Law Legal Studies · Commerce Accountancy

Contract Law

1,497 Questions

Contract Law encompasses the rules and statutes governing legally binding agreements between parties. This hub provides practice questions on essential topics like legal obligations, breach of contract, and termination clauses. These concepts are frequently tested in law entrance tests and various other competitive government examinations.

Legal obligationsVoid contractsBreach of contractCommunication of acceptanceStatute of FraudsContract clauses

Contract Law Questions

Multiple choice

Assertion (A): Law of contract recently facing a problem due to frequent use of contract of Adhesion. Reason (R): One party to contract has no choice to negotiate but to accept it.

  1. (A) is right but (R) is wrong

  2. (A) is wrong but (R) is right

  3. (A) and (R) both right and (R) is right explanation of (A)

  4. (A) and (R) both right but (R) is not right explanation of (A)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Contracts of adhesion (standard form contracts) are indeed a contemporary problem in contract law because one party has no choice but to accept them on a 'take it or leave it' basis - there is no negotiation. Both Assertion (A) and Reason (R) are correct, and (R) correctly explains (A) - the lack of negotiation opportunity is precisely why adhesion contracts present challenges. The principle concern is unequal bargaining power and potential unfair terms that consumers must accept to obtain essential services.

Multiple choice

Which one of the following statements is right?

  1. Two or more persons are said to consent when they agree upon some thing in some sense.

  2. Two or more persons are said to consent when they agree upon the same thing in the same sense.

  3. Two or more persons are said to enter into a contract when they agree upon the same thing in the same sense

  4. Two or more persons are said to enter a quasi contract when they agree upon the same thing in the same sense.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Option C is correct because it uses the precise legal terminology - 'enter into a contract' requires 'consensus ad idem' (meeting of minds on the same thing in the same sense). Option A is incomplete, and Options B and D incorrectly substitute 'consent' for 'contract' and 'quasi contract' respectively. Contract formation requires agreement on the same terms in the same sense.

Multiple choice

A valuable consideration in the sense of the law may consist either in some right or interest or benefit accruing to one party on Some forebearance, detriment, loss, responsibility given, suffered or undertaken by the other is well explained in:

  1. Currie Vs. Misa

  2. Abdul Aziz Vs. Manzum Au

  3. Gopal Co. Ltd. Vs. 1-Eazarilal Co. Ltd.,

  4. Kedarnuth Vs. Gauri Mohammed

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option A is correct. Currie v Misa (1875) is the landmark English case that established the classic definition of consideration as 'some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.' This definition remains foundational in contract law across common law jurisdictions including India.

Multiple choice

Contract is frustrated due to frustration of ---

  1. Subject matter of contract

  2. Change of one party's desire

  3. Consideration of contract

  4. Capacity to contract
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Frustration of contract occurs when an unforeseen event destroys the fundamental basis of the agreement. The subject matter must become radically different or impossible to perform - not just harder or more expensive. Change of desire, consideration issues, or capacity problems don't constitute frustration.

Multiple choice

Offer must he:

  1. General

  2. Specific

  3. Incapable of Communication

  4. Possible
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An offer must be specific and definite to be valid in contract law. It must clearly express the intention to create legal obligations and contain all essential terms. A general or vague proposal that lacks specificity cannot constitute a valid offer. The requirement of specificity ensures that the offeree knows exactly what is being proposed and can give informed consent. Offers that are incapable of communication or merely 'possible' fail this fundamental requirement.

Multiple choice

In a Wrestling 'A' tells 'B' that Wrestler no. I will win. 'B' challenges the statement of 'A'. They bet with each other over the result of the match. This is:

  1. Unlawful agreement

  2. Wagering agreement

  3. Contingent contract

  4. Voidable contract
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A wagering agreement is one where two parties bet on the outcome of an uncertain event, with each agreeing to pay the other a sum of money depending on which view proves correct. Here, A and B are betting on a wrestling match result, which is classic wagering. Under Section 30 of the Indian Contract Act, wagering agreements are void. This differs from contingent contracts (which depend on uncertain events but are not pure bets) and unlawful agreements.

Multiple choice

Arrange the sequence of the following concepts in which they appear in a contract, using the code: (i) Communication of acceptance (ii) Deceit (iii) Invitation to offer (iv) Damages

  1. (iii) (ii) (i) (iv)

  2. (iii) (iv) (ii) (i)

  3. (iii) (i) (ii) (iv)

  4. (iii) (ii) (i) (iv)

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In contract formation: (iii) Invitation to offer comes first (advertisement/catalog), then (i) Communication of acceptance (forming the contract), then if there's (ii) Deceit/fraud vitiating consent, it leads to (iv) Damages as the remedy. The sequence iii → i → ii → iv represents: invitation → acceptance → potential fraud → damages.

Multiple choice

Illegal object makes an agreement:

  1. Void

  2. Voidable

  3. Void ab initio

  4. A contract
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An agreement with an illegal object (or consideration) is void - it cannot be enforced by law. This is a fundamental principle of contract law, exemplified by agreements to commit crimes or violate public policy. 'Void ab initio' means essentially the same thing (void from the beginning), but the standard term used is simply 'void'. Voidable contracts are valid but can be canceled by an aggrieved party.

Multiple choice

Damage actually caused by a breach of contract, where special circumstances have been brought to the knowledge of the promise, is recoverable provided that when the contract was made, such damages:

  1. are excessive

  2. are reasonable

  3. arise due to the fault of promisee

  4. were reasonably foreseeable
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Damage actually caused by a breach of contract, where special circumstances have been brought to the knowledge of the promise, is recoverable provided that when the contract was made, such damages were reasonably foreseeable.

Multiple choice

An infant who obtains loan by falsely misrepresenting his age can be made to repay the amount

  1. As if he never entered into the void contract

  2. The contract is void so he is not liable to repay

  3. He is liable because of the fraud

  4. The contract is valid
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Under Indian law, minors (infants) generally cannot enter into valid contracts - contracts with minors are void. However, if a minor fraudulently misrepresents their age to obtain a loan, they can be held liable to repay the amount. The fraud exception overrides the general protection of minors. This prevents minors from exploiting their minority status through dishonesty.

Multiple choice

Arrange the sequence of following concepts in a contract. Use the code given below (i) Damage (ii) Damages (iii) Undue influence (iv) Invitation to offer

  1. (i) (ii) (iii) (iv)

  2. (iv) (iii) (ii) (i)

  3. (iv) (iii) (i) (ii)

  4. (iv) (i) (iii) (ii)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The correct sequence in contract formation begins with (iv) Invitation to offer, which is not an offer itself but an invitation for others to make offers. Then comes (i) Damage, which refers to the harm or loss that gives rise to potential liability. This is followed by (iii) Undue influence, which can vitiate free consent in contract formation. Finally, (ii) Damages represents the monetary compensation awarded for breach or harm. This logical progression tracks the contract lifecycle from initiation to remedy.