List of top Legal Studies Questions on Laws of Contract

Select the most appropriate statement that applies to impossibility of performance or doctrine of frustration

Which of the following is a requisite condition for a contract with the Government under Article 299 of the Constitution of India ?

A contract against public policy is

Delivery of goods as security for payment of a debt or performance of a promise is called

Which of the following laws places an embargo on the civil court granting injunction in respect of all disputes arising out of a contract relating to infrastructural projects ?

A _____________ is a contract to do or not to do something, if an uncertain future event happens. It also cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.

Delivery of goods from one person to another for a special purpose is called as

According to section 4 of the Indian Contract Act, 1872, the communication of an acceptance is complete as against the proposer

Every agreement of which the object or consideration is unlawful is

Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent

It is a cardinal principle of the law of contract that acceptance of an offer must be absolute and it can give no room for doubt. The offer and acceptance must be founded on three components, viz., ‘certainty’, ‘commitment’ and ‘communication’. However, when the acceptor puts any new condition while accepting the proposal already signed by the proposer, the contract is not complete until the proposer accepts that condition, as held by the Court in Haridwar Singh v. Bagun Sumbrui,[(1973) 3 SCC 889]. An acceptance with a variation is no acceptance. It is, in effect and substance, simply a counter-proposal which must be accepted fully by the original proposer, before a contract is made.

The Supreme Court of India has held that it is a cardinal principle of the law of contract that the offer and acceptance of an offer must be absolute. It can give no room for doubt. The offer and acceptance must be based or founded on three components, that is, certainty, commitment and communication. However, when the acceptor puts in a new condition while accepting the contract already signed by the proposer, the contract is not complete until the proposer accepts that condition, as held by the Court in Haridwar Singh v. Bagun Sumbrui, [AIR 1972 SC 1242]. An acceptance with a variation is no acceptance. It is, in effect and substance, simply a counter proposal which must be accepted fully by the original proposer, before a contract is made.

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

Section 4 of the Indian Contract Act, 1872 reads as follows:
Communication when complete - The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete, - as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer. 
Thus, the provision makes no difference in the position of the offeror. The offeror becomes bound when a properly addressed and adequately stamped letter of acceptance is posted. The acceptor does not become bound by merely posting his acceptance. He becomes bound only when his acceptance comes to the knowledge of the proposer. The contract is concluded at the place from where the proposal is accepted and communication of acceptance is dispatched, i.e., the address at which the proposal was sent. The court at that place would have jurisdiction to entertain a cause of action under the contract. This rule, that the communication of an acceptance is complete as against the proposer when the letter is posted, is probably intended to apply only when the parties are at a distance and they communicate by post. “Where, however, the parties are in each other’s presence or, though separated in space”, they are in direct communication, as, for example, by telephone, no contract will arise until the offeror receives the notification of acceptance

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

Select the correct statement:

The principle of balancing between losses and gains, by reason of death, to arrive at the amount of compensation is a general rule applicable to the following:

What is the correct statement for insurance contracts?

Following is true about 'Theory of unjust enrichment':

Select the incorrect statement about sale and contract of sale:

Select the correct statement from the following:

A contracting party is under no obligation to disclose the whole truth to the other party or to give him the whole information in his possession affecting the subject-matter of the contract, Pick the most appropriate option for the statement:

'A surety's liability can be discharged only by release of principal debtor'. Pick the appropriate option/s in relation to the given statement from the following:

Following is true in the case of frustration of contracts:

A person deposited his suitcase at a cloak room at a railway station. He was handed over a ticket by the clerk on the face of which it was mentioned "see back". On the back of the ticket, there was a notice that the railway administration will not be responsible for any luggage exceeding Rs 5000/- value. In the cloak room a notice to the same affect was hung. The person's suitcase was lost and he claimed the full value of his loss approximating around Rs 20,000/-. On the basis of the above, select the correct answer: