Test: Contract Of Law - 3


50 Questions MCQ Test Legal Reasoning for CLAT | Test: Contract Of Law - 3


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QUESTION: 1

Assertion (A):  A void contract is not necessarily illegal

Reason (R): Every illegal contract is void.

Solution:
QUESTION: 2

Assertion (A):  A void contract is not necessarily illegal

Reason (R): Every illegal contract is void.

Solution:

All void contracts are not necessarily illegal. There are other reasons as well by which a contract can be voided So the explanation is not satisfactory.

QUESTION: 3

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

Solution:
QUESTION: 4

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. Can Lopamudra force performance?

Solution:

Astha she is in her intervel she was capable of understanding the situation at that time which means her mind  was sound enough.

QUESTION: 5

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. Is the contract void?

Solution:

The contract is void as it is a sale of illegal drugs. As per the provisions of Indian Contract Act, an agreement should be done for a lawful object.

QUESTION: 6

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?

Solution:
QUESTION: 7

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-

Solution:
QUESTION: 8

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.

In order to defend the sale, Kumud will need to show that-

Solution:
QUESTION: 9

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?

Solution:
QUESTION: 10

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?

Solution:

The correct option is A.
A minor is not permitted by law to enter into a contract.
 

QUESTION: 11

B accepts A’s proposal by a letter sent by post. The communication of the acceptance is complete

Solution:

The communication of an acceptance is complete-
as against the proposer (A), when it is put in a course of transmission to him so to be out of the power of the acceptor;
as against the acceptor(B), when it comes to the knowledge of the proposer
QUESTION: 12

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

Solution:
QUESTION: 13

A applies to a banker for a loan at a time when there is stringency in the money market. The banker declines to make the loan except at an unusually high rate of interest. A accepts the loan on these terms.

Solution: There is NO undue influence because the banker has no hidden motive or intention from the loan and A still had other options but he accepted everything hence there is no undue influence
QUESTION: 14

Principles: 1) An agreement enforceable by law is a contract

2) 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

3) 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 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:

Solution:
QUESTION: 15

A agrees to pay B Rs. 1000 if the two straight lines should enclose a space           

Solution:

A agrees to pay B 1,000 rupees if two straight lines should enclose a space. The agreement is void. Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made. 

QUESTION: 16

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 ₹40000. 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. Is Shivani entitled to the reward?

Solution:

Shivani had the knowledge of reward after reading the advertisement and she found her daughter and it depends on her whether she wants to take it or not.

QUESTION: 17

“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: 18

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

Solution:

B is the correct option.Goods displayed of a shop window with a price label will amount invitation to offer since the shopkeeper making an invitation invites others to make an offer to him. It is prelude to an offer inviting negotiations or preliminary discussions.

QUESTION: 19

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: 20

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: 21

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: 22

All contracts are agreements
All agreements are accepted offers
Which of the following derivation is correct?

Solution:
QUESTION: 23

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:

Both parties are bound for agreement as the acceptance is put in course of transmission by 'A' by e-mail and is not in the power of 'A'.

QUESTION: 24

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: 25

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: 26

The doctrine of privity of contract means

Solution:

The doctrine of privity of contract is a common law principle which provides that a contract cannot confer rights or impose obligations upon any person who is not a party to the contract.

QUESTION: 27

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

Solution:

B is the correct option. When two parties make identical offers to each other, in ignorance of each other‟s offer, the offers are known as cross-offers. Cross offers never initiate the process of contract because it does not fulfill the requirements of valid offer.

QUESTION: 28

A notice in the newspaper inviting tenders is

Solution:

A notice in the newspaper inviting tenders is an invitation as tender can b given by any company it would turn into a promise 

QUESTION: 29

The agreement which is not legally enforceable is known as

Solution:

A void contract imposes no legal rights or obligations upon the parties and is not enforceable by a court.

QUESTION: 30

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:

The correct answer is A as No agreement as the acceptance was never communicated to the proposer.

QUESTION: 31

‘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: 32

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

Solution:

When both parties of a contract are under a mistake of fact essential to the agreement, such a mistake is what we call a bilateral mistake. Here both the parties have not consented to the same thing in the same sense, which is the definition of consent. Since there is an absence of consent altogether the agreement is void.

QUESTION: 33

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

Solution:

The correct option is A.

A "contingent contract" is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.

QUESTION: 34

An agreement to do an impossible act has been declared

Solution:
QUESTION: 35

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

Solution:

A and B contract to marry each other. Before the time fixed for the marriage, A goes mad. The contract becomes void.

QUESTION: 36

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: 37

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: 38

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: 39

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: 40

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:

C is the correct answer because it is a partial restraint. Had it been a restraint validaity a ver limited options only it was a void agreement but not in this case.

QUESTION: 41

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: 42

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

Solution:
QUESTION: 43

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

Solution:

The correct option is B.

as there was no communication of the contract and no acceptance was there from her side

QUESTION: 44

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

Solution:
QUESTION: 45

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

Solution:
QUESTION: 46

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: 47

A Lease Agreement is a form of:

Solution:
QUESTION: 48

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?

Solution:
QUESTION: 49

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: 50

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:

B is the correct option. Straightway applying the given principle the agreement should not be fraudulent or injure any person or property , so it is an unlawful act.

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