Unit 1 - Practice Quiz

Section 2(h) of the Indian Contract Act, 1872, explicitly defines a contract as 'an agreement enforceable by law'.

In contract law, the party that makes the offer is called the 'Offeror' or 'Promisor'. The party to whom the offer is made is the 'Offeree'.

'Quid pro quo' is a Latin phrase meaning 'something for something' or 'something in return'. This is the essence of consideration in a contract.

Section 11 of the Act specifies that every person is competent to contract who is of the age of majority, is of sound mind, and is not disqualified from contracting. A minor is therefore not competent.

According to Section 19, when consent to an agreement is caused by coercion, fraud, or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.

An implied contract is one where the agreement is inferred from the circumstances and the conduct of the parties, such as boarding a public bus.

An agreement (which is formed by an offer and its acceptance) becomes a contract only when it is enforceable by law. This combination is the fundamental structure of a valid contract.

Section 7 of the Act states that to convert a proposal into a promise, the acceptance must be absolute and unqualified. Any variation constitutes a counter-offer.

Section 25 of the Indian Contract Act declares that 'an agreement made without consideration is void', subject to certain specified exceptions.

The term 'void ab initio' means void from the very beginning. As a minor is incompetent to contract, any agreement made with a minor is void from the start and has no legal effect.

Section 15 defines coercion as committing, or threatening to commit, any act forbidden by the Indian Penal Code, or unlawfully detaining property, to the prejudice of any person, with the intention of causing that person to enter into an agreement.

As per Section 2(j), a contract that was valid when made but later ceases to be enforceable by law (e.g., due to a change in law) becomes a void contract.

This is the precise definition of an 'agreement' as provided in Section 2(e) of the Indian Contract Act, 1872. An agreement is the first step towards forming a contract.

This is the definition of a voidable contract under Section 2(i). The aggrieved party has the right to either affirm or reject the contract.

A price tag or catalogue is not an offer, but an invitation for the public to make an offer. The shopkeeper is free to accept or reject the customer's offer to buy.

For the purpose of entering into contracts, a person is considered to have attained the age of majority upon completing 18 years of age.

Section 16 defines undue influence as the use of a position of power or trust to dominate the will of another person to gain an unfair advantage in a contract.

Unlike English law, Indian law under Section 2(d) allows consideration to be provided by the promisee or any other person, even a stranger to the consideration.

When the offer and acceptance that form an agreement are made in words (oral or written), the contract is termed an 'Express Contract'.

The core element that distinguishes a contract from a mere agreement is 'enforceability by law', which means the agreement must give rise to legal obligations and rights.

Based on the principle from Balfour v. Balfour, agreements of a social or domestic nature are presumed not to have an intention to create legal relations, which is an essential element of a valid contract. Therefore, the son cannot legally enforce the father's promise.

A counter-offer acts as a rejection of the original offer and puts an end to it. Once Priya made a counter-offer of ₹1,80,000, the original offer from Riya for ₹2,00,000 lapsed. Priya cannot revive the original offer by her subsequent acceptance. This is based on the principle from Hyde v. Wrench.

Section 25(3) of the Indian Contract Act, 1872, provides a key exception to the rule 'no consideration, no contract'. It states that a promise made in writing and signed by the person to be charged therewith, to pay a debt barred by the limitation law, is enforceable even without fresh consideration.

As per Section 68 of the Indian Contract Act, while a minor's agreement is void, if a person supplies 'necessaries' suited to the minor's condition in life, the supplier is entitled to be reimbursed from the minor's property. A laptop for a college student can be considered a necessary. The supplier can only claim a reasonable price, not necessarily the contract price.

This scenario fits the definition of Undue Influence under Section 16. A fiduciary relationship exists between a spiritual advisor and a devotee. Given the woman's dependence and the unconscionable nature of the transaction (gifting her entire property), the burden of proof shifts to the guru to prove that the consent was not induced by undue influence.

According to Section 56 of the Indian Contract Act, a contract to do an act which, after the contract is made, becomes impossible to perform without any fault of the promisor, becomes void. The destruction of the specific subject matter (the vintage car) makes the contract void due to supervening impossibility.

To create a binding contract, acceptance must be made in response to the offer. Since B was unaware of the offer of a reward when he found and returned the cat, there was no acceptance. The performance of the act was not linked to the offer. This principle was established in the case of Lalman Shukla v. Gauri Datt.

