List of top Legal Studies Questions on Laws of Contract

Consideration should be something in return of promise which

A stipulation in a bond for payment of compound interest on failure to pay simple interest at the same rate as was payable upon the principal is not a penalty within the meaning of:

The correct sequence in the formation of a contract is:

When an agreement is discovered to be void, or when a contract becomes void, any person who has received any under such an agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.

Following statements are correct about the Sale of Goods Act, 1930:

Following is true about any hire-purchase agreement:

Following applies to voidable contracts:

The Contract Labour (Regulation and Abolition) Act, 1970 will be applicable on which of the following:

Establishment X has 17 female employees since the last two years as contract labours for making papers.

Establishment Y has 21 female employees since the last two years as contract labours for making papers.

Establishment Z hires 21 female employees as contract labours for 59 days in the preceding year for destroying papers after Exams in NLUs.

Contractor A hires 21 female employees as contract labours for a seasonal work of preparing a sweet dish called Ghevar on occasion of Raksha Bandhan in the month of August.

Select the correct option:

A party cannot avail the benefit of Doctrine of Fairness to alter the terms of contract because it is presumed that if a commercial contract is taking place under a statute:

The doctrine of promissory estoppel is by now well recognized and well defined by a catena of decisions of this Court. Where the Government makes a promise knowing or intending that it would be acted on by the promise and, in fact, the promise, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promise notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 229 of the Constitution. The rule of promissory estoppel being an equitable doctrine has to be moulded to suit the particular situation. It is not a hard-and-fast rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. This doctrine is a principle evolved by equity, to avoid injustice and though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. For application of the doctrine of promissory estoppel the promise must establish that he suffered in detriment or altered his position by reliance on the promise.
Normally, the doctrine of promissory estoppel is being applied against the Government and defence based on executive necessity would not be accepted by the court. However, if it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise an equity in favour of the promise and enforce the promise against the Government. Where public interest warrants, the principles of promissory estoppel cannot be invoked. The Government can change the policy in public interest. However, it is well settled that taking cue from this doctrine, the authority cannot be compelled to do something which is not allowed by law or prohibited by law. There is no promissory estoppel against the settled proposition of law. Doctrine of promissory estoppel cannot be invoked for enforcement of a promise made contrary to law, because none can be compelled to act against the statute. Thus, the Government or public authority cannot be compelled to make a provision which is contrary to law.
[Extract from the judgment of the Supreme Court in Shree Sidhbali Steels Limited v. State of Uttar Pradesh, (2011) 3 SCC 193, decided on January 20, 2011, hereafter ‘Shree Sidhbali Steels’].

Indeed, in England, in the celebrated Sea Angel case, 2013 (1) Lloyds Law Report 569, the modern approach to frustration is well put, and the same reads as under: “In my judgment, the application of the doctrine of frustration requires a multi-factorial approach. Among the factors that have to be considered are the terms of the contract itself, its matrix or context, the parties’ knowledge, expectations, assumptions and contemplations, in particular as to risk, as at the time of the contract, at any rate so far as these can be ascribed mutually and objectively, and then the nature of the supervening event, and the parties’ reasonable and objectively ascertainable calculations as to the possibilities of future performance in the new circumstances. Since the subject matter of the doctrine of frustration is contract, and contracts are about the allocation of risk, and since the allocation and assumption of risk is not simply a matter of express or implied provision but may also depend on less easily defined matters such as “the contemplation of the parties”, the application of the doctrine can often be a difficult one. In such circumstances, the test of “radically different” is important: it tells us that the doctrine is not to be lightly invoked; that mere incidence of expense or delay or onerousness is not sufficient; and that there has to be as it were a break in identity between the contract as provided for and contemplated and its performance in the new circumstances.”
“… It is clear from the above that the doctrine of frustration cannot apply to these cases as the fundamental basis of the PPAs remains unaltered. Nowhere do the PPAs state that coal is to be procured only from Indonesia at a particular price. In fact, it is clear on a reading of the PPA as a whole that the price payable for the supply of coal is entirely for the person who sets up the power plant to bear. The fact that the fuel supply agreement has to be appended to the PPA is only to indicate that the raw material for the working of the plant is there and is in order. It is clear that an unexpected rise in the price of coal will not absolve the generating companies from performing their part of the contract for the very good reason that when they submitted their bids, this was a risk they knowingly took. We are of the view that the mere fact that the bid may be non-escalable does not mean that the respondents are precluded from raising the plea of frustration, if otherwise it is available in law and can be pleaded by them. But the fact that a non-escalable tariff has been paid for, for example, in the Adani case, is a factor which may be taken into account only to show that the risk of supplying electricity at the tariff indicated was upon the generating company”. 
[Extracted from Energy Watchdog v. Central Electricity Regulatory Commission (2017) 14 SCC 80].

