Your Answer : (Not Answered)

Correct Answer : C

Section 178 validates a pledge made by a mercantile agent.

Ordinarily no one can pledge goods he does not own (the paper prints 'by now owner' for a non-owner). Section 178 of the Indian Contract Act makes an exception: where a mercantile agent is, with the owner's consent, in possession of goods or documents of title, a pledge he makes in the ordinary course of business is as valid as if the owner had authorised it, provided the pledgee acts in good faith and without notice of his lack of authority.

Factors, auctioneers and bankers are not the persons the section names; a factor may happen to be a mercantile agent, but the section is framed in terms of mercantile agents.

Your Answer : (Not Answered)

Correct Answer : D

The key gives Both (A) and (B).

Section 169 of the Indian Contract Act lets a finder sell the goods when the owner cannot with reasonable diligence be found, or refuses the finder's lawful charges, in two situations: when the thing is in danger of perishing or losing most of its value, and when the lawful charges of the finder amount to two-thirds of its value.

The key reads 'Both' as both of these situations being recognised grounds of sale. Either ground is enough on its own, so 'Either (A) or (B)' expresses the same law; the key prefers the option that names both grounds.

Your Answer : (Not Answered)

Correct Answer : C

Section 73 covers general and special damages arising out of usual or natural and peculiar circumstances of a particular case.

Section 73 of the Indian Contract Act, based on Hadley v. Baxendale, allows compensation for loss which naturally arose in the usual course of things from the breach (general damages), or which the parties knew, when they made the contract, to be likely to result from it (special damages arising from particular circumstances known to both).

Options A and B each describe only one limb of the rule. Option D is wrong because the section expressly excludes remote and indirect loss.

Your Answer : (Not Answered)

Correct Answer : B

A frustrated contract is void.

Section 56 of the Indian Contract Act provides that a contract to do an act which, after it is made, becomes impossible or unlawful through an event the promisor could not prevent, becomes void when the act becomes impossible or unlawful. This is the doctrine of frustration (Satyabrata Ghose v. Mugneeram Bangur, 1954).

It is not enforceable or valid, since performance is excused. Voidable means valid until avoided at a party's option, which is not how frustration operates; it discharges the contract automatically.

Your Answer : (Not Answered)

Correct Answer : D

The answer is (A) is false but (R) is true.

Section 7 of the Indian Contract Act says that to convert a proposal into a promise the acceptance must be absolute and unqualified (section 7(1)), and must be expressed in some usual and reasonable manner unless the proposal prescribes the manner (section 7(2)).

The assertion says 'absolute and qualified', which reverses the rule, since a qualified acceptance is a counter-offer. The reason reproduces section 7(2) correctly. So only (R) is true.

Your Answer : (Not Answered)

Correct Answer : D

Under English law, indemnity covers all of the above.

Section 124 of the Indian Contract Act defines a contract of indemnity narrowly: a promise to save the other from loss caused by the conduct of the promisor himself or of any other person. English law is wider. An indemnity there covers loss however caused, whether by the promisor's act, by a third party, or by an accident or event not caused by any person, such as an act of God (vis major). That is why a contract of insurance is an indemnity in English law.

So each of the first three options states only part of the English position.

Your Answer : (Not Answered)

Correct Answer : D

The answer is All of the above.

Standard form contracts are printed contracts drafted in advance by one party, usually a large enterprise, and offered on a take-it-or-leave-it basis. The other party can only accept or reject the terms as they stand. Common examples are insurance policies for life, fire and marine risks, railway tickets for passengers and goods, and bills of lading issued by carriers.

All three listed documents are of this kind, so choosing any one alone is incomplete. Courts protect the weaker party through rules such as reasonable notice of terms and strict construction against the drafter.

Your Answer : (Not Answered)

Correct Answer : B

A voidable agreement is an agreement enforceable at the option of the party whose consent is not free.

Section 2(i) of the Indian Contract Act defines a voidable contract as an agreement which is enforceable by law at the option of one or more of the parties, but not at the option of the other or others. Under Section 19, when consent is caused by coercion, fraud or misrepresentation, the contract is voidable at the option of the party whose consent was so caused. The option's word 'acceptor' stands for that party.

'An agreement enforceable' describes a valid contract, 'not enforceable' describes a void agreement, and 'Both (A) and (B)' fails with A.

Your Answer : (Not Answered)

Correct Answer : C

The principle that no one should be enriched at another's expense signifies quasi-contract.

Quasi-contracts (sections 68 to 72 of the Contract Act) create obligations resembling those of a contract where there is no agreement, to prevent unjust enrichment. Examples are the duty to pay for necessaries supplied to a person incapable of contracting, to repay money paid by mistake, and to pay for a non-gratuitous benefit enjoyed.

Damages and compensation are remedies for breach, and a penalty is a sum stipulated to deter breach; none is the doctrine against unjust enrichment.

Your Answer : (Not Answered)

Correct Answer : A

The claim lies under Section 68 of the Indian Contract Act, 1872.

Section 68 provides that if a person incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied with necessaries suited to his condition in life, the person who supplied them is entitled to be reimbursed from the property of the incapable person. Its illustration (b) is exactly the case of a person who supplies the wife and children of a lunatic with necessaries.

Section 69 covers a person who pays money due by another, Section 70 a person enjoying the benefit of a non-gratuitous act, and Section 71 the finder of goods.

Your Answer : (Not Answered)

Correct Answer : C

A breach of contract can result in both liquidated and unliquidated damages.

