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Test: Breach Of Contract- 1 - CA Foundation MCQ


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30 Questions MCQ Test Business Laws for CA Foundation - Test: Breach Of Contract- 1

Test: Breach Of Contract- 1 for CA Foundation 2024 is part of Business Laws for CA Foundation preparation. The Test: Breach Of Contract- 1 questions and answers have been prepared according to the CA Foundation exam syllabus.The Test: Breach Of Contract- 1 MCQs are made for CA Foundation 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Breach Of Contract- 1 below.
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Test: Breach Of Contract- 1 - Question 1
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G, a film star agreed to act exclusively for Y, a film producer, for one year. During the year, she contracted to act for some other producer. In this case, Y: 

Detailed Solution for Test: Breach Of Contract- 1 - Question 1

To answer this question, we need to understand the concept of exclusivity in a contract and the remedies available to the injured party.
1. Exclusivity in a contract:
When G, the film star, agreed to act exclusively for Y, the film producer, it means that G cannot act for any other producer during the agreed-upon period. This exclusivity clause restricts G from entering into contracts with other producers.
2. Breach of exclusivity clause:
If G contracts to act for another producer during the exclusive period, it would be considered a breach of the contract between G and Y. In this case, Y can take legal action against G to seek remedies for the breach.
3. Remedies available to Y:
Y, as the injured party, has certain remedies available to address the breach of the exclusivity clause. One of the possible remedies is the option to restrain G from acting for the other producer through an injunction.
4. Answer:
Based on the information provided and the understanding of the legal principles involved, the correct answer to the question is:
A: Y can restrain G by an injunction.
Test: Breach Of Contract- 1 - Question 2
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Sometimes a party is entitled to claim compensation in proportion to work done by him. This is possible by a suit for:

Detailed Solution for Test: Breach Of Contract- 1 - Question 2
Claiming Compensation in Proportion to Work Done: Suit for Quantum Meruit
Quantum meruit is a Latin term that translates to "as much as he deserves." It is a legal principle that allows a party to claim compensation in proportion to the work done by them when there is no specific contract or agreement governing their remuneration. Here is a detailed explanation of the concept:
Definition:
- Quantum meruit is an equitable remedy that ensures fairness and prevents unjust enrichment.
- It allows a party to claim reasonable compensation for the value of the work or services they have provided.
Conditions for a Suit for Quantum Meruit:
To bring a successful suit for quantum meruit, the following conditions must be met:
1. Absence of a Contract:
- There should be no valid contract or agreement specifying the terms of remuneration.
- This could be due to a lack of a written contract, an oral agreement, or an incomplete agreement.
2. Work or Services Rendered:
- The claiming party must have performed work, provided services, or delivered goods.
- The work done should be beneficial and add value to the other party involved.
3. Reasonable Expectation of Payment:
- The claiming party should have a reasonable expectation of being compensated for their work or services.
- This expectation can be implied based on the circumstances or the conduct of the parties involved.
4. Proportional Compensation:
- The compensation claimed should be reasonable and proportionate to the value of the work or services rendered.
- The court will assess the quantum meruit claim based on factors such as the nature of the work, prevailing market rates, and any prior dealings between the parties.
Outcome and Remedies:
If the court finds that the conditions for a suit for quantum meruit are satisfied, the claiming party may be awarded the following remedies:
1. Monetary Compensation:
- The court may order the party benefited by the work or services to pay a reasonable amount of compensation to the claiming party.
- The compensation will be based on the fair value of the work done and may include any out-of-pocket expenses incurred.
2. Restitution:
- In some cases, the court may require the party benefited to return any benefits or profits obtained as a result of the work or services provided.
In conclusion, a suit for quantum meruit provides a means for a party to claim compensation in proportion to the work done by them when there is no specific contractual agreement in place. It ensures fairness and prevents unjust enrichment by allowing reasonable compensation for the value of work or services rendered.
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Test: Breach Of Contract- 1 - Question 3
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A fair and genuine pre-estimated sum of damages likely to result due to breach of contract is termed as 

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Answer:
Liquidated Damages:
- A fair and genuine pre-estimated sum of damages likely to result due to breach of contract is termed as liquidated damages.
- It is a specific amount of money agreed upon by the parties involved in the contract, which will be paid in the event of a breach.
- Liquidated damages are often included in contracts to provide certainty and avoid the need for lengthy and expensive litigation to determine the actual damages suffered.
- The purpose of liquidated damages is to compensate the non-breaching party for the loss or harm caused by the breach.
- The amount of liquidated damages must be reasonable and proportionate to the potential harm caused by the breach.
- If the amount of liquidated damages is found to be excessive or punitive, it may be considered a penalty and may not be enforceable.
Ordinary Damages:
- Ordinary damages, also known as compensatory damages, are the actual damages suffered by the non-breaching party as a result of the breach of contract.
- Unlike liquidated damages, ordinary damages are not pre-estimated or predetermined, but are determined based on the actual loss or harm suffered.
- Ordinary damages are intended to put the non-breaching party in the position they would have been in if the contract had been performed as agreed.
Penalty:
- A penalty is a sum of money that is imposed as punishment for breaching a contract.
- Unlike liquidated damages, which are intended to compensate the non-breaching party for their actual loss or harm, a penalty is designed to punish the breaching party.
- Penalties are generally unenforceable in contract law because they are considered to be disproportionate to the actual harm caused by the breach.
- Courts are more likely to enforce liquidated damages provisions that are reasonable and genuine, rather than penalties.
Conclusion:
- A fair and genuine pre-estimated sum of damages likely to result due to breach of contract is termed as liquidated damages. It provides certainty and avoids lengthy litigation.
- Ordinary damages are the actual damages suffered by the non-breaching party, while penalties are punitive sums imposed for breach of contract.
Test: Breach Of Contract- 1 - Question 4
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Generally, the following damages are not recoverable : 
Detailed Solution for Test: Breach Of Contract- 1 - Question 4
Recoverable Damages in a Lawsuit:

  • Ordinary Damages: These are also known as general damages and are intended to compensate the plaintiff for the direct and immediate consequences of the defendant's actions. They are typically subjective and do not require specific evidence of monetary loss.

