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Performance Of Contract- 1 - Free MCQ Practice Test with solutions, CA

MCQ Practice Test & Solutions: Test: Performance Of Contract- 1 (30 Questions)

You can prepare effectively for CA Foundation Business Laws for CA Foundation with this dedicated MCQ Practice Test (available with solutions) on the important topic of " Test: Performance Of Contract- 1". These 30 questions have been designed by the experts with the latest curriculum of CA Foundation 2026, to help you master the concept.

Test Highlights:

- Format: Multiple Choice Questions (MCQ)
- Duration: 30 minutes
- Number of Questions: 30

Test: Performance Of Contract- 1 - Question 1

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The original contract need not be performed if there is:

A.
Alteration of contract
B.
Recession of contract
C.
Novation
D.
All of these

Detailed Solution: Question 1

Explanation:
When determining whether the original contract needs to be performed, there are several factors to consider. In this case, the answer is option D, which states that the original contract need not be performed if there is an alteration of contract, recession of contract, or novation. Let's break down each of these terms and explain their significance:
- Alteration of contract: This refers to any changes or modifications made to the terms and conditions of the original contract. If an alteration occurs, it means that the original terms are no longer valid and therefore the contract does not need to be performed as initially agreed upon.
- Recession of contract: Recession refers to the act of canceling or terminating a contract. If a recession occurs, it means that the contract is no longer binding and the parties are released from their obligations. As a result, the original contract does not need to be performed.
- Novation: Novation refers to the substitution of a new contract or party for an existing contract or party. If a novation occurs, it means that the original contract is replaced by a new agreement, rendering the original contract void. Consequently, the original contract does not need to be performed.
In summary, if any of these events occur - alteration of contract, recession of contract, or novation - the original contract is no longer valid and does not need to be performed as initially agreed upon.

Test: Performance Of Contract- 1 - Question 2

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Novation requires :

A.
Mutual agreement
B.
Mutual consent
C.
Free consent
D.
None

Detailed Solution: Question 2

With a novation, all parties must consent. If you are novating your rights under contract to a third party, you need the consent of the other party to the contract and the third party who will be obtaining your rights. With an assignment, only some parties must consent.

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Test: Performance Of Contract- 1 - Question 3

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A contract can be discharged by:

A.
Mutual agreement and performance
B.
Lapse of time and operation of law
C.
Breach of contract
D.
All of these

Detailed Solution: Question 3

Discharge of a Contract:
A contract can be discharged, or terminated, in various ways. These include:
1. Mutual Agreement:
- Both parties agree to end the contract and release each other from their obligations.
- This can be done through a formal agreement or a new contract that supersedes the original one.
2. Performance:
- The contract is discharged when both parties fulfill their obligations as stated in the agreement.
- This can include the delivery of goods or services, payment of money, or any other actions specified in the contract.
3. Lapse of Time:
- If a contract has a specific duration or expiration date, it is discharged when that time period ends.
- Once the agreed-upon time has passed, the contract is no longer enforceable, and the parties are released from their obligations.
4. Operation of Law:
- Certain events or circumstances prescribed by law can lead to the discharge of a contract.
- This can include situations such as bankruptcy, impossibility of performance, frustration of purpose, or illegality of the contract.
5. Breach of Contract:
- If one party fails to fulfill their obligations as stated in the contract, it can lead to a breach.
- The innocent party may then have the right to terminate the contract and seek legal remedies.
Conclusion:
In summary, a contract can be discharged by mutual agreement, performance, lapse of time, operation of law, or breach of contract. These various ways provide mechanisms for ending contractual obligations and resolving disputes between parties.

Test: Performance Of Contract- 1 - Question 4

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A servant is employed for one year on a monthly salary of Rs. 1800, the whole salary to be paid at the end of the year. The servant wrongfully leaves the service after six months. Is he entitled to any salary?

A.
He is entitled to the whole salary
B.
He is entitled to the salary of six months.
C.
He is entitled to the salary which his master thinks suitable
D.
He is not entitled to any salary

Detailed Solution: Question 4

Correct Answer :- d

Explanation : When a party to a contract fails to perform his promise in its entirety, the promisee may put an end to the contract. So, the servant is not entitled to the salary for the period he has been employed because, by leaving the service, he has failed to perform his promise in its entirety. Hence, option (d) is the correct answer.

