CBSE Questions for Class 12 Commerce Legal Studies Topics Of Law Quiz 17 - MCQExams.com

_______is the delivery of goods, by one person to another, for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of, according to the instructions of the person delivering them.
  • Indemnity
  • Bailment
  • Guarantee
  • Sale
Ravi found a purse in a computer education centre. He deposited the purse with proprietor of the centre so that the real owner can claim. However, no one claimed the purse. Ravi wants the purse back. Can he succeed?
  • Yes
  • No
  • Partly yes
  • None of the above
Anything committing, or threatening to commit, any act forbidden by the Indian Penal Code with the intention of causing any person to enter, into an agreement is called______.
  • Fraud
  • Coercion
  • Misrepresentation
  • Cheating
An agreement made with the intention of entering into legal relationship gives rise to contractual liabilities. 

Factual Situation: X invited Y and this family to dinner on a certain night. Y accepted X's invitation. On the date fixed,Y drove with his family from Sector 14 to Industrial Area and found his house locked.They waited up to 9.30 p.m. but the hosts did not turn up.They left the place and had their meals in Piccadilly in SectorThe cost of meal came to Rs.100. 
Issue: Can Y recover the amount?
  • No, Y cannot recover the amount from X because agreement was purely social in nature and there was no intention to create legal relationship.
  • Y can recover the amount because it is responsible for all botheration caused to Y, so X is liable.
  • Neither (a) nor (b).
  • Both (a) and  (b).
If an agent commits a tort or other wrong (e.g., misrepresentation or fraud) during his agency, whilst acting within the scope of his actual or apparent authority, the principal is not liable.
  • True
  • False
  • Partly true
  • None of the above
A ___ is a transaction under which goods are delivered by one person to another for some purpose, upon a contract that they be returned or disposed of as directed after the purpose accomplished.
  • Pledge
  • Bailment
  • Sale
  • All of the above
The general rule is that only owner can create a valid pledge. However, even non-owner can create a valid pledge. Decide.
  • A mercantile agent who is in possession of goods or of document of title to goods, with the consent of owner
  • When the pawnor has obtained possession of goods under a voidable contract by way of fraud, coercion, etc
  • Co-owner is in possession of goods with the consent of other co-owner
  • All of the above
C stayed in a room in a hotel. The hotel-keeper knew that the room was in an insecure condition. While C was dining in the dining room, some articles were stolen from his room. State whether hotel-keeper was liable for the loss?
  • Yes. Hotel-keeper is liable for the loss as he should have taken reasonable steps to rectify the in secured condition of the rooms.
  • No. Hotel-keeper is not liable for the loss even if do not take reasonable steps to rectify the in secured condition of the rooms.
  • Partly yes
  • None of the above
An authority is said to be ______ when it is to be inferred from the circumstances of the case, and things spoken or written, or the ordinary course of dealings.
  • Express
  • Implied
  • (A) or (B)
  • None of the above
The bailee must take as much care of the goods bailed to him as a ______ would take under similar circumstances of his own goods of the same bulk, quality and value as the goods bailed.
  • Man of political prudence
  • Man of extra-ordinary prudence
  • Man of ordinary prudence
  • Man of ordinary economic condition
LEGAL PRINCIPLE: Contract is an agreement freely entered into between the parties. But when consent to an agreement is obtained by undue influence, the contract is voidable at the option of the party whose consent was so obtained.
FACTUAL SITUATION: Pragya had been working for a business man Anurag since the age ofIn 2000, (aged 21) Pragya purchased a flat. In 2005, Mr. Anurag's business was facing financial difficulties, and he asked Pragya to offer up her flat as financial security against an overdraft facility for the business. In July of that year, the banks solicitors wrote to Pragya, advising that she should take independent legal advice before putting property up as a security for the debt. The bank also notified Pragya that the guarantee was unlimited in both time and financial amount. Having discussed the arrangement with Anurag, Pragya was unaware of the extent of the borrowing, but was assured that her mortgage would not be called upon, and that his properties which were also used as security would be looked at first. A charge was executed over the Pragya's property in AugustIn 2009, Mr. Anurag's business went into liquidation and the bank formally demanded RS. 60,24,912 from Pragya. Pragya raised the defence of undue influence-stating that Mr. Anurag had induced her to enter into the agreement, and the bank had full knowledge/notice of this undue influence which should set aside the banks right to enforce the debt recovery against Pragya. Bank is contending that there is no undue influence.