  • Special Damages: Special damages are awarded to compensate the plaintiff for specific monetary losses that can be proven with evidence. They are quantifiable and include medical bills, property damage, lost wages, and other measurable expenses.

  • Nominal Damages: Nominal damages are symbolic in nature and are awarded when the court recognizes that a legal right has been violated but the plaintiff has not suffered any actual monetary loss. They are usually a small amount, such as $1, and serve to acknowledge the wrongdoing.


Non-Recoverable Damages:

  • Remote Damages: Remote damages refer to losses that are too far removed from the defendant's actions and are not directly caused by them. These damages are considered too speculative or unpredictable to be recoverable. Examples include hypothetical future profits, speculative investments, or potential earnings that may or may not have been realized.


In summary, ordinary damages, special damages, and nominal damages are recoverable in a lawsuit as they compensate for actual losses or violations of legal rights. However, remote damages are not recoverable as they are too speculative or unrelated to the defendant's actions.
Test: Breach Of Contract- 1 - Question 5
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The remedies open to a person, suffering from breach of contract are: 
Detailed Solution for Test: Breach Of Contract- 1 - Question 5
Remedies for Breach of Contract:
There are several remedies available to a person who has suffered from a breach of contract. These remedies include:
1. Suit for Damages: The most common remedy for breach of contract is to sue for damages. This involves seeking financial compensation to cover any losses suffered as a result of the breach. The damages awarded may include both actual damages (the amount necessary to put the injured party in the position they would have been in if the contract had been performed) and consequential damages (any additional losses that were directly caused by the breach).
2. Suit for Injunction: In some cases, the injured party may seek an injunction to prevent the breaching party from continuing to carry out the breach. An injunction is a court order that requires the breaching party to stop a certain action or behavior. This remedy is typically used when monetary damages are not sufficient to fully compensate the injured party or when the breach involves ongoing or continuous harm.
3. Suit upon Quantum Meruit: Quantum meruit is a Latin term that means "as much as he deserves." This remedy allows the injured party to recover the reasonable value of the work or services provided before the breach occurred. It is typically used when the breaching party has received a benefit or advantage from the injured party's performance under the contract.
4. All of these: In some cases, the injured party may have the option to pursue multiple remedies simultaneously. This allows them to choose the most appropriate remedy or combination of remedies to fully address the breach and obtain appropriate compensation.
Overall, the choice of remedy will depend on the specific circumstances of the breach and the desired outcome of the injured party. It is important to consult with a legal professional to determine the most effective course of action in each individual case.
Test: Breach Of Contract- 1 - Question 6
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 In case of anticipatory breach, where the promisee elects to keep the contract alive, if during the time the contract remains open, some event happens discharging the promisor from his liability, the contract becomes : 
Detailed Solution for Test: Breach Of Contract- 1 - Question 6
Anticipatory Breach
Anticipatory breach refers to a situation where one party to a contract indicates, either through words or actions, that they will not fulfill their obligations under the contract. In such cases, the innocent party, or promisee, has the option to either treat the breach as an immediate repudiation of the contract or to keep the contract alive and wait for the performance.
Keeping the Contract Alive
If the promisee elects to keep the contract alive after an anticipatory breach, the contract remains open and the promisor is still liable to perform their obligations. However, there are certain events that may discharge the promisor from their liability during the time the contract remains open. If such an event occurs, the contract becomes void.
Discharging the Promisor from Liability
When an event happens that discharges the promisor from their liability, the contract becomes void. This means that both parties are released from their obligations under the contract, and it is considered null and void.
Answer
The correct answer to the question is D: Void.
Test: Breach Of Contract- 1 - Question 7
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 N chartered M’s ship and agreed to load it with a cargo in Orissa within 50 days. N was unable to supply the cargo but M continued to demand it. Meanwhile war broke out, rendering the performance impossible. In such a case: 
Detailed Solution for Test: Breach Of Contract- 1 - Question 7
Answer:
Contractual Obligations:
- N chartered M's ship and agreed to load it with a cargo in Orissa within 50 days.
- N was unable to supply the cargo, but M continued to demand it.
War Breaking Out:
- Meanwhile, war broke out, rendering the performance of the contract impossible.
Legal Implications:
- In such a case, the contract is discharged, meaning that the parties are released from their obligations under the contract.
- Both parties are relieved from performing their respective duties due to the impossibility caused by the war.
Legal Consequences:
- M cannot sue N for damages because the contract has been discharged.
- N is not liable to provide the cargo due to the impossibility caused by the war.
Answer:
- The correct answer is (D) Both (a) and (b), as M cannot sue for damages and the contract is discharged due to the impossibility of performance caused by the war.
Test: Breach Of Contract- 1 - Question 8
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 Ordinary damages are Claimed on breach of a Contract.
Detailed Solution for Test: Breach Of Contract- 1 - Question 8
Explanation:
1. Ordinary damages:
- Ordinary damages are claimed on breach of a contract.
- Ordinary damages refer to the compensation or monetary amount that the party who suffered a loss is entitled to receive as a result of a breach of contract.
- These damages are generally awarded to compensate for the actual loss suffered by the non-breaching party.
2. Types of damages:
- In contract law, there are different types of damages that can be claimed for a breach of contract.
- Apart from ordinary damages, there are also special damages, consequential damages, and nominal damages.
3. Special damages:
- Special damages are damages that are not a direct result of the breach of contract but are still reasonably foreseeable.
- These damages are specific to the particular circumstances of the case and may include additional costs or expenses incurred as a result of the breach.
4. Consequential damages:
- Consequential damages are damages that arise as a result of the breach of contract but are not directly caused by it.
- These damages are typically awarded when the non-breaching party can show that they suffered additional losses or damages as a consequence of the breach.
5. Nominal damages:
- Nominal damages are damages that are awarded when the non-breaching party has not suffered any actual loss or damage.
- These damages are awarded as a symbolic gesture to acknowledge that a breach of contract has occurred.
Conclusion:
- In summary, ordinary damages are indeed claimed on breach of a contract.
- However, it is important to note that there are other types of damages that can also be claimed depending on the circumstances of the case.
Test: Breach Of Contract- 1 - Question 9
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Specific Performance may be ordered by the court when: 
Detailed Solution for Test: Breach Of Contract- 1 - Question 9
Specific Performance and When It Can be Ordered by the Court
Specific Performance is a legal remedy that may be ordered by a court in certain circumstances. It is an alternative to the payment of damages and involves the actual performance of a contractual obligation. The court may order specific performance when:
1. Damages are not an adequate remedy:
- When damages would not adequately compensate the non-breaching party for the harm caused by the breach of contract, specific performance may be granted.
- This usually occurs when the subject matter of the contract is unique or rare, such as a specific piece of artwork or a one-of-a-kind property.
2. The defaulting party is not ready to pay damages:
- If the defaulting party is unwilling or unable to pay the damages, the court may order specific performance to ensure that the non-breaching party receives the promised performance.
- This is often seen in cases where the breaching party is financially insolvent or has limited resources to compensate the non-breaching party adequately.
3. The contract is not voidable:
- Specific performance is only available for valid and enforceable contracts.
- If the contract is voidable or unenforceable, the court will not order specific performance.
It is important to note that specific performance is not granted as a matter of right. The court has discretion in deciding whether to order specific performance based on the specific circumstances of the case.
In conclusion, specific performance may be ordered by the court when damages are not an adequate remedy, the defaulting party is not ready to pay damages, and the contract is not voidable. This remedy ensures that the non-breaching party receives the performance promised in the contract when other remedies would be insufficient.
Test: Breach Of Contract- 1 - Question 10
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 Which one of the following is relevant in normal circumstances in determining the amount of damages from breach of contract ?
Detailed Solution for Test: Breach Of Contract- 1 - Question 10
Relevant Factors in Determining Damages from Breach of Contract:

