Contract Law

The Bhagwandas Goverdhandas Kedia case (1966) established that for instantaneous communications like telephone, the contract is concluded at the place where the acceptance is heard. This is the 'rule of the place where acceptance is heard' principle for instantaneous communication.

The Indian doctrine of impossibility is based on Section 56 of the Indian Contract Act, 1872, which deals with 'supervening impossibility or illegality.' Unlike the English doctrine of frustration, India's approach focuses on subsequent events making performance impossible or illegal.

The doctrine of privity of contract means that only parties to the contract can enforce its terms or be sued under it. Third parties cannot enforce contractual rights even if the contract benefits them. This protects the freedom to contract and limits liability to those who agreed to be bound.

Section 23 of the Indian Contract Act voids agreements whose object or consideration is forbidden by law, fraudulent, or would defeat legal provisions. Courts also deem agreements immoral or against public policy as void. Option D correctly captures all these grounds.

Quasi-contracts (Sections 68-72) create obligations by law without actual agreement: benefit of non-gratuitous acts (Section 68), responsibility of finder of goods (Section 71), and quantum meruit (Section 70). Novation is a consensual contract modification, not a quasi-contract.

Undue influence requires one party to be in a dominant position over the other. Banking transactions, even at high rates during market stringency, are in the ordinary course of business. The borrower is free to accept or reject the terms - no dominance, no undue influence.

A voidable contract is one that is enforceable by law at the option of one or more parties but not at the option of the other(s). This typically arises from defects in consent like coercion, undue influence, fraud, or misrepresentation. The aggrieved party can choose to enforce or avoid the contract.

When time is of the essence of a contract and the promisor fails to perform by the specified time, the promisee has the right to treat the contract as void. The contract becomes voidable at the option of the promisee (the injured party), who may choose to rescind it or seek performance. This principle protects parties where timely performance was a fundamental condition of the agreement.

When parties make reciprocal promises where the first set involves lawful acts but the second set involves illegal acts under specified circumstances, the first set remains a valid contract while the second set becomes a void agreement. The law treats each set of promises independently based on the legality of their consideration and objects. Only the illegal portion is void, not the entire agreement.

A contract of guarantee can be formed either orally or in writing under Indian contract law. There is no legal requirement for a guarantee to be in writing to be valid, though written documentation is practically advisable for evidentiary purposes. Both modes of formation are legally recognized and enforceable.

Option B is correct. When a contract for personal service becomes impossible to perform due to illness (a contingency beyond the parties' control), Section 56 of the Contract Act (doctrine of frustration) applies. A who is too ill to sing cannot be compelled to perform personal service. However, Section 65 provides that when a contract becomes void or is discovered to be void, any advantage (the Rs. 50,000 advance) must be restored. A is bound to refund the entire advance, not just unspent portion. Option A is incorrect - liability for loss of profits does not arise in impossibility cases.

Under Section 19(3) of the Specific Relief Act, 1963, courts may deny specific performance if the contract's execution would cause undue hardship on the defendant that they could not have foreseen, while non-performance would not cause comparable hardship to the plaintiff. Inadequate consideration alone is not a ground for refusal, nor is the mere fact that the contract appears onerous.

Under the postal rule in contract law, acceptance is complete when the letter of acceptance is put in the course of transmission, i.e., when it is posted and beyond the acceptor's control. This rule applies specifically to acceptance by post as against the proposer, making the contract binding at that moment.

(3) This option follows from (1), i.e. a contract with a minor is void, but the minor cannot, based on this principle, unjustly enrich himself/herself.

Under Section 25(3) of the Indian Contract Act, a written promise to pay a time-barred debt is enforceable even though the original debt cannot be sued upon. The written promise itself constitutes new consideration. A's written promise to pay Rs. 500 is valid consideration, and B can enforce this new promise regardless of the original debt being time-barred.