Unit VI · Topic 2Breach of contract, frustration of contract, void and voidable agreements – Previous Year Questions

68 previous year questions on Breach of contract, frustration of contract, void and voidable agreements from UGC NET Law papers (2009–2026), including 9 assertion–reason, 7 match-the-list, 3 statement-based questions. The correct option is marked in green.

Questions

68 questions

2009Assertion–Reason

Find correct explanation form following Assertion and Reason form code: Assertion (A) : Agreement by way of wager are void. Reason (R) : Performance of the bargain must depend upon the determination of an uncertain event, in case of wager.

  1. (a)Assertion and Reason are right✓
  2. (b)Assertion and Reason are wrong
  3. (c)Assertion is right, Reason is wrong
  4. (d)Assertion is wrong, Reason is right
Answer & explanation

Ans. (a) : Section 30 of the Indian Contract Act 1872 declares wagering agreements void. Wagering agreements are those in which performance of the bargain must depend upon the determination of an uncertain event, as defined by Justice Hawkins in Carlill v. Carbolic Smoke Ball Co.

2009

In Khemchand v. Bertan, (1888) 13 Bom 150, in context, of public policy relating to a contract, it was decided that:

  1. (a)Help given or promised to a dancing girl is tainted with immorality
  2. (b)Help given or promised to a dancing girl is not tainted with immorality✓
  3. (c)Help given or promised to a dancing girl does not constitute valid consideration for a contract
  4. (d)Help given or promised to a dancing girl is an offer for a contract
Answer & explanation

Ans. (b) : In Khemchand v. Bertan (1888), it was held that help given or promised to a dancing girl is not tainted with immorality, because it is not necessary that a dancing girl is a prostitute.

2009

In estimating the loss or damage arising from a breach of contract:

  1. (a)The means which existed of remedying the inconvenience caused by nonperformance of the contract must be taken into account✓
  2. (b)The means which existed of remedying the convenience caused by performance of the contract must be taken into account
  3. (c)The means which existed of remedying the inconvenience caused by nonperformance of the contract must not be taken into account
  4. (d)The means which did not exist of remedying the inconvenience caused by non-performance of the contract must be taken into account
Answer & explanation

Ans. (a) : Section 73 of the Indian Contract Act 1872 provides that compensation or loss shall be given only to the extent of ordinary damages suffered, not special damages, keeping in view the circumstances of the breach of contract (Hadley v. Baxendale).

2009

The issue in paradine v. Jane, 82 ER 897, was

  1. (a)Mistake
  2. (b)Fraud
  3. (c)Frustration✓
  4. (d)Undue influence
Answer & explanation

Ans. (c) : The case of Paradine v. Jane is related to frustration or impossibility. The earlier rule in English law was that parties to a contract could not seek discharge on the basis of events occurring after the formation of the contract. In Taylor v. Caldwell, even post-contractual events were included in this doctrine.

2009Assertion–Reason

Find correct explanation from following assertion and reason from code. Assertion (A): Damages must be reasonable for breach of a contract. Reason (R): Because reasonable damages are agreed upon in a contract.

Codes:

  1. (a)Assertion (A) and Reason (R) are right
  2. (b)Assertion (A) and Reason (R) wrong
  3. (c)Assertion (A) is right, Reason (R) is wrong✓
  4. (d)Assertion (A) is wrong, Reason (R) is right
Answer & explanation

Ans. (c) : Sections 73-74 of the Indian Contract Act 1872 relate to damages arising from breach of contract. If any party to a contract breaches its terms and causes loss to the other party, that party who committed the breach shall be made to pay compensation, for the loss that naturally followed. In Hadley v. Baxendale, two principles of determining compensation were established: (1) General damages (2) Special damages. Whether any party can agree to reasonable damages for breach of contract depends on facts. Hence, Code (A) is correct and statement (R) is wrong.

2009

Frustration of contract is provided by which section of the Indian Contract Act?

  1. (a)73
  2. (b)70
  3. (c)2
  4. (d)56✓
Answer & explanation

Ans. (d) : Section 56 of the Indian Contract Act provides for frustration (impossibility) of contract. According to it, impossibility of performance is a mode of discharge of contract. When performance of a contract becomes impossible, it becomes void. There are two types of impossibility — (1) Initial impossibility (where the agreement is void from the start) (2) Subsequent impossibility (where the contract becomes void after formation).

2010

When consent is given by mistake, agreement will be:

  1. (a)Voidable
  2. (b)Void✓
  3. (c)Illegal
  4. (d)Valid
Answer & explanation

Ans. (b) : According to Section 20 of the Contract Act, when both parties are under a mistake of fact, the agreement is void.

2010

When the parties to the contract agree to substitute the existing contract with new contract, it is called:

  1. (a)Alteration in Contract
  2. (b)Rescission of Contract
  3. (c)Novation of Contract✓
  4. (d)All of the above
Answer & explanation

Ans. (c) : Section 62 of the Contract Act provides for the effect of novation, rescission and alteration of contract, according to which when the parties to the contract agree to substitute the existing contract with a new contract, it is called novation of contract.

2010

Where a contract contains a stipulation by way of penalty on breach of contract, the aggrieved party is entitled for compensation:

  1. (a)Stipulated amount, if actual loss is proved
  2. (b)Stipulated amount, even actual loss is not proved
  3. (c)Reasonable amount but not more than stipulated amount✓
  4. (d)Reasonable amount, even more than stipulated amount if loss is proved
Answer & explanation

Ans. (c) : Section 74 of the Contract Act provides that where there is a penalty stipulation, the party complaining of breach of contract is entitled to receive from the party who has broken the contract, reasonable compensation not exceeding the named sum.