Whether the consent to offer the flat as a financial security obtained through undue influence?
  • No, because Pragya was not forced by Anurag to offer her flat as a security.
  • No, because Pragya was an educated and adult employee of Anurag and she knew what she was doing.
  • Yes an employer/ employee relationship was capable of developing into such a relationship for undue influence. There was no benefit to Pragya in the agreement. The lack of benefit to one party was evidence enough.
  • No, an employer/employee relationship is not capable of developing into a relationship for undue influence.
LEGAL PRINCIPLE: It is a case of fraud where a party to a contract knows or believes a fact to be true, but conceals it actively from the other party with a view to induce that person to enter into the contract.
FACTUAL SITUATION: While taking a life insurance policy, in reply to questions by the insurance company during the inquiry into his proposal, Zameer deliberately concealed the fact of his medical treatment for a serious ailment, which he had undergone only a few weeks ago.
  • The concealment of fact by Zameer amounted to fraud.
  • The act of Zameer amounted to innocent misrepresentation.
  • The act of Zameer did not amount to any misrepresentation.
  • The act of Zameer did not amount to fraud, as disclosing the fact would have resulted in exposure of his privacy.
LEGAL PRINCIPLE: When a person who has made a promise to another person to do something does not fulfill his promise, the other person becomes entitled to receive from the person who did not fulfill his promises, compensation in the form of money.
FACTUAL SITUATION: 'X' made a promise to 'Y' to repair his car engine. Y made the payment for repair. After the repair, 'Y' went for a drive in the same car. While driving the car, Y met with an accident due to bursting of a tyre.
  • 'X' will not be entitled to receive compensation.
  • 'Y' will not be entitled to receive compensation from 'X'.
  • 'X' will be entitled to receive compensation from 'Y' in the form of money.
  • 'Y' will be entitled to receive compensation from 'X' in the form of money.
LEGAL PRINCIPLE: An agreement, the terms of which are not certain, or capable of being made certain, is void.
FACTUAL SITUATION: Sunder agreed to take Bhola's penthouse on rent for three years at the rate of rupees 12,00,000 per annum provided the house was put to thorough repairs and the living rooms are decorated according to contemporary style.
  • It is voidable contract at the option of Bhola.
  • There is a valid contract because there is an offer from Sunder and acceptance from Bhola.
  • There is a valid contract because all the terms of contract are certain and not vague as the rent is fixed by both of them and the term present style only can be interpreted to mean the latest style.
  • There is no valid contract because it has vague and uncertain terms, as the term 'contemporary style' may mean one thing to Sunder and another to Bhola.
A, a contractor, appointed B to manage his entire work. It as agreed that B would receive 50% of the profits as his remuneration and would bear all the losses, if any here, B is___________.
  • A' agent
  • A' & partner
  • Sole proprietor
  • None of the above.
PRINCIPLE: Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.
FACT: A sells, by auction to B, a horse which A knows to be unsound. A says nothing to B about the horse's unsoundness.
  • A can be held liable for fraud.
  • A can be held liable for misrepresentation.
  • A cannot be held liable, because he did not say anything positive about the soundness of horse.
  • A cannot be held liable because it is the buyer who must be aware of the things.
The author classifies Indias workforce into-
  • organized and unorganized sector
  • the formal and informal sector
  • Both (a) and (b)
  • None of the above
LEGAL PRINCIPLE: Contract is a written or spoken agreement, with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration. Such an agreement is intended to be enforceable by law. A unilateral contract is one in which there is a promise to pay or give other consideration in return for actual performance.