Consideration must be something more than what the promisee is already bound to do by law. Since the firefighter was performing his public duty, this act cannot serve as valid consideration for X's promise to pay. The promise is unenforceable for want of valid consideration.

As per Section 22, a contract is not voidable merely because it was caused by one of the parties being under a mistake as to a matter of fact. Mere silence is not fraud unless there is a duty to speak. Since B did not make any misrepresentation, A's own mistake about the quality of the horse (a non-essential fact) does not affect the contract's validity.

According to Section 29, agreements where the meaning is not certain or capable of being made certain are void. The price is an essential term. Since the agreed mechanism for making the price certain (valuation by R) has failed due to R's death, the agreement becomes void for uncertainty.

This is a classic example of a quasi-contract. There is no actual agreement between the finder and the owner. However, the law imposes an obligation on the owner to compensate the finder for the legitimate expenses incurred. This is based on principles of equity and justice, specifically Section 71 of the Indian Contract Act, which deals with the responsibility of the finder of goods.

According to Section 4 of the Indian Contract Act, the communication of an acceptance is complete as against the proposer (P) when it is put in a course of transmission to him, so as to be out of the power of the acceptor (Q). In this case, that happens on March 4th, when Q posts the letter of acceptance.

Section 11 states that a person is competent to contract who is of the age of majority and of sound mind. Section 12 clarifies that a person cannot make a contract when he is of unsound mind, even if he is usually of sound mind. A contract made by a person of unsound mind is treated as void, similar to a contract with a minor.

Under Section 17, fraud includes the active concealment of a fact by one having knowledge or belief of the fact. The impending acquisition was a material fact that would affect B's decision. A's deliberate silence on this matter, with the intent to induce B into the contract, constitutes fraud, making the contract voidable at B's option.

Unlike English Law, Indian Law (as per Section 2(d)) recognizes that consideration may move from the promisee or 'any other person'. Here, the consideration is the detriment A suffered by incurring extra expenses. A's daughter, being the beneficiary for whom the promise was made, can sue B, even though she herself did not provide any consideration. This is based on the principle from Chinnayya v. Ramayya.

A 'void contract' (Section 2(j)) is a contract which ceases to be enforceable by law. This is distinct from a 'void agreement' (Section 2(g)) which is void from the very beginning. In this case, the contract was initially valid but became void due to a subsequent change in law (supervening illegality), making it a void contract.

A price catalogue, like a display of goods in a shop or an advertisement, is not a binding offer. It is an invitation to the public to make offers to buy the goods at the listed prices. The contract is formed only when the shopkeeper accepts the customer's offer.

Coercion, as defined in Section 15, involves committing or threatening to commit an act forbidden by the Indian Penal Code, or the unlawful detaining of property. A threat to file a legitimate civil suit is a legal right and does not fall under this definition. Therefore, the consent is considered free, and the settlement agreement is valid.

The performance of an existing contractual duty is not a valid consideration for a new promise from the other party. The contractor was already obligated to finish the house for the original price. The promise to pay more is not supported by fresh consideration and is generally unenforceable. This situation may also be viewed as economic duress, a form of coercion, making B's consent not free.

According to Section 20 of the Indian Contract Act, an agreement is void where both parties are under a mistake as to a matter of fact essential to the agreement. The existence of the specific painting is a fact essential to this agreement. Since both parties were mistaken, the agreement is void ab initio (from the beginning).

This is a complex issue based on the principle from Barry v Davies. While an advertisement for an auction is typically an 'invitation to offer', the inclusion of the words 'without reserve' creates a separate, binding collateral contract. This collateral contract is between the auctioneer and the highest bidder. The auctioneer promises to sell to the highest bidder, and the consideration from the bidder is the act of bidding and potentially driving up the price, which is a detriment to the bidder and a benefit to the auctioneer. Option A is incorrect because the primary contract of sale isn't formed until the hammer falls; the advertisement itself is not the offer for sale. Option B is close but less precise than C, which correctly identifies the 'collateral contract' theory as the specific legal mechanism.

