Law of Contract Questions and Answers

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.

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.

Answer: A

The remark was made by Lord Denning (Master of the Rolls, printed 'H.R.').

In Thornton v. Shoe Lane Parking Ltd. (1971), on a ticket issued by an automatic machine at a car park, Lord Denning M.R. observed that no customer in a thousand ever read the conditions printed on such tickets, and held that onerous exemption terms must be brought fairly to the customer's notice before the contract is made.

Mellish L.J. gave the classic ticket-case judgment in Parker v. South Eastern Railway (1877). Scrutton L.J. decided L'Estrange v. Graucob (1934) on signed documents, and Lord Wilberforce is not linked with this quotation.

Answer: A

The essential of a valid contract named here is the meeting of minds, that is, consensus ad idem: the parties must agree on the same thing in the same sense, as Section 13 of the Contract Act says. A meeting of the parties in person is not necessary, since contracts are made by post or electronic means, and a meeting to discuss consideration or to discuss proposal and acceptance describes a stage of negotiation, not the requirement of agreement itself.

Answer: D

The sequence in which the concepts occur is offer, acceptance, damage, damages. A contract begins with an offer, then acceptance makes it binding, then a breach causes damage (the loss suffered), and finally the court awards damages as the remedy. The other sequences place the remedy or the loss before the contract exists, or put damages before damage, which is not the order of events. The point of the question is the difference between damage (loss) and damages (compensation in money), which are easily confused.

Answer: B

The correct matching is i-b, ii-a, iii-d, iv-c. Section 56 of the Contract Act deals with frustration (impossibility), Section 2(d) is the definition of consideration, which the key pairs with promise, Section 26 makes an agreement in restraint of marriage void, and Section 38 gives the effect of refusal to accept an offer of performance. That is the code b a d c. The other codes put at least two of the sections against the wrong subject; only the second code pairs sections 56, 26 and 38 correctly.

Answer: A

Only statement (i) is correct.

Capacity to contract is an essential of a valid contract under Section 10 of the Contract Act, which requires parties who are competent to contract.

A legal mind and intelligence are not required, and an invitation to offer is not accepted at all, since it only invites offers. So statements (ii), (iii) and (iv) are wrong. The rule of Section 10 also requires free consent, a lawful consideration and a lawful object, which are not in the options.

Answer: A

The correct code is (i)-b, (ii)-c, (iii)-d, (iv)-a.

Section 15 of the Contract Act defines coercion (b). Section 25(2) deals with past consideration, in the promise to compensate for a past voluntary service (c). Section 73 deals with compensation for breach and the rule of remoteness of damage (d), and Section 29 provides that agreements the meaning of which is uncertain are void (a).

The other codes give these sections to the wrong subjects, so only option (A) is correct.

Answer: D

The right answer is that X is not liable for breach of contract.

An invitation to dinner between friends is a social arrangement. The parties do not intend it to have legal consequences, so there is no contract, in the sense of the rule in Balfour v. Balfour on domestic and social agreements. Without a contract there can be no breach.

The options that make X liable, even if Y goes to the house and returns without dinner or has dinner at a hotel, assume a legal duty that does not exist.

Answer: D

The correct match is (a)-3, (b)-4, (c)-2, (d)-1.

• Breach of contract gives rise to compensation (3).
• Revocation of an offer takes place by lapse of the stipulated time (4).
• Consent means agreeing upon the same thing in the same sense, as section 13 of the Contract Act says (2).
• Frustration arises when it becomes impossible to perform the contract (1).

The other codes give these terms the wrong meaning, such as linking frustration with compensation.