SHORT ANSWER TYPE QUESTIONS
Q.1. Give the definition of Consideration?
Ans. Consideration has been variously defined. The simplest definition
is by Blackstone, ” Consideration is the recompense given by
the party contracting to the other.”
In other words, it is a price of the promise.
In the words of Pollock, consideration is the price for which the
the promise of the other is bought, and the promise thus given for value is
nal enforceable. “
Another simple definition is by justice Patterson-
consideration means something which is of some value in the eyes of the law….
It may be some benefit to the plaintiff or some detriment to the defendant .But the most commonly accepted definition is that which was attempted by Lush J . In Currie V.Misa.
or In Section 2 (d) of the Indian Contract Act consideration is defined as follows-
When, at the desire of the promisor the promised or any other person has done or abstained from doing or does or abstains from doing ,or promises to do or to abstain from doing , something ,such act or abstinence or promise is called a consideration for the promise.
Q.2. Explain the nature of consideration?
Ans. Nature of consideration-Consideration is an important
requisite of a contract. An analysis of any contract will show that it
consists of two clearly separable parts, (i) promise on the one hand
and (ii) consideration for the promise on the other hand. A person who
makes a promise to do or refrain from doing something, as a legal duty,
usually does so as a return or equivalent of some benefit accruing to
him, or as a return or equivalent of some loss, damage or inconvenience
that may occasion or may have been occasioned, to the other party in
respect of the promise.
The benefit to received, or the loss, damage or inconvenience so
caused, is regarded in law as consideration of the promise. It may be
described as something accepted or agreed upon as a return or
equivalent for the promise made.
Q.3. Give the distinction between Agreement and Contract?
Ans. 1. S. 2 (e) says, “ Every promise and every set of promises,
forming the consideration for each other, is an agreement.” According
to Savigny, an agreement is the expression by two or more persons of
a common intention to affect their legal relation. ” It is a wider term
than contract.” S. 2 (h) says, “ An agreement enforceable by law is a
Contract results from a combination of two ingredients
agreement and ebligation. An agreement becomes a contract when
there are competent parties, consideration, free consent and legal
object. (S. 10).
directly contemplates and creates an obligation. Thus, all contracts are
agreements but all agreements are not contracts. An agreement, in
order to be a contract, must be enforceable by law.
variety of transactions which may not be enforceable by law because of
the absence of some of the essential elements of a valid contract, e.g.
capacity of parties, genuineness of consent, legality of object, etc. In
the words of Desai, ” An agreement becomes a contract when there are
competent parties, consideration, consent and legal object.”
Q.4. Can there be acceptance by performing conditions or
Ans. Yes, According to S.8 when the proposer had invited the
doing of an act in consideration of the promise made by him,
performance of the act mentioned in the proposal will amount to
acceptance and no formal communication of acceptance is necessary.
The doctrine is based upon the practical view that actual performance
is more valuable to the offeror than mere promise to perform. This is
illustrated by what are called general offers, offers made to public at
large, wherein performance is expressly or impliedly indicated as a
mode of acceptance. The case of Carlill Vs. Carbolic Smoke Ball
Company I.Q.B.D. 256 is good example of this principle.
Q.5. What is the effect of frustration?
Ans. The contract becomes void and parties to the contract are
excuse from performing their respective parts of the obligations under
the contract. The second paragraph of S. 56 deals with the case where
there is no impossibility at the outsets but where the impossibility
supervenes after the contract has been made.
It provides that a contract becomes void if it means the doing
of an act which after the contract is made
(i) Becomes impossible or (ii) which becomes unlawfulness must
not have arisen by reason of some even which the promisor could
For Example-“A â€™ promises to sell his house to’ B ‘. The
agreement is perfectly valid at the outset as A can deliver the house
to’ B ‘. But after the agreement the house catches fire. The accident
makes the performance of the agreement impossible and hence the
agreement becomes void.
Q. 7. What is the effect of novation, rescission and alteration
Ans. Effect of novation, rescission and alteration of contract-
According to S. 62 of Contract Act, novation means that there being a
contract in existence some new contract is substituted for it either
between the same parties or between different parties, the consideration
being discharge of the old contract. Novation of a contract implies a
fresh contract, directly or by implication in place of the original
contract. There is novation when the parties are changed or the nature
of the obligation is changed.
