Indian Contract Act Cases

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Questions and Answers

Under the Indian Contract Act, 1872, if Mr. L fails to reimburse Mr. M for the electricity bill payment, which legal principle best supports Mr. M's claim for reimbursement, considering he paid to avoid disconnection?

Quasi-contract based on unjust enrichment, where Mr. L benefited from Mr. M's payment. (correct)
Voluntary payment, as Mr. M acted in his own interest.
Contract of indemnity, as Mr. L was contractually obligated to pay the bill.
Promissory estoppel, preventing Mr. L from denying his responsibility.

Mr. A offered chairs to Mr. B, promising to keep the offer open until a specific date but sold them to Mr. C before that date. If Mr. B accepted the offer before learning about the sale to Mr. C, what is the most accurate legal position under the Indian Contract Act, 1872?

Mr. B can claim damages for breach of contract, as Mr. A was bound to keep the offer open until the promised date. (correct)
Mr. B can sue Mr. C for interfering with his contractual rights.
Mr. B has no claim because Mr. A effectively revoked the offer by selling to Mr. C, and revocation need not be explicitly communicated.
Mr. B can only claim if he provided consideration for Mr. A's promise to keep the offer open.

Mr. A, running an orphanage, was promised a donation by Mr. S for a child's cancer treatment. Mr. A spent money, but Mr. S refused to pay. Applying the Indian Contract Act, 1872, which of the following is the most likely legal outcome?

Mr. A can only claim if he can prove that the child directly benefited from the expenditure.
Mr. A can claim the full amount because Mr. S made a valid offer that Mr. A accepted by incurring expenses.
Mr. A cannot claim because the agreement lacks consideration, making it a charitable promise unenforceable by law. (correct)
Mr. A can claim under promissory estoppel if he altered his position based on Mr. S's promise.

Kamal, a Chartered Accountant, wants to appoint a nominee for his One Person Company (OPC). If Robert, an Indian citizen who recently moved to the USA, and Dinkar, a non-resident Indian working in India, are shortlisted, who is eligible under the Companies Act, 2013?

Neither Robert nor Dinkar is eligible due to residency issues; the nominee must be a resident in India. (C) Signup and view all the answers

XYZ Ltd., formed to hold a patent, delays commercial production but orders plant and machinery with a down payment. Can it be termed a 'dormant company' under the Companies Act, 2013, and if so, under what conditions?

Yes, if it makes a formal application to the Registrar of Companies and meets other regulatory requirements, despite the down payment. (C) Signup and view all the answers

In a partnership, a partner is expelled without proper cause. According to the Indian Partnership Act, 1932, what is the legal consequence of this expulsion?

The expulsion is void, and the expelled partner retains all rights within the firm. (B) Signup and view all the answers

Under what circumstances does the Indian Partnership Act, 1932, state that an expelled partner remains liable for acts of the firm post-expulsion?

The partner remains liable until public notice of their expulsion is given. (D) Signup and view all the answers

RK Traders contracted with CK Traders to purchase basmati rice specifically grown in Chhattisgarh and packed in pink bags. However, CK Traders mistakenly packed some rice from Maharashtra in white bags. What recourse does RK Traders have under the Sale of Goods Act, 1930?

RK Traders can reject the entire quantity due to non-compliance with the agreed-upon specifications. (A) Signup and view all the answers

In Kartik's agreement to sell his laptop to Vasant, the price was to be fixed by Kusum, but Kartik later refused to share the configuration details needed for valuation. If Vasant then promised Kartik a reasonable price for the laptop, is Kartik bound to deliver it, and what remedies are available to Vasant under the Sale of Goods Act, 1930?

Kartik is not bound, as the initial agreement was void for uncertainty, and the subsequent promise lacks consideration from Vasant. (B) Signup and view all the answers

Under the Companies Act, 2013, what specific instances allow a court to disregard the corporate veil, holding members liable for the company’s actions, even if the company is a separate legal entity?

When a company is used as a vehicle for tax evasion, to avoid legal obligations, or to commit fraud. (A) Signup and view all the answers

As per the Companies Act, 2013, what is the legal effect once the Memorandum of Association (MoA) and Articles of Association (AoA) are registered by a company?