2011

Void agreement signifies:

  1. (a)Illegal agreement
  2. (b)Legally unenforceable agreement✓
  3. (c)Agreement without contract
  4. (d)Agreement without substance
Answer & explanation

Ans. (b)

According to Section 2(q) of the Indian Contract Act, 1872, agreements not enforceable by law are called void agreements.

2011

An agreement obtained by coercion is:

  1. (a)Void
  2. (b)Voidable✓
  3. (c)Valid
  4. (d)Illegal
Answer & explanation

Ans. (b)

According to Section 19 of the Indian Contract Act, 1872, an agreement obtained by coercion is voidable. In such a situation, consent is not considered free.

2011

An agreement shall be void on account of:

  1. (a)Mistake of law
  2. (b)Mistake of fact by one party
  3. (c)Mistake of fact by both the parties✓
  4. (d)Mistake apparent on face of record
Answer & explanation

Ans. (c)

According to Section 20 of the Indian Contract Act, 1872, when both parties to the contract are under a mistake of fact material to the agreement, the agreement is void. Clarification — a mistake as to the value of the thing which is the subject matter of the contract is not deemed a mistake of fact.

2011

A contingent contract:

  1. (a)becomes void when the event becomes impossible✓
  2. (b)is voidable
  3. (c)is void
  4. (d)never becomes void
Answer & explanation

Ans. (a)

According to Section 36 of the Indian Contract Act, 1872, a contingent contract becomes void when the event becomes impossible. Section 36 makes contracts contingent on impossible events void.

2011

An agreement to do an impossible act is:

  1. (a)void✓
  2. (b)voidable
  3. (c)Valid
  4. (d)unenforceable
Answer & explanation

Ans. (a)

An agreement to do an impossible act is void. This provision is given under Section 56 of the Contract Act. According to the first part of this section, a contract to do an act which is inherently impossible is void.

2011

Section 73 of the Indian Contract Act applies to:

  1. (a)for sale of movable property
  2. (b)for sale of immovable property
  3. (c)both (A) and (B)
  4. (d)None of the above✓
Answer & explanation

Ans. (d)

Section 73 of the Indian Contract Act, 1872 deals with compensation for loss arising from breach of contract. The provision for sale of movable property is made in the Sale of Goods Act 1930, and the provision for sale of immovable property is made in the Transfer of Property Act 1882.

2011

A Wagering Contract is void under:

  1. (a)Section 28
  2. (b)Section 29
  3. (c)Section 30✓
  4. (d)Section 31
Answer & explanation

Ans. (c)

According to Section 30 of the Indian Contract Act, a wagering agreement is void because its object is not to establish legal relations, but merely to distribute gain or loss arising from the occurrence or non-occurrence of a future event.

2011

When a contract provides for a specified sum in case of breach:

  1. (a)it prescribes the minimum liability
  2. (b)it prescribes the maximum limit of liability
  3. (c)it prescribes neither the minimum nor the maximum extent of liability
  4. (d)None of the above✓
Answer & explanation

Ans. (d)

2011

Under Section 74 of the Indian Contract Act, the provision of liquidated damages is that where liquidated damages are provided for breach of contract, the aggrieved party is entitled to receive reasonable compensation not exceeding the stipulated sum from the party who has broken the contract.

An agreement made by mistake is

  1. (a)Void✓
  2. (b)Voidable
  3. (c)Illegal
  4. (d)Immoral
Answer & explanation

Ans. (a) : According to Section 20 of the Indian Contract Act 1872, where both parties to a contract are under a mistake as to a matter of fact essential to the agreement, the agreement is void. Example — A makes a contract with B to buy a white horse, but the horse had already died at the time of the contract, which neither party knew; the agreement is void.

2012Assertion–Reason

Assertion (A): Damages must be related to damage. Reason (R): Damage is damaging and damages are compensating. Codes:

  1. (a)(A) and (R) are true and (R) is correct explanation of (A)
  2. (b)(A) and (R) are true but (R) is not correct explanation of (A)
  3. (c)(A) is true, but (R) is false
  4. (d)(A) is false, but (R) is true✓
Answer & explanation

Ans. (d) : Sections 73, 74 and 75 of the Indian Contract Act, 1872 provide for remedy on breach of contract. When one party breaks the contract, the other party can get compensation (Damages). The purpose of compensation is to put the party who has not broken the contract in the position in which it would have been if the contract had been performed. On breach of contract, loss can be of two kinds — direct or proximate loss, and indirect or remote loss. Under Section 73, the loss must be a direct consequence of the breach of contract only then compensation can be obtained. It is not at all necessary for damages to be related to loss, because a claim for damages can also arise when the loss or harm that is going to occur is a direct consequence of the breach of contract.

2012Assertion–Reason

Assertion (A): Collateral transactions to wagering agreements are valid. Reason (R): Only wagering agreements are declared void under section 30 of the Indian Contract Act. Code:

  1. (a)(A) is true, but (R) is false
  2. (b)(A) is false, but (R) is true
  3. (c)(A) and (R) are true and (R) is not correct explanation of (A)
  4. (d)(A) and (R) are true but (R) is correct explanation of (A)✓
Answer & explanation

Ans. (d) : Section 30 of the Contract Act declares wagering agreements void. A wagering agreement exists when the intention of the parties is merely to bear gain or loss arising from the occurrence or non-occurrence of an uncertain future event. Since wagering agreements are void and not illegal, collateral transactions to wagering agreements are valid. An important case on collateral transactions to wagering agreements is Gherulal v. Mahadeodas. Hence both the assertion and reason are correct and Reason (R) is the correct explanation of Assertion (A).