This is a difficult question because both options B and C seem correct. However, the most direct and overriding principle in Indian law is Section 63. While the English common law rule (Option B) about payment from a third party being good consideration is a valid argument, Section 63 is a specific statutory provision in India that departs from the English requirement of consideration for a waiver or remission. It states that a promisee may accept any satisfaction which he thinks fit. Therefore, Y's acceptance of ₹60,000 from Z acts as a complete discharge of the debt under Section 63, which is the most definitive reason in the Indian context.

The relationship between a principal and an agent is a fiduciary one, which imposes a duty on the agent to act in utmost good faith (uberrimae fidei). This fiduciary duty includes a duty to disclose all material facts. By concealing the fact that he was the real purchaser, the agent committed a breach of this duty. This active concealment of a material fact by one having a duty to speak constitutes fraud under Section 17(2) of the Indian Contract Act. It is not undue influence as the agent did not necessarily 'dominate the will' to get consent for the sale itself, but rather deceived the principal about the identity of the buyer.

This question tests the limits of equitable restitution against a minor. Based on Mohori Bibee v. Dharmodas Ghose and Leslie v. Sheill, a minor's agreement is void. Section 65 (restitution) does not apply as it presumes competence to contract. A minor cannot be held liable for a tort directly connected to a void contract. However, equity provides a limited remedy. The court can compel the fraudulent minor to restore the specific property acquired through the loan if it is still traceable and in their possession. It will not, however, order the minor to repay the loan amount, as that would be equivalent to enforcing the void contract.

This is a contingent contract, specifically governed by Section 32, which deals with contracts contingent on the happening of an event. When that event (the ship's safe arrival) becomes impossible, the contract becomes void. It is not a case of supervening impossibility under Section 56 in its typical sense, but rather the failure of the contingency. Crucially, a contract of guarantee is an ancillary contract. The liability of the surety (C) is co-extensive with that of the principal debtor (B). Since the primary contract between A and B has become void and B has no liability to pay, the surety's (C's) liability is also extinguished.

The general rule for instantaneous communication, as established in cases like Entores Ltd v Miles Far East Corp, is that the contract is formed only when the acceptance is received by the offeror. The 'postal rule' is an exception that does not apply to instantaneous forms of communication. The responsibility lies with the offeree (Q) to ensure their acceptance is communicated to the offeror (P). Since P never received the acceptance, no contract was formed.

The core issue here is consideration. For a promise to be enforceable, the promisee must provide valid consideration. Consideration cannot be something that the promisee is already legally obligated to do. As a firefighter on duty, B had a pre-existing public/legal duty to attempt the rescue. Therefore, his act of rescuing the daughter does not constitute valid consideration for A's promise of a reward. While Option D is related, Option C provides the more precise legal mechanism from contract law – the failure of consideration due to a pre-existing duty.

Section 56, paragraph 1, states that an agreement to do an act impossible in itself is void. The concept of a perpetual motion machine violates the fundamental laws of physics and is considered an inherent impossibility. Therefore, the agreement was void from the very beginning (void ab initio). It is not a contingent contract based on an uncertain future event, but a contract for an act that is fundamentally impossible to perform.

This is a classic case of undue influence under Section 16. The relationship between a spiritual advisor and a devotee is recognized as a fiduciary one where one party is in a position to dominate the will of the other. The transaction – gifting away one's entire property for no real consideration – is on its face unconscionable. In such cases, the burden of proof shifts to the dominant party (the guru, A) to prove that the contract was not induced by undue influence. While it has elements of fraud, the core legal issue stems from the abuse of the relationship, which is the essence of undue influence.

This question tests the distinction between 'void' and 'illegal' agreements and their effect on collateral transactions. Under Section 30 of the Indian Contract Act, wagering agreements are void, but they are not expressly declared illegal (except in some states). The rule is that a collateral transaction to a void agreement is perfectly valid and enforceable. However, a collateral transaction to an illegal agreement is void. Since the wagering agreement is merely void, the subsequent loan agreement by C to A for paying the debt is valid and C can recover the money from A. This is a crucial distinction often tested in law exams.

This is based on the principle laid down in Lalman Shukla v. Gauri Datt. A contract is formed by an offer and its acceptance. Acceptance is the manifestation of assent to the terms of the offer. A person cannot assent to an offer of which they are unaware. Therefore, F's act of returning the dog, while being the condition of the offer, cannot be treated as acceptance because it was done in ignorance of the offer. There was no consensus ad idem (meeting of minds).

