Law Legal Studies · Commerce Accountancy

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

E, a dancer, contracts with F, the manager of a night club, to dance in his night club for the next one month in the night. On the thirteenth night, E wilfully absents herself from the night club. In this case,

  1. F is not entltled to claim the compensation from E

  2. the contract becomes void

  3. E is entitled to receive compensation from F

  4. none of these

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

 E has the right to claim compensation from F as he has sustained loss due to non-performance of contract by F.

Multiple choice

Which of the following is an example of reciprocal contract?

  1. S promises to pay a sum of Rs 3,000 to T, if T discovers his treasure by magic.

  2. A and B contract that A shall complete a project for B at a fixed price.

  3. C promises to pay a sum of Rs 30,000 to D, if he wins the cricket match.

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

Right answer because it is an example of reciprocal contract, as it consists of reciprocal promise to be simultaneously performed. A's promise to complete the project must be performed before B's promise to pay for it.

Multiple choice

B, a broker at Delhi, on the order of A contracts with C for the purchase of 20 kg of iron-ore. Afterwards A refuses to receive the iron-ore, and C sues B. B informs A who rejects the contract altogether. B defends, but unsuccessfully, and has to pay damages and costs and incurs expenses. A is liable to B for

  1. damages only

  2. costs only

  3. damages, costs and expenses

  4. none of these

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

 A is liable to pay to B the damages suffered due to rejection of contract, costs incurred on contract for purchase of iron-ore and expenses incurred by B to defend himself when sued by C. It is total error on part of A and B is sued by C, because of rejection of contract by A.

Multiple choice

Which one of the following statements is incorrect?

  1. Contract made under undue influence is voidable.

  2. Contract made by minor is voidable.

  3. Contracts made under mistake are voidable.

  4. Contract made under fraud is voidable.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Right- This is incorrect because the contract act says that contract made under mistake is voidable.

Multiple choice

Which one of the following statements is correct?

  1. All agrements are contracts.

  2. All contracts are agreements.

  3. Contract and agreement is opposite to each other.

  4. Contract and agreement is the same thing
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Right- An agreement is between parties then it becomes a contract.Every contract consists the essentials of the agreement.

Multiple choice

What is the objective of contract of guarantee?

  1. To provide additional security to the principal debtor

  2. To provide additional security to the creditor

  3. To provide additional security to the surety

  4. To provide additional security both to the principal debtor and creditor
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Objective of contract of guarantee is to provide additional security to the creditor.

Multiple choice

Which of the following statements is incorrect?

  1. Guarantee obtained by misrepresentation is invalid.

  2. Guarantee obtained by concealment is invalid.

  3. Every contract requires free consent.

  4. Guarantee obtained by concealment is sometimes valid.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

It is not correct statement because Section 143 says consent obtained by concealment is not free consent and contract is not valid.

Multiple choice

Which of the following is a correct statement?

  1. Contract of guarantee is always in written.

  2. Benefit to the principal debtor is sufficient consideration.

  3. There is no need of principal debt.

  4. Contract of guarantee is always in oral form.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

It is right statement according to the Contract Law.

Multiple choice

Which of the following statements is incorrect?

  1. There are two parties in the contract of indemnity.

  2. Object of contract of guarantee is the security of creditor.

  3. Contract of guarantee consists of three contracts.

  4. Indemnity contract consists of two contracts.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Right- Because indemnity contract always consists one contract only that is indemnifier with indemnity holder. So it is incorrect statement.