Test: Contract Of Law - 1 - CLAT MCQ

Principle: Parties to a contract have absolute freedom to decide the terms of the contract provided there is approximate equality of bargaining power. If this is not the case, the contract is void.

Facts: In Delhi, there is a big cycle market with lots of cycle sellers. A goes to that market and to B’s store. B’s store is biggest in the market. He sees a cycle that he really likes. B says the price of the cycle is Rs. 100000/- A and B enter into a contract for purchase of the cycle. Is this contract legally enforceable?

Principle: If a party to the contract offers to fulfill his part of the contract and the other party declines, the first party is freed from his obligations.

Facts: A contracts with B to deliver 100 bales of cotton to him. The scheduled delivery date is 19.10.2014. A rings up on 1.10.2014 and tells him he is bringing the cotton to his house for delivery. B tells him he can’t accept the delivery because he doesn’t have the space to store it. Is A free from his contractual obligations?

An agreement enforceable by law is called

Which section of The Indian Contract Act, 1872 provides that where both parties to an agreement are under a mistake of fact, the agreement is void.

Principle: Agreement void where both parties are under mistake as to matter of fact.

Facts: A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Bombay. It turns out that before the day of the bargain the ship conveying the cargo had been cast away and the goods lost. Neither party was aware of these facts.

Principle: The consideration or object of an agreement is lawful, unless -It is forbidden by law; or is of such nature that, if permitted it would defeat the provisions of any law or is fraudulent; of involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.

In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.

Facts: A promises to obtain for B an employment in the public service and B promises to pay Rs. 1000 to A.

Principle: When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. The expression of willingness/desire results in a valid proposal only when it is made/addressed to some person (s).  

Facts: ‘X’ makes the following statement in an uninhabited hall. ‘I wish to sell my mobile phone for Rs. 1000.

Principle: A proposal (offer) should be made with an intention that after its valid acceptance, a legally binding promise or agreement will be created. The test for the determination of such intention is not subjective, rather it is objective. The intension of the parties is to be ascertained from the terms of the agreement and the surrounding circumstance under which such an agreement is entered into.    

As a general rule, in the case of arrangements regulating social relations, it follows as a matter of course that the parties do not intend legal consequences to follow. On the contrary, as a general rule, in the case of arrangements regulating business affairs, it follows as a matter of course that the parties intend legal consequences to follow. However, the above rules are just presumptive in nature and hence can be rebutted.

Facts: One morning while having breakfast, ‘X’, the father, says to ‘Y’ (X’s son), in a casual manner, ‘I shall buy a motorbike for you if you get through the CLAT’.

Q. 

Which of the following derivations is correct?  

Which of the following principles would you identify as central to the classical law of contract?

Principle: Acceptance (of offer) must be communicated by the offeree to the offeror so as to give rise to a binding obligation. The expression ‘by the offeree to the offeror’ includes communication between their authorized agents.

Facts: ‘X’ made an offer to buy Y’s property for a stipulated price. ‘Y’ accepted it and communicated his acceptance to ‘Z’, a stranger.

Principle: Acceptance should be made while the offer is still subsisting. The offeror is free to retract his offer at any time before his offer gets accepted by offeree. Once the offer is withdrawn or is lapsed, it is not open to be accepted so as to give rise to a contract. Similarly, if a time is prescribed within which the offer is to be accepted, then the offer must be accepted within the prescribed time. And if no time is prescribed, then the acceptance must be made within a reasonable time. ‘What is a reasonable time’, is a question of fact which is to be determined by taking into account all the relevant facts and surrounding circumstances. 

Facts: ‘X’ makes an offer to ‘Y’ to sell his equipment for Rs.1000.00. No time is specified for the acceptance. ‘Y’ sends his reply two years after receiving the offer.

Principle: Minor’s agreement is void from the very beginning. It can never be validated. It cannot be enforced in the court of law.
Facts: ‘A’, a boy of 16 yrs of age, agrees to buy a camera from ‘B’, who is a girl of 21yrs of age.

Principle: The consideration of object of an agreement is unlawful if the court regards it as opposed to public policy. Every agreement of which the object or consideration is unlawful is void.

Facts: ‘X’ promises to obtain for ‘Y’ an employment in the public service and ‘Y’ promises to pay Rs. 500000 to ‘X’

Principle: Two or more person are said to consent if they agree upon the same thing in the same sense. Consent is said to be free when it is not caused by coercion, or undue influence, or fraud, or misrepresentation, or mistake.  

When consent to an agreement is caused by coercion, undue influence, fraud or misrepresentation, the agreement is a contract voidable (rescindable or terminable) at the option of the party whose consent was so caused, However, when consent to an agreement is caused by mistake as to a matter of fact essential to the agreement, the agreement is void.

Facts: ‘X’ threatens to gun down ‘Y’, if he (‘Y’) does not sell his property worth Rs. 2000000 for Rs. 100000 only. As a consequence ‘Y’ agrees to sell it as demanded by ‘X’. 

Principles:

a) A minor is a person who is below the age of eighteen. However, where a guardian administers the minor’s property, the age of majority is twenty-one.
b) A minor is not permitted by law to enter into a contract. Hence, where a minor enters into a contract with a major person, the contract is not enforceable. This effectively means that neither the minor nor the other party can make any claim on the basis of the contract.
c) In a contract with a minor, if the other party hands over any money or confers any other benefit on the minor, the same shall not be recoverable from the minor unless the other party was deceived by the minor to hand over money or any other benefit. The other party will have to show that the minor misrepresented her age, he was ignorant about the age of the minor and that he handed over the benefit on the basis of such representation.

