Void Agreements – Multiple Choice Questions

1. Which of the following is Void Contract ?
a. Agreement the meaning of which is certain
b. Agreement with unlawful consideration
c. Contract entered under coercion
d. Agreement with inadequate consideration, if inadequacy is not supported by free consent

Agreements the consideration or object of which is unlawful is considered as Void Contract. Hence, option (b) is the correct answer.

2. Under which of the following situations, does a contract become void?
a. In a contingent contract, when the event becomes impossible
b. Agreements the consideration of object of which is unlawful
c. When the act becomes impossible or illegal after the contract is executed, without any fault on the part of the promissory
d. All of the above.

As per the Contract Act, the following agreements are void and unenforceable by law:

  • Agreements the consideration or object of which is unlawful (Sec. 23).
  • Contingent agreements becoming impossible (Sec. 36).
  • Agreements to do impossible acts (Sec. 56).

So, in all the three conditions the contract becomes void. Hence, option (d) is the correct answer.

3. In which of the following cases, the rule of restitution by a minor person is allowed?
a. Where the other party is aware of his minority
b. Where the minor has misrepresented his age
c. Where justice does not require the return of the property or money by the minor
d. All of these.

In contracts with parties incompetent to contract (like minor, person of unsound mind), the Court may, on equitable grounds, order for the restoration of the benefit by the minor where he has misrepresented his age.
Hence, option (b) is the correct answer.

4. Doctrine of restitution can be invoked in the case of :
a. Quasi-contracts
b. Void agreements
c. Collateral contracts
d. Contingent contracts.

When contract becomes void, any person who received any advantage out of such contract is bound to restore it, to such person from whom he has received it. So, doctrine of restitution can be invoked in the case of void agreements. Hence, option (b) is the correct answer.

5. A borrowed Rs.10,000 from B and start a gambling house. Later on, A refused to return the money to B.
a. B can not recover the money from A
b. B can recover the money from A
c. B can recover the money from A if the purpose was not known to him
d. None of the above.

If the purpose was not known to B, it is a valid contract. However, if B knew the purpose, the contract was illegal and so B could not recover money from A. Hence, option (c) is the correct answer.

6. Mr. Agarwal agreed to sell and deliver 2,500 jute bags from India to Mr. Huxley at Geneva knowing the fact that direct or indirect export of jute bags was prohibited by the Government of India. Consequently, the bags were not delivered at Geneva as agreed.
a. The contract is valid and hence enforceable
b. The contract is enforceable subject to approval of the Government of India
c. The contract is void as forbidden by law
d. The contract is voidable.

Here, the contract is forbidden by law as export of jute bags is banned. So, the contract between Mr. Huxley and Mr. Agarwal is not valid and enforceable as it is prohibited by the Government of India. Hence, option (c) is the correct answer.

7. A promised to obtain an employment to B in a public office and B promised to pay Rs.5,000. This agreement is

a. Opposed to public policy
b. Illegal object & consideration
c. Void being in the nature of trafficking in public offices
d. All of these.

This is an illegal agreement which is opposed to public policy and void being in the nature of trafficking in public offices. Hence, option (d) is the correct answer

8. X agrees to pay ‘Y’ Rs.5,000 if Y delivers a judgement in his favour in a suit. ‘Y’ does so but X refuses to pay any money. In this context which one of these gives the correct legal position of the agreement?
a. The agreement is void being opposed to public policy
b. The agreement is valid and enforceable
c. The agreement is voidable at the option of ‘Y’
d. The agreement is void being a wagering agreement

Delivering biased judgement is considered as opposed to public policy. In this case, as Y has delivered a wrong judgement in consideration of money, the agreement is void being opposed to public policy. Hence, option (a) is the correct answer.

9. An agreement is void if it is opposed to public policy. Which of the following does not cover this head?
a. Trading with an enemy
b. Trafficking in public offices
c. Marriage brokerage contracts
d. Contracts to do impossible acts

Trading with an enemy, trafficking in public offices, marriage brokerage contracts are considered as agreements opposed to public policy as these agreements tend to be mischievous and injurious to the interest of Public. But, contracts to do impossible acts do not fall under agreements opposed to public policy. Hence, option (d) is the correct answer.

