3RD NOVICE INTRA MOOT COURT COMPETITION

3rd NOVICE INTRA MOOT COURT COMPETITION 2020

BEFORE THE HON’BLE CITY CIVIL COURT OF

MEDITARRANEO

SUIT FOR BREACH OF CONTRACT

CIVIL CASE NO. /2020

(UNDER SECTION 55 OF SALES OF GOODS ACT,1903)

IN THE MATTER OF

VERITAS CORPORATION ……………………………………… PLAINTIFF

V.

SOMEL……………………………………………………………..DEFENDANT

WRITTEN SUBMISSION ON BEHALF OF DEFENDANT

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TABLE OF CONTENTS

LIST OF ABBREVIATIONS .........................................................................................3

INDEX OF AUTHORITIES............................................................................................4

STATEMENT OF JURISDICTION .............................................................................6

STATEMENT OF FACTS .............................................................................................7

ISSUES RAISED .............................................................................................................8

SUMMARY OF ARGUMENTS.....................................................................................10

ARGUMENTS ADVANCED .........................................................................................12

1) WHETHER A BINDING CONTRACT FOR THE SALE OF GOODS HAS BEEN

VALIDLY FORMED BETWEEN THE PARTIES TO THE DISPUTE?

1.1) NO BINDING CONTRACT BETWEEN BOTH THE PARTIES

1.2) ABSENCE OF ABSOLUTE AND UNQUALIFIED ACCEPTANCE
1.3) VOID AGREEMENT BETWEEN MR SOMEL AND VERITAS
CORPORATION

2) WHETHER VERITAS CORPORATION IS RIGHT IN ASSERTING THAT THE

CHANGE IN LABOUR COST IS A RESULT OF AN UNFORESEEN EVENT
OUT OF THE CONTROL OF VERITAS CORPORATION?

PRAYER FOR RELIEF..................................................................................................20

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LIST OF ABBREVIATIONS

AIR All India Reporter

Hon’ble Honourable

Anr. Another

Ors Others

SC Supreme Court

SCC Supreme Court Cases

V. and vs versus

Ltd Limited

M/s Messrs

UOI Union Of India

LLC Limited Liability Company

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INDEX OF AUTHORITIES

TABLE OF CASES:-

Badri Prasad v. state of Madhya Pradesh

Vedanta limited v emirates trading agency LLC,

Chilingworth v. esche.

Nicolene Ltd v Simmonds

Sreenivasa General Traders & Ors. Vs. State Of Andhra Pradesh & Ors

U.P. State Bridge Corporation Ltd & ors v. U.P. Rajya Setu Nigam S. Karamchari Sangh

M/s Alopi Parshad & Sons Ltd v. Union of India

BOOKS:-

 Avtar Singh, LAW OF CONTRACT AND SPECIFIC RELIEF (5th ed., 2009)
 Avtar Singh, LAW OF CONTRACT AND SPECIFIC RELIEF (11th ed., 2013)
 Dr. S.S. Srivastava, LAW OF CONTRACT 1&2 (5th ed., 2015)

STATUTES:-

 Indian Contract Act, 1872

 Industrial Dispute Act, 1947
 The Code of Civil Procedure, 1908
 The Sale of Goods Act, 1930

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WEB LINKS:-

 Investopedia.com
 scconline.com
 Mondaq.com
 Indiakanoon.org
 Advocatekhoj.com

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STATEMENT OF JURISDICTION

The defendant humbly submits that the memorandum is in furtherance of the suit filed before
the Hon’ble city civil court of Meditarraneo under section 9 of code of civil procedure,1908
read with section 55 of Sale of Goods Act, 1930.

Section 9 of The Code of Civil Procedure, 1908 reads as follows,

9. Courts to try all civil suits unless barred.—The Courts shall (subject to the provisions
herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which
their cognizance is either expressly or impliedly barred.

10 [Explanation I].—A suit in which the right to property or to an office is contested is a suit
of a civil nature, notwithstanding that such right may depend entirely on the decision of
questions as to religious rites or ceremonies.