2012Assertion–Reason

Assertion (A): When subject matter of a contract is destroyed, the contract is frustrated. Reason (R): Frustration of a contract frustrates a party to the contract. Codes:

  1. (a)Both (A) and (R) are true and (R) is the correct explanation of (A)
  2. (b)Both (A) and (R) are true, but (R) is not correct explanation of (A)✓
  3. (c)(A) is true, but (R) is false
  4. (d)(A) is false, but (R) is true
Answer & explanation

Ans. (b) : According to Section 56 of the Indian Contract Act, if the contract was capable of performance when entered into, but due to a subsequent change the subject matter of the contract is destroyed, the contract becomes impossible. When the contract becomes impossible, the parties to the contract also suffer disappointment. They will not be able to compel any party to perform the contract. Hence both (A) and (R) are correct but (R) is not the correct explanation of (A).

2013Statements

When a person making a false statement believes the statement to be true and does not intend to mislead to the other party to the contract, it is known as

  1. (a)Mistake
  2. (b)Fraud
  3. (c)Misrepresentation✓
  4. (d)Undue influence
Answer & explanation

Ans. (c) : Section 18 of the Indian Contract Act 1872 defines misrepresentation. Those who come under misrepresentation are —

2013Assertion–Reason

A positive assertion of something which is not true, made in a manner not warranted by the information of the person making it, though he believes it to be true.

Any breach of duty which, without an intent to deceive, gains an advantage to the person committing it or anyone claiming under him, by misleading another to his prejudice or to the prejudice of anyone claiming under him.

Causing a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement, however innocently.

Read Assertion (A) and Reason (R) and with help of code given below, point out the correct explanation. Assertion (A): An agreement not enforceable by law is said to be void. Reason (R): Law has no force. Codes:

  1. (a)Both (A) and (R) are true and (R) is the correct explanation of (A)
  2. (b)Both (A) and (R) are true, but (R) is not correct explanation of (A)
  3. (c)(A) is correct but (R) is false✓
  4. (d)(A) is false but (R) is correct
Answer & explanation

Ans. (c) : According to Section 2(g) of the Indian Contract Act, an agreement not enforceable by law is called void. Therefore, for an agreement to become a contract it is necessary that such agreement is enforceable by law under Section 2(h). It is wrong to say that law has no force. Every person is bound to comply with the law and is liable to punishment for non-compliance.

2013Match the lists

Match items in Table-A with items in Table-B, using codes given below: Table-A: A. Ambiguous and uncertain agreements B. Coercion C. Past consideration D. Remoteness of damage Table-B:

Section-15

Section-25(2)

Section-73

Section-29 Codes:

  1. (a)A-2, B-3, C-4, D-1
  2. (b)A-4, B-1, C-2, D-3✓
  3. (c)A-3, B-2, C-1, D-4
  4. (d)A-1, B-4, C-3, D-2
Answer & explanation

Ans. (b) : A. Ambiguous and uncertain agreements — Section 29 B. Coercion — Section 15 C. Past consideration — Section 25(2) D. Remoteness of damage — Section 73

2013

Which one of the following provisions of the Indian Contract Act deals with the reciprocal promise to do things legal and also other things illegal?

  1. (a)Section 56
  2. (b)Section 57✓
  3. (c)Section 58
  4. (d)Section 17
Answer & explanation

Ans. (b) : Section 57 of the Indian Contract Act 1872 deals with reciprocal promises to do legal things and also other things that are illegal. According to it, where a person promises first to do certain things that are legal and secondly under certain specified circumstances to do certain other things that are illegal, the first set of promises is a contract but the second is a void agreement.

2013

Section 26 of the Indian Contract Act declares the agreement void on the ground of

  1. (a)Absolute restraint only
  2. (b)Partial restraint only
  3. (c)Both absolute or partial restraint✓
  4. (d)None of the above
Answer & explanation

Ans. (c) : According to Section 26 of the Indian Contract Act 1872, an agreement in restraint of marriage is void. Section 26 declares an agreement void on both absolute and partial grounds. According to Section 26, every agreement in restraint of the marriage of any person other than a minor is void.

2013

When consent is given due to mistake, an agreement will be

  1. (a)Voidable
  2. (b)Legal
  3. (c)Illegal
  4. (d)Void✓
Answer & explanation

Ans. (d) : According to Section 20 of the Indian Contract Act 1872, where both parties to a contract are under a mistake as to a matter of fact essential to the agreement, the agreement is void. According to its explanation, a wrong opinion as to the value of the thing which forms the subject matter of the agreement is not to be deemed a mistake as to a matter of fact. Section 21 deals with the effect of mistakes of law, and Section 22 deals with contracts caused by mistake of one party as to matter of fact.

2013

A contract may be vitiated by:

Fraud

Mistake

Frustration

Undue influence Find correct answer, using codes:

  1. (a)Only (i) is correct
  2. (b)Only (i) and (ii) are correct
  3. (c)Only (i), (ii) and (iii) are correct
  4. (d)All are correct✓
Answer & explanation

Ans. (d) : A contract can be vitiated by the following reasons —

Due to fraud (Section 19 of the Indian Contract Act)

Due to mistake (Sections 20 to 22)

Due to frustration (Section 56)

Due to undue influence (Section 19A)

2013Match the lists

Match items in Table A with Items in Table B, using codes given below: Table-A: A. Promise B. Frustration C. Effect of refusal to accept offer of performance D. Agreement in restraint of marriage Table-B:

Section 56

Section 2(D)

Section 26

Section 38 Codes:

  1. (a)A-2, B-4, C-1, D-3
  2. (b)A-2, B-1, C-4, D-3✓
  3. (c)A-1, B-2, C-4, D-3
  4. (d)A-1, B-2, C-3, D-4
Answer & explanation

Ans. (b) : A. Promise — Section 2(D) B. Frustration — Section 56 C. Effect of refusal to accept offer of performance — Section 38 D. Agreement in restraint of marriage — Section 26

2014

In Indian Contract Act, the term voidable contract has been defined under:

  1. (a)Section 2 (e)
  2. (b)Section 2 (h)
  3. (c)Section 2 (i)✓
  4. (d)Section 2 (g)
Answer & explanation

Ans. (c) : Section 2 (i) Explanation: According to Section 2(i) of the Contract Act, a voidable contract means a contract which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others.

