Rama directs Shyam to sell laptops for him and agrees to give Shyam eleven percent (11%) commission on the sale price fixed by Rama for each laptop.…

CA Foundation · Business Laws · RTP · January 2025
Rama directs Shyam to sell laptops for him and agrees to give Shyam eleven percent (11%) commission on the sale price fixed by Rama for each laptop. As Government of India put restrictions on import of Laptops, Rama thought that the prices of laptops might go up in near future and he revokes Shyam's authority for any further sale. Shyam, before receiving the letter at his end sold5laptops at the price fixed by Rama. Shyam asked for 11% commission on the sale of5Laptops for 1 lakh each. Explain under the provisions of the Indian Contract Act, 1872: (i) Whether sale of laptops after revoking Shyam's authority is binding on Rama? (ii) Whether Shyam will be able to recover his commission from Rama, if yes, what will be the amount of such commission?

Suggested Answer and Working Notes:

Warranty as to quality or fitness by usage of trade [Section 16 (3) ]: An implied warranty as to quality or fitness for a particular purpose may be annexed or attached by the usage of trade. Regarding implied condition or warranty as to the quality or fitness for any particular purpose of goods supplied, the rule is ‘let the buyer beware’ i.e., the seller is under no duty to reveal unflattering truths about the goods sold, but this rule has certain exceptions.

Topics: The Indian Contract Act, 1872

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