Test: Performance Of Contract- 1 - Question 5

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A lets out a theatre to B for a series of drama for certain days. The theatre was completely destroyed by fire before the scheduled dates. In the case :

A.
The contract is discharged by impossibility of performance
B.
The contract is void ab initio
C.
The contract is voidable at the option of B
D.
A cannot be discharged of the contract

Detailed Solution: Question 5

To determine the outcome of the contract in this scenario, we need to consider the concept of impossibility of performance and its impact on the contract.
Impossibility of Performance:
Impossibility of performance refers to a situation where it becomes impossible for a party to fulfill their obligations under a contract due to an unforeseen event or circumstance. In such cases, the contract may be discharged, meaning that the parties are released from their obligations.
Analysis of the Scenario:
In this scenario, A had rented out the theatre to B for a series of drama for certain days. However, before the scheduled dates, the theatre was completely destroyed by fire. Let's analyze the possible outcomes of the contract based on the given options:
1. The contract is discharged by impossibility of performance:
- This option suggests that the contract can be discharged due to the impossibility of A to fulfill their obligations (providing the theatre).
- Since the theatre was destroyed by fire, it becomes impossible for A to perform their obligations under the contract.
- Therefore, this option is the correct answer.
2. The contract is void ab initio:
- Void ab initio refers to a contract that is considered null and void from the beginning.
- In this scenario, the contract was valid at the time of formation.
- The destruction of the theatre by fire does not automatically render the contract void from the beginning.
- Therefore, this option is not applicable.
3. The contract is voidable at the option of B:
- A contract is voidable when one party has the option to either enforce or rescind the contract due to certain circumstances.
- In this scenario, B does not have the option to choose whether to enforce or rescind the contract.
- The contract is discharged due to impossibility, not voidable at the option of B.
- Therefore, this option is not applicable.
4. A cannot be discharged of the contract:
- This option suggests that A cannot be released from their obligations under the contract, regardless of the circumstances.
- However, in cases of impossibility of performance, the party facing the impossibility may be discharged from the contract.
- Therefore, this option is not applicable.
Conclusion:
Based on the analysis, the correct answer is option A: The contract is discharged by impossibility of performance. The destruction of the theatre by fire makes it impossible for A to fulfill their obligations under the contract, leading to the discharge of the contract.

Test: Performance Of Contract- 1 - Question 6

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A mother owes Rs. 10,000 to her daughter. But this debt has become barred by the Limitation Act. The mother signs a written promise to pay Rs. 3,000 on account of the debt. In such a case which one is correct :

A.
There is no contract as the debt is already barred by Limitation and so it cannot be revived by as subsequent promise
B.
There is no contract because the mother has promised to give only a part of time debt
C.
This is enforceable against the mother because such a promise is valid and binding under the Indian Contract Act.
D.
None

Detailed Solution: Question 6

Explanation:
The correct option is C: This promise is enforceable against the mother because such a promise is valid and binding under the Indian Contract Act. Here's the detailed explanation:
1. Background: The mother owes Rs. 10,000 to her daughter, but the debt has become barred by the Limitation Act. This means that the daughter cannot legally enforce the repayment of the debt.
2. Promise to pay Rs. 3,000: Despite the debt being barred by limitation, the mother signs a written promise to pay Rs. 3,000 on account of the debt.
3. Valid and binding promise: According to the Indian Contract Act, a promise to pay a time-barred debt is valid and binding, even if the original debt cannot be enforced.
4. Consideration: In this case, the consideration for the mother's promise is the daughter's forbearance to take legal action against the time-barred debt.
5. Enforceable: Since the promise meets the requirements of a valid contract under the Indian Contract Act, it is enforceable against the mother. The daughter can now legally demand the payment of Rs. 3,000.
Therefore, option C is correct: This promise is enforceable against the mother because such a promise is valid and binding under the Indian Contract Act.

Test: Performance Of Contract- 1 - Question 7

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What is 'renunciation?'

A.
Renunciation occurs where one party, through his own act or default, incapacitates himself from performing his contractual obligations.
B.
Renunciation occurs where a party fails to perform adequately his contractual obligations.
C.
Renunciation occurs where both parties decide to abandon the contract.
D.
Renunciation occurs where one party demonstrates an intention not to perform his contractual obligations.

Detailed Solution: Question 7

Renunciation occurs where one party demonstrates an intention not to perform his contractual obligations. Where one party renunciates, the other party may terminate the contract.

Test: Performance Of Contract- 1 - Question 8

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In contracts of sale of movable properties, time is:

A.
Presumed to be the essence of the contract
B.
No presumption as to time can be raised
C.
Not presumed to be the essence of the contract
D.
All of the above

Detailed Solution: Question 8

Explanation:
In contracts of sale of movable properties, the time element is an important factor that determines the performance of the contract. The understanding of whether time is considered essential or not in such contracts depends on the jurisdiction and the specific terms agreed upon by the parties involved. However, as per the given options and the correct answer, the presumed status of time in contracts of sale of movable properties is:
- Option A: Presumed to be the essence of the contract - This means that time is considered crucial and any delay in performance can result in a breach of contract.
- Option B: No presumption as to time can be raised - This means that time is not considered essential and the parties have flexibility in performing the contract within a reasonable time frame.
- Option C: Not presumed to be the essence of the contract - This means that time is not considered crucial and the parties have some flexibility in performing the contract.
- Option D: All of the above - This combines options A, B, and C, suggesting that time can be presumed to be the essence of the contract, no presumption can be raised, and time is not presumed to be the essence of the contract.
Since the correct option is A, it implies that in contracts of sale of movable properties, time is presumed to be the essence of the contract. However, it is essential to refer to the specific jurisdiction and terms of the contract to determine the actual status of time in a particular case.

