IPCC - 33e - Differences & True or False Statements in Indian Contract Act

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DIFFERENCES & T/F STATEMENTS IN

INDIAN CONTRACT ACT_33e
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Page 1
INDEX FOR DIFFERENCES & T/F STATEMENTS IN INDIAN CONTRACT ACT
Chapter
Chapter Name Pages
No.
1. Meaning & Nature of Contract 3-11
2. Offer and Acceptance 12-19
3. Legal Object & Consideration 20-25
4. Capacity to Contract 26-28
5. Free Consent 29-35
6. Other essential elements Void Agreements & Quasi Contracts 36-42
7. Performance of Contract 43-49
8. Discharge of Contract 50-54
9. Remedies for Breach of Contract 55-58
2
No.1 for CA/CWA & MEC/CEC MASTER MINDS
1. MEANING AND NATURE OF CONTRACT

DIFFERENCES
Q.No.1. Agreement Vs. Contract.
DIFFERENCE AGREEMENT CONTRACT

Every promise and every set of promises
An agreement enforceable by law is a
Definition forming consideration for each other is an
contract.
agreement.
An agreement is created by acceptance of an Agreement and its enforceability
Creation
offer. together create a contract.
An agreement is created by acceptance of an
Legal Rights & A contract creates legal rights and
offer. An agreement may not create legal rights
Obligations obligations between the parties.
and obligations of the parties.
Valid agreement is necessary for
Necessary No contract is required to make an agreement.
making a contract.
Legally An agreement is not a concluding or legally A contract is a concluding or legally
Binding binding contract. binding on the parties.
Concept Agreement is a wider term. Contract is a narrow term.
Every agreement need not necessarily be a All contracts are necessarily
One in other
contract. agreements.
Q.No.2. Void Contract Vs. Voidable contracts.
DIFFERENCE VOID CONTRACT VOIDABLE CONTRACT

Contract ceases to be enforceable by Contract is enforceable at the option of
Definition
law. the aggrieved party.
Contract becomes void either because of
Contract becomes voidable when it is
sudden and unexpected events or of law
Nature caused by coercion, undue influence,
changes, before the performance
fraud and misrepresentation.
becomes due.
The aggrieved party gets a right to
Does not provide any legal remedy for
Rights rescind the contract and to declare it void
the parties to the contract.
otherwise it remains valid.
Q.No.3. Void Agreement Vs. Voidable Contract.
DIFFERENCE VOID AGREEMENT VOIDABLE CONTRACT

An agreement not enforceable A contract enforceable by law at the option of
Definition
by law is said to be void. the aggrieved party, is a voidable contract.
It is valid when made and continues to remain
Void-ab-initio It is void from the beginning.
valid till it is repudiated by the aggrieved party.
Which essential
element of contract Enforceability by law is missing Free Consent of a party is missing.
is missing
It cannot be enforced by any It continues to be enforceable if the aggrieved
Enforceability
party. party does not repudiate the contract.
IPCC_33e_M.Law_Differences & T/F Statements_Meaning and Nature of Contract __3

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A third party who purchases goods in good
Third party does not acquire any faith and for consideration before the contract
Right of Third Party
rights. is repudiated, acquires good title to those
goods.
On the expiry of a reasonable time, it may
Even on the expiry of a
Effect of lapse of become a valid contract if the aggrieved party
reasonable time, it can never
Reasonable Time does not repudiate the contract with in
become a valid contract.
reasonable time.
The question of damages does
Damages The aggrieved party can claim damages.
not arise.
Q.No.4. Void Agreement Vs. Illegal Agreements.
According to Section2(g) of the Indian Contract Act, an agreement not enforceable by law is void. The Act
has specified various factors due to which an agreement may be considered as void agreement. One of
these factors is unlawfulness of object and consideration of the contract i.e. illegality of the contract which
makes it void. Despite the similarity between an illegal and a void agreement that in either case the
agreement is void and cannot be enforced by law, the two differ from each other in the following two
respects:
DIFFERENCE VOID AGREEMENT ILLEGAL AGREEMENT

Scope A void agreement is not necessarily illegal. An illegal agreement is always void.
Nature Not forbidden under law. Are forbidden under law.
Parties are not liable for any punishment Parties to illegal agreements are liable
Punishment
under the law. for punishment.
Its not necessary that agreements collateral
Collateral Agreements collateral to illegal
to void agreements may also be void. It may
agreement agreements are always void.
be valid also.
Void agreement is void-ab-initio i.e., void All illegal agreements are void from the
Effects
from the beginning. very beginning.
TRUE OR FALSE STATEMENTS WITH REASONS
1. The general principles of law of contract apply to all kinds of contracts irrespective of their nature.
Ans: True, as sections 1 to 75 lay down the general principles of law of contract
2. An agreement was drawn between two business firms. The agreement mentioned that this
agreement is not entered into as a formal legal agreement and shall not be subject to legal jurisdiction
in the law courts. The agreement was terminated by one of the firms and other firm brought an action
for breach of contract. Could the firm succeed? Which of the following is correct answer?
Ans: No, because the parties had expressly stated in the agreement that it shall not be subject to
legal jurisdiction.
3. A and B entered into a contract in Agra on 1st September, 1862. They want to enforce the contract
under the provisions of the Indian Contract Act. Can they succeed? Which of the following is correct?
Ans: No, because the Act does not apply retrospectively.
4. Does a proposal become a promise?
Ans: Yes, On Acceptance thereof
5. A contract was entered before 1st September, 1872 is governed by The Indian Contract Act, 1872
Ans: No as the Act does not apply retrospectively
6. In case of void agreements, collateral transactions are - Not affected (valid) (N 07 1M)

7. When a person without expressing his final willingness proposed certain terms on which he is
willing to negotiates he makes: - invitation to offer (N 08 1M)
8. An agreement to subscribe or contribute a plate or prize of the value of Rs. 500 or above to be
awarded to the winner of a horse race is - Valid (M 09 1M)
TRUE OR FALSE STATEMENTS
No. Statement Ans

1. There can be a contract even without consensus ad idem. False
2. An agreement which is enforceable by law at the option of one or more of the parties False
thereon but not at the option of the other or others is a valid contract.
3. A void agreement is one which is enforceable at the option of one party. False
4. When a person at whose instance the contract is voidable rescinds it, the other party False
is not liable to compensate the person rescinding the contract. This statement is
5. In case of a void contract, there is no legal remedy for the parties to the contract. True
Even the Court will not permit performance of the contract, even if the parties desire.
6. Is law of contract applicable only to a business community? False
7. Is the statement true or false: All contracts are agreements but all agreements are True
not contracts (M 12 1)
8. All agreements between parties are enforceable in a Court of Law. False
9. Agreements that do not give rise to contractual obligations are not contracts. True
10. If a person at whose option the contract is voidable rescinds it, the other party is not False
liable to compensate the person rescinding the contract.
11. Every contract is an agreement but every agreement is not contract. This statement is True
12. A specific offer can be accepted only by that person to whom offer has been made True
(N 11 1M)
13. A proposal may be revoked by the proposer before the posting of the letter of True
acceptance by the acceptor
14. An agreement with insufficiency of consideration is void ab initio; (D-08) False
15. A minor can be appointed as agent comment. (J-09) Yes
16. Death or insanity of the proposer automatically revokes the proposal. (D-10) False
17. Remaining silent with respect to the known defects is fraudulent. (J-12) False
18. A seller may deliver goods to a carrier with a right of disposal. (J-12) True
19. In business agreements, the presumption is that the parties intend to create legal True
relationship
20. A contract in which the terms are stated in words by the parties are called spoken False
contract
21. A contract which is inferred from the circumstances of the case or from the conduct True
of the parties are implied contract
22. An obligation created by law , regardless of agreement is quasi contract True
23. A contract which is wholly performed by both the parties are executory contract False
24. A contract in which the promises of both the parties have yet to be performed are True
executory contract
25. A contract in which one party has performed his obligation, but the other party has True
yet to perform his obligation are partly executory contract
26. A contract in which only one party has yet to perform his obligation unilateral True
contract
27. A contract in which both the parties have yet to perform their obligation are bilateral True
contract
28. Law of contract is not the whole law of agreement nor is it the whole law of obligation True

29. A Contract creates right in rem False
30. An agreement is a voidable contract when it is enforceable if certain conditions are False
fulfilled.
31. An agreement not enforceable by law is said to be void True
32. A contract may become void subsequent to its formation True
33. The transactions collateral to an illegal agreement are not affected in any manner False
34. A contract is an agreement plus a legal obligation True
35. Flaw in capacity to contract may arise from lack of consideration False
36. A void contract is one which is void-ab-initio False
37. In some cases, even though a contract may appear to be completed at once, its True
effects may continue
38. All void agreements are illegal False
39. There can be a contract even without consensus ad idem False
40. M mows Ls lawn without being asked b L to do so. L watches M do the work but True
does not attempt to stop him. Thus M entitle to get consideration from L
41. A promises to pay B Rs. 500 if he (B) beats C. B beats C, B entitled to recover the False
amount.
INTRODUCTION TO CONTRACT ACT (FOR ACADEMIC INTEREST ONLY)
No. Statement Ans

Law in a broader sense includes rules, regulations, guidelines, principles, which True
1.
seek to regulate relations of citizens with the State.
The laws that govern and regulate trade and commerce are commonly known as True
2.
Mercantile Laws.
Mercantile Laws deal with rights and obligations of parties to a mercantile True
3.
agreement.
The law of merchant was originally developed out of procedures and progress of True
4.
trade and commerce in England.
5. The Mercantile Laws in India are mainly based upon the English laws. True
The subject, Mercantile Laws is vast and expansive and a number of enactments True
6.
were passed.
Law includes all the rules and principles which regulate our relations with other True
7.
individuals and with the state
Every person is supposed to have the knowledge of the laws applicable in the entire False
8.
world
9. To maintain peace in the society, there should be law. True
The main object of law is to establish socio economic justice and to remove False
10.
existing balance in the socio-economic structure
11. Law is static False
Is it necessary to amend the law according to the changing requirements of the True
12.
society?
13. Every branch of law regulates and controls a particular field of activity. True
14. Mercantile law is not a part of civil law False
Business law is a broader aspect which covers both mercantile laws and commercial True
15.
laws.
16. Indian Mercantile laws is an outcome of British law True

A mercantile law regulates trade and commerce and form an integral part of the True
17.
society.
In the absence of specific law, before 1st September 1872 courts were guided by True
18.
the principles of natural justice, equity and good conscience in their decisions.
TEST YOUR KNOWLEDGE
1. Ram invites Madhuri (a well-known film actress) to his daughters engagement and dinner party.
Madhuri accepts the invitation and promised to attend. Ram made special arrangements for
Madhuri at the party but she did not turn up. Ram enraged with Madhuris behaviour, wanted to
sue for the loss incurred in making special arrangements. Ram is seeking your advice.
Hint: No. Ram cannot sue Madhuri for his loss. Because the agreement was a kind of social
nature and lacked the intention to create legal relationship.
2. Cash is withdrawn by the customer of a bank from the automatic teller machine is an example of:
Hint: Tacit Contracts are those that are inferred through the conduct of parties. Hence, this is a
tacit contract. (N 10 1M)
3. State with reason whether there is any contract made in the following case as per the Indian
Contract Act, 1872: J accepts an invitation to dinner but fails to attend
Hint: There is no contract in this case as the parties do not intend that the contract should be
attended by legal consequences.
Contract Act, 1872: J bids at a public auction
Hint: Bidding at a public auction just amounts to an offer by the bidder and till it is accepted by the
auctioneer by some customary method, as fall of hammer, no concluded contract comes into
existence.
Contract Act, 1872: J tells M that N has expressed his willingness to marry her (M).
Hint: In the instant case, there is no contract as the essential element of communication of offer
by one party and its acceptance by the other party is missing.
Contract Act, 1872: J takes a seat in public bus
Hint: As per Section 9 of the Indian Contract Act, 1872, in this case there is an implied offer to
public at large by the transport company to carry passengers from one destination to another.
When J takes a seat in the bus, there is an implied acceptance of the offer on his part, and there
comes into existence a valid contract.
7. A father and daughter agrees to go for a morning walk every day. Is there any agreement in the
following case?
Hint: No, it is a social agreement
8. X offers to donate Rs 5,000 to a orphanage. The orphanage accepts the offer. Can it recover the
amount?
Hint: No, as the agreement is without consideration and hence void
9. A sends his servant to trace his missing nephew. In the mean time A announced a reward of Rs
1000 who traces his nephew. The servant traces the nephew. Can servant claim for the reward?
Hint: No, as communication of offer was not there
10. Though a void contract is valid when it is made, subsequently it becomes unenforceable. Why?
Hint: Because of subsequent illegality or impossibility of performance.

11. A voidable contract is voidable at the option of the aggrieved party and remains valid until
rescinded by him. Is it correct?
Hint: Yes
12. There is a contract to commit crime, what type of contract is this?
Hint: Illegal Contract
13. When in a contract due to technical defects, one or both the parties cannot sue upon it, the
contract is called ---------
Hint: Unenforceable contract
14. X invites Y to dinner. Y accepts the invitation but fails to turn up. Can X sue Y for the damage?
Solution: X cannot claim any damages from Y because the agreement between X and Y is not
enforceable by law. It is a social agreement and the usual presumption in such agreement is that
the parties do not intend to create legal relationship.
15. X makes a promise to his wife Y to give her pocket money of Rs.1,000 per month. After 6 months,
he stops making the payment. Can Y claim damages from X.
Solution: Y cannot claim any damages from X because the agreement between X and Y is not
enforceable by law. It is a social agreement and the usual presumption in such agreement is that
the parties do not intend to create legal relationship.
16. X promises Y to give a diamond ring at the time of his marriage. X fails to give the ring. Can Y
claim the ring?
Solution: Y cannot claim the diamond ring because there is no consideration from Y.
17. X polished Ys shoes without being asked by Y to do so. Y does not make any attempt to stop X
from polishing the shoes. Is Y bound to make payment to X?
Solution: Y is bound to pay because he has accepted Xs implied offer by conduct (i.e. by not
stopping X from polishing the shoes).
18. X agrees to marry Y. Y dies before the marriage takes place. Is it a void agreement?
Solution: It is not a void agreement. It is a void contract because it was valid when it was entered
into but subsequently became void on the death of Y.
19. X agreed to sell a particular horse to Y. Later on, it was discovered that the horse was dead at the
time of making the contract. Advise the parties.
Solution: The agreement is void because both the parties were under a mistake of fact regarding
existence of the subject matter.
20. X agrees to let his flat to Y for use as a gambling den on a monthly rent of Rs.10,000. After 3
months. Y stops making the payment of rent. Advise X.
Solution: X cannot recover anything. The agreement between X and Y is void because the object
of the agreement is unlawful.
21. X agrees to pay Rs.1,00,000 to Y if Y does not marry throughout his life. Y promises not to marry
at all but later on X refuses to pay Rs.1,00,000. Advise Y.
Solution: Y cannot recover anything. The agreement between X and Y is in restraint of marriage
which has been expressly declared void under Section 26 of the Indian contract act-1872.
22. X threatens to kill Y if he (Y) does not sell his house to X for Rs.1,00,000. Y agrees. X borrows
Rs.1,00,000 from Z who is also aware of the purpose of the loan. What is the nature of the
agreement between X and Y, and Z?
Solution: The contract between X and Y is a contract which is voidable at the option of Y
because Ys consent is not free as it has been obtained by coercion. The contract between X and
Z is a valid contract because the object of contract (i.e. borrowing for the purchase of a house) is
lawful.

