Last Updated on: 14th January 2025, 01:58 pm
1. Indian Contract Act came into force since
(a) 1st April ,1872,
(b) 1st January, 1872,
(c) 1st September, 1872,
(d) 1st July, 1872.
The Indian Contract Act, 1872 was enacted on 25th April, 1872 and subsequently came into force on the first day of September 1872. Options (a), (b) and (d) are not correct.
Hence, option (c) is the correct answer.
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2. A Contract means
(a) a promise or set of promises forming consideration for each other
(b) an agreement between two parties
(c) an agreement enforceable by Law
(d) none of the above.
A Contract is an agreement enforceable by Law. When an agreement is valid as per the law of land and legally enforceable, it becomes a Contract. Options (a), (b) and (d) are not correct.
Hence, option (c) is the correct answer.
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3. Which of these are essential elements of a valid contract?
(a) Adequacy of consideration
(b) Lawful consideration
(c) Must be in writing
(d) The offer and its acceptance must be in writing.
A contract must involve some lawful consideration (benefit etc). Consideration of a Contract may not be adequate. A Contract is valid even if the offer and acceptance is not written in paper. Options (a), (c) and (d) are not correct.
Hence, option (b) is the correct answer.
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4. A & B promise to marry each other. Is it a valid contract?
(a) It is not a valid contract between A & B
(b) It is a valid contract between A & B
(c) It is a voidable contract at the option of any of the party
(d) None of the above.
The contract must be intended to create a legally binding relationship between the parties. Since A & B has promised to marry each other they intend form a legal relationship between them. So, it is a valid contract between A & B. Options (a), (c) and (d) are not correct.
Hence, option (b) is the correct answer.
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5. An Executed Contract is
(a) An act of mutual exchange of promises
(b) An act done in the expectation of a proposal
(c) A contract in which parties performed their respective promises
(d) All of the above
When a contract has been executed completely in which both the parties performed their respective promises and nothing remains to be done by either party, it is termed as Executed Contract. Options (a), (b) and (d) are not correct.
Hence, option (c) is the correct answer.
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6. If the terms of the Contract is written or spoken, it is called an
(a) Implied contract
(b) Express contract
(c) Formal contract
(d) Contract under seal.
Contracts in which terms are specified are called Express Contract. It may be oral of written. Options (a), (c) and (d) are not correct.
So, option (b) is correct.
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7. P agrees to pay Rs 1 lakh to Q, if Q brings on earth a star from sky. This is a :
(a) Valid contract
(b) Void agreement
(c) Voidable contract
(d) Enforceable contract
In the given case, the terms of contract is unreal and impossible to perform. So, this is a void agreement. Options (a), (c) and (d) are not correct.
Hence, option (b) is the correct answer
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8. X Promises to pay Z Rs.5,00,000, if Z can make his dead wife alive. Such an agreement is :
(a) Valid
(b) Void
(c) Voidable
(d) Unenforceable
As the terms of this contract is unreal & impossible to perform, it is a void agreement. Options (a), (c) and (d) are not correct.
Hence, option (b) is the correct answer.
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9. A invites B for his son’s wedding. B accepts the invitation. In this case, there is a valid agreement but no valid contract, since:
(a) There is no consideration
(b) There is no intention to create legal relationship
(c) There is no written document
(d) There is no formal acceptance of the offer
Invitation related to wedding is not intended to create a legal relationship between parties. So, this is just an agreement but not a contract. Options (a), (c) and (d) are not correct.
Hence, option (b) is the correct answer.
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10. An agreement enforceable by law amounts to
(a) offer
(b) promise
(c) contract
(d) obligation
An agreement enforceable by law amounts to a contract. Options (a), (b) and (d) are not correct.
Hence, option (c) is correct.
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11. A Contract means
- a promise or set of promises forming consideration for each other
- an agreement between two parties
- an agreement enforceable by Law
- none of the above.
A Contract is an agreement enforceable by Law. Options (a), (b) and (d) are incorrect.
Hence, option (c) is correct.
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12. M invites N for dinner in a restaurant and N accepts the invitation. On the appointed date, N goes there but M is not present. In this case
(a) N can sue M for not coming to the dinner
(b) N has no remedy against M
(c) M has to invite N again, to perform the promise
(d) N can claim compensation from M.
