Contract Of Law Test-8


50 Questions MCQ Test Legal Reasoning for CLAT | Contract Of Law Test-8


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QUESTION: 1

Principle: A "contingent contract" is a contract to do or not to do something contingent on the occurrence of a particular event. Contingent contracts are permissible in law only if the events that they refer to are possible. 

Facts: A agrees to pay B a sum of money if B marries C. C marries D.

Q. Is this contract enforceable in law? 

Solution:

This contract is enforceable by law because there is a contingent contract which is enforceable.
There is an uncertain event as, C is married to D, but wedding of B and C is possible in future if C and D get divorced or D dies. So it is a contingent contract and enforceable by law.

QUESTION: 2

Principle: A "contingent contract" is a contract to do or not to do something contingent on the occurrence of a particular event. Contingent contracts are permissible in law only if the events that they refer to are possible. 

Facts: A promises to give B his house if the earth, sun and moon are ever situated in a straight line. Is this contract enforceable by law

Solution:

This is not a contingent contract as contingent contracts include some uncertain future events and in this question he is talking about eclipse which is a possible event .

QUESTION: 3

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.

Q. Is this contract legally enforceable?

Solution:
QUESTION: 4

Principle: In case of the death of either of the parties to the contract, wherever possible, the deceased representatives must give effect to the terms of the contract.

Facts: A and B enter into the contract for A to paint B’s picture. B dies. Are his representatives bound by the contract?

Solution:

Under section 37 of indian contract act 1872, an illustration states ‘A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The contract cannot be enforced either by A’s representatives or by B. (b) A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The contract cannot be enforced either by A’s representatives or by B."

QUESTION: 5

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.

Q. Is A free from his contractual obligations?

Solution:
QUESTION: 6

Principle: The communication of a proposal is complete when it becomes to the knowledge of the person to whom it is made.

Facts: A proposes by letter to sell a house to B at a certain price. The communication of proposal is complete when

Solution:
QUESTION: 7

Principle: "Fraud" means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agents, with intent to deceive another party thereto his agent, or to induce him to enter into the contract;
(1) the suggestion as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent. 

Facts: A sells by auction to B, a horse which A knows to be unsound. A says nothing to B about the horse unsoundness.

Solution:
QUESTION: 8

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.

Solution:
QUESTION: 9

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.

Solution:
QUESTION: 10

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 B to drop prosecution which he has instituted against B for robbery and B promises to restore the value of the things taken.

Solution:
QUESTION: 11

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.

Solution:
QUESTION: 12

Principle: A proposal (offer) should be made with an intention that after  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?   

Solution:
QUESTION: 13

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.

Solution:
QUESTION: 14

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.

Solution:
QUESTION: 15

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.

Solution:
QUESTION: 16

Principle: A contract which is duly supported by real and lawful consideration is valid notwithstanding the fact that the consideration is inadequate. The quantum of consideration is for the parties to decide at the time of making a contract and not for the courts (to decide) when the contract is sought to be enforced. An agreement to which the consent merely because the consent of the promisor is freely given is not void inadequate. But the inadequacy of the consideration may be taken into account by the court in determining the    question whether the consent of the promisor was freely given.

Facts: ‘A’ agrees to sell his mobile phone worth Rs. 20000 for Rs. 100 only to ‘B’ A’s consent is freely given.

Solution:
QUESTION: 17

Principle: the consideration or object of an agreement is unlawful if it is forbidden by law. Every agreement of which the object or consideration is unlawful is void.    
Facts: ‘X’ promises to pay ‘Y’ Rs. 50000, if he (‘Y’) commits a crime, ‘X’ further promises to indemnify his (‘Y’) against any liability arising thereof. ‘Y’ agrees to act as per X’s promise. 

Solution:
QUESTION: 18

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’

Solution:
QUESTION: 19

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’.  

Solution:
QUESTION: 20

Principle: Agreements in restraint of marriage is void.
Facts: ‘X’ enters into an agreement, with ‘Y’ where under he agrees not to marry anybody else other than a person whose name starts with the letter ‘A’ and promises to pay Rs. 100000 to ‘Y’ of the (‘X’) breaks this agreement.

Solution:
QUESTION: 21

Principal: A gift comprising existing property is valid and a gift comprising future property is void.
Facts: ‘X’ has a house which is owned by him. He contracted to purchase a plot of land adjacent to the said house, but the sale (of the plot of land) in his favour is yet to be completed. He makes a gift of both the properties (house and land) to ‘Y’.  

Solution:
QUESTION: 22

Contract is said to have three essentials. Which one among the following is not an essential in the formation of contract?

Solution:
QUESTION: 23

Rania applied for the post of Director in an organization. The governing body of the organization passed a resolution appointing him to the post. Afterwards, one of the members of the governing body informed him privately of the resolution. Subsequently, the resolution was rescinded by the governing body. Rania files a suit for breach of contract and claims damages.

Q. Which one of the following is the correct legal proposition in the case?

Solution:
QUESTION: 24

A contract to which a minor is a party, is known as:

Solution:
QUESTION: 25

A contract enforceable at the instance of one party is known as:

Solution:
QUESTION: 26

X duly posts a letter of acceptance to Y, but the letter is lost in transit by the negligence of the Post Office

Solution:
QUESTION: 27

A Lease Agreement is a form of:

Solution:
QUESTION: 28

Principle: A contract is an agreement enforceable by law.

Facts: X invited Y to her house for dinner. Y accepted the invitation but later did not go. On Y's failure to attend, X filed a suit against Y for the price of non-consumed food.

Q. Can this agreement be enforced by law?

Solution:
QUESTION: 29

Principle: An agreement to do an act impossible in itself is void.