“The Specific Relief Act, 1963 was enacted to define and amend the law relating to certain kinds of specific relief. It contains provisions, inter alia, specific performance of contracts, contracts not specifically enforceable, parties who may obtain and against whom specific performance may be obtained, etc. It also confers wide discretionary powers upon the courts to decree specific performance and to refuse injunction, etc. As a result of wide discretionary powers, the courts in majority of cases award damages as a general rule and grant specific performance as an exception. The tremendous economic development since the enactment of the Act have brought in enormous commercial activities in India including foreign direct investments, public private partnerships, public utilities infrastructure developments, etc., which have prompted extensive reforms in the related laws to facilitate enforcement of contracts, settlement of disputes in speedy manner. It has been felt that the Act is not in tune with the rapid economic growth happening in our country and the expansion of infrastructure activities that are needed for the overall development of the country.
In view of the above, it is proposed to do away with the wider discretion of courts to grant specific performance and to make specific performance of contract a general rule than exception subject to certain limited grounds. Further, it is proposed to provide for substituted performance of contracts, where a contract is broken, the party who suffers would be entitled to get the contract performed by a third party or by his own agency and to recover expenses and costs, including compensation from the party who failed to perform his part of contract. This would be an alternative remedy at the option of the party who suffers the broken contract. It is also proposed to enable the courts to engage experts on specific issues and to secure their attendance, etc.
A new section 20A is proposed for infrastructure project contracts which provides that the court shall not grant injunction in any suit, where it appears to it that granting injunction would cause hindrance or delay in the continuance or completion of the infrastructure project... Special courts are proposed to be designated to try suits in respect of contracts relating to infrastructure projects and to dispose of such suits within a period of twelve months from the date of service of summons to the defendant and also to extend the said period for another six months in aggregate, after recordings reasons therefor.” [Extracted from Statement of Objects and Reasons, the Specific Relief (Amendment) Bill, 2017].

Which of the following is the time limit given under Section 17 of the Transfer of Property Act, 1882?

Which of the following is not a negotiable instrument as per the Negotiable Instruments Act, 1881?

In the light of Negotiable Instruments Act, 1881, at what rate interest will be charged if the rate of interest is not mentioned on the negotiable instruments?

A stipulation in a bond for payment of compound interest on failure to pay simple interest at the same rate as was payable upon the principal is not a penalty within the meaning of which of the following provision of the Indian Contract Act, 1872?

Which of the following statement is correct if A, intending to deceive B, falsely represents that five hundred maunds of indigo are made annually at A’s factory, and thereby induces B to buy the factory?

What is the default interest payable under Section 63A of the Transfer of Property Act, 1882?

Which of the following injunction can be granted only by the decree made at hearing and upon the merit of the suit?

Which of the following is not a fraud as per the Indian Contract Act, 1872?

Following is true about relationship of partnership :

Acknowledgement of a debt by a principal debtor binds the guarantor in all respects if he had given an express consent :

Revocation of a proposal may not be made by the following :

The following statements are related to s. 56 of the Contract Act, 1872 :

The questions are to be answered on the basis of what is stated or implied in the passage.Choose the most appropriate response that accurately and completely answer the question.
A contract of guarantee is a contract to perform the promise, of discharge the liability,of a third person in case of his default. Anything done,or any promise made,for the benefit of the principal debtor may be a sufficient consideration to the surety for giving the guarantee.In every contract of guarantee there is an implied promise by the principal debtor to indemnify the surety, and the surety is entitled to recover from the principal debtor whatever sum he has rightfully paid under the guarantee,but no sums, which he has paid wrongfully. Any guarantee,which has been obtained by means of misrepresentation made by the creditor, or with his knowledge and assent, concerning a material part of the transaction,is invalid.Any guarantee,which the creditor has obtained by means of keeping silence as to material circumstance, is also invalid.