2014

An agreement of trade combination to regulate legal trade in organized way is

  1. (a)Void
  2. (b)Voidable
  3. (c)Legal✓
  4. (d)Illegal
Answer & explanation

Ans. (c) : Legal Explanation: Section 27 of the Indian Contract Act 1872 provides that an agreement in restraint of trade is void, but an agreement of trade combination to regulate legal trade in an organized way shall be valid.

2014Sequence / order

Arrange the following concepts in which sequence they appeared, using the codes given below:

Damage

Breach of terms of agreement of partnership

Damaged

Agreement to share profits from business of firm Codes:

  1. (a)1, 2, 4, 3
  2. (b)4, 2, 1, 3✓
  3. (c)2, 4, 1, 3
  4. (d)3, 1, 2, 4
Answer & explanation

Ans. (b) : 4, 2, 1, 3 Explanation: The correct chronological order is as follows — (1) Agreement to share profits from the firm's business, (2) Breach of terms of partnership agreement, (3) Damage, (4) Damaged.

2014

Where, a law promulgated after the contract is made, makes the performance of the agreement impossible, the agreement becomes

  1. (a)Voidable
  2. (b)Valid
  3. (c)Void✓
  4. (d)Absolutely binding
Answer & explanation

Ans. (c) : Void Explanation: On the basis of Section 56 of the Contract Act, it can be said that when any law promulgated after the contract is made renders the performance of that agreement impossible, such an agreement becomes void.

2014Match the lists

Match List-I with List-II and select the correct answer using the codes given below: List-I A. Damages arising in the usual course of things B. Compensation for mental anguish C. Measure of damages D. Compensation for breach of contract where penalty is stipulated for List-II

Ghaziabad Dev. Authority v. Union of India

Hadley v. Baxendale

M/s Ganga Maruthi v. Nagaraj

Jamal v. Moolla Dewood Code:

  1. (a)A-2, B-1, C-4, D-3✓
  2. (b)A-1, B-2, C-4, D-3
  3. (c)A-2, B-1, C-3, D-4
  4. (d)A-4, B-3, C-1, D-2
Answer & explanation

Ans. (a) : A — Damages arising in the usual course — Hadley v. Baxendale B — Compensation for mental anguish — Ghaziabad Vikas Pradhikaran v. Union of India C — Measure of damages — Jamal v. Moolla Dewood D — Compensation for breach where penalty is stipulated — M/s Ganga Maruthi v. Nagaraj

2015Match the lists

Match List-I with List-II and select the correct answer using the codes given below: List-I (Heads of Public Policy) A. Trading with enemy B. Trafficking in public offices C. Interference with administration of justice D. Marriage brokage contracts List-II (Case-Law)

Girdhari Singh v. Neeladhar Singh

Espostiv v. Bowden

Shivsaran Lal v. Keshav Prasad

Nand Kishor v. Kunj Bihari Lal Code:

  1. (a)A-1, B-4, C-2, D-3
  2. (b)A-4, B-1, C-2, D-3✓
  3. (c)A-4, B-1, C-3, D-2
  4. (d)A-2, B-3, C-1, D-4
Answer & explanation

Ans. (b) : (a) Trading with enemy — Nand Kishor v. Kunj Bihari Lal (b) Trafficking in public offices — Girdhari Singh v. Neeladhar Singh (c) Interference with administration of justice — Espostiv v. Bowden (d) Marriage brokage contracts — Shivsaran Lal v. Keshav Prasad

2015Assertion–Reason

Read Assertion (A) and Reason (R) are answer using codes given below: Assertion (A): Compensation is recoverable for any loss or damage arising unnaturally in the unusual course of things from breach of contract, or which the parties did not know at the time of the contract as likely to result from the breach. Reason (R): Because Section 73 of the Indian Contract Act stipulates so. Codes:

  1. (a)Both (A) and (R) are right and (R) is correct reason for (A)
  2. (b)Both (A) and (R) are wrong✓
  3. (c)(A) is right, but (R) is wrong
  4. (d)(R) is right, but (A) is wrong
Answer & explanation

Ans. (b) : Both (A) and (R) are wrong Explanation: Under Section 73 of the Contract Act, an aggrieved party can claim compensation from parties who breach the contract for the following kinds of loss — (1) Such loss or damage which arose naturally in the usual course of events as a consequence of the breach of contract, (2) Such loss which the parties knew at the time of making the contract to be its likely result. Section 73 is based on the sub-section Hadley v. Baxendale (1954) principle.

2015

Doctrine of frustration was laid down for the first time in:

  1. (a)Krell v. Henry
  2. (b)Taylor v. Caldwell✓
  3. (c)Paradine v. Jane
  4. (d)Cricklewood Property and Investment Trust Ltd. v. Leighton's Investment Trust Ltd.
Answer & explanation

Ans. (b) : Taylor v. Caldwell Explanation: The doctrine of frustration was first laid down in Taylor v. Caldwell (1863), and this doctrine was later incorporated in Section 56 of the Indian Contract Act.

2015

Which of the following cases is about performance of contract?