  • Difference between market price and contract price: This factor is relevant in determining damages from breach of contract because it measures the financial impact of the breach on the non-breaching party. It takes into account the difference between the price agreed upon in the contract and the current market price for the goods or services in question.

  • Normally expected loss: This factor considers the loss that the non-breaching party would normally expect to incur as a result of the breach. It takes into account any foreseeable damages that would arise in the ordinary course of events.

  • Additional expenses for procuring the goods: If the non-breaching party has to incur additional expenses to procure the goods or services elsewhere due to the breach, these expenses may be relevant in determining the amount of damages. This factor takes into account any reasonable costs incurred in finding alternative sources or suppliers.

  • Sudden closure price of production: While sudden closure price of production may not be relevant in normal circumstances, it could be a relevant factor if the breach of contract leads to the sudden closure of the production facilities or operations. In such cases, the costs associated with the closure and any resulting financial losses may be considered in determining damages.


Therefore, in normal circumstances, the most relevant factor in determining the amount of damages from breach of contract is the difference between the market price and contract price. This factor provides a clear measure of the financial impact on the non-breaching party and is commonly used in calculating damages.
Test: Breach Of Contract- 1 - Question 11
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 If a party refuses to performs his part of promise before the due date of performance, it is known as:-
Detailed Solution for Test: Breach Of Contract- 1 - Question 11
Anticipatory breach of contract:
- When a party refuses to perform their part of a promise before the due date of performance, it is known as an anticipatory breach of contract.
- This occurs when one party clearly communicates that they will not fulfill their contractual obligations.
- It is also referred to as an anticipatory repudiation.
- The party who anticipates the breach can choose to treat the contract as terminated and seek damages.
- The non-breaching party can also wait until the due date of performance and then file a lawsuit for breach of contract.
- In both cases, the non-breaching party is entitled to recover damages caused by the breach.
- The anticipatory breach of contract allows the non-breaching party to mitigate their losses by seeking alternative arrangements or contracts.
- It is important for the non-breaching party to document the communication of the anticipatory breach to provide evidence in case of legal action.
Test: Breach Of Contract- 1 - Question 12
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In case of deterioration caused due to delay in transit the damages can be recovered, even without any notice, from ___________.
Detailed Solution for Test: Breach Of Contract- 1 - Question 12
Answer:
Carrier:
- The carrier refers to the party responsible for transporting the goods from the seller to the buyer.
- In case of deterioration or damage caused due to a delay in transit, the carrier can be held liable.
- The carrier has a duty to deliver the goods in a timely manner and in the same condition as they were at the time of shipment.
Seller:
- The seller is the party who sells the goods to the buyer.
- If the seller is responsible for arranging the transportation of the goods, they may also be held liable for any damages caused due to a delay in transit.
- The seller has a duty to ensure that the goods are properly packaged and protected during transportation.
Buyer:
- The buyer is the party who purchases the goods from the seller.
- If the buyer has arranged for the transportation of the goods, they may be responsible for any damages caused during transit.
- However, if the damages were caused due to a delay in transit, the buyer may be able to recover the damages from the carrier or the seller.
All the above:
- In this case, the damages can be recovered from the carrier, seller, or buyer, depending on who is responsible for the delay in transit and the resulting deterioration or damage.
- The specific circumstances and contractual agreements between the parties will determine who is liable for the damages.
Overall, in case of deterioration caused due to delay in transit, the damages can be recovered from the carrier, seller, or buyer, depending on the circumstances and contractual agreements.
Test: Breach Of Contract- 1 - Question 13
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The damages which arise due to some special or unusual circumstances:
Detailed Solution for Test: Breach Of Contract- 1 - Question 13

