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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 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

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.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Which of the following is not true for a Lease decision for the lessee?

  1. Helps in project selection

  2. Helps in project financing

  3. Helps in project location

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

Lease decisions are primarily about financing (choosing between leasing or buying). While they affect financial strategy, they do not inherently help in project selection or location, which are strategic business decisions.

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Which of the following statement is false?

  1. Void agreements are punishable

  2. Illegal agreements are punishable

  3. Illegal agreements are forbidden under the law

  4. Collateral transactions of a void agreement are not void
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A void agreement is not punishable under law whereas an illegal agreement is considered as an offence, hence the parties to it are punishable and penalised under Indian Penal Code (IPC)


An illegal agreement is one which is forbidden by law ; but a void agreement may not be forbidden , the law may merely say that if it is made , the courts will not enforce it . Thus every illegal contract is void but a void contract is not necessarily illegal.

Collateral agreements of a void agreement may or may not be void i.e. they may be valid also. Conversely, collateral agreements of an illegal agreement cannot be enforceable by law as they are void ab initio.