11 [Explanation I].—For the purposes of this section, it is immaterial whether or not any
fees are attached to the office referred to in Explanation I or whether or not such office is
attached to a particular place.]

Section 55 of The Sale of Goods Act, 1930 reads as follows,

Suit for price.—(1) Where under a contract of sale the property in the goods has passed to
the buyer and the buyer wrongfully neglects or refuses to pay for the goods according to the
terms of the contract, the seller may sue him for the price of the goods. 14

(2) Where under a contract of sale the price is payable on a day certain irrespective of
delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may sue
him for the price although the property in the goods has not passed and the goods have not
been appropriated to the contract.

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STATEMENT OF FACTS

Somel is a merchant of wine in a country called Vinonia. He has a keen eye for specific years
and vintages of wines. Besides of such type of attraction towards wines, Somel is a
businessman first and is always on hunt for lucrative deals. He often drives through world-
famous vineyards of Vinonia for the search of deals. One day, as he is speeding through
Vinonia’s sprawling wine country, he notices three vineyards. These vineyards especially
catch his attention because of some reasons such as the texture of the soil and the colour of
the groups. After doing some research about these vineyards, he finds out that these vineyards
are owned by some Veritas Corporation.

The above stated vineyards produce three rare, collectors’ editions wines, i.e., Veri - Red,
Veri – White and Veri – Gold. Apart from this Somel also finds out that the wines from the
coming April are of particularly fine vintage. Some additional information also come to his
knowledge that the Veritas Corporation is struggling to turn a profit and is on the brink of
shutting down. Keeping all this circumstances in mind, Somel sends an email to Veritas
Corporation on 31st Jan, 2019. This mail states that Somel is offering to purchase 10 barrels
each of three different types of wines. He is offering to pay 50 Vins for each barrel and
therefore in totality will pay 1500 Vins; He expects the delivery by 1st April, 2019. In
addition to this he also states that the future fortunes of Veritas Corporation lies in this deal or
otherwise it will get bankrupt.

In reply to the mail of Somel, Veritas Corporation says that it finds Somel’s offer reasonable
and is thankful to him. Further it goes on to say that Somel must send his address, the mode
and method of payment (50% in advance and 50% after receiving the receipt of the order).
The main clause of this reply mail is that Veritas Corporation should not bear responsibility
or be liable for any damage caused to the good or the delay caused in delivery of the goods /
inability to deliver goods on the part of Veritas Corporation on account of an unforeseen
event beyond the reasonable control of Veritas Corporation, including – Floods, Meteor
showers, War, Change in law, and Change in geographical borders of Vinonia.

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In reply to this mail, Somel sends his address, digital receipt of the transaction of 750 Vins.
After this mail, Somel didn’t come to hear anything from Veritas Corporation for quite a long
time, and therefore enquires about the track of the delivery. To this, Veritas Corporation
replies that due to nationwide labour strike and consequent labour shortage in the vineyards
resulting in the severe shortage in the number of barrels produced. Therefore, price per barrel
has increased to 75 Vins. Accordingly, Veritas Corporation offers Somel either to accept
lower quantity of barrels otherwise pay the additional amount required for 30 barrels. Somel
obviously enraged by such recent developments, claim the refund of 750 Vins. According to
Somel, there was never a concluded contract as Veritas Corporation never formally accepted
Somel’s offer.

To this mail, Veritas Corporation replies that, it cannot refund the payment made by Somel,
the nationwide labour strike was an unforeseen event and it is delivering the 30 barrels of
wine on the specified day. Receiving no response from Somel, Veritas Corporation delivers
30 barrels of wine and demands the remainder of the payment from Somel who once again
refuses to pay citing the lack of contract between the parties. Aggrieved by this action,
Veritas Corporation sues Somel for non-payment/non-performance of his part of the contract.

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ISSUES RAISED

ISSUE 1: Whether a binding contract for the sale of goods has been validly formed between
the parties to the dispute?

ISSUE 2: Whether Veritas Corporation is right in asserting that the change in labour cost is a
result of an unforeseen event out of the control of Veritas Corporation?