The damages that arise due to some special or unusual circumstances may not always be recoverable or claimed as a matter of right. Here is a detailed explanation:
1. Cannot be claimed as a matter of right:
- Special or unusual circumstances might make it difficult to establish a clear liability for damages.
- The party seeking compensation may not have a legal entitlement to claim damages in such cases.
2. Are not recoverable:
- Some special or unusual circumstances may be excluded from the scope of recoverable damages.
- This could be due to specific provisions in the applicable laws or contractual agreements.
3. Are recoverable at the discretion of partly at default:
- In certain cases, the recovery of damages may depend on the discretion of the parties involved.
- The defaulting party may have the option to compensate the damaged party based on the circumstances and their level of fault or responsibility.
4. Are recoverable:
- In some instances, damages arising from special or unusual circumstances may still be recoverable.
- This could be possible if the circumstances can be clearly linked to the actions or omissions of a liable party.
In the given options, the correct answer is A: Cannot be claimed as a matter of right. This implies that damages arising from special or unusual circumstances may not be automatically recoverable but would require a legal evaluation based on the specific circumstances and applicable laws.
Test: Breach Of Contract- 1 - Question 14
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The phase “Quantum Meruit” Literally means : 
Detailed Solution for Test: Breach Of Contract- 1 - Question 14
The meaning of the phrase "Quantum Meruit" is:
- As much as is earned: This phrase is derived from Latin and translates to "as much as is deserved" or "as much as is earned." It refers to the principle that a person should be compensated for the value of their work or services provided.
- Legal context: Quantum Meruit is a legal doctrine that allows a party to recover a reasonable amount for services rendered or work performed, even if there was no formal contract or agreed-upon price. It is often used when there is an implied contract or when the terms of a contract are unclear.
- Equitable remedy: Quantum Meruit is considered an equitable remedy, meaning it is based on fairness and the principle of preventing unjust enrichment. It ensures that individuals or businesses are compensated for the value they have contributed, regardless of the absence of a formal agreement.
- Factors considered: When determining the amount to be awarded under Quantum Meruit, several factors are taken into account, such as the nature and extent of the services performed, the prevailing market rates, and any special circumstances surrounding the work.
- Alternative to contract: Quantum Meruit serves as a fallback option when parties have not agreed upon a specific payment amount or when a contract is deemed unenforceable. It provides a means for individuals to be fairly compensated for their efforts and prevents one party from taking advantage of another.
- Legal disputes: Quantum Meruit claims often arise in situations where one party believes they are entitled to compensation for work performed, but the other party disputes the amount owed or denies any obligation to pay. In such cases, the court may apply the principle of Quantum Meruit to determine a fair and reasonable payment.
In conclusion, Quantum Meruit is a legal doctrine that ensures individuals are compensated for the value of their work or services, even in the absence of a formal agreement. It is based on the principle of fairness and prevents unjust enrichment.
Test: Breach Of Contract- 1 - Question 15
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 The damages awarded by way of punishment are:
Detailed Solution for Test: Breach Of Contract- 1 - Question 15
The damages awarded by way of punishment are:


There are different types of damages that can be awarded by a court as a form of punishment. These damages are meant to deter the wrongdoer from repeating their actions and serve as a warning to others. The damages awarded by way of punishment include:
1. Vindictive damages:


- Also known as punitive or exemplary damages.
- Awarded in cases where the defendant's conduct is particularly egregious or malicious.
- Intended to punish the wrongdoer and deter them from similar behavior in the future.
- These damages are often awarded on top of compensatory damages.
- The amount awarded is typically higher than ordinary damages.
2. Special damages:


- Also known as specific damages.
- Awarded to compensate the plaintiff for quantifiable financial losses that have been incurred as a direct result of the defendant's actions.
- Examples include medical expenses, lost wages, and property damage.
- These damages are specific to the individual circumstances of the case and may vary in amount.
3. Nominal damages:


- Awarded when the court recognizes that the plaintiff has suffered a legal wrong, but no actual or significant harm has been caused.
- The purpose of nominal damages is to vindicate the plaintiff's rights and acknowledge the defendant's liability.
- The amount awarded is usually symbolic, such as a token amount of money (e.g., $1).
- Nominal damages are often sought in cases where the plaintiff wants a legal recognition of the wrong committed, even if there are no substantial damages.
4. Ordinary damages:


- Also known as compensatory or actual damages.
- Awarded to compensate the plaintiff for the actual harm or loss suffered as a result of the defendant's actions.
- Examples include physical injuries, emotional distress, and loss of consortium.
- The amount awarded is based on evidence and calculations of the specific harm suffered by the plaintiff.
Answer: a. Vindictive damages
Test: Breach Of Contract- 1 - Question 16
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 Suman, age of 17 year, enter into a contract for the sale of property but breaches the contract before performance. Can buyer file any claim in this condition?
Detailed Solution for Test: Breach Of Contract- 1 - Question 16
Answer:
The buyer cannot file any claim in this condition because Suman, being 17 years old, is considered a minor and lacks the legal capacity to enter into a contract. In general, minors are not bound by contracts they enter into and have the right to disaffirm or cancel the contract at any time before reaching the age of majority. Therefore, the breach of contract by Suman would not result in any legal consequences for the buyer.
Additionally, minors are protected by the law to prevent them from being taken advantage of in contractual agreements. This protection includes the ability to void contracts and avoid liability for breaching them. The rationale behind this is that minors may not have the necessary maturity and understanding to fully comprehend the implications and responsibilities of a contract.
In summary, the buyer cannot file any claim against Suman because Suman is a minor and lacks the legal capacity to be bound by the contract. The contract can be considered voidable at the discretion of the minor.
Test: Breach Of Contract- 1 - Question 17
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E contracts to marry F. Before the agreed date of marriage, E marries K. Here, F is entitled to sue E for : 
Detailed Solution for Test: Breach Of Contract- 1 - Question 17
Explanation:
Background:
- E and F entered into a contract to marry each other.
- The agreed date of marriage has not yet arrived.
- Before the agreed date, E marries K.
Legal Analysis:
- In this scenario, F is entitled to sue E for anticipatory breach of contract in an implied manner.
- Anticipatory breach refers to a situation where one party to a contract indicates, either by words or actions, that they will not fulfill their contractual obligations in the future.
- In this case, E's action of marrying K before the agreed date of marriage indicates an intention to not fulfill their contractual obligations to marry F.
- The breach is implied because it is not explicitly stated but can be inferred from E's actions.
Reason for Choosing Option C:
- Option C states that F can sue E for anticipatory breach in an implied manner, which aligns with the legal analysis explained above.
- Option A (anticipatory breach in an express manner), Option B (actual breach in an express manner), and Option D (actual breach in an implied manner) do not accurately describe the situation.
Conclusion:
- F can sue E for anticipatory breach in an implied manner, as E's marriage to K before the agreed date of marriage indicates an intention to not fulfill their contractual obligations.
Test: Breach Of Contract- 1 - Question 18
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 The damages which are not Natural and direct are known as : 
Detailed Solution for Test: Breach Of Contract- 1 - Question 18
Damages which are not Natural and Direct:
There are various types of damages that can be awarded in a legal case, depending on the circumstances. When it comes to damages that are not natural and direct, the options are:
1. Penalty:
- A penalty is a specific type of damages that is awarded as a punishment for a breach of contract or other legal violation.
- Penalties are often included in contracts as a deterrent to prevent parties from defaulting on their obligations.
- The purpose of a penalty is to impose a financial burden on the party in breach and discourage similar behavior in the future.
2. Liquidated damages:
- Liquidated damages are a predetermined amount agreed upon by the parties in a contract to be paid as compensation in the event of a breach.
- These damages are typically included in contracts when it is difficult to determine the actual losses that may occur as a result of a breach.
- Liquidated damages are meant to provide a reasonable estimate of the damages that would be incurred and are agreed upon by both parties in advance.
3. Ordinary damages:
- Ordinary damages, also known as general damages, are the most common type of damages awarded in a legal case.
- These damages are intended to compensate the injured party for the actual harm suffered as a result of the defendant's actions.
- Ordinary damages include compensation for pain and suffering, emotional distress, loss of enjoyment of life, and other non-monetary losses.
4. Remote damages:
- Remote damages are damages that are not directly caused by the defendant's actions but are still a consequence of the defendant's wrongful conduct.
- These damages are considered to be more speculative or indirect in nature.
- Remote damages are typically awarded when the plaintiff can prove a causal link between the defendant's actions and the damages suffered, even if the connection is not immediate or obvious.
In conclusion, damages that are not natural and direct include penalties, liquidated damages, ordinary damages, and remote damages. Each type of damage serves a specific purpose in compensating the injured party or deterring wrongful behavior.
Test: Breach Of Contract- 1 - Question 19
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 P contracts with Q to deliver possession of a house under construction within a period of six months; failing which he would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of :
Detailed Solution for Test: Breach Of Contract- 1 - Question 19
Explanation:
The monthly rental payable by P for Q is in the nature of Liquidated Damages. Here's why:
Definition:
Liquidated damages refer to the pre-determined amount of compensation agreed upon by parties in a contract. It is a fixed sum of money that is payable as damages in case of a breach of contract.
Factors making it liquidated damages:
1. Contractual Agreement: P and Q have agreed upon the payment of monthly rental by P in case of failure to deliver possession of the house within six months.
2. Reasonable Estimate: The monthly rental amount is a reasonable estimate of the actual loss or damages that Q would suffer due to the delay in possession.
3. Difficulty in Calculation: It may be difficult to ascertain the exact amount of loss suffered by Q due to the delay, making it reasonable to agree upon a fixed sum as compensation.
Other options explained:
- Penalty: A penalty is a punitive measure imposed to deter a party from breaching the contract. In this case, the payment of monthly rental is not intended to punish or deter P, but rather compensate Q for the delay.
- Exemplary Damages: Exemplary damages, also known as punitive damages, are awarded to punish the wrongdoer for their actions. In this case, the payment of monthly rental is not intended to punish P, but rather compensate Q for the delay.
- Special Damages: Special damages are specific, quantifiable losses that result from a breach of contract. In this case, the payment of monthly rental is a predetermined amount agreed upon by the parties, rather than specific losses incurred by Q.
Therefore, the correct answer is B: Liquidated Damages.
Test: Breach Of Contract- 1 - Question 20
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In a breach of promise to marry ______ may be awarded.
Detailed Solution for Test: Breach Of Contract- 1 - Question 20
Explanation:
In a breach of promise to marry case, the court may award damages to the party who was wronged. The types of damages that may be awarded are as follows:
No damages:
- In some cases, the court may determine that no damages are appropriate or necessary.
Exemplary damages:
- Exemplary damages, also known as punitive damages, are awarded in order to punish the breaching party for their misconduct and deter others from similar behavior. These damages are usually awarded in cases where the breach of promise to marry was particularly egregious.
Special damages:
- Special damages are awarded to compensate the injured party for specific losses that can be quantified, such as financial expenses incurred in preparation for the marriage or emotional distress caused by the breach.
Nominal damages:
- Nominal damages are awarded when the court determines that only a small or symbolic amount of damages should be awarded. These damages are typically awarded in cases where the injured party has not suffered significant harm or loss.
Based on the options provided, the correct answer is B: Exemplary damages.
Test: Breach Of Contract- 1 - Question 21
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 __________ damages are awarded to establish a right of decree for the breach of contract. 
Detailed Solution for Test: Breach Of Contract- 1 - Question 21
Nominal Damages