The MoA and AoA bind the company and its members, creating a contract enforceable by both the company and the members. (C) Signup and view all the answers

Under what circumstances must a Limited Liability Partnership (LLP) compulsorily change its name, and what are the compliance and consequence requirements following said change?

If directed by the Central Government due to similarity with an existing entity; requires immediate notification to the Registrar and advertisement in newspapers, with penalties for non-compliance. (D) Signup and view all the answers

Under the Indian Partnership Act, 1932, if Ram introduces Gopal (not a partner) as a newly joined partner to Sundar, and Gopal remains silent, what liabilities does Gopal incur when Sundar and Madhav subsequently extend credit to the firm under the belief that Gopal is a partner?

Gopal is liable to both Sundar and Madhav as a partner by estoppel, because he knowingly allowed himself to be represented as a partner. (B) Signup and view all the answers

Under what specific conditions, as per the Indian Partnership Act, 1932, can a new partner, Amar, be held liable for the pre-existing debts of the firm?

Amar is not liable for existing debts unless a separate agreement is made with the creditors to assume such liability. (A) Signup and view all the answers

Suman retires from a firm with a 10% share in its property but the firm continues business without settling her accounts. As per the Indian Partnership Act, 1932, what are Suman's rights regarding the firm’s profits earned after her retirement?

Suman is entitled to a share of the profits proportionate to her share in the firm’s assets or 6% interest on the amount of her share. (A) Signup and view all the answers

JV Limited secured a loan of ₹5 crore from Star Bank, but its Memorandum of Association restricts borrowing powers to ₹1 crore. If the company refuses to repay the loan citing ultra vires and has utilized ₹3 crore for lawful debts, what remedies are available to the bank under the Companies Act, 2013?

The bank can only recover the ₹3 crore that was demonstrably used for the company's lawful debts. (D) Signup and view all the answers

Goodwill Private Limited issued share certificates to subscribers without affixing the common seal but with the signatures of two directors. If a director objects to this, citing the Companies Act, 2013, and the other directors claim the certificates' validity because the company opted not to have a common seal, which position is legally correct?

The other directors are correct; if the company doesn’t have a common seal, director signatures suffice. (C) Signup and view all the answers

Under the Indian Contract Act, 1872, when can a court award special damages, as opposed to ordinary damages, in the event of a breach of contract?

If the special circumstances leading to the damages were known to the breaching party at the time of contract formation. (C) Signup and view all the answers

Under the Indian Contract Act, 1872, what conditions must be met for an agreement based on natural love and affection to be considered valid without consideration?

The agreement must be in writing, registered, and made out of natural love and affection between parties in close relation to each other. (D) Signup and view all the answers

Raghav finds a valuable wristwatch and advertises for its owner. After waiting, he gifts it to his son. Later, the true owner, Madhav, claims it, but Raghav demands reimbursement for his expenses. Under the Indian Contract Act, 1872, what action would be considered lawful?

Warning Madhav that he will commence legal proceedings to recover expenses. (D) Signup and view all the answers

Woollen Garments Limited contracts to supply woollen clothes to a group of women before winter, but a strike delays delivery until winter is over. Under the Indian Contract Act, 1872, can the company reject the supply?

The company can reject the supply, as time was of the essence and the delay frustrated the contract's purpose. (B) Signup and view all the answers

Under the Negotiable Instruments Act, 1881, what are the instances where a person is deemed to have committed an offence for dishonour of a cheque and what conditions must be complied with for not committing such an offence?

When the cheque bounces due to insufficient funds, the drawer is liable if they fail to make the payment within 30 days of receiving a notice, but there are exceptions for reasonable causes. (A) Signup and view all the answers

Flashcards

Reimbursement Entitlement

When a person voluntarily performs an act that another is legally bound to do, they are entitled to be reimbursed by the latter.

Breach of Offer

If one party makes an offer and sells the object of said offer before communicating the acceptance from the offeree. The offeror is liable to the offeree for damages.

Dormant Company

A company that is not carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years.