Passage Based Questions for Legal Reasoning - 3 | Legal Reasoning for CLAT PDF Download

Passage 1

When parties to a contract are under a ‘mistake’ regarding an important fact related to such contract, it may affect the contract in two ways. It may, firstly, defeat the consent altogether that the parties are supposed to have given, that is to say, the consent is unreal. Two or more persons are said to consent when they agree upon the same thing in the same sense. Secondly, the mistake may mislead the parties as to the purpose which they had contemplated. Where the mistake does not defeat consent, but only misleads the parties, i.e., where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. However, if the mistake is concerning an erroneous opinion regarding value of the subject-matter of the agreement, it is not a mistake as to a matter of fact. Thus, agreement is void when: (1) both the parties to an agreement are mistaken, (2) their mistake is as to a matter of fact, and (3) the fact about which they are mistaken is essential to the agreement. Further, it is pertinent to note that a mistake, in order to invalidate a contract, should be a mistake of fact and not a mistake of law. Furthermore, where only one party to the contract is under mistake of fact, and the other party is not, the contract is not voidable merely for such reason.

Q1: Mr. A entered into an agreement to sell his bicycle which had been kept unused in his attic for a year, to Mr. B, at an agreed price. However, neither party was aware that at the time of entering into the agreement, the bicycle had already been destroyed by a fire in the attic. In the given situation, which of the following statements is true?
(a) The agreement is void as both parties were under a mistake as to a matter of fact essential to the agreement.
(b) The agreement is void as both parties were under a mistake as to a law in force in India.
(c) The agreement is not voidable as only one of the parties was under a mistake as to a matter of fact.
(d) The agreement is not voidable as the promise made under the agreement had not been performed.
Ans: (A)

Q2: Ms. X and Ms. Y entered into a contract of sale of an article, while reeling under the erroneous belief that the sale of the article, which was the subject-matter of the agreement, was permitted by the law in force in India. In the given situation, which of the following statements is true?
(a) The contract is valid.
(b) The contract is voidable at the option of Ms. X.
(c) The contract is voidable at the option of Ms. Y.
(d) The contract is not voidable.
Ans: (D)

Q3: Mr. J entered into an agreement with Mr. K for the sale of Mr. J’s ‘club’. At the time of entering into the agreement, while Mr. J believed that he was agreeing to sell his golf club, Mr. K believed that he was agreeing to buy a clubhouse owned by Mr. J. The agreement is void because:
(a) Mistake of fact defeated the consent of the parties.
(b) Mistake of fact misled the parties as to the purpose of the contract.
(c) Mistake of fact was regarding the identity of parties.
(d) Both (A) and (B)
Ans: (D)

Q4: Mr. D appointed Mr. K to manage the cultivation of his land as he was unable to manage it himself due to his advanced age. Mr. K agreed to manage the cultivation of Mr. D’s land if he granted Mr. K a lease of the said land. Mr. D agreed to the same and signed a deed which was, unknown to both parties, a gift deed of the land and not a lease deed. In the given situation, which of the following statements is true?
(a) Mr. D and Mr. K were reeling under a mistake as to a matter of fact essential to the agreement.
(b) Mr. D and Mr. K were reeling under a mistake as to a matter of law essential to the agreement.
(c) Mr. D was reeling under a mistake as to a matter of fact essential to the agreement.
(d) Mr. D was reeling under a mistake as to a matter of law essential to the agreement.
Ans: (A)

Q5: Ms. X and Ms. Y entered into a contract of sale of an article which was agreed to be shipped by Ms. X in a ship named ‘The Cruiser’ and delivered to Ms. Y on an agreed date. Mr. X shipped the said article by a different ship named ‘The Mariner’, without informing Ms. Y and the article was delivered to Ms. Y on the agreed date. In the given situation, which of the following statements is true?
(a) The agreement is void as both parties were under a mistake as to a matter of fact essential to the agreement.
(b) The agreement is void as both parties were under a mistake as to a law in force in India.
(c) The agreement is valid as both parties were under a mistake as to a matter of fact not essential to the agreement.
(d) The agreement is valid as both parties were under a mistake as to a matter of fact essential to the agreement.
Ans: (C)