Nominal damages are awarded in a breach of contract case when the plaintiff proves that the defendant has breached the contract but has not suffered any actual financial loss or harm. These damages are typically awarded to establish a right of decree or to acknowledge that a legal right has been violated. Here is a detailed explanation of nominal damages:
1. Definition:
- Nominal damages are a small amount of money awarded to the plaintiff when no actual financial loss has been suffered.
- They are symbolic in nature and are meant to recognize that a breach of contract has occurred.
2. Purpose:
- Nominal damages are awarded to establish a right of decree or legal recognition that a breach of contract has taken place.
- They serve as a form of legal redress for the violation of a contractual obligation, even if no significant harm or loss has occurred.
3. Conditions for Awarding Nominal Damages:
- The plaintiff must prove that a breach of contract has occurred.
- The plaintiff must demonstrate that no actual financial loss or harm has been suffered as a result of the breach.
4. Amount of Nominal Damages:
- The amount awarded as nominal damages is usually a small sum, often as low as $1.
- The purpose is not to compensate the plaintiff for any actual loss but to acknowledge the breach of contract.
5. Legal Significance:
- Nominal damages have a legal significance as they establish a right of decree and can be used as evidence in future legal proceedings.
- They can also serve as a deterrent against future breaches of contract.
In conclusion, nominal damages are awarded in breach of contract cases to establish a legal right of decree or recognition that a breach has occurred, even if no actual financial loss has been suffered. They are symbolic in nature and carry legal significance.
Test: Breach Of Contract- 1 - Question 22
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 The court may order for a specific performance of a contract where:
Detailed Solution for Test: Breach Of Contract- 1 - Question 22
The court may order for a specific performance of a contract where:
A: One party prevents the other party from performance of the contract
- If one party is actively preventing the other party from fulfilling their obligations under the contract, the court may order specific performance. This means that the court can require the party in breach to carry out their obligations as stated in the contract.
B: Damages are not adequate remedy
- In cases where monetary compensation (damages) would not sufficiently compensate the injured party for the breach of contract, the court may order specific performance. This typically occurs when the subject matter of the contract is unique or rare, making it difficult to determine an accurate monetary value for the damages.
C: The promisee has not attempted to mitigate the loss
- If the party seeking specific performance has not made any reasonable efforts to minimize their losses or mitigate the damages caused by the breach, the court may deny the request for specific performance.
D: Damages payable are huge
- If the damages payable as a result of the breach of contract are substantial and the party seeking compensation would face significant financial hardship or loss, the court may consider ordering specific performance as a remedy.
It is important to note that the court has discretion in deciding whether to order specific performance or not. The specific circumstances of each case will be taken into account, and the court will weigh the interests and equities of both parties before making a decision.
Test: Breach Of Contract- 1 - Question 23
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Breach of contract on the due date is known as:
Detailed Solution for Test: Breach Of Contract- 1 - Question 23
Breach of Contract on the Due Date:
When a party fails to fulfill their contractual obligations on the due date, it is considered a breach of contract. This breach can have legal consequences and may entitle the non-breaching party to certain remedies. In this case, the breach occurs on the agreed upon due date of the contract.
Types of Breach:
There are two types of breaches that can occur on the due date:
1. Anticipatory Breach: This occurs when one party clearly and unequivocally communicates their intention to not fulfill their contractual obligations before the due date. It is a breach that happens before the actual due date.
2. Actual Breach: This occurs when one party fails to perform their obligations on the due date without any prior notice or communication regarding their inability to fulfill the contract.
Answer:
The correct answer to the question is B: Actual Breach.
Test: Breach Of Contract- 1 - Question 24
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In case of a breach of contract the remedy available to the aggrieved party is:
Detailed Solution for Test: Breach Of Contract- 1 - Question 24

