- A contract can be discharged by:
a. Mutual agreement and performance
b. Lapse of time and operation of law
c. Breach of contract
d. All of these
A contract may come to an end on account of mutual agreement and performance, lapse of time and operation of law and breach of contract. Hence, option (d) is the correct answer.
- If a new contract is substituted in place of an existing contract it is called
a. Alteration
b. Rescission
c. Novation
d. Waiver
Novation occurs when a new contract is substituted for an existing one between the same parties. Hence, option (c) is the correct answer.
- The original contract need not be performed if there is
a. Alteration of contract
b. Rescission of contract
c. Novation
d. All of these
In alteration of contract, one or more terms of the original contract changes with mutual consent of the parties. In Rescission of contract, all or some of the terms of the contract are cancelled. In case of novation, a new contract is substituted for an existing one between the same parties. In all these cases the original contract is discharged and a new contract is created. So, the original contract need not be performed if there is alteration, rescission or novation of contract. Hence, option (d) is the correct answer.
- When an inferior right accruing to a party in a contract merges into a superior right accruing to the same party, then:
a. The contract conferring the superior right is discharged
b. The contract conferring the inferior right is discharged
c. None of the contracts are discharged
d. Both contracts are discharged
When an inferior right accruing to a party in a contract merges into a superior right accruing to the same party, then the contract conferring the inferior right is discharged. Hence option (b) is the correct answer.
- A lets out a theatre to B for a series of drama for certain days. The theatre was completely destroyed by fire before the scheduled dates. In the case:
a. The contract is discharged by impossibility of performance
b. The contract is void ab initio
c. The contract is voidable at the option of B
d. The contract remains valid and must be performed
If at the time of making the contract, both the parties are ignorant of the impossibility, then the contract is discharged by impossibility of performance. In this case, at the time of formation of contract A and B both did not know about the fire. So, the contract is discharged by impossibility of performance. Hence, option (a) is the correct answer.
- P, a resident of USA agrees to export leather bags to Q, a resident of Afghanistan. Meanwhile before the order can be executed, war broke out between USA and Afghanistan.
a. P must execute the contract
b. The agreement becomes voidable at the instance of Q.
c. The agreement becomes void due to Supervening impossibility
d. All of these.
Where the impossibility arises subsequent to the formation of a contract, the act becomes impossible or unlawful to perform, it is called as supervening impossibility and the contract becomes void (sec. 56). As, war broke out between USA and Afghanistan, the agreement becomes void due to Supervening impossibility. Hence, option (c) is the correct answer.
- P hired a godown from D for a period of 12 months @Rs.1,000 per month and paid the full amount (Rs.12,000) of rent to D in advance. After four months, the godown was destroyed by fire.
a. P can claim refund of Rs.12,000 from D
b. P cannot claim for any refund from D
c. P can claim refund of Rs.8,000 from D
d. None of the above.
Where the impossibility arises subsequent to the formation of a contract and the act becomes impossible or unlawful to perform, it is called as supervening impossibility and the contract becomes void (sec. 56). In the given problem, P can claim refund of Rs.8,000 from D as the accident takes place after 4 months of the contract. Hence, option (c) is the correct answer.
8. X agreed on 1st April, to let a bus to Y for a picnic tour on 30th April. X took an advance of Rs.1,000. But on 15th April, the police requisitioned the bus for Election Duty. On 18th April, X rescinded the contract.
a. Y can claim damages from X
b. Y can claim refund of Rs.1,000 advance paid
c. Both (a) & (b)
d. None of the above.
Where the impossibility arises subsequent to the formation of a contract, the act becomes impossible or unlawful to perform, it is called as supervening impossibility and the contract becomes void (sec. 56). Any person receiving benefit out of such contract must restore the benefit to the respective person (Sec. 65). So, Y can claim refund of Rs.1,000 advance paid after rescission of the contract made by X. Hence, option (b) is the correct answer.
