Indian Contract Act, 1872 MCQ Quiz - Objective Question with Answer for Indian Contract Act, 1872 - Download Free PDF

Latest Indian Contract Act, 1872 MCQ Objective Questions

Indian Contract Act, 1872 Question 1:

A general offer of continuing nature is:

1. An offer given to a specific person/persons and continues for a long time
2. An offer given to any number of people until is retracted
3. An offer which is by superseded by another offer
4. An offer which can be accepted anytime and is never called off
5. None of the above

Answer (Detailed Solution Below)

Indian Contract Act, 1872 Question 1 Detailed Solution

The correct answer is An offer given to any number of people until is retracted

An offer is defined under Section 2(a) of The Indian Contract Act as:

• "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."

Important Points

• When a general offer is of continuing nature, it can be accepted by a number of people till it is retracted.
• However, when a similar offer requires information regarding a missing thing, it is closed as soon as the first information comes in.

Therefore, the correct answer is Option 2.

Indian Contract Act, 1872 Question 2:

Given below are two statements: Statement I: A agrees to sell to B “white horse for rupees five hundred or rupees one thousand". This agreement is void. Statement II: A agrees to sell to B “a hundred tons of oil”. This agreement is void. In the light of the above statements, choose the most appropriate answer from the options given below:

1. Both Statement I and Statement II are correct
2. Both Statement I and Statement II are incorrect
3. Statement I is correct but Statement II is incorrect
4. Statement I is incorrect but Statement II is correct

Answer (Detailed Solution Below)

Indian Contract Act, 1872 Question 2 Detailed Solution

Key Points

Section 29 of Indian Contract Act, 1872:

Agreements void for uncertainty:

• Agreements, the meaning of which is not certain, or capable of being made certain, are void.
• The purpose of Section 29 of the Contract Act is to ensure that the parties to a contract should be aware of the precise nature and scope of their mutual rights and obligations under the contract.

Important Points Statement I: A agrees to sell to B “white horse for rupees five hundred or rupees one thousand".

• A agrees to sell to B “my white horse for rupees five hundred or rupees one thousand”.
• There is nothing to show which of the two prices was to be given. The agreement is void.

Hence, this Statement is correct.

Statement II: A agrees to sell to B “a hundred tons of oil”.

• A agrees to sell to B “a hundred tons of oil”. There is nothing whatever to show what kind of oil was intended.
• The agreement is void for uncertainty.

Hence, this Statement is correct.

Indian Contract Act, 1872 Question 3:

Under which of the following conditions can a proposal be revoked according to the Indian Contract Act 1872? A. By the communication of notice of revocation by the proposer to the other party B. By the failure of the acceptor to fulfil a condition of proposal C. By the death or insanity of the proposer D. By the lapse of the time prescribed E. By notice of revocation after the acceptance is communicated.

1. A, B and D only
2. B, C, D and E only
3. A, B, C and D only
4. All A, B, C, D, E

Answer (Detailed Solution Below)

Indian Contract Act, 1872 Question 3 Detailed Solution

Key Points

Proposal:

• In the Indian Contract Act 1872, a proposal is defined as a suggestion or offer made by one person to another, with an intention to enter into a contract.
• It is also referred to as an offer.
• The proposal should be definite and certain, and should be communicated to the person to whom it is made.
• Once the proposal is accepted, it becomes a promise or an agreement, forming a binding contract between the parties.
• However, if the proposal is rejected, it comes to an end and cannot be revived.

Important Points Section 6 of Indian Contract Act 1872:

Revocation how made —A proposal is revoked—

1. by the communication of notice of revocation by the proposer to the other party;
2. by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;
3. by the failure of the acceptor to fulfil a condition precedent to acceptance; or
4. by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.

Hence the correct answer is A, B, C and D only.

Indian Contract Act, 1872 Question 4:

1. Section 32
2. Section 31
3. Section 37
4. Section 39

Answer (Detailed Solution Below)

Indian Contract Act, 1872 Question 4 Detailed Solution

Key Points

Section 31 of Indian Contract Act 1872:

“Contingent contract” defined.—A “contingent contract is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.

Important Points Contingent Contracts:

• A Contingent Contract is a type of contract in which the performance of the contract is dependent on the occurrence or non-occurrence of an uncertain event.
• In other words, the contract's fulfilment depends upon the occurrence or non-occurrence of a future event that is not certain to happen.
• For example, A agrees to sell his house to B if B's loan application is approved. Here, the sale of the house depends on the approval of B's loan application, which is an uncertain event. If B's loan application is not approved, the contract becomes void.
• A Contingent Contract becomes enforceable only if the uncertain event occurs.
• If the uncertain event does not occur, the contract becomes void.
• The Indian Contract Act provides certain rules and conditions for the enforcement of Contingent Contracts.

Hence, Section 31 of Indian Contract Act 1872 defines Contingent Contract.