  1. (a)Maruti Udyog Ltd. v. Susheel Kumar Gobgetra
  2. (b)Great Northern Railway Co. v. Harrison✓
  3. (c)Joyce v. Swanri
  4. (d)Behn v. Burness
Answer & explanation

Ans. (b) : Great Northern Railway Co. v. Harrison Explanation: Great Northern Railway Company v. Harrison is a case about performance of contract.

2016

A relationship involving trust and confidence

In a relationship, one party is a person in mental distress Code:

  1. (a)Only 1 and 2
  2. (b)Only 2 and 3
  3. (c)Only 3 and 4✓
  4. (d)Only 1 and 4
Answer & explanation

Ans. (c) : Only 3 and 4 Explanation: According to Section 16 of the Indian Contract Act 1872, a contract is said to be induced by undue influence only where one party is in a position to dominate the will of another and uses that position to obtain an unfair advantage. It is therefore clear that a relationship involving trust and confidence is one which law requires to be maintained and where on its breach the other party is put under distress. Therefore, if these two factors are present, the contract is induced by undue influence. Hence the correct answer is (c).

2016Statements

Which of the following statements are wrong? Answer using the codes given below:

Fraud renders a contract void

Misrepresentation renders a contract voidable

Misrepresentation is more or less an intentional wrong, whereas fraud may be quite innocent

Damages for loss caused by innocent misrepresentation are assessed on the same principles as in the case of a deliberate fraud Code:

  1. (a)1 and 3 only✓
  2. (b)2 and 4 only
  3. (c)1 and 4 only
  4. (d)1 and 2 only
Answer & explanation

Ans. (a) : 1 and 3 only Explanation: Fraud is defined in Section 17 of the Indian Contract Act 1872. According to Section 19, when consent to an agreement is caused by fraud or misrepresentation, the contract is a voidable contract at the option of the party whose consent was so caused. Therefore, statement (1) is wrong. Statement (2) is correct. Misrepresentation is an innocent wrong, whereas fraud can be innocent — this statement is wrong. Damages for loss caused by innocent misrepresentation are assessed on the same principles as in the case of deliberate fraud — this statement is correct.

2016Match the lists

Match List-I with List-II and select the correct answer using the codes given below: List-I (Consequences of ultra vires transaction) A. Rights of a member of company to get against ultra vires transaction B. Personal liability of directors C. Breach of warranty of authority to induce a third party to enter into ultra vires transaction D. Ultra vires acquired property List-II (Judgement)

Jehangir R. Modi v. Shamji injunction Ladha

Attorney General v. Great Eastern

Coltman v. Coltman

Weeks v. Propert Code:

  1. (a)A-2, B-1, C-4, D-3✓
  2. (b)A-1, B-2, C-4, D-3
  3. (c)A-2, B-1, C-3, D-4
  4. (d)A-4, B-3, C-1, D-2
Answer & explanation

Ans. (a) : Correct matching is — (a) Rights of a member of company against ultra vires transaction — Attorney General v. Great Eastern Railway Co. (1880) (b) Personal liability of directors — Jehangir R. Modi v. Shamji Ladha (1866) (c) Breach of warranty of authority to induce a third party to enter into ultra vires transaction with company — Weeks v. Propert (1914) (d) Ultra vires acquired property — Coltman v. Coltman

2016

Where the plaintiff suffers no loss, the court may still award him nominal damages in recognition of his right. But this is in the discretion of the court

In ordinary cases damages for mental pain and suffering caused by the breach of contract are not allowed Code:

  1. (a)Only (1) and (2) are wrong
  2. (b)Only (2) and (4) are wrong
  3. (c)Only (1) is wrong✓
  4. (d)Only (4) is wrong
Answer & explanation

Ans. (c) : Only (1) is wrong Explanation: In cases of tort, an action for unliquidated damages is filed. A claim for damages is not a debt because it is not related to the obligation to pay any specified or liquidated sum of money. Damages are compensatory, not penal. Where a plaintiff suffers no loss, the court may still award him some nominal damages in recognition of his rights. In ordinary cases, damages for mental pain and suffering caused by breach of contract are not allowed.

2016Match the lists

Match List-I with List-II and select the correct answer using the codes given below: List-I (Mistake as to subject matter of contract) A. Mistake as to non-existent subject-matter B. Mistake as to title or rights C. Different subject-matters in mind D. Mistake as to substance, nature or quality or subject matter List-II (Judgements)

Bell v. Lever Bros. Ltd. (1931) UKHL

Raffles v. Wichelhaus (1864)

Gustavus Couturier v. Robert Hastie (1956) UKHL

Sheikh Bros. Ltd. v. Ochsner (1957) Code:

  1. (a)A-1, B-3, C-2, D-4
  2. (b)A-1, B-3, C-4, D-2
  3. (c)A-3, B-1, C-2, D-4✓
  4. (d)A-4, B-2, C-1, D-3
Answer & explanation

Ans. (c) : Correct matching — Bell v. Lever Bros. Ltd. — Mistake as to title or rights Raffles v. Wichelhaus (1864) — Different subject-matters in mind Gustavus Couturier v. Robert Hastie — Mistake as to non-existent subject-matter Sheikh Bros. Ltd. v. Ochsner (1957) — Mistake as to substance, nature or quality or subject matter

2016Match the lists

Match List-I with List-II and select the correct answer using codes given below: List-I (Law relating to directors) A. Appointment of Additional Directors B. Removal of Directors by Shareholders. C. Special Statutory Protection for Directors against liability D. Exclusion of Liability not allowed to Directors List-II (Relevant Sections under Companies Act)

S. 284

S. 201

S.260

S. 633 Code:

  1. (a)A-1, B-3, C-4, D-2
  2. (b)A-3, B-1, C-4, D-2✓
  3. (c)A-3, B-1, C-2, D-4
  4. (d)A-4, B-2, C-1, D-3
Answer & explanation

Ans. (b) : Correct matching — Appointment of Additional Directors — Section 260/161 Removal of Directors by Shareholders — Section 284/169 Special Statutory Protection for Directors against liability — Section 633 Exclusion of Liability not allowed to Directors — Section 201

2017

In which one of the following cases doctrine of frustration was laid down?