FACTUAL SITUATION: A Toilet Soap Manufacturing Company in India in order to promote the sale of their product, published an advertisement in all the newspapers on January 1, 2017 that the Company has kept a model ignition key of an Audi A3 Car. The advertisement also stated that whoever gets the said key before December 31, 2017 from a soap bar will be gifted the Audi A3 Car. Mr. Martin, a foreigner who came to India as a Tourist who was staying in a Hotel found a Key similar to Car Ignition Key. Mr. Martin brought this matter to the notice of the Hotel Manager. The Manager informed Mr. Martin about the Company's advertisement on January 1,Mr. Martin wants to claim the Car. Will he succeed?
  • No, The Soap Company has not entered into a contract with Mr. Martin as he was not in India on January 1, 2017 when the advertisement was published.
  • Mr. Martin obtained the Key before the stipulated date from the Soap Bar. So he is covered by the offer of the Soap Company and can claim the car.
  • No, Actual intention of the Company was to promote the sale of the Soap.
  • The Hotel Manager who could legally claim the Car as he was the one actually purchased the soap for the use in the Hotel.
LEGAL PRINCIPLE: If a party to a contract agrees to it under undue influence of any other party then the party under the undue influence may refuse to perform in accordance with the agreement.
FACTUAL SITUATION: A, a rich youngster became a member of a religious group and soon he was appointed by P, the head of the group as his personal secretary. As per the rules of the group, all officials and staff of the group were supposed to stay in the group's official premises itself. Some days later, A was asked by P to execute a Gift deed in favour of P, in which it was mentioned that all immovable properties in his name are being gifted to P. A was unwilling to execute the deed, but he was forcefully restrained by P and his body guards in P's office and made A sign the gift deed. Soon after this A left the group and refused to hand over the property as agreed to in the gift deed. Is A's action valid?
  • As gift is also contract, the consent of A was not obtained by P while executing the deed.
  • It is illegal for religious groups acquire properly from its members.
  • A executed the deed, under compulsion and undue influence, and was right in withdrawing from the contract.
  • As the gift deed was executed by A, he cannot refuse.
When the parties to a contract agree that a certain sum of money would be payable in case of breach of contact such payment of damage is called ________________.
  • liquidated damage
  • unliquidated damage
  • penalty
  • special damages
LEGAL PRINCIPLE: Contract is an agreement freely entered into between the parties. But when consent to an agreement is obtained by undue influence, the contract is voidable at the option of the party whose consent was so obtained.
FACTUAL SITUATION: Pragya had been working for a business man Anurag since the age ofIn 2000, (aged 21) Pragya purchased a flat. In 2005, Mr. Anurag's business was facing financial difficulties, and he asked Pragya to offer up her flat as financial security against an overdraft facility for the business. In July of that year, the banks solicitors wrote to Pragya, advising that she should take independent legal advice before putting property up as a security for the debt. The bank also notified Pragya that the guarantee was unlimited in both time and financial amount. Having discussed the arrangement with Anurag, Pragya was unaware of the extent of the borrowing, but was assured that her mortgage would not be called upon, and that his properties which were also used as security would be looked at first. A charge was executed over the Pragya's property in AugustIn 2009, Mr. Anurag's business went into liquidation and the bank formally demanded RS. 60,24,912 from Pragya. Pragya raised the defence of undue influence-stating that Mr. Anurag had induced her to enter into the agreement, and the bank had full knowledge/notice of this undue influence which should set aside the banks right to enforce the debt recovery against Pragya. Bank is contending that there is no undue influence.
Assuming it is a case of undue influence. Decide whether the bank has done enough to allay concerns of undue influence?
  • The bank had not taken all reasonable steps to allay themselves of the concerns regarding undue influence. The fact that, on advice from the bank, the defendant did not seek independent advice, should have been taken as confirmation of undue influence.
  • Yes, the Bank had advised Pragya that she should take independent legal advice before putting her property up as security for the debt.
  • Pragya has a duty to be aware of the consequences of her act.
  • Bank has done enough as it had notified Pragya that the guarantee was unlimited in both time and financial amount.
Given below are Legal Principles followed by a Factual Situation. Apply the principles followed by a factual Situation. Apply the principle to it and select the most appropriate answer for question among the four choices given.