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SUMMARY OF ARGUMENTS

ISSUE 1: WHETHER A BINDING CONTRACT FOR THE SALE OF GOODS HAS

BEEN VALIDLY FORMED BETWEEN THE PARTIES TO THE DISPUTE?

The counsel for the defendant humbly submits that there was no valid contract existing for
sale of goods between Mr Somel and Veritas Corporation as the appellant never formally
accepted the proposal. There was no binding contract between parties. The agreement
convened by Mr Somel was not according to the counter-offer made by Veritas Corporation
also the proposal lacks absolute and unqualified acceptance which is a glaring concern.

ISSUE 2: WHETHER VERITAS CORPORATION IS RIGHT IN ASSERTING THAT

THE CHANGE IN LABOUR COST IS A RESULT OF AN UNFORESEEN EVENT
OUT OF THE CONTROL OF VERITAS CORPORATION?

The counsel for the defendant humbly submits that the labour strike occurred clearly shows
that it is a foreseeable event there must be prior notice from labourers before a labour strike
happened. It was a nationwide labour strike it can be clearly anticipated. Also if there was a
labour strike plaintiff should have kept check on number of labourers. Plaintiff should be held
liable for the uncertainty of agreement he was negligent in having the check on no. of
labourer

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ARGUMENTS ADVANCED

ISSUE 1: WHETHER A BINDING CONTRACT FOR THE SALE OF GOODS HAS

BEEN VALIDLY FORMED BETWEEN THE PARTIES TO THE DISPUTE?

The counsel for the defendant humbly submits that there was no valid contract existing
between Mr Somel and Veritas Corporation as the appellant never formally accepted the
proposal and therefore Mr Somel is entitled to get refund of his part payment. The
agreements lacks absolute and unqualified acceptance according to procedure prescribed in
section 29 of Indian Contract Act.

1.1 NO BINDING CONTRACT BETWEEN BOTH THE PARTIES

It is humbly submitted to the Hon’ble court that there was no existing valid contract between
the parties. To make a valid contract there should be the following elements present. To form
a valid contract there must be a proposal. The proposal is the starting point of the contract
section2 (a)1 defines “proposal” as follows

When one person signifies to another his willingness to do or abstain from doing anything,
with a view to obtaining the assent of that other to such act or abstinence, he is said to make
a proposal.

The person making the proposal is called the “promisor”, and the person accepting the
proposal is called the “promisee”2. The communication of proposal is only complete when
the person to whom the proposal is made signifies his assent there to, the proposal is said to
be accepted.3 In the above case Veritas Corporation never formally accepted the agreement
and the proposer and the accepter must agree upon the same thing and in the same sense
1
Section2(a) Indian contract act 1872
2
Section2(c) Indian contract act 1872
3
Section 4 Indian Contract act 1872
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unless that is done, where each of them is so to speak, making an offer or a cross-offer, it is
not a contract.

A late acceptance of an offer has the legal weight of a counteroffer. In other words, where an
offeror makes an offer to an offeree and the offeree accepts in an untimely manner, that
acceptance is not a valid acceptance. There was no immediate acceptance from Veritas
Corporation which shows that Veritas Corporation was not interested in the offer.

In the case of Badri Prasad v. state of Madhya Pradesh & Anrr 4 it was held that “to form a
contract the contract must be in its ultimate analysis there must be a proposal and an absolute
an unqualified acceptance” from this we can understand that to form a contract there must be
an valid proposal and an absolute acceptance should be present. In the present scenario there
is a valid proposal but there is no absolute and valid acceptance.

If the offeree makes any variations in the original terms of the contract proposed to him and
then accepts the contract, such an acceptance would result in the invalidity of the contract.
Therefor in Email Somel had offered to buy 30 barrels of vines which shows that there was a
valid offer and later on 15th February Veritas Corporation replies to the offer made by making
variation therefore there was a invalid contract between the parties.