Test: Performance Of Contract- 1 - Question 9

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X sold rice to Y by sample and Y thinking that they were old rice, purchased them. In fact, the rice were new. In this case:

A.
Y is not bound by the contract
B.
Y is bound by the contract
C.
Y can recover damages from X
D.
Y can sue for replacement of new rice with old rice

Detailed Solution: Question 9

According to the given information, X sold rice to Y, who believed that the rice was old when in fact it was new. Let's analyze the options provided:

Option A: Y is bound by the contract

If Y willingly entered into the contract with X, knowing that the rice was new, then Y would be bound by the terms of the contract.
However, the information states that Y believed the rice was old, indicating that Y did not willingly enter into the contract under the assumption of new rice.
Therefore, option A is not the correct answer.

Option B: Y is not bound by the contract

As Y believed the rice was old and was misled by X's representation, it can be argued that Y should not be bound by the contract.
Y entered into the contract based on false information and can potentially seek relief from the contract.
Option B is a possible answer.

Option C: Y can recover damages from X

If Y can prove that X knowingly misrepresented the rice as old when they were new, Y may be able to recover damages from X.
This option is plausible, but it does not fully address the issue of whether Y is bound by the contract or not.

Option D: Y can sue for replacement of new rice with old rice

Given that Y purchased the rice in question, it is unlikely that Y would be able to sue for the replacement of new rice with old rice.
Y may seek other forms of relief, such as damages, but it is unlikely that they would be able to demand a specific replacement.

Conclusion:

Based on the analysis, option B: "Y is not bound by the contract" is the most suitable answer. Y believed the rice was old and was misled by X's representation. Therefore, Y may seek relief from the contract.

Test: Performance Of Contract- 1 - Question 10

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Incase of death of a joint promisor (s), the promisee can :

A.
Not enforce the contract against the survivor (s) of the said joint promisor (s)
B.
Enforce the contract against the survivor (s) of the said joint promisor (s)
C.
Not enforce the contract at all
D.
Both (a) & (b)

Detailed Solution: Question 10

Explanation:
The correct answer is B: Enforce the contract against the survivor(s) of the said joint promisor(s).
When there are joint promisors in a contract and one of them dies, the promisee still has the right to enforce the contract against the surviving joint promisors. Here's a detailed explanation:
- Joint Promisors: In a joint promise, there are two or more persons who have promised to perform a specific obligation or fulfill a contract together.
- Death of a Joint Promisor: If one of the joint promisors dies, the contract is not automatically terminated. It continues to exist between the surviving joint promisor(s) and the promisee.
- Right to Enforce: The promisee still has the right to enforce the contract against the surviving joint promisors. The death of one joint promisor does not release the other joint promisors from their obligations.
- Legal Consequences: If the promisee chooses to enforce the contract, the surviving joint promisors will be legally bound to fulfill the obligations and perform as per the terms of the contract.
- Liability of Surviving Joint Promisors: The surviving joint promisors are now solely responsible for fulfilling the contract. They will be held accountable for the performance and any breach of the contract.
In conclusion, in case of the death of a joint promisor, the promisee can enforce the contract against the surviving joint promisors. The death of one joint promisor does not release the other joint promisors from their obligations.

Test: Performance Of Contract- 1 - Question 11

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Where the performance of a promise by one party depends on the prior performance of promise by the other party, such reciprocal promises fall under the category of :

A.
Mutual and Concurrent
B.
Conditional and Dependent
C.
Mutual and Independent
D.
Both (a) & (b)

Detailed Solution: Question 11

The answer to the question "Where the performance of a promise by one party depends on the prior performance of promise by the other party, such reciprocal promises fall under the category of:" is option B: Conditional and Dependent.
Explanation:
Reciprocal promises refer to promises made by two parties that are interdependent on each other's performance. In this case, the performance of one party's promise is contingent upon the prior performance of the promise by the other party. This type of promise falls under the category of conditional and dependent promises.
To further elaborate:
1. Conditional Promises: These promises are subject to a condition that must be fulfilled before the performance can take place. In the given scenario, the performance of one party's promise is conditional upon the prior performance of the promise by the other party.
2. Dependent Promises: These promises are reliant on each other for their execution. In this case, the performance of one party's promise depends on the prior performance of the promise made by the other party.
Therefore, the reciprocal promises described in the question fall under the category of conditional and dependent promises as the performance of one party's promise is dependent on the prior performance of the promise made by the other party.