LEGAL PRINCIPLE: Contract is an agreement freely entered into between the parties.
FACTUAL SITUATION: Ramlal was a dealer in cement. The Government of India, by an order issued under the Essential Commodities Act, fixed the price of cement, and also the quantity which a person can buy from the dealer. Ramlal carried on his business under this new order for sometime, but he refused to pay sales tax on his sale transactions on the ground that these were not the contracts freely entered into by him.
Decide.
  • Ramlal would succeed, because free consent between the parties was there despite the restriction on price and quantity.
  • Ramlal would not succeed, because free consent between the parties was there despite the restriction on price and quantity.
  • Ramlal would succeed, because the Government under the new order, forced him to enter into contracts.
  • None of the above.
LEGAL PRINCIPLE: An agreement is void if its object is unlawful.
FACTUAL SITUATION: Sunil had a rich uncle who owns prime property in Chennai and had lot of money in the bank. Being the only heir, Sunil was sure that he would inherit the property. One day the uncle called him to his room and announced that he planned to marry again. This angered Sunil and he plans to murder his uncle so he hired Anuj, a murderer and entered into a contract with him to kill his uncle's house intending to kill him. On reaching there, he realised that Sunil's uncle was already dead so he left without doing anything. Next day, after post-mortem report, it transpired that Sunil's uncle had died due to heat attack. Now, Sunil wants to recover the advance from Anuj, Will he succeed?
DECIDE.
  • Yes
  • No
  • Anuj is liable to return the amount as the act was done by him
  • None of the above
LEGAL PRINCIPLE:  Every agreement in restraint of marriage of any person is void.
FACTUAL SITUATION: X entered into an agreement with a banker and deposited Rs five lakhs with the banker. The terms of the agreement provided that X's son Y shall be the beneficiary of the deposited amount only if he marries after he attains the age of 21.
QUESTION: Is agreement between X and banker void?
  • Yes, since the agreement is restraining the marriage of Y.
  • Yes, because Y has right to marry only when he is eligible to cast his vote.
  • No, agreement is valid and enforceable.
  • None of the above
PRINCIPLE: Two or more persons are said to consent if they agree upon the same thing in the same sense. Consent is said to be fee when it is not caused by coercion, or undue influence, or fraud, or misrepresentation, or mistake. When consent to an agreement is caused by coercion, undue influence, fraud or misrepresentation, the agreement is a contract viodable (rescindable ot terminable) at the option of the party whose consent was so caused. However, when consent to an agreement is caused by mistake as to a matter of fact essential to the agreement, the agreement is void.
FACTS: ''X' threatens to gun down 'Y', if he ('Y'') does not sell his property worth Rs. 20,00,000 for Rs. 1,00,000 only. As a consequence, 'Y' agrees to see it as demanded by 'X'?
Which of the following derivations is CORRECT?
  • There is a contract between 'X' and 'Y'
  • There is an agreement between 'X' and 'Y', which can be enforced by the court of law
  • There is an agreement between 'X' and 'Y' which cannot be enforced by the court of law
  • There is a contract between 'X 'and 'Y' which voidable at the option of 'Y'
LEGAL PRINCIPLE: A contract is an agreement enforceable by law.
FACTUAL SITUATION: Amita invited Bina to her house for dinner. Bina accepted the invitation but later did not go. On Bina's failure to attend Amita filed a suit against Bina for the price of non-consumed food. Will the law enforce this agreement?
DECIDE.
  • No, it is a social agreement.
  • Yes, Amita can recover amount for non-consumed food.
  • No. as Bina did not accept the invitation in writing.
  • No, because the law does not take account of trivial things.
LEGAL PRINCIPLE: An agreement is void if the court regards it as opposed to the public policy.
FACTUAL SITUATION: Sunita, while her husband Shankar was alive, promised to marry Neel in the event of Shankar's death. Subsequently, Shankar died, but Sunita refused to marry Neel. Neel sues Sunita for damages for breach of promise.
DECIDE.
  • Sunita is liable as she is bound to marry Neel.
  • She is liable to compensate Neel for breach of promise.
