Indian Contract Act, 1872 Overview
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Questions and Answers

What differentiates a contract from an agreement?

  • Agreements always include consideration.
  • Contracts have no legal enforceability.
  • Contracts must meet specific validity criteria. (correct)
  • All agreements are enforceable by law.

Which type of contract is unenforceable due to missing legal requirements?

  • Valid Contract
  • Voidable Contract
  • Express Contract
  • Unenforceable Contract (correct)

Which of the following is a characteristic of consideration in a contract?

  • It can be past, present, or future. (correct)
  • It may come from a third party.
  • Consideration must always be adequate.
  • It must be lawful but need not be real.

Which option correctly defines free consent in the context of contract law?

<p>Consent given without coercion or deception. (C)</p> Signup and view all the answers

In which scenario would a contract be considered void?

<p>The contract is for an illegal purpose. (C)</p> Signup and view all the answers

What type of contract involves both parties exchanging promises?

<p>Bilateral Contract (C)</p> Signup and view all the answers

Which of the following illustrates a situation where the doctrine of privity of contract applies?

<p>Only parties to the contract can enforce it. (A)</p> Signup and view all the answers

What is an example of a quasi-contract?

<p>One party receiving benefits despite not having a formal contract. (C)</p> Signup and view all the answers

What is a fundamental requirement for an agreement to be considered enforceable as a contract?

<p>It must create legal obligations. (D)</p> Signup and view all the answers

Which element is NOT required for a valid contract under the Indian Contract Act, 1872?

<p>Parol evidence rule (C)</p> Signup and view all the answers

Which aspect is essential for the consent to be considered free under the Indian Contract Act?

<p>No coercion or undue influence must be involved. (A)</p> Signup and view all the answers

What does 'consideration' refer to in the context of a contract?

<p>The benefit or value exchanged between parties. (C)</p> Signup and view all the answers

Which of the following statements is true regarding the essential elements of a valid contract?

<p>The purpose of the agreement must not contravene any law. (A)</p> Signup and view all the answers

What does 'competency of parties' refer to in a valid contract?

<p>Parties must be legally capable of entering a contract. (B)</p> Signup and view all the answers

Which of the following can render a contract void?

<p>It includes a minor as one of the parties. (B)</p> Signup and view all the answers

What condition must be met concerning the performance of a contract?

<p>The performance should be achievable. (B)</p> Signup and view all the answers

What type of coercion was recognized in the case of Chikkam Ammiraju v.Chikkam Seshamma?

<p>Threat to commit suicide (C)</p> Signup and view all the answers

Which of the following scenarios would typically be considered as undue influence?

<p>A doctor using their authority to induce a patient into a contract (A)</p> Signup and view all the answers

What characterizes fraud in contract law?

<p>Intentional misrepresentation of facts to deceive (D)</p> Signup and view all the answers

What is the outcome for contracts resulting from innocent misrepresentation?

<p>They can be rescinded by the aggrieved party. (D)</p> Signup and view all the answers

Which type of mistake can lead to the contract being rendered void?

<p>Mutual mistake about a material fact (B)</p> Signup and view all the answers

What kind of agreements are considered void under Section 27?

<p>Agreements in restraint of trade (A)</p> Signup and view all the answers

Which of the following agreements is not void under the law?

<p>Agreements with reasonable trade restrictions (A)</p> Signup and view all the answers

What is an essential feature of contingent contracts as specified in Section 31?

<p>They depend on a certain future event. (C)</p> Signup and view all the answers

What is the primary purpose of quasi-contracts?

<p>To prevent unjust enrichment (A)</p> Signup and view all the answers

Which section deals with the recovery of expenses for providing essentials to an incapable person?

<p>Section 68 (C)</p> Signup and view all the answers

What form of remedy provides a token amount for a breach that did not cause substantial loss?

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

In joint promises, what right does a promisor have if they fulfill the entire obligation?

<p>Right to contribution from co-promisors (C)</p> Signup and view all the answers

What is the consequence of a contract being discharged by frustration?

<p>The contract becomes void due to impossibility of performance (D)</p> Signup and view all the answers

Which remedy involves compelling the breaching party to fulfill their contractual obligations?

<p>Specific performance (C)</p> Signup and view all the answers

What happens under Section 72 when money is paid by mistake?

<p>Recovery of the money can be sought (B)</p> Signup and view all the answers

Which type of damages are awarded for egregious conduct in contract law?

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

What situation does the doctrine of frustration primarily address?

<p>Unforeseen events making obligations impossible or radically changed (A)</p> Signup and view all the answers

Which scenario best exemplifies 'actual impossibility' under the doctrine of frustration?

<p>A rented venue is destroyed in a fire. (B)</p> Signup and view all the answers

When can the doctrine of quantum meruit be applied?

<p>When there is partial performance accepted by one party (B)</p> Signup and view all the answers

What type of breach occurs when one party indicates before the due date that they will not fulfill their obligations?

