1. The remedies open to a person, aggrieved from breach of contract are:
a. Suit for Damages
b. Suit for Injunction
c. Suit upon Quantum Meruit
d. All of these

When a contract is broken, the injured party can sue for damages, injunction and sue upon Quantum Meruit. Hence, option (d) is the correct answer.

2. Robert, a popular singer, enters into a contract with the manager of a theatre, to sing at the theatre one evening a week for the next four months at the rate of Rs.1,000 for each performance. From the fourth evening onwards, Robert absents himself from the theatre. In this context, which of the following remedies is/are available to the manager of the theatre against Robert?
a. The contract is discharged and Manager can claim damages from Robert
b. He cannot claim damages
c. He must pay Robert for the entire contracted period
d. None of the above

When a contract is broken by one party, the other party may sue to treat the contract as rescinded and refuse further performance. A person rightfully rescinding a contract may also claim for compensation for loss suffered due to non-performance. So, the manager of the theatre is at liberty to put an end to the contract, and can claim compensation for damages on A’s failure to sing from the fourth evening onwards. Hence, option (a) is the correct answer.

3. Rescission of Contract means
a. Relinquishment or abandonment of a right in a contract
b. Cancellation of all or some of the terms contracts
c. Change in certain terms of contract
d. All the above

When a contract is broken by one party, the other party may sue to treat the contract as rescinded and refuse further performance. So, Recession means relinquishment or abandonment of a right in a contract. Hence, option (a) is the correct answer.

4. A sold 100 shares to B @ Rs.1,000 to be delivered on 1st March. On that date the price of shares fell to 900 and B refused to take the shares and pay for it. In April, A sold the shares at 1,200.
a. A is entitled to claim Rs.10,000 from B
b. B is entitled to claim Rs.20,000 from A, the extra profit earned by A.
c. A is entitled to claim nothing from B as he ultimately did not suffer any loss
d. None of the above.

A person rightfully rescinding a contract may claim for compensation for loss suffered due to non-performance (s. 75). So, in the given case, A is entitled to claim Rs.10,000 (100 x Rs.1,000) from B. Hence, option (a) is the correct answer.

5. A and B contract that B shall execute certain work for A for Rs.1,000. B is ready and willing to execute the work but A prevents him from doing so.
a. B may rescind the contract
b. B may recover for loss suffered
c. Both (a ) & (b)
d. None of the above.

B may rescind the contract and claim compensation for loss suffered due to non-performance. Hence, option (c) is the correct answer.

6. A agreed to lend B Rs.10 lakhs which B required to execute a Government contract. A failed to give the loan to B, even knowing the purpose of the loan and the consequences of non performance. Consequently B was unable to perform the Government contract. The Government sued B to Judgment.
a. B is not entitled to claim from A for loss suffered
b. B is entitled to claim loss of profit from the contract he would have earned
c. B is entitled to claim damages & cost of suit
d. Both (b) and (c).

As per s.73, for breach of contract the injured party may recover natural and direct damages suffered arising out of breach (but not for any remote or indirect loss). In the given problem, A has failed to perform his duty and consequently, due to non-receipt of money, B has suffered loss on another deal. So, B can claim damages, cost of suit and loss of profit from the contract he would have earned.
Hence, option (d) is the correct answer.

7. ‘M’ employs ‘N’ on a monthly salary of Rs.7,000 for one year. After six months, he removes N from the job without his fault. N goes in search of job and meets with an accident. He spends Rs.25,000 on medicines. Now, he claims damages from M for breach of contract and also for medical expenses of Rs.25,000. Will he succeed on both the counts?
a. B has no remedy against A
b. B can file for compensation for loss of salary
c. B can file for reimbursement of medical expenses incurred by him in the accident
d. None of the above.

As per section 73, When a Contract is broken, the party at loss or damage from the breach is entitled to receive from the party at fault, compensation for loss suffered by him that arose naturally as a result of breach but not for any remote and indirect loss. So, B can file for compensation for breach of contract i.e. loss of salary and not for medical expenses incurred by him. Hence, option (b) is the correct answer.

8. X and Y contract that Y shall build a house for X for Rs.20 Lacs. Y is ready and willing to construct the house but X prevents him from doing so. In such case:
a. Y is entitled to recover compensation for any loss suffered by him
b. Y can opt to rescind the contract
c. Both (a) & (b)
d. Y has no remedy as the house is not built.

When a contract is broken, the party at loss or damage from the breach can rescind from the contract and also is entitled to receive from the defaulting party compensation for loss suffered by him. Hence, option (c) is the correct answer.

9. A person enjoying the benefits of a lawful non – gratuitous act of another:
a. Is liable to compensate that another
b. Has to perform the same non – gratuitous act in return
c. Is not liable to compensate that another
d. That another cannot claim any compensation

A person enjoying the benefits of a lawful non – gratuitous act of another is liable to compensate that other person. Hence, option (a) is the correct answer.

