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Test: Contract Of Law - 7


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Test: Contract Of Law - 7 - Question 1

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

Detailed Solution for Test: Contract Of Law - 7 - Question 1

Acceptance is complete as when the person who has made an offer has received the acceptance. In this case the offeror has not received the acceptance, so there's no contract concluded

Test: Contract Of Law - 7 - Question 2

A Lease Agreement is a form of:

Detailed Solution for Test: Contract Of Law - 7 - Question 2

D is the correct option. A lease agreement is an arrangement between two parties – lessor and lessee, by which the lessor allows the lessee the right to the use a property owned or managed by the lessor for a specified period of time, in exchange for periodic payment of rentals. The agreement does not provide ownership rights to the lessee.

Test: Contract Of Law - 7 - Question 3

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. Can this agreement be enforced by law?

Test: Contract Of Law - 7 - Question 4

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.

Test: Contract Of Law - 7 - Question 5

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 Rs5000 to whip yourself”. Saad agrees and takes the money. Later, he refuses to whip (Chabuk for horse) himself. What is the status of the contract? 

Test: Contract Of Law - 7 - Question 6

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? 

Test: Contract Of Law - 7 - Question 7

“A” offers to sell his bike to “B” for Rs. 30,000/-. “B” agrees to buy the bike offering Rs. 25, 000/-. The reply of “B” amounts to:

Test: Contract Of Law - 7 - Question 8

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

Test: Contract Of Law - 7 - Question 9

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.

Test: Contract Of Law - 7 - Question 10

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.

Detailed Solution for Test: Contract Of Law - 7 - Question 10

B is the correct option. since the contract is void ab initio as the minor is not competent to contract and hence the money can't be recovered.

Test: Contract Of Law - 7 - Question 11

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.

Test: Contract Of Law - 7 - Question 12

All contracts are agreements
All agreements are accepted offers

Q.Which of the following derivation is correct?

Test: Contract Of Law - 7 - Question 13

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

Test: Contract Of Law - 7 - Question 14

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

Detailed Solution for Test: Contract Of Law - 7 - Question 14

D is the correct option. In this case we can say that all the ingredients necessary for a contract that is considered, free consent ,acceptance and, competency of parties is there therefore it is a valid contract.

Test: Contract Of Law - 7 - Question 15

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

Detailed Solution for Test: Contract Of Law - 7 - Question 15

The correct option is B.

Direct from the 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.’

Test: Contract Of Law - 7 - Question 16

The doctrine of privity of contract means

Test: Contract Of Law - 7 - Question 17

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

Test: Contract Of Law - 7 - Question 18

A notice in the newspaper inviting tenders is

Test: Contract Of Law - 7 - Question 19

The agreement which is not legally enforceable is known as

Test: Contract Of Law - 7 - Question 20

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

Test: Contract Of Law - 7 - Question 21

‘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

Test: Contract Of Law - 7 - Question 22

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

Test: Contract Of Law - 7 - Question 23

‘A’ contracts to pay ‘B’ Rs. 1,000 if the B’s house is burnt. This is a 

Test: Contract Of Law - 7 - Question 24

An agreement to do an impossible act has been declared

Test: Contract Of Law - 7 - Question 25

‘A’ and ‘B’ contract to marry each other. Before the date fixed for marriage, ‘A’ goes mad. The contract becomes…………………..

Test: Contract Of Law - 7 - Question 26

Assertion (A):  A void contract is not necessarily illegal
Reason (R): Every illegal contract is void.

Test: Contract Of Law - 7 - Question 27

X, a married woman, agreed to live in adultery with B and also agreed to serve him as his housekeeper. In return, B agreed to pay X Rs. 500 per month for living in adultery and Rs. 500 per month for housekeeping. The agreement is

Test: Contract Of Law - 7 - Question 28

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: Astha, who is a very good painter, is also a patient in a mental asylum, who, at intervals, is of sound mind. During one of these intervals, she entered into a relationship with Lopamudra to paint a picture of her for a specified amount. She, however, asked Lopamudra to pay her the entire amount in advance. One month later, on the day of delivery of the painting, Astha refused to perform the contract saying that she suffers from insanity.

Q. Can Lopamudra force performance?

Test: Contract Of Law - 7 - Question 29

Principle: If the consideration or object of an agreement is forbidden by law, or is of such a nature that would defeat the provisions of any law, or is fraudulent, or is injurious to the person or property of another or, the Court regards it as immoral, or opposed to public policy, then the object or consideration shall be deemed unlawful. Every agreement of which the object or consideration is unlawful is void.

Facts: Agni enters into a contract with Tanuj whereby Tanuj will supply Agni with 10 grams of cocaine for a specified amount.