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

Which type of damages aims to cover indirect losses that were foreseeable at the time of the contract?

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

What is a potential remedy available for a breach of contract according to the Specific Relief Act, 1963?

<p>Court orders for specific performance (C)</p> Signup and view all the answers

In the case of Cutter v. Powell, what principle was established regarding contract performance?

<p>Partial performance can justify partial payment. (C)</p> Signup and view all the answers

What characterizes a legal impossibility in contractual obligations?

<p>A contract becoming unlawful due to changes in the law (B)</p> Signup and view all the answers

What is meant by 'apparent authority' of an agent?

<p>Authority based on third-party perceptions. (C)</p> Signup and view all the answers

Which principle allows a party who has made a mistaken payment to recover funds?

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

In which case did the court establish that exclusion clauses must be communicated at the time of the contract?

<p>Olley v.Marlborough Court Hotel (C)</p> Signup and view all the answers

What does the term 'novation' refer to in contract law?

<p>Replacement of an existing contract with a new one. (A)</p> Signup and view all the answers

What must occur for a claim of unjust enrichment to be valid?

<p>There must be enrichment at another's expense. (D)</p> Signup and view all the answers

Which of the following accurately describes the implications when time is stated as the essence of a contract?

<p>Failure to perform on time constitutes a breach. (B)</p> Signup and view all the answers

How can a principal be held liable in agency relationships?

<p>For acts conducted within the agent’s prescribed authority. (B)</p> Signup and view all the answers

What legal concept addresses the issue of unequal bargaining power in standard form contracts?

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

Flashcards

Contract (Section 2(h))

An agreement enforceable by law.

Agreement (Section 2(e))

A set of promises where each promise is consideration for the other.

Offer (Section 2(a))

A willingness to do or abstain from doing something to get assent.

Acceptance (Section 2(b))

Agreement to the offer.

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Free Consent (Section 13)

Mutual agreement without pressure or deceit.

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Competent Parties (Section 11)

Parties legally able to enter a contract (major, of sound mind, not disqualified).

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Lawful Consideration (Section 23)

Something of value exchanged for a promise, not illegal or against public policy.

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Legal Object in Contract

The purpose of the agreement is lawful i.e. not against the law.

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Voidable Contract

A contract that may be canceled by one party due to a flaw in the agreement's formation.

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Coercion

Using force or threat to make someone enter into a contract against their will.

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Undue Influence

Taking advantage of a weaker party's trust or vulnerability to get them to agree to a contract.

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Fraud

Intentionally making false statements to deceive someone into entering a contract.

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Void Contract

A contract that has no legal effect from its inception.

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Restraint of Trade

An agreement that prevents someone from doing business in a certain area or with certain people.

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Bilateral Mistake

Both parties in a contract are mistaken about a crucial fact.

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Contingent Contract

A contract whose performance depends on a future event.

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Contract vs. Agreement

All contracts are agreements, but not all agreements are contracts. A contract requires specific legal elements (Section 10) for enforceability.

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Free Consent

Consent to agreement must not be influenced by coercion, undue influence, fraud, misrepresentation, or mistake (Section 14).

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Consideration (Section 2(d))

Something of value exchanged between the parties; it's what induces the agreement. It must be real and lawful, but doesn't need to be adequate.

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Implied Contract

A contract inferred from the conduct or circumstances of the parties, not explicitly stated.

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Unilateral Contract

A contract where one party's promise is exchanged for the other party's performance.

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Privity of Contract

Generally, only parties to a contract can sue or be sued on it. Exceptions exist.

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Quasi-Contract

A legal obligation imposed to prevent unjust enrichment, not a traditional contract.

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Supply of Necessaries

Someone can recover costs for supplying essentials (food, shelter, etc.) to someone incapable of providing for themselves.

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Payment by Interested Party

Someone can recover expenses paid for someone else's benefit, if they acted in good faith.

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Non-Gratuitous Act

Compensation is owed for services provided when it's understood they weren't free.

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Joint Promisors Liability

Individuals jointly promising something are equally liable unless agreed otherwise.

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Right to Contribution

A promisor who fulfills an entire shared obligation can claim back contributions from co-promisors.

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Frustration of Contract

When performance becomes impossible due to unforeseen circumstances, the contract is discharged.

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Damages (Contract)

Compensation for a breach of contract: Compensatory, Nominal, Exemplary.

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Doctrine of Frustration

A legal principle that allows a contract to be terminated when unforeseen events make performance impossible or radically different from what was agreed upon.

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Impossibility of performance

The legal principle where a contract can be discharged if it becomes impossible to perform due to events that are beyond the parties' control.

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Types of Impossibility

There are two types of impossibility that can cause a contract to be discharged: actual impossibility, where the subject matter of the contract is destroyed or unavailable (e.g., a music hall burns down), and legal impossibility, where the contract becomes unlawful due to changes in the law.