10. A sold a cow to B with a warranty that it was free from disease, but in fact was suffering from some mouth disease at the time of sale. As a result, the cow purchased died and also infected other cows of B
a. B is not entitled to claim any damages from A
b. B is entitled to claim loss suffered in his business
c. B is entitled to claim cost of the cow and the loss due to diseases inflicted on other cows, from A
d. None of the above.

When contract is broken, the injured party may recover natural and direct damages suffered arising out of breach (but not for any remote or indirect loss). So, B is entitled to claim cost of the cow and the loss due to diseases inflicted on other cows, from A. Hence, option (c) is the correct answer.

11. A, a retailer of milk supplied virus infected milk to C. On consuming the milk, C’s minor daughter got infected and died.
a. C cannot recover anything from A
b. C can recover only the price of the milk from A and nothing for damages
c. C can recover from A, all direct damages suffered on account of consumption of milk
d. None of the above.

A supplied milk which was unfit for human consumption. So, there is a breach of contract. The injured party may recover natural and direct damages suffered arising out of breach of contract (but not for any remote or indirect loss). So, in the given problem, C can recover all direct damages suffered on account of consumption of milk from A. Hence, option (c) is the correct answer.

12. Some cattle belonging to ‘K’ were with ‘L’. Without any negligence on the part of L, the cattle were stolen. L did not inform the owner or the police or make any efforts to recover them, because he thought it would be useless to do so. In the above context, which of the following statements is/are true?
a. L is not liable because the theft occurred without any negligence on his part
b. L is liable because the theft occurred for his negligence
c. L is liable because he did not make reasonable efforts to recover them
d. None of the above.

A person who is custodian of goods belonging to others, must take reasonable care to protect the goods and reasonable steps to protect the loss. In the given case, L did not inform the police. This indicates that he did not take reasonable steps to recover the loss. Hence L is liable for loss. Hence, option (c) is the correct answer.

13. Damages which were in the contemplation of both the parties at the time of contracts are called.
a. Demurrage
b. Liquidated damages
c. Special damages
d. Vindictive damages.

Liquidated damages represent an amount of compensation, which is a fair and genuine pre-estimate of the probable loss arising from the breach, specified by the parties in the contract. Hence, option (b) is the correct answer.

14. P contracts with Q to deliver possession of a house under construction within a period of six months; failing which he would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of:
a. Penalty
b. Liquidated Damages
c. Exemplary Damages
d. Special Damages

Liquidated Damages represent an amount of compensation, which is a fair and genuine pre-estimate of the probable loss arising from the breach, specified by the parties in the contract. So, the monthly rental payable by P for Q is in the nature of Liquidated Damages. Hence, option (b) is the correct answer.

15. A took loan from B on interest @ 12% p.a. with a stipulation for payment of compound interest @ 20% p.a. on failure to repay on due date. A failed to pay within due date.
a. B can recover principal amount only
b. B can recover simple interest @ 12% p.a. only
c. A can apply to court for relief from penalty
d. None of the above.

Any stipulation in the contract which is unreasonable compared to the maximum loss that could have occurred from the breach, is treated as penalty and normally not allowed by court. In the given problem, as A has failed to repay loan within due date he have to pay penalty by paying compound interest @ 20% p.a. So, A can apply to court for relief from penalty. Hence, option (c) is the correct answer.

16. Specific Performance may be ordered by the court when:

a. Damages are an adequate remedy
b. Damages are not an adequate remedy
c. Defaulting party is not ready to pay damages
d. The contract is of a revocable nature

Where the court thinks that damages are not an adequate remedy, it may direct the party for specific performance. Hence, option (b) is the correct answer.

17. X, a T.V artist promised to work exclusively for Y for one year. Later on, X refused to work for Y and started working for Z. In this case Y can bring
a. Y has no remedy
b. Suit for injunction to prevent X to work for Z
c. Suit upon Quantum meruit
d. X may work for Z

Where a party is in breach of a negative term of a contract (i.e., where he is doing something which he promised not to do), the court may, by issuing an order (known as Injunction), restrain him from doing what he promised not to do. So, in the given case, Y can bring suit for injunction. Hence, option (b) is the correct answer.

18. A agreed to erect a plant for B by 31st January. The contract stipulated Rs.500 per month damages from A for delay in his work. A was late by six months for shortage of materials. B sued A for Rs.10,000, towards loss caused to him as a result of the delay.
a. B is not entitled to any damages, occurred due to shortage of materials
b. B is entitled to Rs.10,000 from A, for actual loss suffered by him due to delay by A
c. B is entitled to Rs.3,000 from A, for delay, as per contract terms
d. None of the above.

As A was late by 6 months, B is entitled to Rs.3,000 (Rs.500 x 6) from A, for delay, as per terms of contract. Hence, option (c) is the correct answer.