Question

Legal Principle: An agreement between two private parties that creates mutual legal obligations. A contract can be either oral or written.
Facts: Mr. Ram and Mr. Rahim were work colleagues who had an arrangement regarding shared lifts to work. Rahim would drive his motorbike and Ram would ride pillion in return for a weekly sum of money. Unfortunately both were killed in a road traffic accident and the wife of Mr. Ram made a claim for damages against the estate of Mr. Rahim. However Rahim's insurance policy did not cover pillion passengers and as his estate had no assets or money to satisfy the judgment, Mrs. Ram pursued the Motor Insurance Bureau (MIB).
The MIB have an agreement whereby accidents and consequential claims would be satisfied by the Government in circumstances where the driver has no relevant policy of insurance. However the rules covering this situation require Mr. Ram was carried for "hire or reward". Mrs. Ram argues that there was a contract in place between Ram and Rahim for the lifts to work. Decide whether there was a contract so as to make Mrs. Ram eligible for claim from MIB.

• A. Notwithstanding the regular payment of money in return for the lift, it was not a legal obligation as to create a contract. There were no terms as to how long this was to last, what would happen in default of payment or the availability of transport, or anything written down so as to at least make their intention clear.
• B. Yes, there was clearly an offer of transport and this was accepted. In addition, the consideration exchanged by the parties was the service of transport and the money paid by Ram.
• C. Yes, the practice of agreements between colleagues sharing a lift to work (or "car-pooling") is an accepted and wide spread practice. Parties will usually agree that one will take their car and in return the others will make a contribution towards the petrol costs.
• D. No, unless the wife of Ram can show that the accident happened due to rash and negligent driving of Rahim.

Answer 1

The Correct Option is A

The correct option is (A):Notwithstanding the regular payment of money in return for the lift, it was not a legal obligation as to create a contract. There were no terms as to how long this was to last, what would happen in default of payment or the availability of transport, or anything written down so as to at least make their intention clear..