1.2 ABSENCE OF ABSOLUTE AND UNQUALIFIED ACCEPTANCE

The counsel for defendant most humbly submits that the actions of Veritas Corporation
clearly show that there is no absolute and unqualified acceptance from the side of Veritas
Corporation. The proposal in the above case made by Mr Somel via email dated 31 January
2019. Veritas Corporation responds to the mail on 15 February 2019 which clearly shows that
there is no absolute acceptance from the side of the Veritas Corporation.

In Email 1 Somel wrote to Veritas Corporation if Veritas Corporation accepts the offer it
must write back confirming the quantity and the time within which the shipment will take
place. In the subsequent email by Veritas corporation there was nowhere mentioned about the
quantity and the time in which shipment will take place. The contract can be cancelled at
such time till the time there is no absolute and unqualified acceptance. The contract should
have valid acceptance. According to section 7(1)

4
Badri Prasad v. state of Madhya Pradesh & Anr, 1970 AIR 706
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In order to convert a proposal into a promise, the acceptance must be absolute and
unqualified.

So there was no absolute and unqualified acceptance from Veritas Corporation the proposal
has not been converted into promise. Since the acceptance of proposal does not contains
essential elements of a contract and henceforth isn’t a valid contract. For words of acceptance
of proposal which do not correspond to the proposal actually put forward are not really
accepting anything and can therefore amount to nothing more than a new proposal or, as it is
called a counter-offer.

In the case of Vedanta limited v emirates trading agency LLC,5 it was held that there is no
concluded contract if instead of acceptance of proposal, a counter proposal is made. An
acceptance with a variation in terms of proposal or with a qualification is a counter-proposal.

An agreement relating to land which was signed by both parties contained words: "subject to
proper contract to be prepared by the vendor’s solicitors". The buyer refused to accept the
final draft as prepared by the solicitors. He sued for the refund of his advance deposit and
succeeded there was no concluded contract but only an agreement about the parties’ contract.6

A composite offer each part whereof is dependent upon the other, if accepted in part only, the
acceptance would not be absolute and unqualified.

In the case of Nicolene Ltd v Simmonds7, Nicolene Ltd ordered 3,000 tonnes of steel bars
from Simmonds. The two parties had never done business before. The written agreement
between the parties provided that the ‘usual conditions of acceptance’ applied. There were no
‘usual conditions of acceptance’. After Simmonds failed to perform delivery of the ordered

5
Vedanta limited v emirates trading agency LLC, (2017) 13 SCC 243

6
chillingworth v. esche. [1922. c. 4973.]
7
Nicolene Ltd v Simmonds
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steel bars, Nicolene sued for breach of contract. Simmonds argued that there was no
agreement, because the contract was vague and uncertain, because there were not any ‘usual
conditions of acceptance’ on which the contract could be formed.

Furthermore there was no absolute acceptance from Veritas Corporation to the Email 1 and
also the counter-offer made by Veritas Corporation was never concluded in the proposal
made by the defendant.

1.3 VOID AGREEMENT BETWEEN MR SOMEL AND VERITAS CORPORATION

According to section 29 of Indian Contract Act, 1872 agreements, the meaning of which is
not certain, or capable of being made certain are void.8

It must also be taken in account that the defendant offered to pay 50 Vins a barrel for a total
payment of total 1500 whereas Veritas Corporation accepted the agreement by replying the
mail dated 15th February 2019. Whereas after the acceptance of agreement Veritas
Corporation increased the price of barrel up to 75 Vins a barrel which was never concluded in
the agreement, therefore the agreement is completely to be void and the proposed offer is
uncertain. Hence the agreement agreed upon between the parties is void for uncertainty.

The thrust of this section is that the essential elements such as the nature of the product or
services and consideration, of any contract must be certain and definitive or capable of
making certain or definitive according to the agreement made by the parties. Also the
contract is uncertain because there is no absolute acceptance; the price has been change
without reason.