Passage 2

Harm suffered voluntarily does not constitute a legal injury and is not actionable. This principle is embodied in the maxim volenti non fit injuria. A person cannot complain of harm to the chances of which he has exposed himself with his free consent and free will. The maxim volenti non fit injuria is founded on good sense and justice. A person who has invited or assented to an act being done towards him cannot, when he suffers from it, complain of it as a wrong. The maxim presupposes a tortious act by the defendant. The maxim applies, in the first place, to intentional acts which would otherwise be tortious. There are certain limitations to the application of this maxim:
(i) It is no answer to a claim made by a workman against his employer for injury caused through a breach by the employer of a duty imposed upon him by a statute. But where the negligence or breach of statutory duty is on the part of an employee of the plaintiff who knowingly accepts the risk flowing from such breach and the employer-defendant is not guilty of negligence or breach of statutory duty, the defence of volenti non fit injuria is available to the defendant.
(ii) Under an exigency caused by the defendant’s wrongful misconduct, consciously and deliberately faced a risk, even of death, whether the person endangered is one to whom he owes a duty of protection, as a member of his family, or is a mere stranger to whom he owes no such special duty. The rescuer will not be deprived of his remedy merely because the risk which he runs is not the same as that run by the person whom he rescues. But where there is no need to take any risk, the person suffering harm in doing so cannot recover.
(iii) To cover a case of negligence the defence on the basis of the maxim must be based on implied agreement whether amounting to contract or not. The defence is available only when the plaintiff freely and voluntarily, with full knowledge of the nature and extent of the risk impliedly agreed to incur it and to waive any claim for injury. But when the plaintiff has no choice or when the notice is given at a stage when it is beyond the ability of the plaintiff to make a choice there can be no implied agreement and the defence on the basis of the maxim must fail.
(iv) The maxim will also not apply when the act relied upon is done because of the psychological condition which the defendant’s breach of duty had induced.

Q1: Mr. A was the owner of a car and he had a driver- Mr. D. On January 19, 2021, Mr. A and Mr. D were travelling in their car wherein Mr. A got down at a restaurant and told Mr. D to take the car back to Mr. A’s bungalow. Mr. D was filling the petrol tank of the car, and two strangers- Mr. B and Mr. C took a lift from Mr. D in his car. The car went ahead and the right-side front wheel of the car flew away, the car toppled and Mr. D and Mr. C were thrown out. Mr. C sustained severe injuries and ultimately died due to those injuries on January 20, 2021. Mr. B and legal representatives of Mr. C claimed compensation from Mr. A and Mr. D.
Which of the following statements is true?
(a) Mr. D will be liable to pay the compensation.
(b) Volenti non fit injuria will be applicable and no compensation can be claimed.
(c) Volenti non fit injuria will not be applicable and compensation can be claimed.
(d) Mr. A and Mr. D both will be liable to pay the compensation.
Ans: (B)

Q2: Rama was a spectator at a motor car race being held on a track owned by the defendant company. During the race, there was a collision between two cars, one of the cars was thrown among the spectators, thereby injuring Rama severely. Which of the following statements is correct?
(a) Rama impliedly took the risk of such injury, the danger being inherent in the sport which any spectator could foresee, the defendant was not liable.
(b) It was a negligence on the part of defendant and volenti non fit injuria will be applicable.
(c) Rama did not take the risk of such injury, and she only consented to watching the race and hence the defendant was liable.
(d) Rama was negligent and hence she suffered injuries.
Ans: (A)

Q3: Which of the following is correct about consent in volenti non fit injuria?
(a) Knowledge of the risk does not always amount to consent.
(b) Knowledge of a risk does not precede consent.
(c) Knowledge of the risk always amounts to consent.
(d) Mere perception of the existence of danger amounts to consent.
Ans: (A)

Q4: Lily had placed spring guns in a wood on her ground for the protection of the garden. Karan, with full knowledge that there were spring guns somewhere in the wood, trespassed on the land of Lily and was injured. Which of the following statements is correct?
(a) Lily will be liable to pay compensation to Karan.
(b) Lily has not committed a tort against Karan by exceeding her right of private defence.
(c) Karan’s case does not fall within volenti non fit injuria.
(d) Karan had knowledge of the spring guns and wilfully courted the danger himself.
Ans: (D)

