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Indian Contract Act - IV

Description: Get Complete Study Material for Indian Contract Act-III, Essential Elements of a Valid Contract, Types of Contracts, Offer, Acceptance, Lawful Consideration, Competent To Contract, Free Consent, Revocation of Offer, Agency
Number of Questions: 24
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Tags: Indian Contract Act-III Essential Elements of a Valid Contract Types of Contracts Offer Acceptance Lawful Consideration Competent To Contract Free Consent Revocation of Offer Agency The Indian Contract Act , 1872
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A person agrees to sell his property worth Rs. 20,00,000 for Rs. 2,00,000. The consideration is inadequate. The contract is

  1. valid

  2. void

  3. voidable

  4. illegal


Correct Option: A
Explanation:

Consideration need not be adequate, but it must be real. It need not be approximately of equal value with the promise for which it is exchanged, but it must be something which the law would regard as having some value. Thus, if A agrees to voluntarily sell his house worth Rs. 20,00,00 for Rs. 2,00,000, it is a valid contract.

Anil offers by letter to Sunil to sell his house for Rs. 10,00,000 and Sunil, who is not aware about the offer, writes to Anil to purchase his house for Rs. 10,00,000. It is a _______ offer.

  1. counter

  2. cross

  3. standing

  4. valid


Correct Option: B
Explanation:

Cross offer means identical offers to each other without knowledge the offer of other party. Counter offer is the offer to other's offer in negotiation.

An investor offered to purchase certain gold of a company for Rs. 20,000, but consent was given by the company six months after his offer. The contract is valid at the option of

  1. company

  2. court

  3. government

  4. investor


Correct Option: D
Explanation:

The reasonable time has passed. So, the offer is valid at the option of investor only.

An investor applied for the IPO of a company. The company confirmed the allotment to him, but the allotment letter never reached the investor as it was lost during the course of post. It is

  1. a valid acceptance

  2. an invalid acceptance

  3. an invalid offer

  4. none of these


Correct Option: A
Explanation:

Though the letter has not reached the offerer, yet the acceptance is valid.

A person offers the other person to sell his car at the price to be set by the third party. The third party refused to set the price. The offer is

  1. valid

  2. revocated

  3. binding

  4. void


Correct Option: B
Explanation:

When the condition in an offer is not satisfied, it is bound to revoke.

A person aged 17 years and 11 months made an agreement to take a loan from some other person and promises to bind himself on attaining the age of 18 years. The contract is

  1. valid

  2. voidable

  3. void ab initio

  4. illegal


Correct Option: C
Explanation:

The agreement with the minor during his period of minority is void.

A minor made an agreement with a coaching institute to get coaching for PMT course. The agreement is

  1. Void ab initio

  2. voidable

  3. Valid

  4. illegal


Correct Option: A
Explanation:

An agreement entered into by minor is void ab initio. MInor is not bound to fulfill his obligation because agreement is not enforceable by law. In case of necessaries supplied to minor, neither minor nor his guardian is liable but Minor's personal property is liable . If personal property is not there, no recovery is possible. Necessaries cover food, shelter, education, medical treatment, marriage of female and others. In given que, if minor does not pay fees, his personal assets shall be liable, not the minor.

A person promised to donate a considerable amount to an NGO for the construction of a community hall. Later on, he refused to fulfill his promise on the plea of no consideration. Which of the following holds true in this case?

  1. He is bound to pay

  2. He is not bound to pay

  3. He is bound to pay if the construction work has started

  4. None of these


Correct Option: C
Explanation:

He is bound to pay only in case if construction has started

A man threatened to suicide in case his wife and son do not agree to make a favorable deed in his brother`s favour. The agreement is

  1. valid at the option of his wife and son

  2. voidable at the option of his wife and son

  3. both (1) and (2)

  4. none of these


Correct Option: C
Explanation:

The contract is valid or voidable at the option of aggrieved party.

An illiterate person who was in need of money, took a loan of Rs. 1,00,000 but the financer got his signature for a loan of Rs. 2,00,000. The contract is made under:

  1. fraud

  2. undue influence

  3. mistake

  4. coercion


Correct Option: A
Explanation:

It is a case of fraud.