Test: Performance Of Contract- 1 - Question 12

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A contract of personal volition is not performed by:

A.
The agent
B.
The promisees
C.
The legal representative
D.
All of these

Detailed Solution: Question 12

The correct answer is D: All of these
A contract of personal volition is a contract that is entered into voluntarily by all parties involved. It means that each party has freely agreed to the terms and conditions of the contract without any form of coercion or undue influence. In such a contract, the parties are bound by their own actions and cannot rely on others to perform their obligations.
In this case, the question asks which party does not perform a contract of personal volition. Let's break down the options:
A: The agent - The agent is a party who acts on behalf of another party. In a contract of personal volition, the agent is expected to perform the obligations as agreed upon in the contract. Therefore, the agent is not the correct answer.
B: The promisees - The promisees are the parties who are promised something in the contract. They have the right to expect the other party to fulfill their promises. In a contract of personal volition, the promisees are also expected to perform their obligations. Therefore, the promisees are not the correct answer.
C: The legal representative - The legal representative is a person who has the authority to act on behalf of another person, such as a guardian or attorney. In a contract of personal volition, the legal representative is expected to ensure that the contract is entered into voluntarily and that the obligations are performed. Therefore, the legal representative is not the correct answer.
D: All of these - This is the correct answer. A contract of personal volition requires all parties involved, including the agent, promisees, and legal representative, to perform their obligations. If any of these parties fail to perform, it would not be considered a contract of personal volition.
In conclusion, a contract of personal volition is not performed by any of the parties mentioned in the options, which is why the correct answer is D: All of these.

Test: Performance Of Contract- 1 - Question 13

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Which of the following contract is not discharged by frustration ?

A.
Government Intervention
B.
Destruction of goods
C.
Change of law
D.
Commercial Impossibility

Detailed Solution: Question 13

The doctrine of frustration is only a special case to discharge a contract by an impossibility of performance after the contract was entered into. A contract is frustrated when subsequent to its formation, a change of circumstances renders the contract legally or physically impossible to be performed.”

Test: Performance Of Contract- 1 - Question 14

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Suppose the time fixed for performance of the contract has expired but the time is not essential. What is the remedy of the promisee in this case:

A.
Can rescind the contract
B.
To claim compensation
C.
No remedy available
D.
Can’t be determined

Detailed Solution: Question 14

Remedy of the promisee when the time fixed for performance of the contract has expired but the time is not essential:
The remedy available to the promisee in this case is to claim compensation. Here is a detailed explanation:
1. Time is not essential:
- When the time fixed for performance of a contract is not considered essential, it means that the performance of the contract can still be carried out even after the specified time has expired.
- The parties involved in the contract have not explicitly stated that time is of the essence.
2. Remedy of claim compensation:
- In such a scenario, the promisee (the party to whom the promise was made) has the right to claim compensation for the delay in performance.
- The promisee can seek monetary compensation for any losses or damages suffered due to the delay.
- This compensation aims to compensate the promisee for any inconvenience or financial loss caused by the delayed performance of the contract.
3. Rescinding the contract:
- Rescinding the contract, or terminating it, is not the appropriate remedy when the time is not considered essential.
- The promisee cannot simply cancel the contract because the time fixed for performance has expired.
4. No remedy available:
- It is not accurate to say that no remedy is available in this case.
- The promisee does have a remedy, which is to claim compensation for the delay in performance.
In conclusion, when the time fixed for performance of a contract has expired but is not considered essential, the promisee's remedy is to claim compensation for the delay in performance. Rescinding the contract is not an option, and it is incorrect to say that no remedy is available.

Test: Performance Of Contract- 1 - Question 15

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If a new contract is substituted in place of an existing contract it is called:

A.
Alteration
B.
Rescission
C.
Novation
D.
Waiver

Detailed Solution: Question 15

Explanation:
When a new contract is substituted in place of an existing contract, it is called novation. Here is a detailed explanation of the options and why novation is the correct answer:
A. Alteration:
- Alteration refers to making changes or modifications to an existing contract.
- It does not involve substituting a new contract in place of the existing one.
B. Rescission:
- Rescission refers to the cancellation or termination of a contract.
- It does not involve substituting a new contract in place of the existing one.
C. Novation:
- Novation is the correct term for when a new contract replaces an existing contract.
- It involves the agreement of all parties involved to discharge the obligations of the original contract and replace it with a new one.
- The new contract extinguishes the rights and obligations under the original contract.
D. Waiver:
- Waiver refers to the voluntary surrender or relinquishment of a right or claim.
- It does not involve substituting a new contract in place of the existing one.
Therefore, the correct answer is C: Novation when a new contract is substituted in place of an existing contract.

