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X contracts to supply Y with 1,000 tons of iron at Rs 100 a ton by a stated date. X then contracts to…

Illustration (j) to Section 73 of the Contract Act: as A knew the purpose of the purchase, the lost profit on the sub-contract was within the parties' contemplation, so A…

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X contracts to supply Y with 1,000 tons of iron at Rs 100 a ton by a stated date. X then contracts to buy 1,000 tons of iron from A at Rs 80 a ton, telling A that he buys it to perform his contract with Y. A fails to deliver, X cannot procure other iron, and Y therefore rescinds the contract. Under Section 73 of the Indian Contract Act, 1872, A must pay X:

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Correct answer A

Illustration (j) to Section 73 of the Contract Act: as A knew the purpose of the purchase, the lost profit on the sub-contract was within the parties' contemplation, so A must pay Rs 20,000, the profit X would have made on his contract with Y.

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