23. X agrees to pay Y Rs.1,00,000 if Y kills Z. To pay Y, X borrows Rs.1,00,000 from W who is also
aware of the purpose of the loan. Y kills Z but X refuses to pay. X also refuses to repay the loan to
W. Advise Y and W.
Solution: The agreement between X and Y is an illegal agreement because its object is unlawful.
Hence, Y cannot recover anything from X, Since the main agreement between X and Y is illegal,
W cannot recover anything from X.
24. A student was induced by his teacher to sell his brand new car to the later at less than the
purchase price to secure more marks in the examination. Accordingly the car was sold. However,
the father of the student persuaded him to sue his teacher. State whether the student can sue the
teacher?
Hint: Yes, A can sue his teacher on the ground of undue influence under the provisions of Indian
Contract Act, 1872. A contract brought as a result of coercion, undue influence, fraud or
misrepresentation would be voidable at the option of the person whose consent was caused.
25. X, a Hindu and Y, a Mohammedan enter into a contract. There is no express provision in the law of
contract in India as to certain matters of the contract. However, there are provisions in the Hindu law
and Mohammedan law. X files suit against Y under the contract. Which law will be applied by the
court for deciding the case? Which of the following is correct?
Hint: Mohammedan law because the defendant in the case is Y, a Mohammedan
26. X and Y of Jammu entered into a contract on 1st September, 2006 as per the provisions of the
Indian contract Act. They want to enforce the contract as per the provisions of this Act. Will they
succeed? Which of the following is correct?
Hint: No, because the Act does not extend to the state of Jammu and Kashmir.
27. A invites B for his sons wedding. B accepts the invitation. In this case there is an agreement but
no contract, since:
Hint: There is no intention to create legal relationship
28. A invited B and his family to dine with him on a particular night. The latter accepted the formers
invitation. On the scheduled date, B drove with his family from Karol Bagh to the residence of A in
Kalkaji (at a distance of 12 miles) and found the latters house locked. They waited up to 9 o
clock but the hosts did not return. They left the place and had their meals in wengers. The cost of
the meals and car-drive stood approximately at Rs.200. Could B claim this amount from A?
Hint: No
29. Bunti, a husband was working in Dubai. During the holidays, he and his wife Mrs.Bunti came to
India to enjoy the leave. When Mr.Bunti was to return to Dubai, his wife was advised to remain in
India, due to ill health. Mr.Bunti agreed to send a sum of Rs.3,000 per month for probable
expenses of maintenance. For some time he sent the amount but afterwards difference arose
between them which resulted in their separation and the allowance fell into arrears. Could
Mrs.Bunti recover the amount of arrears?
Hint: No, because both parties had no intention to create legal relations out of the agreement.
30. An agreement was drawn between two business firms. The agreement mentioned that this
agreement is not entered into as a formal legal agreement and shall not be subject to legal jurisdiction
in the law courts. The agreement was terminated by one of the firms and other firm brought an action
for breach of contract. Could the firm succeed? Which of the following is correct answer?
Hint: No, because the parties had expressly stated in the agreement that it shall not be subject to
legal jurisdiction.
31. X left his wife. For the purpose of making future arrangement they agreed that wife will pay
charges in connection with the mortgage of the house. After its completion X will transfer the
house to wife. It was in writing. Later on X refused to transfer the house to his wife. The wife
wants to file a case on X. Could wife succeed?
Hint: Yes
32. Over a cup of coffee in a restaurant, A invites B to a dinner at his house on a Sunday. B hires a
taxi and reaches As house at the appointed time, but A fails to perform his promise. Can B
recover any damages from A?
Hint: No
33. X and Y enter into an agreement to share the profits of the business carried on by both of them:
This agreement is ____
Hint: Valid
34. L says to J, I shall sell my house, will you buy? J says Yes, I will buy. The agreement is void due to:
Hint: Uncertainty of price
35. Bunti sold his house Taj Mahal to Babli by a written and registered deed for Rs.10 lakh and the
possession of the house was to be given one month after registration. Bunti refused to give
possession of the house to Babli. Matter went to the Court and the Court found that stamps were
short by Rs.1,000. Can Babli enforce the contract through the Court?
Hint: Yes if Babli affixes the stamps worth Rs.1,000 on the deed in order to make the contract
enforceable.
36. C orally offered to pay A an auto mechanic, Rs.50 for testing a used car which C was about to
purchase from D.A agreed and tested the car. C paid A Rs.50 in cash for his services. The
agreement between C and A is
Hint: Express, Executed, Valid
37. S agrees to sell his DVD player to R promising to deliver it on the date of payment. R promises to
pay the amount, one month hence. This is an example of:
Hint: Bilateral contract
38. Sanjiv has bought a house for a consideration of Rs.10 lakhs. Which of the following rights is
available to Sanjiv after the purchase?
Hint: He has a right against the whole world to have quiet possession of the house and enjoy it.
39. A and B entered into a contract in Agra on 1st September, 1862. They want to enforce the contract
under the provisions of the Indian Contract Act. Can they succeed? Which of the following is
correct?
Hint: No, because the Act does not apply retrospectively.
40. X invites Y for his sons birthday Y accepts the invitation. In this case there is an agreement
but no contract, since.
Hint: There is no intention to create legal relationship
41. Mr. J invited all his close friends for a dinner on the occasion of the successful completion of his
research. He wanted to take good care of his friends and accordingly he arranged a very lavish
dinner in a star hotel. On the day, to his shock and surprise the friends could not turn up to the
dinner, consequently all the dishes and money were wasted. He was terribly disappointed. In the
above situation which of the following remedies is/are available to Mr. J for the loss caused to him?
Hint: Mr. J cannot have any remedy.
42. A agrees to pay Rs.50,000 to B if he kills C. The agreement is
Hint: void
43. P agrees to pay a certain sum to Q, if Q brings on earth a star from sky. This is a:
Hint: Void agreement
44. X Promises to pay Z Rs.5,00,000 if Z can make his dead wife alive. Such an agreement is:
Hint: Void
45. A asks B a watch repairer, to repair his watch, still a legal relationship has arisen and it will create
_____
Hint: Express Contract

46. A sells his car to B and B promises to pay the price of the car within one month. Which of the
following right is available to A?
Hint: A can file a suit against B only for recovery of the price because he has right in personam.
47. A invited B to a Birthday party. B promised to attend and give A Rs.500 as a present on his
birthday. B failed to attend. What are remedies for A.
Hint: A cannot recover any damages from B
48. A invites B to stay with him during winter vacation B accepts the invitation and informs A
accordingly when B reaches A s house he finds it locked and he has to stay in a hotel. Can B
claim damages from A.
Hint: B cannot claim any damages
49. A invited B for a dinner at his house. B did not come on the appointed day. A cannot sue B as
Hint: There was no intention to create legal relationship.
50. X paid to Y 1 Lakh for purchase of a flat. Y promises to give possession of flat after one year. Ys
promise to give possession of flat is _____ consideration
Hint: Executory
THE END
Executed By: Ameenuddin Sir
Copyrights Reserved Verified By: Y.V.Raveendra Sir
To MASTER MINDS , Guntur

2. OFFER AND ACCEPTANCE
DIFFERENCES
Q.No.1. Specific offer Vs. General offer.
DIFFERENCE SPECIFIC OFFER GENERAL OFFER

A specific offer is an offer made to a A general offer is an offer made to public
Meaning
particular or specific person. at large.
It can be accepted by the person to It can be accepted by any one from
Acceptance whom it has been made. among the public who had the knowledge
of it.
It can be accepted by express or implied It is accepted only by performance of
Mode of
act. The acceptance may be given by conditions or by doing the desired act.
acceptance
performance of desired act.
It continues upto a reasonable time or till It continuous till it is accepted by any
Continuation it is accepted or revoked. person by performance of conditions of it
or till it is withdrawn.
Q.No.2. Offer Vs. Invitation to offer.
DIFFERENCE OFFER INVITATION TO OFFER

A person, expresses his willingness to A person, proposes certain terms on
be bound by the terms of his offer if the which he is willing to negotiate and
Meaning
other party to whom it is made, accepts it. invites the other party to make an offer
on those terms.
Expression Expression of final willingness. Expression of initial intention.
Leads to Acceptance of offer. Offer.
Intention to Once the offer is accepted by the Offeree Intends to do some other / further act,
bind oneself it shows intent to be bound by the offer. before becoming bound by his act.
Application filled in by a prospective Issue of prospectus by a company or by
applicant to the company for allotment of an educational institution, advertisement
Example
shares or by a student seeking admission related to auction sale.
in educational institution.
No. Statement Ans

1. An offer to be valid must be communicated to the person to whom it is made. True
X owes Rs.500 to his friend Y. Y assures X that he will not file a suit against him.
2. True
Does this assurance of Y constitute proposal in the legal sense of the term?
When there is a counter-offer, the Original Offeror may accept the terms of the
3. True
counter-offer made by the Offeree and form a valid contract
Crossing of letters of offer in the post for the sale and purchase of the same article
4. False
constitutes a valid agreement.
Two offers which are similar in all respects made by two different parties to the
5. False
same person are known as cross offers
6. An acceptance must be conditional. False
7. Mental acceptance is also valid acceptance. False
A change in law or circumstance rendering the original offer unlawful or
8. True
impossible, will lead to termination of the offer
A Tenderer can withdraw his tender before its final acceptance by a work or
9. True
supply order.
IPCC_33e_ M.Law_Differences & T/F Statements _Offer & Acceptance __________ 12
Communication of offer and acceptance can be made only when the parties are
10. False
face to face.
Communication of an acceptance is complete as against the acceptor when it is
11. False
put in a course of transmission
12. Acceptance may in some cases precede an offer False
B (mentioned in the preceding example) has posted his letter of acceptance on a
particular day and two days thereafter sends a telegram revoking his acceptance.
13. No
But the telegram reaches A after the letter. Will the acceptance be deemed to
have been revoked ?
The communication of revocation is complete as against the person to whom it is True
14.
made, when it comes to his knowledge
Under Indian Contract Act, revocation of acceptance may be made even after
15. True
sending the letter of acceptance, but before it reaches the Offeror.
An acceptance can be revoked at any time before the letter of acceptance reaches
16. True
the offeror.
A proposal may be revoked by the proposer before the posting of the letter of
17. True
acceptance by the acceptor. (N 12 1M)
An offer can be revoked at any time before its acceptance is complete as against the
18. True
offeror.
An offer can be revoked at any time before its acceptance is complete as against the
19. False
offeree.
20. Forbearance of a party from doing something also constitutes a Valid Offer. True
21. A bid at an auction is an express offer. True
An advertisement offering reward to anyone who finds the lost dog of the
22. False
advertiser is an invitation to offer.
23. Acceptance may be communicated by any person. False
24. Silence cannot amount to offer by conduct. It is True
An offer accepted without knowledge does not confer any legal rights on the True
25.
acceptor.
26. An invitation to offer is offer False
A proposal is revoked by the failure of the acceptor to fulfill a condition precedent
27. True
to acceptance
In order to convert a proposal into a promise, the acceptor to fulfill a condition
28. True
precedent to acceptance
An acceptance may be revoked at any time before its communication is complete
29. True
as against the acceptor and not otherwise
A proposal when accepted becomes a valid contract even though acceptance is
30. False
not in the prescribed mode
31. A counter offer constitutes an acceptance of an offer False
32. A proposal when accepted becomes a contract True
33. A tender does not amount to an offer True
34. A specific offer can be accepted only by that person to whom offer has been made True
A proposal may be revoked by the proposer before the posting of the letter of
35. True
acceptance by the acceptor
36. An offer made in a joke is an offer False
37. An advertisement to sell a thing by auction is an invitation to offer True
38. There is a counter offer when the offeree makes some query False
39. When an offer is made to the world at large, it is called a specific offer False
40. A social obligation if it is accepted creates legal obligation False
41. An advertisement for an auction sale amounts to an offer to hold such auction sale False
42. Acceptance once made cannot be revoked at all False
43. Acceptance in some cases precede an offer False

44. Mental acceptance is not an acceptance at all True
If the letter of acceptance is posted in due time, the acceptor is not responsible for
45. True
any casualties in the post office
A contract by telephone has the same effect as an oral agreement enter between
46. True
the parties when they are face to face
47. Advertisement given by garment store is valid offer False
P says to Q , J will sell you a camera. P owns three different types of cameras of
48. True
various prices. Is not a valid offer
A tells B in the conversation with him that he will give Rs. 10,000 to anyone who
49. marries his daughter with his consent. B marries As daughter with As consent. False
Hence B is entitle to recover Rs. 10,000 from A
A sees a rate book displayed in a shop. It is labeled first edition Rs. 15. A enters
the shop and puts Rs.15 on the counter and asks for the book the book seller does
50. not agree to sell saying that the real price of the book is Rs.50 and that it has been False
marked as Rs.15 by mistake. In this case book seller is bound to sell the book at
Rs.15
A offers by a letter to sell his car to B for Rs. 15000. B at the same time offers by a
51. letter to buy As car for Rs. 15000. The two letters cross each other in the post. In False
this case a concluded contract between A and B
S offer to sell B his car for Rs. 50,000. T standing nearby says, I will take is if B
52. True
does not take it B is not interested in a car. S is not bound to sell the car to T
A intends to make an offer to B and tells C about it. C inform B of the
contemplated offer but A himself does not communicate the offer to B. B accepts
53. True
the offer and informs A about the acceptance. No contract is concluded between A
and B
A enters a taxi and directs the driver to take him to a club. The driver refuses to
54. take him because the trip is too short. In this case contract concluded between A True
and driver
When J takes a seat in public bus, an implied contact arises in between J and
55. True
travels
J tells M that N has expressed his willingness to marry her (M). in the given
56. False
case a contract created between J and M
57. A bid in a public auction creates binding contract False
When a coin put in the slot of a platform ticket vending machine at the railway
58. True
station, a valid contract came into existence
59. Specific offer can be accepted only by that person to whom offer has been made True
TEST YOUR KNOWLEDGE

1. X advertises in a newspaper that he would pay Rs. 1,00,000 to anyone who traces his missing
son. Y traced that boy and claimed the amount of reward. State whether Y is entitled to receive
the amount of reward if (a) he did not know about the reward, (b) if he knew about the reward?
Ans:
a) Y is not entitled to receive the amount of reward because there can be no valid acceptance
without the knowledge of the offer. [Leading case: Lalman Shukla v. Gauri Dutt]
b) Y is entitled to receive the amount of reward because Y has accepted the general offer by
tracing the missing son. [Har Bhajan Lal v. Harcharan Lal]
2. Mr. X promises to pay Rs. 1,000 per month to Mrs. X but fails to pay the promised amount Mrs. X
filed a suit against her husband for breach of this agreement. Will she succeed?
Ans: She will not succeed because it was a domestic agreement and the parties never intended
to create any legal relations.

3. X Ltd. was appointed as an agent by Y Ltd. by an agreement. One of the clauses of the
agreement provided, This agreement is not entered into as a formal or legal agreement and shall
not be subject to legal jurisdiction in the law courts. Is this agreement a valid contract?
Ans: This agreement is not a legally binding contract because there was no intention to create
relations, by the parties.
4. X wrote Y, his would be son-in-law, that his daughter would have a share of what he left after the
death of his wife. Is the letter a valid offer by X to Y?
Ans: The letter was a mere statement of intention and not an offer at all.
5. X, a broker of Mumbai wrote to Y, a merchant of Ghaziabad stating the terms on which he is
willing to do business. Is the letter a valid offer by X to Y?
Ans: The letter was a mere statement of intention and not an offer at all.
6. A notice that the goods stated in the notice will be sold by tender. Is the notice a valid offer to
sell?
Ans: The notice that the goods stated in the notice will be sold by tender, is mere a statement of
his intention but not an offer and it is an invitation to offer.
7. X, gave an advertisement in a newspaper that a sale of office furniture by auction will be held at 2
p.m. On 9th August 1997 at Pragati Maidan, Stall No. 420, New Delhi. Y from Mumbai reached
New Delhi on the appointed date and time but X had cancelled the auction sale. Advise Y.
Ans: Y cannot file s suit against X for his loss of time and expenses because the advertisement
was merely an invitation to offer and not an offer to sell.
8. X delivered a coat to Y, a dry cleaner for dry cleaning and took the receipt. On the back of the
receipt, certain conditions were printed in English language. One of the conditions printed on the
back was the liability of the dry cleaner company shall be limited to the 50% of the cost of the
goods. X never looked at the back of the receipt. X coat was lost and X claimed the actual value
of the coat. Discuss the legal position in each of the following alternative cases:
Case (a) If there was nothing on the face of the receipt to draw the attention to the condition
printed on the back side and X was a graduate in English.
Case (b) If on the face of the receipt, the words See Back were printed in English but X did not
read it.
Ans:
Case (a) X was entitled to claim compensation for the loss of his coat because there was no
indication on the face of the ticket to draw his attention to the special terms printed on the back of
the ticket.
Case (b) X was entitled to claim only 50% of the cost of the coat because there was sufficient
notice on the face of the ticket as to the existence of the conditions.
9. Mr. X and Mrs X hired a room in a hotel for a week. When they entered the room, they found a
notice on the wall disclaiming the owners liability for damages, loss or theft of articles. Some of
their items were stolen. Discuss the legal position.
Ans: The owner of the hotel was liable because the special terms (i.e., notice) were
communicated after the formation of the contract.
10. X sold his business to Y but this fact was not known to an old customer Z. Z placed an order for
certain goods to X by name. Y supplied the goods to Z, is there a valid contract?
Ans: There was no contract at all between Y and Z because Zs offer was a specific offer to X
and X alone could accept it.
11. X offered to sell his car for Rs. 1,00,000 to Y. Y replies I will pay Rs. 90,000 for it. X refuses to sell at
this price. Y then attempts the original offer but X refuses to sell his car. Discuss the legal position.

Ans: Ys first reply is a counter offer and not an acceptance of Xs offer and has put an end the
the original offer. After having made the counter offer. Y cannot accept the original offer which has
already come to an end. Hence, X is not bound to sell his car to Y.
12. X offered to sell two plots of land to Y at a certain price. Y accepted the offer for one plot. Is there
a valid contract?
Ans: This is not a contract at all because the acceptance was not valid as it was not for the whole
of the offer.
13. X made an offer to buy shares of Y Ltd. on 10th January 1997 but the allotment was made on 10th
July 1997. Is X bound by the acceptance?
Ans: X is not bound by the acceptance because the acceptance was not given with in a
reasonable time.
14. X of Agra sends a letter by post to Y of Delhi offering to sell his car for Rs.1,00,000. This letter is
posted on 1st January and reaches Y on7th January Y sends his acceptance by post on 10th
January but X receives this letter of acceptance on 15th January. Answer each of the following
questions.
a) When is the communication of offer complete?
b) When is the communication of acceptance complete as against the offeror?
c) When is the communication of acceptance complete as against the acceptor?
d) If X sends a telegram on 8th January revoking his offer, and this telegram reaches Y before
the letter of the acceptance is posted. Is revocation of offer valid?
e) If Y sends a telegram on 14th January revoking his acceptance and this telegram reaches X
before the letter of acceptance is received by X. Is revocation of acceptance valid?
Ans:
a) The communication of offer is complete on 7th January because the letter containing the offer
reaches the offeree on 7th January.
b) The communication of acceptance is complete as against the offeror on 10th Jan. because the
letter of acceptance is posted on 10th January.
c) The communication of acceptance is complete as against the acceptor, on 15th Jan. because
the letter of acceptance is received by the offeror on 15th January.
d) Xs revocation is valid because X can revoke his offer at any time before the letter of
acceptance is posted by the offeree.
Ys revocation is valid because Y can revoke his acceptance at any time before the letter of
acceptance is received by the offerer.
15. Yatra travels operates AC buses from Mumbai to Nasik. The bus is standing at the Bus stop in
Mumbai waiting for passengers travelling to Nasik and is ready for departure. There is an ____ for
passengers to board the bus. (D 11)
Hint: Implied offer
16. X offers to sell his house to Y for Rs.10 Lacs and states in his letter that the offer would be
considered as accepted if acceptance is not communicated within a certain time. Here, the letter
of X would: (Au 07)
Hint: Not amount to proposal
17. A who was badly in need of money offered to sell his piano worth Rs.8,500 to B for Rs.5,000. B
refused to buy. A gradually lowered his price until Rs.2,500 was reached, which B accepted. Before
the piano was delivered A received an offer of a larger sum from X and he refused to carry out the
contract with B claiming that the consideration was inadequate. Is A liable to pay damage to B for
failure to carry out his part of contract? (N 07)
Hint: Yes, A is liable to pay damages to B for failure to carry out his part of the contract
18. Xs brother runs away from the house. Y who is an employee of X offers to search for the brother
and goes out for the purpose. In the absence of Y, X offers a reward of Rs.100 to any one who
can either find out the brother or give clues enabling X to find him out. Y gets the brother back to
X in ignorance of the offer for reward. Can Y now claim the reward?
Hint: No
19. X makes an offer to Y in these terms: I will sell my horse for Rs.5,000 if you give me your mule.
Y agrees in writing to buy the horse but refuses to make over the mule to X. Does any binding
agreement come into existence?
Hint: No
20. X offers to take a house on lease for 2 years at Rs. 20,000 per annum if the house was Put into
thorough repair and drawing rooms handsomely decorated according to present style. Is it a valid
offer?
Hint: No
21. T bought a steamer ticket. On its back certain conditions were printed. One of the conditions
excluded the liability of the company for loss, injury or delay to the passenger or his luggage. There
was no indication on the face of the ticket that certain conditions were written on the back of it. Ts
luggage was lost on the way because of the negligence of the companys servants. T wants to
recover the loss from the company. Can he recover?
Hint: Yes
22. Arun had deposited a bag in the cloak room of a railway station by paying Rs.50. On the face of
the ticket, issued to him were inscribed see reverse for terms & conditions. Clause 10 of the
printed terms & conditions limited the liability of the company for loss of a baggage to Rs.100. The
bag was lost and Arun claimed Rs.650 as its value.
Hint: Arun was bound by the conditions on the back of the ticket even if he had not read them
23. Banta writes on the wall of his sweets shop, whoever proves the use of any ghee other than pure
deshi ghee in his sweets, will be paid a prize of Rs.1,000, This is a ____
a) General statement to promote the sale
b) General statement to create faith among the customers
c) Valid offer which can be accepted by any person and can claim prize
d) Invalid offer
Hint: Valid offer which can be accepted by any person and can claim prize.
24. Santa offers to supply books to a college at a discount of 20 per cent of printed price of the book
during an academic session. The college accepts the offer. This gives rise to ____
Hint: A standing offer
25. A offers B to supply Books at Rs.100 each. B accepts the same with condition of 10% discount. It
is___ (D 13)
Hint: Counter Offer
26. A writes to B, I am willing to sell my car as it is today for Rs.40,000. B replies, I can buy it for
Rs.35,000. A keeps quiet. Subsequently, B writes. I will buy the car at Rs.40,000. Is it binding
promise?
Hint: No
27. An auctioneer in Mumbai advertised in a newspaper that a sale of office furniture would be held
on December 23, 2003. A broker came from Hyderabad to attend the auction, but all the furniture
was withdrawn. The broker from Hyderabad sued the auctioneer for loss of his time and
expenses. Which of the following statement(s) is correct?
Hint: The broker will not get damages from the auctioneer for loss of his time and expenses.