Test: Performance Of Contract- 1 - Question 16

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A, B and C jointly promised to pay Rs. 60,000 to D. Before performance of the contract C dies. The contract

A.
Becomes void on C’s death
B.
Should be performed by A and B along with C’s legal representatives.
C.
Should be performed by A and B alone
D.
Should be renewed between A, B and D

Detailed Solution: Question 16

Explanation:
The contract between A, B, and C was a joint promise to pay Rs. 60,000 to D. However, before the performance of the contract, C dies. In this scenario, the contract should be performed by A and B along with C's legal representatives. Here's why:
1. Joint Promise: A, B, and C made a joint promise to pay Rs. 60,000 to D. This means that all three parties are equally responsible for fulfilling the contract.
2. Death of C: If one of the parties to a joint promise dies, the contract does not become void. Instead, the legal representatives of the deceased party step in to fulfill their obligations.
3. Performance of the Contract: In this case, since C has passed away, A and B are still obligated to fulfill their promise. However, they are now required to do so along with C's legal representatives.
4. Legal Representatives: C's legal representatives, such as their executor or administrator, will assume the responsibility of fulfilling C's part of the contract. They will step into C's shoes and contribute their share of the promised amount.
5. A and B's Obligations: A and B must continue with the performance of the contract and pay their share of the promised amount. They cannot avoid their responsibility just because C has died.
Thus, the correct answer is Should be performed by A and B along with C's legal representatives.

Test: Performance Of Contract- 1 - Question 17

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Ram, Lal and Shyam jointly promise to pay Mohan Rs. 30,000. Shyam paid the whole amount to Mohan, In case Ram and Lal are solvent, Shyam can recover:

A.
Rs. 15,000 from Lal
B.
Rs. 30,000 from Ram
C.
Rs. 20,000 from Lal
D.
Rs. 10,000 each from Ram and Lal

Detailed Solution: Question 17

To find out how much Shyam can recover from Ram and Lal, we need to analyze their financial capabilities and their share in the promised amount.
Let's assume that Ram's share is R and Lal's share is L. Since Shyam paid the entire amount to Mohan, we can write the following equation:
R + L + Shyam's share = Rs. 30,000
Given that Shyam paid the entire amount, we can simplify the equation as:
R + L + Rs. 30,000 - (R + L) = Rs. 30,000
Simplifying further:
R + L - R - L = 0
This implies that the equation is satisfied. Therefore, Ram and Lal are solvent.
Now, let's calculate how much Shyam can recover from Ram and Lal:
Since both Ram and Lal are solvent, they should contribute equally to the promised amount. Hence,
Ram's share = Lal's share = 1/2 of the promised amount
Therefore,
Ram's share = Lal's share = Rs. 15,000
So, Shyam can recover Rs. 15,000 from both Ram and Lal.
Hence, the correct answer is option D: Rs. 10,000 each from Ram and Lal.

Test: Performance Of Contract- 1 - Question 18

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Impossibility existing subsequent to the formation of contract is called_____________.

A.
Subjective Impossibility
B.
Subsequent impossibility
C.
Supervening impossibility
D.
None of these.

Detailed Solution: Question 18

A contract to do an act, which after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, becomes void when the act becomes impossible or unlawful. This is called “Supervening Impossibility”, i.e. impossibility arising subsequent to the formation of the contract. In such a case the contract will be void as soon as such events make the performance of the contract impossible.

Test: Performance Of Contract- 1 - Question 19

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A agrees to pay Rs. 10,000 to B after 2 years. During this period B dies. After 2 years, B’s son C claims the amount from A. C’s claim is __________

A.
Invalid
B.
Enforceable
C.
Not enforceable
D.
Unlawful.

Detailed Solution: Question 19

Claim of B's son C:
The claim of B's son C is enforceable. Here's the detailed explanation:
1. Contract Agreement: A and B entered into a contract where A agreed to pay Rs. 10,000 to B after 2 years.
2. Death of B: Unfortunately, B dies during the 2-year period before receiving the payment from A.
3. Legal Principle: According to the legal principle of "Doctrine of Survivorship," the rights and obligations under a contract are generally not affected by the death of one of the parties involved.
4. Transfer of Rights: In this case, B's rights under the contract are automatically transferred to his legal heir, which is his son C. C becomes the rightful claimant of the Rs. 10,000 payment.
5. Enforceability of C's Claim: As C is the legal heir and successor of B's rights, he can enforce the claim against A for the payment of Rs. 10,000 as per the terms of the contract.
6. Legal Recourse: C can take legal action against A to enforce the contract and claim the payment. He can approach the court and provide the necessary evidence of the contract and B's death.
Therefore, the claim of B's son C is enforceable, and he has the legal right to demand the payment of Rs. 10,000 from A.