  1. (a)BOI Finance Ltd. v. Custodian
  2. (b)Orissa Textile Mills ltd. v. Ganesh Das
  3. (c)Sachidananda patnaik v. G.P. & Co.
  4. (d)Taylor v. Coldwell✓
Answer & explanation

Ans. (d) : Taylor v. Coldwell Explanation: The doctrine of frustration of contract was laid down in Taylor v. Caldwell. Section 56 of the Indian Contract Act is related to this doctrine. According to it, an agreement to do an act impossible in itself is void, and a contract to do an act which later becomes impossible or becomes unlawful by reason of some event, is also void.

2017Assertion–Reason

Read Assertion (A) and Reason (R) and answer using the code given below: Assertion (A): Compensation is recoverable for any loss or damage of which the parties knew at the time of the contract and unlikely to result from the breach of the contract. Reason (R): Because above rule is laid down in Hadley v. Baxendale case. Codes:

  1. (a)Both (A) and (R) are correct and (R) is correct reason for (A)✓
  2. (b)Both (A) and (R) are wrong
  3. (c)(A) is right, but (R) is wrong
  4. (d)(R) is right, but (A) is wrong
Answer & explanation

Ans. (a) : Both (A) and (R) are correct and (R) is correct reason for (A) Explanation: In the case of Hadley v. Baxendale, it was held that on the breach of a contract, the party in breach shall be responsible for those losses arising from the breach, which the parties knew at the time of making the contract that such loss was likely to result from the breach. Therefore, both (A) and (R) are correct and (R) is the correct explanation of (A).

2017Assertion–Reason

Read Assertion (A) and Reason (R) and answer by using code given below: Assertion (A): An agreement would be void if both the parties to the agreement were under a mistake as to a matter of fact no essential to the agreements. Reason (R): Because Section 20 of the Indian Contract Act so provides. Code:

  1. (a)(A) is correct, but (R) is incorrect
  2. (b)(A) is correct, but (R) is incorrect
  3. (c)Both (A) and (R) are correct
  4. (d)Both (A) and (R) are incorrect✓
Answer & explanation

Ans. (d) : Both (A) and (R) are incorrect Explanation: Section 20 of the Contract Act 1872 provides that where both parties to a contract are under a mistake as to a matter of fact essential to the agreement, the contract is void.

2017

In which of the following cases law of frustration was applied? Answer using code given below:

Paradine v. Jane

Taylor v. Caldwell

Krell v. Henry

Criklewood property and investment Trust Ltd. v. Leighton's investment Trust Ltd. Code:

  1. (a)1 only
  2. (b)1 and 2 only
  3. (c)1, 2 and 3 only
  4. (d)1, 2, 3 and 4✓
Answer & explanation

Ans. (d) : 1, 2, 3 and 4 Explanation: The doctrine of frustration is provided in Section 56 of the Contract Act. The following cases are related to this doctrine — 1. Paradine v. Jane, 2. Taylor v. Caldwell, 3. Krell v. Henry, 4. Cricklewood Property and Investment Trust Ltd. v. Leighton's Investment Trust Ltd.

2017

Which one of the following cases enshrine the present position of the doctrine of policy in India?

  1. (a)Ramchand Hirachand v. Askar Nawaz Jung
  2. (b)Gherulal Parekh v. Mahadeodas✓
  3. (c)Munlammal v. Raja
  4. (d)Geeta Satish Gokarna v. Satish Shankarrao Gokarna
Answer & explanation

Ans. (b) : Gherulal Parekh v. Mahadeodas Explanation: The present position of the doctrine of public policy in India has been established in the case of Gherulal Parekh v. Mahadeodas.

2017

The defence of 'non est factum' is available to the contracting party who has committed mistake as to the:

  1. (a)Identity of the other contracting party
  2. (b)Natural of contract✓
  3. (c)Quality of the subject matter of the contract
  4. (d)Quality of the promise made by the other party
Answer & explanation

Ans. (b) : Natural of contract Explanation: 'Non est factum' is a law by which one party to an agreement is allowed to escape from signing the agreement by showing that it is a mistake as to the nature of the agreement. That is, signing any agreement without knowing its nature, the mistake of fact is a good defence in law which is provided in Sections 20, 21, 22.

2017

Special damages will be awarded in case of a breach of contact:

  1. (a)Only when the contracting parties express the same specifically as the terms of the contract
  2. (b)Always in the special circumstances leading to the formation of the contract
  3. (c)Only when the court of law thinks fit in the special circumstances of the case
  4. (d)Only when the special circumstance causing loss of profit resulting from the breach of contract were brought to the notice of the party committing breach at the time of formation of the contract✓
Answer & explanation

Ans. (d) : Only when the special circumstance causing loss of profit resulting from the breach of contract were brought to the notice of the party committing breach at the time of formation of the contract Explanation: Special damages for breach of contract can be awarded only when the special circumstances causing loss of profit resulting from the breach of contract were brought to the notice of the party in breach at the time of formation of the contract (Hadley v. Baxendale). Under Section 73 of the Contract Act, compensation for breach of contract is determined. The general rule is that the compensation will depend on the direct acts of the defendant. The defendant will not be liable for infinite damages.

