new contracthas been entered into by Faster Motors. A case law in the support of this argument is Lata ConstructionVs. Rameshchandra Ramniklal Shah 2000 (1) SCC 586.


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PRAYER

In light of the issues raised, arguments advanced and authorities cited,the counsel for the respondent humbly prays that the Honble Court be

pleased to adjudge, hold and declare that:

And pass any order that this Honble court may deem fit in the interest ofequity, justice and good conscience

And for this act of kindness, the counsel for the respondent shall dutybound forever pray.

Sd/-

y (Counsel for the Respondent)

faster motors limited vs sunny limited

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