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

A contractors to sell his car to B for Rs. 4,00,000 and B agrees to pay on delivery. Once the car is delivered to B and B pays Rs. 4,00,000, contract comes to an end. This is called __________

  1. waiver of a Contract

  2. breach of a Contract

  3. rescission of a Contract

  4. discharge of a Contract
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When both parties have fulfilled their respective obligations under a contract, the contract is said to be discharged by performance.

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

When an inferior right accruing to a party in a contract merges into a superior right accruing to the same party, then________.

  1. the contract conferring the inferior right is discharged

  2. the contract conferring the superior right is discharged

  3. both contracts are discharged

  4. both contracts are not discharged
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Merger occurs when an inferior right and a superior right in the same subject matter meet in the same person. The inferior right is extinguished or merged into the superior one, thus discharging the contract related to the inferior right.

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

A contract can be discharged by __________.

  1. frustration of the contract

  2. performance of the contract

  3. both (a) & (b)

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

A contract can be discharged through various methods, including performance (both parties fulfill their duties) and frustration (an unforeseen event makes performance impossible).

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

_________ signifies that the parties are not further bound under the contract.

  1. Waiver of a Contract

  2. Breach of a Contract

  3. Rescission of a Contract

  4. Discharge of a Contract
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Discharge of a contract means that the parties are no longer bound by the obligations created by the contract.

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

When both the parties have decided to cancel the contract, it is known as _______ .

  1. remission

  2. novation

  3. rescission

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

Rescission is the act of canceling or terminating a contract by mutual agreement, effectively releasing both parties from their future obligations.

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

Rescission of a Voidable Contract may also be revoked and the parties can get back on the original contract.

  1. True

  2. Partly true

  3. False

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

Rescission of a voidable contract allows the aggrieved party to set aside the contract. Once rescinded, the contract is no longer binding, and the parties are released from their obligations.

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

In case of necessaries supplied to a person incompetent to contract, which of the following is true?

  1. Only the property (movable and immovable) of the incapable person shall be liable.

  2. The incapable person cannot be held liable personally.

  3. Where the incapable person does not own any property, nothing shall be payable.

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

Under the Indian Contract Act, a person incapable of contracting is not personally liable for necessaries supplied; however, their property is liable for reimbursement. If they have no property, the supplier cannot recover the cost.

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

A minor got injured in his left leg in Football match. He engaged a doctor for treatment of leg. The doctor's claim for his services under the Indian Contract Act 1872 is _______.

  1. Valid

  2. Invalid

  3. Void

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

Medical services provided to a minor are classified as necessaries. Consequently, the claim for payment is legally valid under the Indian Contract Act, specifically regarding the minor's estate.

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

A, a singer enters into a contract with B, the manager of a theatre to sing at his theatre two nights in every week during the next two months and B engages to pay her Rs. 1,00,000 for each night's performance. On the sixth night, A willfully absents himself from the theatre. If A turns up after a week and B without saying anything allowed A to perform that night __________.

  1. B is at liberty to put an end to the contract

  2. B cannot put an end to the contract but can claim damages from A

  3. The contract is left at the liberty of A

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

If a party accepts performance after a breach, they waive their right to rescind the contract based on that breach, though they may still be entitled to claim damages for the loss suffered.

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

A contract may be discharged by

  1. Lapse of time

  2. Operation of the law

  3. Mutual agreement

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

A contract can be discharged through various means, including performance, mutual agreement, operation of law, or breach. All the listed options are valid methods of discharge.

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

A contract is discharged by operation of law:

  1. by death of the promisor;

  2. by insolvency of promisor;

  3. by death or insolvency of promisor.

  4. any of the above.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Discharge by operation of law occurs in cases such as insolvency or the death of a promisor (in contracts involving personal skill), making all the listed options correct.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Which one of the following is not the characteristic of a negotiable instrument?

  1. It must be in writing

  2. It must be freely transferable

  3. It must be registered

  4. It must contain definite amount of money
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Negotiable instruments are characterized by being in writing, freely transferable, and containing a definite amount of money. Registration is not a requirement for an instrument to be considered negotiable.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

A bearer negotiable instrument is payable to ______________.

  1. banker

  2. receiver

  3. holder

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

A bearer instrument means that any check or draft can be transferred to the holder by delivery without having to be endorsed. Section 8 of N.I.Act 1881 defines 'Holder' as under. “The holder of a promissory note, bill of exchange or cheque means, any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto."

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Characteristics of Negotiable Instruments
Which of the following can be considered as characteristic/s of negotiable instruments?
A. The holder in due course is entitled to sue on the instrument in his own name.
B. The instrument is transferable till maturity and in case of cheques, till it becomes stale.
Select the correct answer from the options given below-

  1. A only

  2. B only

  3. Both A & B

  4. None of above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Important characteristics of Negotiable Instruments are:
  • Negotiable instrument does not simply give ownership of the instrument but right to property as well. The property in negotiable instrument can be moved without any formality. In the case of bearer instrument, the possessions pass by meager delivery to the transferee. In case of order instrument, endorsement & delivery are necessary for transfer of property.
  • The transferee of negotiable instrument is called ‘holder in due course.’ A genuine transferee for value is not affected by any flaw of title on the part of transferor or of any of the previous holders of instrument.
  • The transferee of negotiable instrument can take legal action in his own name, in case of dishonour. A negotiable instrument can be reassigned any number of times till it is attains maturity. The holder of instrument need not give notice of transfer to the party legally responsible on the instrument to pay.
  • Certain presumptions are applicable to all negotiable instruments. It is not essential to write in promissory note the words ‘for value received’ or alike expressions for the reason that the payment of consideration is acknowledged. The words are typically included to generate additional substantiation of consideration.
  • A negotiable instrument facilitates the holder to anticipate prompt payment because dishonour refers to the ruin of credit of all persons who are parties to the instrument.
Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Introduction of Negotiable Instruments
A negotiable instrument dated  31st August, 2019, is made payable 3 months after date. The instrument is at maturity on ______.

  1. 30th August, 2019

  2. 3rd December, 2019

  3. 1st December, 2019

  4. 31st December, 2019
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Maturity means the date on which a bill of exchange falls due for payment. The date of maturity is to be calculated in respect of bills which are payable after a specified time. In arriving at the maturity date three days, known as days of grace, must be added to the date on which the period of credit expires instrument is payable. Here, the cheque is payable after three mgonths and addin the three days grace which makes the maturity date to be 31st August 2019 + 3 months + 3 days i.e. 3rd December, 2019.