A contract must be intended to create a legally binding relationship between the parties. But, in this case, the invitation for dinner does not intend to create legal relationship between parties. So, no contract is established and N has no remedy against M. Options (a), (c) and (d) are incorrect.
Hence, option (b) is correct.
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13. Which one of the following is an essential element of a valid contract?
(a) Acceptance of Offer
(b) Consideration
(c) Competent Parties
(d) all of the above.
In a valid contract, there must be an offer by one competent party and acceptance by another competent party. There must be a consideration also. So, statements in Options (a), (b) and (c) are all correct.
Hence, option (d) is correct.
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14. In a Bilateral Contract,
(a) one party has performed his obligation while the other has yet to perform his obligation,
(b) promise on one side is exchanged for an act on the other side,
(c) both the parties are yet to fulfill their obligations,
(d) None of these.
In a Bilateral Contract, both the parties are yet to fulfill their obligations. Options (a), (b) and (d) are incorrect.
Hence, option (c) is correct.
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15. A unilateral contract, in which only one party is bound is also known as a
(a) executed contract
(b) executory contract
(c) tacit contract
(d) Implied contract.
A contract where one or both the parties to the contract have still to perform their obligations is called as Executory Contract. So, Options (a), (c) and (d) are incorrect.
Hence, option (b) is correct.
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16. Under which of these circumstances an agreement becomes void and illegal?
(a) When it is forbidden by law
(b) When it is voidable at the option of the aggrieved party
(c) When there is no consideration in the contract
(d) When it is a bilateral contract.
When an agreement is forbidden by law, it becomes void and illegal. Options (b), (c) and (d) are incorrect.
Hence, option (a) is the correct answer.
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17. An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other, is a :
(a) Valid contract
(b) Unenforceable contract
(c) Voidable contract
(d) Void agreement
- An agreement which satisfies all the requirements prescribed by law is called a Valid Contract. Hence, option (a) is not correct.
- A contract which fulfils all the requirements of a contract except some technical requirement is called as an unenforceable contract. Hence, option (b) is not correct.
- A contract which is enforceable by law at the option of one or more parties, but not at the option of the other, is a voidable contract. Hence, option (c) is the correct answer.
- An agreement which is not enforceable by law is called as void agreement. Hence, option (d) is not correct.
Hence, option (c) is the correct.
18. …………………….. Contract is good in substance but suffers from some technical defect:
(a) Valid
(b) Illegal
(c) Voidable
(d) Unenforceable
- An agreement which satisfies all the requirements prescribed by law is called a Valid Contract. Hence, option (a) is not correct.
- An agreement which is prohibited by any law in force is an illegal agreement. Hence, option (b) is not correct.
- A contract which is enforceable by law at the option of one or more parties, but not at the option of the other, is a voidable contract. Hence, this option (c) is not correct.
- A contract which fulfils all the requirements of a contract except some technical requirement is called as an unenforceable contract. Hence, option (d) is correct.
Hence, option (d) is correct.
19. Law of Contracts creates
(a) A right against stranger to contract
(b) A right against or in a respect of a thing
(c) A right against or in respect of a specific person
(d) Both (a) and (b).
A contract gives rise to rights and obligations to specified persons. Options (a), (b) and (d) are incorrect.
Hence, option (c) is the correct answer.
20. An Executed Contract is :
(a) An act of mutual exchange of promises
(b) An act done in the expectation of a proposal
(c) A contract in which parties performed their respective promises
(d) All of the above
When a contract has been executed completely in which both the parties performed their respective promises and nothing remains to be done by either party, it is termed as Executed Contract. Options (a), (b) and (d) are not correct.
Hence, option (c) is correct.
21. In case of illegal agreements, the collateral agreements are:
(a) Valid
(b) Voidable
(c) Void
(d) None
Any transaction collateral to illegal agreements also becomes illegal and hence void.
Hence, option (c) is the correct.
22. A proposal when accepted becomes a
(a) offer
(b) acceptance
(c) contract
(d) agreement
Contract is a legal binding of Agreement. So, a proposal when accepted becomes a contract. Hence, option (c) is the correct answer.
Hence, option (c) is correct.