Q. Is the contract void?

Test: Contract Of Law - 7 - Question 30

A borrows Rs. 500 from B to pay C to whom B has lost a bet. Contract between A and B is 

Detailed Solution for Test: Contract Of Law - 7 - Question 30

B is the correct option. Agreements entered into between parties under the condition that money is payable by the first party to the second party on the happening of a future uncertain event, and the second party to the first party when the event does not happen, are called Wagering Agreements or Wager. There should be mutual chance of profit and loss in a wagering agreement. Generally wagering agreements are void.

Test: Contract Of Law - 7 - Question 31

An offer made to the public in general which anyone can accept and do the desired act is

Test: Contract Of Law - 7 - Question 32

The objects of an agreement shall not be unlawful if………

Detailed Solution for Test: Contract Of Law - 7 - Question 32

The correct option is C.
unlawful consideration can not be enforce by law.

Test: Contract Of Law - 7 - Question 33

Agreement for the creation of monopolies…………

Detailed Solution for Test: Contract Of Law - 7 - Question 33

The correct option is D.

It received the assent of the President of India on 27 December, 1969. The Monopolies and Restrictive Trade Practices Act was intended to curb the rise of concentration of wealth in a few hands and of monopolistic practices. It was repealed in September 2009. The Act has been succeeded by The Competition Act, 2002.

Test: Contract Of Law - 7 - Question 34

An offer may lapse by………

Detailed Solution for Test: Contract Of Law - 7 - Question 34

An offer lapses:

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)].

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.

By counter offer:

Sometimes a counter offer is made by the offeree. In such case the original offer automatically comes to an end as the counter offer amounts to rejection of the original offer.

Test: Contract Of Law - 7 - Question 35

An auctioneer in Mumbai advertised in a newspaper that a sale of office furniture would be held on Dec. 23, 2005 a broker came from Hyderabad to attend the auction, but all the furniture was withdrawn. The broker from Hyderabad sued the auctioneer for loss of his time and expenses.

Q. Which of the following statement is correct?

Detailed Solution for Test: Contract Of Law - 7 - Question 35

An advertisement is only an invitation to an offer so the broker cannot claim his expenses from the auctioneer.

Test: Contract Of Law - 7 - Question 36

The damage awarded by way of punishment is

Detailed Solution for Test: Contract Of Law - 7 - Question 36

Vindictive Damages are awarded against the party who has committed a breach of the contract with the object of punishing the erring as defaulting party and to compensate the aggrieved party. Generally, these damages are awarded in case of action on lost b) A and B contract to marry each other. Before the time fixed for the marriage, A goes mad. The contract becomes void." or breach of promise.

Test: Contract Of Law - 7 - Question 37

An agreement to commit a crime is

Test: Contract Of Law - 7 - Question 38

……………..means termination of contract

Detailed Solution for Test: Contract Of Law - 7 - Question 38

The correct option is A.
In contract law, rescission has been defined as the unmaking of a contract between parties. Rescission is the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract.

Test: Contract Of Law - 7 - Question 39

Consent is said to be free when it is not caused by………..

Test: Contract Of Law - 7 - Question 40

A contract is discharged by Novation which means the

Test: Contract Of Law - 7 - Question 41

Advertisement inviting tender is………..

Test: Contract Of Law - 7 - Question 42

An offer to be valid must

Test: Contract Of Law - 7 - Question 43

A person who finds the goods belonging to another and takes them into his custody……….

Detailed Solution for Test: Contract Of Law - 7 - Question 43

According to section 71 of Indian Contract Act,a person who finds goods belonging to another and takes them into his custody, is subject to the same responsibility as a bailee. Since the position of the finder of the goods is that of a bailee he is supposed to take the same amount of care with regard to the goods as is expected of a bailee under section 151. He is also subject to all the duties of a bailee, including a duty to return the goods after the true owner is found. If he refuses to return, he could be made liable for conversion. 

Test: Contract Of Law - 7 - Question 44

A Hindu widow borrowed money from a lender for the purpose of filing a suit for maintenance. The lender advanced money at 100% rate of interest. The act of the money lender is induced by

Test: Contract Of Law - 7 - Question 45

The following are the essential elements which need to co-exist in order to make a valid contract

Test: Contract Of Law - 7 - Question 46

Quasi contracts arise…….

Test: Contract Of Law - 7 - Question 47

According to Indian contract act, an agreement must be

Detailed Solution for Test: Contract Of Law - 7 - Question 47

The correct option is D.
Agreement without consideration, void, unless it is in writing and registered or is out of natural love and affection between parties standing in a near relation to each is valid

Test: Contract Of Law - 7 - Question 48

Where the consent of both the parties is given by mistake, the contract is:

Test: Contract Of Law - 7 - Question 49

When the consent of the party is not free, the contract is……………

Detailed Solution for Test: Contract Of Law - 7 - Question 49

The correct option is B
When a contract is entered into without the free consent of the party, it is considered a voidable contract. The definition of the act states that a voidable contract is enforceable by law at the option of one or more parties but not at option of the other parties.

Test: Contract Of Law - 7 - Question 50

Assertion (A):  A void contract is not necessarily illegal
Reason (R): Every illegal contract is void.

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