The remedy available to the aggrieved party in case of a breach of contract depends on the nature of the breach and the specific terms of the contract. Generally, there are three common remedies that the aggrieved party can seek:
1. Suit for Rescission: This remedy allows the aggrieved party to request the cancellation or termination of the contract. It is typically sought when one party has committed a fundamental breach of the contract, making it impossible or impracticable to continue with the agreement. Rescission seeks to restore the parties to their original positions before entering into the contract.
2. Suit for Damages: The aggrieved party can seek monetary compensation for any losses or harm suffered as a result of the breach. The damages awarded aim to put the non-breaching party in the position they would have been in if the breach had not occurred. There are different types of damages that can be claimed, such as compensatory damages, consequential damages, and punitive damages.
3. Suit for Specific Performance: In certain situations, the court may order the breaching party to fulfill their contractual obligations as agreed. This remedy is typically sought when the subject matter of the contract is unique or when monetary compensation would not adequately remedy the harm caused by the breach. Specific performance is most commonly used in contracts involving real estate or unique items.
Therefore, the correct answer is (D) All of the above, as all three remedies (suit for recession, suit for damages, and suit for specific performance) are available to the aggrieved party in case of a breach of contract.
Test: Breach Of Contract- 1 - Question 25
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Where the plaintiff has proved that there has been a breach of contract but he has not suffered any damage, the damages awarded are called
Detailed Solution for Test: Breach Of Contract- 1 - Question 25
The correct answer is B: Nominal damages.
Explanation:
When a plaintiff proves that there has been a breach of contract but has not suffered any actual damage, the damages awarded in such cases are called nominal damages. Here's a detailed explanation of this concept:
1. Breach of contract: A breach of contract occurs when one party fails to fulfill its obligations as stated in the contract.
2. Plaintiff: The plaintiff is the party who brings a legal action against another party (defendant) in a court of law.
3. Damages: Damages refer to the monetary compensation awarded to the plaintiff to compensate for the loss or harm suffered due to the breach of contract.
4. Nominal damages: Nominal damages are awarded when the plaintiff proves that there has been a breach of contract but has not suffered any actual loss or damage. These damages are usually symbolic in nature and are awarded to recognize the breach of contract rather than compensating for any specific harm.
5. Purpose of nominal damages: Nominal damages serve several purposes, including:
- Recognizing and reaffirming the existence of a contractual obligation.
- Providing a legal remedy even when no actual harm has been suffered.
- Discouraging future breaches of contract by holding the breaching party accountable.
6. Amount of nominal damages: The amount of nominal damages awarded is typically small, often a token amount such as $1. This is because nominal damages are not intended to compensate for actual losses but rather to acknowledge the breach of contract.
In conclusion, when a plaintiff proves a breach of contract without suffering any actual damage, the damages awarded are called nominal damages. These damages serve a symbolic purpose and are typically a small amount.
Test: Breach Of Contract- 1 - Question 26
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Exemplary damages are otherwise called as ________
Detailed Solution for Test: Breach Of Contract- 1 - Question 26
Exemplary damages, also known as vindictive damages
- Exemplary damages are a type of damages that are awarded in addition to compensatory damages in a civil lawsuit. They are meant to punish the defendant for their wrongful conduct and to deter others from engaging in similar behavior.
Characteristics of exemplary damages:
1. Purpose: The primary purpose of exemplary damages is to punish the defendant for their behavior and to deter others from committing similar acts.
2. Wrongful conduct: Exemplary damages are typically awarded in cases where the defendant's conduct was particularly egregious, willful, or malicious.
3. Compensation: Unlike compensatory damages, which aim to compensate the plaintiff for their losses, exemplary damages are not meant to compensate the plaintiff. Instead, they serve as a form of punishment.
4. Discretionary: The awarding of exemplary damages is within the court's discretion. The amount awarded is subjective and varies on a case-by-case basis.
5. Higher standards of proof: In order to be awarded exemplary damages, the plaintiff usually needs to prove their case by a higher standard of proof, such as clear and convincing evidence or beyond a reasonable doubt.
6. Limitations: Exemplary damages are subject to limitations imposed by law, such as statutory caps or constitutional restrictions.
Conclusion:
Exemplary damages, also known as vindictive damages, are a type of damages awarded in civil lawsuits to punish the defendant for their wrongful conduct and to deter others from engaging in similar behavior. They are discretionary and typically require a higher standard of proof.
Test: Breach Of Contract- 1 - Question 27
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In which of the following cases a claim is not enforceable on the ground of quantum meruit?
Detailed Solution for Test: Breach Of Contract- 1 - Question 27
Explanation:
The case in which a claim is not enforceable on the ground of quantum meruit is:
A: A is engaged by B to write a book to be published in instalments in a weekly magazine. The magazine is abandoned after a few issues.
- In this case, A has not completed the entire work as agreed upon in the contract.
- Since the magazine is abandoned before the book is fully published, A cannot claim payment on the basis of quantum meruit.
B: A is employed as a managing director in a company. After he renders service for some time, it is found that the directors were not qualified to appoint him as such.
- In this case, A has rendered the services as a managing director in good faith.
- Even if the appointment was not valid, A can claim payment on the basis of quantum meruit as he has fulfilled his duties.
C: A undertakes to build a house for B for Rs. 25,000, but after having done half the work, he abandons the contract. B afterwards completes the house.
- In this case, A has abandoned the contract without completing the entire work.
- B has to complete the house on his own, and therefore, A cannot claim payment on the basis of quantum meruit.
D: A decorates B's flat and fits a wardrobe and a bookcase for a lump sum of Rs. 15,000. The work is done, but B complains of faulty workmanship.
- In this case, A has completed the agreed-upon work of decorating the flat and fitting the wardrobe and bookcase.
- B's complaint about faulty workmanship does not prevent A from claiming payment on the basis of quantum meruit. A has fulfilled his obligations under the contract.
Therefore, out of the given cases, the claim that is not enforceable on the ground of quantum meruit is case C.
Test: Breach Of Contract- 1 - Question 28
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__________ damages are measured on the basis of extent of shock to the sentiments of promisee 
Detailed Solution for Test: Breach Of Contract- 1 - Question 28
Explanation:
To answer this question, we need to understand the different types of damages and their measurement. In this case, the damages are measured based on the extent of shock to the sentiments of the promisee. Let's break down the options and determine which one fits this description:
- Vindictive damages: Vindictive damages, also known as punitive damages, are awarded to punish the defendant for their wrongful actions. They are not directly related to the shock to the promisee's sentiments.
- Nominal damages: Nominal damages are a small amount of money awarded to the plaintiff when they have suffered a legal wrong but have not suffered any actual financial loss. They are not specifically related to the shock to the promisee's sentiments.
- Loss of reputation: Loss of reputation damages are awarded when a person's reputation has been damaged due to the actions of the defendant. While this may cause shock to the promisee, it is not the specific basis for measuring these damages.
- Discomfort damages: Discomfort damages are awarded to compensate the promisee for physical or emotional discomfort caused by the breach of contract. While this may be related to the shock to the promisee's sentiments, it is not specifically measured based on the extent of shock.
Therefore, the correct answer is A: Vindictive damages. These damages are measured based on the extent of shock to the sentiments of the promisee.
Test: Breach Of Contract- 1 - Question 29
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 Damages which an aggrieved party claim besides general damages for any loss he has suffered owing to special circumstances known to both the parties at the time of signing the contract are known as :
Detailed Solution for Test: Breach Of Contract- 1 - Question 29
Detailed
Special damages are the damages that an aggrieved party can claim in addition to general damages for any loss they have suffered due to special circumstances known to both parties at the time of signing the contract. Here is a detailed explanation:
1. Definition: Special damages refer to the specific and quantifiable losses that are a direct result of the breach of contract or wrongdoing. These damages are not presumed or automatically awarded but must be proven by the aggrieved party.
2. Special Circumstances: Special damages can only be claimed if the circumstances leading to the damages were known to both parties at the time of contract formation. This means that both parties were aware of the potential losses that could arise from a breach of contract.
3. Quantifiable Loss: Special damages are meant to compensate the aggrieved party for the actual monetary loss they have suffered. These damages can include financial losses such as lost profits, additional expenses incurred, or the cost of repairing or replacing damaged property.
4. Proof of Damages: In order to claim special damages, the aggrieved party must provide evidence to support their claim. This may include invoices, receipts, contracts, or other relevant documentation that proves the financial impact of the breach.
5. Difference from General Damages: General damages, on the other hand, are non-quantifiable losses that are typically awarded for pain and suffering, emotional distress, or loss of reputation. They do not require proof of specific monetary loss and are awarded at the court's discretion.
In conclusion, special damages are the additional damages that an aggrieved party can claim for specific and quantifiable losses resulting from a breach of contract or wrongdoing. These damages must be proven and are only awarded if the special circumstances leading to the damages were known to both parties at the time of contract formation.
Test: Breach Of Contract- 1 - Question 30
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 A party who does not suffer any loss in case of breach of contract is entitled to : 
Detailed Solution for Test: Breach Of Contract- 1 - Question 30