  • Neel can marry someone else.
  • She is not liable as the contract is opposed to public policy and is void.
PRINCIPLE: Every agreement, by which any party is restricted absolutely from enforcing his rights of any contract, by the usual legal proceedings in the ordinary Tribunals, is void to that extent.
FACTUAL SITUATION: Feroz and Pinto entered into an agreement for rendering certain services. As per the prevailing law, the agreement may be enforced either at Jaipur or Udaipur. The agreement itself, however, specifies that upon breach, the parties can only approach courts at Jaipur. Feroz breaches the contract and Pinto, being a resident of Udaipur, would like to sue him in Udaipur. He challenged the validity of the clause,
DECIDE.
  • Pinto will succeed as Feroz had made him suffer and the law must take his convenience into account and allow him to sue in Udaipur
  • Pinto will succeed as the contract does not allow him to institute any legal proceedings in any court of Tribunal in Udaipur
  • Pinto will fail as the contract does not restrain him from instituting legal proceedings in Jaipur
  • Pinto will fail as he was of sound mind while entering into contract and having accepted it, he cannot now deny his obligation
Given below are Legal Principles followed by a Factual Situation. Apply the principles followed by a factual Situation. Apply the principle to it and select the most appropriate answer for question among the four choices given.
LEGAL PRINCIPLE: An agreement to do act impossible in itself is void.
FACTUAL SITUATION: A promises B to discover a treasure trove by magic, if B pays him Rs.B being aware of the fact that A is a magician agrees to the same and pays him Rs.But to B's dismay no treasure trove was discovered. B files a suit for breach of contract and to recover Rs. 500.
DECIDE.
  • B's suit will fail
  • B would recover Rs. 500
  • B would recover Rs. 500 only if he has suffered some loss
  • A shall be required to discover treasure trove by magic otherwise he would be liable for breach of contract.
LEGAL PRINCIPLE: An agreement may be entered into orally or in writing, or by conduct.
FACTUAL SITUATION: 'A' went to the shop of 'B' and picked a toothbrush and gave a cheque of Rupees twenty to 'B' and left the shop.
  • 'A' should have carried a currency note of Rupees twenty to make the payment.
  • There was an agreement between 'A' and 'B'.
  • Payment of toothbrush cannot be made through a cheque.
  • 'A 'did not enter into an agreement with 'B'.
LEGAL PRINCIPLE: Mere silence as to facts likely to affect the decision of a person to enter into a contract is not fraud.
FACTUAL SITUATION: 'A' sells to 'B' a horse which 'A' knows to be unsound. 'A' says nothing to 'B' about the unsoundness of the house.
  • 'B' can take plea of fraud because she is minor.
  • 'A' has committed fraud.
  • There cannot be a contract between a father and daughter.
  • 'A' has not committed fraud.
As per the rules and the given facts, who coerces whom?
  • Aadil coerces Baalu
  • Baalu coerces Chulbul
  • Dhanraj coerces Chulbul
  • None of the above
PRINCIPLE: Mere silence as to facts likely to affect the decision of a person to enter into a contract does not amount to fraud, unless his silence is in itself equivalent to speech.
FACTS: A sells to B a horse which A knows to be of unsound mind. B says to A that if A does not say anything about the state of mind of horse, then B shall presume that the horse of sound mind. A says nothing to B about the mental condition of horse.
  • A has committed fraud
  • A has committed mis-representation
  • There cannot be a fraud because A says nothing about the mental condition of the horse
  • There cannot be a fraud because B did not ask A whether the horse is of sound mind
PRINCIPLE: A contract between the father and his son is a contract of utmost good faith. In such type of contract law presumes that at the time of entering into the contract the father was in a position to dominate the will of his son. Where one of the parties was in position to dominate the will of the other party, the contract is enforceable only at the option of the party whose will was so dominated.
FACTS: Ram had advanced a sum of Rs. 10,000 to his minor son Shyam. When Shyam became major, his father Ram misused his paternal position and entered into an agreement with Shyam and obtained a bond from him for a sum of Rs. 30,000 in respect of the advance. Whether this agreement is enforceable?