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Frustration - Radical Change

A contract can be frustrated if the performance becomes so burdensome or different from what was initially agreed upon that it's unfair to enforce the contract.

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Quantum Meruit

A legal principle that allows a party to claim payment for services or goods delivered under a contract that is void or incomplete.

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Breach of Contract

When a party fails to fulfill the obligations as promised in a contract.

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Types of Breach

There are two types of breach: actual breach (occurs when performance is due) and anticipatory breach (occurs before performance is due when a party declares they won't fulfill their obligations).

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Remedies for Breach

Courts can award damages for a breach (compensatory, special, or exemplary) or order specific performance (forcing the breaching party to fulfill their obligations).

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Joint Promisors

Two or more people who jointly promise to fulfill a contractual obligation.

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Creation of Agency

An agency relationship can be established through explicit agreement, necessity (e.g., emergencies), or by actions that suggest a principal's consent (estoppel).

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Apparent Authority

An agent seems to have authority even though they don't actually have it, and the principal is bound by the agent's actions because of how they acted towards third parties.

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Standard Form Contracts

Pre-written contracts with non-negotiable terms, often found in consumer agreements, such as insurance policies or software licenses.

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Unconscionable Clauses

Terms within standard form contracts that are so unfair or abusive that they are likely to be deemed invalid by the court.

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Unjust Enrichment

One party unfairly benefits at the expense of another.

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Time of the Essence

When time is explicitly stated as crucial in a contract, failing to meet the deadline is a breach.

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Novation

Replacing an old contract with a brand new one.

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Study Notes

Indian Contract Act, 1872

  • Contract (Section 2(h)): An agreement enforceable by law. Essential elements include an agreement and enforceability by law
  • Agreement (Section 2(e)): Every promise and set of promises forming the consideration for each other. Key elements include promise and consideration
  • Essential Elements of a Valid Contract (Section 10): A valid contract must meet these conditions: offer and acceptance; free consent; competency of parties; lawful consideration; lawful object; intention to create legal obligations; certainty; and possibility of performance.
  • Offer and Acceptance: An offer is a willingness to do or abstain from doing something with the intention to obtain assent; acceptance signifies assent of the offer by the person to whom the offer was made.
  • Free Consent (Section 13): Agreement must be a result of free consent; both parties agreeing to the same thing in the same sense without coercion, undue influence, fraud, misrepresentation, or mistake.
  • Competency of Parties (Section 11): Parties must be of sound mind and major (above 18 years of age)
  • Lawful Consideration (Section 23): Consideration must be lawful, not illegal, immoral or opposed to public policy; must not involve criminal activity or fraud
  • Lawful Object: The purpose of the agreement must not contravene any law.
  • Intention to Create Legal Obligations: Both parties intend to establish legal relationships
  • Certainty (Section 29): Agreement terms must be clear and unambiguous
  • Possibility of Performance (Section 56): Contractual obligations must be possible to perform

Types of Contracts

  • Based on Enforceability: Valid, void, voidable, unlawful, unenforceable contracts
  • Based on Formation: Express and implied contracts
  • Based on Performance: Executed and executory contracts
  • Bilateral Contracts: Both parties exchange promises
  • Unilateral Contracts: One party performs while the other party makes a promise
  • Quasi Contracts: Not true contracts but legal obligations imposed to prevent unjust enrichment

Doctrine of Privity of Contract

  • Only parties to a contract can enforce it. Exceptions exist for trusts, family arrangements, assignment of rights, and agency.

Consideration

  • The price paid for the promise (quid pro quo)
  • Must be real and lawful but need not be adequate
  • Valid consent must be present, lacking consent through coercion, undue influence, fraud, misrepresentation, and mistake make agreements voidable.

Void Agreements (Section 2(g))

  • Contracts not enforceable by law. Examples include agreements in restraint of trade, marriage, and wagering agreements.

Contingent Contracts (Section 31)

  • Contracts contingent on a future uncertain event. Example is an insurance policy

Joint Promises (Sections 42-44)

  • Liability and rights of multiple parties in a contract

Agency (Sections 182-238)

  • Relationships where one party (agent) acts on behalf of another (principal)

Unlawful Considerations or Objects

  • Agreements that violate a law or are immoral.

Breach of Contract and Remedies

  • Breaches of contract include actual and anticipatory breaches, for which the remedies include damages, specific performance, injunctions and restitution.

Doctrine of Frustration (Section 56)

  • Unforeseen events that render contract impossible or radically change its nature

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Indian Contract Act, 1872 Concepts PDF

Description

Test your knowledge on the Indian Contract Act, 1872, focusing on key concepts such as contracts, agreements, and the essential elements of a valid contract. This quiz covers definitions, offer and acceptance, and the significance of free consent. Perfect for law students and those interested in contract law.

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