Contract Law and Privity Quiz
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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

    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</p> Signup and view all the answers

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

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

    A stranger can exercise undue influence over a contracting party.

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

    Champerty agreements are illegal and unenforceable in India.

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

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

    <p>False</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</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</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.</p> Signup and view all the answers

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

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

    Revocation of an offer can be communicated in any manner.

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

    All void contracts are agreements enforceable by law.

    <p>False</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.</p> Signup and view all the answers

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

    <p>False</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

    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.

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    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.

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