Law: Contract Act (IX of 1872)

Section: 74

  (a) Contract-Breach-   Compensation--Penalty-Covenant by buyer of motor car to pay 1,000 to dealer in case of further sale of car by buyer within 2 years of purchase-(New Zealand case) [Contract Act (IX of 1872), S. 74]. The buyer of a Chevrolet motor car covenanted with the dealer that he will not during the space of two years after the delivery of the vehicle to him transfer the same by sale, mortgage etc., to third persons, in case of breach of which covenant, he was to pay to the dealer "as and by way of liquidated damages and not as a penalty" the sum of 1,000. Held, that the amount stipulated was a penalty and was not recoverable. (b) Contract-   Consideration-Added covenant, on direction of Board of Trade, by buyer of motor car, to pay 1,000 to dealer, in case of further sale of car to third person by buyer within 2 years Whether contravenes law of price control-(New Zealand case) [Contract Act (IX of 1872), S. 23]. The Board of Trade (New Zealand), under statutory authority, could impose conditions on importers before grant of licences of import. One of these conditions was that every dealer of motor cars, will require from the buyer a covenant that' the latter will not during the space of 2 years after delivery of the vehicle to him, transfer the same by sale, mortgage, etc., to third persons, in case of breach of which agreement, the buyer would be liable to the dealer in the sum of 1,000.   Held, that the covenant did not relate to the sale and was not part of the "price" but was a "pre-requisite to the transfer" of the vehicle and not part of the consideration for it. The covenant, therefore, did not defeat the law of price control and thus was not illegal.   Even if the " price " did include the special covenant, there was no illegality, inasmuch as the direction of the Board of Trade re: special covenant was implicit in the communications fixing the maximum price of motor cars. (c) Damages   Breach of contract Promisee entitled to be put into as good a position as if promisor had fulfilled his covenant Motor car bought from dealer on control price with a covenant that the…