Novation can not be compulsory, it can only be with the mutual
consent of both the parties. Novations may took place in the following
1. Novation by change of parties-A owes money of B under a
contract. It is agreed between ‘ A’ B ‘ and’ C ‘ that’ B’shall thenceforth
accept ‘ C’ as his debtor instead of ‘ A’. The old debt of ‘ A’ to ‘ B’ is at
an end, a new debt from ‘ C’ to ‘ B’ has been contracted.
2. Novation by change in nature of obligation — ‘ A’ owes B 10,000
rupees on a bond. A enters into an arrangement with ‘ B’ any gives ‘ B’
a mortgage deed of his, (A’s) estate for 5,000 rupees in place of the
bond of 10,000 rupees. This is a new contract and extinguishes the old.
Q. 8. What do you mean by penalty and liquidated damages?
Is there any difference between the two?
Ans. The parties to a contract may provide that in case of breach
of contract the party in default is to pay to the other a sum certain
specified in, or ascertainable from, the contract. This may be either
liquidated damages or a penalty, which covers the loss. If the sum does
per performance attempt to of assess the contract the loss, it, but is penalty is imposed. as security for the due
Q. 9. What is the effect essential of failure to perform at fixed time, in contract in which time is essential?
Ans. is Effect of-failure $ to perform at fixed time, in contract in which time is essential- S.55 of contract Act deals with the rights and liabilities of parties in case where time is fixed for the performance of a promise which is not performed within the specified time but fails to do it then the contract becomes voidable at the option of the
promisee provided the intention of the parties was that time should be
of the essence of the contract. But if it was not the intention of parties
that time should be of the essence of the contract, then the contract
does not become voidable but the promisee becomes entitled to
compensation from the promisor for any loss suffered by him.
Q. 10. Write down the characteristics of an agreement?
Ans. The main characteristics of an agreement are
1. Plurality of Persons — Agreement results when one person
makes a proposal and the person to whom it is made accepts it.
Therefore, it is impossible for one person to make an agreement with
For instance, wlien a person, in his official capacity, as a director
of a company, makes a promise to himself as an individual, no
agreement is formed by an acceptance in the latter capacity.
2. Consensus-ad-idem or meeting of minds-To constitute an
agreement, there must be a meeting of minds of the parties and both
the parties must agree to the (i) same thing (ii) in the same sense (ii)
at the same time.
3. Reciprocal Promises-Agreement is described as a promise,
and every set of promises, forming the consideration for each other. In
other words, wherever a promise or a set of promises is exchanged for
a promise, or set of promises, agreement shall results. Thus, agreement
is reciprocal promises. Section 2 (f) defines reciprocal promises as
“ promises, which form the consideration or part of the consideration
for each other, are called reciprocal promises.”
Q. 12. Explain, ” All contracts are agreement, but all agreements
are not contract”?
Ans. A contract is made up of two elements-
(i) An agreement (ii) The agreement is such as is enforceable
Therefore, for a contract, there has to be an agreement for it
means only an agreement enforceable at law. The necessary implication
of this is that all contracts are agreements and since only agreements
enforceable at law are contracts, agreement is the genus of which
contract is the specie, some agreements remain only agreements and
they do not become contracts because they can not be enforced at law,
such agreements are-
(i) Agreements not intended to create legal relationship,
(ii) Agreements not made with the free consent of parties,
(iii) Agreements not made by competent persons, or
(iv) Agreements not made for a lawful object, or
(V) Agreements not supported by lawful considerations,
(vi) Agreements which have been declared void by law, and,
(vii) Agreements which have not been written or which lack
altestation or registration though law requires them to be so made.
This means that all agreements do not become contracts, though
every contract is certainly an agreement.
Q. 13. Give the definition of ‘ Fraud’?
Ans, Fraud, as defined in Sec. 17 of the Contract Act, means
and includes any of the following acts committed by a party to a
contract (or with his connivance or by his agent) with intent to deceive
another party there to (or his agent) or to induce him to enter into the
Q. 14. What are the requirements of misrepresentation?
Ans. A misrepresentation is relevant if it satisfies the following
(A) It must be made with the intention that it should be acted
upon by the person to whom it is addressed.
(B) It must be a representation of a material fact. Mere
expression of opinion does not amount to misrepresentation even if it
turns out to be wrong.
(C) it must be made before the conclusion of the contract with
a view to inducing the other party to enter into the contract.
(D) It need not be made directly to the plaintiff. A wrong
statement of facts made to a third person with the intention of
communicating it to the plaintiff also amounts to misrepresentation.