Q5: Which of the following is not an element to claim the defence of volenti non fit Injuria?
(a) Prior knowledge of the plaintiff about the risk involved.
(b) Free consent.
(c) Plaintiff is compelled to agree to a risk by the defendant.
(d) Voluntary acceptance of the risk by the plaintiff.
Ans: (C)

Passage 3

It is essential to the creation of a contract that both parties should agree to the same thing in the same sense. Mutual consent, which should also be a free consent, is the sine qua non of a valid agreement and one of its essential elements is that a thing is understood in the same sense by a party as is understood by the other. Not only consent, but free consent is provided in Section 10 of the Indian Contract Act, 1872 to be necessary to the complete validity of a contract. Consent is free when it works without obstacles to impede its exercise. Where there is no consent or no real and certain object of consent, there can be no contract at all. Where there is consent, but not free consent, there is generally a contract voidable at the option of the party whose consent was not free. A general averment that consent was not freely obtained is not enough, and it is necessary to set up one of the vitiating elements such as fraud which includes, false assertion, active concealment, promise without intention of performing it, any other deceptive act, or any act declared as fraudulent. In order to constitute fraud, the act should have been done by the party to the contract, or by any other person with his connivance, or by his agent and with intent to deceive the other party thereto or his agent, or to induce him to enter into the contract. There is no duty upon parties to speak about facts likely to affect the other party’s consent to the contract and mere silence does not amount to fraud, unless the circumstances of the case show that there is duty to speak, or silence is, in itself equivalent to speech. On the other hand, misrepresentation falls into three categories: (i) a statement of fact, which if false, would be misrepresentation if the maker believes it to be true, but which is not justified by the information he possesses; (ii) any breach of duty which gains an advantage to the person committing it by misleading another to his prejudice, there being no intention to deceive; and (iii) causing a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement, even though done innocently.

Q1: Which of the following statements correctly depicts the essentials of misrepresentation?
(a) A misrepresentation is a positive statement of fact, which is made or adopted by a party to a contract and is untrue.
(b) Misrepresentation and false representation do not mean the same.
(c) If one party has induced the other to enter into a contract by misrepresenting, though innocently, any material fact especially within his own knowledge, the party misled cannot avoid the contract.
(d) A misrepresentation is a negative statement of fact, which is made or adopted by a party to a contract and is true.
Ans: (A)

Q2: Consider the statements given below and answer which one correctly describes a fraudulent act.
(I) The expression fraud means an intention to deceive, whether it is from any expectation of advantage to the party himself or from ill will towards the other is immaterial.
(II) A fraud is an act of deliberate deception with the design of securing something by taking an unfair advantage of another. It is a deception to gain from another’s loss.
(III) Fraud arises out of deliberate active role of representor about a fact.
Which of the following is correct?
(a) (I), (II) are correct.
(b) (I) correct.
(c) (I), (II), (III) are correct.
(d) (I) and (II) are correct but (III) is incorrect.
Ans: (C)

Q3: Which of the following statements is correct?
(a) Fraud is an innocent wrong whereas misrepresentation is an intentional wrong.
(b) The principal difference between fraud and misrepresentation is that in the former, the person making the suggestion does not believe it
to be true and, in the latter, he believes it to be true.
(c) In fraud and misrepresentation both, it is not a misstatement of fact which misleads the promisee.
(d) Fraud and misrepresentation both are innocent wrongs.

