The Indian Contract Act: Formation, Consent and Breach — Practice

Question 1

What is the status of a minor's agreement and which case decides it?

Accepted Answer

It is void ab initio, as held in Mohori Bibee v. Dharmodas Ghose (1903).

Question 2

State the essentials of a valid contract under Section 10.

Accepted Answer

Free consent of competent parties, lawful consideration, lawful object, and not expressly declared void.

Question 3

How does the Indian definition of consideration differ from the English rule, and what are the exceptions to Section 25?

Accepted Answer

Under Section 2(d), consideration may move from the promisee or any other person, and may be past, while English law requires it to move from the promisee. Section 25 voids an agreement without consideration, except a written registered promise from natural love and affection, a promise to compensate voluntary service and a written promise to pay a time-barred debt.

Question 4

Distinguish fraud from misrepresentation.

Accepted Answer

Fraud is an intentional false statement, active concealment or a promise made without intention to perform, made to deceive. Misrepresentation is an innocent false statement. Both make the contract voidable, but fraud may also give a claim for damages in deceit.

Question 5

State the rule in Section 27 and the exception.

Accepted Answer

An agreement in restraint of trade is void, except where a person sells the goodwill of a business and agrees to refrain from a similar business within specified limits. A restraint operating during employment may be valid, but a post-employment restraint is generally void (Niranjan Shankar Golikari).

Question 6

Explain the law on liquidated damages and penalty under Section 74.

Accepted Answer

Where a sum is named for breach, the party complaining is entitled to reasonable compensation not exceeding the sum named, whether or not actual loss is proved, but legal injury must be shown. Indian law does not distinguish rigidly between a penalty and a genuine pre-estimate (Fateh Chand  Kailash Nath Associates v. DDA). The court awards reasonable compensation, not the full amount automatically.

Question 7

A shop advertises that it will pay Rs 1,000 to anyone who buys a heater and finds it defective within a month. A buyer claims after a fault. Advise.

Accepted Answer

The advertisement is a general offer, which can be accepted by performing the conditions (Carlill v. Carbolic Smoke Ball). Acceptance is by conduct of buying and using the heater, and no communication of acceptance is needed. The purchase supplies consideration. The buyer, having a defect within the month, may claim the promised sum as compensation under Section 73, subject to proof of the defect.

Question 8

Which section deals with frustration of contract and which case explains it?

Accepted Answer

Section 56, explained in Satyabrata Ghose v. Mugneeram Bangur (1954).

Practice — The Indian Contract Act: Formation, Consent and Breach

Sign in to save attempts to your dashboard and track your accuracy over time

Find a verified tutor

Join a live course

Browse coaching centres

About

Categories

Support

Documentation

Get Study Tips & Updates

Download Our App

Download for iOS

Download for Android

Popular Cities