  • The agreement is enforceable against Shyam only for Rs. 10,000, the actual amount of money advanced to him
  • The agreement is enforceable against Shyam for Rs. 30,000 because he has signed the bond
  • The agreement is enforceable against Shyam because he was major at the time of agreement
  • The agreement is not enforceable against Shyam because Ram has misused his position as father to obtain an unfair advantage
PRINCIPLE: An agreement may be oral or written. However, if a law specifically requires that an agreement must be in writing then the agreement must be in writing. A law specifically requires that the agreements relating to transfer of the copyright in novel between an author of a novel and the producer of a motion picture must be in writing.
FACTS: The author of a novel, Love at Lost Sight had several rounds of discussion with a producer of motion picture regarding making of a motion picture based on Love at Lost Sight. During the last discussion, they decided to make a motion picture on Love at Lost Sight after making a payment of Rs. 10,00,000 (ten Lac only) in cash to the author who happily accepted this amount as full and final payment. Later on, on the advice of his lawyer, the author brought a case in a court of law against the producer on the ground that there is no written agreement between the producer and him.
  • The author is likely to succeed in the case as the agreement is not in accordance with the law
  • The author cannot succeed in the case as he has given his consent to the agreement
  • The author is not likely to succeed in the case because he has already accepted the amount of Rs. 10,00,000 as full and final payment
  • The author can succeed in the case as the consideration is not adequate
PRINCIPLE: If the object of an agreement is or becomes unlawful or immoral or opposed to public policy in the eyes of law then the courts will not enforce such agreements. Law, generally prohibits Child labour.
FACTS: P enters into an agreement with T by which P has to let his house to T for two years and T has to pay Rs 20,000.00 per month to P as rent. T starts a child care centre in that house. But after some time in order to earn more money for the maintenance of the centre, T starts sending the children of the centre on the rotation basis to work for four hours a day in some nearby chemical and hazardous factories. When P comes to know about this new development, he asks T either to stop the children from working in factories or to leave his house immediately. T neither agrees to leave the house nor to stop the children from working in the factories. P files a suit in the court of law for appropriate relief/action.
  • P cannot succeed as the agreement was for the two years and it cannot he terminated before the expiry of that period
  • P cannot succeed as the object at the time of making the agreement was not clear
  • P will succeed as the object of the agreement has become unlawful
  • P will not succeed if T agrees to share the wages of the children with P
Given below are Legal Principles followed by a Factual Situation. Apply the principles followed by a factual Situation. Apply the principle to it and select the most appropriate answer for question among the four choices given.
LEGAL PRINCIPLE: When due to natural disaster or war it becomes impossible to perform a contract, non-performance of such contract shall not make either of the parties liable for breach of contract but this does not include commercial impossibility.
FACTUAL SITUATION: Rakesh a merchant based in Kolkata deals in almonds, which he procures from Indian as well as foreign markets. Vimlesh enters into a contract with Rakesh for supply of 500  kilograms of almonds @ Rs. 400 per kilogram. The relations between India and Pakistan turned sour and both countries snapped business ties soon after Rakesh agreed to supply almonds to Vimlesh. Rakesh did not deliver almonds to Vimlesh because he mostly procured almonds from Pakistan, which were comparatively cheaper. When asked by Vimlesh, Rakesh said that due to no trade and war like conditions between India and Pakistan, he is not in a position to supply him almonds. Vimlesh files a suit for breach of contract.
DECIDE.
  • Vimlesh will succeed
  • Rakesh will succeed
  • None of them will succeed
  • Both of them will partially succeed
PRINCIPLE: A contract cannot be enforced by or against a person who is not a party to it. However, where some benefit is conferred on third party by the contract  itself, there third party can be allowed to enforce that contract to get such benefit.
FACTS: Dinesh is liable to pay Rs. 50,000 to Suresh. In order to discharge this liability Dinesh enters into a contract with Ramesh by which Dinesh sells his car to Ramesh for Rs. 1 lac. Ramesh takes the delivery of the car and promises/assures to pay its price at the earliest. Dinesh separately informs Suresh about this contract for his satisfaction. Ramesh fails to pay the car's price. Suresh wants to join Dinesh in filing suit against Ramesh for the recovery of price of the car. Whether suresh is entitled to do so?
