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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

Some, all or none of the following statements are correct, answer using the code

  1. Consideration is the recompense given by the party contracting with the other

  2. If the promised act has been done before the agreement is made, it is past consideration and past consideration is no consideration

  3. Consideration should be something which has some value in law

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All three statements are correct. Consideration is indeed the recompense given by the party contracting with the other (it's the price paid for the promise). Past consideration is generally no consideration because it doesn't involve the element of bargain - if the act was done before the agreement, it cannot serve as consideration. And consideration must have some value in the eyes of the law, though it need not be adequate. The doctrine of consideration requires a bargained-for exchange between parties.

Multiple choice

A counter offer is:

  1. an invitation to offer

  2. an acceptance to offer

  3. a rejection of the offer

  4. a conditional acceptance
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A counter offer operates as a rejection of the original offer and simultaneously constitutes a new offer. It is essentially a conditional acceptance - 'I accept, but only if...' - which destroys the original offer. The original offeror can then accept this counter offer to form a contract.

Multiple choice

An acceptance given by post

  1. can be revoked at any time

  2. cannot be revoked a all

  3. can be revoked, if it does not reach to the proposer

  4. can he revoked, even if it comes to the knowledge of proposer
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Under the postal rule (mailbox rule), acceptance is complete when posted, not when received. However, it can be revoked if it never reaches the proposer. Once acceptance is in the post, it cannot normally be revoked, but if the letter is lost and never arrives, the acceptance fails. Option C captures this nuance correctly.

Multiple choice

Communication of acceptance is complete

  1. before the offer is revoked

  2. when acceptance is put in the course of transmission

  3. even the acceptance is lost in transit

  4. after the revocation of acceptance reaches the offeror
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice

Which one is not matching:

  1. Proposal

  2. Consideration

  3. Acceptance

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

A valid contract requires three essential elements: proposal (offer), consideration, and acceptance. These form the foundation of contract law under Indian Contract Act, 1872. A quasi-contract, however, is NOT a true contract - it's a legal obligation imposed by law to prevent unjust enrichment, without any offer, acceptance, or agreement between parties. Thus, quasi-contract is the odd one out as it's not a contract element.

Multiple choice

You have been asked to supervise an army purchase deal. While going through the files you notice that the deal has not been offered to the contractor with the lowest bid but instead to someone else. Your co-workers have also pressurised you to accept the proposal.

  1. Ignoring the pressure you order an internal inquiry into the matter.

  2. You write a formal complaint about your co-workers.

  3. You ignore the mishandling in the tender process and leave the matter to your seniors.

  4. You approach your juniors to get into the root of the matter.

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

Internal inquiry (A) is mandatory when tender process irregularities are discovered, regardless of peer pressure. Complaining about co-workers (B) focuses on wrong issue, ignoring mishandling (C) enables corruption, and approaching juniors (D) is not the proper channel.

Multiple choice

Acceptance sent through post

  1. can be revoked at any time

  2. cannot be revoked at any time

  3. can be revoked before it comes to the knowledge of the offeror

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

An acceptance may be revoked at any time before the communication of the acceptance is complete.

Multiple choice

A partial illegality

  1. may avoid the whole agreement

  2. will not avoid the whole agreement

  3. will avoid the whole agreement

  4. Either (2) or (3)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Partial illegality means if any provision of this agreement or the application thereof to any party or circumstances shall be declared void, illegal or unenforceable, the remainder of this agreement shall be valid and enforceable.

Multiple choice

Which of the following cases does not have coercion?

  1. A contract was made to avoid threatened prosecution.

  2. There is a threat to strike.

  3. A contract was made under a statutory compulsion.

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Statutory transactions are contracts under compulsion of law whereby parties are mandated by executive orders or legal regulations. 

Multiple choice

If a contract is based on personal skill or confidence of parties, the death of a party in such a case

  1. does not put an end to the contract

  2. makes the representatives of the deceased liable to perform such a contract

  3. puts an end to the contract

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If a contract is based on personal skill or confidence of parties, the death of a party in such a case puts an end to the contract and damages can be claimed for the breach.

Multiple choice

An arbitral award may be set aside by the court if a party making the application furnishes proof that

  1. the party was under some incapacity

  2. the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law in force for the time being

  3. the party making the application was not given proper notice of the appointment

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An arbitral award may be set aside by the court if the party making the application furnishes proof that a party was under some incapacity or if the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law in force for the time being, or the party making the application was not given proper notice of the appointment.

Multiple choice

‘Payment in due course’ requires the payment to be made

  1. in accordance with the apparent tenor of the instrument

  2. in good faith

  3. without negligence

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

‘Payment in due course’ requires the payment to be made in good faith without negligence in accordance with the apparent tenor of the instrument.