Failing to reply to an offer is not acceptance in most cases. If the offeror doesn’t accepts the
offer made this doesn’t mean that the offeree has accepted the offer in some cases where both
the parties have history in dealing and have a contract where an notice for acceptance is given
and there is no communication of acceptance given then also there will be valid acceptance
because both the parties are intentionally to bind a contract. But in the fresh contracts where
both parties make a contract for the first time if there is a valid contract and the terms are
changed and the offeree doesn’t replies a communication of acceptance there will no valid
8
Section 29 Indian Contract Act 1872
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acceptance concluded in the contract. A valid contract needs a valid acceptance if there is no
valid acceptance there will be no valid acceptance concluded and hence

According to the term “quid pro quo” In every contract there should be consideration flowing
from each side for each other, the Latin maxim "quid pro quo" signifies that part of the
contract. The consideration will make both the parties oblige to do something or abstains
from doing something as per the wish and/or desire of the other. According to general
practice quid pro quo means giving passing of one valuable thing for other. Therefore the
term "quid pro quo" signifies the consideration part of contract which passes from one party
to the other, of a contract thereby rendering the agreement valid and binding. Similarly in
thepresent scenario there was no consideration from the side of Veritas Corporation there was
an amount paid in the good faith by defendant to whom there was no service rendered in
return therefore, the contract can’t be concluded because there is no consideration from both
the sides.

In the case of Sreenivasa General Traders & Ors. vs State Of Andhra Pradesh & Ors9. On 6
September, 1983 it was held that there should be an element of quid pro quo present for each
service rendered in the sphere of a contractual relationship. Similarly in the present scenario
there was no consideration from both the sides there was consideration only from the side of
defendant.

ISSUE 2: WHETHER VERITAS CORPORATION IS RIGHT IN ASSERTING THAT

THE CHANGE IN LABOUR COST IS A RESULT OF AN UNFORESEEN EVENT
OUT OF THE CONTROL OF VERITAS CORPORATION?

9
Sreenivasa General Traders & Ors. vs State Of Andhra Pradesh & Ors, 1983 AIR 1246

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The counsel for the defendant humbly submits that the labour strike was clearly a foreseeable
event. If there was a strike at a company there must be an official notice to the Veritas
Corporation before the event occurred.

Force majeure stands for an inevitable accident or 'Act of God' in legal parlance. Events that
can neither be anticipated nor controlled fall under this category. Recognised under the Indian
Contract Act, 1872, force majeure gives a party more time to perform its contractual
obligations for things beyond its control.

According to Black’s Law Dictionary, force majeure is defined as “An event or effect that
can be neither anticipated nor controlled”. Force majeure clauses allocate risk between the
contracting parties if performance becomes impossible or impracticable because of an
unforeseen event. Labour strike is a foreseeable even or it can be anticipated.

In force majeure, you can only account for the delay of goods which can matter the
production of goods and there can be delay of sale of goods, but there cannot be increase in
price of goods in such matters. Only in certain circumstances, you are allowed to increase the
price of goods during the sale of goods, these cases are when there are events which are act of
god or can‘t be avoided at any stage and are extreme which are unavoidable which cannot be
anticipated. Whereas in the above case it was a foreseeable event it can be anticipated and
also there was no prior notice provided from the side of Veritas Corporation.

A party should give a prompt notice to the other party on the occurrence of such event.
Whereas Veritas Corporation never informed about the labour strike, Somel was the one who
asked whether the order is on track or not? Veritas Corporation should have demanded for the
extension of the sale of goods rather than increasing the price which is completely unfair
towards the defendant rather than being silent there was no such notice provided by the
Veritas Corporation which clearly shows that they were not interested in the agreement. The
labour strike was within the sphere of control of Veritas Corporation.

Some events are clearly easier to predict than others labour strike is one of them. Labour
strike are usually happened in the production companies, also labour strike are foreseeable
they can be anticipated labour strike can’t happen any time while working and in between
they can’t go for a strike. The plaintiff has made an uncertainty in the agreement by adding
labour strike as an unforeseeable event. According to the section 22 10 of the Industrial

10
Section 22, Industrial Dispute Act, 1947
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Disputes Act, 1947 no person employed in a public utility service shall go on strike in breach
of contract there must be a notice of the strike given by the labours. They cannot go on a
strike without a prior notice which should be given six weeks before the strike is going to
happen if there is no such notice the strike is considered as an illegal strike therefore from
this we can prove that the labour strike happened was clearly a foreseeable event.