23. Under which of these circumstances an agreement becomes void and illegal?
(a) When it is forbidden by law
(b) When it is voidable at the option of the aggrieved party
(c) When there is no consideration in the contract
(d) When it is a bilateral contract.
When an agreement is forbidden by law, it becomes void and illegal. Hence, option (a) is the correct answer.
Hence, option (a) is the correct answer.
24. A contract which is valid initially but ceases to be enforceable subsequently
(a) becomes void since inception
(b) becomes void when it ceases to be enforceable
(c) becomes voidable when it ceases to enforceable
(d) remains valid
A contract which was initially valid at the time of its formation but subsequently ceases to be enforceable, becomes void.
So, option (b) is the correct answer.
25. A proposal when accepted becomes a
(a) Promise
(b) Acceptance
(c) Contract
(d) Offer
Promise is the acceptance of the proposal by the other party.
Hence, option (a) is the correct answer.
26. Proposal and its valid acceptance make
(a) A contract,
(b) An agreement,
(c) An obligation,
(d) None of these.
Agreement means a proposal made by one party and acceptance by another.
Hence, option (b) is the correct answer.
27. A promises to deliver his watch to B in consideration of Rs.3,000. This is said to be a / an
(a) Agreement
(b) Acceptance
(c) Offer
(d) Proposal
A promises to deliver his watch to B in consideration of Rs. 3,000. It fulfils all the elements of a valid agreement. Hence, this is said to be an Agreement and option (a) is the correct answer.
28. A void contract is one which is
(a) enforceable at the option of one party
(b) enforceable at the option of both the parties
(c) enforceable at the direction of court
(d) not enforceable in a court of law.
A contract which ceases to be enforceable by law becomes void. Hence, option (d) is the correct answer.
29. A voidable contract is one which
(a) can be enforced at the option of aggrieved party
(b) can be enforced at the option of both the parties
(c) cannot be enforced in a court of law
(d) courts prohibit.
A contract which is enforceable by law at the option of one or more of the aggrieved parties, but not at the option of the other, is a voidable contract. Hence, option (a) is the correct answer.
30. A proposal when accepted becomes a
(a) offer
(b) acceptance
(c) agreement
(d) None of the above
So, a proposal when accepted becomes a contract. Legally enforceable Agreement becomes Contract.
Hence, option (c) is the correct answer.
31. Which of these rights is enforceable to an aggrieved party in a void agreement?
(a) Right of enforceability
(b) Restitution
(c) Compensation for non-performance
(d) Right of the third party
When a contract becomes void, the party who has received any benefit under it must restore it to the other party. This restoration of the benefit is called Restitution.
Hence, option (b) is the correct answer.
32. In a voidable contract
(a) parties are incompetent to contract
(b) consent is obtained by coercion, undue influence, fraud etc.
(c) consideration is inadequate
(d) the party whose consent is not free is entitled to rescind the contract.
A contract in which consent of the party is not free, becomes voidable at the option of the party whose consent was not free. Hence, option (b) is the correct answer.
33. A contract which is valid initially but ceases to be enforceable subsequently
(a) becomes void since inception
(b) becomes void when it ceases to be enforceable
(c) becomes voidable when it ceases to enforceable
(d) remains valid
A contract which was initially valid at the time of its formation but subsequently ceases to be enforceable, becomes void. So, option (b) is the correct answer.
34. In case of illegal agreements, the collateral transactions are
(a) Valid
(b) Voidable
(c) Void
(d) None of these.
Any transaction collateral to illegal agreement also becomes illegal and cannot be enforced. Hence, it is void. So, option (c) is the correct answer.
35. When the consent to an agreement is obtained by undue influence, the agreement is voidable at the option of
(a) either of the parties to agreement
(b) a party whose consent was so obtained
(c) a party who obtained the consent
(d) none of the above.
A contract becomes voidable if the consent of the party is obtained by undue influence at the option of the party whose consent was so obtained. Hence, option (b) is the correct answer.
36. A proposal when accepted becomes a
(a) Promise
(b) Acceptance
(c) Contract
(d) Offer
Promise is the acceptance of the proposal by the other party. Hence, option (a) is the correct answer.
37. Proposal and its valid acceptance make
(a) A contract,
(b) An agreement,
(c) An obligation,
(d) None of these.
Agreement means a proposal made by one party and acceptance by another. Hence, option (b) is the correct answer.