  • Suresh is entitled to do so because the contract was made for his benefit
  • Suresh is entitled to do so because Dinesh is liable to him and discharge of this liability depends upon the payment of the price of the car by Ramesh
  • Suresh is not entitled to do so because liability of Dinesh does not depend upon any assurance of Ramesh
  • Suresh is not entitled to do so because he is not a party to the contract between Dinesh and Ramesh
Why the author believes that the proviso mentioned in the ordinance is obfuscated?
  • The creditors can still approach the court against the companies.
  • The banks and financial institutions can still approach debt recovery tribunal.
  • The proviso must be explained by substantial meanings and elaborations.
  • All of the above
PRINCIPLE: If a contract is made by post between two persons living in two different cities, then the contract is said to be complete as soon as the letter of acceptance is properly posted, and the place of completion of the contract is that city where acceptance is posted. It is worth mentioning here that in every contract there is always an offer from one party and the acceptance of the offer from the other party
FACTS: Sani, a resident of Patna, gives an offer by post to sell his house for Rs. 25 lacs to Hani, a resident of Allahabad. This offer letter is posted on 1st January 2013 from Patna and reaches Allahabad on 7th JanuaryHani accepts this offer and posts the letter of acceptance on 8th January, 2013 from Allahabad which reaches Patna on 16th Jaunuary,But Sani presuming that Hani is not interested in accepting this offer, sells his house to Gani at same price on 15th of JanuaryHani files a suit against Sani for breach of contract in the competent court of Allahabad. Whether Hani will succeed?
  • Hani cannot succeed as Sani cannot be compelled by law to wait for the answer from Hani for and indefinite period of time
  • Hani cannot succeed as he could use some other effective and speedy mode for communicating his acceptance in minimum possible time
  • Hani can succeed as he properly posted the letter of acceptance and the delay was beyond his control
  • Hani can succeed as contract became complete in the eyes of law on the date of posting the letter of acceptance
PRINCIPLE: An agreement to do an act impossible in itself cannot be enforced by a court of law.
FACTS: Ramesh agrees with his girl friend Shilpa to pluck stars from the sky through his extraordinary will power and bring them down on earth for her within a week. After the expiry of one week, Shilpa filed a suit for damages against Ramesh for the breach of contract against Ramesh for the breach of contract as Ramesh failed to perform his promise.
  • Shilpa can succeed in getting damages as Ramesh has deceived her
  • Ramesh cannot be held liable as he honestly believes that his love for Shilpa is true and, therefore, he will succeed in his endeavour
  • The court cannot entertain such suits as the act promised under the agreement is impossible in itself
  • Ramesh can be held liable for making an absurd promise
LEGAL PRINCIPLE: Mere silence as to the facts likely to affect the willingness of a person to enter to contract is not a fraud, unless the circumstances of the case are such that, on close examination if it is found to be the duty of the person keeping silent to speak, or unless his silence is, in itself, equivalent to speech.
FACTS: X sells by auction to Y, a horse which X knows to be of unsound state of mind. X says nothing to Y about the horse's unsound state of mind. Give the correct answer.
  • X can be held liable for fraud
  • X can be held for misrepresentation
  • X cannot be held liable, because he did not say anything positive about the mental state of the horse
  • X cannot be held liable because it is the buyer who must be aware of the things
PRINCIPLE: Where both parties to an agreement are under a mistake as to matter of fact essential to the agreement, the agreement is void.
FACTS: A had a piece of land, he believed that the value of the land was Rs. 1000 per square foot. B knew that the value of the land was in fact Rs. 1500 per square foot. However, he did not inform A and purchased the land at Rs. 1000.
  • The contract is valid since A should have been more careful
  • The contract is valid since B paid for the land
  • The contract is void since A was mistaken about the cost of the land
  • The contract is valid since the land has already been purchased
Baalu will succeed in getting the employment contract enforced if he can show that ______.