2017

A master asks his servant to sell his cycle to him at less than the market price. This contract can be avoided by the servants on the ground of:

  1. (a)Coercion
  2. (b)Fraud
  3. (c)Undue influence✓
  4. (d)Misrepresentation
Answer & explanation

Ans. (c) : Undue influence Explanation: In the present problem, the contract has been caused by undue influence. The definition of undue influence is given in Section 16 of the Indian Contract Act. According to Section 16, a contract is said to be induced by undue influence where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other. Therefore, the servant will have the right to make the contract voidable under Section 19-A of the Contract Act.

2017

'Non est factum' means, a document executed

  1. (a)Under undue influence
  2. (b)In ignorance✓
  3. (c)Outside India
  4. (d)Under undue influence
Answer & explanation

Ans. (b) : In ignorance Explanation: Non est factum means a contract signed without understanding the meaning of the contract (in ignorance). It is a defence in law.

2017

Hadley v. Baxendale is a leading case on:

  1. (a)Minor's agreement
  2. (b)Anticipatory breach
  3. (c)Breach of implied term
  4. (d)Remoteness of damages✓
Answer & explanation

Ans. (d) : Remoteness of damages Explanation: Hadley v. Baxendale is a leading case on remoteness of damages and is based on Section 73 of the Indian Contract Act. In this case, the 'doctrine of remoteness of damages' was laid down, which means the defendant shall not be liable for infinite damages that are not the direct consequence of his acts.

2019

Frustration of contract implies:

  1. (a)Legal impediment to materialize the contract
  2. (b)Commercial hardship
  3. (c)Financial constraint to materialise the contract
  4. (d)Physical impossibility due to disappearance of the subject matter of contract or object has failed to materialise✓
Answer & explanation

Ans. (d) : Physical impossibility due to disappearance of the subject matter of contract or object has failed to materialise Explanation: Frustration of contract means physical impossibility due to the disappearance of the subject matter of the contract or because the object has failed to materialise. Section 56 of the Indian Contract Act is related to this principle. According to it, an agreement to do an impossible act or a contract to do an act which later becomes impossible or unlawful is void. The case of Taylor v. Caldwell is related to this.

2020-2021

A party who suffers loss as a result of a breach of contract can in the usual course claim:

  1. (a)Ordinary damages✓
  2. (b)Special damages
  3. (c)Exemplary damages
  4. (d)Penal damages
Answer & explanation

Ans. (a) : Ordinary damages Explanation: A party who suffers loss due to breach of contract can ordinarily claim ordinary damages. Ordinary damages refer to compensation payable for loss naturally arising in the usual course of events from the breach. Sections 73–75 of the Indian Contract Act, 1872 provide for the right to receive compensation. Section 73 provides for ordinary damages — when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be the likely result of the breach. Special damages are awarded when the plaintiff alleges that special loss was foreseeable and known to the parties at the time of contracting. Nominal damages aim to recognise the rights of the parties and are not punitive in nature. Exemplary damages are awarded to set an example for others, and are payable in cases such as breach of promise of marriage and dishonour of a cheque despite sufficient funds.

2020-2021

Frustration of a contract occurs in two conditions. Firstly, where the contract has become physically impossible and secondly, where the object has failed. The above was laid down in the case of:

  1. (a)Krell vs Henry✓
  2. (b)Paradine vs Jane
  3. (c)Taylor vs Caldwell
  4. (d)Komal Rani vs Chandram
Answer & explanation

Ans. (a) : Krell vs Henry Explanation: In Krell v Henry (1903), the court held that a contract is frustrated in the following circumstances:

When performance of the contract becomes physically impossible;

2020-2021

When performance is physically possible but the object of the parties cannot be fulfilled. Taylor v Caldwell (1863) — the court held that when the subject matter of the contract is destroyed, the contract is discharged. Paradine v Jane (1647) — the first rule in English law was that events occurring after the formation of a contract cannot excuse a party from performance.

Which of the following are correct? A. The Doctrine of Privity of Consideration is applicable in India B. The Doctrine of Privity of Consideration is not applicable in India C. The Rule of Privity of Contract is applicable in India D. The Rule of Privity of Contract is not applicable in India Choose the correct answer from the options given below:

  1. (a)A and C only
  2. (b)B and D only
  3. (c)B and C only
  4. (d)C only
Answer & explanation

Ans. (*) : The doctrine of 'Privity of Contract' is a principle established by English courts. According to this doctrine, a person who is not a party to the contract cannot enforce the contract, even if it is made for his benefit. This doctrine applies in both India and England. Under this doctrine, a rule exists that a person who is a party to the contract but consideration was not given by him but by some other person on his behalf can enforce the contract. This rule applies in India but not in English law. Note: This question has been removed by NTA.

2021-2022Statements

Given below are two statements: Statement I: A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. Statement II: An agreement in restraint of trade is voidable. In light of the above statements, choose the correct answer from the options given below:

  1. (a)Both Statement I and Statement II are true
  2. (b)Both Statement I and Statement II are false
  3. (c)Statement I is true but Statement II is false✓
  4. (d)Statement I is false but Statement II is true
Answer & explanation

Ans. (c) : According to Section 2(j) of the Indian Contract Act, 1872, a contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. According to Section 27, an agreement in restraint of trade is void, not voidable.

2021-2022

In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract:

  1. (a)Can be taken into account
  2. (b)Cannot be taken into account
  3. (c)Must be taken into account✓
  4. (d)Must never be taken into account
Answer & explanation

Ans. (c) : In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account. The provision relating to compensation in case of breach of contract is given under Section 73 of the Contract Act, 1872.

