Contract Law and Privity Quiz
48 Questions
1 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following scenarios allows a stranger to sue on a contract?

  • A trust arrangement (correct)
  • A promise made in passing
  • A stranger wishing to benefit from a gift
  • An informal handshake agreement

A person who is not a party to a contract can sue upon it if the contract was made for their benefit.

False (B)

What is the doctrine of privity of contract?

A legal principle stating that only the parties to a contract can sue or be sued on it.

An agreement with an unlawful _______ cannot be enforced by law.

<p>consideration</p> Signup and view all the answers

Match the types of unlawful consideration or objects with their descriptions:

<p>Forbidden by law = Not permitted by legal statutes Fraudulent = Involves deceit or trickery Immorality = Contrary to accepted moral standards Injury = Causing harm to person or property</p> Signup and view all the answers

What is one of the consequences of the doctrine of privity of contract?

<p>Only parties to a contract will have rights and obligations under that contract (B)</p> Signup and view all the answers

All agreements, regardless of their object or consideration, are enforceable by law.

<p>False (B)</p> Signup and view all the answers

Which of the following is NOT a ground to rebut a case of undue influence?

<p>Emotional support provided (B)</p> Signup and view all the answers

List one exception where a stranger can sue in relation to a contract.

<p>Trust or charge, marriage settlement, partition, or family arrangements.</p> Signup and view all the answers

A parda-nishin woman must wear a burga to be classified as such.

<p>False (B)</p> Signup and view all the answers

What is the key distinction between coercion and undue influence?

<p>Coercion involves physical force while undue influence involves moral force.</p> Signup and view all the answers

A woman who observes complete seclusion due to community customs is called a ________.

<p>parda-nishin</p> Signup and view all the answers

Match the terms to their definitions:

<p>Coercion = An act punishable under the Indian Penal Code Undue Influence = Exercised only by one of the parties to the contract Parda-nishin woman = A woman in complete seclusion due to custom Independent Legal Advice = Counseling received to ensure understanding of contracts</p> Signup and view all the answers

What does the Privy Council emphasize in transactions with parda-nishin women?

<p>Wider basis of equity and good conscience (B)</p> Signup and view all the answers

A stranger can exercise undue influence over a contracting party.

<p>False (B)</p> Signup and view all the answers

List two requirements for proving the validity of a contract with a parda-nishin woman.

<ol> <li>The woman understood the contents of the contracts; 2. She received free and independent advice.</li> </ol> Signup and view all the answers

What type of agreement involves a stranger assisting someone in litigation without any legal interest in the case?

<p>Maintenance (D)</p> Signup and view all the answers

Champerty agreements are illegal and unenforceable in India.

<p>False (B)</p> Signup and view all the answers

What must be considered to judge the fairness of an agreement in champerty?

<p>The quantum of the share that the financier would get</p> Signup and view all the answers

According to English Law, agreements for maintenance and ____ are illegal.

<p>champerty</p> Signup and view all the answers

Which of the following scenarios is considered extortionate and inequitable?

<p>An agreement to pay Rs. 30,000 for a claim that did not require a suit (B)</p> Signup and view all the answers

An agreement in India can be considered valid if it is made with a bona fide intention to assist a claim believed to be just.

<p>True (A)</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Maintenance = Assistance in litigation without legal interest Champerty = Agreement to share recovered property Extortionate = Unreasonable charge or fee in agreements Public Policy = Principles guiding agreements' legality</p> Signup and view all the answers

Agreements that are made for improper objects, such as ____ in litigation, can be void.

<p>gambling</p> Signup and view all the answers

What is the status of collateral transactions related to wagering agreements in India, excluding Maharashtra?

<p>They are valid and enforceable (C)</p> Signup and view all the answers

In the state of Maharashtra, wagering transactions are generally considered legal and enforceable.

<p>False (B)</p> Signup and view all the answers

What can a person do in recovery of a loan to pay a gambling debt?

<p>File a suit to recover the loan</p> Signup and view all the answers

An agreement by way of wager is _____ but not forbidden by law.

<p>void</p> Signup and view all the answers

Which act has declared wagering transactions as illegal?

<p>Bombay Act (A)</p> Signup and view all the answers

Match the following cases with their outcomes regarding wagering agreements:

<p>Beni Madho Das v Kaunsal = Suit to recover loan for gambling debt Gherulal Parakh v Mahadedoas = Partnership for wagering transactions not unlawful Bhola Nath v Mulchand = Affirmation of collateral agreements Read v Anderson = Recovery for bets paid after loss</p> Signup and view all the answers

Collateral transactions related to wagers have been declared void in all jurisdiction across India.

