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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

An agent may be liable to a third party when

  1. there is a contract permitting the agent to act on the principal's behalf

  2. the agent exceeds his or her authority

  3. he is acting under the terms of a valid agency agreement

  4. agents will never be liable to third parties
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

(2) An agent may be liable to a third party when he exceeds his or her authority.

Multiple choice

The location of a contract which is electronically completed

  1. will be determined by agreement of the parties to the contract

  2. may be determined by Canadian courts

  3. may be determined by the passing of legislation by governments who impose jurisdiction

  4. remains uncertain at present
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

(4) The location of a contract which is electronically completed remains uncertain at present.

Multiple choice

Which of the following contracts is specifically enforceable?

  1. A (an author) contracts with B (a publisher) to complete a literary work.

  2. A contracts to sell and B contracts to buy a residential building.

  3. A contracts to marry B.

  4. A contract by a guardian to purchase immovable property on behalf of a minor.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Only option 2 is correct as it contains the promise from the two parties and the essentials elements of a valid contract, which is legally enforceable. Option 1 is incorrect as it contains the contract involving personal service and such contracts are not enforceable. Option 3 is a promise and as such it is not a contract. Option 4 is not correct as the contracts made by guardians on behalf of minors are not enforceable.

Multiple choice

If a proposal has been accepted subject to certain conditions, then

  1. the contract is valid and conditions are binding

  2. the contract is voidable

  3. the contract is valid but conditions are not binding

  4. the contract is not constituted at all
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Option (4) is correct as acceptance of proposal subject to conditions create counter offer and thus there is no contract. Option (1) is incorrect. The voidable contact is the one, which is valid at the option of one of the parties but not at the option of the other party. Option (3) is incorrect as the proposal accepted as such cannot be valid.

Multiple choice

A counter-offer is

  1. a change in the original offer

  2. a rejection of the original offer

  3. same as the original offer

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

Option (1) is correct: A counter-offer is an offer given in response to an offer. Option (2) is incorrect: It is not a rejection of the original offer. Option (3) is incorrect: It is not the same as tthe original offer.

Multiple choice

When the consent to the contract is caused by coercion, fraud or misrepresentation, the contract under Section 19 is

  1. valid

  2. voidable

  3. void

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

Option (1) is incorrect: It is not a valid contract. Option (2) is correct: The contract is voidable at the option of the party whose consent was so caused. Option (3) is incorrect: It is not void, but voidable at the option of the party whose consent was so caused. Option (4) is incorrect: It is not illegal, but voidable at the option of the party whose consent was so caused.

Multiple choice

An agreement not enforceable by law is said to be

  1. voidable

  2. void

  3. legal

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

Option (1) is incorrect: An agreement not enforceable by law is not voidable. Option (2) is correct: An agreement not enforceable by law is said to be void. Option (3) is incorrect: An agreement not enforceable by law is not illegal, but void.

Multiple choice

Which of the following agreements is not void?

  1. A agrees to sell B a hundred tons of oil.

  2. A promises to obtain for B an employment in the public service and B promises to pay Rs. 1000 to A.

  3. A agrees with B to discover treasure by magic.

  4. A finds B's purse and gives it to him. B promises to give Rs. 50 to A.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Option (1) is incorrect: Agreement is without consideration. Option (2) is incorrect: Promise is against the public policy or provisions of law. Option (3) is incorrect: Agreement is void as to uncertainty. Option (4) is correct: It is a valid agreement.

Multiple choice

A clickwrap agreement

  1. is the clickbox of "I agree"

  2. does not constitute acceptance

  3. can constitute a valid acceptance

  4. Both (1) and (3)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

(4) A clickwrap agreement is the clickbox of "I agree" and can constitute a valid acceptance.

Multiple choice

A relief against parties and persons claiming under them by subsequent title, for specific performance of a contract, may be enforced under

  1. Section 12

  2. Section 19

  3. Section 18

  4. Section 8
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (1) is incorrect: Section 12 of the Specific Relief Act deals with specific performance of a part of contract. Option (2) is correct: Section 19 of the Specific Relief Act talks about relief against parties and persons claiming under them by subsequent title. Option (3) is incorrect: Section 18 of the Specific Relief Act deals with non-enforcement, except with variation. Option (4) is incorrect: Section 8 of the Specific Relief Act deals with liability of person in possession, not as owner, to deliver to persons entitled to immediate possession.

Multiple choice

Tender is

  1. an offer

  2. an invitation to offer

  3. a counter-offer

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

Option (1) is incorrect: An offer is always by one party to another. Option (2) is correct: Tender means a type of quotation offering lowest price for supply of some goods or services or job works. It is an invitation to offer. Option (3) is incorrect: It is not a counter-offer.  Option (4) is incorrect: An offer when accepted becomes a promise.

Multiple choice

A contract is not frustrated by

  1. commercial impossibility

  2. imposition of government restriction or order

  3. destruction of subject matter of contract

  4. death or incapability of party when contract is of the personal services
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: A contract under the Indian Contract Act, 1872 is not frustrated by mere commercial impossibility. Option (2) is incorrect: A contract stands frustrated by imposition of government restriction. Option (3) is incorrect: A contract stands frustrated by destruction of subject matter. Option (4) is incorrect: A contract stands frustrated by death or impossibility of party when contract is of the personal services.

Multiple choice

In case of repudiation, frustration and breach of contract,

  1. performance of contract comes to an end and arbitration clause does not operate

  2. performance of contract does not come to an end and arbitration clause operates

  3. performance of contract comes to an end, but operation clause operates

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

(1) In case of repudiation, frustration and breach of contract, performance of contract comes to an end and arbitration clause does not operate.

Multiple choice

In a new contract that replaced the old one, there was no arbitration clause. Reference was made to an arbitrator under the new contract. The contractor objected to the jurisdiction of the arbitrator.

  1. The contractor’s participation constituted waiver.

  2. The whole arbitration proceedings were invalid.

  3. The whole arbitration award was not liable to be set aside.

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

(4) Jurisdiction cannot be objected as a separate agreement can be made for arbitration.