Ans: (B)

Q4: Mr. A sells a car to Mr. Y, his childhood friend with a knowledge that the car is defective. Before buying the car, Mr. Y says to Mr. A, “If you do not deny it, I shall assume that the car is perfect”. Mr. A says nothing. In light of the statement, decide the liability of Mr. A.
(a) A’s silence is equivalent to speech and hence a misrepresentation.
(b) A is not liable for fraud, but liable for misrepresentation.
(c) A is liable for fraud and misrepresentation both.
(d) A’s silence is equivalent to speech and hence a fraud.
Ans: (D)

Q5: In which of the following statements will a contract not be voidable at the option of a party?
(a) When a party takes consent by fraud.
(b) When a party takes consent by misrepresentation.
(c) A contract entered by fraud and misrepresentation is neither void nor voidable.
(d) When silence amounts to fraud, but the other party whose consent was taken had discovered the truth or had the means of discovering the truth with ordinary diligence.
Ans: (D)

Passage 4

Section 4 of the Indian Contract Act, 1872 reads as follows:

Communication when complete – The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.
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.
Thus, the provision makes no difference in the position of the offeror. The offeror becomes bound when a properly addressed and adequately stamped letter of acceptance is posted. The acceptor does not become bound by merely posting his acceptance. He becomes bound only when his acceptance comes to the knowledge of the proposer. The contract is concluded at the place from where the proposal is accepted and communication of acceptance is dispatched, i.e., the address at which the proposal was sent. The court at that place would have jurisdiction to entertain a cause of action under the contract. This rule, that the communication of an acceptance is complete as against the proposer when the letter is posted, is probably intended to apply only when the parties are at a distance and they communicate by post. “Where, however, the parties are in each other’s presence or, though separated in space”, they are in direct communication, as, for example, by telephone, no contract will arise until the offeror receives the notification of acceptance.

Q1: ‘S’ wanted to purchase shares of a company and communicated his offer to buy shares on March 1, 2021. A letter of allotment of shares addressed to ‘S’, which is an acceptance of the offer to purchase shares, was posted by the company on March 10, 2021, but the letter never reached ‘S’ and was lost in transit. In the given situation, which of the following statements is true?
(a) Communication of acceptance is not complete as against ‘S’ and hence, there is no valid contract between ‘S’ and the company.
(b) Communication of acceptance is complete as against ‘S’ however not complete as against the company.
(c) Communication of acceptance is complete as against the company however not complete as against ‘S’.
(d) Communication of acceptance is complete against both ‘S’ as well as the company.
Ans: (B)

Q2: ‘A’, who is in Mumbai, makes an offer for supply of goods to ‘B’, who is in Delhi, via a mobile phone call. During the same call, A’s offer is absolutely and unconditionally accepted by ‘B’. According to the terms agreed between ‘A’ and ‘B’, goods are to be supplied at Pune and payment is to be made electronically. In the given situation, where is the contract concluded?
(a) Neither Mumbai, Delhi nor Pune as it is a telephonic contract.
(b) Pune
(c) Delhi
(d) Mumbai
Ans: (D)

Q3: ‘X’, who is in Gandhinagar, makes an offer for sale of second-hand luxury car to ‘Y’, who is in Jammu, via an e-mail sent on January 15, 2021 at 2:03 pm. X’s offer is absolutely and unconditionally accepted by ‘Y’ via an e-mail sent on January 15, 2021 at 4:04 pm. The e-mail communicating acceptance is read by ‘X’ on January 15, 2021 at 7:05 pm. In the given situation, when is the contract concluded?
(a) As against ‘X’, on January 15, 2021 at 4:04 pm and as against ‘Y’, on January 15, 2021 at 7:05 p.m.
(b) As against ‘Y’, on January 15, 2021 at 4:04 pm and as against ‘X’, on January 15, 2021 at 7:05 p.m.
(c) January 15, 2021 at 4:04 p.m.
(d) January 15, 2021 at 7:05 p.m.
Ans: (B)

Q4: ‘X’, who is in Agra, makes an offer for sale of second-hand luxury car to ‘Y’, who is Jammu, via an e-mail sent on January 15, 2021 at 2:03 pm. However, the e-mail did not reach ‘Y’ due to some technical error at the server which is located in Delhi. Thereafter, ‘X’ makes a mobile phone call to ‘Y’ on January 15, 2021 at 4:04 pm and makes him the same offer as was made in the e-mail. In the same mobile phone call, the offer is absolutely and unconditionally accepted by ‘Y’ at 4:10 pm. In the given situation, where is the contract concluded?
(a) Delhi
(b) Jammu
(c) Agra
(d) Neither Delhi, Jammu nor Agra as it is an electronic contract.
Ans: (C)

