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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

The inadequacy of consideration will be taken into account by a Court of Law

  1. when the promisor expresses his desire to get maximum returns for a promise

  2. when the promisor performs his promise

  3. when the fraud, coercion or undue influence in the formation of contract is pleaded

  4. <font size="2">a</font>lways at the discretion of the Court
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given. 

Multiple choice

A quantum meruit claim might arise in the situations some of which are contractual and others quasi-contractual. The plaintiff entered into an agreement to work for a periodical and as per the agreement, he was to receive a lumpsum amount on completion of his work. When the plaintiff had written part of the work, the defendant had already abandoned the project. The plaintiff was held entitled to sue for the work already done because the plaintiff’s claim was

  1. contractual

  2. tortous

  3. quasi-contractual

  4. partly contractual and partly tortous
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The plaintiff entered into an agreement to work for a periodical and as per the agreement, he was to receive a lumpsum amount on completion of his work. When the plaintiff had written part of the work, the defendant had already abandoned the project. The plaintiff was held entitled to sue for the work already done because the plaintiff’s claim was contractual.

Multiple choice

A standard form of contract is the one in which

  1. the terms are fixed by the government of the state to which the contracting party belongs

  2. the terms are pre-determined by the custom of the trade to which the contracting parties belong

  3. the terms on which mercantile transactions of common occurrence are to be carried out

  4. the terms are fixed by one of the parties in advance and one open to acceptance by any one
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A standard form of contract is the one in which the terms are fixed by one of the parties in advance and one open to acceptance by any one.

Multiple choice

Consider the following statements with regard to “Uberrima fides”:

  1. It falls within a class of cases which require utmost good faith.
  2. Every contract is a contract, “Uberrima tides”.
  3. Contract of insurance is an example of “Uberrima fides”.

  1. 1, 2 and 3 are correct.

  2. 1 and 3 are correct.

  3. 2 and 3 are correct.

  4. 1 and 2 are correct.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Uberrima fides is a Latin phrase meaning "utmost good faith". It is the name of a legal doctrine which governs insurance contracts.

Multiple choice

Which one of the following is a contingent contract?

  1. “A” insures his factory against damage or destruction by fire.

  2. “A” sells his property subject to the condition that the property will be reconveyed to him on repayment of price with interest.

  3. A guard is appointed at a swimming pooi for the sole purpose of rescuing drowning persons.

  4. A borrower solemnly promises to pay off the tender when the borrower will be in funds.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 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.“A” insures his factory against damage or destruction by fire. It is a contingent contract.

Multiple choice

A property worth Rs. 25,000 was agreed to be sold by “X” for Rs. 8,000. However, X’s mother moves for setting aside the agreement on the proof that “X” is a congenital “idiot”. In this context, which one of the following is correct?

  1. The mother will not succeed.

  2. The mother will succeed.

  3. The mother is bound to execute the agreement.

  4. The “idiot” can avoid the agreement.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

X's mother proved that he was an idiot, incapable of understanding the transaction and that he mostly wandered about. The sale was held void. X's mother will succeed.

Multiple choice

The defence of “non est factum” is available to the contracting party who has committed mistake as to the

  1. nature of contract

  2. identity of the contracting party

  3. quality of the promise made by other contracting party

  4. quality of the subject<font size="2"> </font>matter of the contract
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

There is a legal maxim, non est factum, which means "not his deed" and a special defence in contract law to allow a person to avoid having to respect a contract that she or he signed because of certain reasons. The defence of “non est factum” is available to the contracting party who has committed mistake as to the nature of contract. 

Multiple choice

Under Section 12(2) of the Specific Relief Act, 1963, part performance of a contract can be enforced by

  1. promisor

  2. promisee

  3. Both (1) and (2)

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

Under section 12(2) of the specific relief act where a party to a contract is unable to perform the whole of his part of it but the part which must be left unperformed by only a small proportion to the whole in value and admits of compensation in money, the court may at the suit of either party, direct the specific performance of so much of the contract as can be performed and award compensation in money for the deficiency.

Multiple choice

Contracts of adhesion are

  1. unfair contracts

  2. unlawful contracts

  3. contracts of adults

  4. standard form contracts
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Contract of adhesion is a standard form contract drafted by one party and signed by the weaker party who must adhere to the contract and therefore, does not have the power to negotiate or modify the terms of the contract.

Multiple choice

A contract of guarantee may be

  1. oral

  2. written

  3. oral or written

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

A contract of guarantee may be oral or written. It may even be inferred from the course of conduct of the parties concerned.

Multiple choice

A contracts to pay B Rs. 20,000 if B’s house is burnt. It is a

  1. wagering contract

  2. quasi contract

  3. contingent contract

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

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. A contracts to pay B Rs.10,000 if B's house is burnt. This is a contingent contract.

Multiple choice

A proposal, when accepted, becomes

  1. an undertaking

  2. a promise

  3. an agreement

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

Under Section 2(b) of the Indian Contract act, it is defined as when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.