10. Mr. M, at the time of borrowing money agreed that, he will not leave his job, borrow money, dispose of his property, or shift his residence without the lender’s consent. In the context of the situation, which of following statements is true?

a. The restrictions on the borrower are to be implemented as per the agreement
b. The contract is viodable at the option of the lender
c. The contract is void, as it unduly restricted the freedom of the borrower
d. The lender can demand excess money in case of violation of any restriction.

The contract which unduly restricts the personal liberty of a person is void. So, in the present case, the contract is void as the conditions cause undue restriction on personal liberty of the borrower. Hence, option (c) is the correct answer.

11. A sum of money was agreed to be paid to the father in consideration of giving his daughter in marriage. The agreement is void on grounds of being:
a. Restraint of marriage
b. Marriage brokerage contract
c. Restraint of personal liberty
d. Restraint of legal proceedings

An agreement to procure the marriage of another for monetary consideration is void. In this case, as money has been paid to the father in consideration of giving his daughter in marriage, the agreement is void on grounds of being marriage brokerage contract. Hence, option (b) is the correct answer.

12. M, a seller of imitation jewellery, sells his business to N and promises, not to carry on business in imitation jewellery and real jewellery. The agreement is:
a. Fully valid
b. Valid with regard to imitation jewellery, and void as regards real jewellery
c. Void with regard to imitation jewellery, and valid as regards real jewellery
d. Wholly void

Normally agreements or services in restraint of Trade are void. A seller of goodwill of a business may be restrained from carrying on similar business within local limits, provided such restraint is reasonable. M sells only imitation jewellery but not real jewellery. So, the agreement between M and N is valid with regard to imitation jewellery not to carry similar business, but void as regards real jewellery as it amounts to restriction on trade. Hence, option (b) is the correct answer.

13. In which of the following agreements, restraint of trade is valid?
a. Agreement with buyer of goodwill
b. Trade combinations, to the extent they do not create monopoly or opposed to public policy
c. Agreements under the Partnership Act, 1932
d. All of the above

Normally agreements or services in restraint of trade are void. But, in case of sale of goodwill, partners agreements and trade combinations, to the extent they do not create monopoly or opposed to public policy, the agreements are considered as valid though they are in restraint of trade or services. Hence, option (d) is the correct answer.

14. An agreement in restraint of legal proceedings is void. Such restraint does not cover an agreement which:
a. cuts short the period of limitation
b. restricts absolutely the parties from enforcing their legal rights
c. Discharges a party from liability or extinguishes the rights of a party
d. Provides for a reference to arbitration instead of court of law

An agreement in restraint of legal proceedings is not void merely because it provides that any dispute that has arisen or may arise shall be referred to arbitration. Hence, option (d) is the correct answer.

15. A says to B that he will give Rs.1,000 to him if it rains and if doesn’t rain B will give him Rs.1,000. Which type of contract is this?
a. Wagering contract
b. Contingent contract
c. Valid contract
d. Quasi contract
A wager is an agreement between two parties by which one promises to pay money or money’s worth on the happening of some uncertain event in consideration of the other party’s promise to pay if the event does not happen. So, it is a wagering contract. Hence, option (a) is the correct answer.

16. A agrees to sell to B a horse for Rs.20,000 if it wins a race and Rs.500 if it does not. The horse wins the race.
a. A can compel B to buy the horse at Rs.20000
b. B can compel A to sell the horse at Rs.20000
c. The agreement is wager and so is void
d. None of the above.

This is a wagering agreement which is declared to be void in India. Hence, option (c) is the correct answer.

17. Payment of remuneration to an advocate depending upon the winning of the case is
a. Void contract
b. Voidable contract
c. A contingent contract
d. A quasi contract.

It is a wagering contract as it involves payment of money depending on happening of an uncertain event. Wagering contracts are void. Hence, option (a) is the correct answer.