Additional Information

• Section 32: Enforcement of contracts contingent on an event happening.
• Section 37: Obligation of parties to contracts.
• Section 39: Effect of refusal of party to perform promise wholly

Indian Contract Act, 1872 Question 5:

Given below are two statements: one is labeled as Assertion(A) and the other is labeled as Reason(R) Assertion: A contract made under coercion is voidable at the option of the party whose consent was so obtained. Reason: Coercion renders contract void ab initio. In the light of the above statements, choose the most appropriate answer from the options given below:

1. Both Assertion and Reason are true, and Reason (R) is the correct explanation of Assertion (A)
2. Both Assertion and Reason are true, and Reason (R) is not the correct explanation of Assertion (A)
3. Assertion (A) is True, but Reason (R) is False
4. Assertion (A) is False, but Reason (R) is True

Answer (Detailed Solution Below)

Indian Contract Act, 1872 Question 5 Detailed Solution

Key Points

Coercion- Coercion refers to the use of force or threats to make someone do something against their will.

Example: A threatens to hurt B if he doesn't give his son, C, a large sum of money. B believes the threat and gives C the money. This agreement is believed to be coerced.

Important Points Assertion: A contract made under coercion is voidable at the option of the party whose consent was so obtained.

• Under Section 19 of Indian Contract Act, 1872, if a contract is made under coercion, the party whose consent was obtained by coercion has the option to either affirm the contract or void it.
• In other words, the contract is voidable at the option of the coerced party.
• This means that the coerced party has the right to choose whether to continue with the contract or to cancel it.

Hence, Assertion is true.

Reason: Coercion renders contract void ab initio.

• A contract was void AB Initio, or "void from the beginning," as soon as it was made.
• Due to the fact that such a contract was never legitimate in the first place, it can never be declared invalid.
• The parties are returned to their original locations when a court determines an act to be void ab initio since the agreement essentially never happened and had no binding authority on any of the parties.
• A contract with a minor is an illustration of an AB Initio agreement that is void since the minor is an incompetent party to the contract.

Hence, Reason is incorrect as coercion is not void from beginning but is voidable on the consent of party involved.

Hence, Assertion (A) is True, but Reason (R) is False.

Top Indian Contract Act, 1872 MCQ Objective Questions

Indian Contract Act, 1872 Question 6

1. Difficulty in performance
2. Commercial Impossibility
3. Impossibility known to the parties at the time of making of the contract
4. Strikes, Locks-outs, and civil disturbances

Answer (Detailed Solution Below)

Indian Contract Act, 1872 Question 6 Detailed Solution

The correct answer is Impossibility known to the parties at the time of making of the contract.

Key Points Doctrine of Supervening Impossibility:

• The Indian Contract Act, 1872 states in Section 56, paragraph 2, that if the doctrine of supervening impossibility applies and a contract becomesimpossible or illegal to perform after it is formed, it will be void.
• It's interesting to note that, generally speaking, the inability to perform a contract is not a reason for failing to do so.
• It only applies where this impossibility results from causes outside the parties' control. They can only be released from any additional contract obligations in that scenario.
• Here, Impossibilities are known to the parties at the time of making of the contract that's why it will be applied.

Important Points

​ Doctrine of Supervening Impossibility will be applied in following cases:

• Destruction of Subject Matter of Contract: A contract is dismissed if, after it is formed, its subject matter is destroyed without any of the parties' fault.
• Non-existence or non-occurrence of a particular state of things: There are occasions when a contract is made based on the occurrence or existence of a specific condition. However, if the circumstances that formed the contract's very foundation change or cease to exist, the agreement is null and void
• Death or Incapacity of Services: If the performance of a contract depends on a party's qualifications or personal skills and that party's demise, illness, or incapacity renders the contract void, the contract may also be discharged by supervening impossibility. This is true because the contract's implied terms include a man's life.
• Change of law or stepping in of a new law: After the creation of a contract, it is possible that the law changes or that an amendment is made to an ordinance, a special act, or a set of government regulations. The contract is discharged since the change makes it impossible to carry out the terms of the agreement.
• Outbreak of war: When two parties from separate nations sign in to a contract with one another and a war is subsequently declared between the countries, the contract typically becomes void since it cannot be carried out.

Additional Information The doctrine of Supervening impossibility will not apply in following cases:

• Difficulty in performance: The mere fact that it is now more difficult to carry out a contract due to unforeseen circumstances or delays does not deem it to be fulfilled.
• Commercial Impossibility: A contract is not discharged for these reasons if an anticipation of larger profits is not met, the required raw material becomes available at a very expensive price due to the start of a war, or if a sudden depreciation of currency happens.
• Impossibility due to failure of third party: A contract is also not discharged if it was unable to be carried out because a third party the promisor had depended on defaulted.
• Strikes, lock-outs, and civil disturbances: Events like strikes, lockouts, or public unrest do not discharge a contract unless the parties explicitly consented to such terms at the time the contract was signed.
• Failure of one of the objects: In addition to the aforementioned situations, if a contract is made for a number of purposes, the simple failure of one of those purposes does not cancel the agreement.

