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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

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

As regards the payment, the dower can be

  1. prompt

  2. deferred

  3. Both (1) and (2)

  4. Only (1) and not (2)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Prompt dower is payable on demand by the wife. Deferred dower is payable on (i) dissolution of marriage by death or (ii) divorce.

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Any person interested in a contract may sue to have it rescinded, and such rescission may be adjudged by Court in�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

Multiple choice

Section 10, provides

  1. cases in which specific performance of contract enforceable

  2. contracts not specifically enforceable

  3. Both (A) and (B)

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

Section 10 of the Specific Relief Act enumerates cases where specific performance of contracts IS enforceable. It establishes the positive rule for when courts can order specific performance - primarily for contracts involving transfer of property, where monetary compensation would be inadequate. Section 14 (option B) is the exception list, not the rule.

Multiple choice

The contracts can not be specifically enforced

  1. a contract for the non-performance of which compensation is an adequate relief

  2. a contract which runs into such minute or numerous details or which is so dependent on the personal qualifications

  3. a contract which is in its nature determinable

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

Specific performance is an equitable remedy that courts grant selectively. It is refused when monetary compensation is adequate (A), when the contract requires continuous supervision due to minute details or personal qualifications (B), or when the contract is determinable in nature (C). All three scenarios represent valid bars to specific performance.

Multiple choice

The specific performance of a contract may be obtained by

  1. any party thereto

  2. the representative in interest or the principal

  3. where the contract has been entered into by tenant for life due exercise of a power the reminderman

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

The Specific Relief Act allows multiple parties to seek specific performance. Any party to the contract (A), their representative in interest or principal (B), and in certain cases tenants for life exercising powers (C) may all obtain this remedy when eligible.

Multiple choice

Specific performance of a contract can not be enforced in favour of a person

  1. who would not be entitled to recover compensation for its breach

  2. who has become in capable of performing or violates any essential term of, the relation intended to be established by the contract

  3. Both (A) and (B)

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

Specific performance cannot be obtained by someone who could not recover damages for breach (A), or by someone who has become incapable of performance or violated essential terms (B). Section 16 bars relief to those who have materially impaired the contract's performance.

Multiple choice

Specific performance of a contract may be enforced against

  1. either party thereto

  2. any other person claiming under him by a title subsequently to the contract

  3. any person claiming under a title which, through prior or the plaintiff, might have been displaced by the defendant

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

Specific performance may be enforced against the original party to the contract (A), persons claiming under them subsequently (B), and persons claiming under titles the plaintiff could have enforced (C). The remedy binds successors and representatives.

Multiple choice

A contract to sell or let any immovable property can not be specifically enforced infavour of a vender

  1. who knowing not to have any title to the property has contracted to sell or let the property

  2. who though be entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties, give the purchaser a title free from reasonable doubt

  3. Both (A) and (B)

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

A vendor cannot enforce specific performance if they knew they had no title (A), or if they cannot provide title free from reasonable doubt despite believing they had good title (B). Section 19 requires the vendor to be able to convey clear title.

Multiple choice

Notwithstanding anything to the contrary contained in CPC, any person suing for specific performance of a contract for the transfer of immovable property may, in an appropriate case, ask for

  1. possession or partition and separate possession, of the property in addition to such performance, or

  2. any other relief to which he may be entitled, including the refund of any earnest money or deposit paid or made by him, incase his claim for specific performance is refused

  3. Both (A) and (B)

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

Section 21 allows plaintiffs seeking specific performance of immovable property transfers to also claim possession or partition (A), and alternative relief including refund of earnest money if specific performance is refused (B). This prevents multiplicity of proceedings.