38. A void contract is one which is
(a) enforceable at the option of one party
(b) enforceable at the option of both the parties
(c) enforceable at the direction of court
(d) not enforceable in a court of law.
A contract which ceases to be enforceable by law becomes void. Hence, option (d) is the correct answer.
39. Where the obligation of both the parties to the contract is outstanding it is called
(a) Quasi Contract
(b) Contingent Contract
(c) Unilateral Contract
(d) Bilateral Contract.
Bilateral contract means a contract in which both the Parties are yet to fulfill their obligations. Hence, option (d) is the correct answer.
40. Law of Contracts creates
(a) A right against stranger to contract
(b) A right against or in a respect of a thing
(c) A right against or in respect of a specific person
(d) Both (a) and (b).
A contract gives rise to rights and obligations to specified persons. Hence, option (c) is the correct answer.
41. All innocent promises collateral to the main illegal promise contained in a contract will be regarded as :
(a) Valid
(b) Void
(c) Illegal
(d) Voidable
Any transaction collateral to illegal agreements also becomes illegal and cannot be enforced. Hence, option (c) is the correct answer.
42. A voidable contract is one which
(a) can be enforced at the option of aggrieved party
(b) can be enforced at the option of both the parties
(c) cannot be enforced in a court of law
(d) courts prohibit.
A contract which is enforceable by law at the option of one or more of the aggrieved parties, but not at the option of the other, is a voidable contract. Hence, option (a) is the correct answer.
43. Which of these statements is false?
(a) Any contract, whether spoken by word or written are equally enforceable
(b) Collateral transactions to an illegal agreement is void
(c) Agreements must be enforceable by law
(d) A contract becomes voidable if the consent of the party was not free.
Any contract, whether spoken by word or written are equally enforceable; collateral transactions to an illegal agreement is void and a contract becomes voidable if the consent of the party was not free. But, agreements may or may not be enforceable by law. So, statements stated in options (a), (b) and (d) are correct except option (c).
Hence, option (c) is the correct answer.
44. In a voidable contract
(a) parties are incompetent to contract
(b) consent is obtained by coercion, undue influence, fraud etc.
(c) consideration is inadequate
(d) the party whose consent is not free is entitled to rescind the contract.
A contract in which consent of the party is not free, becomes voidable at the option of the party whose consent was not free. Hence, option (b) is the correct answer.
45. In case of illegal agreements, the collateral transactions are
(a) Valid
(b) Voidable
(c) Void
(d) None of these.
Any transaction collateral to illegal agreement also becomes illegal and cannot be enforced. Hence, it is void. So, option (c) is the correct answer.
46. When the consent to an agreement is obtained by undue influence, the agreement is voidable at the option of
(a) either of the parties to agreement
(b) a party whose consent was so obtained
(c) a party who obtained the consent
(d) none of the above.
A contract becomes voidable if the consent of the party is obtained by undue influence at the option of the party whose consent was so obtained.
Hence, option (b) is the correct answer.
47. An Executed Contract is
(a) An act of mutual exchange of promises
(b) An act done in the expectation of a proposal
(c) A contract in which parties performed their respective promises
(d) All of the above
When a contract has been executed completely in which both the parties performed their respective promises and nothing remains to be done by either party it is termed as Executed Contract.
Hence, option (c) is the correct answer.
48. Which of the following statement is false?
(a) A contract is not voidable if fraud or misrepresentation does not induce the other party to enter into a contract
(b) A party cannot complain of fraudulent silence or misrepresentation if he had the means of discovering the truth
with ordinary means
(c) In case of fraud or misrepresentation, aggrieved party can either rescind or affirm the contract
(d) A party who affirms the contract, can also change his option
afterwards if he so decides
A party who affirms the contract, the contract is binding and cannot change his option afterwards. So, statement under option (d) is not correct. But, statements under options (a), (b) and (c) are correct.
Hence, option (d) is the correct answer.
49. Which of these rights is enforceable to an aggrieved party in a void agreement?
(a) Right of enforceability
(b) Restitution
(c) Compensation for non-performance
(d) Right of the third party
When a contract becomes void, the party who has received any benefit under it must restore it to the other party. This restoration of the benefit is called Restitution.
Hence, option (b) is the correct answer.
