AILET (All India Law Entrance Test) Legal-Aptitude: Questions 194 - 194 of 254

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Question 194

Appeared in Year: 2020

Question

MCQ▾

Legal Principles:

(1) A contract can become void when: It is unfairly one-sided; it goes against public policy; its subject matter is illegal; it is impossible to perform; it unfairly restricts one side՚s actions (such as the right to work) ; one of the parties is not legally competent to enter into a binding contract.

(2) A contract is void as against public policy if: (1) it is a contract by the defendant to pay the plaintiff for inducing a public official to act in a certain manner; (2) it is a contract to do an illegal act; or (3) it is a contract that contemplates collusive bidding on a public contract.

Facts: BR Industries, a company manufacturing drills, machine parts and components thereof and a purchaser of subcontract work from other suppliers, won the bid from the HLK Company to supply certain parts to it at a specified price. BR industries then contracted with SU Co. to supply the parts under the contract for a much lower price. BR Industries then intended to keep the difference between the amount it billed the HLK Company and the amount SU Co. charged for the parts. BR Industries initiated an action for breach of contract when SU Co. failed to complete the order. In its defense, SU Co. asserts that the contract is void as against public policy because Defendant turned a profit of 84.09 % on anvils, 39.13 % on holder primers and 68.33 % on plunger supports. Did plaintiff receive too much compensation deeming it unconscionable and against public policy?

Choices

Choice (4)Response

a.

Relative values of the consideration in a contract between business men at “arms-length” without fraud will not affect the validity of the contract.

b.

The Contract is void as it unfairly one sided.

c.

Relative values of the consideration in a contract between business men will affect the validity of the contract as it amounts to abuse of dominance and unconscionable.

d.

The contract is void as against public policy as it is a contract that contemplates collusive bidding on a public contract.

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