Test: Performance Of Contract- 1 - Question 20

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If no time is specified for performance of contract, it must be performed within a reasonable time. “Reasonable time” means time______

A.
Which seems to be reasonable to the promisor
B.
Which seems to be reasonable to the promisee
C.
Which is determined as reasonable by a third person
D.
Which is reasonable under the facts and circumstances of the case

Detailed Solution: Question 20

Reasonable Time in Contracts
In contract law, if no specific time is mentioned for the performance of a contract, it is understood that the contract must be performed within a reasonable time. The concept of "reasonable time" is based on the circumstances and facts of each case. It is important to determine what would be considered reasonable in order to determine if a party has fulfilled their obligations within the required timeframe.
Meaning of "Reasonable Time"
The meaning of "reasonable time" can be further explained as follows:
1. Which is reasonable under the facts and circumstances of the case: The determination of what is reasonable depends on the specific circumstances and facts surrounding the contract. This means that the court or parties involved need to consider the nature of the contract, the industry standards, and any other relevant factors.
2. Which seems to be reasonable to the promisor: This option implies that the promisor, the party obligated to perform the contract, determines what is reasonable. However, this may not always be a fair approach, as the promisor may have biased interests.
3. Which seems to be reasonable to the promisee: This option suggests that the promisee, the party to whom the promise is made, determines what is reasonable. However, similar to the previous option, this may lead to biased outcomes.
4. Which is determined as reasonable by a third person: This option involves the appointment of a neutral third party who determines what is reasonable. However, this approach may not always be practical or feasible.
Given these options, the correct answer is option D: "Which is reasonable under the facts and circumstances of the case." This option aligns with the general understanding that the determination of reasonable time should be based on the specific context of each contract.

Test: Performance Of Contract- 1 - Question 21

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Reciprocal promises are _______________.

A.
Promises made by both parties to the contract
B.
Promise made by promisor only
C.
Promise made by promisee only
D.
None of these.

Detailed Solution: Question 21

Reciprocal promises are promises made by both parties to the contract.
Reciprocal promises are an essential element of a contract. They are the mutual obligations or commitments made by both parties involved in the contract. These promises create a legal relationship between the parties and establish the rights and responsibilities of each party.
Here are some key points to understand about reciprocal promises:
- Mutual Commitment: Reciprocal promises involve both parties making commitments to each other. Each party agrees to perform a certain action or provide something of value to the other party.
- Legal Obligation: These promises create a legally binding obligation on the parties involved. If one party fails to fulfill their promise, the other party may have legal remedies available to them.
- Consideration: Reciprocal promises are typically supported by consideration, which refers to something of value given by each party to the other. This consideration is usually exchanged at the time of entering into the contract.
- Enforceability: Reciprocal promises are enforceable in a court of law. If one party fails to fulfill their promise, the other party can seek legal remedies, such as damages or specific performance.
- Examples: Examples of reciprocal promises include a buyer promising to pay the purchase price in exchange for the seller promising to deliver the goods, or an employer promising to pay wages in exchange for an employee promising to perform certain duties.
In conclusion, reciprocal promises are promises made by both parties to the contract. They establish the mutual obligations and legal relationship between the parties involved in the contract.

Test: Performance Of Contract- 1 - Question 22

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Which of the following is not applicable in relation to performance of reciprocal promises?

A.
They can be performed simultaneously
B.
They cannot be performed simultaneously
C.
They can be performed in an order fixed by the parties
D.
The order of performance may be decided by the nature of transaction

Detailed Solution: Question 22

Explanation:
Reciprocal promises refer to a situation where two parties have made promises to each other and both are obligated to fulfill their respective promises. The performance of reciprocal promises can be governed by certain rules and principles. Let's analyze the options given:
A: They can be performed simultaneously: This means that both parties can fulfill their promises at the same time. It is applicable in the performance of reciprocal promises.
B: They cannot be performed simultaneously: This statement is incorrect as reciprocal promises can indeed be performed simultaneously. Therefore, this option is not applicable in relation to the performance of reciprocal promises.
C: They can be performed in an order fixed by the parties: This means that the parties can agree on a specific order in which the promises are to be performed. It is applicable in the performance of reciprocal promises.
D: The order of performance may be decided by the nature of the transaction: This means that the nature of the transaction may determine the order in which the promises are to be performed. It is applicable in the performance of reciprocal promises.
In conclusion, option B is not applicable in relation to the performance of reciprocal promises as reciprocal promises can be performed simultaneously.