The party who does not suffer any loss in case of a breach of contract is entitled to nominal damages. Here's a detailed explanation:
Nominal Damages:
- Nominal damages are a small amount of money awarded to a party who has not suffered any actual financial loss due to a breach of contract.
- It is usually a token amount, often a nominal sum like $1 or $10, and it is awarded to recognize that a legal right has been violated.
- Nominal damages can be awarded even if no actual damages have been proven or suffered by the non-breaching party.
Other Types of Damages:
While the correct answer is nominal damages, it is beneficial to understand the other types of damages as well:
- Statutory Damages:
- Statutory damages are fixed amounts of money that are established by law and are awarded without requiring proof of actual damages.
- These damages are typically set by statutes and can be awarded for specific types of breaches, such as copyright infringement or violation of consumer protection laws.
- Liquidated Damages:
- Liquidated damages are a predetermined amount of money agreed upon by the parties in the contract to be paid in the event of a breach.
- These damages are specified in the contract itself and are meant to compensate the non-breaching party for the estimated loss incurred due to the breach.
- Exemplary Damages:
- Exemplary damages, also known as punitive damages, are awarded to punish the breaching party for their wrongful conduct and to deter others from similar behavior.
- These damages go beyond compensating the non-breaching party for their actual losses and are meant to send a message that certain actions will not be tolerated.
In conclusion, when a party does not suffer any financial loss in a breach of contract, they are entitled to nominal damages, which are a symbolic recognition of the violation of their legal rights.
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