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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 commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

N singer contracted with a theatre manager to sing a song. due to her illness she failed to perform the contract she received 20000 as advance _________.

  1. N must refund 20000

  2. N need not refund 20000

  3. they must enter into new agreement

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

Under the doctrine of frustration of contract, if a contract becomes impossible to perform due to unforeseen circumstances like illness, the party who received an advance must refund it to prevent unjust enrichment.

Multiple choice commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

Quantum Meruit means _______.

  1. a non-gratuitous promise

  2. as implied promise

  3. as much as is earned

  4. as much as is paid
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Quantum Meruit is a Latin phrase meaning 'as much as he has earned'. It is a claim for the reasonable value of services rendered when a contract is discharged or found to be void.

Multiple choice commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

______ arises obligations where no Contract is originally entered.

  1. Wagering Contract

  2. Contingent Contract

  3. Quasi Contract

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

A quasi-contract is not a true contract but an obligation imposed by law to prevent one person from being unjustly enriched at the expense of another, even though no contract was originally entered into.

Multiple choice commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

Quasi Contractual Obligations arise by the principle of ______.

  1. Equity, Justice & Good conscience

  2. Restitution

  3. Recession

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

Quasi-contracts are based on the principle of equity, justice, and good conscience, ensuring that no person is unjustly enriched at the expense of another.

Multiple choice commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

Quasi Contractual liabilities lead to ____. 

  1. Prevention of unjust enrichment

  2. Counter Offer

  3. Cross Offer

  4. Specific Offer
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The primary purpose of quasi-contractual obligations is to prevent unjust enrichment, where one party benefits at the expense of another without a valid legal basis.

Multiple choice commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

A promise made without any intention of performing it cannot be regarded as Fraud

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A promise made without any intention of performing it is a classic example of fraud, as it involves a false representation of one's state of mind at the time of the contract.

Multiple choice commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

In case of Anticipatory Breach, the Promisee can ___________.

  1. put an end to the contract and treat the anticipatory breach as actual breach of contract.

  2. elect to keep the contract alive till the date of performance

  3. either (a) or (b)

  4. neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In an anticipatory breach, the promisee has the option to either rescind the contract immediately or wait until the actual date of performance. Both options are legally valid under contract law.

Multiple choice commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

In case of anticipatory breach, where the Promise elects to keep the contract alive, if during the time the contract remains open, some event happens discharging the Promisor from his liability, the Contract becomes _________.

  1. Illegal

  2. Void

  3. Voidable

  4. contingent
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

If the promisee keeps the contract alive, they remain subject to the risks of the contract. If a supervening event makes performance impossible or illegal during that time, the contract is discharged and becomes void.

Multiple choice commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

S, a singer, contracts with H, manager of a theatre, a sing at his theatre for two nights every week during next two months. H agrees to pay her Rs.1000 for each night's performance. On sixth night, S willfully absents herself, and H, in consequence, rescinds the contract. In this case ________.

  1. H has no obligations to S

  2. H must pay S for five nights on which she had performed

  3. S has no remedy against H

  4. The contract is illegal
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When a contract is divisible, the party who has performed part of the obligations is entitled to payment for the work done before the contract was rescinded. H must pay S for the nights she actually performed.

Multiple choice commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

B chartered A's ship and agreed to load it with a cargo in Odessa within 45 days. B was unable to supply the cargo, but A continued to demand it. Meanwhile war broke out, rendering the performance impossible. In such case _________.

  1. contract is discharged

  2. A cannot sue for damages

  3. both (a) and (b)

  4. neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When performance becomes impossible due to a supervening event like war, the contract is discharged by frustration. Consequently, neither party can sue the other for damages arising from the non-performance.

Multiple choice commerce discharge and breach of a contract remedies for breach of contract performance, discharge, breach and remedies of contract business law and contract act

A who was badly in need of money offered to sell his piano worth Rs. 8,500 to B fro Rs. 5,000. B refused to buy. A gradually lowered his price until Rs. 2500 was reached, which B accepted. Before the piano was delivered A received an offer of a larger sum from X and he refused to carry out the contract with B claiming that the consideration was inadequate. Is A liable to pay damages to B for faiiure to carry out part of contract?

  1. No, as the consideration was inadequate A cancelled the contract

  2. Yes, A is liable to pay damages to B for failure to carry out his part of the contract

  3. No, as the contract was made due to Undue Influence

  4. Any of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under contract law, the adequacy of consideration is not a requirement for a valid contract. If the parties freely agreed to the price, the contract is binding regardless of whether the price was lower than market value.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

A negotiable instrument does not require the signature of its maker.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A negotiable instrument must bear the signature of its maker. Without the signature of the drawer or the maker, the instrument shall not be a valid one. ... Any negotiable instrument like a cheque or a promissory note is not complete till it is delivered to its payee.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

The person to whom the amount mentioned in the promissory note is payable is known as promise.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A Promissory Note must always be written by hand. It must include all the mandatory elements such as the legal names of the payee and maker's name, amount being loaned / to be repaid, full terms of the agreement and the full amount of liability, beside other elements.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

In a promissory note, the person who makes the promise to pay is called as Promisor.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The drawer issues the promissory note and promises to pay a certain amount to the drawee (payee). He is also called the promisor. The drawer of a promissory note can theoretically consist of 2 or more parties.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

A negotiable instrument is not freely transferable.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Negotiable instrument must be freely transferable from one party to another party: negotiable instruments are easily and freely transferable. There are no formalities or much paperwork involved in such a transfer. The ownership of an instrument can transfer simply by delivery or by a valid endorsement.