<p>False (B)</p> Signup and view all the answers

What differentiates a contingent contract from a wager?

<p>Performance depends on an event occurring or not occurring.</p> Signup and view all the answers

What happens if the offeree fails to accept the offer within the specified time period?

<p>The offer is considered revoked. (A)</p> Signup and view all the answers

An offer can still be accepted if it is not within a reasonable time frame.

<p>False (B)</p> Signup and view all the answers

What is revocation in the context of an offer?

<p>Withdrawal of an offer prior to acceptance.</p> Signup and view all the answers

Revocation is effective when the revocation is actually received by the ______.

<p>offeree</p> Signup and view all the answers

Match the following situations with their outcomes regarding an offer:

<p>Offeree fails to accept within specified time = Offer is revoked No specified time and offeree takes too long = Offer expires Either party dies or becomes incapable = Offer may be void unless stated Revocation is communicated effectively = Offer is withdrawn</p> Signup and view all the answers

Which of the following is NOT a condition that could void an offer?

<p>The offer is not revocable (A)</p> Signup and view all the answers

Revocation of an offer can be communicated in any manner.

<p>False (B)</p> Signup and view all the answers

What factors do courts consider when determining what constitutes a 'reasonable time' for offer acceptance?

<p>Subject matter, volatility of the market, and industry practices.</p> Signup and view all the answers

For ongoing contracts, when is a minor liable under the contract as if they were an adult?

<p>If the minor does not repudiate the contract after becoming an adult (B)</p> Signup and view all the answers

All void contracts are agreements enforceable by law.

<p>False (B)</p> Signup and view all the answers

What must a minor do to ratify a contract for it to be enforceable once they reach adulthood?

<p>The minor must ratify it in writing and sign it.</p> Signup and view all the answers

Contracts that are prejudicial and unfair to minors are ______.

<p>void</p> Signup and view all the answers

Match the type of contract with its definition:

<p>Valid Contract = Enforceable at law courts Void Contract = Not enforceable at law courts Voidable Contract = Enforceable unless a party chooses to void it Ratification = Confirmation of a contract to make it enforceable</p> Signup and view all the answers

Which of the following statements is true regarding voidable contracts?

<p>They result from a flaw in consent. (B)</p> Signup and view all the answers

A minor is always bound by a contract for a single transaction.

<p>False (B)</p> Signup and view all the answers

What is the primary characteristic of void contracts?

<p>They cannot be enforced by law.</p> Signup and view all the answers

Flashcards

Undue Influence in Relationships

Certain relationships, like mother-daughter, husband-wife, and landlord-tenant, are presumed to have potential for undue influence.

Rebutting Undue Influence

To argue against undue influence, one must demonstrate full disclosure, fair consideration, and independent legal advice.

Parda-Nishin Woman

A woman living in seclusion according to cultural customs, unable to act independently.

Parda-Nishin Contract Concerns

Contracts with Parda-Nishin women require extra care to confirm the woman understood the agreement, had independent advice, and acted willingly.

Signup and view all the flashcards

Coercion vs. Undue Influence

Coercion involves physical force, while undue influence uses moral pressure. Only one party to a contract can exert undue influence. Coercion might involve a stranger.

Signup and view all the flashcards

Coercion Definition

Coercion is an act punishable under the Indian Penal Code that involves physical force.

Signup and view all the flashcards

Independent Legal Advice

Separate legal counsel provided to a party, particularly crucial in cases involving potential undue influence.

Signup and view all the flashcards

Full Disclosure

Completely sharing all important details related to a transaction, especially with a vulnerable party.

Signup and view all the flashcards

Stranger to Contract

A person who is not a party to a contract cannot sue or be sued on that contract, according to general contract law.

Signup and view all the flashcards

Privity of Contract

The relationship between the parties to a contract, creating a legal bond.

Signup and view all the flashcards

Unlawful Consideration/Object

An agreement's consideration or object is unlawful if forbidden by law, defeats law, is fraudulent, harms someone, or is immoral/against public policy.

Signup and view all the flashcards

Exceptions to Stranger Suitability

Strangers to a contract can sue if a contract involves a trust, charge, marriage settlement, partition, family arrangement, acknowledgement, estoppel, or contracts assigned (excluding personal skill/service).

Signup and view all the flashcards

Void Agreement

An agreement with an unlawful consideration or object cannot be enforced by law.

Signup and view all the flashcards

Assignment of Rights (Contract)

Assigning rights under a contract (not involving personal skill) to a third party allows the assignee to enforce the contract, but subject to prior agreements.

Signup and view all the flashcards

Lawful Consideration

Valid consideration (reason for promise) must meet legal requirements; not forbidden or unethical.

