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Contract Law - 2

Description: Contract Law - 2
Number of Questions: 15
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Tags: Contract Law - 2 Frustration of Contract Offer, Acceptance and Consideration Fraud Misinterpretation Public Policy Law of Contracts-General Principles
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The display of articles in a showroom, indicating their prices, amounts to

  1. offer

  2. counter offer

  3. invitation to an offer

  4. mere advertisement

Show answer
Correct Option: C
Explanation:

An invitation to offer is an intention of a person to invite others with a view to enter into an agreement.

Acceptance sent through post

  1. can be revoked at any time

  2. cannot be revoked at any time

  3. can be revoked before it comes to the knowledge of the offeror

  4. None of these

Show answer
Correct Option: C
Explanation:

An acceptance may be revoked at any time before the communication of the acceptance is complete.

A partial illegality

  1. may avoid the whole agreement

  2. will not avoid the whole agreement

  3. will avoid the whole agreement

  4. Either (2) or (3)

Show answer
Correct Option: A
Explanation:

Partial illegality means if any provision of this agreement or the application thereof to any party or circumstances shall be declared void, illegal or unenforceable, the remainder of this agreement shall be valid and enforceable.

The plaintiff saves the defendant’s son from drowning in a pond. Later on, the defendant promises to pay the plaintiff one thousand rupees as a reward. In this context, which of the following propositions is correct?

  1. The defendant’s liability arises in quasi-contract.

  2. The defendant’s liability is statutory.

  3. The defendant is not liable to pay.

  4. The defendant is liable to pay because the agreement is not nudum pactum.

Show answer
Correct Option: D
Explanation:

The defendant is liable to pay because the agreement is not nudum pactum., which means t refers to a promise that is not legally enforceable for want of consideration. 

Which of the following cases does not have coercion?

  1. A contract was made to avoid threatened prosecution.

  2. There is a threat to strike.

  3. A contract was made under a statutory compulsion.

  4. None of these

Show answer
Correct Option: C
Explanation:

Statutory transactions are contracts under compulsion of law whereby parties are mandated by executive orders or legal regulations. 

A guru (spiritual advisor) induced his chela (devotee) to gift him all his property for securing benefit to his soul in the next world. The gift shall be

  1. void

  2. voidable

  3. valid

  4. immoral

Show answer
Correct Option: B
Explanation:

Fiduciary relationship means a relationship of confidence and trust. When a person reposes confidence in the other, it is expected that he will not be betrayed.

Ordinarily, passive concealment or mere silence is no fraud. But, it may become deceptive in certain cases. In which of the following cases does it amount to fraud?

  1. When the person keeping silent is under ‘duty to speak’

  2. When the silence is itself ‘equivalent to seech’

  3. ‘Half-truths’

  4. All of the above

Show answer
Correct Option: D
Explanation:

Mere silence as to facts does not amount to fraud. There is difference between active concealment and passive concealment. 

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

  1. valid

  2. voidable

  3. void

  4. illegal

Show answer
Correct Option: A
Explanation:

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. 

A person agrees to maintain his mother as part of a family arrangement during partition in the family. Which of the following is correct about this contract?

  1. It is void and not enforceable.

  2. It is voidable but enforceable.

  3. It is valid and enforceable.

  4. It is null and void (as per partition under Hindu law).

Show answer
Correct Option: C
Explanation:

During partition in a family or an agreement as a family arrangement, a person contracts to maintain his mother. This contract is completely valid and enforceable.

Which of the following does not amount to fraud?

  1. Active concealment of a fact

  2. A promise made without any intention of performing it

  3. Suggestion as a fact of that which is not true by one who does not believe it to be true

  4. A representation made without knowing it to be false, honestly believing it to be true

Show answer
Correct Option: D
Explanation:

For a statement to constitute a fraud, it must not only be made without an honest belief in the facts presented but must be made knowing it to be false or without belief in the truth of the false representation.

A knows that his horse had a damaged hoof which he filled up in such a way as to defy detection and sold it to B. This defect was subsequently discovered by B. The act of A amounts to

  1. a false suggestion

  2. active concealment of fact

  3. misrepresentation

  4. mistake

Show answer
Correct Option: B
Explanation:

The act will amount to an active concealment of fact. 

In which of the following cases can a finder of goods not sell the goods that he has found?

  1. Where the goods are not perishable in nature

  2. Where his lawful charges amount to more than two-third of the value of the goods found

  3. Where the owner cannot be traced even with reasonable diligence

  4. Where the real owner is found but he refuses to pay reasonable charges to the finder

Show answer
Correct Option: A
Explanation:

According to Section 71, a person who finds goods belonging to another and takes them into his custody is subject to the same responsibility as a bailee. 

An agreement by which one is restrained from exercising a lawful profession or business of any kind is

  1. void

  2. valid and unenforceable at law

  3. valid and enforceable at law

  4. None of these

Show answer
Correct Option: A
Explanation:

As given under Section 27 of the Indian Contract Act, every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. 

If a contract is based on personal skill or confidence of parties, the death of a party in such a case

  1. does not put an end to the contract

  2. makes the representatives of the deceased liable to perform such a contract

  3. puts an end to the contract

  4. None of these

Show answer
Correct Option: C
Explanation:

If a contract is based on personal skill or confidence of parties, the death of a party in such a case puts an end to the contract and damages can be claimed for the breach.

A party to a contract can be discharged from performing it if it becomes

  1. expensive

  2. onerous

  3. commercially unviable

  4. impossible

Show answer
Correct Option: D
Explanation:

There may be instances where performance of the contract is impossible and it isn’t the fault of any of the parties. 

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