Misrepresentation results not only from mis-statement of facts.
but also from suppression of material facts.
Q. 15. Distinguish between Coercion and Under Influence?
Ans. Both coercion and undue influence affect the free consent
and make the contract voidable at the option of the aggrieved party.
However, the two differ from each other in the following respects-
1. Relationship-In case of coercion, relationship between the
promisor and promisee is not necessary, while in case of undue
influence some sort of relationship generally exists between the two
2. Domination-Under Coercion, the consent of the affected
party is obtained under the threat of an offence, i.e. committing or
threatening to commit act act forbidden by the I.P.C. or detaining or
threatening to detain property of some other person unlawfully. But in
undue influence, the consent of the aggrieved party is obtained by the
exercise of domination by the other party securing unfair advantage ..
3. Type of Force-Coercion involves use of physical or violent
force over the person or property of another whereas undue influence
involves the use of moral force.
2.Uncertain event -The promise must be conditional on an event happening or not happening. A wager generally contemplates a future event, but it may also relate to a past event provided the parties are not aware of its result or the time of its lappening.
3.Each party must stand to win or loss-Upon the determination of the contemplated event ,each party should stand to win or lose .An agreement is not wager if either of the parties may win but cannot lose or may lose but cannot win.
4.No control over the event-Neither party should have control over the happening of the event one way or the other .
5.No other interest in the event- Lastly ,neither party should have any interest in the happening or non- happening of the event other than the sum or stake he will win or lose.
Q. 17. Describe the main features of Quasi-Contract?
Ans. Quasi-Contracts are exceptional kinds of contracts by which
one party is bound to pay money in consideration of something done
or suffered by the other party not based on actual promises.
Features of Quasi-Contract
1. It is a right to a sum of money-” Such a right is always a
right to money and generally, though not always, to liquidated sum of
2. This right is imposed by Law and does not arise by agreement
of parties –“ It does not arise from any agreement of the parties
concerned, but is imposed by law, so that in this respect a
quasi-contract resembles a tort. 5 “
3. This right is available only against a particular person or
persons-” it is a right which is available not, like the rights protected
by the law of torts, against all the world, but against a particular person,
or persons only, so that in this respect, it resembles a contractual right. “
Q. 18. What is’ Quasi-Contract?
Ans. Definition of Quasi-Contract
Quasi-Contracts are exceptional kinds of contracts by which one party is bound to pay
money in consideration of something done or suffered by the other
party not based on actual promises.
“ Quasi-Contract arises when one person has done something for
another or paid money on his behalf to third party then the court comes
forward on the ground of” equity ” saying that the person receiving the
benefit must make compensation to the other otherwise he would
become rich on the expenses of the other.” For Example- A person to whom money has been paid or anything delivered by mistake must repay or return it as if there was a contract between the parties to that effect, such obligation, for want of proper name , it appears ,are called Quasi-Contracts under the English law. They are not contracts are there is no intention to enter into one but as the results resembles those of a contract they are called quasi-contracts.
Q. 19. Write a short note ‘ doctrine of frustration’?
Ans. Doctrine of Frustration-To a great extent S. 56 is based
on the English doctrine of frustration. According to S. 56 the Doctrine
of Frustration means the discharge of a contract rendered impossible
of performance by external causes beyond the contemplation of the
It includes both
(i) Impossibility of the performance of contract,
(ii) Impossibility of fulfillment of the ulterior purpose for which
contract was entered into
|Wagering Contract||Contingent Contract|
|1. According to S.30 a “Wager is a promise to pay money |
or money’s worth on the happening or not happening of an uncertain event.”
|1. According to S. 31 a “contingent contract is a contract to do |
or not to do something if some event collateral to such contract does or does not happen.”
|2. All wagering contracts are contingent contracts.||2. All contingents contracts are not wagering contracts.|
|3. Wagering Contracts are void.||3. Contingent contracts are not void unless they are dependant on an impossible event.|
|4. In a wager, the uncertain event is beyond the power of both parties.||4. In a contingent contract, the event may be within the power of one of the parties.|
|5. In a wager, the future event is the sole determining factor of the contract.||5. In a contingent contract the future event is merely collateral or incidental.|
|6. The basis of a wagering contract is a mutual chance of loss and gain of the parties.||6. In a contingent contract there is no chance of loss or gain of any party.|
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