1. X promise to pay his son Y a sum of ` 1 lakh if Y passed CA examination in the first attempt.

Y passed
the examination on his first attempt but X failed to pay the as promised. Y filed a suit for the recovery
of the amount. State whether Y can recover the amount under the ICA 1872.

Solution:- According to section 2(h) of Indian Contract Act, 1872 "an agreement enforceable by law is a
contract"
Thus, Contract Involve
▪ An Agreement
▪ Enforceability by Law i.e. intention to create legal obligation.
Meaning of Agreement -"Every promise and every set of promises, which form the consideration for each
other, is an agreement"
Meaning of Enforceability by Law- An agreement is said to be enforceable by law if some intention exist
on part of both parties to sue each other in case of non-fulfillment of their promises. In other words, if it
creates some legal obligation on parties.
Example- X invites his friend Y to a dinner and Y accept the invitation, If Y fails to turn up for dinner, X
cannot go to the court to claim his loss.
In Commercial or business agreement the usual presumption is that the parties intend to create legal
relations.
Social promise does not give rise to legal obligations, thus they are agreement but not contract. [Balfour
V Balfour]
In given case, X promise to pay his son Y a sum of ` 1 lakh if Y passed CA examination in the first attempt.
Y passed the examination on his first attempt but X failed to pay the as promised. Y filed a suit for the
recovery of the amount.

Conclusion- Given case is a social promise which will not give rise to any legal obligation, thus Y is not
entitled to recover the amount from his father i.e. X

2. Difference between illegal agreement and void agreement

Solution:- The illegal and void agreement differ from each other in the following respects:

Basis of difference Void agreement Illegal agreement

Scope A void agreement is not necessarily An illegal agreement is always void.
illegal.
Nature Not forbidden under law. Are forbidden under law.
Punishment Parties are not liable for any Parties to illegal agreements are liable
punishment under the law. for punishment.
Collateral Agreement It’s not necessary that agreements Agreements collateral to illegal
collateral to void agreements may also agreements are always void.
be void. It may be valid also.

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3. X says to Y, "If you will pay me 500 per month, I will not play Casio every night." Is this offer valid ?
According to Section 2(a) of the Indian Contract Act, 1872,
"A person is said to have made the proposal when he signifies to another
▪ his willingness to do or
▪ his willingness to abstain from doing
Anything with a view to obtain the assent of that offer to such act or abstinence."
Thus, offer may reflect an expression of willingness to abstain from doing something

Meaning of expression of willingness to abstain from doing — It means a negative act on part of 1 party
to abstain from doing something for other
Example: Ravi lends `2.0 Lacs to Hari, now on due date when Hari failed to pay. Ravi offers not to lodge a
suit against Hari if he managed to pay the amount within a week’s time. It is a negative act on the part of
Ravi.

In given case, X says to Y, "If you will pay me 500 per month, I will not play Casio every night.", in other
words, promise by X is a negative promise but it falls within the definition of Offer as offer include even a
proposal where one person signifies to another his willingness to abstain from doing.

Conclusion:- Since offer may be positive or negative. In this case, the offer is negative as X is willing to
abstain from playing Casio for a consideration.

4. SBI communicates voluntary retirement scheme to all its employees. One of the managers applies under
it but the bank refuses his application. Is the bank manager entitled to any right against the bank ?

Sol:- There is a difference between the term offer and Invitation to offer, which can be summarised as
follow:-

Meaning of Offer "A person is said to have made the proposal when he signifies to another
▪ his willingness to do or
▪ his willingness to abstain from doing
Anything with a view to obtain the assent of that offer to such act or abstinence."
Meaning of Invitation to offer- offer made with the intention to receive offers are known as invitation
to offer

An offer is definite and capable of converting an intention into a contract. Whereas an

invitation to an offer is an act precedent to making an offer. Acceptance of an invitation to an
offer does not result in the contract
Thus where a party without expressing his final willingness proposes certain terms on which
he is willing to negotiate he does not make an offer, but only invites the other party to make an
offer on those terms.

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In order to ascertain whether a particular statement amounts to an offer or an invitation to offer,
the test would be intention with which such statement is made.
If a person who makes the statement has the intention to be bound by it as soon as the other
accepts, he is making an offer. Thus the intention to be bound is important factor to be
considered in deciding whether a statement is an ‘offer’ or ‘invitation to offer.’
Following are instances of invitation to offer to buy or sell:
(i) An invitation by a company to the public to subscribe for its shares.
(ii) Display of goods for sale in shop windows.
(iii) Advertising auction sales and
(iv) Quotation of prices sent in reply to a query regarding price.

In given case, SBI communicates voluntary retirement scheme to all its employees. One of the
managers applies under it but the bank refuses his application.
Conclusion- From above facts, we may conclude that VRS scheme by SBI will amount to an
Invitation to offer and SBI is justified in rejecting an offer made by its manager