Mcqs Of The Day: Indian Contract Act, 1872

Q1. ‘S’ said to a shopkeeper paid ___ " let 'P' have the good I will see you get paid". 

This is a-

a)    Contract of guarantee 

b)    Contract of indemnity 

c)    Contract of wager

d)    Contingent contract

Answer – a) Contract of guarantee

Explanation -  

Contract of guarantee which is defined under section 126 of the Indian Contract act 1782 Involving three parties, in this case the (surety) promises to fill the obligation of another party the (principal debtor) to the shopkeeper (creditor).

Here ‘S’ promises a shopkeeper that ‘S’ will pay if ‘P’ does not, which makes it a contract of guarantee.

Q2. In relation to devolution of joint liabilities as a general rule the Indian contract act incorporates the principle of-

a)    Survivorship 

b)    Succession 

c)    Both a and b 

d)    None of the above

Answer - c)    Both a and b

Explanation – Section 42 of the Indian Contract act 1872 includes the principle of both survivorship and succession states that-

When two or more people make a joint promise then they all are responsible for fulfilling at promise together. If one of them dies, the survivors along with the representative (heirs) of the deceased are still responsible for fulfilling the promise. 

The joint liability of the promises is not affected by the death of any of them and the representative promisors or his heirs can claim performance in such case.

Q3. 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 dispose of a character of the person delivering them is a contract of-

a)    Guarantee 

b)    Bailment 

c)    Indemnity 

d)    None of these

Answer- b) Bailment 

Explanation 

Under section 148 of the Indian Contract act 1872, 

Bailment, one person the bailor deliver the goods to another person the bailee for a specific purpose under the agreement that the goods will be returned or otherwise dealt with according to the bailors directions once the purpose is accomplished.

Q4. ‘A’ saves ‘B’ from drowning in a river ‘B’ promises to pay ‘A’ 10000 for his kind act this contract is-

a)    Void for want of consideration

b)    Voidable 

c)    Unenforceable because it is immoral 

d)    Enforceable as it is covered by exceptions to consideration 

e)    Answer- d) Enforceable as it is covered by exceptions to consideration 

Explanation:

Under the Indian Contract act 1872 section 25(2) states, that an agreement made without consideration is void unless to the promise to compensate, wholly or in part a person who has already voluntarily done something for the promisor.

In this case is A’s act of saving B from drowning is a voluntary act and B promises to pay A Rs10000 for his kind act is covered by this exception to the requirement of consideration.

 Q5- A executed an agreement with B who was a minor age 17 years at the time of execution of the agreement. After attaining majority, the erstwhile minor-

a)    Can ratify the agreement 

b)    Cannot ratify the agreement 

c)    Has to set aside the agreement 

d)    None of the above

Answer – b) Cannot ratify the agreement

Explanation:

Under the Indian Contract act 1872, an agreement with a minor is void ab initio which means the void since the very beginning.

Since the agreement was void from the very beginning it cannot be ratified by the minor after attaining the age of majority the law doesn't allow to ratify or approve an agreement that was invalid when the minor was under age.

Q6. The case of Hadley vs baxendale is related to

a)    Quasi contract 

b)    Contingent Contract 

c)    Damages for breach of contract 

d)    None of the above

Answer- c) Damages for breach of contract

Explanation:

The case of Hadley vs baxendale 1854 is a landmark decision in contract law concerning the principles governing the recoverability of damages for breach of contract which established the rule that the damages arising naturally from a breach of contract or those that could reasonably  be supposed to have been in the contemplation of both parties at a time they made up contract are recoverable. This case is important and defining the scope of damages that can be claim for breach of contract.

Q7.  Under the Indian contract act 1872 an agency shall stand terminated in the below mentioned case

a)    Death or insolvency of principle 

b)    Death or insolvency of agent 

c)    Death or insolvency of both the agent and the principle 

d)    Death or insolvency of either the agent or the principle

Answer – d)    Death or insolvency of either the agent or the principle

Explanation:

Under the Indian Contract act 1872, Section 201 states that an agency is terminated by the death or insolvency of either the principle or the agent. This means that if the principle or the agent themselves dies or becomes insolvent the agency relationship automatically comes to an end as they would no longer be capable of fulfilling their roles under the agency agreement.

Q8.  A contract of telephone becomes complete at the place where acceptance is heard in which case it has been held

a)    Bhagwan Das v Girdhari Lal 

b)    Carlill v Carbolic Smoke Ball Co

c)    Satyabratta Ghosh v Mugheeram

d)    Mohribibi v Dharmodas ghosh

Answer- a) Bhagwan Das v Girdhari Lal

Explanation: 

In the case of Bhagwan Das v Girdhari Lal, the issue revolved around the acceptance of an offer made over the telephone. The court held that in cases where acceptance is communicated via telephone the contract becomes complete at the place where acceptance is heard by the offeror. The principal is based on the communication theory of contract formation, where acceptance is effective upon being communicated and heard by the offeror.

Q9.  The right of subrogation in a contract to guarantee is available to the

a)    Creditor 

b)    Principle debtor

c)    Surety 

d)    Indemnifier

Answer- c) Surety

Explanation:

The right of subrogation in a contract of guarantees available to the surety. Subrogation refers to the right of a person who has paid off a debt or obligation on behalf of another to recover the amount paid from the principal debtor to the creditor. The surety has the right to be subrogated to the rights of the creditor against the principle debtor after surety has paid off the debt.

Surety, is a person who guarantees the debt or obligation of another (principal debtor) to a creditor.

Creditor, is the person to whom the debt is Owed. 

Principal debtor refers to the person whose debt or obligation is guaranteed by the surety.

Q10.  Rescission of the contract means

a)    The renewal of original contract 

b)    Cancellation of contract 

c)    Alteration of Contract

d)    Substitution of new contract 

Answer- b) Cancellation of contract

Explanation:

Rescission of the contract refers to the cancellation of the contract, it essentially means that the parties to the contract agree to terminate or undo the contract usually returning each other to the positions they were or restoring their pre-contractual position before the contract was made. This may cause due to various reasons such as mutual agreement, breach of contract, misrepresentation or fraud or other legal grounds.