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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

A promises, for no consideration, to give to B Rs. 1000. The agreement is

  1. voidable

  2. void

  3. enforceable

  4. not enforceable not being in writing

  5. None of above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (1) is incorrect: It is not a voidable agreement. Option (2) is correct: Under Section 2 of the Indian Contract Act, 1872, every promise and every set of promises, forming the consideration for each other, is an agreement. Hence, the given agreement is void from the beginning. Option (3) is incorrect: It is not enforceable in the court of law.  Option (4) is incorrect: Not enforceable at all, whether in writing or in oral.

Multiple choice

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

  1. set aside the contract, but cannot recover damages

  2. only recover damages

  3. set aside the contract and can recover damages also

  4. ask for a specific performance

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

Option (1) is incorrect: X can set aside the contract and can recover damages also. Option (2) is incorrect: X can set aside the contract and can recover damages also. Option (3) is correct: X has both remedies, i.e. he can repudiate the contract and can recover damages from Y.

Multiple choice

A agrees to sell a horse worth Rs. 1000 for Rs. 10. A's consent to the agreement was freely given. The agreement is

  1. voidable

  2. void

  3. contract

  4. illegal

  5. valid
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Option (1) is incorrect: Valid contract in the eye of law Option (2) is incorrect: Agreement became contract and completely valid in the eyes of law. Option (3) is correct: Agreement becomes contract and consideration may be of any value.  Option (4) is incorrect: It is a legal agreement and enforceable in the court of law.

Multiple choice

All illegal contracts are void, but all void contracts are not

  1. legal

  2. illegal

  3. enforceable

  4. voidable

  5. valid
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (1) is incorrect: All illegal contracts are void, but all void contracts are not illegal. Option (2) is correct: Illegal contracts are against the provisions of law whereas void contracts are legal, but not valid in the eye of law. Option (3) is incorrect: All illegal contracts are void, but all void contracts are not illegal. Option (4) is incorrect: All illegal contracts are void, but all void contracts are not illegal.

Multiple choice

Where both the parties are under mistake as to matter of fact, the agreement is void under

  1. Section 20 of the Indian Contract Act, 1872

  2. Section 21 of the Indian Contract Act, 1872

  3. Section 22 of the Indian Contract Act, 1872

  4. Section 23 of the Indian Contract Act, 1872

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

Option (1) is correct: Section 20 of the Indian Contract Act, 1872 states that agreement is void, where both the parties are under mistake as to matter of fact. Option (2) is incorrect: Section 21 of the Indian Contract Act, 1872 provides effects of mistake as to law. Option (3) is incorrect: Section 22 of the Indian Contract Act, 1872 provides contract caused by mistake of one party as to matter of fact. Option (4) is incorrect: Section 23 of the Indian Contract Act, 1872 provides what consideration and objects are lawful. 

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

A lends a farm to B on a condition that he shall walk hundred miles in an hour. Choose the correct option for the statement.

  1. The lease is void.

  2. The lease can be executed if B walks 100 miles in an hour.

  3. The lease can be executed.

  4. Conditional transfer can be made.

  5. Valid and conditional transfer can be made.

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

Option (1) is correct: According to Section 25 of Transfer of Property Act, 1882, an interest created on a transfer of property and dependent upon a condition fails if the fulfillment of the condition is impossible. Hence, the lease is void.

Options (2), (3) and (4) are incorrect: The lease cannot be executed at all and conditional transfer is not enforceable under law.