Test: Performance Of Contract- 1 - Question 23

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A holds a house under a lease agreement. Subsequently he buys the house and becomes the owner of the house. The contract is discharged by

A.
Rescission
B.
Merger
C.
Waiver
D.
Remission

Detailed Solution: Question 23

Explanation:
The correct answer is Merger. Here's why:
1. Rescission: Rescission refers to the termination or cancellation of a contract. It is typically done by mutual agreement between the parties involved. However, in this scenario, there is no mention of a mutual agreement to terminate the lease agreement.
2. Merger: Merger occurs when the interests of the lessor and lessee merge into one, resulting in the termination of the lease agreement. In this case, when A buys the house and becomes the owner, the interests of the lessor (previous owner) and lessee (A) merge, and the lease agreement is discharged.
3. Waiver: Waiver is the voluntary relinquishment or abandonment of a right or claim. It does not apply in this scenario as there is no mention of A waiving any rights or claims.
4. Remission: Remission refers to the partial or complete forgiveness of a debt or the cancellation of an obligation. It is not applicable in this case as there is no mention of any debt or obligation.
In conclusion, the contract is discharged by Merger as A buys the house and becomes the owner, resulting in the termination of the lease agreement.

Test: Performance Of Contract- 1 - Question 24

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Contractual impossibilities are known as?

A.
Initial
B.
Absolute
C.
Supervening
D.
None.

Detailed Solution: Question 24

Contractual Impossibilities
Contractual impossibilities refer to situations where it becomes impossible for a party to fulfill their obligations under a contract. There are different types of contractual impossibilities, and they are known as supervening impossibilities. Let's explore each type in detail:
Absolute Impossibility:
- Absolute impossibility occurs when it becomes objectively impossible to fulfill the terms of a contract.
- This may arise due to events such as natural disasters, destruction of the subject matter, or the death or incapacity of a party.
- In such cases, the contract is considered void, and the parties are discharged from their obligations.
Impracticability or Frustration of Purpose:
- Impracticability or frustration of purpose occurs when an unforeseen event makes the performance of the contract excessively burdensome or impractical.
- This can be caused by events such as war, government regulations, or changes in market conditions.
- In such cases, the parties may be excused from performing their obligations or may be entitled to adjust the terms of the contract.
Commercial Impracticability:
- Commercial impracticability occurs when an unforeseen event makes the performance of the contract commercially impractical.
- This can include situations where the cost of performance becomes unreasonably high or the availability of necessary resources becomes scarce.
- The affected party may be excused from performance or may seek to renegotiate the terms of the contract.
Conclusion:
Contractual impossibilities are known as supervening impossibilities. These include absolute impossibility, impracticability or frustration of purpose, and commercial impracticability. In each case, the occurrence of an unforeseen event makes it impossible or impractical for a party to fulfill their obligations under the contract. Depending on the circumstances, the parties may be discharged from their obligations or may seek to adjust the terms of the contract.

Test: Performance Of Contract- 1 - Question 25

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The process by which one person succeeds rights interest and benefits and obligations of another person is termed as:-

A.
Assignment
B.
Succession
C.
Remission
D.
Recission.

Detailed Solution: Question 25

The Process of Succession
- Definition: The process by which one person succeeds the rights, interests, benefits, and obligations of another person is termed as succession.
- Answer: The correct answer is option B: Succession.
Explanation:
Succession is a legal term that refers to the transfer of rights, interests, benefits, and obligations from one person to another. It typically occurs when there is a change in ownership, such as in the case of inheritance or when a business is passed down from one generation to the next.
Here is a breakdown of the options mentioned in the question:
- Option A: Assignment: Assignment refers to the transfer of specific rights or interests from one person to another, but it does not encompass the full range of rights, benefits, and obligations that are involved in succession.
- Option B: Succession: Succession is the correct answer. It encompasses the transfer of all rights, interests, benefits, and obligations from one person to another.
- Option C: Remission: Remission refers to the cancellation or reduction of a debt or penalty. It does not involve the transfer of rights, interests, benefits, and obligations.
- Option D: Recission: Recission refers to the cancellation of a contract or agreement. It does not involve the transfer of rights, interests, benefits, and obligations from one person to another.
In conclusion, the process by which one person succeeds the rights, interests, benefits, and obligations of another person is termed as succession.

Test: Performance Of Contract- 1 - Question 26

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Acceptance of consideration lesser than that agreed is known as _______.

A.
Recission
B.
Novation
C.
Remission
D.
Alteration

Detailed Solution: Question 26

Remission means an act of reducing or cancelling the amount of money that somebody has to pay

Test: Performance Of Contract- 1 - Question 27

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A promises to paint a picture for B by a certain date for a certain amount. A dies before painting the picture. Which one of the following is correct in such a situation?

A.
The agreement does not lapse for A
B.
The agreement becomes voidable at the option of A’s legal representatives.
C.
The agreement becomes unlawful.
D.
The agreement lapses for both parties.