  • He is the best friend of Aadil
  • It was his father, and not he, who used coercion against Chulbul
  • Chulbul has promised his father to employ him
  • None of the above
A and B, a Hindu couple were married to each other. Owing to differences between them, they decide to get divorced. They entered into a contract laying down the conditions that both parties had to adhere with. One of the terms of the contract was that their children would not be entitled to claim the ancestral property of A, the husband.
  • The contract will be void since the children are not a party to the contract
  • The contract will be void sine its terms opposed to the personal law of the parties
  • The contract will be void
  • The contract will be void since woman cannot enter into a contract with her husband
A sent a letter to B stating that he was willing to sell to B, 10 bags of rice at Rs. 20 each. B wrote a letter to A accepting the offer and posted it.
  • The contract is entered into the moment B posts the letter
  • The contract is entered into only after A receives and reads the letter
  • The contract is entered into only after A receives the letter, reads it and then gets back to B
  • The contract is entered into the moment A makes the offer
PRINCIPLE: An agreement, the meaning of which is not certain, or capable of being made certain, is void.
FACTUAL SITUATION: A and B, who were brothers, entered into an agreement which stated that A would sell his entire share of the ancestral property to B. The agreement did not mention the specific details (like survey number) of the property.
  • The contract will be void since it is vague
  • The contract will be void because it is not possible to ascertain the property which is being referred to
  • The contract will be void since it is illegal
  • The contract is valid since there is clarity about the property sought to be sold
PRINCIPLE: A contract procured by coercion is bad under Indian Contract Act. Coercion is defined as committing or threatening to commit any act forbidden by Indian Penal Code. Attempt to commit suicide is an offence under Indian Penal Code.
FACTS: A wanted his wife B to part with some landed property given to her by her father. B resisted fearing that her husband would sqander it away. A threatened her that if she does not sign the deed transferring the property to him (i.e., A), he would commit suicide. B signed the deed. Subsequently, she challenged the deed on the ground that the deed was bad under law.
  • The deed is valid under the law
  • The transfer of property is complete once the deed is entered between the owner of the property and the buyer
  • The deed is not valid as it was signed under the threat of suicide by her husband which amounts to coercion and vitiates the contract
  • Husband has a right over the property of the wife that was voluntarily transferred to the buyer
PRINCIPLE: An agreement is void to the extent that it restricts absolutely, a party from enforcing his contractual rights by usual proceedings in any ordinary event.
FACTS: A and B entered into a transaction in Delhi for sale of goods based in Delhi. The contract stated that in case of a dispute, only civil courts in Chennai would have jurisdiction. Neither A nor B reside or carried on business in Chennai.
  • The contract is valid since it is still on Indian court that has jurisdication
  • The contract is void since it ousts the jurisdiction of the competent court
  • The contract is void since the consent of the court is required before entering into such a contract
  • The contract is valid since Chennai courts have expertise with respect to contractual matters
PRINCIPLE: When the parties to an agreement agree on the same thing in the same sense, there arises legally binding obligations between them.
FACTS: Zaverilla's antique shop was a well-known shop of the locality. Taradevi, a socialite of the locality, went to the shop and she was attracted by an earthen jar on display. Zaverilla explained to her that the jar belonged to Hoysala period; and despite its earthern composition, it was very strong and almost unbreakable. Taradevi replied to him that she was so captivated by the jar that it was immaterial to her as to which period it belonged. She bought the jar and came home. She placed the jar in a prominent place in her drawing room. One of her friends, an art critique, who happened to visit her, told her that the jar was not at all an antique, but Taradevi did not bother about it. One day, it accidentally fell down and broke into pieces. Taradevi took up the matter with Zaverilal that his both statements were wrong and, therefore, he should pay damages to her.
  • Zaverilal must compensate her, since both his statements concerning jar were wrong
  • Zaverilal need not compensate, since, Taradevi was not concerned with its antique value at all
  • Zaverilal must compensate, because he carelessly made the statements
  • None of the above
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Practice Class 12 Commerce Legal Studies Quiz Questions and Answers