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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.

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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

A Contract entered between Promisor and Promisee becomes impossible to perform due to destruction of subject matter. In this case __________.

  1. promisee is entitled for compensation

  2. contract continues to be valid

  3. contract is void

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

Under the doctrine of frustration, if the subject matter of a contract is destroyed without the fault of either party, the contract becomes void as it is impossible to perform.

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

Change in some or all terms of the Contract is ______.

  1. novation

  2. alteration

  3. merger

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

Alteration refers to a change in one or more of the terms of a contract, while the parties remain the same. Novation involves the substitution of a new contract or parties.

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

Novation of a contract under Indian Contract Act, means _______.

  1. cancellation of contract

  2. alteration of the contract

  3. the renewal of original contract

  4. substitution of a new contract in place of original contract
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Novation occurs when a new contract is substituted for an existing one, either between the same parties or with new parties, thereby discharging the original contract.

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

The original contract need not  be performed if there is _________.

  1. rescission of contract

  2. novation of contract

  3. alteration of contract

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

Rescission, novation, and alteration all result in the original contract being discharged or modified, meaning the original terms no longer need to be performed as they were.

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

N, a film star, agreed to act exclusively for K, a film producer, for one year. During the year, she contracted to act for some other producer. In this case, K ________.

  1. cannot sue N at all

  2. cannot restrain N by an injunction

  3. can restrain N by an injunction

  4. has to produce the film with other actors only
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In cases of negative covenants in a contract for personal service, the court may grant an injunction to prevent the party from performing the service for others, even if it cannot specifically enforce the positive act.

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

Specific performance may be ordered by the Court when________.

  1. the contract is voidable

  2. damages are an adequate remedy

  3. damages are not an adequate remedy

  4. defaulting party is not ready to pay damages
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Specific performance is an equitable remedy granted by the court when monetary damages are inadequate to compensate the aggrieved party for the breach.

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

Suit for specific performance of contract can be instituted by the promisee, where ___________. 

  1. the promisor has breached the contract

  2. the promisor has suffered abnormal loss

  3. damages are not an adequate remedy to promisee

  4. parties agree to go to court for remedy
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A suit for specific performance is appropriate when the subject matter is unique or where damages would not provide an adequate remedy for the breach.

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

An agreement for rendering services entered into by a father on behalf of his minor daughter is _______.

  1. Void

  2. Voidable

  3. Valid

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

A minor is incompetent to contract. An agreement entered into by a father on behalf of his minor daughter for personal services is void because the minor cannot be bound by such a contract.

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

Contract contingent upon the non- happening of an uncertain future event can be enforced __________.

  1. when the happening of event becomes impossible

  2. when the event has happened

  3. at the time of making the contact

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

A contract contingent upon the non-happening of an uncertain future event becomes enforceable when the happening of that event becomes impossible, as the condition for non-happening is then fulfilled.

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

Status quo obligations arise:

  1. In case of legal obligations

  2. When the contract is made

  3. Outside scope of the Indian Contract Act, 1872

  4. Within the scope of the Indian Contract Act, 1872
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Status quo obligations generally refer to legal duties that exist independently of the specific provisions of the Indian Contract Act, often arising from other areas of law or equity.

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

Which of the following is an example of immaterial alteration in a negotiable instrument?

  1. Changing the date

  2. Changing the sum payable

  3. Correcting the spelling

  4. Changing the place of payment
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

An immaterial alteration is one that does not change the legal effect or the identity of the instrument. Correcting a spelling mistake is purely clerical and does not alter the obligation.

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.