A agreed to sell a car to B but the car had already damaged at the time of making the contract. If both of the parties were not aware of this fact, the contract will be

  1. valid

  2. void

  3. voidable

  4. illegal


Correct Option: B
Explanation:

The agreement is void as it can’t be performed and both the parties are unaware about it.

A person agrees to sell his property worth Rs. 20,00,000 for Rs. 2,00,000. The consideration is inadequate. The contract is

  1. valid

  2. void

  3. voidable

  4. illegal


Correct Option: A
Explanation:

Consideration need not be adequate, but it must be real. It need not be approximately of equal value with the promise for which it is exchanged, but it must be something which the law would regard as having some value. Thus, if A agrees to voluntarily sell his house worth Rs. 20,00,00 for Rs. 2,00,000, it is a valid contract.

A trust was created in favour of an old player. The trust organized a match to help the player, but he was refused to be paid on account of no consideration from the player. The player

  1. can sue, though he is stranger to contract

  2. can't sue as he is stranger

  3. is not entitled to get anything

  4. none of these


Correct Option: A
Explanation:

A stranger can sue if a trust is created in his favour.

A husband and wife agreed to live apart due to differences. The husband transferred a land in favour of his wife and registered the agreement. The agreement is

  1. valid

  2. void

  3. voidable

  4. illegal


Correct Option: B
Explanation:

Though there is an exception of no consideration, but in such cases there should be natural love and affection which is not present in the case.

A Hindu promised to marry a girl inspite of the fact that he was already married. The agreement is

  1. valid

  2. void

  3. voidable

  4. illegal


Correct Option: B
Explanation:

If an agreement results in defeating the purpose of any other law, it is void.

A hired his house to B. The house was hired to run a gamble house. The tenant did not pay the rent due and a case was filed against him. In this case

  1. the tenant will have to pay the rent

  2. as the object is unlawful, the contract is not valid

  3. the court can award any of these

  4. none of these


Correct Option: B
Explanation:

If the object of contract is unlawful, it is void.

A singer proposes to sing in a theatre. Due to an accident, he became hospitalized and could not make his performance. The agreement is

  1. valid

  2. void

  3. voidable

  4. illegal


Correct Option: B
Explanation:

An agreement can become void on the basis of subsequent impossibility of events.

A promised to paint a picture for B. Who must perform this promise?

  1. A only

  2. A or his agent

  3. A or his representatives

  4. A or his son


Correct Option: A
Explanation:

If contract is of personal nature, it should be performed by the promisor only.

If a contract is not of personal nature, then on the death of performance, the contract is

  1. void

  2. to be performed by his representative

  3. not valid

  4. none of these


Correct Option: B
Explanation:

If a contract is not of personal nature and does not require personal skills, it must be performed by his representatives.

A promised to supply certain items to B by January end. Subsequently, they decided to defer the supply till February end. It is called

  1. novation

  2. alteration

  3. rescission

  4. remission


Correct Option: B
Explanation:

Alteration means changing one or more terms. Novation means substitution of new contract in place of old one. Recission means cancellation of contract.

A`s car was completely destroyed in an accident. The fact was known to him. Still he made an agreement with B to sell him the car in good condition and received advance money from him. In this case

  1. the contract is void

  2. B has no legal remedy

  3. B can sue A for the loss caused to him

  4. B should request A to give back the advance money only


Correct Option: C
Explanation:

If the contract becomes void due to impossibility known to one party, that party is bound to make good the loss caused to other party. Had it been not known to A at the time of making the contract, the agreement would have been void.

A person agrees to sell a part of the goods if the ship from England lands in India in safe condition. It is an example of a/an

  1. contingent event

  2. wagering event

  3. quasi event

  4. expressed event


Correct Option: A
Explanation:

Contingent events always arise on happening or non-happening of an event.

Death or insolvency of promisor results in discharge of contract by

  1. impossibility of performance

  2. operation of law

  3. breach of contract

  4. remission


Correct Option: B
Explanation:

As the insolvent persons cannot continue the contract, the contract is discharged by the law.

Which of the following is true?

  1. Every unlawful agreement is necessarily illegal.

  2. Every illegal agreement is necessarily unlawful.

  3. The term illegal agreement is wider than unlawful agreement.

  4. None of these


Correct Option: B
Explanation:

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