Also Veritas Corporation is completely liable because it was negligent in having the check
over its working labourers. There must be a prior notice from when strike was going to
happen according to that plaintiff should have employed that no. of workers but Veritas
Corporation intentionally knowing of the fact ignored and because of which the shortage of
labour must have occurred. A strike of the workmen employed in executing work under a
contract does not of itself make performance impossible.

The term “doctrine of restitution” refers to the damages which are designed to restore the
plaintiff's state to their state of being before he or she was wronged. Therefore the doctrine of
restitution will be applicable in this situation the defendant is entitled to get the refund for his
part payment made in return to which there was no service provided. Veritas Corporation can
either refund the part payment or can provide the delivery of goods.

In the case of U.P. State Bridge Corporation Ltd & ors v. U.P. Rajya Setu Nigam S.
Karamchari Sangh11 it was held that there should be a prior notice to the employer before the
strike is going to happen, notice is of utmost important, if a strike is going to happen.

According to the email 2 Veritas Corporation never mentioned anything about the price rises
due to unforeseeable events in the terms of contract. It only mentioned about the damages,
delay of goods and delivery of goods. The terms of the agreements are uncertain according to
the section 29 of Indian Contract Act, 1872. Also labour strike can be anticipated it’s not an
unforeseeable event or it can be avoidable. Also there was a very long duration given to the
Veritas Corporation to deliver the goods there were only 8 days left for the delivery. There
must be an early production as the delivery of sale of goods was very big. Plaintiff should
have manufactured the vines in advance if there was going to happen a labour strike.

The “contra proferentem” rule broadly states that where there is doubt about the meaning of a
contract, the words will be construed against the party who put them forward. This is because
11
U.P. State Bridge Corporation Ltd & ors v. U.P. Rajya Setu Nigam S. Karamchari Sangh
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a party who imposes terms on another must make those terms clear and should suffer the
consequences if it fails to do so. Therefore Veritas Corporation has ambiguously mentioned
the labour strike as an unforeseeable event whereas it is a foreseeable event. It was nowhere
written in terms and conditions that labour strike will be included in unforeseeable event.

In the case of M/s Alopi Parshad & Sons Ltd v. Union of India 12 contract is not frustrated
merely because the circumstances in which it was made are altered. The court has no general
power to absolve a party from the performance of his part of the contract merely because its
performance has become on account of an unforeseen turn of events,

Also the contract cannot be claimed under frustration because the labour strike isn’t a
frustrated event it is onerous it can be tackled and can be on a routine within couple of days.
The clause of frustration can only be revoked in such conditions where the work is
impossible and is unavoidable. Therefore the clause of frustration cannot be added in onerous
event, labour strike can be controlled. In the production companies the products are always
manufactured in advance before the delivery of date and the according to the replied mail by
plaintiff on 22 march 2020 there were only 8 days left for the delivery which shows that there
was a negligence in part of plaintiff who took time to manufacture the product from the above
incidents it shows that due to the negligence in part of plaintiff the defendant is been held
liable. “An untoward event or change of circumstance totally upsets the very foundation upon
which the parties entered in agreement”. The contract can be claimed void if the parties for
which they came together in to contract have been affected.

PRAYER FOR RELIEF

WHEREFORE, in light of the issues raised, arguments advanced and authorities cited it is
most humbly and respectfully requested that this Hon’ble civil of Meditarraneo Court
adjudge and declare that:

12
M/s Alopi Parshad & Sons Ltd v. Union of India, AIR 1960 SC 588
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1. Declare that there was no binding contract between plaintiff and defendant.

2. Declare that plaintiff is not right while asserting that change in labour cost is an unforeseen
event beyond control of plaintiff.

3. Direct plaintiff to refund part payment paid by the defendant.

And pass any other Order, Direction, or Relief that it may deem fit in the

Best Interests of Justice, Equity and Good Conscience.

For This Act of Kindness, the Defendant Shall Duty Bound Forever Pray.

All of which is humbly prayed,

Counsel for the defendant

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