Facts:
Animesh convinces Kumud, a girl aged 18 that she would sell her land to him. Kumud’s mother Parineeti is her guardian. Nonetheless Kumud, without the permission of Parineeti, sells the land to Animesh for a total sum of rupees fifty lakh, paid in full and final settlement of the price. Parineeti challenges this transaction claiming the Kumud is a minor and hence the possession of the land shall not be given to Animesh. Thus Animesh is in a difficult situation and has no idea how to recover his money from Kumud.

Q. Why is Parineeti justified in challenging the sale transaction?

Principles:
a) A minor is a person who is below the age of eighteen. However, where a guardian administers the minor’s property, the age of majority is twenty-one.
b) A minor is not permitted by law to enter into a contract. Hence, where a minor enters into a contract with a major person, the contract is not enforceable. This effectively means that neither the minor nor the other party can make any claim on the basis of the contract.
c) In a contract with a minor, if the other party hands over any money or confers any other benefit on the minor, the same shall not be recoverable from the minor unless the other party was deceived by the minor to hand over money or any other benefit. The other party will have to show that the minor misrepresented her age, he was ignorant about the age of the minor and that he handed over the benefit on the basis of such representation.

Facts:
Animesh convinces Kumud, a girl aged 18 that she would sell her land to him. Kumud’s mother Parineeti is her guardian. Nonetheless Kumud, without the permission of Parineeti, sells the land to Animesh for a total sum of rupees fifty lakh, paid in full and final settlement of the price. Parineeti challenges this transaction claiming the Kumud is a minor and hence the possession of the land shall not be given to Animesh. Thus Animesh is in a difficult situation and has no idea how to recover his money from Kumud.

Q. Animesh can be allowed to recover the money only if he can show that:

Principles:
a) A minor is a person who is below the age of eighteen. However, where a guardian administers the minor’s property, the age of majority is twenty-one.
b) A minor is not permitted by law to enter into a contract. Hence, where a minor enters into a contract with a major person, the contract is not enforceable. This effectively means that neither the minor nor the other party can make any claim on the basis of the contract.
c) In a contract with a minor, if the other party hands over any money or confers any other benefit on the minor, the same shall not be recoverable from the minor unless the other party was deceived by the minor to hand over money or any other benefit. The other party will have to show that the minor misrepresented her age, he was ignorant about the age of the minor and that he handed over the benefit on the basis of such representation.

Facts:
Animesh convinces Kumud, a girl aged 18 that she would sell her land to him. Kumud’s mother Parineeti is her guardian. Nonetheless Kumud, without the permission of Parineeti, sells the land to Animesh for a total sum of rupees fifty lakh, paid in full and final settlement of the price. Parineeti challenges this transaction claiming the Kumud is a minor and hence the possession of the land shall not be given to Animesh. Thus Animesh is in a difficult situation and has no idea how to recover his money from Kumud.

Q. Which of the following is correct?

Principles:
a) A minor is a person who is below the age of eighteen. However, where a guardian administers the minor’s property, the age of majority is twenty-one.
b) A minor is not permitted by law to enter into a contract. Hence, where a minor enters into a contract with a major person, the contract is not enforceable. This effectively means that neither the minor nor the other party can make any claim on the basis of the contract.
c) In a contract with a minor, if the other party hands over any money or confers any other benefit on the minor, the same shall not be recoverable from the minor unless the other party was deceived by the minor to hand over money or any other benefit. The other party will have to show that the minor misrepresented her age, he was ignorant about the age of the minor and that he handed over the benefit on the basis of such representation.

Facts:
Animesh convinces Kumud, a girl aged 18 that she would sell her land to him. Kumud’s mother Parineeti is her guardian. Nonetheless Kumud, without the permission of Parineeti, sells the land to Animesh for a total sum of rupees fifty lakh, paid in full and final settlement of the price. Parineeti challenges this transaction claiming the Kumud is a minor and hence the possession of the land shall not be given to Animesh. Thus Animesh is in a difficult situation and has no idea how to recover his money from Kumud.

Q. Which of the following is correct?

Q. A proposes by a letter sent by post to sell his house to B. B accepts the proposal by a letter sent by post.

"Reciprocal" Contracts means

Principles:
(i) An agreement enforceable by law is a contract
(ii) In order for an agreement to be enforceable in a court of law, there must be a meeting of minds b/w both the parties
(iii) Parties to a contract should do something for the other party. The obligation to do something for the other party is mutual. This is called consideration and the absence of consideration renders the contract unenforceable.

Facts: A promised to take B out for a dinner in a restaurant. Even after two weeks, A did not fulfill the promise. B wants to sue A to enforce that promise. If B goes to court:

Principle: If a party consent has been obtained by misrepresentation, the party to whom the misrepresentation has been made may reject the contract.

Facts: J is in need of a house for immediate occupation and hence approaches S, the owner of a house. The house is in a visibly precarious condition and requires a few repairs in order to make it habitable. However, S tells J that the house is good for lodging and J signs the leases agreement with S. J then finds out the actual state of the house and seeks to reject the contract

Principle: For a contract an offer has to be made that is accepted and there is consensus ad idem.

Facts: A goes to a shop and asks the shopkeeper to deliver rice at his residence in their previous dealings of about 12 years; he had always ordered the Basmati variety of rice. The shopkeeper stores five varieties of rice. He delivers krishnakali variety. A had wanted basmati. Shopkeeper wants to enforce the contract.

Principle: Imposition of total restraint on the liberty of a person without lawful justification constitutes false imprisonment.

Facts: R wished to enter a swimming pool but did not have passes for the same. The policeman at one gate did not allow him to enter. R claimed false imprisonment.

When the consent to an agreement is obtained by undue influence, the agreement is at the option of

Mere silence is no fraud unless           

A minor estate is liable for the ____________supplied to him.