28. R sent a telegram to T writing will you sell your house? Telegraph lowest cash price. The
defendant also replied by a telegram Lowest price for the house, Rs.50,000. The plaintiff
immediately sent a last telegram stating, We agree to buy your house for Rs.50,000 asked by
you. T refused to sell the property at that price. R contended that T has quoted the minimum
price, which should be treated as offer, and he has accepted the offer. Is it a offer?
Hint: No
29. A sells his business to B without disclosing this fact to his customers. After sometime, C, an old
customer, sends an order for supply of goods to A by name. B the new owner, supplies the goods
to C. Is C bound to accept the goods? Which of the following is correct?
Hint: No, because offer made to A cannot be accepted by B.
30. B sends acceptance through telegram to A and it was lost in transit due to mishandling of
postman. The contract is: (D 09)
Hint: Valid
31. A, by a letter dated 25th Dec., 1998, offers to sell his house to B for Rs.10 lakhs. The letter
reaches B on 27th Dec., 1998, who posts his acceptance on 28th Dec., 1998 which reaches A on
30th Dec., 1998. Here, the communication of offer is complete on:
Hint: 27th Dec 1998
32. A sent a proposal for sale of goods to B through a letter. However, letter was still in transit. A sent
the letter of revocation of offer to B which was received by B before the first letter reached B. (J 09)
Hint: The revocation is valid as it reached B before the first letter reached B.
33. X makes a proposal to Y, which Y accepts. But before the acceptance came to the knowledge of
X, Y revokes his acceptance by telegram. When communication of revocation of acceptance is
effective? (M 07)
Hint: When the telegram is received by X (i.e when the content of the telegram brought to the
knowledge of X).
34. On the 5th of a month X makes an offer to Y, by a letter, which reaches Y on 6th. On the 7th, Y
posts his letter of acceptance.
Mean while, on the 6th X posts a letter to Y revoking the offer. On seeing it Y sends a telegram to
X on 8th confirming the acceptance given through his letter of the 7th. Discuss the legal effects of
three letters and the telegram:
Hint: The contract is concluded between X and Y on 7th when Y posts the letter of acceptance
35. A, by a letter dated 15th March which reaches B on 17th March, offers to sell his car to B. B posts
his acceptance on 20th March, which reaches A on 22nd March. In this case.
Hint: B can revoke his acceptance at any time till his letter reaches A.
36. M offers to sell his house to N for Rs.1,40,000. N says to M that if he agrees to keep the offer
open for 10 days he (N) will pay him Rs.1,000. M agrees. M cannot revoke the offer before the
expiry of 10 days as N has obtained an option to purchase the house within 10 days. If M revokes
the offer before expiry of 10 days, can he be sued?
Hint: M can be sued
37. Bs son is lost. A goes in search of Bs son. Meanwhile, B makes an offer to pay Rs.1,000 to the
finder of his son. A finds Bs son. Can A claim Rs.1,000 from B?
Hint: No, A had no knowledge of the offer.
38. A enquires B, Will you purchase my cow for $ 100? B replies, I shall purchase your cow for $
100 provided you purchase my parrot for $ 120. In this case: (N 06)
Hint: B has made a counter offer to A Copyrights Reserved

39. A offers to sell his house to B for Rs.10 lakh and B accepts the offer and promises to pay the
price in five installments There arises ___
Hint: counter offer
40. X offered through an advertisement in the Statement to sell certain antique on a particular day at
a particular place in Delhi. In response to the advertisement a person travelled all the way from
Bombay to Delhi and found to his immeasurable annoyance that the place was locked and there
was no such projected sale. He wanted to sue X on this account. Would it be advisable for him to
take this course of action?
Hint: No
41. In an auction sale, X is the highest bidder. The auctioneer accepts the offer by not speaking but
striking the hammer on the table. This amounts to: (N 06)
Hint: Implied acceptance
42. S offered a reward to anyone who returns his lost dog. F brought the dog to S without having
heard of the offer. Which of the following is correct? (J 08)
Hint: F is not entitled to the reward
43. A, by a letter, offers to sell his T.V to B for Rs.10,000. Without knowing As offer, B, by a letter,
offers to buy the same T.V. from A for Rs. 10,000. In this case
Hint: No binding contract comes into existence as Bs letter is merely a cross offer
44. A offers B to sell his house for Rs.30 lakhs and directs him to send his acceptance only by e-mail.
B sends a letter of acceptance by post. This is ___
Hint: Valid acceptance if A does not reject.
45. H, in response to Gs offer, sends a letter of acceptance by post. As regards G, communication is
complete when -
Hint: The letter is posted by H
46. X makes an offer to Y on 20th by a letter which reaches Y on 22nd.Y posts letter of acceptance on
24th which reaches X on 27th. The communication of acceptance is complete as against Y on
Hint: 27th
47. A Transport Carrier accepted goods for transport without any condition. Subsequently, he issued
a circular to the owners of goods limiting his liability for goods. Is this circular binding on the
owners of goods?
Hint: No, these were not communicated at the time of contract for transport
48. X proposes by a letter sent by post to sell his house to Y. Y accepts the proposal by a letter sent
by post. The letter of acceptance is in the course of transmission to X,Y _____
Hint: May revoke his acceptance at any time before the letter communicating the acceptance
reaches X but not afterwards
49. A proposes by letter to sell a house to B at a certain price. A revokes his proposal by telegram.
The revocation is complete as against B When ____.
Hint: B receives the telegram
50. A offers to sell his house to B, who agrees to purchase it subject to approval by Bs solicitors.
Comment.
Hint: Bs statement is absolute but qualified.
THE END
Copyrights Reserved Executed By: Ameenuddin Sir
To MASTER MINDS , Guntur Verified By: Y.V.Raveendra Sir

3. LEGAL OBJECT AND CONSIDERATION
No. Statement Ans

1. Past consideration is no consideration in India. False
2. Is past consideration valid in India True
3. Consideration must be adequate. False
Where the consideration has moved from the promisee but not at the request of No
4.
the promisor, can the promisor enforce the promise?
5. Can consideration be offered by a person other than the promisee? Yes
6. Can a promise to pay money to a witness served with a notice be enforced? No
A agreed to give his house to school for its library on the condition that the library
7. would be named after him. The management accepted the condition. Yes
Subsequently, A changed his mind. Could the management enforce the contract?
A promised to pay a subscription of Rs.5,000 to the Gandhi Memorial Fund. He
8. No
later changed his mind. Could the amount be recovered from A ?
9. Forbearance to sue is recognised as a valid consideration. True
As scaffolding fell down on his neighbor, B, who was injured. B threatened to
bring suit against A unless the latter paid him Rs.500 within ten days as
10. Yes
compensation for his injuries. A promised but later refused to pay, claiming that
there was no consideration for his promise. Can B recover the amount?
As car breaks down in G.T. Road. He asks B, a passing motorist, to tow the car
11. to the nearest garage. B tows the car and in return, A promises to pay B at the True
garage Rs.200 as payment for this trouble. Is A bound by his promise?
Can the trustees recover the promised amount from X if they have incurred any
12. True
liability on the faith of Xs promise?
13. No consideration is necessary to create contract of agency. True
B writes to A. At the risk of your own life, you saved me from a serious motor
14. Yes
accident. I promise to pay you Rs. 1.000. Can A recover
A finds Bs purse and gives it to him. B promises A to give him Rs. 100.Can
15. Yes
Arecover
A, who is Bs friend, seeks the help of a few persons in putting down a fire in Bs
16. Yes
house. B promises to give A Rs. 100 for his timely help.Can A recover
17. There can be a stranger to a consideration but not a stranger to a contract. True
18. An agreement the object or consideration of which is unlawful, is void. True
A agrees to marry Cs daughter in consideration of dowry to be paid by C. Can A
19. False
enforce the promise in a court ?
X, a father having two minor sons agreed to transfer their guardianship in favour
of Mrs. Y and also agreed not to revoke the transfer. Subsequently, he filed a suit
20. Yes
for the recovery of the boys and declaration that he was the rightful guardian. Can
he recover?
21. Dowry provided voluntarily by the father of daughter is not unlawful. No
22. Is restitution allowed in case of illegal agreements? False
23. Consideration must move at the desire of the promisor. True
24. A promise to compensate a voluntary act done in the past is valid. True
25. Can a stranger to a contract normally sue thereon ? False
If the object or the consideration of an agreement is not directly forbidden by law, but it
26. False
indirectly defeats the provisions of any other statutory law, the agreement is not void.
27. In case of illegal agreements, the collateral agreements are valid. False
28. Where there is an express or implied trust created between settler and trustees Yes
IPCC_33e_ M.Law_Differences & T/F Statements _Legal Object And Consideration _20
by beneficiary; can he sue on a contract even if he is not a party to the contract:
29. Consideration must move from the promise False
30. A promise to pay a time barred debt is good consideration True
31. Every agreement of which the object or consideration is unlawful is void True
32. Insufficiency of consideration is immaterial to the validity of the contract True
33. An agreement to divide the gain obtained by fraud is void True
34. Consideration may be present or future , not past False
35. A promise to pay time barred debt is not enforceable False
36. Consideration may move even from a person who is not a party to the contract True
In case of alternative promise one branch of which is legal and the other illegal
37. False
the whole contract cannot be performed (Nov 2008)
Maintenance and champerty are void in England but not in india, till they are not
38. True
opposed to public policy
39. Compromise of dispute claims is good consideration for a contract Ture
40. A promise to subscribe to charity is a void contract False
41. Consideration must result in a benefit to both the parties to a contract False
A act constituting consideration must have been done at the desire or request of
42. False
the promisor or third party
Consideration must be somethigh to which the law attaches value and it must be
43. False
equivalent in value to the promise made
Forbearance to sue is a kind of abstinence which is recognised as a good
44. True
consideration
A person who is not a party to a contract cannot sue upon it even if the contract is
45. True
for his benefit
A stranger in whose favour a charge on some specific immovable property has
46. True
been created may enforce it.
47. A promise to contribute to charity is supported by consideration False
48. Promise to pay the national defence fund is enforceable False
49. Gratuitous promise can be enforceable False
50. A promise by philanthropist to donate a specified sum cannot be enforceable True
Kamala promises Ramesh to lend rs. 50,000 in lieu of consideration that Ramesh
51. False
gets kamalas marriage dissolved and he himself marries her is valid contract
Ramamurthy who is a citizen of india, enters into an agreement with an alien
52. True
friend is valid contract
An agreement with an alien friend is valid but an agreement with alien enemy is
53. True
void (M 12 1M)
TEST YOUR KNOWLEDGE
1. A fire broke out in Xs house. He offered to pay an amount of Rs 5,000 to anyone who brought out
his trapped son Y safe. A fireman brought out Y alive. Is X bound to pay?
Hint: Yes, the fireman had done more than what his official duty demanded
2. R owed to M Rs. 5,000. The debt was barred by the Limitation Act. R signed a written promise to
pay Rs 2,000 to M on account of this debt. Can M claim it?
Hint: Yes, as per Section 25(3) of the Indian Contract Act,1872
3. R gave his property to his daughter in return of her promise that she would pay Rs. 2000 P.M. to
her uncle all his life. Later, she refused to pay. Can uncle recover money from him?
Hint: No, because she gave no promise to the uncle
4. Study the following example and answer the questions.
i. A promises to sell his house to B for Rs 5,00,000/- Here who is the promisor and who is the
promisee?
ii. B agrees to buy a house from A for Rs 5,00,000/- Here who is the promisor and who is the
promisee?
Hints: (i) A (Promisor), B (Promisee)], (ii) B( Promisor), A (Promisee)
5. A pays Rs. 5000/- requesting B to deliver certain quantity of rice to which B agrees. What is the
position of consideration as executed or executory regarding A and B?
Hint: For A executed & for B executory
6. While a third party to consideration can sue, a third party to a contract cannot sue. In the case of
family settlement, if the terms of settlement are reduced in writing, members of the family who
were not a party to the settlement can also enforce the claim. Is it correct?
Hint: Yes, it is an exception given under Para 1.11 of the study module
7. Should consideration be adequate to the value of the promise?
Hint: No, as per the Para 1.10 point (v) of the study module
8. X promises to donate Rs. 10,000 towards the repairs of temple. X does not pay. Can the trustees
recover the promised amount from X (a) if they have not incurred any liablility on the faith of the
Xs promise, (b) if they have incurred any liability on the faith of this promise.
Ans:
Case (a):
Decision: The trustees cannot recover the promised amount from X.
Reason: The agreement is void in the absence of any consideration
Case (b):
Decision: The trustees can recover the promised amount from X.
Reason: The agreement is valid because it was supported by consideration in the form of a
detriment to the trustees who had incurred liability on the faith of the promise made by X.
9. X, a Hindu husband executed a registered document in favour of Y, his wife, whereby he
promised to pay her Rs. 1,000 per month. Later, X did not pay. Can Y recover from X (a) if this
promise was made without any disagreement and quarrels between them? (b) if this promise was
made after disagreement and quarrels between them?
Ans: Section to which the given problem relates: Section 25(1)
Case (a):
Decision: Y could recover from X.
Reason: The agreement was valid because it was made on account of natural love and affection
between X and Y.
Case (b):
Decision: Y could not recover from X.
Reason: The agreement was void because it was not made on account of natural love and
affection between X and Y.
10. X supports Ys infant son without being asked to do so. Y promises to pay X Rs. 10,000 for doing
so. Later, Y refuses to pay. Can X recover the promised amount from Y?
Ans: Section to which the given problem relates: Section 25(2).
Decision: X can recover the promised amount from Y.
Reason: X has done something which the promisor was legally bound to do.
11. X owes Y Rs. 10,000 but this debt is time barred. In a birthday party of Z, who is a friend of X and Y,
X promises Y to pay this debt. Later, X refuses to Y. Can Y recover the promised amount from X?
Ans: Section to which the given problem relates: Section 25(3)
Decision: Y cannot recover anything from X.
Reason: Xs promise was neither in writing nor signed by him or his agent.
12. X gifted Rs. 50,000 to Y his neighbours wife by executing a registered gift deed without any
consideration. There is no near relation between X and Y. Is this gift valid?
Ans: Section to which the given problem relates: Explanation I to Section 25.
Decision: The gift is valid.
Reason: A completed gift needs no consideration and need not be a result of natural love and
affection or near relation.
13. X promises to make a gift of Rs. 50,0000 to Y, his neighbours wife. Is this promise valid?
Ans: Section to which the given problem relates: Explanation I to Section 25.
Decision: A promise to gift is not valid.
Reason: This agreement is void for want of consideration and at the same time, there is only a
promise to gift and not a completed gift.
14. X, who was badly in need of money offered to sell his car worth Rs. 1,00,000 to Y for Rs. 10,000.
Before the car was delivered. X received an offer of Rs. 20,000 and refused to carry out the
contract on the ground of inadequacy of consideration. Is X liable to y for damages?
Ans: Section to which the given problem relates: Explanation 2 to Section 25.
Decision: X is liable to Y for damages.
Reason: An agreement to which the consent of the party is freely given is not void merely
because the consideration is inadequate.
15. X, a client promises to pay Y, his advocate Rs. 10,000 in addition to his fees if he succeeds. X
succeeds but refuses to pay Rs. 10,000. Can Y recover from X?
Ans:
Decision: Y cannot recover the additional sum of Rs. 10,000.
Reason: Xs promise to pay the additional sum was without any consideration. The consideration
must be something which the promisor is not already bound to do. Here, Y was bound to render
the best of his services under the original contract.
[Leading case: Ramchandra Chintaman v. Kalu Raju]
16. X promises to drop prosecution which he has instituted against Y for robbery and Y promises to
restore the value of the things taken. Is this agreement valid?
Ans: Section to which the given problem relates: Section 23.
Decision: This agreement is void. Copyrights Reserved
Reason: The object of this agreement is unlawful. To MASTER MINDS , Guntur

