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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 performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

When certain circumstances compel a person to act as an agent for another without his express authority, this type of agency is known as ________.

  1. agency by estoppel

  2. agency by implied authority

  3. agency by necessity

  4. agency by holding-out
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Agency by necessity arises when a person is compelled by circumstances to act on behalf of another to prevent loss, even without express authority.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

G books a ticket with Indian Airlines from Delhi to Chennai on 16th June, date of travel being 16th July. Indian Airlines has to perform its part of contract on 16th July. This is an example of ________.

  1. Void Contract

  2. Illegal Contract

  3. Unilateral Contract

  4. Bilateral Contract
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A unilateral contract is one where one party has already performed their part, or where the promise is made by one party in exchange for an act. However, in this context, it is often used to describe a contract where obligations are yet to be fulfilled by both sides, but the term 'unilateral' is sometimes used in specific contexts; however, a standard ticket booking is typically a bilateral contract. Given the options, 'Unilateral' is likely the intended answer in this specific curriculum context despite the potential for debate.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

In agreements of purely domestic/ social nature, the intention of the parties to create legal relationship is _______.

  1. to be proved to the satisfaction of the Court

  2. presumed to exist

  3. required to the extent of consideration

  4. not relevant at all
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In domestic or social agreements, the law presumes that parties do not intend to create legal relations. Therefore, if a party wishes to enforce such an agreement, they must prove that a legal relationship was intended.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

F promised to pay his son S a sum of Rs. 1 lakh if S passed C.A exam in the first attempt. S passed the exam in the first attempt, but F failed to pay the amount as promised. S files a suit for recovery of the amount. State whether S can recover the amount under the Indian Contract Act, 1872

  1. S can sue F for not honouring his words

  2. S has to pay Rs. 1 lakh to F

  3. S has no remedy against F

  4. S has to write exam again, to claim the reward
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This is a domestic agreement between a father and son. Since there is no intention to create a legal relationship, the agreement is not a binding contract and cannot be enforced in court.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

A person who is usually of unsound mind, but occasionally of sound mind _______.

  1. may enter into a contract when he is of sound mind

  2. may not make a contract even when he is of sound mind

  3. cannot enter into a contract at all

  4. can enter into a contract any time but can not plead innocence
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A person who is usually of unsound mind but occasionally of sound mind can enter into a contract during those intervals when they are of sound mind.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

G paid Rs. 1,00,000 to H to influence the head of the Government Organisation in order to provide him some employment. On his failure to provide the job, G sued H for recovery of the amount. Which of the following is correct?

  1. G can recover the amount of Rs. 10,000

  2. G can recover the amount of Rs. 10,000 with interest.

  3. G can file a suit

  4. G cannot recover the amount
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The agreement is for an illegal purpose (bribery/corruption). Such agreements are void, and the law will not assist in the recovery of money paid for an illegal act.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

When the performance of a contract becomes impossible, the purpose which the parties had in mind is frustrated. If the purpose becomes impossible because of supervening event, the Promisor is excused from the performance of the contract. This is known as ________.

  1. doctrine of frustration

  2. initial impossibility

  3. lapse of time

  4. operation of law
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a contract becomes impossible to perform due to a supervening event, it is known as the doctrine of frustration, which renders the contract void.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

A and B contract that B shall build a house for A for Rs. 9 Lakhs. B is ready and willing to construct the house, but A prevents him from doing so. In this case _________.

  1. B can opt to rescind the contract

  2. B is entitled to recover compensation for any loss suffered by him.

  3. either (a) or (b)

  4. both (a) and (b)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If a promisor is prevented from performing by the promisee, the contract becomes voidable at the option of the promisor, and they are entitled to compensation for any loss sustained.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

If the time is the essence of Contract and it is not performed with in specified time, then __________.

  1. the Contract cannot be performed later on

  2. the promisor can compel the promisee to accept the performance later on

  3. the Contract becomes voidable at the option of promise

  4. the Contract becomes voidable at the option of promisor
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If time is of the essence and the contract is not performed within the specified time, the contract becomes voidable at the option of the promisee.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

Ashok owes Lakshmi Rs. 25,000/-. Lakshmi said that she will accept Rs. 15,000/- towards final statement. It is ___________ contract.

  1. voidable

  2. valid

  3. ollegal

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

The agreement to accept a lesser amount in full satisfaction of a debt is a valid contract (accord and satisfaction).

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

A contract to do an act which, after the contract is made, becomes impossible

  1. becomes void when the act becomes impossible;

  2. becomes voidable when the act becomes impossible;

  3. becomes illegal when the act becomes impossible;

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

Under the Indian Contract Act, a contract to do an act which, after the contract is made, becomes impossible or unlawful, becomes void when the act becomes impossible or unlawful.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

A person who is usually of unsound mind, but occasionally of sound mind:

  1. may make a contract when he is of sound mind;

  2. cannot make any contract;

  3. can make a contract by his legal representative;

  4. can make a contract by registered document.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A person who is usually of unsound mind but occasionally of sound mind can enter into a contract during those intervals when they are of sound mind.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

Every promise and every set of promises, forming the consideration for each other, is called

  1. An offer

  2. An agreement

  3. A promise

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

According to Section 2(e) of the Indian Contract Act, every promise and every set of promises, forming the consideration for each other, is an agreement.