18. In case of void agreements, collateral transactions are
a. Also void
b. Unenforceable
c. Not affected
d. Illegal.

Transactions collateral to void agreements are not affected. Hence, the correct answer is (c).

19. A transaction collateral to a wagering agreement is
a. Enforceable
b. Illegal
c. Voidable
d. Void.

A transaction collateral to wagering agreement is valid and hence enforceable. So, option (a) is the correct answer.

20. Which of these is / are wagering agreement
a. Athletic competitions
b. A crossword competition
c. A lottery prize
d. Share purchase and sale with delivery.

A Lottery being a game of chance, is a Wagering Agreement. Hence, option (c) is the correct answer.

21. P agrees to sell a certain piece of land to Q, in case he succeeds in his court case concerning that land this is an example of
a. Executed Contract
b. Wagering Contract
c. Voidable Contract
d. Contingent Contract.

A contingent contract is a contract to do or abstain from doing something, if some event, collateral to such contract, does or does not happen. So, this is an example of contingent contract. Hence, option (d) is the correct answer.

22. A contingent contract is
a. valid
b. void
c. voidable
d. illegal.
A contingent contract is valid. Hence, option (a) is the correct answer.

23. A contract of insurance is
a. Contingent Contract
b. Wagering agreement
c. Contract of guarantee
d. Unilateral agreement.
A contract of insurance is a Contingent Contract. Hence, option (a) is the correct answer.

24. Illegal agreements are
a. forbidden under law
b. unenforceable under the law
c. Voidable
d. Both (a) and (b).
An illegal agreement is forbidden and cannot be enforced under the law. Hence, option (d) is the correct answer.

25. If the illegal part of a contract is inseparable from legal part of the contract, the contract becomes:
a. Void
b. Voidable
c. Valid
d. Unenforceable
If the illegal part of a contract is inseparable from legal part of the contract, the contract becomes void. Hence, option (a) is the correct answer.

26. Where an agreement consists of two parts one legal and other illegal, and the legal part is separable from the illegal one, such legal part is:
a. Void
b. Valid
c. Voidable
d. Illegal
Where an agreement consists of two parts one legal and other illegal, and the legal part is separable from the illegal one, such legal part is valid. Hence, option (b) is the correct answer.

27. A and B agree that A shall sell his house to B for a sum of Rs.1 lakh provided he used it for residential purposes and would charge Rs.2 lakhs if he uses for gambling. It is further agreed between them that the consideration shall be paid after a year of registration of the house in the name of B. A executes a transfer in favour of B. After six months, B uses the “house for gambling purposes.
a. A can recover only Rs.1 lakh
b. A can recover Rs.2 lakh
c. A can rescind the contract and get back the house restored in his own name
d. None of the above.
Where persons reciprocally promise, firstly, to do certain things which are legal, and secondly, under specified circumstances, to do certain other things which are illegal, the set of promises which is legal is a contract, but second is a void agreement. So, A can recover only Rs.1 lakh. Hence, option (a) is the correct answer.

28. 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. Hence, option (b) is the correct answer.

29. X Ltd. the organizers of a crossword competition made a rule that (1) in matters arising in the competition, the editor’s decision shall be final and cannot be challenged in court of law (2) that at the expiration of three months from the publication of the prize list, X Ltd. shall not be liable to pay any claim unless a suit for it is then pending.
a. Both the rules are valid
b. Rule No 1 only is not valid
c. Rule No 2 only is not valid
d. Both the rules are invalid.

Rule No. 1 restricts persons from enforcing their rights through Court of law. Rule No. 2 limits the time to a period shorter than the period prescribed by the Law of Limitation. Hence, both the rules are not enforceable. So, option (d) is the correct answer.

30. A tells B that he will file a case against him for theft. B tells to A that he will give the half of the market price of the theft. This offer is:
a. Void
b. Voidable
c. Valid
d. None of these
The consideration or object of this offer is unlawful. So, this offer is void. Hence, option (a) is the correct answer

31. 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.

32. …………………….. 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, this option is not correct.
An agreement which is prohibited by any law in force is an illegal agreement. Hence, this option 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 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 the correct answer.