Q5: “When the words of acceptance are spoken into the telephone, they are put into the course of transmission to the offerer so as to be beyond the power of the acceptor. The acceptor cannot recall them.” In light of the given proposition, which of the following statements is/are true?
(I) The communication being instantaneous, the contract immediately arises.
(II) The communication being instantaneous, the communication of acceptance is immediately complete as against the proposer as well as the acceptor.
(III) The communication being non-instantaneous, the communication of acceptance is complete as against the acceptor when the words of acceptance are spoken into the telephone.
(IV) The communication being non-instantaneous, the communication of acceptance is complete as against the proposer when the words of acceptance are spoken into the telephone.
(a) Only I
(b) I and II
(c) III and IV
(d) Only II
Ans: (B)

Passage 5

It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, –
(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or
(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.
Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.

Q1: ‘A’, a resident of Mumbai, and ‘B’, a resident of Delhi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Mumbai and partly in Delhi. There is a clause in the agreement which stipulates that in the event of a dispute between ‘A’ and ‘B’, the courts in Kolkata would have exclusive jurisdiction to decide the dispute. ‘A’ and ‘B’ agreed to the said clause in order to avoid dispute over choice between the two proper places of jurisdiction- Mumbai and Delhi. In the given situation, which of the following statements is true?
(a) The clause relating to jurisdiction is in restraint of legal proceedings.
(b) The clause relating to jurisdiction is not in restraint of legal proceedings.
(c) The clause relating to jurisdiction is valid as ‘A’ and ‘B’ have mutually agreed to the same.
(d) The clause relating to jurisdiction is valid as its object is lawful.
Ans: (A)

Q2: ‘A’, a resident of Chennai, and ‘B’, a resident of Bengaluru, enter into an agreement for sale and supply of goods. The transaction takes place partly in Chennai and partly in Bengaluru. There is a clause in the agreement which stipulates that in the event of a dispute between ‘A’ and ‘B’, the courts in Chennai would have exclusive jurisdiction to decide the dispute. ‘A’ and ‘B’ agreed to the said clause in order to avoid dispute over choice between the two proper places of jurisdiction- Chennai and Bengaluru. In the given situation, which of the following statements is true?
(a) The clause relating to jurisdiction is in restraint of legal proceedings.
(b) The clause relating to jurisdiction is void.
(c) The clause relating to jurisdiction is valid as ‘A’ and ‘B’ have mutually agreed to the same.
(d) The clause relating to jurisdiction is valid as courts in Chennai have jurisdiction to decide the dispute.
Ans: (D)

Q3: ‘A’, a resident of Agra, and ‘B’, a resident of Bhubaneswar, enter into an agreement for sale and supply of goods. The transaction takes place partly in Agra and partly in Bhubaneswar. There is a clause in the agreement which stipulates that in the event of a dispute between ‘A’ and ‘B’, neither of them can approach the court of law or take recourse to any alternative dispute resolution mechanism to settle the dispute. In the given situation, which of the following statements is true?
(a) The clause relating to jurisdiction is not valid as it is in restraint of legal proceedings.
(b) The clause relating to jurisdiction is not valid as the clause is vague and ambiguous.
(c) The clause relating to jurisdiction is valid as they have not restricted the choice of either party regarding choice of jurisdiction.
(d) The clause relating to jurisdiction is valid as no court’s has been ousted by the clause.
Ans: (A)

Q4: ‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contract, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ after the expiry of six months of entering into contract, the courts in Chennai would have exclusive jurisdiction to decide the dispute. In the given situation, which of the following statements is true?
(a) Clause 6 is void and Clause 7 is valid.
(b) Clause 6 is valid and Clause 7 is void.
(c) Both Clause 6 and Clause 7 are valid.
(d) Both Clause 6 and Clause 7 are void.
Ans: (D)

Q5: According to the given passage, which of the following statements is true?
(a) Parties cannot by contract make a choice of jurisdiction.
(b) Parties cannot by contract exclude the jurisdiction of all courts.
(c) Parties can by contract confer jurisdiction on any court.
(d) Parties can by contract extinguish their rights under any contract.
Ans: (B)