| Principle Contract is an agreement freely entered into between the parties. |
| Facts Ramlal was dealer of cement. The Government of India, by an order issued under the Essential Commodities Act, fixed the price of cement, and also the quantity which a person can buy from the dealer. Ramlal carried on his business under this new order for some time, but he refused to pay sales tax on his sale transactions on the ground that these were not the contracts freely entered into by him |
A) Ramlal would succeed, because free consent between the parties was there despite the restriction on price and quantity
B) Ramlal would not succeed, because free consent between the parties was there despite the restrictions on price and quantity
C) Ramlal would succeed, because the government under the new order, forced him to enter into contracts
D) None of the above
Correct Answer: B
Solution :
According to the Indian Contract Act, 1872 and the principle given here, the Contract is an agreement freely entered into between the parties. In the present case the Government of India, by an order issued under the Essential Commodities Act, fixed the price of cement and also the quantity which a person can buy from the dealer. Ramlal would no succeed, because free consent between the parties was there despite the restrictions on price and quantity. Secondly the restrictions imposed by Government of India, comes under the protection of Sovereign functions.
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