Facts: Rajdeep, a shipping magnate and wildlife enthusiast entered into an agreement with Karan as per which the latter was be paid Rupees five lacs in addition to expenses incurred by him if he caught a live anaconda in the Gir Forest area of India within a period of one year from the date of agreement. It is common knowledge that anaconda is endemic to South America.

Solution:
QUESTION: 30

Principle: The consideration or object of an agreement must be lawful. It should not be forbidden by law and should not defeat the provisions of any law. It should not be fraudulent or injure any person or property. The Court should not regard it as immoral or opposed to public policy. 

Explanation – Every agreement of which the object or consideration is unlawful is void. 

Facts: Rohan has a very perverted mind and he tells Saad who is desperately in need of money that, “I will pay you RS 5000 to whip yourself”. Saad agrees and takes the money. Later, he refuses to whip (Chabuk for horse) himself.

Q. What is the status of the contract? 

Solution:
QUESTION: 31

Principle:  The communication of proposals, their acceptance and revocation are deemed to be made by any act or omission of the party proposing, accepting or revoking by which he intends to communicate such proposal acceptance or revocation, or which has the effect of communicating it.

Explanation – The communication of an acceptance is complete, as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer. 

Facts – The only daughter of Mrs Aggarwal went missing. She put a notice in the newspaper stating a reward for anyone who could find her. The reward was RS40000. Ms Shivani Bagul was a long-time friend of Mrs Aggarwal. She came to know of the reward but due to her bond with Mrs Aggarwal, she set out to search for the missing girl. She found Mrs Aggarwal’s daughter Shweta and returned her to her mother.

Q. Is Shivani entitled to the reward? 

Solution:
QUESTION: 32

“A” offers to sell his car to “B” for Rs. 50,000/-. “B” agrees to buy the car offering Rs.45, 000/-. The reply of “B” amounts to:

Solution:
QUESTION: 33

When goods are displayed in a show – window bearing price tags, it indicates:

Solution:
QUESTION: 34

Principle: A person is said to be of sound mind for the purpose of making a contract if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests.

Facts: Mr. X who is usually of sound state of mind, but occasionally of unsound state of mind, enters into a contract with Mr. Y when he was of unsound state of mind. Mr. Y having come to know about this fact afterwards wants to file a suit against Mr. X.

Solution:
QUESTION: 35

Principle: Every person, who is of the age of majority, is competent to contract according to the law to which he is subject.

Facts: A minor mortgaged his house in favour of Thakur Das, a money lender, to secure a loan of Rs. 20000. A part of this, i.e. Rs. 10500 was actually advanced to him. While considering the proposed advance, the attorney who was acting for the money lender, received information that the plaintiff was still a minor. Subsequently the minor commenced an action stating that he was underage when he executed the mortgage and the same should, therefore, be cancelled. He prayed for setting aside the mortgage. The mortgagee money lender prayed for the refund of Rs. 10500 from the minor.

Solution:
QUESTION: 36

Principle: Agreements, the meaning of which is not certain, or not capable of being made certain, are void.

Facts: A horse was bought for a certain price coupled with a promise to give Rs.500 more if the horse is proved lucky.

Solution:
QUESTION: 37

All contracts are agreements
All agreements are accepted offers

Q. Which of the following derivation is correct?

Solution:
QUESTION: 38

Legal Principle 1: Acceptance of an offer is complete when the acceptance is put into the course of transmission so as to be out of the power of the acceptor

Legal Principle 2: Acceptance once completed, makes the agreement binding on both the parties

Facts: A accepts to buy B’s offer of his motor car for Rs. 4 Lakhs. The acceptance was put into e-mail. Unfortunately, when the e-mail was put, there is distortion as a result of which B is not in a position to really read what A has written

Solution:
QUESTION: 39

Legal Principle: A contract is an agreement which the law will enforce. All agreements are contracts if they are made with free consent by parties competent to contract for a lawful consideration and with a lawful contract

Facts: A, a 40 yrs. old businessman of sound mind agrees of his own free will to sell his bungalow worth Rs. 10 Lakhs for Rs. 1 Lakh. The agreement

I. Is invalid because of inadequate consideration
II. Is valid because there is lawful consideration
III. Is valid because it was entered into with the free consent
IV. Is valid because X has capacity to contract

Solution:
QUESTION: 40

Legal principle: A contract requires a proposal and an acceptance of the proposal. It is necessary to make a binding contract, not only that the proposal be accepted, but also that the acceptance is notified to the proposer.

Facts:  D sent his servant P to trace his child. D in the meantime announced a reward for providing information about the missing boy. P, in ignorance of the announcement traced the boy and informed D. P later on came to know and he claimed it.
Issue: is the servant entitled to reward

Solution:
QUESTION: 41

The doctrine of privity of contract means

Solution:
QUESTION: 42

A situation when two parties make identical offers to each other in ignorance of each other offer is known as

Solution:
QUESTION: 43

A notice in the newspaper inviting tenders is

Solution:
QUESTION: 44

The agreement which is not legally enforceable is known as

Solution:
QUESTION: 45

An offer was sent by post, the acceptor wrote accepted on the letter, put it in his drawer & forgot about it. The transaction is 

Solution:
QUESTION: 46

‘A’ offers to sell his car to ‘B’ for Rs. 50,000. ‘B’ agrees to buy the car offering Rs. 45,000. The reply of ‘B’ amounts to

Solution:
QUESTION: 47

Mistake of both the parties about the subject matter renders an agreement

Solution:
QUESTION: 48

When goods are displayed in a show – window bearing price tags, it indicates:

Solution:
QUESTION: 49

An agreement which is enforceable by law at the option of one or more of the parties there to but not at the option of other or others is

Solution:

(i) An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract;

(j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

QUESTION: 50

A Lease Agreement is a form of:

Solution:

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