Legal Reasoning Practice Paper on Contracts

Legal Reasoning Practice Paper on Contracts

Question: Indentify the correct option in the following questions of Law of Contract using ordinary prudence

• The doctrine of privity of contract means:

• A contract without consideration

• An unlawful agreement

• A stranger to a contract cannot sue

• A stranger to contract can sue

Ans. d

Rationale: privity of contract means privacy between the parties to contract thus a stranger to contract can sue.

• The law of contract is the law regulating agreements which create obligations. The statement is​​ 

• True

• False

• Partly correct

• None of the above

Ans. a

Rationale: contract creates obligations in between the parties to contract i.e. they become legally bound to perform their part of liability.

• An offer which is allowed to remain open for acceptance over a period of time is known as

• Implied offer

• Express offer

• Specific offer

• Standing offer

Ans. d

Rationale: an offer which can be accepted over a period of time is known as standing offer

• A bid at an auction sale is

• An implied offer to buy

• An express offer to buy

• An invitation to offer to buy

• An invitation to come to bid

Ans. a

Rationale: a bid in the auction sale is an implied offer to buy tendered by the prospective customer

• A dress is displayed in the showroom of a shop with a price tag attached to it. A buyer interested in the dress and ready to pay the price mentioned in the tag approached the shopkeeper for purchasing the dress. Which one of the following is correct?

• The shopkeeper can refuse to sell the dress

• The shopkeeper cannot refuse to sell the dress as the buyer has accepted the offer

• In case of refusal, the shopkeeper will be liable for breach of contract

• The shopkeeper cannot refuse to sell the dress but may charge higher price

Ans. a

Rationale: display of dress in the showroom is an invitation to offer and not an offer from the buyer. Thus in this case the customer takes offer to the shopkeeper for buying the dress and the shopkeeper has the autonomy to reject it.

• A tender is

• Offer

• Promise

• Only a quotation of prices

• Agreement

Ans. c

Rationale: a tender is the quotation of prices i.e. an invitation of offer.

• An offer of performance is called

• Proposal

• Contract

• Tender

• Acceptance

Ans. c

Rationale: offer of performance means invitation of offer and tender is the same.

• Which of the following is an invitation to offer?

• A catalogue

• Bids

• Request for loan

• All the above

Ans. a

Rationale: catalogue is an invitation to offer i.e. it is a document which invites the customers to bring offers to the seller

• A wanted to purchase B’s old car which he wanted to dispose of and therefore sent a telegram to B asking him the lowest price of the car which he would accept. B telegraphed back that he would accept Rs. 55000. On A’s agreeing to but at the price, B refused to sell. In this case

• B is liable of breach of contract, as his offer to sell the car was accepted by A

• B is not liable of breach of contract

• B is not guilty of breach of contract ​​ as his telegram stating the price of the car was no more than an invitation to proposal

• B is liable for damages

Ans. c

Rationale: when B sent the reply to telegram he only mentioned the price he is willing to accept. It is only an invitation to offer.

• Which one of the following falls into the category of offer?

• Newspaper advertisement regarding a sale

• Display of goods by a shopkeeper in his window with prices marked on them

• An advertisement for a concert

• Announcement of reward to the public

Ans. d

Rationale: only option d is the valid offer rest​​ are invitations​​ to offer

• ​​ A consideration is

• Doing or abstaining from doing something at the desire of the promisor

• A reason for making a proposal

• Regard for the condition of other party

• None of these

Ans. a

Rationale: According to Section 2(d), Consideration is defined as: "When at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing something, such act or abstinence or promise is called consideration for the promise".

• Consideration must move at the desire of​​ 

• The promise

• The promisor

• Promisor or any third party

• Both the promisor and the promisee

Ans. b

Rationale: According to Section 2(d), Consideration is defined as: "When at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing something, such act or abstinence or promise is called consideration for the promise".

• In India, a person who is stranger to the consideration

• Can sue for breach of contract

• Cannot sue for breach of contract

• Depends on the conditions

• None of the above

Ans. a

Rationale: in Indian Contract Act it is not necessary that consideration should flow from parties to contract. The person who has not given consideration still can sue for breach of contract if he is the party or beneficiary to it.

• ​​ Past consideration means

• The price received in the past without making even a proposal of any sort

• The price which is more than the promisor expected

• The price or service rendered at the desire or request of the promisor in the past followed by a subsequent promise

• None of these

Ans. c

Rationale: past consideration is the benefit that you get as a result of making the contract. In other words, each person who signed the contract promised to do something.

• A consideration may be

• Only in the future

• Only in the present

• Only in the past

• All the above

Ans. d

Rationale: in Indian Contract Act consideration can be past, present or future.