9. A lent a room to B in front of the Sports Stadium for watching a cricket tournament for Rs.1,500. B paid Rs.1,000 as advance. But subsequently the tournament was cancelled. B filed a suit for the recovery of the amount he had paid. Can B recover the amount from A.
a. B can recover Rs.1,000 only from A
b. B can recover Rs.1,000 and compensation from A
c. B can recover Rs.1,000 already paid and further Rs 500 as committed, from A
d. B cannot recover Rs.1,000 from A.
Where the impossibility arises subsequent to the formation of a contract, the act becomes impossible or unlawful to perform, it is called as supervening impossibility and the contract becomes void (sec. 56). Any person receiving benefit out of such contract must restore the benefit to the respective person (Sec. 65). So, in the given case, B can recover only Rs.1,000 from A. Hence, option (a) is the correct answer.
10. A contracted to supply B some goods of a specified mill. The Mills did not supply to A so A did not supply to B. B filed suit for non delivery of goods. A pleaded impossibility on ground of non-supply by mills.
a. A can rescind the contract
b. B is entitled to compensation from A, for non performance
c. B is not entitled to compensation from A
d. None of the above.
As the mills did not supply goods to A, A could not deliver goods to B. But he could have supplied by buying the goods from market. A contract is not discharged due to difficulty of performance. So, B is entitled to compensation from A, for non performance. Hence, option (b) is the correct answer.
- A contracts with B to build a house for Rs.10,00,000, within 12 months. Owing to unexpected shortage of skilled labour and Cement, the contract took 24 months to complete and cost escalated to about Rs.12,50,000. A contended that the contract had been frustrated and that he was entitled for the cost actually incurred.
a. A is entitled to receive Rs.10,00,000 from B as per contract
b. A is entitled to receive Rs.12,50,000 from B as per actual cost
c. A is not entitled to get his dues from B as he could not perform within contracted time
d. None of the above.
Contract is not discharged merely because its performance has become more difficult, more expensive or less profitable than estimated at the time of entering into contract. So, A is entitled to receive Rs.10,00,000 from B as per contract. Hence, option (a) is the correct answer.
12. A agreed to deliver a certain amount of goods to B within a stipulated time, but failed due to the strike of his company workers and was delayed beyond the date agreed.
a. B can claim damages for non performance
b. A can plead for supervening impossibility
c. The contract stands cancelled due to strike
d. None of the above.
In the given problem, contract is not void due to the strike of company workers. But the contract is terminated due to non-performance within time. So, B can claim damages for non performance. Hence, option (a) is the correct answer.
13. E contracts to marry F. Before the agreed date of marriage, E marries K. F is entitled to sue E for:
a. Anticipatory Breach in an express manner
b. Actual Breach in an express manner
c. Anticipatory Breach in an implied manner
d. Actual Breach in an implied manner
When a party, before the performance is due, does some act so that the performance becomes impossible then it is called as Anticipatory Breach of Contract by Implied Repudiation. So, when E marries K avoiding the contract to marry F, then F is entitled to sue E for Anticipatory Breach in an implied manner. Hence, option (c) is the correct answer.
14. A promised to sell his house to B after 1 year. But within three months, A sold the house to C. The contract is not performed due to :
a. Novation
b. Rescission
c. Actual Breach of Contract
d. Anticipatory Breach of Contract.
When a party, before the performance is due, expresses in advance his intention of not performing the contract or does an act so that the performance becomes impossible, then it is called as Anticipatory Breach of Contract. So, in the given case, the contract is not performed due to Anticipatory Breach of Contract. Hence, option (d) is the correct answer.
- N chartered M’s ship and agreed to load it with a cargo in Orissa within 50 days. N was unable to supply the cargo but M continued to demand it. Meanwhile war broke out, rendering the performance impossible. In such a case:
a. M can sue for damages
b. Contract must be performed
c. The Contract is discharged and M cannot sue for damage
d. None of the above
While the contract is alive, if an event (say, a supervening impossibility) happens which discharges the contract legally, the promisee loses his right to sue for damage. So, in this case, the contract is discharged due to supervening impossibility (as the war broke out), M cannot sue for damages. Hence, option (c) is the correct answer.