When an adult and a minor jointly enter into an agreement, the agreement is void as against the minor but can be enforced against the adult promisor. The contract is not void in its entirety. Under Section 43 of the Indian Contract Act (Devolution of joint liabilities), when two or more persons make a joint promise, the promisee may compel any one or more of such joint promisors to perform the whole of the promise. Therefore, Z can sue X for the full amount, and X cannot claim that his liability is limited to his share.

Indian parties to a contract that is to be performed in India cannot contract out of Indian law. The Indian Contract Act, 1872, is the applicable law, and its provisions are mandatory, not optional. A clause that seeks to substitute Indian law with a foreign law for a purely domestic transaction is considered against public policy and is void under Section 23 of the Act. The principle of party autonomy in choosing governing law does not extend to evading the mandatory laws of the land for domestic contracts.

This is based on the principle of consideration as defined in Section 2(d) of the Act. Consideration does not necessarily mean a detriment to the promisee or a benefit to the promisor. It means 'doing or abstaining from doing something' at the desire of the promisor. B had a legal right (freedom) to smoke and drink. By abstaining from exercising this right at A's request, he has provided valid consideration. The fact that this abstinence also benefited B himself is irrelevant to the validity of the consideration.

This is a clear case of fraud under Section 17(1). Fraud includes the suggestion, as a fact, of that which is not true, by one who does not believe it to be true. The dealer knew the mileage was false but actively drew B's attention to the 'low mileage' as a selling point. This is more than mere silence; it's an active, deceptive statement intended to induce the contract. It's not innocent misrepresentation because the dealer had knowledge of the falsehood. It is not a mere mistake by B because it was induced by the dealer's fraudulent act.

Section 56 of the Indian Contract Act deals with the doctrine of frustration, which includes supervening impossibility or illegality. When the performance of a contract becomes unlawful due to a change in the law after the contract was made, the contract becomes void. This is a case of supervening illegality. The absence of a force majeure clause does not prevent the application of Section 56. The contract is discharged automatically by law, and both parties are excused from further performance. Therefore, A is not liable for breach.

In an auction, the auctioneer's call for bids is an invitation to offer. Each bid made by a potential buyer is an offer. The acceptance of the offer occurs when the auctioneer strikes the hammer. The auctioneer is not bound to accept any bid. When an auction is 'subject to a reserve price', it explicitly means the auctioneer cannot accept a bid that is below that set price. Therefore, B's bid, being the highest but still below the reserve, is an unaccepted offer, and no contract is formed.

This question tests the rules of evidence related to contractual capacity under Section 12. The general presumption is that a person is sane. However, if a person (P) is generally of unsound mind, the burden of proof is on the person who affirms the contract (Q) to prove that it was made during a lucid interval. Conversely, if a person is generally of sound mind but occasionally of unsound mind, the burden of proof is on the person who challenges the contract (P) to prove that he was of unsound mind at the time of contracting. Option D most accurately captures the nuance for a person who has fluctuating mental states; the initial burden is on the challenger (P) to prove his general condition, after which the burden may shift to the one affirming the contract (Q) to prove it was made during a lucid interval. In this specific question, as P is 'usually of sound mind', the initial burden would lie on him to prove he was unsound at that time.

This scenario is based on the landmark case of Chinnaya v. Ramayya. The Indian Contract Act's definition of consideration in Section 2(d) is a significant departure from English Law. It explicitly states that consideration can move from the promisee or any other person. In this case, the consideration for R's promise to pay M was the gift of property from her mother, C. Even though M (the promisee) herself did not provide any consideration, the consideration provided by C is sufficient to support the promise. Therefore, M can sue R. This negates the strict application of the doctrine of privity of consideration.

This is a case of a bilateral mistake as to a matter of fact essential to the agreement, as covered by Section 20. Both parties were mistaken about the fundamental quality and usability of the subject matter (the land's eligibility for construction). The fact that construction was not permitted was an existing fact at the time of the contract, even though the parties were ignorant of it. This makes the agreement void from the beginning. It is not frustration under Section 56, because frustration applies when an event makes performance impossible after the contract is made. Here, the 'impossibility' (in a commercial sense) already existed.