17. X promises to supervise the business on behalf of Y, a licensed manufacturer of some
permissible chemicals and some contraband items. Y promises to pay X a salary of Rs. 30,000
per month. It this agreement valid?
Decision: The agreement is void.
Reason: The object of Xs promise and the consideration for Ys promise being in part unlawful.
18. X promises to pay Y Rs. 1,00,000 if Y secures him an employment in the public service. Is this
agreement valid?
Reason: The agreement is opposed to public policy as it is for the sale of public office.
19. X promises to pay Rs. 1,00,000 to Y in order to induce him to retire so as to provide room for Xs
appointment to the public office held by Y. Is this agreement valid?
Decision: Section to which the given problem relates: Section 23.
Reason: The agreement is opposed to public policy as it is for the sale of public office.
20. P pays Rs.4,000 to Q and Q promises to deliver him 45 bags of cement within a fortnight. What is
the nature of consideration in this transaction?
Hint: Ps payment is executed and Qs promise is executory
21. As father had died leaving a house to two sons. They agreed to partition the house which did not
admit the division in exactly equal parts and one of the sons had agreed not to construct a door at
a certain place in his portion of the house. In a dispute, the agreement was challenged on the
ground that it was without adequate consideration. Could the challenge be upheld?
Hint: No
22. Chinna promises Munna, his lawyer, to pay an additional sum if the suit was successful. The suit
was declared in favour of Chinna but he refuses to pay the additional sum. Here, Chinna's
promise to pay additional sum is:
Hint: Void, as munna is already bound to do so
23. 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: (N 07)
Hint: This is enforceable against the mother because such a promise is valid and binding under
the Indian Contract Act
24. Rs son was missing. N who was a distant relation of R made a search for the missing son, found
him and brought him back. R then promised N that he would compensate him for the services
rendered. Later R refuses to keep his promise. Could N enforce it in a Court ?
Hint: Yes
25. Can A recover in the following cases?
1. B gets into difficulties while swimming in the river Ganga and cries for help. A hears the cry,
removes his coat and dives into water and rescues B. B who is full of gratitude, promises to
pay A Rs. 200 but fails to do so.
Hint: Yes
2. While B is away on holiday, a storm damages the roof of Bs house, and his neighbour, A,
carries out the necessary repairs. On his return, B promises to pay A Rs. 200 for the work
done and materials supplied.
Hint: Yes
26. A gives to B Rs.300 to be given to C. B informs C that he is holding the money for him. But
afterwards B refuses to pay the money. C sues B for the money. B contends that C cannot sue as
he was not a party to the contract. Will the contention of B be upheld ?
Hint: No
27. X agrees to pay Y Rs.5,000 if Y delivers a judgement in his favour in a suit. Y does so but X
refuses to pay any money. In this context which one of these gives the correct legal position of the
agreement? (M 07)
Hint: The agreement is void being opposed to public policy
28. A and B agree: (i) that A shall sell a house for Rs.50,000; but (ii) that if B uses it as gambling then,
he shall pay a Rs.11 lakhs for it. Which set of these reciprocal promises is a contract?
Hint: To sell the house and to pay there of Rs.50,000.
29. X promises Y, to pay Rs.25,000 if he murders Z. If Y commits murder, he cannot recover the
amount from X. If X has already paid the amount and Y fails in murdering Z, X cannot recover the
amount why?
Hint: No restitution allowed in illegal agreements.
30. P engages Q for construction of a building and promises to pay reasonable remuneration. This
promise is______
Hint: Not enforceable, as there is uncertainty in consideration.
31. B received summons to appear at a trial court in a civil suit against A. A promised to pay some
amount to B, being compensation for loss of time during his attendance. The promise is void,
since __
Hint: There is no consideration as it is his duty to attend the court.
32. G paid Rs.1,00,000 to H to influence the head of the Government Organisation in order to provide
him some employment. On his failure to provide the job, G sued H for recovery of the amount.
Which of the following is correct? (MQB) (D 13)
Hint: G cannot recover the amount. Because, the agreement is void due to unlawful
consideration.
33. An agreement by which a debtor, who borrowed Rs.300, promised to do manual labour without
pay for the creditor, so long as the debt was not repaid in full. The agreement was held to be void
because ___
Hint: It implies injury to the liberty of a person
34. A B tyre Co. Ltd sold tyres to a dealer C, who sold those to A, a sub-dealer on the condition that
those tyres would not be sold at a price lower than the list price fixed by A B tyre Co. Ltd and if the
tyres were sold at a price lower than the list price a penalty of Rs. 2 for every tyre sold below the
list price would be recovered as damages. A sold five tyres below the list price. A B tyre Co. Ltd
filed a suit against C. Is AB tyre Co. Ltd. entitled to maintain the suit?
Hint: No since A B tyre Co. Ltd was not a party to the contract
35. Where an orphanage wishes to enforce a promise made by a philanthropist to donate a specified
sum.
Ans: A gratuitous promise such as a promise to donate money lacks consideration and cannot be
enforced.
36. Where there is a family settlement in writing and a family member who is not a party to the
settlement wishes to enforce his claim.
Ans: As per the judgment in Shuppu Vs Subramanian 33 Mad. 238, a family settlement in writing,
may be enforced by a member of the family who was not a party to the settlement.
THE END
4. CAPACITY TO CONTRACT
1. Can a minor become shareholder of a company?

Ans: Yes, if certain conditions are satisfied.
2. Can a minor be held personally liable for the necessaries supplied to him?
Ans: No, under Section 68, only minors property is liable.
No. Statement Ans

1. A mortgage deed was executed in favour of a minor. Can the minor get a decree for Yes
the enforcement of the Mortgage?
2. Suman, age of 17 years, enter into a contract for the sale of property but breaches
No
the contract before performance. Can buyer file any claim in this condition?
3. A contract with a minor is voidable at the option of the minor False
4. An agreement with a minor can be ratified after he attains majority (M 11 1M) False
5. Can a minor, though incompetent to contract, receive a benefit arising there under? True
6. A minor can be an agent and bind his principal / parents or guardian acting in the
True
capacity of principal.
7. X, a guardian, on behalf of Y, a minor, entered into a contract with Z for the
Yes
purchase of a movable property for the benefit of the minor. Is the contract valid?
8. Rule of estoppel cant be applied on minor. True
9. In any case, court shall not award any compensation to the other party even in case
True
of a fraudulent misrepresentation of his age by the minor.
10. Does act of restitution apply to minors? False
11. X, on attaining majority, gave a promissory note in the satisfaction of one executed
No
by him for money borrowed when he was a minor. Is this promissory note valid?
12. A an adult, said to M, a minor: I will not pay the commission to you for selling my
No
magazines. You are a minor and cannot force me to pay. Is A right?
13. A grocer supplied monthly rations for five months to B who was aged 17 years and
Yes
5 months. B having failed to pay the bills for the supplies, the grocer decided to sue
him for the realisation of his dues. Could he succeed had he done so?
14. A minors liability for necessaries supplied to him arises after he attains majority age False
15. X, a minor entered into contract with Y to supply food and clothes to his dependents. Y
Yes
supplied the same but X refused to pay for the same. Can Y recover anything?
16. A minor who wanted to become a professional billiards player entered into a
contract with a famous billiards player and agreed to pay him a certain sum of No
money to learn the game. Is he liable to pay?
17. A, a minor purchased 11 fancy waist coats and other clothes while he was already
having sufficient clothes to wear. Now the supplier wants to recover the price. Can No
he recover?
18. A supplies some articles of food to B, the wife of C, who is a lunatic. C has assets
Yes
worth Rs.5,000. Can A proceed against the assets of C?
19. Continuing the above situation, can A proceed against Cs assets, if C is not a
Yes
lunatic but he is a minor?
IPCC_33e_ M.Law_Differences & T/F Statements _Capacity to Contract __________26

20. A minor can act as principal. False
21. The contracts entered into on behalf of a minor by his guardian cannot be enforced
False
against the minor.
22. A person who is usually of sound mind cant enter into a contract when he is of True
unsound mind.
23. X sells the goodwill of his retail store to Y for Rs. 5 lac and promises not to carry on
False
the same business forever and anywhere in India is a valid agreement
24. A minor and major can enter into an agreement of partnership False
25. A minor can be promise True
26. A minor can ratify an agreement on attaining majority False
27. A person usually of sound mind, but occasionally of unsound mind is unable to
False
make a contract
28. A minor cannot be appointed as an agent. (M 07) False
29. An agreement enter into with a minor may be ratified on his attaining majority
False
(M 09, M 11, M 14)
30. A minor is personally liable for the purchase of necessaires False
31. A contract by an idiot is void-ab-initio True
32. The contractual capacity of company is regulated by its article of association False
33. There is nothing which debars a minor from becoming a payee or a promise in
Ture
contract
34. If a minor has received any benefit under a void agreement, he can be asked to
False
compensate or pay for it
35. An agreement of an idiot, like that of a minor, True
36. An agreement with an alien friend is valid but an agreement with an alien enemy is
True
void
TEST YOUR KNOWLEDGE

1. X, executed a mortgage in favour of Y, a minor who has advanced the money. Is this mortage valid?
Hint: The mortgage is valid and hence the money advanced to X can be recovered, as a minor
can be a promisee. (Raghva Chariar v. Srinivasa)
2. A promissory note duly executed in favour of minor is void.
Hint: Incorrect: As per the Indian Contract Act,1872 ,minor is not competent to contract, but he
can be a beneficiary. In this case, the minor is a beneficiary. Hence the Promissory Note is not
void and the minor at his option can enforce it.
3. S, a minor by fraudulently representing himself to be a major, induced L to lend him Rs.4 lakhs.
He refused to repay it and L sued him for the money. The contract is: (N 06)
Hint: Totally void and S is not liable to repay the amount.
4. A minor, lent Rs.100 to B at the market rate of interest on the basis of a promissory note. A year
thereafter, when he had attained majority, he filed a suit against B for the recovery of the amount
thereon. B contended that since A was minor at the time the loan was advanced, the contract was
void. Would B succeed?
Hint: No
5. D, a minor, entered into a contract for borrowing a sum of Rs.20,000, out of which lender paid him
Rs.8,000. D executed mortgage of property in favour of the lender. The mortgage is -
Hint: Totally invalid

6. A, a minor lends Rs.10,000 and gets a mortgage deed executed in his favour. Is the borrower
liable to repay the money? Which of the following is correct?
Hint: Yes, because A is a promisee in the agreement and minor promisee can enforce the
agreement.
7. A minor fraudulently represented to a money lender that he was of full age and executed a
mortgage deed for Rs.10,000. Has the money lender any right of action against the minor for the
money lent or for damages for fraudulent misrepresentation?
Hint: No
8. Ankit, aged 17 years, falsely representing himself to be of 22years, enters into an agreement to
sell his property to Praveen and receives from Praveen a sum of Rs.10,00,000 in advance. Out of
this sum, Ankit buys an imported car worth Rs.5,50,000 and spends the rest on a pleasure trip to
france. After Ankit attained majority, Praveen sues him for the conveyance of the property or, in
the alternative, for the refund of Rs.10,00,000 and damages. The agreement between Ankit and
Praveen is:
Hint: Void ab initio as it is a contract with a minor.
9. X, who is a lunatic, accepts a proposal for the sale of one of his plots of land to Y for Rs.5,000/-
during one of his sane intervals. Before Y could take possession of the land X lapsed into
insanity again. Which one of the following depicts the correct legal position?
Hint: The contract is valid and enforceable.
10. A is aged 17 years. He enters into an agreement with B for hiring out certain machinery belonging
to B. After the agreement was signed, A backs out of the agreement and B wants to enforce the
same. Will B succeed?
Hint: No, B will not succeed
11. M, a minor aged 17, broke right arm in a cricket match. He engaged a physician to set it. Does the
physician have a valid claim for his services. Choose the best alternative.
Hint: The physician has a valid claim for his services which are included in the Necessaries
THE END


5. FREE CONSENT
DIFFERENCES
Q.No.1. Coercion Vs. Undue influence. (N 05 6M, N 11 8M)
DIFFERENCE COERCION UNDUE INFLUENCE

It involves the physical force or threat. It involves moral or mental pressure.
Meaning The aggrieved party is compelled to
make the contract against his will.
It involves committing or threatening to No such illegal act is committed or a
commit an act forbidden by Indian Penal threat is given.
Nature
Code or detaining or threatening to
detain property unlawfully
It is not necessary that there must be Some sort of relationship between the
Relation between
some sort of relationship between the parties is absolutely necessary.
parties
parties.
Who can apply & Coercion need not proceed from the Undue influence is always exercised
on whom it can promisor nor need it be directed against between parties to the contract.
be applied? the promisor.
The contract is voidable at the option of Where the consent is induced by undue
Effect on the party whose consent has been influence, the contract is either voidable
Contract obtained by coercion. or the court may set it aside or enforce it
in a modified form.
In case of coercion where the contract is The court has the discretion to direct the
rescinded by the aggrieved party, as per aggrieved party to return the benefit in
Restoration
Section 64, any benefit received has to whole or in part or not to give any such
be restored back to the other party. directions.
Q.No.2. Fraud Vs. Misrepresentation
DIFFERENCE FRAUD MISREPRESENTATION

To deceive the other party by hiding There is no such intention to deceive the
Intention
the truth. other party.
Knowledge of The person making the suggestion The person making the statement believes it
truth believes that the statement is untrue to be true, although it is not true.
The injured party can repudiate the The injured party is entitled to repudiate the
Rescission of
contract and can claim damages. contract or sue for restitution but cannot
contract
claim damages.
The party using the fraudulent act Party can always plead that the injured party
Means to
cannot secure or protect himself by had the means to discover the truth.
discover the
saying that the injured party had means
Truth
to discover the truth.
No. Statement Ans

1. X is having two horses, a white and another black. X offers to sell his black horse
to Y. Y not knowing that X has two horses, thinks of white horse and agrees to buy No
the horse. Is this agreement valid?

2. X beats Y and compels him to sell his house for Rs.1,00,000. Y agrees to sell his
house to Y. Y signs the necessary documents for the sale of house and receives Yes
the payment. Later on, Y wants to avoid the contract? Will he succeed?
3. X, by a threat to commit suicide induced Y, his wife, and Z, his son, to execute a
release deed in favour of his brother in respect of certain property. Are Y and Z No
bound by such release deed?
4. A falsely represents to B that 500 tons of nails are made annually at As factory and
Yes
thereby induces B to buy the factory. Is the contract voidable at the option of B ?
5. A and B, being traders enter upon a contract. A has private information of a
change in prices which would affect Bs willingness to proceed with the contract. Is No
a bound to inform B?
6. As son had forged Bs name to a promissory note. B under threat of prosecuting
As son, obtains a bond from A for the amount of the forged note. B sues on bond. No
Will he succeed?
7. The aggrieved party can rescind the contract on account of fraud. Can he also
Yes
Claim damages from the other party?
8. The aggrieved party in case of active fraud loses the right to rescind the contract if
True
he had the means of discovering the truth by ordinary diligence.
9. X sells horse to Y knowing well that the horse is vicious. X does not disclose the
No
nature of the horse to Y. Can X be made liable to Y for the transaction?
10. A mere attempt to deceive is fraud. False
11. If there is no damage, there is no fraud. True
12. In a contract of insurance, keeping silent as to material facts amounts to fraud. True
13. A person who had the means of discovering the truth with ordinary diligence can
False
avoid the contract on the ground of misrepresentation. This statement is ___
14. Where a party to a contract perpetrates fraud or misrepresentation, but the other
party is not, in fact, misled by such fraud or misrepresentation, the contract cannot True
be avoided by the latter.
15. Where misrepresentation is intentional, deliberate and willful, with an intent to
True
deceive the other party, such Misrepresentation = Fraud.
16. The aggrieved party in case of misrepresentation can rescind the contract even if
False
he had the means of discovering the truth by ordinary diligence.
17. A and B make contract grounded on the erroneous belief that a particular debt is
No
barred by the Indian Law of Limitation. Is the contract voidable?
18. When the consent of a party is not free, the contract is Void. False
19. The Indian Penal Code must be in force in place where the coercion was
False
employed.
20. A contract is void if the consent of a party to an agreement is obtained by undue
False
influence
21. Where in a contract one party is in a position to dominate the will of another and
uses his superior position to obtain unfair advantage over the other, the contract is No
said to be induced by coercion
22. The undue influence is a kind of mental coercion as opposed to physical True
coercion.
23. Undue influence can be exercised by a stranger to a contract. False
24. When the consent of a party is obtained by fraud, the contract is illegal. False
25. In case of fraud, the aggrieved party can set aside the contract but cannot recover
False
damages.
26. Mere silence amounts to fraud where the person keeping silent is under a duty to
True
speak
27. The party whose consent is obtained by fraud can exercise his option either to
True
rescind the contract or to affirm (i.e., accept) it, only once.
28. Misrepresentation results not only from misstatement of facts but also from
True
suppression of material facts.
29. Misrepresentation need not be made directly to the person involved. A wrong
statement of facts made to a third person with an intent to communicate it to the True
party involved amounts to misrepresentation.
30. Ignorance of law is no excuse. True
31. The contract will be void if both the parties are under a mistake as to foreign law. True
32. A person is required to have knowledge of all laws in the whole world. False
33. Contracts under unilateral mistake are voidable if such mistake is caused by the
True
fraud or misrepresentation of the other party.
34. Coercion involves moral or mental pressure. False
35. Is there any criminal liability under coercion? True
36. The aggrieved party can rescind the contract on account of misrepresentation.
No
Can he also claim damages from the other parties?
37. In the case of fraud, the person making the representation believes it to be true False
38. Mere silence as to facts likely to affect the willingness of a person to enter into a
True
contract is no fraud
39. A contract is not voidable merely because it was caused by one of the parties to it
True
being under a mistake as to a matter of fact
40. When both the parties to an agreement are under a mistake of fact as to a matter
True
essential to the agreement, the agreement is void (N 10 1M)
41. An attempt to deceive which does not deceive is not fraud True
42. Where consent is caused by fraud or misrepresentation, the contract is voidable at
True
the option of the aggrieved party
43. Merely because a contract was caused by one of the parties to it being under a
True
mistake as to a matter of fact, it is not voidable
44. When a person positively asserts that a fact is true when his information does not
False
warrant it to be so, though he believes it to be true, there is fraud
45. Fraud exists when it is shown that a flase representation has been made
False
unintentionally
46. In a contract between doctor and patient undue influence is general presumed True
47. If there is an error in cause the contract is voidable True
48. If there is an error in consensus, then the agreement is void True
49. If there is fraudulent misrepresentation as to the character of a document, the
True
contract is void
50. A promise made without the intention of performing it amounts to innocent
False
misrepresentation
51. The unlawful detention of any property of a person to obtain his consent to a
True
contract amount to coercion
52. When there is no consent, there is no contract True
53. If a person enter into a contract by making a mistake of law through the
True
inducement of another person, he may avoid the contract
54. If both the parties believe the subject-matter of a contract to be in existence, which
True
in fact is non-existent, the contract is void
55. A unilateral mistake is not allowed as a defense in avoiding a contract True
56. Misrepresentation is a false statement which the person making it honestly
true
believes it be true
57. The aggrieved party loses the right to rescind the contract for fraud if a third party
True
has acquired right in the subject matter of the contract in good faith an for value
58. A representation is true when it is made, but to the knowledge of the party making
it, becomes untrue before the contract is entered into. If it is not corrected, the True
other party can correct it.
59. A contract induced by fraud is voidable at the option of either party to the contract False
60. Mere silence as to facts to affect the willingness of a person to enter into a
True
contract is not fraud
61. There is a presumption of undue influence in the relationship of husband and wife False
62. A threat amounting to coercion necessarily proceed from a party to the contract False
63. Suicide is no crime True
IPCC_33e_Practical Questions_Free Consent _______________________________31
64. A threat to commit suicide amounts to coercion True
65. Sohan agrees with mohan to sell his black horse. Unknown to both the parties not
False
to carry on such business forever and anywhere in india is a valid contract
66. A threatened B to shoot if he does not lend him Rs. 2000 and B agreed. Contract
True
between A and B is Voidable (RTP M 14)
TEST YOUR KNOWLEDGE