Signup and view all the flashcards

Validity of Gift

The validity of a gift between donor and donee is not affected by external factors.

Signup and view all the flashcards

Maintenance

Agreement to assist in a lawsuit by a stranger who has no legal interest in the claim, financially or otherwise.

Signup and view all the flashcards

Champerty

A type of maintenance, an agreement where one party finances another's case in return for a share of the recovered property.

Signup and view all the flashcards

Illegal Maintenance/Champerty (English Law)

Agreements for maintenance and champerty are unenforceable under English law.

Signup and view all the flashcards

Valid Maintenance/Champerty (Indian Law)

In India, maintenance and champerty are valid, if the agreement is done with a justifiable object and the compensation amount is reasonable

Signup and view all the flashcards

Extortionate Agreement

An agreement considered unfair or excessively demanding, often involving an excessive share of the property.

Signup and view all the flashcards

Unconscionable Agreement

A contract so unfair that it is against one party's interests to sign it.

Signup and view all the flashcards

Public Policy

A principle that guides legal decisions in favour of social welfare.

Signup and view all the flashcards

Fair agreement to fund a suit

An agreement to supply funds to pursue a legal case in return for a share of the recovered property, if fairly agreed upon.

Signup and view all the flashcards

Collateral Transaction

A transaction separate from a wagering agreement but related to it (e.g., a loan for gambling).

Signup and view all the flashcards

Wagering Agreement

A contract where the outcome depends on chance, not skill. It's void in most places, but not in Maharashtra.

Signup and view all the flashcards

Enforceable Collateral Transaction (most of India)

A loan or other transaction related to a wager can often be legally enforced, even if the wager itself is illegal.

Signup and view all the flashcards

Contingent Contract

A contract where the performance relies on the occurrence (or non-occurrence) of a future uncertain event.

Signup and view all the flashcards

Void Contract

A contract that is not legally binding (does not create any legal obligations).

Signup and view all the flashcards

Unlawful Contract (Maharashtra)

A contract whose object, purpose, or consideration is against the law.

Signup and view all the flashcards

Bombay Act of 1865

Old law that made wagering transactions unlawful in Bombay (now Mumbai).

Signup and view all the flashcards

Contingent Contract vs Wager

Contingent contracts are valid if the uncertain event is linked to skill (not chance), unlike a wager.

Signup and view all the flashcards

Offer Termination: Time Lapse

An offer ends if the offeree doesn't accept within the specified time or, if no time is set, within a reasonable time. The court considers the nature of the offer, market conditions, and industry practices.

Signup and view all the flashcards

Offer Termination: Death or Incapacity

An offer terminates if either the offeror or offeree dies or becomes incapacitated, unless the contract specifically states it binds heirs and estates.

Signup and view all the flashcards

Offer Revocation

An offer can be revoked (taken back) by the offeror before the offeree accepts. The revocation must be communicated in a way that a reasonable person would understand it.

Signup and view all the flashcards

When is Revocation Effective?

Revocation is effective when the offeree actually receives the notice of revocation.

Signup and view all the flashcards

Offer Rejection

The offeree simply says 'no' to the offer. This rejection terminates the offer.

Signup and view all the flashcards

What is an Offer?

An offer is a proposal made by one party (the offeror) to another party (the offeree) to enter into a contract.

Signup and view all the flashcards

Acceptance

Acceptance is when the offeree agrees to the terms of the offer. It must be communicated to the offeror.

Signup and view all the flashcards

Contract Formation

A contract is formed when an offer is accepted by the offeree. The acceptance must be clear, communicated properly, and meet the terms of the offer.

Signup and view all the flashcards

Minor's Ongoing Contracts

When a minor enters a contract that continues over time (e.g., gym membership, car lease), they're generally bound to its terms after becoming an adult, unless they quickly reject it.

Signup and view all the flashcards

Minor's Single Transaction Contracts

For one-time deals, a minor can only be bound to the agreement if they confirm (ratify) it in writing after becoming an adult.

Signup and view all the flashcards

Minor's Unfair Contracts

Contracts that are clearly unfair to a minor are automatically invalid and don't need to be rejected.

Signup and view all the flashcards

Voidable Contract

A contract that appears valid but can be canceled by one of the parties due to a flaw in consent, like undue influence, or the party being a minor.

Signup and view all the flashcards

What makes a contract voidable?

A contract becomes voidable if there are flaws in consent, such as undue influence, misrepresentation, or one party being a minor.

Signup and view all the flashcards

How does a minor ratify a contract?

A minor can ratify a contract after becoming an adult by confirming it in writing, showing that they fully understand and accept the obligations.