2021-2022

Which of the following are correct? Fraud means and includes: A. The suggestion as a fact, of that which is not true, by one who does not believe it to be true. B. The passive concealment of a fact. C. A promise made without any intention of performing it. D. Any other act fitted to deceive. E. Any such thing which the law declares as misrepresentation. Choose the most appropriate answer from the options given below:

  1. (a)A, B, C and D only
  2. (b)A, B and E only
  3. (c)C, D and E only
  4. (d)A, C and D only✓
Answer & explanation

Ans. (d) : According to Section 17 of the Indian Contract Act, 1872, fraud means and includes: A. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true, B. The active concealment of a fact by one having knowledge or belief of the fact, C. A promise made without any intention of performing it, D. Any other act fitted to deceive, E. Any such act or omission as the law specially declares to be fraudulent.

Dec 2020/June 2021 · Q62

In which of the following cases the duties are not specifically enforced in respect of the act done?

(1) The liability of a borrower to repay a debt barred by statue of limitation

(2) The liability of a borrower to repay the money borrowed by him

(3) To refrain the wrong doer from publication when a libel has already been published

(4) To refrain the wrong doer to continue the commission of a nuisance

Choose the correct answer from the options given below

  1. (a)(1) and (2) only
  2. (b)(1) and (3) only✓
  3. (c)(2) and (3) only
  4. (d)(2) and (4) only
Answer & explanation

Answer: (b) (1) and (3) only

December 2024 · Q74Sequence / order

Arrange the following provisions related to 'void agreement in chronological order, as provided under the Indian Contract Act

(A) Agreement in restraint of marriage

(B) Agreement in restraint of legal proceedings

(C) Agreement in restraint of trade

(D) Agreement without consideration

(E) Agreement which is ambiguous and uncertain

Choose the correct answer from the options given below

  1. (a)(D), (A), (C), (B), (E)✓
  2. (b)(C), (A), (B), (E), (D)
  3. (c)(B), (A), (D), (C), (E)
  4. (d)(A), (C), (E), (D), (B)
Answer & explanation

Answer: (a) (D), (A), (C), (B), (E)

December 2024 · Q109Sequence / order

Which of the following are consequences of Breach of Contract?

(A) Damages in ordinary course

(B) Remote damages and ordinary damages

(C) If stipulation by way of penalty is given in contract, then penalty is a consequence

(D) In quantifying damages, the inconvenience of non performance has to be considered

Choose the correct answer from the options given below

  1. (a)(A), (B), (C) Only
  2. (b)(A), (C), (D) Only✓
  3. (c)(D), (B), (C) Only
  4. (d)(B), (C), (D) Only
Answer & explanation

Answer: (b) (A), (C), (D) Only

December 2024 · Q113

What is the meaning of the following maxim?

"Ex turpi causa non oritur actio"

  1. (a)From an immoral cause no action arises✓
  2. (b)From an immoral cause an action arises
  3. (c)From a moral cause an action arises
  4. (d)From a moral cause no action arises
Answer & explanation

Answer: (a) From an immoral cause no action arises

June 2025 · Q48Sequence / order

Arrange the following in the order in which they appear in the Indian Contract Act

A. Agreement by way of wager

B. Agreement in restraint of legal proceedings

C. Agreement in restraint of trade

D. Agreement in restraint of marriage

  1. (a)A, B, C, D
  2. (b)B, C, D, A
  3. (c)D, C, B, A✓
  4. (d)C, D, A, B
Answer & explanation

Answer: (c) D, C, B, A

Explanation: The order as per the Indian Contract Act:

1. Restraint of trade (Sec. 27)

2. Restraint of marriage (Sec. 26)

3. Wagering agreements (Sec. 30)

4. Restraint of legal proceedings (Sec. 28)

June 2026 · Q67

The legal maxim "In Pari Delicto" refers to

  1. (a)A mad man has no will
  2. (b)The crime carries the persons
  3. (c)In equal fault✓
  4. (d)An act done by me against my will
Answer & explanation

Answer: (c) In equal fault

Explanation: The full Latin legal maxim is In pari delicto potior est conditio defendentis, which translates to "where both parties are in equal fault, the position of the defendant is stronger." Under the law of contracts and torts:

• If two parties enter into an illegal or immoral agreement, or engage in a joint wrongful act, the court will not assist either party to enforce the contract or recover damages.

• When both parties are in equal fault (in pari delicto), the law leaves them exactly as it finds them, refusing judicial relief to a claimant who comes to court with "unclean hands."

June 2026 · Q135

As per the Section 30 of the Indian Contract Act, 1872, which of the following is not an essential elements of a contingent contract?

  1. (a)There must be a valid contract to do or not to do something
  2. (b)Such act or abstinence must depend on the happening or non-happening of the uncertain event
  3. (c)An Uncertain event non-necessarily collateral to the contract✓
  4. (d)The event should not be at the discretion of promisor
Answer & explanation

Answer: (c) An Uncertain event non-necessarily collateral to the contract

Explanation: A contingent contract is governed under Section 31 (not Section 30) of the Indian Contract Act, 1872. Section 31 defines a contingent contract as "a contract to do or not to do something, if some event, collateral to such contract, does or does not happen." Why Option (c) is NOT an essential element:

• It is mandatory that the uncertain event must be collateral (incidental/independent) to the contract. Stating that the event is "non-necessarily collateral" directly contradicts Section 31. Valid Essentials of a Contingent Contract:

1. Valid Contract: There must be an underlying contract to do or abstain from doing something (Option a).

2. Uncertain Future Event: Performance depends on whether an uncertain event happens or does not happen (Option b).

3. Collateral Event: The event must be collateral (independent of the core performance/consideration).

4. Beyond Promisor's Discretion: The event must not depend purely on the arbitrary will or discretion of the promisor (Option d).

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