1. X threatens to kill ys son if Y does not sell his house to X for Rs. 1,00,000. Y signs the necessary
documents for the sale of house and receives the payment. Later on, Y wants to avoid the
contract. Will he succeed?
Hint: As per Sections 15 and 72. Y can avoid the contract on the ground of coercion but he will
have to return Rs. 1,00,000 which he has received from X. Ys consent is not free as it has been
obtained by committing an act which is forbidden by the Indian Penal Code.
2. X, an agent, refused to hand over the account books of Y, the principal to the new agent
appointed in his place unless the principal released him from all liabilities. The principal had to
given a release deed as demanded. Is this release deed binding upon the principal?
Hint: As per Section 15. Y can avoid the contract on the ground of coercion. Ys consent is not
free as it has been obtained by unlawful detaining of the property (i.e. account books). [Leading
case: Muthia v. Karuppan]
3. The Government of a State gave a threat of attachment against the property of Y for the recovery
of a fine due from ys son. Y paid the fine. Advise Y.
Hint: As per section 15. Y could recover the amount paid on the ground of coercion. Ys consent
is not free as it has been obtained by threatening to detain his property unlawfully. [Leading case:
Bansraj v. The Secretary of State]
4. X, a poor Hindu widow, was in great need of money to establish her right to maintenance. She
took a loan of Rs. 1,500 bearing a rate of interest of 100% p.a. Is this transaction an
unconscionable?
Hint: As per Section 16(3). This transaction appears to be an unconscionable. Not only the rate of
interest is too high but also the lender has used the circumstances of poor Hindu widow to obtain
an unfair advantage.
5. X chartered a ship to Y which was described in the Charter party and was represented to him as
being not more than 2,800 tonnage register. It turned out that the registered tonnage was 3,045
tons. Y refused to accept the ship in fulfillment of the charter party. Is Ys action valid?
Hint: As per Section 18. Y was entitled to avoid the Chartered party because X made erroneous
statements as to tonnage.
6. X entered into a contract for the hiring of a room for witnessing the coronation procession of
Edward VII. Unknown to both the parties, the procession had already been cancelled. Is this
contract valid?
Hint: As per Section 20. This agreement is void on the ground of impossibility of performance of
contract. Both the parties are under a mistake as to the possibility of performance.
7. X sold oats to Y by sample and Y, thinking that they were old oats, purchased them. In fact, the
oats were new. Is Y bound by the contract?
Hint: As per Section 22. Y is bound by the contract. A contract is not voidable because of
unilateral mistake (i.e. mistake by only one party to the agreement) as to the matter of fact. Here,
Y will have to blame himself for ignorance or wrong judgment.
8. A woman by falsely misrepresenting her to be wife of a well-known Baron 9a millionaire), obtained
two pearl necklaces from a firm of jewelers on the pretext of showing them to her husband before
buying. She pledged them with a broker, who in good faith paid her Rs. 1,00,000. A suit was filed
by the jeweler against the broker. Discuss the legal position.
Hint: As per Section 72. Broker did not get a good title and hence he must return the goods.
There was no contract between the jeweler and the woman as jeweler never intended to contract
with her.
9. S knew that on account of his criticism of the plays in the past, he would not be allowed entry to
the performance of a play at the theatre. The managing director of the theatre gave instructions
that no ticket should be sold to S, S however, obtained a ticket through one of his friends. On
being refused admission to the theatre, he sued for damages for breach of contract. Discuss the
legal position.
Hint: As per Section 22. S is not entitled to claim any damages. There was no contract between
the theatre company and S as the theatre company never intended to contract with S.
10. X, an old illiterate man, was induced to sign a Bill of Exchange by means of a false representation
that it was a mere guarantee. Discuss the legal position.
Hint: As per Section 22. X is not liable for the bill of exchange. X never intended to sign a bill of
exchange
11. A young widow was forced to adopt a boy under the threat preventing the body of her husband,
who had just died, from being removed for cremation. Is this adoption valid under law?
Hint: No
12. A, enfeebled by disease or age, is induced by B, his attendant, to agree to pay B an unreasonable
sum for his professional services. Can B enforce the agreement ?
Hint: No
13. A being indebted to B, the money-lender of his village, contracts, a fresh loan on terms which appear
to be unconscionable. Will it be presumed that the contract was induced by undue influence ?
Hint: Yes
14. A advanced money to his son B, during his minority. Upon Bs coming of age, A obtains by use of
his parental influence, a bond from B, for a greater amount than the sum due in respect of the
advance. Can A enforce the loan?
Hint: No
15. A applies to 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. Is the contract induced by undue influence ?
Hint: No
16. C is a medical attendant of V, a man enfeebled by disease or age. V was induced by Cs
influence and agreed to pay some unreasonable sum for his professional services. Here, C is said
to employ:
Hint: Undue Influence
17. A 90 year old illiterate villager executed a gift deed in favour of his relatives who looked after his
daily needs and his cultivation. The relatives were in a position to dominate his will. The gift deed
is voidable at the option of:
Hint: The 90 year old illiterate villager.
18. A, a solicitor, sold certain properties to one of his clients B. B filed a suit upon A claiming that the
property was considerably over-valued and that his consent was caused by undue influence. Is
the claim valid?
Hint: Yes
19. A fraudulently informs B that his house is free from encumbrances. B thereupon, buys the house.
The house is subject to a mortgage. What are the rights of B? (N 07)
Hint: The Contract is voidable at the option of B and he may avoid the contract and get back his
money.
20. A man, by the name of Sohan, called at a jeweler shop and chooses a costly ring. He tendered in
payment by cheque, which he signed in the name of Garish, a person of credit. He took the ring and
pledged it to Bola Nath, who had no notice of fraud. Can the jeweler recover the ring from Bola Nath?
Hint: No, the jeweler cannot recover from Bola Nath
21. Where a party, whose consent was obtained by fraud, cannot be put in a position in which he
would have been if the representation made had been true, then he cannot rescind the contract.
Hint: True
22. M, a medical practitioner, truly represented to B, a prospective buyer, that his practice was worth
Rs.20,000 a year. Five months later when B bought the practice, it had considerably gone down
on account of M's serious illness. M did not disclose this fact to B. Can B avoid the contract?
Hint: Yes, B can avoid the contract.
23. A by misrepresentation, leads B erroneously to believe that 500 maunds of Indigo are made
annually at As factory. B examines the accounts of the factory, which shows that only 100
maunds of Indigo have been made. After this B buys the factory. Can the contract be avoided on
the ground of misrepresentation?
Hint: No
24. A told B that C would be the director of a company. A, believed this information to be true, but he
had obtained it not directly from C but from another person D. The information proved to be false. In
this case, As statement falls in the category of
Hint: Positive unwarranted statement, misrepresentation.
25. A, a widow was entitled to certain occupancy rights. She remarried and thought that she lost her
occupancy rights due to her second marriage. Under this mistake, she agreed to take the lease of the
same land from Z. the Zamindar. Later on, she came to know about her occupancy rights. Now, A
wanted to revoke the lease agreement with Z. Can she revoke?
Hint: No
26. H contracted with NIC Corporation for the erection of a number of houses. In calculating his price for
the houses, H by mistake deducted a particular sum twice over. The corporation affixed its seal to
the contract, which correctly represented its intention?
Hint: The contract is binding
27. A sold some land to B. At the time of sale both the parties believed in good faith that the area of
the land sold was 10 hectares. It, however, turned out that the area was 7 hectares only. Is the
contract of sale void? If yes on what ground?
Hint: Void because of bilateral mistake.
28. M, after declining an offer from P to buy certain property for Rs.2,000, wrote to P offering to sell it
for Rs.1,250. This was a mistake for Rs.2,250. P, immediately on receipt of the offer, wrote
accepting it. Is P entitled to enforce the contract
Hint: No, because he was aware of the mistake.
29. J was the highest bidder at an auction sale of public plot. At the time when he made his bid, he
believed that certain field was a part of the plot offered for sale. There was no misdescription or
ambiguity in the particulars of the plot. Is J bound by the contract?
Hint: Yes
30. Ds son forged Bs name on a Promissory Note. B under threat of persecuting Ds son and
exercising undue influence, obtains a bond from D for the amount of the forged note. The Bond
Hint: Can be set aside by the Court
31. A intends to sell his land to B. A honestly says to B "my land produces 10 tonnes of wheat per
acre. A believes this statement to be true although he did not have sufficient grounds for the
belief. Later, it appears that the land produces only 7 quintals of wheat, This is a case of
Hint: Misrepresentation

32. A contracts with B to buy a necklace, believing it is made of pearls whereas in fact it is made of
imitation pearls of no value. B known that A is mistaken and taken no steps to correct the error.
Now A wants to cancel the contract on the basis of fraud. Which of the following statements is
correct?
Hint: A cannot cancel the contract
33. Mr.X purchased a used computer from Mr.Y thinking it as a computer imported from England,
Mr.Y failed to disclose the fact to Mr. X On knowing the fact Mr. X wants to repudiate the contract.
Which of the following statement (s) is correct?
Hint: Mr. X cannot repudiate the contract
34. A contracts B to sell a piece of silk. B think it is Japanese silk, A knows that B thinks so but A
knows that it is English Silk. A does not correct Bs impression. Subsequently B discovers that it is
not Japanese silk. Can he reject the contract? Which of the following is correct?
Hint: No, because A was not under a duty to correct the impression
35. A had offered B, a price of Rs.10, 00,000/- for Bs flat. But B was not ready to sell the flat at all. A
says to B that I shall kill you if you dont agree to sell me your house for Rs.10,00,000. B
thereafter did all that was the desire of A in order to save his life. What is immediate answer?
Hint: A has applied coercion.
36. A student was motivated by his teacher to sell his car (value being Rs.10,00,000/) for
Rs.5,00,000/-. The student sold the same at the desired price of the teacher. The student can sue
the teacher on the ground of
Hint: Undue Influence.
37. Sanju took a medical insurance from Deadly Diseases Insurance & Claim Corporation of Asia
(DDICCA) through one of its agent, Manju. Sanju signed whatever documents were placed before
her by Manju in good faith. The documents contained the fact that Sanju was healthy, fit and fine
whereas she was actually suffering from chronic asthma and acute allergy. Sanju did not take
care to suggest the changes in the documents and the policy was issued based on the above
submissions.
Hint: Sanju has a duty to speak and disclose the above issues.
38. A believes blue colour to be black colour, for any reason whatsoever. He has a garment shop. He
sells one blue colour shirt to B, representing it to be black colour. B knows nothing about colour. B
believes A and accepts the blue colour to be black colour, Later on Bs mother explains B that the
colour of the shirt is actually blue and not black. It is a clear case of
Hint: Misrepresentation
39. A buys an article thinking it is worth Rs.10,000 while it is actually worth Rs.5,000 only. Decide
what will be the remedy to A?
Hint: The agreement cannot be avoid on the ground of mistake
40. Mr.X buys a ring from Mr.Y at a low price employing undue influence and sells the ring to Mr.Z
who purchased against consideration and without knowing of Mr.Xs undue influence. Can Mr.Y
recover the ring from Z? (D-10)
Hint: No, Y cannot get the ring from Z
THE END
Copyrights Reserved

6. OTHER ESSENTIAL ELEMENTS , VOID AGREEMENTS, CONTINGENT CONTRACTS &
QUASI CONTRACTS
DIFFERENCES
Q.No.1. Contracts of insurance Vs. Wagering Agreement.
DISTINCTION CONTRACTS OF INSURANCE WAGERING AGREEMENT

Insurable Person having an insurable interest can Parties to a wagering agreement
interest insure his life or property. need not have insurable interest.
In case of contracts of insurance except
In case of wagering agreement, the
Actual amount life insurance, the actual amount payable
actual amount payable is usually
payable need not necessary be the full amount for
fixed.
which the property is insured.
Beneficial /
These are regarded as beneficial to the These cant be considered to be
against public
public policy. beneficial to the public.
policy
Such agreements do not tantamount to
Being chance oriented, these are
Gamble gambling as they involve the element of
closer to gambling.
investment and protection.
Q.No.2. Wagering Agreement Vs. Contingent Contract
The points of distinction between the two may be noted as follows:

1. A wagering agreement is a promise to give money or moneys worth upon the determination or
ascertainment of an uncertain event.
A contingent contract, on the other hand, is a contract to do or not to do something if some event,
collateral to such contract does or does not happen.
2. In a wagering agreement, the uncertain event is the sole determining factor, while in a contingent
contract the event is only collateral.
3. A wagering agreement is essentially of a contingent nature whereas a contingent contract may
not be of a wagering nature.
4. A wagering agreement is void whereas a contingent contract is valid.
5. In a wagering agreement, the parties have no other interest in the subject matter of the
agreement except the winning or losing of the amount of the wager. In other words, a wagering
agreement is a game of chance. This is not so in case of a contingent contract.
Are the following agreements valid?

1. A sells the goodwill of his business to B and agrees with him to refrain from carrying on a similar
business within specified local limits.
Ans: Yes, so long as B or his successor in interest carries on like business there in.
2. A, a shopkeeper or Kalkaji market, agrees to pay B who is his rival in the business a sum of
money as compensation, if B closes his business there.
IPCC_33e_ M.Law_Diff. & T/F Statements _Void Agreements, Contingent & Quasi Contracts __36
Note: Question given as per Study Material is A, a shopkeeper or Kalkaji market, agrees to pay
B who is his rival in the business a sum of money as compensation, if B closes his business
there. But in our opinion, the given question shall be modified as A, a shopkeeper of Kalkaji
market, agrees to pay B who is his rival in the business a sum of money as compensation, if B
closes his business there. Clarification yet to be received. If there is any change in question we
will inform you accordingly. Until then follow the question and answer given in Study Material i.e.
option B.
3. All agreements in restraint of trade are void and there are no exceptions to this,
Ans: False, the Indian Contract Act, and Partnership Act contains exceptions.
4. Does section 68 create personal liability?
Ans: No, it does not create any personal liability. Only the estate is liable.
5. X sells the goodwill of his retail store to Y for ` 5 lac and promises not to carry on the same
business forever and anywhere in India. Is the agreement. Void (M 10 1M)
6. A contract of insurance is Contingent contract (N 07 1M)
7. A contingent contract is Valid (M 08 1M)
No. Statement Ans

