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Contract Law

1,453 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

Reasonable time for performance of a contract is a question of

  1. fact

  2. law

  3. prudence

  4. fact and law

  5. fact and prudence
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: Reasonable time for performance of a contract is a question of fact. Option (2) is incorrect: Reasonable time for performance of a contract is not a question of law. Option (3) is incorrect: Reasonable time for performance of a contract is only a question of fact, not a question of law. Option (4) is incorrect: Reasonable time for performance of a contract is not a question of prudence. 

Multiple choice

A contingent contract is a

  1. valid contract

  2. voidable contract

  3. contract void ab initio

  4. contract that becomes void when the event becomes impossible

  5. valid, but voidable contract
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: Under Section 31 of the Indian Contract Act, 1872, a 'contingent contract' is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen. It is a valid contract. Option (2) is incorrect: It is not a voidable contract. Option (3) is incorrect: It is not void ab initio. Option (4) is incorrect: It does not become void when the event becomes impossible.

Multiple choice

When a contract has been broken, the party who suffers by such breach is entitled to receive ______ damages from the party who has broken the contract.

  1. liquidated

  2. compensatory

  3. penal

  4. unliquidated

  5. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: Under Section 73 of the Indian Contract Act, 1872, when a contract has been broken, the party who suffers by such breach is entitled to receive damages, from the party who has broken the contract, compensation for any loss or damage caused to him and is thereby called liquidated damages. Option (2) is incorrect: Are not compensatory damages. Option (3) is incorrect: Are not penal damages.

Multiple choice

A mortgagor who has executed two or more mortgagees in favour of the same mortgagee in absence of contract to the contrary

  1. is bound to redeem all such mortgages together

  2. is not entitled to redeem any one such mortgage separately

  3. is bound to redeem at least two such mortgages together

  4. be entitled to redeem any one such mortgage separately or any two or more of such mortgages together
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under Section 61 of Transfer of Property Act, 1882, a mortgagor who has executed two or more mortgages in favour of the same mortgagee shall, in the absence of a contract to the contrary, when the principal money of any two or more of the mortgages has become due, be entitled to redeem any one such mortgage separately, or any two or more of such mortgages together.

Multiple choice

Compromise under Order XXIII, Rule 3 of the CPC must be in

  1. writing and signed by the parties

  2. writing, but need not be signed by the parties

  3. writing, but need not be lawful

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

Option (1) is correct: Compromise under Order XXIII, Rule 3 of the CPC must be in writing and signed by the parties.

Multiple choice

‘X’ enters into a contract with Y for which Y is guilty of fraud. X can

  1. set aside the contract and recover damages

  2. set aside the contract but cannot recover damages

  3. recover damages but cannot set aside the contract

  4. recover damages for actual loss suffered
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

‘X’ enters into a contract with Y for which Y is guilty of fraud. X can set aside the contract and recover damages from Y.

Multiple choice

Novation of a contract means

  1. the renewal of original contract

  2. substitution of a new contract in place of original contract

  3. cancellation of contract

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

Novation of contract means the substitution of a new contract for an old one. The new agreement extinguishes the rights and obligations that were in effect under the old agreement.

Multiple choice

(The Specific Relief Act, 1963)

Any person interested in a contract may sue to have it rescinded, and such rescission may be adjudged by Court in�

  1. where the contract is voidable or terminable

  2. where the contract is unlawful for causes not apparent on its face and the defendant is more to blame than the plaintiff

  3. Both (A) and (B)

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

Under Section 27 of the Specific Relief Act, rescission can be adjudged in two situations: (1) where the contract is voidable or terminable, and (2) where the contract is unlawful for causes not apparent on its face and the defendant is more to blame than the plaintiff. Section 27 covers both circumstances, making option C correct.

Multiple choice

(The Specific Relief Act, 1963)

Rescission may be adjudicated or refused�

  1. where the contract is voidable or tenninable by the plaintiff

  2. where the contract is unlawful for causes not apparent on its face and the defendant is more to balance than the plaintiff

  3. Both (A) and (B)

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

Rescission (cancellation of contract) may be refused in multiple circumstances under the Specific Relief Act. It can be refused where the contract is voidable/terminable by the plaintiff, or where the contract is unlawful for reasons not apparent on its face and the defendant is more to blame than plaintiff. Option B contains a typo ('balance' should be 'blame'). Both are valid grounds for refusal.

Multiple choice

Obligation includes

  1. enforce by law

  2. every duty

  3. every duty includes by law

  4. any act
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Under Section 2 of the Indian Contract Act, an obligation is defined as every duty enforceable by law. Option C, 'every duty enforceable by law', most closely matches this definition. The key word is 'enforceable' - obligations are duties that can be legally enforced.

Multiple choice

Section 14, provides

  1. contracts not specially enforceable

  2. cases in which specific performance of contract enforceable

  3. cases in which specific performance of contracts connected with trusts enforceable

  4. All of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Section 14 lists contracts that are NOT specifically enforceable, including contracts requiring constant supervision, involving personal skill/finesse, or where damages are an adequate remedy. This creates exceptions to the general rule of specific performance. Section 10 (option B) and Section 12 for trusts (option C) are separate provisions about when specific performance IS available.