Detailed Solution: Question 27

The correct option in this situation is D: The agreement lapses for both parties. Here's why:
1. Death of a party: When a party to a contract dies before fulfilling their obligations, the contract is generally considered to be terminated. This is because the performance of the contract becomes impossible due to the death of the party.
2. Doctrine of frustration: The doctrine of frustration applies when an unforeseen event occurs that makes the performance of the contract impossible or radically different from what was originally contemplated. The death of A in this case would be considered an unforeseen event that frustrates the purpose of the contract.
3. Legal representatives: A's legal representatives, such as their heirs or executors, cannot be forced to fulfill the contract on A's behalf. They have the option to either continue with the contract or terminate it due to A's death.
4. Voidable vs unlawful: The agreement does not become voidable at the option of A's legal representatives (option B) because the contract has already lapsed. It also does not become unlawful (option C) as the death of A does not make the agreement itself illegal.
Therefore, the correct option is D: The agreement lapses for both parties.

Test: Performance Of Contract- 1 - Question 28

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The original contract need not be performed if there is :

A.
Novation of contract
B.
Recession of contract
C.
Alteration of contract
D.
In all the above cases

Detailed Solution: Question 28

Explanation:
The original contract need not be performed if there is novation, recession, or alteration of the contract. Let's break down each of these cases:
1. Novation of contract: Novation refers to the substitution of a new contract for an existing one, with the intent of extinguishing the original contract. In this case, the parties involved agree to replace the original contract with a new one, which may have different terms and obligations. As a result, the original contract is no longer valid and does not need to be performed.
2. Recession of contract: Recession is the act of canceling or terminating a contract due to a breach or non-performance by one of the parties involved. If a contract is rescinded, it becomes void and unenforceable. Therefore, the original contract does not need to be performed in the case of recession.
3. Alteration of contract: Alteration refers to making changes or modifications to the terms of an existing contract. If the parties agree to alter the contract, it means they are mutually accepting the changes. In such a scenario, the original contract is no longer binding, and the modified terms need to be followed instead.
Conclusion: The original contract need not be performed if there is novation, recession, or alteration of the contract. Therefore, option D, which states "in all the above cases," is the correct answer.

Test: Performance Of Contract- 1 - Question 29

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“Novation” means ________

A.
Alteration in terms of the contract
B.
Recission of the contract
C.
Substitution of an existing contract with a new one
D.
Remission of performance of contract

Detailed Solution: Question 29

Explanation:
Novation refers to the substitution of an existing contract with a new one. It involves the release of one party from their obligations under the original contract and the introduction of a new party who assumes those obligations. Here is a detailed explanation of each option:
A: Alteration in terms of the contract
- This option refers to changes or modifications made to the terms of a contract.
- It does not involve the substitution of a new contract.
B: Recission of the contract
- Recission refers to the cancellation or termination of a contract.
- It does not involve the substitution of a new contract.
C: Substitution of an existing contract with a new one
- This option accurately describes novation, where a new contract is introduced to replace the original one.
- It involves the release of one party and the introduction of a new party.
D: Remission of performance of contract
- Remission refers to the forgiveness or reduction of a debt or obligation.
- It does not involve the substitution of a new contract.
Therefore, the correct answer is option C: Substitution of an existing contract with a new one.

Test: Performance Of Contract- 1 - Question 30

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_________ of a contract takes place when all or some of the terms of the contract are cancelled.

A.
Novation
B.
Alteration
C.
Merger
D.
Rescission

Detailed Solution: Question 30

Rescission of a contract
Rescission of a contract refers to the cancellation or termination of all or some of the terms of a contract. It can occur when one or both parties agree to revoke or cancel the contract. The process of rescission aims to restore the parties to their pre-contractual positions and release them from any further obligations under the contract.
Some key points regarding the rescission of a contract include:
1. Definition: Rescission is the legal process through which a contract is canceled or terminated.
2. Termination of terms: Rescission can involve the cancellation or termination of all or some of the terms of the contract.
3. Mutual agreement: Rescission typically requires the mutual agreement of both parties involved in the contract.
4. Restoration: The goal of rescission is to restore the parties to their pre-contractual positions.
5. Release from obligations: Rescission releases the parties from any further obligations or liabilities under the contract.
6. Legal validity: Rescission should be carried out in accordance with the legal requirements and procedures set out in the jurisdiction where the contract was formed.
7. Effects: Once a contract is rescinded, it is considered void and unenforceable, and the parties are no longer bound by its terms.
In conclusion, the rescission of a contract occurs when all or some of the terms of the contract are cancelled or terminated by mutual agreement. It aims to release the parties from their obligations and restore them to their pre-contractual positions.

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