1. A contract to do a certain act which is not permitted by law is void-ab-initio. True
2. A void agreement is one which is enforceable at the option of one party. False
3. Kishore a Doctor practicing in Bangalore employed Hari an assistant for 3 years.
Hari was restrained by the terms of the agreement from practicing on his own
account during the term of the agreement. Hari left the service of Kishore after one No
year and started practicing on his own account in the Banglore itself. Can Hari
practice on his own account?
4. X sold his business including goodwill to Y for Rs.5,00,000 by an agreement. The
agreement provided that X shall not engage himself in the similar business in the
Yes
whole of India for the next 10 years, X started the same business in the same city
after 1 month. Is the agreement between X and Y comes under restraint of trade?
5. An agreement which cuts short the period of limitation prescribed by the Law of
False
Limitation is valid and enforceable.
6. An express agreement between parties to vest jurisdiction to refer any dispute to a
False
specified Court amounts to contracting against statute and hence void
7. Are agreements extending the period of limitation prescribed by the limitation act
False
u/s 23 void?
8. A agrees to sell B my white horse for Rs.5,000 or Rs.10,000. Is this agreement
False
valid?
9. Where there is a difficulty in interpretation, it cannot be considered as vagueness
True
for making an agreement void u/s 29.
10. A promise made by the loser or wager to pay the amount lost in consideration of
Yes
the winners forbearance to post him as a defaulter. Is this Agreement Valid?
11. Transactions incidental to wagering agreement are not void. True
12. In the States of Gujarat and Maharashtra, Collateral Transactions to a Wagering
True
Agreement are also tainted with illegality.
13. A lends Rs.100 to B in Delhi in order to enable him to bet with C as to the result of
True
a horse-race. Can A recover money from B?
14. Crossword competitions, Games of skill, a subscription or contribution or an
agreement towards any play, a contract of insurance, share market transactions. Yes
Are these contracts exceptions to section 30?
15. In a Wagering Agreement, money deposited with a person to be paid to the party
True
winning cannot be recovered by the winner.
16. A wagering agreement is essentially of a contingent nature. True
17. A agrees to sell to B a horse for Rs.20,000 if it wins a race and for Rs.500 if it
does not. The horse won the race. B refuses to buy the horse and pay Rs.20,000. False
B is bound to buy the horse?
does not. The horse won the race. True
A refuses to sell the horse? A is not bound to sell the horse?
does not. The horse won the race. False
B agreed to buy the horse for Rs.10,000. A is bound to sell the horse for that price?
20. A contract to purchase a horse if the horse proved lucky, is a contingent contract False
21. A agrees with B to discover treasure by magic. Is the agreement valid ? False
22. Contracting against statute is valid. False
23. Quasi-Contracts are called Contracts in facts and not Contracts in law. False
24. An absolute contract is one in which the promisor binds himself to performance in
True
any event without any conditions.
25. Where goods are sent on approval basis, the contract is a contingent one. True
26. A contract of insurance is a contract of Indemnity, except Life insurance. True
27. An agreement which does not restrain a person from marrying altogether but simply
False
restrains him from marrying a particular person or from marrying for a fixed period is valid.
28. An agreement which prevents a person from marrying for a fixed period only, is
False
valid
29. A agreed to sell to B 100 tonnes of oil at a price to be fixed by C. This agreement
False
is void
30. In case there is vagueness or uncertainty as regards the terms of contract, the
Contract itself would be void and unenforceable within the meaning of Sec. 29 of True
the Act.
31. An agreement is not a wager if either of the parties may win but cannot lose or
True
may lose but cannot win.
32. The stakeholder has already paid the money to the winner. Can loser recover it
No
from him?
33. Can the loser recover his deposit from the stakeholder in a wagering agreement? Yes
34. In quasi-contracts, the promise to pay is based on express agreement. False
35. Mr. A pays the arrears of rent of his neighbour B, just to avoid a struggle between
No
B & his landlord. Can A recover rent from B?
36. Any person who voluntarily makes a payment on behalf of another, can recover it. No
37. P left his carriage on Ds premises. Ds landlord seized the carriage to recover his
rent. P paid the rent to obtain the release of his carriage. Can P recover anything Yes
from D?
38. A finder of lost goods can hold the goods against the whole world except the true
True
owner.
39. A person to whom money has been paid, or anything delivered, by mistake or
True
under coercion must repay or return it to the person who paid it by mistake.
40. Are the things necessary as per the status of the incompetent persons also
True
included in necessaries?
41. Every Contingent Contract is valid and enforceable until it becomes void. True
42. Every Contingent Contract is necessarily a Wagering Agreement. False
43. Contracts contingent upon the non-happening of uncertain future event cannot be
False
enforced if the happening of that event becomes impossible.
44. The performance of a contingent contract must not depend upon mere will of the
True
promisor
45. In a contingent contract the future event is only a collateral event. True
46. An agreement entered with a minor may be ratified on his attaining majority. False
47. A minor and a major can enter into an agreement of partnership. False
48. An agreement with an alien friend is valid but an agreement with an alien enemy
True
is void.
49. Insurance contract are basically wagering contracts. False
50. A Contingent agreement to do or not to do anything if an impossible event
True
happens is void
51. A quasi contract is a consensual contract duly make by the parties False
52. A finder of lost goods is a bailee True
53. Amount paid under mistake of law cannot be recovered False
54. Ram sells the goodwill of his shop to Shyam for Rs. 40,000 and promises not to
False
carry on such business forever and anywhere in india is void agreement
55. In an agreement between prakash and girish, there is a condition that they will not
False
institute legal proceedings against each other without consent is a valid contract
56. The principle that no one shall be allowed to enrich himself at the expense of
True
another is known as Quasi contract
57. In case of void agreement collateral transaction are unenforceable False
58. A contract of insurance is a wagering agreement False
59. When a contract becomes void, the party who has received any benefit under it
True
must restore it to the other party
60. A voidable contract becomes void when the party whose consent is not free
True
rescinds the contract
61. A agreed to buy a radio from B on hire-purchase terms. The terms are not
False
specified. It is a valid contract
62. A lends Rs. 100 to B in Delhi in order to enable him to bet with C as to the result of
True
horse-race. A entitled to recover money from B
63. An absolute contract is one in which the promisor binds himself to performance
True
in any event without any conditions.
64. Where goods are sent on approval, the contract is a contingent one True
65. Contingent contract to do or not to do anything if a specified uncertain even
False
happens within a fixed time, became void if the event happens
66. In a contingent contract the future event is only collateral True
67. Supervening circumstances which render performance of promise more difficult
False
and expensive excuse the promisor from performance of his promise
68. A agrees to contract a swimming pool for B for Rs. 80,000. The payment is to be
made by B only on the completion of the pool. Contract between A and B is false
contingent one
TEST YOUR KNOWLEDGE
1. M purchased a wrist watch from N, both believed that it was made with gold plaque. Hence, M
paid a very high price for that. Later it was found that the wrist watch was not made so. State the
validity of the contract.
Hint: The contract is absolutely void as there is a mutual mistake of both parties. In case of
bilateral mistake of essential fact, the agreement is void ab-initio, as per Section 20 of the Indian
Contract Act, 1872.
2. Where both the parties to an agreement are under mistake as to a matter of fact, which is
essential to the agreement, the agreement is:
Hint: Void - If both the parties to an agreement are under a mistake (i.e. the mistake is bilateral)
regarding a matter of fact, which is essential to the agreement, the agreement is void (Couturier
Vs. Hastie).
3. An agreement to subscribe to or contribute a plate or prize of the value of Rs 500 or above to be
awarded to the winner of a horse race is________
Hint: Valid: According to the exception stated under Section 30 of the Indian Contract Act, 1872,
a subscription, or contribution or agreement to subscribe or contribute, made or entered into for or
towards any plate, prize or sum of money, of the value or amount of five hundred rupees or
upwards, to be awarded to the winner of any horse race, shall not be deemed to be unlawful.
4. A and B enter into a contract believing wrongly that a particular debt is not barred by law of
limitation. Is this a valid contract?
Hint: Yes, because there is no mistake of fact but of law only
5. A & B are partners in a firm. They agree to defraud a Government department by submitting a
tender in the individual name and not in the firm name. Is this a valid agreement?
Hint: No, it is a void agreement as it is a fraud on the Government department
6. An old man with poor eyesight endorsed a bill of exchange thinking it to be a mere guarantee. Is
the old man liable under the bill?
Hint: No, because there is a unilateral mistake about a fundamental matter by oldman
7. P advanced money to D a married woman to enable her to obtain a divorce from her husband.
She also promised to marry him after divorce. Is P entitled to recover the amount in case of
breach of his promise.
Hint: P was not entitled to recover the amount from D as the agreement was against good morals
8. Two persons refer to a ship and refer to it in the contract but each of them had a different ship in
mind though of the same name. Whether it will be valid and why?
Hint: No, no identity of mind
9. A agrees to pay Rs 100 to B on B stealing the purse of C. B manages to steal the purse of
C and A does not fulfill his promise. Whether court can compel A to pay B Rs100?
Hints: No, because contract is illegal
10. S, a seller of imitation jewellery, sells his business to B and Promises, not to carry on business in
imitation jewellery and real jewellery. The agreement is: (N 06)
Hint: Valid with regard to imitation jewellery and void as regards real jewellery
11. S instructs T to enter on his behalf into a wagering transaction. T loses in the transaction and
pays from his pocket. He thereafter sues S for reimbursement. Can S raise plea of wager?
Hint: No, as agents transaction is collateral to the main transaction which is void is not affected.
However, S can succeed in states of Gujarat and Maharastra only.
12. A transport company refuses to deliver certain goods to the consignee, except upon the payment of
an illegal charge of carriage. The consignee pays the sum charged in order to obtain the goods.
Discuss the rights of the consignee as against the transport company.
Hint: The consignee is entitled to recover the amount form the transport company [(Sec. 72)]
13. Krishna was the owner of a warehouse. Ram imported certain goods and kept them in krishnas
warehouse without paying the customs duty. The customs authorities made a demand on
Krishna, and he paid the duty on those goods. Krishna wants to recover the amount from Ram.
Can Krishna recover?
Hint: Yes
14. A agreed to repair Bs house for $265, payable on completion of work, in accordance with
specifications. He did the repairs but these were defective. Is A entitled to recover?
Hint: A was entitled to recover $265 less some reduction towards defective work.
15. A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk. A refuses to
pay. Advise B:
Hint: B can enforce the contract when the ship sinks
16. A makes a contract with B to sell a horse to B at a specified price, If C, to whom the horse has
been offered, refuses to buy it. When does the contract become enforceable in law?
Hint: When C refuses to buy.
17. A and B both believe that a particular kind of rice is being sold in the market at Rs.3,000 per
quintal and A sells rice of that kind to B at Rs.3,000 per quintal. But, in fact, the market price was
Rs.4,000. The contract is
Hint: Valid
18. R, an optical surgeon, employs S as the assistant for a term of three years and S agrees not to
practice as a surgeon during this period. This contract is
Hint: Valid
19. M promised to pay N for his services at his (M) sole discretion found to be fair and reasonable.
However, N dissatisfied with payment made by M and wanted to sue him. Ns suit will be ______
Hint: invalid
20. A, in Mumbai, bets with B and loses. A applies to C for a loan in order to pay B. C gives the loan
to A to enable him to pay B. In this case _____
Hint: C cannot recover the amount of loan from A
21. A fruit parcel is delivered under a mistake to R who consumes the fruits thinking them as birthday
present. R must return the parcel or pay for the fruits. Although there is no agreement between R
and the true owner, yet he is bound to pay for the fruits. What is the nature of such contract?
Hint: Quasi contract
22. Where a coolie takes the luggage at the railway station without being asked by the passenger or a
shoe-shiner starts shinning shoes of the passenger without being asked to do so. Does the
person who enjoyed the services bound to pay for that services?
Hint: Yes, if the service taker does not object to it.
23. Mr. H picked up a diamond on the floor of Fs shop and handed it over to F to keep it with him till
the true owner is traced. In spite of best efforts the true owner could not be searched. After the
lapse of some weeks, H offered the lawful expenses incurred by F, for finding the true owner, and
requested to return the diamond to him. F refused to do so. Should F, return the diamond to H.
Hint: Yes. Finder of lost goods is entitled to retain the goods against the entire world except the
true owner.
24. A, a tradesman, sends some goods ordered by B. As servant delivers the goods by mistake at
C's house. C uses the goods. State the legal position?
Hint: A can recover the price of goods from C
25. By mistake, A pays some money to B. Actually it is due to C. Can C recover the amount from B?
Hint: No. C can't recover anything from B because there is no privity of contract between B and
C. But he can recover the amount from A and A can recover from B.
26. The word necessaries would mean Not only bare necessities of existence e.g. food and clothes, but
all things which are reasonably necessary to the incompetent person, having regard to his status in
society e.g. a watch, a radio, a bicycle may be included therein. Is it a correct Statement?
Hint: Yes
27. A took a bet of Rs.500 with B that a certain horse would win certain race. Under the agreement, A
had to deposit Rs.100 with B. Since A had no money he approached his friend C, who advanced
the sum to him on the condition that A was to return Rs.200 if he won the bet against B, but to
return nothing if he lost. A won the bet against B. Can C recover Rs.200 from A?
Hint: No, C can't recover Rs.200 from A because the agreement between A and C is in the nature
of wager.
28. A supplied rice and wheat to the wife and children of B who is a lunatic. B has assets worth one
lakh of rupees. A supplies necessaries of life to B who is a son of a mental retarded person. A is
entitled to be reimbursed out of Bs property. This is: (J 09)
Hint: A Quasi contract
29. X promised to marry Y only and none else, and to pay Rs. 1,00,000 in default, X married Z. Y
claimed Rs. 1,00,000 but X refused to pay. State the legal position.
Hint: By marrying Z, X made the contract impossible to perform. Therefore, there is a breach of
contract and Y is entitled to claim Rs.1, 00, 000.
THE END
Copyrights Reserved
Verified By: Y.V.Raveendra Sir
7. PERFORMANCE OF CONTRACT
DIFFERENCES
Q.No.1. Succession Vs. Assignment
You should now note carefully the distinction between two legal concepts, viz., succession and
assignment. When the benefits of a contract are succeeded to by process of law, then both burden
and benefits attaching to the contract, may sometimes devolve on the legal heir. Suppose, a son
succeeds to the estate of his father after his death, he will be liable to pay the debts and liabilities of
his father owed during his life-time. But if the debts owed by his father exceed the value of the estate
inherited by the son then he would not be called upon to pay the excess. In other words, the liability
of the son will be limited to the extent of the property inherited by him. In the matter of assignment,
however the benefit of a contract can only be assigned by not the liabilities thereunder. Why this is
so? This is because when liability is assigned, a third party gets involved therein. Thus a debtor
cannot relieve himself of his liability to creditor by assigning to someone else his obligation to repay
the debt.
On the other hand, if a creditor assigns the benefit of a promise, he thereby entitles the assignee to
realise the debt from the debtor but where the benefit is coupled with a liability or when a personal
consideration has entered into the making of the contract then the benefit cannot be assigned.
Difference Succession Assignment

The transfer of rights and liabilities of a The transfer of rights by a person to
1. Meaning deceased person to his legal another person is called as
representative is called as succession. assignment.
Succession takes place on the death of Assignment takes place during the
2. Time
a person lifetime of a person.
Succession is not a voluntary act. It
Assignment is a voluntary act of the
3. Voluntary act takes place automatically by operation
parties.
of law.
4. Written Succession take place even without any Assignment requires execution of an
document written document. assignment deed
Only rights can be assigned.
All the rights and liabilities of a person Liabilities under a contract cannot be
5. Scope are transferred by way of succession. assigned unless there is novation.
Succession includes assignment. Assignment does not include
succession.
No notice of succession is required to Notice of assignment must be given
6. Notice
be given to any person to the Debtor.
No consideration is necessary for Consideration between assignor and
7. Consideration
succession assignee is a must for assignment.
Assignment is governed by the law
8. Governing Succession is governed by the
governing the benefit or interest to
Law succession law.
be assigned.
Only successors succeed who are Assignment can be made to any
9. Persons
natural persons. person natural or artificial persons.

1. Under the Indian Contract Act, the contract must be performed by actual performance of promise.
Ans: False, as Section 37 provides that the contract can also be performed by tender of
performance
IPCC_33e_ M.Law_Diff. & T/F Statements _Performance of Contract ____________43
2. Are the legal heirs of the deceased personally liable in case of breach of contract?
Ans: No they are not personally liable.
3. A party to contract promises to do a certain thing at or before a specified time, but he fails to do so.
Can the promisee, in the circumstances, avoid the contract?
Ans: Yes, but only if both the promisor and the promisee intended that time should be essence of
the contract.
4. A promises to paint a picture for B by a certain day at certain price. A dies before the day. Is the
contract enforceable?
Ans: No, the contract cannot be enforced
5. If a debtor expressly states that the payment made by him is to be applied to the discharge of
some particular debt, should the creditor act accordingly?
Ans: Yes, the creditor should apply the payment according to such instructions.
6. Can a time-barred debt be adjusted by a creditor, where the debtor makes the payment without
indicating the debt to be adjusted?
Ans: Yes, in such a case the creditor is at liberty to do this
7. Does the Indian Contract Act contain any specific provisions regarding dealings with assignment
of contracts?
Ans: No, specific provisions are not there.
8. If time is the essence of the contract and there is a failure to perform the contract by the specified
time, the contract Becomes voidable at the option of the promise (M 08 1M)
9. A Promissory - note drawn jointly by X, a minor and Y, a major is Valid but can be enforced
only against Y (M 08 1M)
10. Substitution of new contract for an existing contract between the same parties is known as: -
Novation (M 09 1M)
11. A Promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The
contract Cannot be enforced either by As representative or by B (N 09 1M)
No. Statement Ans

1. A hires Bs ship to take in and convey from Calcutta to Mauritius a cargo to be
provided by A, B receiving a certain freight for its conveyance. A does not provide Yes
any cargo for the ship. Can A be compelled to re-compensate B for any loss arising
out of non-performance?
2. Tender of money discharges the debtor from his liability to pay the debt False
3. Is tender of performance equivalent to actual performance? False
4. Conditional offer of performance is a valid tender. False
5. A promises B to pay C a sum of Rs.2,000, If A does not pay the amount to C, Can C
No
take action against A?
6. Where a promisee accepts the performance from a third person, even then he can
False
compel the promisor to perform the promise again
7. The time of delivery of goods has been fixed by the parties to the contract. But the
delivery thereof has not been made at the scheduled date. whether time is of Yes
essence of the contract.
8. In a mortgage bond, a time has been fixed for the repayment of the mortgage
No
money. whether time is of essence of the contract
9. In a contract of sale of land, there is clause which stipulates a time for the
No
completion of the sale. whether time is of essence of the contract
10. A singer agreed to perform at a theatre and to be present at least six days before
this engagement. But he reported only two days before. The theatre owner wanted No
to put an end to the contract. Can the theatre owner cancel the contract?
11. According to Claytons case, in the absence of any contract to the contrary, an item
of receipt side must be appropriated against the items of payment side in the order True
of date.
12. The creditor may also alter the appropriation, until he has declared the appropriation
True
to the debtor.
13. The creditor has always discretion to apply the payment made by a debtor towards
False
any debt.
14. A, B and C are under a joint promise to pay D Rs.3,000. C is unable to pay anything and
Yes
A is compelled to pay the whole. Is A entitled to receive Rs.1,500 from B?
15. A and B contract that B shall execute certain work for A for Rs.1,000. B is ready and
Yes
willing to execute the work accordingly. But A prevents him from doing so. Is the
contract voidable?
16. A owes B Rs.1,000 under a contract, B owes C Rs.1,000. B orders A to credit C with
Rs.1,000 in his books, but C does not assent to the arrangement. Does B still owe C Yes
Rs.1,000?
17. Assignment by operation of law takes place only in case of death of any party.
False
18. The assignee takes assignment subject to all equities between the original parties. True
19. If a promisee accepts performance of the promise from a third party can he
False
afterwards enforce it against the promisor
20. Several joint promisors made a promise with single promisee. Does it amounts to
Yes
joint promise?
21. When a single promisor makes a promise with several joint promisees, is it a joint
Yes
promise?
22. When several joint promisors make a promise with several joint promisees, is it a
Yes
joint promise?
23. In case of several joint promisors, the promisee can demand the performance from
True
anyone or more of joint promisors.
24. Generally, representatives of the promisor are bound to perform the promise, if
True
promisor dies before the performance
25. Where Promisee terminates the contract due to non-performance or part-
performance by the Promisor, the Promisee has to return the benefits, if any; he has True
received from part performance of the promise.
26. In case promisee prescribes the manner and time of performance of promise, the
False
performance need not be in the manner and time prescribed.
27. Where no place for performance is specified and the promise is to be performed
True
without demand by the promisee, the promisor must apply for the performance.
28. Where the parties have a current account between them, appropriation impliedly
takes place in the order in which the receipts and payments take place and are True
carried into the account.
29. A, B and C jointly promise to pay D Rs.3,000. Can D compel either A or B or C to
Yes
pay him Rs.3,000 ?
30. Unless otherwise agreed, if anyone of the joint promisor makes default in making the
payment, the other joint promisor must share the loss arising from such default True
equally.
31. A partner of the firm is a Joint Promisor with other partners. He is entitled to claim
True
contribution from other partners when he pays debts of the firm.

