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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

Which of the following is not a quasi contract?

  1. Obligation of a person enjoying benefits of non-gratuitous act

  2. Responsibility of finder of goods

  3. Quantum meruit

  4. Novation
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Option (1) is incorrect: It is a quasi contract. Option (2) is incorrect: It is a quasi contract. Option (3) is incorrect: It is a quasi contract. Option (4) is correct: Novation is the substitution of a new contract in place of an old one. It is not a quasi contract.

Multiple choice

A proposal, when accepted, becomes a/an

  1. promise

  2. agreement

  3. contract

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

Option (1) is correct: When the person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise. Option (2) is incorrect: Every promise as well as every set of promises, forming the consideration for each other, is an agreement. Option (3) is incorrect: An agreement enforceable by law is a contract. Option (4) is incorrect: A consideration is something of value given by both the parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Multiple choice

A contract with or by a minor is a

  1. valid contract

  2. void contract

  3. voidable contract

  4. voidable contract at the option of either party
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (1) is incorrect: Void from the beginning Option (2) is correct: Under Section 11 of the Indian Contract Act, 1872, every person is competent to contract who is of the age of majority. A contract with a minor is void ab initio. Option (3) is incorrect: It is not a voidable contract. Option (4) is incorrect: It is not a voidable contract at the option of either party.

Multiple choice

Which of the following statements is incorrect?

  1. A person may authorise an agent to enter into an arbitration agreement.

  2. A person, incapable of entering into a contract, may be a party to an arbitration agreement.

  3. An arbitration agreement remains alive even after the death of signatories thereto.

  4. Waiver may take place by the parties by acting upon the award.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A person cannot authorise an agent to enter into an arbitration agreement.

Multiple choice

In a new contract which replaced the old one, there was no arbitration clause. Reference was made to the 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. The whole arbitration proceedings were valid.

Multiple choice

A, in consideration that B will employ C in collecting the rents of B's Zamindari, promises B to be responsible to the amount of Rs. 5000, for the due collection and payment by C of those rents. This is

  1. no guarantee

  2. simple guarantee

  3. continuing guarantee

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

Option (1) is incorrect: It is an example of continuing guarantee. Option (2) is incorrect: It is not a simple guarantee. Option (3) is correct: A guarantee which extends to a series of transactions is called a 'continuing guarantee'.

Multiple choice

A agrees to pay B a sum of money if B marries C, but C marries D. The agreement is

  1. void

  2. voidable

  3. legal

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

Option (1) is correct: If the future event on which a contract is contingent is the way in which a person will act at an unspecified time, the event shall be considered to become impossible when such a person does anything which renders it impossible that he should so act within any definite time or otherwise than under further contingencies.

Multiple choice

If only a part of the consideration or object is unlawful, then the contract under Section 24 of the Indian Contract Act shall be

  1. valid

  2. voidable

  3. void

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

Option (1) is incorrect: It is not valid. Option (2) is incorrect: An agreement is not voidable, it is completely void. Option (3) is correct: Under Section 24 of the Indian Contract Act, 1872, if any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void. Option (4) is incorrect: The agreement is not illegal, but void.

Multiple choice

Which of the following statements is correct?

  1. Past consideration is no consideration for a contract of guarantee.

  2. Forbearance to sue on the part of the creditor is a good consideration for a guarantee.

  3. A contract of guarantee is a contract of absolute good faith.

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

(2) The creditor’s forbearance from suing the principal may amount to good consideration to support a gurantee.

Multiple choice

Which of the following statements is incorrect?

  1. The liability of the surety is co-extensive with that of the principal debtor.

  2. A suit against the surety without even impending the principal debtor is maintainable.

  3. It is not open to the surety to place a limit upon his liability.

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

In the contract of gurantee, the surety, who put his steps into the shoes of principal debtor, cannot place a limit upon his liability.

Multiple choice

A contract is valid, if it is created by

  1. mistake as to any law enforcable in India

  2. mistake as to any law of foreign country

  3. mistake of fact to both the parties

  4. mistake regarding the existence of subject matter

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

It is a valid contract because mistake of ignorance of law is not an excuse.

Multiple choice

The consideration should

  1. be sufficient

  2. be illusory

  3. be lawful

  4. not be present in valid contract

  5. be in cash only
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The consideration should be lawful.