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Indian Contract Act, 1872 Question 7

Given below are two statements: Statement I: Display of goods by a shopkeeper with prices marked on them, is not an offer but an invitation to the public to make an offer to buy the goods. Statement II: Price quotations, catalogues and advertisements in newspaper for sale of an article do constitute a valid offer. In the light of the above statements, choose the most appropriate answer from the options given below:

1. Both Statement I and Statement II are correct
2. Both Statement I and Statement II are incorrect
3. Statement I is correct but Statement II is incorrect
4. Statement I is incorrect but Statement II is correct

Answer (Detailed Solution Below)

Indian Contract Act, 1872 Question 7 Detailed Solution

The correct answer is Statement I is correct but Statement II is incorrect

Key Points An offer is a proposal while an invitation to offer is inviting someone to make a proposal. An Invitation to Offer is an act prior to an offer, in which one person induces another person to make an offer to him, it is known as invitation to offer.

• A catalog of goods is offered, but only an invitation an for offer.
• Display of goods with price tags in a self-service shop is merely an invitation to offer.
• instead, it is seen as an invitation to offer - that is, an invitation for you as a consumer to go forth and make an offer to the advertiser. Even advertisements with published price lists are not offers. The sellers do not have an obligation to sell the goods to you at the advertised prices. However, an advertisement can be seen as an offer for a unilateral contract. A unilateral contract is a contract where there is an offer made to the offeree (the person making the offer being the offeror) to do something and upon completion of that particular activity, the offeror would do something in return.

Additional Information An offer or proposal made by a person cannot legally be regarded as an offer unless it satisfies the following conditions:

• Offer must intend to create legal relations
• Terms of offer must be certain, definite, and not vague
• The offer must be distinguished from a mere declaration of intention
• Offer must be distinguished from an invitation to offer

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Indian Contract Act, 1872 Question 8

1. Unilateral contract
2. A contract which ceases to be enforceable by law
3. Implied contract
4. Express contract

Answer (Detailed Solution Below)

Indian Contract Act, 1872 Question 8 Detailed Solution

Void Contract Or Agreement

Section 2(j) of the Act defines a void contract as “A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”. This makes all those contracts that are not enforceable by a court of law void.

1. An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract;
2. A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

Therefore, A contract which ceases to be enforceable by law is a void contract.

1. Unilateral Contract:

• A unilateral contract is a contract agreement in which an offeror promises to pay after the occurrence of a specified act.
• In general, unilateral contracts are most often used when an offeror has an open request in which they are willing to pay for a specified act.
• An example of a unilateral contract is an insurance policy contract, which is usually partially unilateral. In a unilateral contract, the offeror is the only party with a contractual obligation.

2. Implied contract:

• An implied contract is a legally-binding obligation that derives from actions, conduct, or circumstances of one or more parties in an agreement.
• It has the same legal force as an express contract, which is a contract that is voluntarily entered into and agreed on verbally or in writing by two or more parties.

3. Express Contract:

• An express contract is a contract whose terms the parties have explicitly set out. This is also termed as a special contract.
• In an express contract, all the elements would be specifically stated. In an express contract, the agreement of the parties is expressed in words, either in oral or written form.

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Indian Contract Act, 1872 Question 9

Which one is the correct sequence implied in the Indian Contract Act 1872? (A) Offer of proposal (B) Contract (C) Promise (D) Agreement (E) Acceptance Choose the correct answer from the options given below:

1. (C), (E), (A), (D), (B)
2. (D), (B), (C), (A), (E)
3. (B), (D), (C), (E), (A)
4. (A), (E), (C), (D), (B)

Answer (Detailed Solution Below)

Indian Contract Act, 1872 Question 9 Detailed Solution

The Indian Contract Act, 1872:

• The Indian Contract Act, 1872 defines the term Contract under its section 2(h) as "An agreement enforceable by law".
• This Act is based upon the principles of English Common Law.
• All agreements are contracts if they are made by the free consent of parties that are involved in the contract, for a lawful consideration with a lawful object, and are not hereby expressed to be void.

The following are the correct sequence implied in the Indian Contract Act 1872:

1. Offer : According to the Indian Contract Act 1872, the proposal is defined in Section 2 (a) as “when one person will signify to another person his willingness to do or not do something (abstain) with a view to obtain the assent of such person to such an act or abstinence, he is said to make a proposal or an offer.”

2. Acceptance : The Indian Contract Act 1872 defines acceptance in Section 2 (b) as “When the person to whom the proposal has been made signifies his assent thereto, the offer is said to be accepted. Thus the proposal when accepted becomes a promise.”

3. Promise: Section 2 of the Indian Contract Act of 1872 defines what promises are- When someone expresses his willingness to do (or not to do) something, he is said to make a proposal. When the other person (to whom the proposal is made) accepts the proposal, the proposal becomes a promise.

4. Agreement: An agreement between private parties creating mutual obligations enforceable by law. The basic elements required for the agreement to be a legally enforceable contract are mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality. Agreement = Offer + Acceptance.

5. Contract: The Indian Contract Act, 1872 defines the term “Contract” under its section 2 (h) as “An agreement enforceable by law”. In other words, we can say that a contract is anything that is an agreement and enforceable by the law of the land.

The objective of the Contract Act is to ensure that the rights and obligations arising out of a contract are honored and that legal remedies are made available to an aggrieved party against the party failing to honor his part of the agreement.

Therefore, option 4 is the correct answer.