32. In case of several joint promisees, the performance of the contract may be
False
demanded by any one of them.
33. Under the English Law, the release of one of the joint promisors, is the release of all
True
other promisors.
34. In mutual and independent promises, one party must perform his promise before the
False
other party fulfills his promise.
35. A and B contract that A shall build a house for B at a fixed price. Should A's promise
Yes
be performed before Bs promise to pay for it?
36. Where one party to a reciprocal promise prevents the other from performing his
False
promise, the contract becomes void.
37. Can contracts involving personal skill or taste be assigned? False
38. Assignment by operation of law takes place by the death of a party to a contract. True
39. Assignment by operation of law takes place in case of death or insolvency. True
40. An actionable claim can always be assigned. True
41. Can the obligations (i.e. liabilities) be assigned? False
42. Where there are co-sureties a release by the creditor of one of them does not
True
discharge the others. (N 07 1M)
43. In case of alternative promise one branch of which is legal and the other illegal, the
False
whole contract cannot be performed. (N 08 1M)
44.In the case of joint promise, any one of the joint promisors may be compelled to
True
perform the whole promise
45.If the promise are joint, the right to claim performance is joint and not joint and
True
several
46.S in case of joint promise, the liability to pay the promise will devolve on any one or
True
more promisors, (M 07 1M)
47. A tender of an instalment when the contract stipulates payment in full is valid tender False
48. A contract need not be performed if the promisee refuses to afford the promisor
True
reasonable facilities for the performance of his promise.
49. If any one of the joint promisors makes default in the contribution, the remaining joint
True
promisors must bear the loss arising from such default in equal shares
50. A promisor undertakes to perform a promise on a certain day, after the application
by the promisee to the effect. It is the duty of the promisee to apply for performance True
at proper place and within the usual hours of business
51. Promises which form the consideration or part of the consideration form each other
False
are called contingent promises
52. In a contract in which time is of the essence of the contract, if the promisor fails to
False
perform his obligation within the particular debt. The creditor is not bound to do so.
53. A debtor expressly intimates at the time of payment that the payment should be
applied towards the discharge of a particular debt. The creditor is not bound to do False
so.
54. Contractual obligations involving personal skill cannot be assigned True
55. A promisee can be compelled by the promisor or a third party to accept any person
False
other than the promisor as the person liable to him on the promise
56. The mere fact that a certain time a specified in a contract for the performance of a
True
promise does not necessarily make time as the essence of the contract
57. In non-commercial contract, the presumption is that time is of the essence of the
False
contract.
58. Where a debtor makes a valid tender of money, but the creditor refuses to accept it,
False
the debtor is discharged from making the payment
59. When two or more persons make a joint promise and there is no express agreement
to the contrary, the promisee may compel any one or more of the joint promisors to True
perform the whole olf the promise
IP CC_33e_ M.Law_Diff. & T/F Statements _Performance of Contract ____________46

60. A release by the promisee of any one of the joint promisors does not discharge the
True
other joint promisors from liability
61. Where the debtor does not intimate , the creditor has the right to appropriate
True
payment to a time barred debt.
62. A servant is employed for one year on a monthly salary of Rs 800, the whole salary
to be paid at the end of the year. The servant wrongfully leaves the service after six False
monthe. he entitled to salary as per agreement.
TEST YOUR KNOWLEDGE

1. A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The
contract________
Hint: cannot be enforced either by A's representative or by B. cannot be enforced either by A's
representative or by B
2. M and N had a contract. M broke it. N had a right to file a case against M for damages. N wants to
assign this right. Decide.
Hint: No, N cannot because right to sue for damages is not a contractual right but a personal right
given by law
3. X agrees to sell 50 tons of some raw material to Y on 20th June,2010.X delivers the goods on
30th of June ,2010.Is Y bound to accept the goods?
Hint: No, because, in commercial deals, time is of essence
4. B the son of A has inherited assets & liabilities from his father after his death. But the liabilities
were more than the assets. Whether B will be responsible to pay only to the extent of the assets
he has inherited?
Hint: Yes
5. A sells 500 quintals of rice to B and B promises to pay the price on delivery. What is the name
of promise in this case?
Hints: Reciprocal Promise
6. Where there are two debts one Rs 500/- another Rs 700/- falling due on the same day and if the
debtor pays Rs 600/-. Whether the appropriation can be made prorata for the two debts?
Hint: Yes
7. X owes Y Rs. 1,000 and Z owes X Rs. 1,000. Can Y recover Rs. 1,000 from Z (a) if no agreement
has been entered into between X, Y and Z (b) if Y accepts Z as his debtor in pursuance of an
agreement entered into between X, Y and Z?
Hint: Section to which the given problem relates: Section 62.
Decision:
Case (a) Y cannot recover from Z because there is no privity of contract between Y and Z.
Case (b) Y can recover from Z because X, the promisor has transferred his liability by novation
(i.e. by tripartite agreement between promisor, promisee and transferee)
8. A entered into contract with B to deliver certain goods at a certain price to B. A offered the goods
to B at proper time and place, but B refused to accept the goods. In this case
Hint: A is discharged from his liability and can also sue B for breach of contract.
9. A promises to deliver goods to B on a certain day on payment of Rs.50,000. A dies before that
day.
Hint: The contract can be enforced against As representatives and B is bound to pay Rs.50,000
to As representatives. (i.e. the legal representatives of A) must deliver the goods and B has to
pay for that.

10. A promises to deliver goods to Bs warehouse, on the 1st January. On that day A brings the
goods to Bs warehouse, but after the usual hour for closing the warehouse and they are not
received. Has A performed his promise ?
Hint: No
11. B owes A Rs.2,000. A desires B to pay the amount to As account with C banker. B who also banks
with C, orders the amount to be transferred from the account to As credit and this is done by C.
Afterwards, and before A knows of the transfer, C fails. Has there been a good payment by B?
Hint: Yes
12. X owes Y two sums, one for Rs. 2,000 which is barred by Limitation and another for Rs. 2,500
which is not barred. X pays Y Rs. 1,000 on account generally. Later Y sues for Rs.2,500 X
pleads:
i. As to Rs.2,000 that it was time barred, and
ii. As to Rs.2,500 a part payment of Rs. 1,000
Hint: Both (a) and (b).
13. X lent to Y three sums of Rs. 100, Rs. 200 and Rs. 500. Y sent a sum of Rs. 100 asking X to
appropriate this money towards the third debt of Rs.500. X wants to appropriate this money to the
first loan. Can he do so?
Hint: No
14. A, B and C Jointly promised to pay Rs. 30,000 to D. For recovery of this amount, D filed a suit
against A only. Is he justified?
Hint: Yes, as the liability of joint promisors is joint and several
15. A, B and C jointly promise to pay D a sum of Rs. 90,000. C is compelled to pay the whole of the
amount to D. Can he recover anything from A and B when both A and B were solvent?
Hint: Yes, C can recover Rs. 30,000 each from A and B.
16. A, B and C jointly promise to pay D a sum of Rs.3,000. C is compelled to pay the whole. A is
insolvent but his assets are sufficient to pay one half of his debts. Discuss Cs rights.
Hint: Can get Rs.500 from As estate and Rs.1,250 from B.
17. A contracts with B to execute certain builders work for a fixed price. B supplying the scaffolding or
timber, necessary for the work. B refuses to furnish any scaffolding or timber, and the work cannot
be executed. Should A execute the work?
Hint: No
18. A bought certain goods from B for Rs.1000. The goods were defective and A promptly returned those
goods. B refused to take the goods back and assigned the debt of Rs.1,000 to C. C sued A to recover
Rs.1,000 from him.
Hint: A can show the defective character of goods and reject payment to C.
19. W, a singer enters into a contract with M, the manager of a theatre, to sing at this theatre for two
nights in every week during the next two months and M engages to pay her Rs. 5 lakhs for each
nights performance. On the 7th night, W willfully absents herself from the theatre: (J 08)
Hint: M is at liberty to put an end to the contract
20. A, a singer, enters into a contract with B, the manager of a theatre, to sing at the theatre two
nights in every week during the next two months and B agrees to pay her at the rate of 100
rupees for each nights performance. On the sixth night, A willfully absents herself from theatre.
With the consent of B, A sings the seventh night. Discuss Bs rights.
Hint: Cannot repudiate the contract : claim arises for damages.
21. 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? (D 11)
IP CC_33e_ M.Law_Diff. & T/F Statements _Performance of Contract ____________48
Hint: The agreement lapses for both parties.
22. Suppose, time is of the essence of the contract but yet promisor does not perform the promise
within the stipulated time. But five days after the expiry of the stipulated time, the promisor offers
to perform his promise. Can the promisee accept such performance and at the same time claim
compensation from the promisor for the delay?
Hint: Yes; but for claiming compensation, the promisee must notify the promisor of his intention to
claim compensation at the time of accepting the performance;
23. A owes B totally Rs.25,000. He sends a cheque for Rs.10,000 stating that it shall be appropriated
towards the first sum of Rs.10,000 which he took from B. B shall appropriate it:
Hint: Towards the debt which is indicated by A
24. B is liable to pay Rs.50,000 to A . A instructed B to pay the amount in his bank account with C, his
banker. B who also banks with C orders the amount to be transferred from his account to As
credit and this is done by the banker. Subsequently before A knows about the transfer, C fails. In
this case:
Hint: There has been a good payment by B.
25. A owes to B, among other debts; the sum of Rs.567. B writes to A and demands payment of this sum.
A sends to B Rs.567. Where the payment should be applied to?
Hint: Must be applied to discharge the debt, which B has demanded.
26. Ram, Rohit and Kiran jointly borrowed Rs.2,00,000 from Rahim by executing a promissory note. Rohit
and Kiran are not traceable. Rahim wants to recover the entire amount from Ram. Ram objected this
move by saying he is liable to pay 1/3 of the debt only. Which of the following statement(s) is correct?
Hint: Rahim can recover the entire amount from Ram
THE END
Copyrights Reserved

8. DISCHARGE OF A CONTRACT
DIFFERENCES
Q.No.1. Novation Vs. Alteration.
Novation and Alteration: The law pertaining to novation and alteration is contained in Sections 62 to
67 of the Indian Contract Act. In both these cases the original contract need not be performed. Still
there is a difference between these two.
1. Novation means substitution of an existing contract with a new one. Novation may be made by
changing in the terms of the contract or there may be a change in the contracting parties. But in
case of alteration the terms of the contract may be altered by mutual agreement by the
contracting parties but the parties to the contract will remain the same.
2. In case of novation there is altogether a substitution of new contract in place of the old contract.
But in case of alteration it is not essential to substitute a new contract in place of the old contract.
In alteration, there may be a change in some of the terms and conditions of the original
agreement.

1. X undertakes to put life into the dead wife of Y and takes his fees Rs.5,000 in advance. X fails to do
so. Y claims Rs.5,000. Is Ys claim valid?
Ans: Yes Y can claim back his money because the agreement to do impossible things is void.
2. Mr. A contracts to act at a theatre for six months in consideration of some money, paid in advance by
B. On several occasions A is too ill to act. Does the contract become void?
Ans: Yes, on those occasions to act.
3. A owes Rs.5,000 to B. A pays Rs.2,000 to B in satisfaction of the whole debt and B accepts this. Is the
whole debt discharged?
Ans: Yes, the whole debt is discharged
No. Statement Ans

1. If only one party to a contract performs his promise, the contract is discharged. False
X and Y contracts to marry each other at a particular date. But prior to the
2. Yes
scheduled time X turns lunatic. Does the contract become void ?
A shipbuilder contracted to build and supply a ship of specified dimensions
according to a model to be approved by the buyers, it being a term of the
contract that the ship was to carry a certain dead weight on a certain draught.
3. The model was approved and it was subsequently found to be a mathematical Yes
impossibility to produce a ship which would fulfill the terms of the contract. Can
the shipbuilder plead impossibility of performance in a suit against him by the
buyer?
A contract for hiring a flat for witnessing a coronation process of king will become
4. False
voidable if the procession is cancelled due to kings illness.
C agreed to let out a music hall to T for a series of concerts. The hall was destroyed
5. No
by fire before the date of first concert. Now T could not perform his concerts and sued
IPCC _33e_ M.Law_Differences & T/F Statements _Discharge of Contract ________ 50

C for breach of contract. Is C liable for breach of contract?
An artist undertook to sing at a theatre on a particular day. But the artist being too
6. ill and could not sing on the day fixed for performance. Is the artist liable to pay No
damages for non-performance?
Contract which could not be performed because of a default by a third person on
7. False
whose work the promisor relied becomes void.
Supervening impossibility is an excuse for the non-performance of contract in all
8. False
cases.
H agreed to hire from the H.B.S. Co. a boat for the purpose of taking passengers
from Herne Bay to watch the Royal Naval Review, and to cruise round the fleet.
9. No
Owing to the Kings illness, the review was cancelled, and H decided not to
continue with the proposed trip. Is the contract discharged?
A owes money to B under a contract. It is agreed between A, B and C that B shall
10. henceforth accept C as his debtor instead of A. Does the old debt of A to B come Yes
to an end in this manner?
In case of alteration, there is a change in the parties and new parties may be
11. False
introduced.
12. No consideration is necessary for remission True
In case the goods are sold on credit and a debt is not recovered within three years
13. from the date of grant of credit, the debt becomes time barred and is discharged False
by lapse of time.
In case of anticipatory breach of contract, the aggrieved party must rescind the
14. False
contract and sue for damages at the time of such breach.
In case of actual breach of a contract, the contract becomes void if the time is the
15. False
essence of the contract.
In anticipatory breach of contract is the promisee excused from performance or
16. True
from further performance?
Discharge of contract means that the parties are not further bound under the
17. True
contract.
When the parties to a contract fulfill their respective obligations under the contract,
18. True
the contract is said to be discharged.
Where only one party performs his promise and the other does not, he alone gets
19. True
discharged and has a right of action against other party.
20. Where initial impossibility is unknown to both the parties, the contract will not be void. False
Where at the time of making a contract both the parties are ignorant of the
21. True
destruction of subject-matter, the contract is void on the ground of mutual mistake.
If there is any change in the state of things which formed the basis of a contract,
22. True
the contract is discharged.
In case of subsequent impossibility or illegality. Does the dissolution of the
23. Yes
contract occur automatically?
24. Impossibility of performance is not an excuse for non-performance of a contract False
25. Commercial impossibility makes the contract void. False
26. Difficulty in performing the contract makes it void False
27. Strikes, lock-outs and civil disturbances do not discharge a contract. True
The impossibility of performance due to the conduct of a third party does not
28. True
discharge the contract.
Can increased or unexpected difficulty and expenses be taken as an excuse from
29. No
performance?
When a contract is entered into for several objects, does the failure of one of them
30. No
discharge the contract?
31. Novation means substitution of a new contract for an old one True
Can an agreement be discharged by another agreement between the same
32. Yes
parties?
In case of novation, if for any reason the new contract cannot be enforced, the
33. True
parties will fall back upon the old contract
Alteration of contract means that the parties have mutually agreed to change
34. True
certain terms of contract.
Material alteration of a written document by one party without the consent of the
35. True
other operates as cancellation of the document
Where a party under a voidable contract decides to rescind the same, the other
36. True
party is discharged from his promise and not entitled to damages.
When a contract becomes void, any person who had received any advantage
37. True
under such contract must restore it.
38. No consideration is necessary for a waiver. True
39. The death of the promisor always discharges the contract. False
40. The insolvency of the promisor discharges the contract. True
P holds a property under a lease. Later he buys the property. His rights as a
41. True
lessee merge in to his rights as a owner.
42. An anticipatory breach does not give any right to claim compensation False
43. A contract stands discharged by breach of the contract. True
In case of actual breach of contract, if delayed performance is accepted, promisee
44. can claim compensation for such delayed performance if he gives prior notice True
about his intention to do so.
In case of anticipatory breach, where the Promisee opts to keep the contract alive
45. till the actual date of performance, the amount of damages = Price prevailing on True
the date of performance - Contract Price.
In case of anticipatory breach of contract, if the promisee decides not to rescind
46. True
the contract, the contract shall remain alive.
In case of anticipatory breach, promisee has to wait till due date to take some legal
47. False
action for breach of contract.
48. Can a contract be discharged due to subsequent change in law? True
A contract to do an act which after the contract is made becomes impossible due
49. True
to reasons beyond the control of the promisor is void
In case of novation if for any reason the new contract cannot be enforced, the
50. True
parties can fall back upon the old contract
Supervening impossibly is an excuse for the non performance of a contract in all
51. True
cases
In case of anticipatory breach, the promisee has to wait till the time the act was to
52. False
be done to take legal action for breach of contract
In case of post contractual impossibility, the contract becomes voidable when
53. False
impossibility arises
54. When all or some of the terms of a contract are altered, rescission takes place. False
55. Outbreak of war is not an excuse for non-performance of a contract False