Liquidated damages are a sum fixed in the contract itself as payable on breach; in India, under Section 74 of the Contract Act, the court awards reasonable compensation not exceeding the sum named. Unliquidated damages are assessed by the court under Section 73 for the loss that naturally arose from the breach, where the contract fixes no sum.

Either kind can follow a breach, depending on whether the parties stipulated an amount, so neither single option is complete.

Your Answer : (Not Answered)

Correct Answer : A

Both (A) and (R) are true and (R) is a good explanation of (A).

Section 2(a) of the Indian Contract Act, 1872 defines a proposal: when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. The Assertion states the first half and the Reason the second.

The Reason supplies the purpose that turns a mere statement of willingness into an offer, so it explains the Assertion rather than merely standing beside it. Neither statement is false, which rules out the last two options.

Your Answer : (Not Answered)

Correct Answer : A

Both (A) and (R) are correct, and (R) is a good explanation of (A).

Goods displayed in a shop window or on shelves with price tags are an invitation to treat, an invitation to customers to make offers, not an offer themselves. In Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953), the court held that the customer makes the offer by taking the article to the cashier and tendering the price, and the shopkeeper accepts it at the counter.

The Reason states exactly that the customer's tender is the offer, which is why the display can only be an invitation, so it explains the Assertion. Hence the options treating either statement as false, or the Reason as unrelated, are wrong.

Your Answer : (Not Answered)

Correct Answer : A

Both A and R are true and R is a good explanation of A.

The assertion is Sir William Anson's well-known image: an acceptance is to an offer what a lighted match is to a train of gunpowder. It produces something that cannot be recalled or undone. The reason states why: once the offer is accepted it becomes a promise, a binding agreement, and it is then too late to withdraw it.

So R gives exactly the ground for A's comparison, which rules out the option saying it is not a good explanation, and both options treating one statement as false.

Your Answer : (Not Answered)

Correct Answer : A

The contract was made under coercion.

These are the facts of the illustration to Section 15 of the Indian Contract Act, 1872. Coercion is the committing or threatening of any act forbidden by the Indian Penal Code, and the Explanation to Section 15 says it is immaterial whether the Penal Code is in force where the coercion is employed. So although the act was done on an English ship on the high seas, A employed coercion, and B may avoid the contract when sued in Calcutta.

Undue influence (Section 16) needs a relationship of domination, and fraud (Section 17) needs deceit; criminal intimidation is neither, and 'None of the above' is wrong because coercion fits exactly.

Your Answer : (Not Answered)

Correct Answer : B

The definition is from the American Restatement of the Law of Contracts.

Section 1 of the Restatement (issued by the American Law Institute in 1932, and kept in the Second Restatement) defines a contract as a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognises as a duty. The definition is built on enforceable promises rather than on agreement.

Halsbury's Laws of England and Chitty on Contracts describe a contract in terms of an agreement giving rise to obligations, so the quoted wording is not theirs, and 'Either (A) or (B) or (C)' fails for the same reason.

Your Answer : (Not Answered)

Correct Answer : C

The principle emanates from Section 56.

Section 56 of the Indian Contract Act, 1872 embodies the doctrine of frustration: an agreement to do an act impossible in itself is void, and a contract becomes void when the act becomes impossible or unlawful after it is made, by events the promisor could not prevent. Force majeure, an event beyond the parties' control, draws on this principle; where the contract has its own force majeure clause, it operates as a contingency under Section 32.

Section 52 deals with the order of performance of reciprocal promises, Section 54 with reciprocal promises dependent on each other, and Section 58 with alternative promises one branch of which is illegal.

Your Answer : (Not Answered)

Correct Answer : D

The answer is All of the above.

The right to rescind a voidable contract is lost in several situations recognised in contract law:

• Affirmation: once the party with the option, knowing the facts, affirms the contract, it can no longer rescind; unreasonable lapse of time may be treated as affirmation.
• Injury to third parties: rescission is barred where a third party has in good faith acquired rights for value before it is exercised.
• Ability to restore: the party rescinding must be able to restore the benefits received (restitutio in integrum); where that is impossible, rescission is not allowed.

Since each option names a real limit, the complete answer combines them.

Your Answer : (Not Answered)

Correct Answer : A

The incorrect statement is An agreement made without consideration is void irrespective of the circumstances.

Section 25 of the Indian Contract Act, 1872 makes an agreement without consideration void unless it falls within its exceptions: a written and registered promise made out of natural love and affection between near relatives, a promise to compensate for something voluntarily done for the promisor, and a written promise to pay a time-barred debt.

The other statements are correct: agreements in restraint of the marriage of a person other than a minor are void (Section 26), agreements in restraint of a lawful profession, trade or business are void to that extent (Section 27), and agreements whose meaning is uncertain are void (Section 29).

Your Answer : (Not Answered)

Correct Answer : B

The clause is void, because it restrains a lawful profession after employment ends.

Section 27 of the Indian Contract Act, 1872 makes every agreement by which anyone is restrained from exercising a lawful profession, trade or business void, with only one statutory exception, the sale of goodwill. The Supreme Court in Superintendence Company of India v. Krishan Murgai held that a covenant restraining an employee from competing after the employment ends is void, however reasonable its period or area.

Indian law does not apply the English test of reasonableness, so 'three years is reasonable' fails. Voluntary agreement does not save a void clause, and protecting the employer's interest justifies restraints only during the employment, not after it.