Signup and view all the flashcards

Study Notes

Business Law Study Notes

  • Business law encompasses regulations governing commercial transactions in a specific jurisdiction.
  • Specific laws, acts and regulations apply in different jurisdictions.
  • Essential elements of a valid contract must be present in all jurisdictions.

Unit 1: Essentials of Contract

  • The Indian Contract Act 1872 governs contracts in India (excluding Jammu & Kashmir).
  • A contract is a legally enforceable agreement between two or more parties.
  • Essential elements of a valid contract:
    • Offer and acceptance
    • Intention to create legal relationship
    • Lawful consideration
    • Capacity of the parties
    • Free consent
    • Lawful object
    • Certainty of meaning
    • Possibility of performance (physical and legal)
    • Not expressly declared void or illegal
    • Legal formalities (where required)

Unit 2: Offer and Acceptance

  • A valid offer requires clear intent.
  • An offer must be communicated to the offeree.
  • Acceptance must mirror the terms of the offer.
  • An invitation to treat is not an offer.
  • Communication of acceptance is essential.

Unit 3: Capacity of Parties

  • Minors (individuals under the age of majority) generally lack the capacity to contract (but there are exceptions for necessaries).
  • Persons of unsound mind generally lack the capacity to contract.
  • Any legal disabilities may affect a person's contract ability.
  • Free consent is essential for a valid contract.
  • Consent is vitiated by:
    • Coercion
    • Undue influence
    • Fraud
    • Misrepresentation
    • Mistake
  • Contracts induced by coercion, undue influence, fraud, misrepresentation, or mistake can be voidable.

Unit 5: Consideration and Legality of Object

  • Consideration is the price paid for a promise.
  • It must be sufficient and lawful.
  • A contract without consideration is void.
  • An unlawful object or consideration will render a contract void.

Unit 6: Void Agreements

  • Void agreements are those agreements that are unenforceable by a court of law under Indian Law.
  • Void agreements lack one or more of the essential elements of a valid contract.

Unit 7: Various Specific Types of Contracts

  • A discussion of various specific types of contracts, such as contract for sale of goods, insurance contracts (including marine, fire and life) and indemnity contracts will be covered in detail

Unit 8: Remedies for Breach of Contract and Quasi Contracts

  • Damages, specific performance, injunction, and rescission are remedies for breach of contract.
  • Quasi-contracts are obligations imposed by law when no contract exists.

Unit 9: Indemnity and Guarantee

  • Indemnity is a promise to save another from loss.
  • Guarantee is a promise to perform the liability of another.

Unit 10: Bailment and Pledge

  • Bailment is the temporary delivery of goods for a purpose.
  • Pledge is a bailment of goods as security.

Unit 11: Contract of Agency

  • Agency is a contract where one person (agent) acts on behalf of another (principal).
  • Agency may be express (explicitly agreed upon) or implied (inferred from circumstances).
  • Agents have duties to act in good faith.

Unit 12: Partnership

  • Partnership is an agreement between two or more persons to share profits of a business.
  • Key aspects of partnership include mutual agency, shared liability, and dissolution arrangements

Unit 13: Sale of Goods

  • Key concepts in sale of goods contracts include goods, price, the transfer of property/ownership,
  • conditions, and warranties.

Unit 14: Rights, Duties and Liabilities of Partners

  • Explanation of the rights and responsibilities of partners towards each other and third parties.

Unit 15: Limited Liability Partnership (LLP)

  • LLPs are a hybrid legal structure incorporating features of companies and partnerships.
  • Key characteristics, formation and differences from other business structures.

Unit 16: Dissolution of Firm

  • Procedures and circumstances surrounding the ending of partnerships

Unit 17-20: Additional Contracts (Sale and Purchase, Transfer of Ownership, etc)

  • Further in-depth details on contract types involving goods, ownership/transfer and other specific cases.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Business Law Notes PDF

Description

Test your understanding of contract law and the doctrine of privity. This quiz covers key concepts including unlawful consideration, undue influence, and exceptions for strangers to sue. Challenge your legal knowledge with various scenarios and definitions integral to understanding contracts.

More Like This

Privity of Contract Doctrine
6 questions

Privity of Contract Doctrine

ImmaculateFreesia avatar
ImmaculateFreesia
Contract Law: Modification of Contracts
40 questions

Contract Law: Modification of Contracts

AppealingSamarium avatar
AppealingSamarium
Doctrine of Part Performance Quiz
49 questions

Doctrine of Part Performance Quiz

DarlingColumbus avatar
DarlingColumbus
Contract Law Week 5 Overview
10 questions

Contract Law Week 5 Overview

AffableSatire avatar
AffableSatire
Use Quizgecko on...
Browser
Open
Browser
Browser