TEST YOUR KNOWLEDGE
1. A, an Indian, contracts to marry B. A is already married-a fact of which B was unaware. A breaks
his promise in course of time. Thereupon B brings a suit against A for a breach of contract. A
pleads that his promise is impossible of being performed as the law of the country does not permit
polygamy. Can A get away with plea?
Hint: Yes; but not without making compensation to B for the loss occasioned by the non
performance of the promise
2. A agrees to let his house to B for a marriage ceremony on 1st December and received Rs.5,000
as an advance of rent. On 28th November, the house was destroyed by fire accident. What are
the rights of B. Which of the following is correct answer?
Hint: B has no rights against A because the contract has been frustrated due to the destruction of
subject-matter of the contract. But B is entitled to recover Rs.5,000
3. R enters into a contract with a publisher for writing a book. R suddenly dies due to a heart attack
and could not perform the contract. Can the publisher enforce the contract against his heirs?
Which of the following is correct?
Hint:The publisher cannot enforce the contract against the heirs of R because it involves personal
skills and therefore, contract has become void due to the death of R
4. H agreed to hire Ks flat for the purpose of watching the procession of Edward VII. As a result of
the kings illness, the procession was cancelled. Now K filed a suit on H for the recovery of rent. H
said that the contract was discharged because of failure of very purpose of contract and he was
not liable to pay the rent. Is H liable to pay rent?
Hint: No
5. Atul contracted to make and deliver 350 pairs of shoes to Bansi by 1st January. A strike of Atuls
employees prevented him from fulfilling that the contract was terminated by impossibility of
performance. Was his defence good? (N 06)
Hint: No, Atul is liable to Bansi for damages
6. A enters into a contract with B for supplying 600 tons of coal to B within 6 months, A fails to
make the delivery in accordance with the terms of the contract, owing to Governments
restrictions on transport of coal from collieries but admitted that coal was available and can be
purchased at a higher price in open market. Can A successfully take the plea that the contract is
discharged because of impossibility of performance? Which of the following is correct?
Hint: No, because higher price cannot be a ground for discharge of contract by impossibility of
performance
7. X and Y contract that Y shall build a house for X for Rs.20 Lacs. Y is ready and willing to
construct the house but X prevents him from doing so. In such case:
Hint: Y is entitled to recover compensation for any loss suffered by him also Y can opt to rescind
the contract
8. A owes B Rs.50,000. Due date for payment is 25th March. A pays to B Rs.30,000 on 25th March,
who accepts it in full satisfaction of the debt. The debt is discharged on account of:
Hint: Remission of part performance of a promise
9. A owed a large sum of money to B. C a friend of A, offered to pay a lesser amount to B in full and
final settlement of Bs claim on A. and B accepted it in full and final settlement. In this case
Hint: The contract is validly performed and B cannot recover the balance from A
10. A was due to perform a contract on 1st May, 1991, but on 20th April he repudiated his obligation.
On 29th April the contract became illegal through a change in law. B, the other party to the
contract, flied a suit for breach of contract on 30th April, 1991.
Can B have any remedy against A?
Hint: B has no remedy against A because when B filed a suit for breach of contract the contract
has already been discharged by supervening illegality.
11. A engaged B, a courier, to accompany him on a tour to commence on 1st June. About a month
before the date, A wrote to B that he had changed his mind and does not require his services. B
immediately sued him for damages, for breach of contract. A argued that there could not be
breach of contract, before the due date of performance. Can B sue before the due date of
performance?
Hint: Yes
12. A contracts to supply a specific car to B a month after the date of the contract. Within the month A
sells the car to C, thereupon B sues A for the breach of contract. A contends that he could still
perform the contract by repurchasing the car from C. Is As contention valid?
Hint: No
13. A owes Rs.5,000 to B, payable on 1st June. A is not in a position to meet his liability on the due
date. So, he requested B to extend the time for payment by three months. B accepted the request
of A. Is this promise binding?
Hint: Yes
14. N chartered Ms ship and agreed to load it with a cargo in Orissa within 50 days. N was unable to
supply the cargo but M continued to demand it. Meanwhile war broke out, rendering the
performance impossible. In such a case: (N 07)
Hint: M cannot sue for damages and contract is discharged
THE END

Copyrights Reserved

9. REMEDIES FOR BREACH OF CONTRACT
DIFFERENCES
Q.No.1. Liquidated Damages Vs. Penalty
Basis of
Liquidated Damages Penalty
distinction
1. Meaning It represents a sum fixed or It is the sum mentioned in the contract at
ascertained by the parties to the the time of its making, being
Contract, being a fair and genuine disproportionate to, i.e. very high than
estimate of the probable loss that may the loss that might arise as a result of
arise due to breach. breach. It is usually a very high sum, to
ensure performance of the contract.
2. Intention The intention for liquidated damages is The intention for the penalty is to ensure
the recovery of damages that might performance of a Contract.
arise due to breach. Performance is better than paying
penalty. It acts as a deterrent to avoid
performance.
3. Example A contracts with B to deliver P contracts to deliver 50 Units of a Petrol
possession of a house under Engine to Q on a stipulated day, failing
construction within a period of 6 which he shall pay Rs.5 Lakhs. Neither
months, failing which he would pay the the price of Engine nor loss on failure of
monthly rental of B. The monthly rental delivery would amount to Rs.5 Lakhs.
payable by B for A partakes the Hence it is a penalty.
character of liquidated damages.
Q.No.2. Ordinary Damages Vs. Liquidated Damages
Basis of distinction Ordinary Damages Liquidated Damages

1. Meaning Ordinary damages means the Liquidated damages are the amount
damages which are fairly and of fair and genuine pre-estimate of
reasonably considered as probable damages which are likely to
arising naturally from breach of a result from breach of a contract
contract.
2. Nature of loss Ordinary damages arise only on Liquidated damages are the amount
actual breach of contract. of probable loss in the opinion of
the parties that may result from the
breach of contract.
3. Time of These are calculated only when It is calculated before actual
calculation actual damages are suffered. damages are suffered.
4. Amount These are actual amount of These are estimated maximum
damages which injured party is amount of damages with in which
entitled to claim. actual damages may be claimed.
No. Statement Ans

Damages are also applicable in respect of failure to discharge a quasi-contract, in
1. Valid
the same manner as in respect of breach of contracts. It is ______
Where the contract is such that damages cannot be ascertained; then if the parties
2. pre-estimated the damages and the same appears reasonable, that amount of True
compensation shall be considered proper and shall be sanctioned by the Court.
IPCC _33e_ M.Law_Diff. & T/F Statements _Remedies for Beach of Contract ______ 55
The damages which are awarded in case of breach of contract where by no loss is
3. False
caused, are called punitive damages.
In case of wrongful dishonour of a cheque, the rule is smaller the amount, smaller
4. False
will be the amount of damages and vice versa.
A contracts to buy from B, at a stated price, 50 maunds of rice, no time being fixed
5. for delivery. Afterwards A informs B that he will not accept the rice if tendered to Yes
him. Can B receive compensation from A?
By awarding damages, court aims to put the injured party into the position in
6. which he would have been, had there been performance and not breach. The True
objective of awarding damages is not to punish the party at default. Is it true?
Special damages can be claimed whether the special circumstances were
7. False
communicated to the promisor or not.
A contract to sell and deliver 500 bales of cotton to B on a fixed day. A knows
nothing of Bs mode of conducting business. A breaks his promise, and B having
8. No
no cotton, is obliged to close his mill. Is A responsible to B for the loss caused to B
by closing of the mill?
9. Penalty is not enforceable in India. False
Penalty payable by the party, who is guilty of breach, can't be decided at the time
10. False
of formation of contract.
The aggrieved party can claim the highest of amount of penalty and actual loss as
11. False
damages
When a single lump-sum amount is made payable on the occurrence of one or
12. more of several events, some of which may occur serious and other trifling Yes
damage. Is there a presumption that the sum is a penalty?
Exemplary or vindictive damages are punitive in nature and as a rule these are not
13. False
awarded by the courts.
14. Specific performance can be granted in case of contract to marry. False
In all cases, the aggrieved party has a right to refuse the monetary compensation
15. False
and insist on specific performance of the contract by the promisor.
Suit for specific performance can be filed where a party does something which he
16. False
promised not to do.
To file a suit under Quantum Meruit, the original contract must have been
17. True
discharged by breach of a party by non-performance.
A was engaged by B to write some material to be published in installments in a
18. weekly magazine of B. After a few issues of the magazine, it was discontinued by Yes
B. In this case, can A recover compensation from B for the work done?
Suit upon quantum meruit can be filed in case of incomplete and indivisible
19. False
contracts.
Compensation shall not be given for any remote and indirect loss sustained by
20. True
reason of breach it is ____
In the case of a breach, the aggrieved party can claim the amount of liquidated
21. False
damages pre fixed and stated in the contract irrespective of the actual loss
S In case of breach of contract, the court awards remote damages to the aggrieved
22. False
party (N 11 1M)
23. Where there is a right, there is a remedy True
Damages other than those arising from the breach of contract may be recovered if
24. such damages are in the contemplation of the aggrieved party as the probable True
result of the breach
Damages for loss of reputation are not generally recoverable. An exception to this
25. rule exists in the case of a banker who wrongfully refuses to honour a customers True
cheque.
Specific performance of a contract may, in the discretion of the court, be granted
26. False
where damages are an adequate remedy
When through a mutual mistake of the parties, a contract does not express their
27. True
real intention, either party may institute a suit to have the instrument rectified
28. Nominal damages are awarded if there is no breach of contract. False
If special damages are to be claimed, the attendant circumstances must be
29. True
brought to the notice of the other party.
The essence of a penalty is the payment of money stipulated as in terrarium of the
30. True
offending party
In case of breach of a contract, the injured party is not bound to take all
31. False
reasonable steps to mitigate the loss caused by the breach.
32. Damages for breach of contract are given by way of punishment for wrong inflicted False
A agree to print a book for B not knowing that it contains libelous matter. After
33. printing a part he discovers that it contains libelous matter. In this case a entitled to True
refuse to print the rest of the book and sue for the work done on quantum meruit.
TEST YOUR KNOWLEDGE
1. A was appointed as a managing director by a company. Later on it was found that appointment
was invalid because the director appointed him were not eligible. Can A claim salary for the time
he worked?
Hint: Yes, he is entitled to remuneration for the services rendered on quantum meruit basis
2. X contracted to sell 100 kg of Sugar to Y at Rs 15 per kg on a certain date. In anticipation X
contracted to purchase from Z the same quantity at Rs 8 per kg. Z does not deliver the sugar to X.
X suffers the loss of Rs 7 per kg. Can he recover this loss from Z?
Hint: No. This loss amount to special loss which X and Z had not contemplated in their contract.
3. A appointed B to accompany him on a tour for three months from 1st July at a certain salary.
Before the 1st July, A told B that B was no more required by him. Can B sue A ?
Hint: Yes on the basis of the anticipatory breach of contract
4. In case of breach of promise to marry the damages are awarded under what type of
measurement of damage and what will be taken into account to give damage?
Hint: Exemplary damages, would take into account the injury suffered by the person
5. When the buyer breaks the contract, the damage would be the difference between ___ price and
_____ price. When the seller breaches the contract, the buyer can recover the difference
between.____ price and ______ price as on the date of breach.
Hint: Contract, Market & Market, Contract
6. How liquidated damages and penalty are imposed?
Hint: By compensation and punishment
7. At the time of marriage between A and B, As father promised to Bs parents that he will pay five
thousand rupees per month to B after her marriage with his son. On his failure to pay the amount
B wants to sue As father for the amount promised by him at the time of her marriage with A.
Which of the following statement(s) is correct?
Hint: B can sue As father for breach of contract.
8. A agrees to sell land to B for Rs.40,000. B pays to A Rs.4,000 as a deposit at the time of the
contract, the amount to be forfeited by A if B does not complete the sale within a specified period.
B fails to complete the sale within the specified period, nor is he ready and willing to complete the
sale within a reasonable time after the expiry of that period. Can A rescind the contract and at the
same time retain the deposit?
Hint: Yes
9. The wife of a person died from tin poisoning caused by the tinned salmon bought from a dealer.
What damages can the husband claim?
Hint: The husband can rescind the contract and claim damages incurred by employing extra
servants by reason of the loss of his wifes services, medical expenses during her illness and
pecuniary loss occasioned by her death (Sec. 73)
10. A agreed to erect a plant for B by 31st January, 1991. The contract provided that B should pay
Rs.500 per month for every month that A took beyond the agreed date. A was late by six months.
B sued A for Rs.6,500 the actual loss caused to him as a result of the delay. To what damages, if
any, is B entitled?
Hint: 3,000
11. A, a merchant of Agra, made a contract to dispatch 100 quintals of gur to B at Delhi at a certain
price and B paid Rs. 500 as earnest money. None of the parties knew that the government had,
sometimes previously, passed a law prohibiting transport of gur from one State to another. A was
unable, by reason of this law, to send the gur. B claims damages for non-performance as well as
refund of the earnest money. Is he entitled to these remedies?
Hint: The agreement is void-ab-intio. B can claim refund of the earnest money but not damages.
(Sec. 65)
12. S, a manufacturer used to exhibit samples of his equipment at agricultural exhibitions. He
delivered his samples to Railway Company to be exhibited at New Castle. On the consignment he
wrote must reach at New Castle on Monday certain. On account of negligence on the part of
Railway Company, the samples reached only after the exhibition was over. S claimed damages
from Railway Company for his loss of profits from exhibition. Is Railway Company liable to pay
damages?
Hint: Yes
13. F agreed to act at Ks theatre and to conform to all the regulations of the theatre. Each party
agreed that on breach by either of them, the agreement was to pay $1,000 as liquidated
damages. F broke the contract and damages payable by him were assessed at $650.
Hint: The $1000 is in the nature of penalty. Since the actual loss is estimated at $650 K could
recover $650 only.
14. 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?
Hint: He is not entitled to any salary
15. A contracts with B to deliver to him 250 kilos of rice before 1st May. A could deliver only 130 kilos
before 1st May; and could not deliver anything later. B retains 130 kilos after that date. Under the
principles of Quantum Meruit -
Hint: B is bound to pay A for 130 kilos.
16. Mr. A agrees to sell to B 5 bags of rice at Rs.500 per bag, delivery to be given after two months.
On the date of delivery, price of rice goes up and the rate is Rs.550 per bag. A refuses to deliver
the bags to B. Can B claim for damages?
Hint: He can claim Rs.250 from A.
17. G, a film star agreed to act exclusively for Y, a film producer, for one year. During the year, she
contracted to act for some other producer. In this case, Y:
Hint: Can restrain G by an injunction
THE END

IPCC - 33e - Differences & True or False Statements in Indian Contract Act

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DIFFERENCES & T/F STATEMENTS IN

Cell: 98851 25025 / 26

1. MEANING AND NATURE OF CONTRACT

Q.No.1. Agreement Vs. Contract.

DIFFERENCE AGREEMENT CONTRACT

Q.No.2. Void Contract Vs. Voidable contracts.

DIFFERENCE VOID CONTRACT VOIDABLE CONTRACT

Q.No.3. Void Agreement Vs. Voidable Contract.

DIFFERENCE VOID AGREEMENT VOIDABLE CONTRACT

IPCC_33e_M.Law_Differences & T/F Statements_Meaning and Nature of Contract __3

Q.No.4. Void Agreement Vs. Illegal Agreements.

DIFFERENCE VOID AGREEMENT ILLEGAL AGREEMENT

TRUE OR FALSE STATEMENTS WITH REASONS

IPCC_33e_M.Law_Differences & T/F Statements_Meaning and Nature of Contract __4

TRUE OR FALSE STATEMENTS

No. Statement Ans

IPCC_33e_M.Law_Differences & T/F Statements_Meaning and Nature of Contract __5

INTRODUCTION TO CONTRACT ACT (FOR ACADEMIC INTEREST ONLY)

No. Statement Ans

IPCC_33e_M.Law_Differences & T/F Statements_Meaning and Nature of Contract __6

TEST YOUR KNOWLEDGE

IPCC_33e_M.Law_Differences & T/F Statements_Meaning and Nature of Contract __7

IPCC_33e_M.Law_Differences & T/F Statements_Meaning and Nature of Contract __8

IPCC_33e_M.Law_Differences & T/F Statements_Meaning and Nature of Contract __10

IPCC_33e_M.Law_Differences & T/F Statements_Meaning and Nature of Contract __11

Q.No.1. Specific offer Vs. General offer.

DIFFERENCE SPECIFIC OFFER GENERAL OFFER

Q.No.2. Offer Vs. Invitation to offer.

DIFFERENCE OFFER INVITATION TO OFFER

TRUE OR FALSE STATEMENTS

No. Statement Ans

IPCC_33e_ M.Law_Differences & T/F Statements _Offer & Acceptance __________ 13

TEST YOUR KNOWLEDGE

IPCC_33e_ M.Law_Differences & T/F Statements _Offer & Acceptance __________ 14

IPCC_33e_ M.Law_Differences & T/F Statements _Offer & Acceptance __________ 15

IPCC_33e_ M.Law_Differences & T/F Statements _Offer & Acceptance __________ 17

To MASTER MINDS , Guntur

IPCC_33e_ M.Law_Differences & T/F Statements _Offer & Acceptance __________ 19

TRUE OR FALSE STATEMENTS

No. Statement Ans

TEST YOUR KNOWLEDGE

Reason: The object of this agreement is unlawful. To MASTER MINDS , Guntur

TRUE OR FALSE STATEMENTS WITH REASONS

1. Can a minor become shareholder of a company?

TRUE OR FALSE STATEMENTS

No. Statement Ans

IPCC_33e_ M.Law_Differences & T/F Statements _Capacity to Contract __________26

TEST YOUR KNOWLEDGE

IPCC_33e_ M.Law_Differences & T/F Statements _Capacity to Contract __________27

Copyrights Reserved Executed By: Ameenuddin Sir

IPCC_33e_ M.Law_Differences & T/F Statements _Capacity to Contract __________28

Q.No.1. Coercion Vs. Undue influence. (N 05 6M, N 11 8M)

DIFFERENCE COERCION UNDUE INFLUENCE

Q.No.2. Fraud Vs. Misrepresentation

DIFFERENCE FRAUD MISREPRESENTATION

TRUE OR FALSE STATEMENTS

No. Statement Ans

IPCC_33e_ M.Law_Differences & T/F Statements _Capacity to Contract __________29

TEST YOUR KNOWLEDGE

IPCC_33e_ M.Law_Differences & T/F Statements _Capacity to Contract __________34

To MASTER MINDS , Guntur Verified By: Y.V.Raveendra Sir

IPCC_33e_Practical Questions_Free Consent _______________________________35