Test: Law of Contract - 1 - CUET Humanities MCQ

Option (3) is correct as the intention of contract is not mentioned in the Contract Act. Section 11 is concerned with competency of parties. As per the Contract Act, the consideration should be real, not illusory. The object should be lawful.

Option (1) is correct: A contract under the Indian Contract Act, 1872 is not frustrated by mere commercial impossibility. Mere commercial impossibility will not excuse a party from performing the contract. Mere increased cost of performance or losing in a transaction does not make the contract impossible. A man is not prevented from performing his contract by mere economic unprofitableness.
Option (2) is incorrect: A contract stands frustrated by imposition of government restriction.
Option (3) is incorrect: A contract stands frustrated by destruction of subject matter.
Option (4) is incorrect: A contract stands frustrated by death or impossibility of party when contract is of the personal services.

When a contract is made by post, the acceptance is complete as soon as the letter is put into the post box, and that is the place where the contract is made. An interesting implication of the operation of the posting rule is that an acceptance is complete once the letter of acceptance is posted; it makes no difference whether the offeror actually receives the letter.

Section 58 in The Indian Contract Act, 1872
In the case of an alternative promise, one branch of which is legal and the other illegal, the legal branch alone can be enforced. —In the case of an alternative promise, one branch of which is legal and the other illegal, the legal branch alone can be enforced." Illustration A and B agree that A shall pay B 1,000 rupees, for which B shall afterwards deliver to A either rice or smuggled opium. A and B agree that A shall pay B 1,000 rupees, for which B shall afterwards deliver to A either rice or smuggled opium." This is a valid contract to deliver rice, and a void agreement as to the opium. This is a valid contract to deliver rice, and a void agreement as to the opium."
The same situation prevails as pistol is also void, one branch of which is legal and the other illegal, the legal branch alone can be enforced. The agreement to deliver wheat is valid, but the agreement is void as for the pistol.

A contingent contract is legal and valid. A contingent contract depends upon the happening or non-happening of a certain event. It is valid and enforceable at law.

The following are the cases where an offer lapses:

1. By revocation- An offer is revoked when it is retracted back by the offeror. An offer may be revoked, at any time before acceptance, by the communication of notice of revocation by the offeror to the other party [Sec. 6(1)].
2. By rejection- An offer lapses if it has been rejected by the offeree. The rejection may be express i.e., by words spoken or written, or implied. Implied rejection is one: (a) where either the offeree makes a counter offer or (b) where the offeree gives a conditional acceptance.
3. By counter offer- Sometimes a counter offer is made by the offeree. In such a case, the original offer automatically comes to an end as the counter offer amounts to a rejection of the original offer.

Section 30 of the Indian Contract Act talks about wagering agreements, which reads as "agreements by way of wager are void". The first thing essential to wager is that the performance of the bargain must depend upon the determination of an uncertain event. Uncertainty in the mind of the parties about the determination of the event in one way or other is necessary.
Therefore, both assertion and reason are correct.

A sum fixed beforehand as amount of compensation payable in the event of breach of contract may be a penalty or liquidated damages.
The amount fixed by all parties, which is a genuine estimate of the loss by a future breach of contract, is referred to as liquidated damages. Thus, all parties to the contract agree that the amount is fair compensation for the breach.
When the amount fixed by all parties is unreasonable or used to force the performing party to fulfill the obligation, then it is a penalty. In such cases, the amount is disregarded and the suffering party cannot claim more than the actual loss.

In the case of Carlill v. Carbolic Smoke-Ball Co. (1893) 1 QBD 256, it was held that the legitimate expectation of a party to a contract and a breach thereof shall constitute a valid cause of action in law, provided that the aggrieved party to that contract had relied and acted upon that implied term.

A general offer is one that is made to the public at large. It is not made any specified parties. So any member of the public can accept the offer and be entitled to the rewards/consideration. In cases of general otter, for a valid contract, the acceptor need not have the knowledge of the offer.